China Merchants Securities International released a research report stating that 51TALK (COE.US) represents an emerging star in the expansive English training market, currently holding approximately 0.5% market share (according to third-party reports, the total addressable market for global regions excluding China is approximately $16.9 billion). The company's rapid expansion is powered by market penetration and AI-driven innovation. 51TALK's forward price-to-sales ratio for 2026 stands at 1.6x, below the peer average of 2.0x, with a PSG ratio of 0.03x (based on consensus expectations of 57% revenue CAGR for 2025-27), significantly lower than the peer average of 0.1x. The firm considers the valuation highly compelling.

**Replicating China's Success Story Internationally with Outstanding Growth Trajectory**

51TALK operates as a globally leading one-on-one online English education platform targeting K-12 students, established in 2011 and went public in 2016. Following regulatory changes in China, 51TALK strategically pivoted its focus toward international markets and completely divested its mainland China operations, now operating across Hong Kong, the Middle East and North Africa (MENA), and Southeast Asian markets.

Prior to the Double Reduction policy, 51TALK's total cash receipts peaked at RMB 2.7 billion in 2020 with high single-digit net profit margins. The company is currently replicating its successful domestic operational expertise in new overseas markets, achieving over 80% compound annual growth rate in international total revenue from 2022 to 2024.

**AI and Localized Operations Enable Promising Outlook**

Total cash receipts for Q2 2025 reached $28.5 million, representing 79% year-over-year growth, with active student count increasing 68% year-over-year to 91,300. Group revenue totaled $20.4 million, up 86% year-over-year, with gross margins at 75%.

The company provided guidance for Q3 2025 total cash receipts to grow 85-90% year-over-year with sequential acceleration, driven by continued market expansion and penetration alongside brand promotion activities (including Riyadh promotional campaigns).

The firm identifies two key drivers that will continue supporting rapid and sustainable growth:

1) **AI-Enhanced Efficiency**: Encompassing content and marketing material development, AI teachers, AI tools for teacher recruitment and training, AI-powered free trial lessons, real-time translation capabilities, and teacher-student operational management systems.

2) **Localized Operations**: 51TALK has established local offices across multiple regions and customized course packages to meet personalized requirements, while launching localized marketing content and offline events to enhance brand awareness and user engagement.