Doushen Education's introduction of Microsoft GraphRAG is a new gimmick or a new starting point?

Blue Whale News, October 12 (Reporter Chi Lei) Recently, the official official account of Microsoft Education released an article titled "Microsoft GraphRAG Empowers Doushen AI|Leading a New Chapter in the Intelligent Transformation of Education and Improving Quality and Efficiency", announcing its cooperation with Doushen Education.

According to the announcement, this cooperation will form a strong support for the future development of Doushen Education, which is manifested in the fact that "Doushen AI has created an AI tutor with the teaching level of famous teachers with the help of Microsoft GraphRAG's capabilities"; "With the support of Microsoft's GraphRAG technology, Doushen AI's teaching content production has brought revolutionary changes"; "With the support of Microsoft GraphRAG, the work efficiency of the Doushen AI teaching and research team has been significantly improved, from the previous average person generating 1-2 classroom content manuscripts a day to the current average person generating more than 20 high-quality content articles a day, and the efficiency has been increased by more than 10 times." "After eight months of hard work, the Doushen AI team has built a domestic cutting-edge language knowledge graph relying on Microsoft GraphRAG" and so on.

All kinds of statements seem to emphasize that Doushen Education will take advantage of the "east wind" of this cooperation to soar.

Often take advantage of the "east wind" and always stand on the cusp of public opinion

The thought-provoking point is that this is not the first time that Doushen Education has "borrowed the east wind".

Blue Whale News has sorted out the hot events that Doushen Education has participated in in recent years, and its development trajectory has always been linked to large manufacturers. As a result, Doushen Education has always maintained a high level of attention in the industry. It is difficult to comment on whether this attention is good or bad.

The most recent one was the "'ByteDance Education Industry Alliance' incident" in the middle of last year.

On April 26, 2023, Doushen Education disclosed in its 2022 annual report that "the company plans to jointly launch the 'ByteDance Education Industry Alliance' with ByteDance...... Serve and empower ByteDance's education ecosystem entrepreneurs. On May 24, Doushen Education disclosed the above matters again in the reply to the inquiry letter of the 2022 annual report.

But the reversal came quickly, at noon on May 31, ByteDance's official Weibo issued a statement saying: Recently, a listed company said that it planned to jointly launch the "ByteDance Education Industry Alliance" with ByteDance in response to the inquiry letter of the Shenzhen Stock Exchange's annual report. It was confirmed that the information was untrue, and that ByteDance, Douyin and its businesses had no plans to establish a so-called "ByteDance Education Alliance" with a third-party company. Investors are hereby advised to pay attention to the investment risks.

Although the statement did not name Doushen Education, the information behind it was about to come out.

On the evening of the same day, Doushen Education issued an announcement saying, "Based on the company's future strategic layout considerations, the company plans to jointly launch the "ByteDance Education Industry Alliance" with the relevant branches of the short video platform to strengthen the company's advantages in the field of new retail." As of now, the Company has not signed any agreement with the relevant partners, nor has it obtained the written consent or relevant feedback of the target partners, and there are obvious uncertainties in related matters."

At this point, the dust has settled, and Doushen Education's attempt to rub off on the operation of the "Universe Factory" has failed.

An earlier typical case is the "light-speed entry" of Doushen Education when the Oriental Selection exploded in 2022.

In mid-2022, New Oriental's "Oriental Selection" successfully "went out of the circle" in the field of e-commerce live broadcast. At that time, bilingual live broadcasts were popular, and the A-share education sector attracted much attention. Doushen Education also announced at that time that the live broadcast rooms such as "Doushen Selection" created by it entered platforms such as Douyin. As soon as the news came out, it gained 4 daily limits in 6 trading days from June 13th to 20th, and its stock price doubled. On June 18, Dou Xin, the founder of Doushen Education, announced the establishment of the "Doushen Selection" platform. On the same day, in the personal Douyin live broadcast room of Dou Xin, CEO of Doushen Education, the first short video of "Doushen Selection" was released, opening the road of selling agricultural products such as "Tianshui Big Cherry".

"Doushen Selection" and "Oriental Selection" have similar names, similar product categories, "plagiarism of New Oriental", "rubbing traffic" and other questions have come one after another, and Doushen Education immediately responded: "There is no behavior of the company's related parties rubbing hot spots". It's just that today, Dongfang Selection is getting stronger and stronger, and despite unpleasant episodes such as the departure of ace anchor Dong Yuhui, the company's daily operation has been on the right track; However, "Doushen Selection" has long ceased to bring goods, and has faded out of the public eye for a long time, and the last updated video of its account has also stayed on July 7, 2022.

Going back further, the earliest case of Doushen Education's "borrowing the east wind" but backfiring should be a grievance entanglement with a good future.

On September 14, 2020, the official public account of Good Future-Xueersi pushed an article entitled "Contempt: The Undisciplined "Doudou God"", accusing Doushen Education of using the Xuelaisi brand and similar LOGOS for malicious marketing.

Good Future officially pointed out that "Doushen University Language" uses "Learning to Think of Welcoming Classes" and "XES Exclusive Benefits" to promote the enrollment of large language courses. According to the staff of Doushen Education, the so-called "XES exclusive benefits" refer to the high-end Chinese class that this course is saved by the mathematics parents of Xueersi (referred to as XES) and Doushen University Chinese, and there are discounts for students who have taken courses in Xueersi. This statement is quite intriguing.

In the face of Xueersi's reprimand, Doushen Education responded with "Retreat, I was wrong". However, under the apology statement, he pinned the registration link of his own course to the top.

This operation has caused a huge response in the industry, and the main one is "black and red is also red".

The performance fluctuated greatly, involving as many as 220 litigation and arbitration cases

According to Doushen Education's recent performance announcement, compared with the previous explosion of hundreds of millions of yuan, it actually seems to have improved slightly, but it fluctuates greatly.

In late March this year, Doushen Education issued an announcement on the revision of the 2023 annual performance forecast. According to the announcement, in the previously disclosed "2023 Annual Performance Forecast", it was expected that the company's net loss attributable to shareholders of listed companies in 2023 would be 3.2-380 million yuan, and the net loss after deducting non-recurring gains and losses would be 308-368 million yuan.

However, the amendment announcement shows that the revised net profit attributable to shareholders of listed companies is expected to be 28.7 million to 34.3 million yuan, compared with the loss of 687 million yuan in the same period last year, turning losses into profits, but it is expected that there will still be a huge net loss after deducting non-recurring gains and losses, which is expected to be 407-487 million yuan.

This performance revision, Doushen Education said, is mainly because of the company's interpretation of the legal process and accounting standards involved in bankruptcy reorganization, the requirements and conditions for the repayment of reorganization debts, the calculation of bankruptcy reorganization income, and the recognition of reorganization income.

By the end of August, the 2024 semi-annual report released by Doushen Education has made some progress in terms of performance. The report shows that in the first half of 2024, Doushen Education's net profit attributable to shareholders of listed companies will be about 69.09 million yuan, a year-on-year increase of 224.41%. However, there was a decline in revenue during the period, and in the first half of 2024, Doushen Education's revenue was about 330 million yuan, a year-on-year decrease of 28.82%. Doushen Education said that the main reason for the decline in revenue was the successful launch of a new sales model in the same period last year, which gradually stabilized during the reporting period.

Either there is a huge deduction of non-net losses, or there is a significant decline in revenue. Although it has escaped the dilemma of both revenue and profit, its business situation is still not clear.

At the same time, Doushen Education is mired in the "quagmire" of a huge number of litigation and arbitration cases, and even needs to issue a special announcement of listed companies for disclosure. Looking at the entire A-shares, this situation is also rare.

On August 15, Doushen Education issued the "Announcement on the Company's Cumulative Litigation and Arbitration". According to the announcement, as of the disclosure date of the announcement, Doushen Education and its subsidiaries have accumulated as many as 220 undisclosed litigation and arbitration cases, including 70 cases as plaintiffs and 150 cases as defendants.

The total amount involved in the case is 334 million yuan, accounting for 34.79% of the company's audited net assets attributable to shareholders of listed companies in 2023; The total amount of the cases as defendants is 120 million yuan, accounting for 12.50% of the company's audited net assets attributable to shareholders of listed companies in 2023. The cumulative amount involved in the superposition of the two phases is 455 million yuan, accounting for 47.28% of the company's audited net assets attributable to shareholders of listed companies in 2023. In view of the fact that some litigation cases have not yet been heard or are still being heard, and some cases are still in the mediation period between the two parties, it is impossible to predict their impact on the company's profits.

It should be noted that as of June 30, 2024, the balance of cash and cash equivalents held by Doushen Education was 73.0244 million yuan. In other words, the total amount of the case in which Doushen Education and its holding subsidiary were the plaintiffs was already 4.6 times the balance of cash and cash equivalents held by them, and 1.6 times that of the defendants. Regardless of whether these cases are won or lost, they will cause huge fluctuations in the future performance of Doushen Education.

Doushen Education, which frequently borrows the "east wind", has always had huge uncertainty in its own operation. The trend of public opinion is a double-edged sword, if it is used well, it can be used to promote business, and if it is not used well, the backlash caused by it should not be underestimated. The long-term development of Doushen education still depends on the improvement and innovation of its own business. Perhaps this cooperation with Microsoft is a new starting point for Doushen Education's performance to continue to improve. But what is the actual situation, it is still necessary to wait for time and user reputation to give an answer.