2021-05-31-掌门教育-Registration_Statement_Under_the_Securities_Act_of_1933_315页_16mb

Summary of Zhangmen Education Inc. Form F-1 Amendment No. 3

Core Content Overview

Zhangmen Education Inc. is registering 3,623,000 American Depositary Shares (ADSs) for an initial public offering (IPO). Each ADS represents nine Class A ordinary shares, and the IPO price is expected to be between $11.00 and $13.00 per ADS. The ADSs will be listed on the New York Stock Exchange under the symbol "ZME."

Zhangmen Education Inc. is a leading online education company in China, specializing in personalized one-on-one and small-class after-school tutoring services for K-12 students. The company has established itself as a well-known brand in the industry and is focused on delivering high-quality, localized educational content through advanced technology and data analytics.

Key Information

• Class A Ordinary Shares: Representing 32,607,000 shares, with an estimated offering price range of $11.00 to $13.00 per share. The total aggregate offering price is estimated at $54,163,850.
• Class B Ordinary Shares: Owned entirely by Mr. Yi Zhang, the founder and CEO, who will control 82.7% of the total voting power of the company.
• Share Rights: Class A shares have one vote per share, while Class B shares have 30 votes per share and are convertible into Class A shares.
• Registration Fee: $5,909.28.
• Registration Status: The offering is subject to the effectiveness of the registration statement, and the preliminary prospectus is not complete and may be amended.

Business Highlights

• Market Position: As of 2020, Zhangmen was the largest online K-12 one-on-one tutoring service provider in China by gross billings, with a 31.9% market share.
• Growth Metrics:
  • Paid student enrollments for one-on-one courses in 2020: 545,000.
  • Paid student enrollments for small-class courses in 4Q2020: 293,000.
  • Student retention rate for one-on-one courses in 2020: 80%+.
  • Referral rate for one-on-one courses in 2020: 50%+.
• Gross Billings and Net Revenue:
  • Gross billings in 2020: RMB5.3 billion.
  • Net revenue in 2020: RMB4.0 billion (approximately $613.3 million).
• Growth in 2021:
  • Paid student enrollments for one-on-one courses increased by 52.2% from Q3 2020 to Q1 2021.
  • Gross billings for small-class courses increased by 222.6% from Q3 2020 to Q1 2021.

Competitive Advantages

• Brand Recognition: Zhangmen is a well-established and trusted brand in the Chinese online education market.
• High-Quality Teachers: The company has over 45,000 trained teachers, selected through a rigorous process and supported by AI-driven tools.
• Proprietary Technology: Utilizes a centralized business intelligence system and a smart content recommendation system to improve operational efficiency and teaching quality.
• Data Analytics: Employs data-driven insights to tailor educational content and improve student outcomes.
• Operational Excellence: Has optimized its business model to achieve high retention and satisfaction rates while maintaining cost efficiency.

Strategic Initiatives

• Market Leadership: Intends to further solidify its position in the one-on-one tutoring market.
• Service Expansion: Plans to expand small-class tutoring services and diversify its offerings to meet unmet educational needs.
• Operational Efficiency: Aims to enhance teaching content and methods, as well as streamline operations and reduce costs.

Regulatory Environment

• The company is subject to PRC regulations on online private education, including the Amended Implementation Regulations of Private Education Law, which will take effect on September 1, 2021.
• The regulations require online education providers to obtain a private school operating permit. Zhangmen has already made filings with the regulatory authorities and is prepared to apply for the permit once the detailed rules are issued and applications are accepted.

Risk Factors

• Student Acquisition and Retention: Failure to attract and retain students could negatively impact business performance.
• Regulatory Compliance: Uncertainty and potential non-compliance with PRC regulations on online education.
• Market Competition: Intense competition in the online education sector, especially among the top players.
• Financial Performance: The company has reported net losses in recent years, which may affect its financial stability.
• Dependence on Key Individuals: Reliance on Mr. Yi Zhang for significant voting power and strategic direction.

Summary of Financial Performance

• Net Revenues:
  • 2019: RMB2,668.7 million.
  • 2020: RMB4,018.4 million (US$613.3 million).
  • Q1 2021: RMB1,345.7 million (US$205.4 million).
• Gross Billings:
  • 2019: RMB3,855.3 million.
  • 2020: RMB5,254.4 million (US$802.0 million).
  • Q1 2021: RMB1,319.3 million (US$201.4 million).
• Operating Efficiency: Sales and marketing expenses as a percentage of net revenue decreased from 81.4% in 2019 to 64.1% in 2020.

Conclusion

Zhangmen Education Inc. is a leading online education provider in China, with a strong focus on personalized, technology-driven tutoring services for K-12 students. The company is registering for an IPO to expand its operations and enhance its market presence. However, it faces significant risks, including regulatory changes, financial performance, and market competition, which investors should carefully consider before making investment decisions.