China Online Education Group Sponsored ADR Aktie

Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Thank you. Hello, everyone, and welcome to the Second Quarter 2026 Earnings Conference Call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com.

Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session.

Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today.

Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

Please also note that the earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead.

Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. Gross billings for the second quarter reached USD 39.3 million, once again exceeding the high end of our guidance announced in June 2026 and representing a growth of 38.1% year-over-year.

Demand across our key markets remains robust. We generated USD 4.9 million of net operating cash inflow during the quarter. On July 1, we launched our next-generation learning product, Global Communicator, built with our strategic partner, Oxford University Press. The world students learn in, the characters they meet and the lessons themselves are all generated end-to-end by our AI-powered content production platform. The same platform will power new regions, new languages and even new subjects. It is the foundation for what we build next.

Our priority for the remainder of 2026 is to sustain healthy growth by building on last year's success. Following an exceptionally strong quarter in Q3 2025, we are investing more efficiently in the third quarter of 2026, moving us towards profitability and long-term shareholder value.

With that, I will now turn the call over to Cindy, our CFO.

Thank you, Jack. Now let me walk you through our second quarter financial details. Net revenues for the second quarter were USD 32.4 million, a 58.8% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the second quarter was 73.9%. Gross billings grew by 38.1% from the same quarter last year to USD 39.3 million.

Q2 operating expenses were USD 26 million, an increase of 41.8% compared to the same quarter last year. Specifically, this has been driven by Q2 sales and marketing expenses of USD 19.3 million, a 48.8% increase from the same quarter last year, primarily attributable to higher sales personnel costs driven by headcount growth in the sales and marketing team as well as increased marketing and branding expenses from intensified promotional activities.

Q2 product development expenses were USD 2.4 million, a 96.6% increase from the same quarter last year. Finally, Q2 general and administrative expenses were USD 4.3 million, broadly flat compared to the same quarter last year. Overall, second quarter operating loss narrowed to USD 2.1 million from USD 3.2 million in the same quarter last year, and net loss attributable to the company's ordinary shareholders was USD 3.1 million compared with USD 3.5 million in the same quarter last year.

Q2 GAAP and non-GAAP earnings per ADS were negative USD 0.51 and USD 0.43, respectively. The company's total cash, cash equivalents and time deposits were USD 40.1 million at the end of the second quarter. Advances from students were USD 86.7 million at the end of the second quarter.

Looking forward to the third quarter of 2026, we currently expect the net gross billings to be between USD 41 million and USD 43 million. The above outlook is based on our current market conditions and reflects the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change.

This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead.

[Operator Instructions]

As we are reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Mr. David, please go ahead.

Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website.

This concludes this conference call. You may now disconnect your lines. Thank you.

Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Thank you. Hello, everyone, and welcome to the First Quarter 2026 Earnings Conference Call of 51Talk. The company's results were issued by Newswire Services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session.

Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead.

Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. We delivered a solid set of results this quarter, highlighted by 52% year-over-year gross billings growth, exceeding the high-end of our guidance and a narrowing sequential operating loss, despite the seasonal softness typical of the first quarter. We remain committed to refining our products and services to be more localized and better tailored to students across each of our markets with a particular focus on enhancing the user experience.

Underlying demand for English learning remains robust across our key markets, and we are optimistic about their growth potential. We have accelerated the development of our platform, our tutor network and our AI-plus-human learning experience. We expect the next generation of our learning product to begin rolling out later this year, offering our customers a significantly more personalized and engaging experience. Our AI-native approach enables us to deliver this upgrade with greater efficiency. We are confident in our long-term growth trajectory and remain committed to disciplined capital allocation and creating value for our shareholders.

With that, I will now turn the call over to Cindy, our CFO.

Thank you, Jack. Now let me walk you through our first quarter financial details. Net revenues for the first quarter were USD 31.2 million, a 70.9% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the first quarter was 73.7%. Gross billings grew by 51.9% from the same quarter last year to USD 33.3 million.

Q1 operating expenses were USD 24.4 million, an increase of 57.2% compared to the same quarter last year. Specifically, this has been driven by Q1 sales and marketing expenses of USD 17.9 million, a 59% increase from the same quarter last year, primarily attributable to higher sales personnel costs driven by headcount growth in the sales and marketing team as well as increased marketing and branding expenses from promotional activities. Q1 product development expenses were USD 1.9 million, an 84.9% increase from the same quarter last year.

Finally, Q1 general and administrative expenses were USD 4.6 million, a 42% increase from the same quarter last year. Overall, first quarter operating loss narrowed to USD 1.4 million from USD 1.5 million in the same quarter last year, while net loss attributable to the company's ordinary shareholders was USD 2.3 million compared with USD 1.7 million in the same quarter last year. Q1 GAAP and non-GAAP earnings per ADS were negative USD 0.39 and USD 0.3, respectively. The company's total cash, cash equivalents and time deposits were USD 35.5 million at the end of the first quarter. Advances from students were USD 78.9 million at the end of the first quarter.

Looking forward to the second quarter of 2026, we currently expect the net gross billings to be between USD 36 million and USD 38 million. The above outlook is based on our current market conditions and reflects the company's current and preliminary estimate of the market and operating conditions and customer demand, which are all subject to change.

Operator, please go ahead.

[Operator Instructions] The first question comes from Linda Bolton Weiser with Water Tower Research.

I just wanted to ask a little bit more if you could give details -- further details about the next version of your platform rolling that's out later this year. Could you give us specifics about the timing of the rollout and then what some of the enhanced features are?

Okay. Thank you very much for your question. So the next-generation product that we are developing right now is a new -- is a product with foreign tutors and as well as a lot of AI features and integrated with with a lot of gamification functions, especially we integrated the new types of technology platform in terms of the gamification. So -- and we will integrate more about the user data and with the LLM analysis, so that we can better serve our customers in terms of their learning outcomes and in terms of their personalized learning journey. Okay, thank you.

As we are nearing the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Mr. David, please go ahead.

Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website. Thank you.

This concludes the conference call. You may now disconnect your line. Thank you.

Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Hello, everyone, and welcome to the Fourth Quarter 2025 Earnings Conference Call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com.

Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session.

Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today.

Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead.

Okay. Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. 2025 has been a transformational year for 51Talk as we began to reap the rewards of our strategic investments made over the past several years.

Full year gross billings reached USD 127.6 million, representing a year-over-year growth of 83.4%, while net revenues grew 88.6% year-over-year to USD 95.6 million. These results may mark a significant milestone as gross billings surpassed and net revenues approached the USD 100 million threshold for the first time since we embarked on our global expansion strategy, providing compelling validation that our business model can scale effectively on a global basis.

Net operating cash inflow also surpassed the USD 10 million mark, reaching USD 11.8 million in 2025 further evidence that we are building a sustainable and scalable business model.

Looking ahead to 2026, we are committed to expand our growth trajectory based on the foundation we built over the past years. We are focused on consolidating the transformational gains of the past year and further enhancing our user experience.

With that, I will now turn the call over to Cindy, our CFO.

Thank you, Jack. Now let me walk you through our fourth quarter financial details. Net revenue for the fourth quarter was USD 30.6 million, an 88.6% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption.

Gross margin for the fourth quarter was 72.4%. Gross billings grew by 72.0% from the same quarter last year to USD 36.8 million. Q4 operating expenses were USD 27.4 million, an increase of 103.6% compared to the same quarter last year. Specifically, this has been driven by Q4 sales and marketing expenses of USD 20.4 million, a 101.6% increase from the same quarter last year, primarily attributable to the rise in marketing and branding expenses resulting from intensified marketing and branding activities as well as higher sales personnel costs related to increases in the number of sales and marketing personnel.

Q4 product development expenses were USD 1.6 million, a 72.2% increase from the same quarter last year. Finally, Q4 general and administrative expenses were USD 5.4 million, a 123.9% increase from the same quarter last year.

Overall, Q4 operating loss was USD 5.2 million, while net loss attributable to the company's ordinary shareholders was USD 6.5 million, a 504.3% and 368.8% increase from the same quarter last year, respectively.

Q4 GAAP and non-GAAP earnings per ADS were negative USD 1.08 and USD 1.03, respectively. The company's total cash, cash equivalents and time deposits were USD 39.0 million at the end of the fourth quarter. Advances from students were USD 76.6 million at the end of the fourth quarter.

Looking forward to the first quarter of 2026, we currently expect the net gross billings to be between USD 29.0 million and USD 31.0 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimate of the market and operating conditions and customer demand, which are all subject to change.

This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead.

[Operator Instructions] The first question today comes from Christo Lee with China Merchants.

So I have 2 questions. The first one is, can you give us an update on how the conflict in the Middle East is affecting your operations? And what's the revenue exposure? And how should we think about the risk to the business? And my second question is, can you share with us any guidance or outlook for this year?

Okay. Thank you very much for your questions. So let's start from the first question. This is a fair question in this timing. So our answer is our operations right now in the Middle East are normal and the markets we serve are not the war parties to the conflict and our teams on the ground are safe and operational. Where we have seen some impact is around the travel restrictions in the region. Beyond that, we are mindful that the rising tensions do affect the sentiment of the people, both among local -- our local employees and our customers.

On the employee side, we have strong local leadership and will be adaptive. We are managing the customer side proactively, and we are confident to navigate potential fluctuation of customer sentiment.

Beyond this, I want to explain more about the Q1 seasonality, which is the Ramadan, with this Ramadan falling from February 18 to March 19 this year, squarely across most of the quarter. And after that, after the Ramadan was about nearly 1 week of the Eid. So we anticipated the natural shift in terms of the lesson activity as we do every year in Q1, and we have planned accordingly.

So let's move on to the next question about the guidance or outlook for 2026. First of all, I want to say that we are not usually providing official full year guidance, but we can give investors a sense of direction. So we have confidence that in 2026, our gross billings, net revenues and operating cash flow will all continue to grow healthily. In 2025, we made significant front-loaded investments in new markets, in technology, in our teams. In 2026, we expect to harvest those investments. We will also be focused on improving the unit economies across every market we operate in. So we expect our cash-generating capability to remain robust over the course of the year. Thank you.

[Operator Instructions] There are no further questions at this call. I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website. Thank you, and goodbye.

This concludes the conference call. You may now disconnect your lines. Thank you.

Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Thank you. Hello, everyone, and welcome to the Third Quarter 2025 Earnings Conference Call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session.

Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead.

Okay. Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. I am very pleased to report that the third quarter of 2025, represented another period of strong performance for our company.

The gross billings reached USD 40.5 million, surpassing our previously issued guidance and demonstrating robust sequential growth of 42.1% quarter-over-quarter and triple-digit year-over-year growth of 104.6% Crucially, we achieved this rapid expansion while maintaining positive net operating cash flow, which further solidifies our cash position and stands as a testament to our disciplined execution.

Our active student base reached 112,600 during this quarter, marking a significant milestone as we surpassed 100,000 active students for the first time since we embarked on our global expansion strategy more than 3 years ago. We remain confident in both the substantial opportunity presented by the global market and our team's ability to execute our strategic vision and drive sustainable long-term value.

As we enter the fourth quarter of 2025, we consolidate recent rapid growth and expand business momentum with existing and new clients. We continue to build bridges and enable our customers to exchange on a global stage as demonstrated by our recent participation in COP30 held in Brazil in November 2025. Our students from 5 countries participated in this event, demonstrating the increasingly diversified nature of our portfolio and our successful reach into new markets. We remain focused on executing our strategic priorities while maintaining disciplined capital allocation to drive long-term shareholder value.

With that, I will now turn the call over to Cindy, our CFO.

Thank you, Jack. Now let me walk you through our third quarter financial details. Third quarter net revenues were USD 26.3 million, an 87.5% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the third quarter was 73.3%. Gross billings grew by 104.6% from the same quarter last year to USD 40.5 million.

Q3 operating expenses were USD 23.4 million, an increase of 97.9%, compared to the same quarter last year. Specifically, this has been driven by Q3, sales and marketing expenses of USD 17.5 million, 114.7% increase from the same quarter last year due to the rise in marketing and branding expenses resulting from intensified marketing and branding activities as well as higher sales personnel costs related to increases in the number of sales and marketing personnel.

Q3 product development expenses were USD 1.6 million, an 87.8% increase from the same quarter last year. Finally, Q3 general and administrative expenses were USD 4.3 million, a 52.5% increase from the same quarter last year. Overall, Q3 operating loss was USD 4.2 million while net loss attributable to ordinary shareholders was USD 4.8 million, a 428.9% and 669.4% increase from the same quarter last year, respectively.

Q3 GAAP and non-GAAP earning per ADS were negative USD 0.8 and USD 0.74 respectively. The company's total cash, cash equivalents and time deposits were USD 36.6 million at the end of the third quarter. Advances from students was USD 70.7 million at the end of the third quarter.

Looking forward to the fourth quarter of 2025, we currently expect the net gross billings to be between USD 35 million and USD 38 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead.

[Operator Instructions] We have no questions at this time. I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website.

This concludes this conference call. You may now disconnect your lines. Thank you.

Hello, and welcome to the Deutsche Bank Virtual Investor Conference, dbVIC. This is Zafar Aziz from the Deutsche Bank team. I'm pleased to welcome our next presentation by 51Talk from China.

Before I introduce our speaker, a few points to note. [Operator Instructions]

All of today's presentation is recorded and can be accessed by the Deutsche Bank website, adr.db.com.

I'm happy now to hand over to 51Talk.

Good morning, everyone, or good afternoon. My name is David Chung. I'm the Investor Relations VP at 51Talk. Thank you for joining us today. In the next 5 to 10 minutes, I'll be walking you through how 51Talk, as an NYSE American-listed company with ticker code COE, is combining localization, technology and people in building an online education business globally. After that, we'll open the floor for questions.

Let's start with the big picture. 51Talk is an AI-driven EdTech platform serving young learners around the world. We're not just offering English lessons, we're providing an integrated, adaptive learning experience that combines proprietary curriculum, high-quality tutors and advanced technology. Our goal is to make high-impact education accessible and relevant in every market we enter.

What makes our platform different is our integrated approach. We've built our solution on 4 pillars: a proprietary curriculum with over 500 hours of refined content, a rigorous AI-enhanced tutor recruitment process, USD 100 million invested in our proprietary technology, and a 360-degree parent and student support model. In the next couple of slides, you'll see how each pillar reinforces the others to deliver results.

First, our curriculum is fully animated, interactive and aligned with CEFR global standards. Second, our tutors are selected through a stringent process with only the best making it through. Every tutor then benefits from AI tools and ongoing training, ensuring quality and consistency at scale. Third, our technology platform is robust and scalable. We have low latency videos, gamified classrooms and features like virtual makeup for tutors. Finally, our 360-degree support ensures every student has a personalized learning path and ongoing guidance from a dedicated learning partner, maximizing both engagement and satisfaction.

Global presence means local adaptation. In every market, our curriculum is customized to fit local school requirements and cultural expectations. Local teams provide direct support and guidance, and our marketing is tailored to reach parents and students where they are. This proven approach has helped us build trust and drive engagement in diverse regions from East Asia to the Middle East and beyond.

AI powers every part of our operations. Our tech stack includes large language models, proprietary infrastructure and advanced automation, all supporting everything from telemarketing to personalized student support. We've developed tools for tutor screening, lesson personalization and adaptive feedback, all designed to improve efficiency and outcomes.

Let's look at some AI application highlights. In tutor recruitment, AI evaluates pronunciation and accent. For every new hire, AI assists in screening, interviewing and training, reducing cost and speeding up onboarding while maintaining high standards. AI also enables truly personalized learning. Every student receives an individualized model and learning path with real-time feedback through features like AI coaches, lesson memos and situational practice. This personalization drives better engagement, faster progress and higher satisfaction.

Our sales process is also optimized by AI, which has already improved our conversion rates and reduced idle times during the sales process. AI supports students during lessons, helping them deliver higher-quality instructions. We have also recently saw our first paying student complete an AI-powered trial class.

Turning to our numbers. Following our China divestment, we are now fully focused on international markets, audited in the U.S. and headquartered in Singapore. Revenues are growing, margins consistently exceed 70% and our cash position is strong. We're expanding with discipline, focusing on profitable and sustainable growth, not just headline numbers.

To close, 51Talk is uniquely positioned at the intersection of global reach, local expertise and cutting-edge applications of AI. We're committed to unlocking long-term value in the EdTech sector, one student, one market at a time.

Thank you for your time. We can now open up for questions.

Okay. The first question that we have is, how does AI affect our business?

So that's a very common question that we do get asked by investors. We believe that online education is one of the industries that's most affected by AI. AI will change everything that we do, but exactly when and how, that's -- we're still trying to find out. But it will definitely happen faster than a lot of people expect.

So at the moment, there are clearly a lot of very good people around the world working on AI and its application in education. And some of them, they work for us. In order to make sure we don't fall behind in this AI race, we use AI to improve everything that we do in the current existing product. We partially use AI tutors. We use AI sales agents. We have AI study reports, and we use AI to customize courses.

If you imagine what's possible with AI and its applications in education, we are probably doing most of it right now. And as a second stream, we are making soft launches on products that don't have human teachers at all. So this helps us to continue to learn and improve, and maybe in the longer term, even replace ourselves. In the end, we believe that who actually decides the best way forward, the best way to learn are the students.

It's important to remember that it is actually in our business, in the K-12 space, it's not easy to keep a 5-year-old motivated to learn for 30 minutes. It is not actually about -- or at least not just knowledge transfer, but it's about keeping the child engaged, making them open their mouth and interact in a new language. That's what parents expect from us. And that's in our KPIs, that's one of the operating metrics that we look at and management continues to drive. And we believe that's something that we are good at. And using AI will just make us continue to be better in that aspect. Okay, I hope that answers the question.

The next question that we have is, what are the key markets that we operate in and if there are plans to open up new markets in the future?

So expanding into new markets is definitely a very key part of our growth. Our product is actually the core product, it's the one-to-one online English K-12 product. And it's -- so our growth is really about geographic growth currently. So growing into new markets, new areas with the same product. Right now, we are already in Southeast Asia, like Thailand, Malaysia. We're continuing to test and go into and further -- and penetrate into new markets like Vietnam and Indonesia. We are also in Arabic markets. And as we continue to explore new markets, Spanish-speaking regions is another potentially very big opportunity for us, as we see.

In selecting a market, we generally look for a relatively large middle-class children population, low cost of acquisitions in terms of traffic and marketing. These are important to justify our unit economics and operating cash flow, which we manage very diligently.

And then the focus is on making this core product in terms of the marketing and in terms of the actual services fit each location. So localization is important. We have -- we build local offices. We have experienced leaders and train new staff in our proven methods. So we send experienced leaders from different locations into the new regions to expand into new markets.

For the product side, obviously, we would adapt and change and to match the local languages, the customs, the colors and styles of the local communities.

So all of these take time and a lot of efforts to build. But once we are in the market, what we find is that it's very hard -- once we've done that, what we find is that it's very hard for local competitors to match this mix of central strength, so the core product, the core infrastructure that we have and then the on-the-ground local teams that we have.

Okay. Moving on to the next question. Got it. Okay. So if there are any new products or services that are coming in next year, how do we actually distinguish 51Talk against competitors?

So this, I guess this is a bit of continuing from the earlier question. We're always on the lookout for what our student needs are, and we're always trying to add and improve our products that is complementary to our existing one-to-one K-12 English product. This may mean other subjects or exam preparation in different markets.

As we discussed earlier, different markets, our experience is that different markets have different needs, and they can be quite unique. So in certain markets, we may offer market-specific programs or services that we operate in. And for that, for every new initiative, we check the market size if we can -- if we have the resources to do it well, the competition that's currently out there and why we are the best to take on this opportunity.

Education is a really local business. Every market has a different school system. Every market is different in terms of where and when students study after school. The student learning habits and behaviors are different. But we believe what we're good at is sending in our people to new markets and building up the local teams and adapting our product and marketing to fit the local needs of local students and parents, and we've been doing that and continuing to show results in the past few years.

Okay. Okay, the next question is more financial numbers related. So it's about we're making losses in the P&L, but our cash position is actually strengthening. What was the logic behind that?

So yes, thank you for taking the time to study our financial statements. So if you look at our P&L, we are making an accounting net loss. So on an accounting revenue recognition basis, we are actually making a net loss after deducting all the operating expenses for that period. And the reason for that is that in education, we spend money to get students now, but lessons happen later. So we receive the cash upfront, but the accounting recognition of income and profit comes in the future when the students actually take the classes.

So actually, as you can see, when we are growing, we have another metric, which is what we call billings. That's the cash that we receive upfront. Our billings, which is not an accounting item, but it's something that we disclose as a top line cash income item. Our billings are higher than our revenues as we grow. And that's why on the balance sheet, you continue to see the cash balance or the cash and cash equivalents continue to grow. And that's because as we discussed earlier, we are very diligent on making sure our operating cash flow continues to grow.

So if you want to see kind of the true value of the operating cash flows, you can look at our billings, subtract the costs for that given period, and that would give you an indication of the cash profitability for a given period.

Additionally, you also see that our balance sheet in shareholders' equity, that's negative as well. And again, that will translate over time to positive as retained earnings. It's recognized. So as revenue gets recognized over time, we have high retained earnings. So that will make the shareholders' equity trend positive over time.

And then I think there's a follow-up question about that, which is if we need capital to fund growth.

So our belief is that we would grow with the cash that we receive from our students, from the parents paying for our products and services and not by growing with the cash that we receive from investors. We want to let our users, our students and parents, decide on our future.

And when you look at our recent filings, you can see that our CEO has continued to buy back shares in the open market. So we think that's another strong signal that should give that the company is not in immediate need to raise capital to fund growth.

And I think that's it. So thank you for having us. And we look forward -- if there's any further questions, please feel free to visit the 51Talk IR website, and you can see our e-mails there and you can e-mail us with any further questions. Thank you so much.