China Online Education Group (NYSE: COE) reported Q4 EPS of ($0.90). Revenue for the quarter came in at $43.4 million, versus $0 reported last year.

• Net revenues were RMB298.1 million (US$43.4 million), a 14.4% increase from RMB260.6 million for the fourth quarter of 2017.
• Gross billings were RMB503.2 million (US$73.2 million), a 27.9% increase from RMB393.4 million for the fourth quarter of 2017.
• Gross billings for the K-12 mass-market one-on-one offering were RMB365.7 million (US$53.2 million), a 63.0% increase from RMB224.3 million for the fourth quarter of 2017.
• Gross margin was 62.5%, compared with 62.4% for the fourth quarter of 2017.
• Operating cash inflow reached a historical high of RMB67.3 million (US$9.8 million) and operating cash outflow was RMB8.7 million in the fourth quarter of 2017.

"Our core K-12 mass-market one-on-one offering continued to grow at a healthy pace in the fourth quarter as we executed on our initiatives to further penetrate non-tier-one cities," said Mr. Jack Jiajia Huang, Founder, Chairman and Chief Executive Officer of 51Talk. "Both our revenues and gross billings exceeded the high-end of our guidance, with our core K-12 mass-market one-on-one offering accounting for 72.7% of our total gross billings in the fourth quarter. We are aggressively pursuing our non-tier-one city strategy and are pleased with our strong hold in these areas, which accounted for 69.7% of our K-12 mass-market one-on-one gross billings in the fourth quarter. There remains great demand for high-quality online education English courses in China, particularly in non-tier-one cities, and we aim to make our courses more accessible to this population.

"As we look to attract more students to our leading online education platform, we are actively raising our brand profile. In February 2019, we engaged China's phenomenally popular 'Super Student' Junkai Wang, from the hit boy band TF Boys, as our new brand spokesperson. With a massive presence among the K-12 demographic, Junkai will work with 51Talk to promote our high-quality English education for students in China. In 2019 we will continue to dedicate resources to increasing the accessibility of our courses, improving our exposure and strengthening the quality of our offerings and technology, while further growing our business," Mr. Huang concluded.

Mr. Min Xu, Chief Financial Officer of 51Talk, added, "In the fourth quarter we further grew our K-12 mass-market one-on-one gross billings by 63.0% year-over-year, led by our dedicated focus on our core K-12 mass market one-on-one offering in non-tier-one cities[3]. We also achieved historical high operating cash inflow of RMB67.3 million in the fourth quarter. Our 2019 strategic growth initiatives are aimed at expanding our business and reaching new students in underserved markets, while maintaining a prudent investment strategy."

Outlook

For the first quarter of 2019, the Company currently expects:

• Net revenues to be between RMB300 million to RMB305 million, which would represent an increase of approximately 14.3% to 16.2% from RMB262.6 million for the same quarter last year;
• Total gross billings to be between RMB425 million to RMB435 million, which would represent an increase of approximately 19.6% to 22.4% from RMB355.3 million for the same quarter last year. - Gross billings for the Company\'s one-on-one business are expected to be between RMB411 million to RMB421 million, which would represent an increase of approximately 29.1% to 32.2% from RMB318.4 million for the same quarter last year. - Gross billings for 51Talk's small class business are expected to be approximately RMB14 million, which would represent a decrease of approximately 62.1% from RMB36.9 million for the same quarter last year.

For earnings history and earnings-related data on China Online Education Group (COE) click here.