Shares in GSX Techedu Down 3% Despite Third Quarter Growth
Shares in GSX Techedu Inc. (NYSE: GSX) slipped 3% to $15.78 apiece on Tuesday afternoon despite news of the company's substantial revenue growth and profit for the third quarter.
The Beijing-based after-school tutoring provider said that in the three months through September its revenue increased 462% year-over-year to 557 million yuan. Net income rose to 1.9 million yuan compared with 700,000 yuan a year ago.
GSX attributed the growth in the quarter to the rise in K-12 course enrollments and higher tuition fees. Student enrollments reached 820,000, up 240% year-over-year, according to the report.
"Thanks to the continuous upgrading of our corporate and organizational capabilities, as well as effective execution of our marketing strategy, we observed the remarkable growth in paid course enrollments," Shannon Shen, the chief financial officer of GSX, said in a statement today.
GSX raised $207.9 million in its U.S. initial public offering in June and aimed to invest 30% of the proceeds toward improving students' learning experience and educational content.
On IPO day, Shen told CapitalWatch, "The interaction between teachers and students is very important. We built a system that makes our instructors into role models. On the other side, our tutors have daily communication with parents with daily Q&A and homework grading."
Founded in 2014, GSX offers tutoring services to primary and secondary grades in foreign language, professional and interest courses, according to its website.
Larry Xiangdong Chen, the founder, chief executive officer and chairman of GSX, said in a statement today that the company will continue to focus on content development and technology.
"We will continue to invest strategically in our customer acquisition and R&D in 2019 and drive even greater engagement with our students and parents. We will continue to have our unwavering focus on the online live large-class tutoring to reap financial rewards."
Looking ahead, the company said it expects to generate revenue in the range of 806 million yuan to 826 million yuan in the fourth quarter, representing an increase of between 343% and 354% year-over-year.
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