QuantaSing Group Limited (QSG) – Taking a More Sober View

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Friday, June 07, 2024

QuantaSing is a leading online service provider in China dedicated to improving people’s quality of life and well-being by providing lifelong personal learning and development opportunities. The Company is the largest service provider in China’s online adult learning market and China’s adult personal interest learning market in terms of revenue, according to a report by Frost & Sullivan based on data from 2022. By leveraging its proprietary tools and technology, QuantaSing offers easy-to-understand, affordable, and accessible online courses to adult learners under a variety of brands, including QiNiu, JiangZhen and QianChi, empowering users to pursue personal development. Leveraging its extensive experience in individual online learning services, the Company has also expanded its services to corporate clients including, among others, marketing services and enterprise talent management services.

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q3 results disappoint. The company reported Q3 revenue of RMB945.6 million, beating our estimate of RMB860.0 million by 10%. But, adj. EBITDA in the quarter was RMB12.2 million, well below our recently lowered estimate of RMB86.0 million. Notably, the lower than expected adj. EBITDA was due to increased sales and marketing expenses, which likely influenced the revenues in the quarter.

Adjusting business strategy. The company plans to invest more heavily into its new growth verticals, such as e-commerce products geared towards its existing user base, including its private label Chinese liquor sales. Additionally, the company is investing in its overseas learning markets, and in-person teaching locations. 

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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 


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