Skillful Craftsman Announces Financial Results for The First Six Months of Fiscal Year 2021
01/14/2021 - 10:00 PM
14% year-over-year revenue growth28% year-over-year total fee-paying members growth
WUXI, China, Jan. 14, 2021 (GLOBE NEWSWIRE) -- Skillful Craftsman Education Technology Ltd. (“the Company”) (NASDAQ: EDTK), an education technology company providing interactive online learning services, today announced its financial results for the first six months of fiscal year 2021 ended September 30, 2020.
First Six Months of Fiscal Year 2021 Financial and Operational Highlights
All financial figures are in US Dollars unless otherwise noted.
Revenue was $15.3 million , compared with $13.4 million for the same period of last year, representing a 14% increase. Gross profit was $8.5 million , compared with $8.1 million for the same period of last year, representing a 5% increase. Gross profit margin was 55% , compared with 60% for the same period of last year. Net income was $4.39 million , compared with $5.13 million for the same period of last year. The decrease was due in part to one-time expense related to the Company’s initial public offering (“IPO”). Basic and diluted earnings per share were $0.44 , compared with $0.57 for the same period of last year. Total fee-paying members1 reached 3.28 million, compared with 2.57 million during the same period of last year, representing a 28% increase. 1 Number of fee-paying members is defined as the total number of members that are paying fees for accessing our platforms as of the end of the applicable period.
Mr. Xiaofeng Gao, Chairman and CEO of Skillful Craftsman Education Technology Ltd., commented, “We are excited to announce our strong results for the first six months of fiscal year 2021 ended September 30, 2020. Our revenue increased by 14% to $15.3 million , from $13.4 million for the same period of last year and our total fee-paying members increased by 28% to 3.28 million, compared with 2.57 million during the same period of last year. We believe the results demonstrate the resilience of our business, the experience of our senior management team, and our commitment to quality service. As an education technology company, we strive to optimize our service and diversify our offerings to meet the evolving needs of the market. We believe that the current business climate, which encourages remote learning, will enhance our business growth more than ever. We have been pursuing our business strategies to expand course offerings in tune with industry trends and national policies, integrate online and offline resources for virtual simulation experimental training, offer professional development-related services and develop mobile app and WeChat interfaces for our online learning platform. We believe we are well-positioned in the turbulent market environment to optimize our revenue structure and strategically explore opportunities to create more value for all of our shareholders.”
First Six Months of Fiscal Year 2021 Financial Results
All figures refer to the first six months of fiscal year 2021 ended September 30, 2020 unless otherwise stated
Revenue
Revenue increased by 14% to $15.3 million , from $13.4 million for the same period of last year.
Cost of Revenue
Cost of revenue increased by 28% to $6.83 million , from $5.35 million for the same period of last year. The increase was mainly caused by the increase of resource usage fee by $0.35 million and website maintenance fee by $0.48 million . In addition, the depreciation expenses of server hardware also increased by $0.6 million .
Gross Profit and Gross Margin
Gross profit increased by 5% to $8.5 million , from $8.1 million for the same period of last year.
Gross margin decreased by 5 percentage points to 55% , from 60% for the same period of last year.
Operating Expenses
Operating expenses increased by 90% to $2.38 million , from $1.25 million for the same period of last year.
Sales and marketing expenses increased by 13% to $0.88 million , from $0.78 million for the same period of last year. This increase was mainly due to Telecommunications service fees, which increased by $0.21 million as the Company expanded their network and service systems.
General and administrative expenses increased by 217% to $1.50 million , from $0.47 million for the same period of last year. This increase was primarily caused by higher employee compensation and welfare expenses and particularly an increase of $0.54 million in salary and fee expenses of independent directors, senior executives and employees related to the IPO. The service fee also increased by $0.27 million due to the success of IPO. The Company also recorded research and development expenses in general and administrative expenses of $0.24 million , compared with $0.10 million for the same period of last year.
Income Before Tax
Income before tax expense decreased by 11% to $6.14 million , from $6.86 million for the same period of last year.
Net Income
Net income decreased by 14% to $4.39 million , from $5.13 million for the same period of last year.
Basic and diluted earnings per share were $0.44 , compared with $0.57 for the same period of last year.
Cash and Cash Equivalents
As of September 30, 2020, the Company had cash and cash equivalents of $17.5 million , compared with $11.9 million as of March 31, 2020.
Cash Flow
Net cash generated from operating activities was $6.58 million , compared with $6.78 million for the same period of last year.
Net cash used in investing activities was $14.24 million , compared with $5.73 million for the same period of last year.
Net cash generated from financing activities was $13.24 million , compared with nil for the same period of last year.
About Skillful Craftsman
Skillful Craftsman is an education technology company that provides interactive online vocational training and virtual simulation experimental training courses. The Company began operations in Wuxi, China in 2013 and is a key supporter for China education reform and development for labor employment. As of March 31, 2020, the Company had 68.5 million total registered members, of which 3.1 million are fee-paying members. For more information, please visit: ir.kingwayup.com
Safe Harbor Statement
This report contains “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.
Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events. These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Such risks, uncertainties, and other factors include, but are not limited to, our ability to improve launch and leverage new technologies and cooperative relationships or anticipate market demand in a timely or cost-effective manner, and those factors discussed under the headings “Risk Factors”, “Operating and Financial Review and Prospects,” and elsewhere in our Annual Report on Form 20-F. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statement.
For investor and media enquiries, please contact:
Skillful Craftsman Investor Relations Departmentiredtk@kingwayedu.cn
Ascent Investor Relations LLC Tina Xiaotina.xiao@ascent-ir.com
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED CONSOLIDATED BALANCE SHEETS
As of September 30, 2020 March 31, 2020 (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $ 17,450,639 $ 11,931,714 Accounts receivable, net 103,069 78,785 Prepayments and other current assets 1,119,333 1,963,102 Other investments 8,000,000 - Total current assets 26,673,041 13,973,601 Non-current assets Property and equipment, net 15,212,700 12,324,125 Intangible assets, net 19,146,875 19,294,740 Long-term prepayments and other non-current assets 68,526 97,035 Total non-current assets 34,428,101 31,715,900 TOTAL ASSETS $ 61,101,142 $ 45,689,501 Current liabilities Accounts payable $ 99,264 $ 249,086 Taxes payable 330,189 543,600 Amounts due to a related party 509,012 - Other payables 996,436 227,525 Deferred revenue-current 12,250,372 16,736,365 Total current liabilities 14,185,273 17,756,576 Non-current liabilities Deferred revenue-non-current 1,597,510 50,877 Total non-current liabilities 1,597,510 50,877 TOTAL LIABILITIES $ 15,782,783 $ 17,807,453 COMMITMENTS AND CONTIGENCIES - SHAREHOLDERS’ EQUITY: Ordinary shares, 500,000,000 shares authorized; par value $0.00 02 per share; 12,000,000 and 9,000,000 shares issued and outstanding as of 30 September, 2020 and 31 March, 2020, respectively 2,400 1,800 Additional paid-in capital 13,415,987 1,619,774 Statutory reserve 745,590 745,590 Retained earnings 31,313,865 26,921,172 Accumulated other component of equity: Foreign currency translation reserve (159,483 ) (1,406,288 ) TOTAL SHAREHOLDERS’ EQUITY 45,318,359 27,882,048 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 61,101,142 $ 45,689,501
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the six months ended September, 2020 2019 (Unaudited) (Unaudited) Revenue $ 15,313,780 $ 13,420,883 Cost of revenue (6,826,879 ) (5,350,363 ) Gross profit 8,486,901 8,070,520 Operating expenses: Selling and marketing expenses (879,812 ) (776,903 ) General and administrative expenses (1,499,774 ) (473,802 ) Total operating expenses (2,379,586 ) (1,250,705 ) Income from operations 6,107,315 6,819,815 Interest income 30,292 41,692 Others, net (909 ) (3,345 ) Income before income taxes 6,136,698 6,858,162 Income tax expense (1,744,005 ) (1,724,099 ) Net income $ 4,392,693 $ 5,134,063 Other comprehensive income/(loss): Foreign currency translation adjustment 1,246,805 (1,020,318 ) Total comprehensive income 5,639,498 4,113,745
Net earnings per ordinary share, basic and diluted 0.44 0.57 Weighted average number of ordinary shares, basic and diluted 10,000,000 9,000,000
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended September 30, 2020 2019 Cash flows from operating activities Net income $ 4,392,693 $ 5,134,063 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 1,657,961 1,069,520 Amortization of intangible assets 3,157,605 3,104,576 Loss on disposals of property and equipment - 7,002 Changes in operating assets and liabilities: Accounts receivables (24,284 ) 365,396 Prepayments and other current assets (602,972 ) (388,049 ) Long-term prepayments and other non-current assets 28,509 (291,606 ) Accounts payable (149,822 ) 18,224 Amounts due to a related party 509,012 - Deferred revenue (2,939,360 ) (1,732,645 ) Other payables 768,911 187,950 Taxes payable (213,411 ) (692,252 ) Net cash generated from operating activities 6,584,842 6,782,179 Cash flows from investing activities Purchases of property and equipment (3,988,249 ) (1,682,416 ) Purchases of intangible assets (2,254,100 ) (4,043,574 ) Purchases of other investments (8,000,000 ) - Net cash used in investing activities $ (14,242,349 ) $ (5,725,990 ) Cash flows from financing activities Proceeds from IPO net off IPO expenses 13,243,554 - Net cash flows generated from financing activities 13,243,554 - Effects of foreign currency translation (67,122 ) 539,066 Net increase in cash and cash equivalents 5,518,925 1,595,255 Cash and cash equivalents at beginning of period 11,931,714 10,362,283 Cash and cash equivalents at end of period $ 17,450,639 $ 11,957,538 Supplemental disclosures of cash flow information: Cash paid for income taxes $ 1,974,038 2,327,558
