GSX Techedu, an Online Tutoring Provider, Seeks $220 Million IPO in New York
Beijing-based GSX Techedu Inc., a provider of after-school tutoring, has filed for an initial public offering in New York of up to $220 million.
Aiming to use technology to improve K-12 education, GSX said it is "laser-focused on online live large-class tutoring" and was the third largest of its kind in China last year in terms of gross billings.
Offering tutoring in K-12 courses, as well as foreign language, professional, and interest courses, the company had 767,000 student enrollments last year, a surge from 80,000 from 2017, according to today's filing with the U.S. Securities and Exchange Commission. In the first three months of this year, GSX said student enrollments tripled year-over-year to 211,000.
The five-year-old company has been fast-growing and reached profitability in 2018. For the year through December, it reported $2.9 million in income in contrast to net loss of $13 million in 2017. Revenue tripled year-over-year to $59.2 million last year. Gross billings for the full year reached $97.6 million, up 438 percent, according to the preliminary prospectus.
For the first quarter of 2019, GSX reported income of $5.1 million and revenue of $40.1 million, an increase of 474 percent from the same period a year ago.
Citing research by Frost & Sullivan, GSX said China's online K-12 large-class after-school tutoring market is still developing, while already more consolidated than the offline market. While there is a strong demand for quality education throughout China, the country's remote areas are lacking these resources, which online platforms may provide, the company stated.
"We adopted the online live large-class format to deliver our courses, which we believe is the most effective and scalable model to disseminate scarce high quality teaching resources to aspiring students in China," GSX said in its filing.
China's online education market in terms of gross billings is expected to grow at a compound annual growth rate (CAGR) of 37 percent to $101.3 billion in 2023, GSX said, citing the research report.
GSX said it intends to use the proceeds of its offering to enhance its students' learning experience and content of its courses, hire teachers, and to improve its technology, as well as for brand promotion and working capital.
The management team at GSX is comprised of experts with experience working with some of China's top companies, including TAL Education Group (NYSE: TAL), Alibaba Group Holding Ltd. (NYSE: BABA), Baidu Inc. (Nasdaq: BIDU), Sohu.com Ltd. (Nasdaq: SOHU), Pinduoduo Inc. (Nasdaq: PDD), and Tencent Holdings Ltd. (HKEX: 0700).
The chairman and chief executive officer of GSX, Larry Xiangdong Chen, previously served as the executive president of China's leading education provider, New Oriental Education & Technology Group Inc. (NYSE: EDU).
Underwriting the IPO are Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Barclays Capital Inc., and CLSA Ltd.
The online tutoring provider seeks to become publicly traded under the symbol "GSX" on the New York Stock Exchange.
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