🧾 What This Document Is

This is 51Talk's annual report (Form 20-F) for the year ended December 31, 2025. It's a comprehensive filing required by the SEC for foreign companies listed in the U.S. Think of it as the company's official "state of the union" for investors. It details their business, financial condition, risks, and strategy.

👉 Key point: This report tells the story of a company that has undergone a massive transformation and is now operating in a completely new market.

🏢 What The Company Does

In simple terms, 51Talk is an online platform that connects students around the world with tutors for one-on-one English lessons. They used to focus on children in mainland China, but regulatory changes forced a complete business pivot.

• The Big Pivot: In 2021, China banned for-profit tutoring in core school subjects. 51Talk sold its mainland China business and now focuses entirely on international markets (like Southeast Asia, the Middle East, and others).
• Current Model: They provide live, online English classes taught by foreign tutors (mostly from the Philippines) to students outside China.
• Listed in the U.S.: Their American Depositary Shares (ADSs), each representing sixty Class A ordinary shares, trade on the NYSE under the symbol COE.

📉 The Financial Reality: Still in the Red

The company's finances show it's in a challenging transition period.

• Revenue & Profit: They reported net losses for 2023, 2024, and again in 2025. The accumulated deficit (total losses over time) stands at a hefty US$370.4 million.
• Balance Sheet Pressure: As of Dec 31, 2025, total shareholders' equity was negative US$31.3 million, meaning liabilities exceed assets. Their current liabilities also exceed current assets by US$35.0 million.
• Key Cost Center: Marketing is a huge expense to attract students in new markets. Sales and marketing for the international business cost US$62.3 million in 2025, up sharply from prior years.

👉 Why it matters: These numbers show the high cost of rebuilding a business from scratch in new countries. Profitability remains a future goal, not a current reality.

🚀 The Great Pivot: Strategy & Operations

The entire filing revolves around the company's transformation.

• Target Market: Students in countries across Asia Pacific, the Middle East, and other regions.
• Growth Strategy: Rapidly expand the international student base, enhance their brand globally, and leverage technology (including AI) to improve learning.
• Global Footprint: They have subsidiaries and operations in Singapore, Hong Kong, the Philippines, Vietnam, Thailand, Malaysia, Saudi Arabia, Jordan, and the UAE, among others.
• Tutor Model: They rely on a large pool of independently contracted tutors, primarily based in the Philippines.

🔍 Key Risk Factors: A Steep Uphill Battle

The report dedicates many pages to risks, which are critical to understand.

• ⚠️ Regulatory & Geopolitical Risk: Operating across many jurisdictions means navigating complex and changing laws (data privacy, education, labor). Rising U.S.-China tensions also create uncertainty for Chinese companies listed in the U.S., even one as global as 51Talk.
• ⚠️ Competitive Pressure: The global English education market is "fragmented, rapidly evolving and highly competitive," including from AI-only solutions. They must spend heavily on marketing to compete.
• ⚠️ Execution Risk: Their success depends entirely on executing this new international strategy—attracting students, retaining tutors, and scaling profitably in new markets. Their short operating history in this model makes it hard to predict the future.
• ⚠️ Financial Risk: The losses, negative equity, and working capital deficit raise substantial doubt about the company's ability to continue as a "going concern" without improved performance or more funding.
• ⚠️ Operational & Tech Risk: They depend on stable internet infrastructure in developing markets and must protect user data across multiple legal regimes. All servers are hosted in Singapore.

💰 Cash & Capital Structure

• Cash Concentration: A significant portion of their cash and deposits are held in Singapore and Hong Kong, creating geographic concentration risk.
• Dual-Class Share: The company has Class A and Class B shares. The dual-class structure (where founders/insiders likely hold Class B shares with more votes) limits the influence of regular shareholders (ADS holders) on corporate decisions.

🧠 The Analogy

Imagine a successful restaurant chain that was forced by city law to close all its locations in its home city overnight. It sells those locations and uses the remaining cash and brand to open new restaurants in foreign cities with a different menu for a new clientele. This filing is their first annual report since that reboot—it details the challenges of finding new suppliers (tutors), attracting new customers (students), paying for big launch parties (marketing), and turning a profit before the money runs out, all while navigating unfamiliar local regulations.

🧩 Final Takeaway

51Talk is a company in the midst of a high-stakes reinvention after a regulatory shock. While it has executed a dramatic pivot to international online English education, it remains unprofitable, faces intense competition, and carries significant financial and geopolitical risks. Its future hinges entirely on successfully scaling this new business model before its resources are depleted.