GSX Techedu Valuation to Reach USD 3 Billion After IPO
GSX Techedu sets an IPO price range of USD 9.5 to USD 11.5 per share, under ticker 'GSX'. The valuation could rise to USD 3 billion after the IPO.
May 24, 2019, GSX Techedu Inc, known as Genshuixue (跟谁学) , a Chinese online education platform that allows its users to study a wide scope of courses, filed Amendment No.1 to Form F-1.
GSX Techedu plans to offer 19.8 million American Depositary Shares (ADSs), which have been approved for listing under 'GSX' on NYSE. The expected IPO price range is USD 9.5 to USD 11.5 per share, which would lead to funding up to USD 262 million, valuing the company at almost USD 3 billion.
Founded in 2014, GSX Techedu has raised millions of dollars in the angel round from QF Capital (启赋资本), and a series A financing of USD 50 million in 2015 from Gaorong Capital (高榕资本), QF Capital (启赋资本), GP Capital (金浦投资), etc. Included in the series A financing were USD 41 million raised from Gaorong Capital (高榕资本) and the rest financed by more than 100 employees voluntarily.
GSX Techedu provides two types of website and mobile education products and services: K12 courses targeting children from age 3-18, and vocational education and leisure courses targeting college students and young professionals. The first type contributes to over 73% and 75% of its total revenues in 2018 and 2019Q1.
Revenue and Profits Skyrocketed
According to the prospectus, GSX Techedu has a fast-growing market size, a scaling net revenue, and a positive operating income before IPO, which is uncommon in Chinese online education area. The company has experienced a 345% CAGR over the past 7 quarters, with 2019Q1 net revenue of CNY 269 million (USD 40 million). GSX Techedu is one of the few companies with large profit gains in this industry.
Investment in Technology Innovation
The prospectus shows that GSX Techedu keeps a high investment to R&D, with CNY 52.45 million ( USD 7.80 million ) R&D expense which is 53% of its revenue in 2017, and CNY 74.05 million ( USD 11.03 million ) in 2018.
The spending is mostly used in recruiting talents and issuing options to encourage employees. Half of the founding members of GSX Techedu had working experience in BAT. At the very early stage in July 2014, GSX Techedu started a leading live streaming technology team. In 2015, almost 300 of the employees were product and technology related.
The company continues to attract talents, expecting a talent pool of 1000 people by the end of 2019. With the development of 5G and IoT, GSX Techedu believes there is a promising live streaming education market with exponentially growing power.