51 Talk’s Annual Report – The Value of Teachers

51 Talk’s Annual Report – The Value of Teachers

Founded in 2012, 51 Talk are one of the oldest online ESL companies. They are also one of the largest, teaching 18.2 million paid classes in 2017.

As a publicly-listed company, 51 Talk must release annual reports to their investors. These are published online, and accessible to all.

To study their 2017 publication is incredibly enlightening. It’s the best document in the public domain to understand the business model, revenues model, and risks faced by an ESL online company.

Always seeking to educate teachers, DigiNo has summarised the most interesting points about teachers and students. Get the original document sent to your inbox below:

On the importance of teachers

If we are not able to continue to engage, train and retain qualified teachers, we may not be able to maintain consistent teaching quality on our platform, and our business, financial conditions and operating results may be materially and adversely affected.

Without teachers, online ESL companies cannot work. 51 Talk note the risk of ‘a shortage of qualified teachers, a decrease in the quality of our teachers’ performance… or a significant increase in the cost to engage or retain qualified teachers’.

On referrals and hire rates

In addition, we have a strong brand presence in the Philippines and a significant percentage of our teachers are referred to us from our existing teachers, which drives cost efficiency of our teacher engagement. Teachers engaged through internal referrals have historically demonstrated higher instructional quality and retention rates.

It’s a little-known fact that teacher referrals save online ESL companies thousands in recruiting costs.

Ads on Google or Facebook may charge up to $5 per click, but with referrals they only pay per successful hire. This lowers the risk for the company, and raises it for the recruiter.

In each of 2016 and 2017, we qualified only approximately 2.2% of the total applicants in the Philippines each year.

Only 2.2% of candidates were successful. This shows the popularity of the company as an employer. But it also reflects an industry-wide trend of unqualified people wanting to teach online.

Here are is a B2B solution for applicant qualification screening.

On Teachers’ Pay and nationality

Originally, 51Talk just employed Filipino teachers, who – across the industry – receive lower pay than speakers from America. In 2017 they reported lessons as ‘highly affordable’, with ‘each 25-minute one-on-one lesson delivered by Filipino teachers, on average costing approximately RMB35 (US$5.4)’.

However, since the company’s IPO (initial public offering on the stock market) in 2016, their stock has dived.

Of course, this has many causes. The market has been saturated since 2016 with competitors like VIPKid, QKids, and Magic Ears. All these employ American/Canadian teachers, and charge more than 51 Talk – proving parents are willing to pay more for native speakers of English.

The company reports charging 400% more for classes with Western teachers.

Each 25-minute one-on-one live lesson and 50-minute group lesson with Filipino teachers per student costs one lesson credit. Each 25-minute one-on-one live lesson with Western teachers costs four lesson credits.

Summary:

  • In 2017, 51 Talk re-iterated the importance of their teachers to shareholders.
  • Hiring through referrals is cheaper and results in better candidates for companies.
  • Only 2.2% of applicants were qualified in 2017.
  • The company charged 400% more for classes with Western teachers.

For a further look at the financial world of online ESL teaching, click the image below:

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