Woongjin ThinkBig, From Offline to Online... Growing Expectations for Performance

[Asia Economy Reporter Yoo Hyun-seok] Woongjin ThinkBig, which has experienced stagnant growth in recent years, is expected to see significant performance improvement this year. As online education has become more active due to COVID-19 and other factors, related businesses are growing.

◇Signal of Escaping Performance Stagnation This Year= Woongjin ThinkBig was established on May 1, 2007, through the spin-off of Woongjin's education and culture business division. Its business segments mainly include domestic education services and publishing, English education, and mobile platform businesses. The Education and Culture Business Headquarters primarily sells both face-to-face and non-face-to-face study materials and operates study rooms. Additionally, reading management involves the Woongjin Book Club service and the sale of complete book sets.

The company’s performance has been stagnant since 2018. Revenue was KRW 631.1 billion in 2018, KRW 638.3 billion in 2019, and KRW 632.6 billion in 2020, remaining around KRW 630 billion over the past three years. Operating profit sharply declined from KRW 34 billion to KRW 14 billion during the same period.

However, recent performance improvements have raised expectations that the long stagnation period may end. In fact, the first quarter of this year recorded strong results. On a consolidated basis, revenue was KRW 176.6 billion, and operating profit was KRW 4.6 billion, with revenue increasing by 9.5% year-on-year and operating profit turning positive.

Performance improved across all segments, including the Education and Culture business, future education, single-volume books, and others including subsidiaries. The company explained that although advertising expenses were incurred for new businesses such as Noriui Balgyeon and Woongjin Compass, the overall growth in scale reduced fixed cost burdens, resulting in favorable growth.

In particular, the Education and Culture Business Headquarters saw an increase in the online proportion. The share of non-face-to-face subjects in this segment reached 21.1% in the first quarter, up 12.5 percentage points from the fourth quarter of 2019. Conversely, face-to-face subjects decreased from 91.4% to 78.9%.

The securities industry also expects Woongjin ThinkBig’s stagnant performance this year to improve. According to FnGuide, securities firms forecast Woongjin ThinkBig’s consolidated revenue and operating profit for this year to be KRW 711.7 billion and KRW 30.6 billion, respectively, representing increases of 10.15% and 118.57% compared to the previous year. For the second quarter, consolidated revenue is expected to increase by 10.9% year-on-year to KRW 172.1 billion, and operating profit to KRW 7.7 billion, a 54.5% increase, indicating continued strong performance following the first quarter.

Researcher An Joo-won of Yuanta Securities said, "The first quarter was a brand switching period with concentrated advertising expenses, but these are expected to decrease quarterly, and profit expansion due to revenue growth will begin to appear in earnest." He added, "Woongjin ThinkBig is currently the most attractive company in the domestic education sector, expanding its age range through business diversification and continuously discovering growth momentum by strengthening its platform business."

◇AI Education Platform ‘SmartAll’ Driving Growth= Expected Synergy in Platform Business= The biggest reason for the expected performance improvement is the growth of the artificial intelligence (AI) education platform business ‘SmartAll.’ Woongjin ThinkBig previously operated print and home-visit learning businesses but began offering digitalizing services in 2014. Since 2019, it has provided AI-based multichannel learning, officially entering the non-face-to-face business.

SmartAll is an AI learning platform based on big data. It applies AI patented technology to organize personalized learning progress tailored to curriculum pace, learning habits, comprehension, and learning outcomes. A key point is the steady increase in subscribers. When launched in November 2019, it targeted only elementary students but has since expanded to include preschoolers, pre-elementary students, and middle school students. As a result, membership grew from 11,663 at launch to 118,444 as of last March.

As membership increases, market share is also rising. According to Woongjin ThinkBig’s first-quarter quarterly report, it ranked first in the publishing and education services market last year. In 2015, Daekyo held 4.21% and Woongjin ThinkBig 3.59%, ranking second, but last year Woongjin ThinkBig recorded 3.41%, surpassing Daekyo’s 3.16%. The company calculated market share by referencing the Statistics Korea’s ‘Private Education Expenses Survey Report’ and each company’s disclosure data.

Additionally, synergy between Woongjin’s existing business and platform business is expected. Woongjin ThinkBig has been expanding its platform business since launching the kids platform ‘Noriui Balgyeon’ in 2019, followed by the adult online education platform ‘Udemy’ in March and the children’s audiobook subscription platform ‘Ddalgi Kong’ in April.

Researcher Park Jong-ryeol of Hyundai Motor Securities said, "Since the launch of SmartAll for elementary students, the target age group has expanded, leading to continuous increases in membership and revenue." He added, "Strong sales of the comprehensive learning mall will increase learning content sales, and the high profitability of learning content, strong sales of new books, and securing bestsellers will also have an impact."

This content was produced with the assistance of AI translation services.