Nanchang, Jiangxi Province, China
Region: China 🇨🇳
Expected Valuation: $192.5 million
IPO Date: 2023 (expected)
Ruanyun Edai Technology Inc.
Key Company Facts
|Sector||Diversified Consumer Services|
|Founders||Fu Yan, Zhao Cong|
|Number of employees||186|
|IPO Date||2023 (expected)|
|Number of investors||N/A|
|Total funding||$59.4 billion USD|
|Number of account holders||14.26 million students|
|Valuation estimate||$192.5 million USD|
Company Overview & History
Ruanyun Edai Technology Inc., based in Nanchang, China, operates as a holding company.
The company, through its subsidiaries, offers an artificial intelligence technology K-12 education learning platform that collects paper-based homework data with intelligent scanning machines.
The primary offerings of the company include AI learning platform, Smart Homework, SmartExam, and Test Preparation.
The firm was founded by CEO Ms. Yan Fu in 2012, who had previously held roles in quality assurance at IgnitionOne and Manhattan Associates.
Ruanyun Edai Technology aims to develop an AI-enabled ‘question bank’ and related test data to assist teachers and students in collecting daily homework and preparing for the Academic Proficiency Assessment.
The firm also seeks to build strategic business alliances with large national publishers in China.
As of March 31, 2022, Ruanyun has booked a fair market value investment of $15.2 million from various investors. The financial results show slowly growing top line revenue from a small base, increasing gross profit and gross margin, and a swing to operating loss.
By November 30, 2022, the firm had ‘over 13.26 million K-13 students who were using their online SmartHomework learning platform, of which approximately 1 million were monthly active users.
The company intends to raise $27.5 million in gross proceeds from an IPO of its ordinary shares, offering 5 million shares at a proposed midpoint price of $5.50 per share.
The company plans to use the net proceeds from the IPO for research and development of new products and services, marketing and customer services, new content creation, cash reserves, and working capital including costs to set up two additional regional offices.
Ruanyun Edai Technology, also known as Soft Cloud Technology, operates a unique business model as a big data education service provider with an evaluation core.
The company’s focus is on artificial intelligence algorithms, new smart question bank construction, learning behavior big data evaluation, and providing comprehensive solutions for education industry applications.
The company holds the concept of “big data changes education” at the core of its business model.
The company utilizes information technology to collect data throughout the entire process of a student’s learning journey.
This data is then processed and applied using artificial intelligence technology to create a highly accurate representation of a student’s learning situation.
The aim of this model is to increase efficiency and reduce the burden of modern education, with the ultimate goal being to help every child shine.
This approach to leveraging big data and AI technologies to enhance education highlights Ruanyun Edai’s commitment to transforming education through technological innovation.
Ruanyun Edai (RYET) is experiencing slow revenue growth from a low base and has many business and regulatory risks.
The firm’s valuation expectations at IPO were considered excessive, leading some analysts to suggest a “hold” status on RYET’s shares.
Selling expenses as a percentage of total revenue have risen as revenues have increased, indicating a possible inefficiency in marketing and sales efforts.
In the most recent reporting period, for each dollar spent on selling, only $0.6 of additional new revenue was generated.
The company’s recent financial results show a swing to operating loss and increasing cash used in operations, which may be concerning for potential investors.
As of March 31, 2022, the firm had total liabilities of $7.4 million and a negative free cash flow of $3.1 million. However, the management states that outstanding legal proceedings will not have a material adverse effect on its financial condition or operations.
According to a 2019 market research report by iResearch, China’s online education market, which Ruanyun Edai operates in, was valued at about $9.9 billion in 2012 and reached $35.2 billion in 2018. The market is expected to exceed $76 billion by 2025.
The main drivers for this expected growth are the increasing acceptance of online education among users, improving online service payment willingness, and enhancements in online learning experience and effectiveness.
As of November 30, 2022, Ruanyun Edai had over 13.26 million K-13 students using its online SmartHomework learning platform, with approximately 1 million monthly active users.
The firm seeks to build strategic business alliances with large national publishers in China, which could potentially expand its market reach.