Significant Surge in Sales Expenses Realized Under New Business Model! Doushen Education Sees 60% Drop in Non-Recurring Net Profit in the First Three Quarters, With Accounts Receivable Doubling

Doushen (Beijing) Education & Technology Inc. 300010 reported its Q3 performance on October 26, revealing that its revenue for the first three quarters of 2025 reached 776 million yuan, representing a year-on-year increase of 39.36%. However, the net profit attributable to shareholders fell by 17.23% to 91.77 million yuan, while the non-recurring net profit saw a staggering decline of 59.97%, totaling 43.95 million yuan.

In the third quarter alone, the company recorded a revenue of 327 million yuan, up 44.05% year-on-year, but the net profit was a loss of 12.09 million yuan, marking a 128.96% decline, and the non-recurring net profit dropped 155.93% to -23.44 million yuan.

Doushen Education attributed the revenue growth in the first three quarters to an increase in sales and services related to educational products. The company launched a new business model in the second half of 2024, intensifying its market promotion efforts this year, which expanded its customer base in the C-end market and further developed its To B clients, resulting in increased sales. However, the size of education integration projects contracted, leading to a decrease in related income.

The decline in net profit is primarily due to heightened market promotion expenses under the new business model, which significantly raised sales costs while reducing the cost of main business operations. The report indicates that sales expenses surged by over 300 million yuan to 464 million yuan, a staggering increase of 300.15% year-on-year.

Cash flow from operating activities for the first three quarters saw a net outflow of 239 million yuan, a year-on-year drop of 1087.85%, mainly attributed to the substantial increase in market promotion expenses.

By the end of Q3, accounts receivable had ballooned to 222 million yuan, increasing by 114.06% compared to the end of the previous year. This surge is linked to an uptick in To B business activities following the commencement of the new business model in the second half of 2024, which involves longer payment cycles.

Doushen Education primarily focuses on art education services, live e-commerce, cultural tourism education, smart education services, and artificial intelligence (AI) education.

From 2020 to 2024, the company has experienced a continuous revenue decline over five years, dropping from 1.979 billion yuan in 2019 to 757 million yuan in 2024, indicating significant challenges ahead.

On September 25, Doushen Education announced that, as of the announcement date, the total amount involved in litigation and arbitration matters had reached 272 million yuan, accounting for 16.78% of its audited net assets for the year 2024.