As noted above, RYB is the largest early childhood education service provider in China. In fact, it’s a pioneer in the early childhood education market in China as it opened its first play-and-learn center in China in 1998. Since then, its teaching facility network is now nationwide, covering 307 cities and towns in 30 provinces and municipalities in China.
RYB operates on a "direct plus franchise" business model. Many of the teaching facilities within its network, including the majority of "RYB branded" kindergartens and most of its play-and-learn centers, are operated through franchisees. Currently it operates 255 kindergartens (80 Direct + 175 Franchised) and 853 Play-and-Learn Centers.
It focuses on early childhood education, for ages 0-6 years olds. It offers kindergarten services, play-and-learn centers as well as at-home education products and services. Outside of its own network, RYB also licenses its courses, sells educational products and provides kindergarten operation services through its Hong Shan Enable Alliance. Some of its kindergartens provide Chinese-English bilingual curricula. At June 30, there were 20,463 students enrolled in its directly operated kindergartens.
As a result of new population policies in China as well as steady urbanization, rising middle class population and growing disposable income per capita, early childhood education in China has experienced rapid growth. The overall size of the kindergarten market in China is significant and private kindergartens have demonstrated strong growth trajectory.
In 2016, only approximately 75% of the total preschool-age population attended kindergartens, among which 41.5% attended private kindergartens and the remaining 33.6% attended public kindergartens. It’s expected that by 2020, approximately 85% of the total preschool-age population will attend kindergartens. In particular, private kindergartens are supported by government policies and parent preferences and are expected to grow substantially. Total revenue of the private kindergarten market in China is expected to reach RMB298.4 billion by 2021 from RMB147.0 billion in 2016. The play-and-learn center market in China is also large in size and growing rapidly.
Turning quickly to the financials, after losses in 2014 and 2015, RYB swung to a profit in 2016. It was also profitable in 1H17. Revenue has been growing nicely from $65.1 million in 2014 to $82.9 million in 2015 then it grew 31% in 2016 to $108.5 million. In 1H17, revenue grew 31% YoY to $64.3 million. Revenue is generated from tuition fees for both directly operated teaching facilities and franchised facilities. RYB also gets revenue from the sale of educational merchandise.