BUSINESS VIPKID posts strong growth momentum


VIPKID posts strong growth momentum

By Cheng Yu |

15:16, August 19, 2020

Zhang Yuejia, co-founder and president of VIPKID, delivers a keynote speech during a media brief on Aug 19. [Photo provided to]

VIPKID, China's leading one-on-one online English tutoring platform, announced on Tuesday the company has achieved growth momentum since the beginning of this year with its UE, or unit economics, staying positive for two consecutive quarters.

Unit economics is a profit and loss calculation model and an aggregate indicator that determines whether there is a financial sense in scaling a company. Investors usually take it as a key factor to see whether a startup's business model is feasible.

The move shows VIPKID has become the only domestic online education startup to realize a UE conversion, with revenue of some tens of billion yuan.

As the nation's online education startups all face operating losses, VIPKID said 90 percent of its channels achieved profitability when customers bought their product for the first time. It also noted its customer acquisition costs decreased by 45 percent year-on-year.

"We have always focused on a strategic balance between quality, scale and efficiency. We hope to pursue scale expansion based on sound teaching quality", said Zhang Yuejia, co-founder and president of VIPKID.

Zhang said the growth momentum is because the company has maintained clear strategic goals to ensure focus and stability, and at the same time has improved the company's management system and organizational efficiency.

"Also, we have accumulated word of mouth, which has led to a significant drop in customer acquisition costs," he added.

VIPKID, founded in 2013, is an online education platform providing children with one-on-one online English courses, and links teachers from North America with Chinese kids aged 4 to 12. The latest data from the company showed it has enrolled more than 90,000 US teachers in its network.

Its new brand, Dami Online School, raised $80 million in its series A round of financing earlier this year, which attracted investors, including Tencent Holdings Ltd, Sequoia Capital China and Heima Zongheng.

Unlike its core one-on-one English tutoring, the upgraded course focuses on K-12, or kindergarten to 12th grade, and involves more students, with classes at lower prices and classes in English and mathematics.

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