LAIX (LAIX) Misses Q4 EPS by 10c, Revenues Beat

LAIX (NYSE: LAIX) reported Q4 EPS of ($0.50), $0.10 worse than the analyst estimate of ($0.40). Revenue for the quarter came in at $32.6 million versus the consensus estimate of $29.72 million.

• Fourth quarter 2018 net revenues increased by 195.1% year-over-year
• Fourth quarter 2018 gross billings1 increased by 171.7% year-over-year
• Full year 2018 net revenues increased by 284.9% year-over-year
• Full year 2018 gross billings increased by 215.2% year-over-year
• Net revenues were RMB224.5 million (US$32.6 million), a 195.1% increase from RMB76.1 million for the fourth quarter of 2017.
• Gross billings were RMB359.0 million (US$52.2 million), a 171.7% increase from RMB132.2 million for the fourth quarter of 2017.
• Gross margin was 68.1% compared with 71.6% for the fourth quarter of 2017.
• Approximately 1.0 million paying users purchased the Company’s courses and services for the fourth quarter of 2018 compared with approximately 400,000 paying users for the fourth quarter of 2017.
• Total cumulative registered users were 110.3 million as of December 31, 2018 compared with 61.3 million total cumulative registered users as of December 31, 2017.

CEO and CFO Comments

“2018 was a milestone year for us, as we successfully completed our IPO on the renowned New York Stock Exchange on September 27, 2018. We believe the cash proceeds and additive brand recognition generated from the IPO will deliver meaningful value for our business in the years to come,” commented Dr. Yi Wang, Chairman and Chief Executive Officer of LAIX. “We are pleased to report fourth quarter revenue of RMB224.5 million, a 195.1% year-over-year increase. Such outstanding performance was driven by the continued robust growth of our overall business and user expansion.”

“As a pioneer in the AI-powered English learning market, we are benefitting from the growing trend of education upgrades in China. We are pleased to see that our advanced platform with interactive, customized courses and services have appealed to a broader user population. The total number of registered users and paying users for 2018 grew by approximately 80.5% and 201.1%, respectively. As we start another year with excitement and optimism, we believe our dedication to (i) advancing our proprietary AI technologies, (ii) providing innovative and differentiated products and (iii) creating a superior personalized learning experience that results in higher user engagement, learning efficacy and efficiency is what sets us apart and allows us to succeed in the long term. While we have a long way to go, as we are in the early stages of the AI-powered Education 3.0, we remain committed to our mission of empowering everyone to realize their full potential.” Dr. Wang concluded.

“We made significant strides in 2018 to position our Company for long-term sustainable growth. Our strong financial performance, in particular our robust top-line growth, was a clear indication of our compelling, scalable model and our strong competitive position,” said Ms. Bin Yu, Chief Financial Officer of LAIX. “As we are building our brand awareness and driving growth of our user base, our sales and marketing expenses increased in terms of absolute dollars in 2018. This is within our expectation, and at the same time, we are striving to optimize the return on our marketing investments. Due to our scalable business model and high revenue growth, sales and marketing expenses as a percentage of net revenues declined to 110.7% in 2018 from 171.0% in 2017. Looking ahead, we see a long runway of rich opportunities before us.”

For earnings history and earnings-related data on LAIX (LAIX) click here.

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