According to the mid-term profit warning announcement released by Fenbi (2469.HK) on the Hong Kong Stock Exchange on July 27, the company's revenue for the first half of the year is expected to be no less than 1.22 billion yuan (RMB), a decrease of no more than 18.30% compared to the 1.492 billion yuan revenue in the same period of 2025.
On the profit side, a significant reversal is anticipated: the estimated net loss could reach up to 200 million yuan, whereas the same period in 2025 recorded a net profit of 226.7 million yuan. After excluding the impact of share-based payments, the adjusted net loss is expected to be no more than 180 million yuan, compared to an adjusted net profit of 271.5 million yuan in the same period last year.
The pressure on performance quickly transmitted to the secondary market. On July 28, Fenbi shares plunged 16.87%, followed by another 5.8% drop on July 29, closing at 0.325 Hong Kong dollars per share, hitting an all-time low since its listing.
From this earnings forecast, which shows a decline in both revenue and performance, it is clear that Fenbi faced a dual squeeze in the first half of the year from shrinking market demand on one side and intensifying competition on the supply side.
Beyond the deteriorating external market environment, internal turmoil within the company is equally significant. In June this year, Fenbi founder Zhang Xiaolong sparked a public controversy due to inappropriate personal remarks, subsequently resigning from all his positions at the company. Veteran Fenbi executive Sheng Haiyan took over. Now, less than a month after the new leader took charge, Fenbi’s earnings forecast has turned from profit to loss. For Sheng Haiyan, the challenge is a dual mission: to reverse the declining trend and rebuild market confidence.
The Public Exam Giant Can't Sell Anymore?
Founded in 2015, Fenbi is a leading non-degree vocational education and training service provider in China, considered one of the "Big Three" in civil service exam training alongside Huatu and Zhonggong Education. With civil service recruitment training as its core, Fenbi covers various professional exams such as public institutions, teacher recruitment, accounting, and legal professional qualification exams, operating through an integrated online and offline model.
On January 9, 2023, Fenbi was officially listed on the Main Board of the Hong Kong Stock Exchange. In June 2023, Fenbi was included as a constituent stock of the Hang Seng Composite Index and approved for inclusion in the Stock Connect program. At the time of its listing, Fenbi’s first annual report showed a year-on-year revenue decline of about 18% and a net loss of over 2 billion yuan, as offline training was severely impacted by the pandemic.
In 2023, Fenbi achieved revenue of 3.021 billion yuan, a year-on-year increase of 7.5%, and returned to profitability. However, in the following two years, Fenbi’s revenue was 2.790 billion yuan and 2.677 billion yuan respectively, declining for two consecutive years, with year-on-year decreases of 7.65% and 4.05%. This shows that in the first half of this year, the decline in Fenbi’s revenue is expected to significantly widen.
Regarding the decline in the first half of the year, Fenbi explained in the announcement that it was mainly affected by two factors. First, a decrease in job vacancies offered through recruitment exams. Second, intensified competition in the domestic recruitment exam training industry, leading to a decline in training service sales.
Behind the continuous decline in revenue, sales of Fenbi’s traditional large-class courses have been impacted by low-price competition from small institutions, resulting in a decrease in training service sales volume. Concurrently, as consumer habits for purchasing books change, sales of Fenbi’s physical books and tutorial materials have also declined. Specifically, in 2025, Fenbi’s training service revenue decreased by 2.2% to 2.289 billion yuan, with this core business contributing over 85% of total revenue. Book sales and other revenue decreased by 13.7% to 387 million yuan.
The core training business mainly consists of large-class training courses, small-class training courses, and other training courses. Facing challenges in its traditional training business, like other training platforms, Fenbi is also attempting to find new growth points through artificial intelligence.
Is the "AI + Education" Strategy Effective?
From a course sales performance perspective, traditional online large-class training courses typically have an online class size of over 1,000 people, lasting 30 to 90 days, and priced between 300 yuan and 1,280 yuan per course. In 2025, Fenbi launched an AI question-brushing system class priced at 399 yuan, generating 38.1 million yuan in revenue that year, becoming a core growth highlight for large-class courses.
It is important to note that in 2025, Fenbi’s large-class training course revenue was 423.3 million yuan, of which the AI question-brushing system class revenue accounted for 9%, less than one-tenth. Additionally, based on the 399 yuan price, approximately 95,500 units of the AI question-brushing system class were sold, which is still a significant gap compared to Fenbi’s overall user base and monthly active users.
Fenbi stated in its financial report that due to an increase in the sales volume of AI-related courses, the overall sales volume of large-class courses increased in 2025, but this was partially offset by a decrease in the average selling price of AI courses. In 2025, Fenbi’s other training course revenue was 43.2 million yuan. The company launched AI-specific courses during the year, such as AI interview assessment for state-owned and central enterprises and AI interview assessment for teacher qualification. However, Fenbi did not disclose the revenue from these AI courses.
Higher-priced small-class courses still rely on teaching teams to provide personalized training services, which are difficult to replace with AI. This business is also Fenbi’s main source of revenue, generating 1.738 billion yuan in 2025, accounting for 65% of total revenue. This revenue structure precisely proves that in the vocational education training track, users are more willing to pay a high premium for targeted guidance from real teachers, and AI still struggles to touch the core of teaching. The role AI currently plays is a "weapon in a price war," helping to maintain volume for large-class courses while lowering customer acquisition costs, but at the expense of lowering the revenue ceiling for the entire large-class training course segment.
How Will Sheng Haiyan "Put Out the Fire"?
Over the past two years, although Fenbi’s revenue has declined consecutively, the company has remained profitable. In 2023, Fenbi turned a profit, with an adjusted net profit of 445 million yuan, a significant year-on-year increase of 134.1%. In 2024, Fenbi’s annual profit once rose to 240 million yuan, hitting a post-listing profit high. In 2025, it fell 17.5% year-on-year to 198 million yuan. Looking at adjusted net profit, it was 363 million yuan and 281 million yuan in 2024 and 2025 respectively, also declining for two consecutive years. For the first half of 2026, Fenbi expects a net loss of up to 200 million yuan, with an adjusted net loss not exceeding 180 million yuan.
Fenbi explained that the loss mainly stems from two aspects: first, the contraction in revenue scale, and second, severance payments made to departing employees as part of a proactive optimization of the employee structure. Additionally, Fenbi disclosed the group’s investment gains and losses in the announcement: from July 1 to July 7, 2026, Fenbi sold certain ETF products and listed securities purchased through the open market, generating a total investment loss of approximately USD 8.3 million (about 56.15 million yuan). As of the close on July 24, the group held listed securities in three public companies among its investments measured at fair value through profit or loss, with a total value of approximately USD 8.5 million. Given recent volatility in global stock markets, share prices still face fluctuation risks.
Severance payments to departing employees are a one-time cost, meaning the pressure on the company’s performance is a short-term pain. However, proactively optimizing the employee structure is also a signal of strategic adjustment. Over a longer timeline, Fenbi’s employee count has been continuously shrinking. In 2021, it had 8,964 employees, a number that has been declining steadily, reaching 7,005 by the end of 2025. More noteworthy is the change in employee structure. The full-time instructor team has significantly shrunk. In 2021, Fenbi had 4,520 full-time instructors, accounting for more than half. Starting in 2023, the number of full-time instructors became fewer than other employees, dropping to 2,870 by the end of 2025, accounting for about 41%. The figure of a more than 36% reduction in the full-time instructor team over five years reflects not only the compression of labor costs but also a realistic picture of AI tools beginning to take over standardized teaching tasks.
However, the problem is that the AI transformation itself is still continuously "burning money." In 2025, Fenbi’s sales and marketing expenses were 644 million yuan, a year-on-year increase of 2.1%, mainly used for commercial promotion of AI products. Research and development expenses were 245 million yuan, a year-on-year increase of 10.6%, primarily due to increased investment in the development of AI-related courses. Based on the attempts of the past year, the AI transformation has not reversed the declining trend in Fenbi’s revenue. From a user perspective, from 2021 to 2023, Fenbi’s average monthly active users were approximately 6.5 million, 7.95 million, and 9.08 million respectively, with increases of 1.45 million and 1.13 million in 2022 and 2023. In 2024, the average monthly active users were 9.14 million, a year-on-year increase of about 60,000. In 2025, the year of AI transformation, the average monthly active users were 9.12 million, showing a decline rather than an increase.
From the perspective of capital market performance, the logic of the AI transformation has also failed to gain investor recognition. After listing on the Hong Kong Stock Exchange in 2023, Fenbi’s stock price once soared to 15.04 Hong Kong dollars, but soon experienced a sharp drop during the lock-up period in June 2023, entering a continuous downward channel. This year, under the dual pressure of declining performance and public controversy, the stock price has accelerated its decline. Since late April, the stock price has consistently been below 1 Hong Kong dollar per share, and on July 29, it fell to a low of 0.32 Hong Kong dollars per share during trading, setting a historic low.
The various difficulties facing Fenbi are now on the desk of Sheng Haiyan, who was appointed CEO earlier this month. In contrast to Zhang Xiaolong, who had a very distinct personal style and was involved in multiple controversies due to his remarks, Sheng Haiyan rarely appears in the public eye. This veteran, who joined Fenbi in 2015, has long been responsible for the book distribution and sales business, possessing a deep understanding of the company’s operational fundamentals. However, transitioning from managing the book business, which accounts for less than 20% of revenue, to taking over the AI strategic direction set by Zhang Xiaolong, Sheng Haiyan needs to cross not just the boundaries of the business, but also lead the group from a founder-driven model to a professional manager management model. Amidst consecutive performance declines, an unfulfilled AI narrative, and a continuously bottoming stock price, the market's patience and time window are already running out.
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