On November 27, 2024, Quantum Song (NASDAQ: QSG) announced its first quarter financial report for the fiscal year 2025, with the total number of registered users increasing from 103.3 million on September 30, 2023 to 134.6 million on September 30, 2024, a growth of 30.2%. The number of paid learners increased by 16.8% year-on-year, reaching approximately 400000 people.
Correspondingly, the total revenue for the quarter was 810 million yuan, with an adjusted net income of 88 million yuan.
Compared to before the IPO, as the first domestic training company to list on the US stock market after the implementation of the "double reduction" policy, Quantum Song's performance has quickly achieved a rebound since its listing on NASDAQ on January 25, 2023. Before July 2023, the company was in a loss making state, with net profits of -233 million yuan and -109 million yuan for the 2021 and 2022 fiscal years, respectively.
On November 21st, Li Peng, founder and chairman of Quantum Song, stated in an interview with People's Daily that as the only representative of technology enterprises in the field of "silver economy", with the steady improvement of China's digital technology aging level in recent years, enterprises are using digital technology to help the "silver" group enjoy the convenience of modern life, and the prospects are broad and promising.
But behind the high performance is the wealth management market born from knowledge anxiety, as well as the lack of regulation after a large number of users were "cut off". Can Quantum Song prove that financial training is a good business?
Integration of financial training into the Internet
In his early years, Li Peng worked in a listed educational information company, and later worked in several major Internet companies. In 2013, he founded an Internet company mainly engaged in blue collar recruitment platforms, which was acquired by BOSS Direct Hire (02076). After several track changes, Li Peng ultimately chose the field of financial education and launched Qiniu School in July 2019.
Li Peng once shared a memorable experience in an interview. On a plane, a mother sitting next to her was teaching her child, who was about eight or nine years old, to read financial reports. It's quite awkward for such a young child to learn how to read financial reports, and I'm quite shocked. "" Do we lack knowledge of financial literacy education since childhood and urgently need to make up for it as adults? "This is also his original intention for financial literacy education.
His career basically runs through investment and wealth management. Since about 2005, he has invested in stocks, trusts, real estate, etc., and also accumulated relevant experience in the Internet industry, finally integrating Internet plus+financial training into the financial intelligence education track.
The Frost&Sullivan report shows that the size of China's adult learning market is expected to increase from 566.4 billion yuan in 2021 to 994.7 billion yuan in 2026, with a compound annual growth rate of 11.9%. The adult personal interest learning market will grow the fastest, with the market size of online financial learning in finance and wealth management increasing from 5 billion yuan in 2017 to 6.5 billion yuan in 2021, with a compound annual growth rate of 6.8%. It is expected to reach 17.1 billion yuan by 2026.
The enthusiasm of the market has spawned tens of thousands of entrants. According to Tianyancha data, around 2020, there were more than 2000 new domestic enterprises related to "financial education" and "financial training", which is eight times more than 10 years ago. Li Peng stated in an interview that there are at least one or two hundred companies that can be named. According to the prospectus, in 2021, Qiniu Academy held a market share of 36.9%.
In addition to Qiniu Academy, Quantum Song also has two other learning platforms: the adult literacy improvement platform - "Speak True" and the middle-aged and elderly interest course platform - "Qianchi Academy". Among them, Qiniu Academy is the largest and the main source of revenue for Quantum Song. As of June 30, 2021, the fiscal year 2022 (i.e. June 30, 2022), and the three months ending September 30, 2022, online financial education accounted for 88.8%, 80.2%, and 71.0% of total revenue, respectively.
Quantum Song launched enterprise services for financial institutions in February 2020 and enterprise talent management services in June 2022, providing online talent assessment, training, and learning services for internal employee management. According to the prospectus, the revenue of B-end enterprises in the fiscal year 2021 was 144 million yuan, which increased to 186 million yuan in 2022. In the three months ending September 30, 2022, the enterprise service revenue increased from 42.6 million yuan in the same period of the previous year to 73.6 million yuan, an increase of 72.9%.
User complaints about false advertising and induced consumption
However, due to high costs such as early traffic diversion, the revenue report of Quantum Song is not very good. In recent years, investment and financial management have become a trend, and the financial education market has gradually formed - through online teaching, knowledge in the fields of finance and investment can be disseminated to various groups of people. The popularity trend can be seen from the short videos filled with advertisements that claim "zero basic knowledge of financial management, high returns".
But the threshold for financial training is not high, and the training results are easy to visually verify. Therefore, the seemingly beautiful financial education course is also an industry with high consumer complaints in recent years. Quantum Song is among them and has been questioned for its three no products: no threshold, no qualification, and no regulation. Netizens roast that whether it was in class or when the chives were cut.
On the Black Cat Complaints Platform, there have been over 4000 complaints related to Qiniu Academy, with "high tuition fees, unclear teacher qualifications, induced consumption, false advertising, poor course quality, and difficulty in returning classes and fees" being the main concentrated issues. One of the users wrote, "Qi Niu claims that as long as you learn from them, you can make a lot of money. After you finish learning, you will find that it's not as simple as they say, basically you will lose money
In fact, the overall reputation of the financial education industry is negative. Qiniu Academy has also been exposed by CCTV and is suspected of illegal stock recommendations. Most of the relevant personnel of financial education institutions do not have securities industry qualifications, and engaging in activities such as recommending stocks is illegal.
False advertising is rampant in the industry. In the promotion, it is claimed that Liu Fan, a lecturer at Qiniu, is a "professional practitioner in the industry". In fact, he only has work experience at K12 company and has studied at Tsinghua Wudaokou School of Finance. There are also lecturers who use pseudonyms, and it is impossible to know his true identity.
Another financial learning platform, "Weimiao", requires applicants to have at least 2 years of experience in finance and securities, hold a CPA certificate or relevant qualification certificate on its official website. It was exposed by CCTV that its teaching does not require professional qualifications, and students who "graduate" from Weimiao Business School have the opportunity to apply for full-time lecturer positions. Students can become financial report teachers by completing a 7-day pre job training.
Charlie Munger once said, "In today's market, there are those who love to teach people how to enter the market and trade stocks. I think they are teaching a group of young people how to use drugs. It's really foolish. You have already become rich, but you still need to rely on teaching people how to trade stocks to make money. Some people advertise on TV, saying, 'My book can teach you how to triple in a year, and I will ship it to you immediately after paying the shipping fee.' If this person really finds a way to triple in a year, how could he still sell books to you here
Unclear qualifications and inadequate supervision
According to Tianyancha data, the business scope of Qiniu Xuetang brand company Feilai (Beijing) Technology Co., Ltd. is only education consulting (excluding education and training activities related to license approval), but it actually engages in education and training business.
Industry insiders say that the establishment process for financial education and training beginners is relatively simple. They can rent a spacious office offline, recruit more than a hundred marketing and online community operation personnel, apply to the industry and commerce department for a business scope covering education consulting, and then sell high-quality and unguaranteed high priced courses online.
In 2021, Ms. Zhang from Baotou saw the poster for the finance and business course of Qiniu School endorsed by Lu Yi online. Influenced by it, she paid for the course and after studying for a period of time, she invested a total of 48000 yuan twice under the persuasion of her teacher to open a securities account for the Qiniu course. After the first withdrawal of 220 yuan, it cannot be withdrawn again. So I called the police and sought help from the industrial and commercial regulatory department, but a year has passed without any results, and so far no regulatory department has supervised this.
Financial education combines the composite attributes of finance and education, and its regulation involves multiple departments. The education regulatory authorities mainly focus on training related to primary and secondary school disciplines, while others involve vocational skills training or quality education training. Online supervision is still a blank area, which is also the main reason why the so-called financial education is actually a mixed bag of good and bad in the financial training industry.
At present, the financial training market has reached a scale of tens of billions of yuan, and some top enterprises have an average annual growth rate of over 50%. However, while the market is rapidly developing, the industry is still in its infancy, and the phenomenon of disorderly and irregular competition is more prominent. It is necessary to formulate relevant standards to regulate the online wealth management training market.
The demand for knowledge payment always exists, and improving financial literacy also has a positive effect. However, how to make profits and achieve significant development in the field of financial training under the blank of financial regulation and the fierce expansion of the industry, as well as the competition among peers for survival space, is the pain that the financial training industry needs to go through.