51Talk's Q2 2025 Earnings Call: Contradictions Emerge on Liquidity, Stock Split, and Auditor Changes

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 3, 2025

Financials Results

• Revenue: $20.4M, up 86.1% YOY
• EPS: $-0.52 GAAP per ADS; $-0.46 non-GAAP per ADS
• Gross Margin: 74.6%

Guidance:

• Q3 2025 gross billings expected between $36.5M and $37.5M.
• Outlook based on current market conditions and preliminary estimates; subject to change.

Business Commentary:

* Revenue Growth and Active Student Increase: - 51Talk's net revenues increased to $20.4 million in Q2, up 86.1% year-on-year. - This growth was driven by an increase in the number of active students and attended lesson consumption.

• Gross Billings and Market Demand:
• Gross billings grew by 79.7% year-on-year to $28.5 million.

• The increase is attributed to healthy demand and disciplined execution.

• Operating Expenses and Investment in Growth:

• Q2 operating expenses rose to $17.9 million, an increase of 53.5% from the previous year.

• This was primarily due to higher sales and marketing expenses, reflecting investments in user experience, service quality, and marketing.

• Change in Auditing Firm:

• 51Talk changed its auditing firm from Marcum to Ernst & Young.
• This decision was made to widen the investor base and cater to potential investors who have mandates for Big 4 auditors.

Sentiment Analysis:

• Management cited a strong quarter with gross billing exceeding guidance and expects positive momentum into H2 2025. Revenue grew 86.1% YOY to $20.4M. Guidance issued for higher Q3 gross billings, reflecting confidence in trajectory.

Q&A:

• Question from Toby Lu (Private Investor): Why did you change auditors from Marcum to Ernst & Young?
  Response: To align with investor mandates favoring Big 4 auditors and broaden the potential investor base.

• Question from Toby Lu (Private Investor): Any plans to increase stock liquidity (e.g., stock split or other measures)?
  Response: No near-term plans; focus is on improving operations, though alternatives may be considered in the future.