GOTU

BEIJING, Aug. 27, 2026 /PRNewswire/ -- Gaotu Techedu Inc. (NYSE: GOTU) ("Gaotu" or the "Company"), a leading technology-driven education company in China focused on enabling lifelong learning through AI-powered solutions, today announced its unaudited financial results for the second quarter ended June 30, 2026. Second Quarter 2026 Highlights[1] Net revenues were RMB1,670.1 million, increased by 20.2% from RMB1,389.4 million in the same period of 2025. Gross billings[2] were RMB2,689.1 million, increased by 19.4% from RMB2,252.4 million in the same period of 2025. Loss from operations was RMB149.8 million, compared with loss from operations of RMB241.9 million in the same period of 2025. Net loss was RMB135.8 million, compared with net loss of RMB216.0 million in the same period of 2025. Non-GAAP net loss was RMB129.1 million, compared with non-GAAP net loss of RMB206.8 million in the same period of 2025. Net operating cash inflow was RMB861.2 million, increased by 46.3% from RMB588.8 million in the same period of 2025. Second Quarter 2026 Key Financial and Operating Data Six Months Ended June 30, 2026 Highlights Net revenues were RMB3,359.5 million, increased by 16.6% from RMB2,882.4 million in the same period of 2025. Gross billings[2] were RMB3,685.3 million, increased by 17.3% from RMB3,141.1 million in the same period of 2025. Loss from operations was RMB142.9 million, compared with loss from operations of RMB207.1 million in the same period of 2025. Net loss was RMB101.3 million, compared with net loss of RMB92.0 million in the same period of 2025. Non-GAAP net loss was RMB87.6 million, compared with non-GAAP net loss of RMB69.5 million in the same period of 2025. Net operating cash inflow was RMB32.8 million, compared with net operating cash inflow of RMB111.6 million in the same period of 2025. First Six Months 2026 Key Financial and Operating Data Larry Xiangdong Chen, the Company's founder, Chairman and CEO, commented, "Our sustained, user-focused investments in educational products, learning services, and organizational capabilities are steadily translating into healthier unit economics and a more efficient operating system. In the second quarter, net revenues increased by 20.2% year over year to nearly RMB1.7 billion, and non-GAAP loss from operations narrowed significantly by 38.5%. We are embedding AI more deeply across our teaching, services, and operational processes to gain actionable insights from users' learning patterns, interactions and feedback, continually enhancing our product experience, service efficiency, and organizational productivity. Additionally, the brand equity and user trust we have cultivated online are driving our offline expansion, while the high-touch service experience delivered offline, in turn, is deepening our brand awareness and user engagement. Together, these dynamics create a growth flywheel in which data, experience, and brand continuously fuel one another. We also remain committed to returning value to shareholders: as of August 26, 2026, we had repurchased RMB741.8 million under our aggregated share repurchase programs. We will continue to prioritize users' long-term growth, harness advanced technology to elevate our service capabilities, and navigate the evolving market dynamics with operational discipline, enhancing long-term shareholder value." Robin Bin Luo, COO of the Company, added, "In the second quarter, we continued to upgrade our educational products and services and strengthen our teacher development system, expanding our user base and delivering long-term user value. Notably, we have deepened the integration of AI and digital tools in our business, driving ongoing efficiency gains across the entire user acquisition funnel and our middle and back-office operations, unlocking greater operating leverage and reducing operating expenses as a percentage of net revenues by 7.9 percentage points year over year. Our net operating cash inflow increased by 46.3% year over year to RMB861.2 million during the quarter, reflecting the broad-based improvements in our organizational capabilities and operating efficiency. As of June 30, 2026, excluding the impact of share repurchases, our cash and cash equivalents, restricted cash, and short-term and long-term investments increased by RMB354.6 million year over year. Going forward, profitable growth remains our top priority. As such, while maintaining a premium user experience and high-quality services, we will allocate resources with greater discipline to drive healthier and more sustainable growth across all business segments." Financial Results for the Second Quarter of 2026 Net Revenues Net revenues increased by 20.2% to RMB1,670.1 million from RMB1,389.4 million in the second quarter of 2025, which was mainly due to continued year-over-year growth in gross billings as a result of our sufficient and effective response to the strong market demand. Furthermore, our high-quality educational products and learning services resulted in improved recognition of our product and service offerings. Cost of Revenues Cost of revenues increased by 18.3% to RMB559.2 million from RMB472.8 million in the second quarter of 2025. The increase was mainly due to the expansion of instructors and tutors workforce, increased server and bandwidth cost, higher rental cost, and increased depreciation and amortization cost. Gross Profit and Gross Margin Gross profit increased by 21.2% to RMB1,110.8 million from RMB916.5 million in the second quarter of 2025. Gross profit margin increased to 66.5% from 66.0% in the same period of 2025. Non-GAAP gross profit increased by 21.1% to RMB1,111.5 million from RMB917.9 million in the second quarter of 2025. Non-GAAP gross profit margin increased to 66.6% from 66.1% in the same period of 2025. Operating Expenses Operating expenses increased by 8.8% to RMB1,260.6 million from RMB1,158.4 million in the second quarter of 2025. The increase was primarily due to higher expenditures on marketing and branding activities, as well as the expansion of employees workforce. Selling expenses increased to RMB913.2 million from RMB820.9 million in the second quarter of 2025. Research and development expenses increased to RMB154.8 million from RMB148.2 million in the second quarter of 2025. General and administrative expenses increased to RMB192.6 million from RMB189.3 million in the second quarter of 2025. Loss from Operations Loss from operations was RMB149.8 million, compared with loss from operations of RMB241.9 million in the second quarter of 2025. Non-GAAP loss from operations was RMB143.0 million, compared with non-GAAP loss from operations of RMB232.7 million in the second quarter of 2025. Interest Income, Net and Realized Gains from Investments Interest income, net and realized gains from investments, in the aggregate, were RMB8.1 million, compared with a total of RMB19.1 million in the second quarter of 2025. Other Income, Net Other income, net was RMB4.8 million, compared with other income, net of RMB5.6 million in the second quarter of 2025. Net Loss Net loss was RMB135.8 million, compared with net loss of RMB216.0 million in the second quarter of 2025. Non-GAAP net loss was RMB129.1 million, compared with non-GAAP net loss of RMB206.8 million in the second quarter of 2025. Cash Flow Net operating cash inflow in the second quarter of 2026 was RMB861.2 million. Basic and Diluted Net Loss per ADS Basic and diluted net loss per ADS were both RMB0.57 in the second quarter of 2026. Non-GAAP basic and diluted net loss per ADS were both RMB0.54 in the second quarter of 2026. Shares Outstanding As of June 30, 2026, the Company had 156,703,879 ordinary shares outstanding. Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments As of June 30, 2026, the Company had cash and cash equivalents, restricted cash, short-term and long-term investments of RMB3,992.9 million in aggregate, compared with a total of RMB3,972.5 million as of December 31, 2025. Share Repurchase In November 2022, the Company's board of directors authorized a share repurchase program ("2022 Share Repurchase Program"), under which the Company may repurchase up to US$30 million of its shares, effective until November 22, 2025. In November 2023, the Company's board of directors authorized modifications to the share repurchase program, increasing the aggregate value of shares that may be repurchased from US$30 million to US$80 million, effective until November 22, 2025. As of September 22, 2025, the Company's repurchase amount had reached US$80 million and the 2022 Share Repurchase Program was completed. In May 2025, the Company's board of directors authorized a new share repurchase program ("2025 Share Repurchase Program"), under which the Company may repurchase up to an aggregate value of US$100 million of its shares during the three-year period beginning upon the completion of the Company's 2022 Share Repurchase Program. As of August 26, 2026, the Company had cumulatively repurchased approximately 36.5 million ADSs for approximately US$103.5 million under the aforesaid two share repurchase programs. Business Outlook Based on the Company's current estimates, total net revenues for the third quarter of 2026 are expected to be between RMB1,838 million and RMB1,858 million, representing an increase of 16.4% to 17.7% on a year-over-year basis. These estimates reflect the Company's current expectations, which are subject to change. Conference Call The Company will hold an earnings conference call at 8:00 AM U.S. Eastern Time on Thursday, August 27, 2026 (8:00 PM Beijing/Hong Kong Time on Thursday, August 27, 2026). Dial-in details for the earnings conference call are as follows: International: 1-412-317-6061United States: 1-888-317-6003Hong Kong: 852-58081995Mainland China: 400-120-6115Passcode: 8246246 A telephone replay will be available two hours after the conclusion of the conference call through September 3, 2026. The dial-in details are: International: 1-412-317-0088United States: 1-855-669-9658Passcode: 4110808 Additionally, a live and archived webcast of this conference call will be available at https://ir.gaotu.cn/home. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook, as well as the Company's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit, train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law. About Gaotu Techedu Inc. Gaotu is a leading technology-driven education company in China focused on enabling lifelong learning through AI-powered solutions that cultivate interest and drive continuous growth. The Company provides AI-powered, product-led learning solutions for learners from pre-school to adulthood. By combining rare, high-caliber teaching resources with AI-enhanced tools and content, Gaotu creates engaging and effective learning experiences delivered through both online and offline channels. AI and data analytics permeate throughout the Company's operations to adapt content and teaching methods to individual learner needs, enhance efficiency and drive sustained learning progress. About Non-GAAP Financial Measures The Company uses gross billings, non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss), each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered. For some courses, the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings have material limitations as an analytical metrics and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. Non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. Exchange Rate The Company's business is primarily conducted in China and a significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("USD") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to USD are made at a rate of RMB6.7851 to USD1.0000, the effective noon buying rate for June 30, 2026 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on June 30, 2026, or at any other rate. For further information, please contact: Gaotu Techedu Inc.Investor RelationsE-mail: [email protected] Piacente Financial CommunicationsBrandi PiacenteTel: +1 212 481-2050Jenny CaiTel: +86 10 6508-0677E-mail: [email protected] View original content:https://www.prnewswire.com/news-releases/gaotu-techedu-announces-second-quarter-2026-unaudited-financial-results-302861439.html

Interested in Gaotu Techedu Inc.? Here are five stocks we like better. Gaotu delivered solid top-line growth in Q2 2026: Revenue rose 20.2% year over year to nearly RMB 1.7 billion, while gross profit increased 21.2% and gross margin reached 66.5%. Profitability and cash generation improved: Non-GAAP net loss narrowed 37.6% to RMB 129.1 million, operating-expense growth lagged revenue growth, and operating cash inflow rose 46.3% to RMB 861.2 million. Management is emphasizing selective expansion and AI-driven efficiency: Non-academic tutoring, online one-on-one tutoring and adult-learning programs posted strong growth, while offline expansion will prioritize profitable locations. Gaotu forecast Q3 revenue of RMB 1.838 billion to RMB 1.858 billion and had repurchased nearly 36.7 million ADSs by Aug. 26. Gaotu Techedu (NYSE:GOTU) reported second-quarter 2026 revenue growth and narrower adjusted losses as the education company emphasized operating efficiency, retention and disciplined investment across its online and offline businesses. Net revenue rose 20.2% from a year earlier to nearly RMB 1.7 billion, while gross billings increased 19.4% to about RMB 2.7 billion, Chief Operating Officer Bin Luo said on the company’s earnings call. Gross profit grew 21.2% to more than RMB 1.1 billion, producing a gross margin of 66.5%. → Quantum Computing Is Raising the Stakes for Cybersecurity: 5 Stocks to Watch The company’s non-GAAP operating loss narrowed 38.5% year over year to RMB 143.0 million, while its non-GAAP net loss narrowed 37.6% to RMB 129.1 million. Gaotu reported a GAAP operating loss of RMB 149.8 million and a net loss of RMB 135.8 million for the quarter. Gaotu said its operating-expense ratio declined by 7 percentage points from the prior year as it worked to optimize user acquisition, middle-office functions and back-office operations. Total operating expenses increased 8.8% to nearly RMB 1.3 billion, a slower rate than revenue growth. Selling expenses increased 11.2% to RMB 913.2 million, or 54.7% of revenue. Research and development expenses rose 4.5% to RMB 154.8 million, or 9.3% of revenue. General and administrative expenses increased 1.8% to RMB 192.6 million, or 11.5% of revenue. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? Net operating cash inflow increased 46.3% year over year to RMB 861.2 million. As of June 30, Gaotu had nearly RMB 4.0 billion in cash reserves, including cash equivalents, restricted cash, short-term investments and long-term investments. Deferred revenue, primarily tuition collected in advance, rose 18.9% to RMB 2.6 billion. Luo said non-academic tutoring services generated revenue growth of more than 30% year over year during the quarter and accounted for more than 40% of total revenue. Gross billings in the segment increased more than 20%, representing over 45% of companywide gross billings. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding The company’s online business benefited from higher retention and service improvements, according to Luo. Retention for online-business enrollments during the spring season increased by more than 5 percentage points from the prior year. Gaotu has integrated artificial intelligence into tutor support and said the technology has improved the responsiveness, personalization and depth of its services. Its traditional learning-services business recorded gross-billings growth of more than 15% and accounted for more than 40% of total gross billings. The company said it refined marketing content, adjusted acquisition channels toward higher-return areas and used AI to improve lead allocation and conversion management during the summer enrollment period. Gaotu’s online one-on-one tutoring business posted more than 55% year-over-year growth in gross billings from new enrollments. Luo attributed the growth to investments since 2025 in talent supply and service-delivery systems. Educational services for college students and adults grew revenue by more than 15% and represented more than 10% of total revenue. Combined revenue and gross billings from college learning programs and civil-service exam preparation businesses each increased more than 40%, Luo said. Gaotu said its two Dream Centers, located in Zhengzhou and Wuhan, had reached full capacity as of the second quarter. Management said the results support the replicability of its centralized learning-center model, though the company plans to expand carefully based on local demand and operating efficiency. In response to an analyst question, Head of Strategy Mike Xu said offline education is becoming an important growth area, but the company will prioritize profitable growth over “blind expansion.” He said current offline improvement has been driven substantially by better renewals, classroom utilization and staff productivity rather than aggressive expansion of the physical footprint. “Footprint growth itself is not the main KPI,” Xu said. He added that Gaotu will review performance by city and project, optimize resource allocation where needed, and potentially eliminate locations or projects that do not demonstrate the potential to meet its economic-return standards. Founder, Chairman and Chief Executive Officer Larry Chen said AI is increasingly embedded in curriculum development, tutoring, quality control and user analysis. He said AI has improved content-development efficiency by five to eight times in certain use cases and reduced repetitive grading work, allowing tutors to focus more on guidance and personalized service. Chen also said Gaotu’s traditional online business helped more than 200 students gain admission to China’s top two domestic universities since the beginning of 2026. The company’s offline overseas-study business helped nearly 700 students receive offers from universities ranked among the world’s top 50, he said. As of Aug. 26, Gaotu had repurchased nearly 36.7 million American depositary shares on the open market for RMB 741.8 million, according to Senior Finance Director Willa Yao. For the third quarter, Gaotu forecast total net revenue of RMB 1.838 billion to RMB 1.858 billion, representing year-over-year growth of 16.4% to 17.7%. Gaotu Techedu Inc (NYSE:GOTU), formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu's rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects. The company's main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Gaotu Techedu Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Net Revenues: Increased by 20.2% year-over-year to nearly RMB1.7 billion. Gross Billing: Grew by 19.4% year-over-year to approximately RMB2.7 billion. Gross Profit: Increased 21.2% year-over-year to over RMB1.1 billion, with a gross margin of 66.5%. Operating Expenses: Increased 8.8% year-over-year to nearly RMB1.3 billion; as a percentage of net revenues, they declined by 7 percentage points. Selling Expenses: Increased 11.2% year-over-year to RMB913.2 million, accounting for 54.7% of net revenue. Research and Development Expenses: Increased 4.5% year-over-year to RMB154.8 million, accounting for 9.3% of net revenues. General and Administrative Expenses: Increased 1.8% year-over-year to RMB192.6 million, accounting for 11.5% of net revenues. Loss from Operations: RMB149.8 million, with an operating loss margin of 9.0%; non-GAAP loss from operations was RMB143.0 million with a margin of 8.6%. Net Loss: RMB135.8 million, with a net loss margin of 8.1%; non-GAAP net loss was RMB129.1 million with a margin of 7.7%. Adjusted operating loss and adjusted net loss narrowed by 38.5% and 37.6% year-over-year, respectively. Net Operating Cash Inflow: Increased by 46.3% year-over-year to RMB861.2 million. Cash Reserves: Totaled nearly RMB4.0 billion as of June 30, 2026, including cash and cash equivalents, restricted cash, and short-term and long-term investments. Deferred Revenue: Reached RMB2.6 billion, representing 18.9% year-over-year growth. Share Repurchases: Repurchased nearly 36.5 million ADSs for RMB741.8 million as of August 26, 2026. Segment Performance (Non-Academic Tutoring Services): Revenue increased by over 30% year-over-year, accounting for over 40% of total revenues; gross billings grew by over 20% year-over-year, contributing over 45% of total gross billings. Segment Performance (Traditional Learning Services): Gross billings increased by over 16% year-over-year, accounting for over 40% of total gross billings; revenue contribution exceeded 40%. Segment Performance (College Students and Adults): Revenue grew by more than 15% year-over-year, accounting for over 10% of total revenues; combined revenue and gross billings for college learning programs and civil service exam preparation grew by over 40% year-over-year. Offline Business: Delivered high double-digit year-over-year revenue growth in the first half of 2026. Third Quarter 2026 Outlook: Total net revenues expected to be between RMB1,838 million and RMB1,858 million, representing an increase of 16.4% to 17.7% year-over-year. Warning! GuruFocus has detected 2 Warning Signs with GOTU. Is GOTU fairly valued? Test your thesis with our free DCF calculator. Release Date: August 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Gaotu Techedu Inc (NYSE:GOTU) reported a 20.2% year-over-year increase in net revenues to nearly RMB1.7 billion, with gross billings up 19.4% to approximately RMB2.7 billion. The company significantly narrowed its adjusted operating loss and adjusted net loss by 38.5% and 37.6% year-over-year, respectively, while operating expenses as a percentage of net revenues declined by 7 percentage points. Gaotu Techedu Inc (NYSE:GOTU) saw a 46.3% year-over-year increase in net operating cash inflow to RMB861.2 million, and cash reserves totaled nearly RMB4.0 billion as of June 30, 2026. The online non-academic tutoring segment remained profitable, with retention rates for spring enrollments improving by over 5 percentage points year-over-year. Gaotu Techedu Inc (NYSE:GOTU) reported strong growth in its offline business, with revenue up high double-digits year-over-year in the first half of 2026, and its two Dream Centers reached full capacity, demonstrating scalability. AI integration improved content development efficiency by 5-8 times in certain scenarios and enhanced tutor productivity, with new tutor productivity up over 20% year-over-year. The company's traditional business saw gross billings increase over 16% year-over-year, and the college learning and civil service exam preparation businesses combined grew revenue and gross billings by over 40% year-over-year. Gaotu Techedu Inc (NYSE:GOTU) continued its share repurchase program, buying back nearly 36.5 million ADSs for RMB741.8 million as of August 26, 2026. Gaotu Techedu Inc (NYSE:GOTU) still reported a net loss of RMB135.8 million and a non-GAAP net loss of RMB129.1 million for the quarter, indicating ongoing profitability challenges. The company's operating loss margin was 9.0%, and non-GAAP operating loss margin was 8.6%, reflecting continued operational losses despite improvements. Selling expenses increased 11.2% year-over-year to RMB913.2 million, accounting for 54.7% of net revenues, which remains a high cost burden. The offline business expansion is capital-intensive and front-loaded, with management noting that it takes time for cities to mature and achieve profitability, posing a risk to near-term margins. The company's revenue growth guidance for Q3 2026 (16.4% to 17.7% year-over-year) is slower than the 20.2% growth achieved in Q2, indicating a potential deceleration. Despite improvements, the company's overall profitability is still negative, and the path to sustained profitability remains uncertain, especially with ongoing investments in new initiatives. The company's reliance on AI and technology integration may require significant ongoing R&D investments, which could pressure margins if not fully offset by efficiency gains. Q: Could management share the latest operational progress of the offline segment and explain the expansion strategy for the next two or three years, including capacity expansion pace and margin improvement roadmap?A: (Unidentified Company Representative) Offline is becoming an important growth area for Gaotu, but we are managing it with a clear principle: profitable growth comes before blind expansion. In Q2 and during the summer season, offline continued to show encouraging momentum, with demand in active cities and earlier-entry locations benefiting from stronger local brand recognition and word of mouth. Current growth is not mainly coming from aggressive footprint expansion but from improving operating qualitybetter renewal rates, classroom utilization, and staff productivity. We are looking to fill existing capacity more effectively, improve cost scheduling, and strengthen teacher supply to drive higher retention rates. On expansion, our approach is selective; we will consider new capacity where demand is clear and the local model is healthy, but footprint growth itself is not the main KPI. After each cycle, we review performance city by city and project by project, reallocating resources away from projects that do not meet profitability standards. The goal is to concentrate resources on profitable and promising sites so offline can move towards meaningful profit contribution over time. Q: What were the key financial highlights for the second quarter of 2026?A: (Willa Yao, Senior Finance Director) Net revenues increased 20.2% year-over-year to nearly RMB1.7 billion, while gross billing grew 19.4% to approximately RMB2.7 billion. Gross profit increased 21.2% year-over-year to over RMB1.1 billion with a gross margin of 66.5%. Adjusted operating loss and adjusted net loss narrowed significantly by 38.5% and 37.6% year-over-year, respectively. Net operating cash inflow increased 46.3% year-over-year to RMB861.2 million. As of June 30, 2026, total cash reserves including cash, restricted cash, and short-term and long-term investments totaled nearly RMB4.0 billion. Deferred revenue reached RMB2.6 billion, representing 18.9% year-over-year growth. For the third quarter of 2026, total net revenues are expected to be between RMB1,838 million and RMB1,858 million, representing an increase of 16.4% to 17.7% year-over-year. Q: How is AI being integrated into the business, and what tangible value is it delivering?A: (Larry Chen, Founder, Chairman and CEO) AI is emerging as a critical productivity driver for Gaotu's future. In curriculum development, AI is helping restructure the content development workflow, improving efficiency by 5 to 8 times in certain scenarios while significantly lowering the cost of producing personalized content. In course delivery and tutoring services, AI-powered assistance and quality control now cover thousands of key checkpoints across the service workflow. Automated assignment grading has substantially reduced repetitive work, enabling tutors to devote more time to high-quality guidance and personalized services. AI is also sharpening user insights by analyzing learning behaviors and interactive data, allowing us to identify user profiles and shifts in demand more promptly and deliver more precise learning support at critical milestones, enhancing student learning experience, boosting engagement, and improving user retention. Q: What were the key operational performance metrics for the non-academic tutoring services segment?A: (Robin Luo, Chief Operating Officer) The non-academic tutoring services segment, which includes online and offline offerings, saw revenue increase by over 30% year-over-year, accounting for over 40% of total revenues, while gross billings grew by over 20% year-over-year, contributing over 45% of total gross billings. The online business remained profitable this quarter with continued improvement in growth quality and operating stability. We integrated AI to further refine service granularity, significantly enhancing the responsiveness, personalization, and depth of tutor support services. This contributed to a meaningful year-over-year increase of over 5 percentage points in the retention rate for the online business enrollments in the spring season. On the product side, we focused on curriculum tailored to the developmental needs of younger learners while broadening product offerings, creating a healthier and more balanced user mix. Q: How did the traditional learning services business perform, and what was the focus during summer enrollment?A: (Robin Luo, Chief Operating Officer) The traditional business continued to deliver solid growth during the quarter, with gross billings increasing by over 16% year-over-year, accounting for over 40% of total gross billings, while revenue contribution exceeded 40%. During summer enrollment, we placed greater emphasis on acquisition quality and conversion efficiency by refining marketing content, dynamically optimizing acquisition channels, and reallocating resources toward higher ROI channels. We leveraged AI capabilities to enhance lead allocation and conversion management throughout the user acquisition process. The contribution from private traffic and word-of-mouth referrals further increased year-over-year, driving steady improvements in channel mix and overall acquisition efficiency. We also enhanced our comprehensive training and mentor talent development system for promotional course tutors, shortening ramp-up for new hires and improving new tutor productivity by more than 20% year-over-year. Q: What is the progress of the online one-on-one tutoring business?A: (Robin Luo, Chief Operating Officer) Since 2025, we have continued to enrich the talent pipeline and service delivery system for our online one-on-one tutoring business. These accumulated investments have increasingly translated into tangible operating outcomes this quarter, driving year-over-year growth of more than 55% in gross billings from new enrollments for this business. Talent reserves and service capabilities enable us to capture large-scale user demand while maintaining consistently high standards of teaching and service delivery. Q: How did the educational services for college students and adults perform, and what synergies are being explored?A: (Robin Luo, Chief Operating Officer) Revenue for educational services for college students and adults grew by more than 15% year-over-year, accounting for over 10% of total revenues. Demand for college students is both strong and varied, so we continue to explore service scenarios spanning the full development arc from academic study to career development and strengthen the cross-business synergy between college learning programs and civil service exam preparation offerings. We updated our service framework to better address student needs across different stages of development, elevating user lifetime value. Operationally, we connected lead management and resource sharing across the two businesses, improving the utilization of offline classrooms and other operational resources. For the college learning programs and civil service exam preparation businesses combined, both revenue and gross billings grew by over 40% year-over-year, while operational cash flow improved substantially. Q: What is the status of the offline Dream Centers, and what are the expansion plans?A: (Robin Luo, Chief Operating Officer) Our For the complete transcript of the earnings call, please refer to the full earnings call transcript.

BEIJING, June 2, 2026 /PRNewswire/ -- Gaotu Techedu Inc. (NYSE: GOTU) ("Gaotu" or the "Company"), a leading technology-driven education company in China focused on enabling lifelong learning through AI-powered solutions, today announced its unaudited financial results for the first quarter ended March 31, 2026. First Quarter 2026 Highlights[1] Net revenues were RMB1,689.5 million, increased by 13.2% from RMB1,493.0 million in the same period of 2025. Gross billings[2] were RMB996.3 million, increased by 12.1% from RMB888.7 million in the same period of 2025. Income from operations was RMB6.9 million, compared with income from operations of RMB34.8 million in the same period of 2025. Net income was RMB34.5 million, compared with net income of RMB124.0 million in the same period of 2025. Non-GAAP net income was RMB41.4 million, compared with non-GAAP net income of RMB137.3 million in the same period of 2025. Net operating cash outflow was RMB828.4 million, compared with net operating cash outflow of RMB477.2 million in the same period of 2025. First Quarter 2026 Key Financial and Operating Data(In thousands of RMB, except for percentages) Larry Xiangdong Chen, the Company's founder, Chairman and CEO, commented, "Gaotu continued to drive profitable growth in the first quarter, while further strengthening its operational quality and long-term capabilities. Net revenues grew by 13.2% year over year to RMB1,689.5 million, with non-GAAP income from operations and non-GAAP net income reaching RMB13.8 million and RMB41.4 million, respectively. As AI becomes more deeply embedded across teaching, curriculum development, learning services and operations, we are accelerating the development of our 'Scale with AI' framework. This has enabled high-quality teaching services and educational products to be delivered more consistently and at greater scale, enhancing the user experience while unlocking organizational efficiency and operating leverage. Meanwhile, we remain committed to enhancing shareholder value, repurchasing approximately RMB704 million through our aggregated share repurchase programs as of June 1, 2026. In education, long-term value is built on user trust—earned through sustained engagement and high-quality delivery—which over time translates into higher retention, stronger word-of-mouth, and compounding brand equity. Looking ahead, Gaotu will continue to integrate technological innovation with our educational mission to better support users throughout their growth journey while creating sustainable long-term value for our shareholders." Bin Luo, COO of the Company, added, "During the quarter, we advanced our refined operations centered on user needs, product value, and service experience, achieving first-quarter profitability for the second consecutive year. R&D and G&A expenses as a percentage of net revenues declined by 0.7 percentage points year over year, reflecting continued improvements in management efficiency and organizational collaboration driven by AI capabilities. Deferred revenue totaled nearly RMB1.8 billion, up 24.1% year over year, providing clear visibility into revenue recognition in the coming quarters and supporting our full-year roadmap. We will continue to concentrate on product-market fit, service quality, and resource allocation, driving healthy and sustainable growth across each business segment according to its respective stage of development." Financial Results for the First Quarter of 2026 Net Revenues Net revenues increased by 13.2% to RMB1,689.5 million from RMB1,493.0 million in the first quarter of 2025, which was mainly due to the continued year-over-year growth in gross billings as a result of our sufficient and effective response to the strong market demand. Furthermore, our high-quality educational products and learning services resulted in improved recognition of our product and service offerings. Cost of Revenues Cost of revenues increased by 13.8% to RMB514.8 million from RMB452.5 million in the first quarter of 2025. The increase was mainly due to expansion of instructors and tutors workforce, increased learning materials cost, higher rental cost, and increased depreciation and amortization cost. Gross Profit and Gross Margin Gross profit increased by 12.9% to RMB1,174.7 million from RMB1,040.6 million in the first quarter of 2025. Gross profit margin decreased to 69.5% from 69.7% in the same period of 2025. Non-GAAP gross profit increased by 12.7% to RMB1,175.1 million from RMB1,042.7 million in the first quarter of 2025. Non-GAAP gross profit margin decreased to 69.6% from 69.8% in the same period of 2025. Operating Expenses Operating expenses increased by 16.1% to RMB1,167.8 million from RMB1,005.8 million in the first quarter of 2025. The increase was primarily due to a higher expenditure on marketing and branding activities, as well as the expansion of employees workforce. Selling expenses increased to RMB844.1 million from RMB709.4 million in the first quarter of 2025. Research and development expenses increased to RMB159.0 million from RMB150.5 million in the first quarter of 2025. General and administrative expenses increased to RMB164.7 million from RMB145.9 million in the first quarter of 2025. Income from Operations Income from operations was RMB6.9 million, compared with income from operations of RMB34.8 million in the first quarter of 2025. Non-GAAP income from operations was RMB13.8 million, compared with non-GAAP income from operations of RMB48.1 million in the first quarter of 2025. Interest Income and Realized Gains from Investments Interest income and realized gains from investments, on aggregate, were RMB17.9 million, compared with a total of RMB17.1 million in the first quarter of 2025. Other Income, net Other income, net was RMB8.6 million, compared with other income, net of RMB71.6 million in the first quarter of 2025. Net Income Net income was RMB34.5 million, compared with net income of RMB124.0 million in the first quarter of 2025. Non-GAAP net income was RMB41.4 million, compared with non-GAAP net income of RMB137.3 million in the first quarter of 2025. Cash Flow Net operating cash outflow in the first quarter of 2026 was RMB828.4 million. Basic and Diluted Net Income per ADS Basic and diluted net income per ADS were both RMB0.14 in the first quarter of 2026. Non-GAAP basic and diluted net income per ADS were both RMB0.17 in the first quarter of 2026. Share Outstanding As of March 31, 2026, the Company had 158,697,626 ordinary shares outstanding. Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments As of March 31, 2026, the Company had cash and cash equivalents, restricted cash, short-term and long-term investments of RMB3,264.8 million in aggregate, compared with a total of RMB3,972.5 million as of December 31, 2025. Share Repurchase In November 2022, the Company's board of directors authorized a share repurchase program ("2022 Share Repurchase Program"), under which the Company may repurchase up to US$30 million of its shares, effective until November 22, 2025. In November 2023, the Company's board of directors authorized modifications to the share repurchase program, increasing the aggregate value of shares that may be repurchased from US$30 million to US$80 million, effective until November 22, 2025. As of September 22, 2025, the Company's repurchase amount had reached US$80 million and the 2022 Share Repurchase Program was completed. In May 2025, the Company's board of directors authorized a new share repurchase program ("2025 Share Repurchase Program"), under which the Company may repurchase up to an aggregate value of US$100 million of its shares during the three-year period beginning upon the completion of the Company's 2022 Share Repurchase Program. As of June 1, 2026, the Company had cumulatively repurchased approximately 33.1 million ADSs for approximately US$97.9 million under aforesaid two share repurchase programs. Business Outlook Based on the Company's current estimates, total net revenues for the second quarter of 2026 are expected to be between RMB1,578 million and RMB1,598 million, representing an increase of 13.6% to 15.0% on a year-over-year basis. These estimates reflect the Company's current expectations, which are subject to change. Conference Call The Company will hold an earnings conference call at 8:00 AM U.S. Eastern Time on Tuesday, June 2, 2026 (8:00 PM Beijing/Hong Kong Time on Tuesday, June 2, 2026). Dial-in details for the earnings conference call are as follows: International: 1-412-317-6061United States: 1-888-317-6003Hong Kong: 800-963-976Mainland China: 400-120-6115Passcode: 3745949 A telephone replay will be available two hours after the conclusion of the conference call through June 9, 2026. The dial-in details are: International: 1-412-317-0088United States: 1-855-669-9658Passcode: 1174517 Additionally, a live and archived webcast of this conference call will be available at https://ir.gaotu.cn/home. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook, as well as the Company's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit, train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law. About Gaotu Techedu Inc. Gaotu is a leading technology-driven education company in China focused on enabling lifelong learning through AI-powered solutions that cultivate interest and drive continuous growth. The Company provides AI-powered, product-led learning solutions for learners from pre-school to adulthood. By combining rare, high-caliber teaching resources with AI-enhanced tools and content, Gaotu creates engaging and effective learning experiences delivered through both online and offline channels. AI and data analytics permeate throughout the Company's operations to adapt content and teaching methods to individual learner needs, enhance efficiency and drive sustained learning progress. About Non-GAAP Financial Measures The Company uses gross billings, non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss), each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered. For some courses, the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings have material limitations as an analytical metrics and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. Non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. Exchange Rate The Company's business is primarily conducted in China and a significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("USD") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to USD are made at a rate of RMB6.8980 to USD1.0000, the effective noon buying rate for March 31, 2026 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on March 31, 2026, or at any other rate. For further information, please contact: Gaotu Techedu Inc.Investor RelationsE-mail: [email protected] Piacente Financial CommunicationsBrandi PiacenteTel: +1 212 481-2050Jenny CaiTel: +86 10 6508-0677E-mail: [email protected] View original content:https://www.prnewswire.com/news-releases/gaotu-techedu-announces-first-quarter-2026-unaudited-financial-results-302788046.html

This article first appeared on GuruFocus. Revenue: Increased by 13.2% year-over-year to approximately RMB1.7 billion. Non-GAAP Operating Profit: Reached RMB13.8 million. Net Profit: Achieved RMB41.4 million. Cash Position: Increased by RMB69.7 million year-over-year. Deferred Revenue: Totaled nearly RMB1.8 billion, up 24.1% year-over-year. Gross Margin: 69.5%. Selling Expenses: Increased 19.0% year-over-year to RMB844.1 million, accounting for 50.0% of net revenue. Research and Development Expenses: Increased 5.7% year-over-year to RMB159.0 million, accounting for 9.4% of net revenues. Administrative Expenses: Increased 12.9% year-over-year to RMB164.7 million, accounting for 9.7% of net revenues. Net Operating Cash Outflow: Increased 73.6% year-over-year to RMB828.4 million. Cash, Cash Equivalents, and Investments: Totaled nearly RMB3.3 billion as of March 31, 2026. ADS Repurchase: Repurchased 33.1 million ADS for approximately RMB704 million. Second Quarter Revenue Outlook: Expected to be between RMB1,578 million and RMB1,598 million, representing an increase of 13.6% to 15.0% year-over-year. Warning! GuruFocus has detected 2 Warning Signs with GOTU. Is GOTU fairly valued? Test your thesis with our free DCF calculator. Release Date: June 02, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Gaotu Techedu Inc (NYSE:GOTU) reported a 13.2% year-over-year revenue growth, reaching approximately RMB1.7 billion. The company achieved profitability for the first quarter for the second consecutive year, reflecting resilience and improved organizational execution. AI integration is enhancing curriculum development, content creation, and operational processes, contributing to scalable growth and improved user experience. The offline business is progressing well, with improved retention and classroom utilization, and plans for expansion in new cities. Gaotu Techedu Inc (NYSE:GOTU) has a strong cash position, with an increase of RMB69.7 million year-over-year, supporting ongoing investments in product and technology. Total operating expenses increased by 16.1% year-over-year, which may impact future profitability if not managed effectively. Net operating cash outflow increased by 73.6% year-over-year, indicating potential cash flow management challenges. The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements. The timing of Chinese New Year affected the delivery mix and resource deployment, highlighting the impact of external factors on operations. Despite profitability, the operating income margin remains low at 0.4%, suggesting room for improvement in operational efficiency. Q: Could you share more details on the latest update regarding the offline business operations and plans for this year? A: Mike Xu, Head of Strategy, explained that the offline business is a crucial part of Gaotu's long-term learning service strategy. It helps build local trust and provides direct services to students and parents. The company has been developing localized curriculum, local teams, and better data systems. As of 2026, these investments are showing positive results with improved retention and classroom utilization. The offline business is progressing as expected, with both gross billing and revenue tracking within the expected range. Gaotu plans to expand with discipline, focusing on user demand, classroom utilization, and teacher supply. Q: What is the outlook on cost control and efficiency over the coming quarters? A: Catherine Chen, Head of Investor Relations, stated that Gaotu has maintained operational efficiency for six consecutive quarters through disciplined resource allocation and customer acquisition efficiency. AI plays a significant role in daily operations, enhancing productivity and teaching services. The company expects continued operating leverage in upcoming quarters, with nonacademic tutoring services and high school tutoring sectors showing profitability. Q: How is AI being integrated into Gaotu's operations and services? A: AI is being integrated across curriculum development, content creation, and learning services. It enhances question banks, supports teaching, and assists with repetitive tasks. AI is also embedded in business workflows and operational processes, serving as core infrastructure for decision-making and collaboration. AI-powered product formats are being explored to meet diverse learning needs, improving user experience and operational leverage. Q: What are the strategic priorities for Gaotu in 2026? A: Xiangdong Chen, CEO, outlined five strategic priorities: 1) Profitable growth through sustainable operational capability, 2) AI integration for scalable growth and transformation, 3) Enhancing user needs and learning experience, 4) Expanding offline service offerings, and 5) Creating long-term value beyond financial results, including social impact and shareholder benefits. Q: How is Gaotu addressing user needs and learning experiences? A: Gaotu focuses on continuous product and service integration, optimizing feedback mechanisms, and strengthening talent development. The company collaborates across instructors, tutors, and curriculum teams to capture real-time student feedback, aligning content with learning pace. Gaotu is also expanding its talent pipeline through recruitment efforts at prestigious universities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Gaotu Techedu Inc.? Here are five stocks we like better. Gaotu Techedu returned to profitability in Q1 2026, with revenue up 13.2% year over year to about RMB 1.7 billion and non-GAAP net income of RMB 41.4 million. Management said disciplined spending and improved operating efficiency helped support the result. Learning services remained the core growth engine, contributing more than 95% of net revenue, while non-academic tutoring and traditional learning services drove most of the business. Offline and one-on-one tutoring also posted strong growth, and deferred revenue rose 24.1% year over year to nearly RMB 1.8 billion. AI integration and offline expansion are key strategic priorities for future growth. The company is using AI to improve curriculum, tutoring, and employee productivity, while continuing to expand offline services cautiously, with plans to extend its model to Wuhan in 2026. Gaotu Techedu (NYSE:GOTU) reported first-quarter 2026 revenue growth and a return to profitability on a non-GAAP basis, as management emphasized disciplined spending, artificial intelligence integration and expansion of offline learning services during the company’s earnings call. Founder, Chairman and Chief Executive Officer Larry Chen said the quarter represented “another important step” in strengthening the company’s operational quality under its profitable growth strategy. He said revenue rose 13.2% year over year to approximately RMB 1.7 billion, while non-GAAP operating profit reached RMB 13.8 million and non-GAAP net profit totaled RMB 41.4 million. → Best Buy’s AI Laptop Boost Sparks Hope for a BBY Turnaround Chen said that, excluding the impact of share repurchases, Gaotu’s cash position increased by RMB 69.7 million year over year, which he said provides support for continued investment in products, technology and talent. Chen said Gaotu is focused on building profitability as a more stable operating capability rather than relying on periodic results. He said the company’s mature online business continued to show resilient profitability during the quarter, supported by operations, teaching services, user engagement and organizational collaboration. → 3 Up-and-Coming Stocks That Could Be the Next NVIDIA Chief Operating Officer Bin Luo, who was referred to as Robin during the call, said Gaotu achieved first-quarter profitability for the second consecutive year. He also said research and development expenses and general and administrative expenses as a percentage of revenue declined by 0.7 percentage points year over year, reflecting improvements in management efficiency and organizational collaboration. Luo said deferred revenue totaled nearly RMB 1.8 billion, up 24.1% year over year, which he said provides visibility into revenue recognition in coming quarters. He noted that education services are subject to seasonality tied to student learning cycles and course schedules, and said the later timing of Chinese New Year shifted the delivery mix between winter and spring classes across quarters. → These 3 CLO ETFs Target a Niche Corner of the Fixed-Income Market Luo said learning services contributed more than 95% of net revenue in the first quarter. He said non-academic tutoring services and traditional learning services, described as Gaotu’s core segments, generated more than 85% of total revenue. In new initiatives focused on online and offline non-academic tutoring services, gross billings increased more than 20% year over year and contributed more than 35% of total gross billings, Luo said. Revenue in the segment grew more than 15% year over year and accounted for nearly 40% of total revenue. He said the online portion of the segment maintained first-quarter profitability for the second consecutive year. Luo said another business area accounted for more than 45% of total revenue and maintained healthy growth in the quarter. He said Gaotu’s one-on-one tutoring business posted year-over-year growth of more than 20% in both revenue and gross billings, supported by professional capabilities, service engagement and supply stability. Educational services for college students and adults also continued to grow, according to Luo. He said gross billings in that area increased more than 15% year over year and contributed more than 25% of total gross billings, while revenue accounted for 10% of total revenue. Within educational services for college students, both gross billings and revenue grew by more than 20% year over year, and operating cash flow improved year over year. Chen described AI as a core capability for Gaotu’s scalable growth and organizational transformation. He said the company has been integrating AI into curriculum development, content creation, operational collaboration and learning services. Chen said AI is being used to enhance question banks and knowledge graphs, support teaching and formative assessment, and assist teachers and curriculum teams with repetitive standardized tasks. On the user side, he said Gaotu is exploring AI-powered learning tools, AI-enhanced one-on-one tutoring scenarios and AI-integrated online large-class courses. Luo said AI is also improving personalized learning services by helping tutors consolidate and analyze learning data, identify knowledge gaps and create more personalized plans. During the question-and-answer session, management said AI tools and AI agents are being deployed to employees to improve productivity and operating efficiency. Chen said Gaotu’s offline service offerings are progressing in line with expectations and are showing value in user engagement, brand equity and long-term value creation. He cited offline educational services for college students across seven cities and said the company’s Zhengzhou Dream Center has been validating an integrated service model that combines learning, daily life services and personal development. Gaotu plans to extend that model to Wuhan in 2026, he said. In response to a question from CLSA analyst Elsie Sheng, Head of Strategy Mike Xu said offline operations are an important part of Gaotu’s long-term learning service strategy and are intended to build local trust and create a “meaningful second growth curve over time.” Xu said the company has been developing localized curricula, local teams, operating talent and data systems. Xu said retention has been improving, classroom utilization is moving in the right direction, and cities where Gaotu has operated longer are benefiting from brand recognition and word of mouth. He said offline gross billings and revenue were tracking within the company’s expected range during the first five months of the year, and management expects offline billings and revenue to maintain relatively strong growth in the first half. Xu said Gaotu will continue to expand offline services with discipline, evaluating user demand, classroom utilization, retention, teacher supply and operating efficiency before scaling further. Senior Finance Director Willa Yao said cost of revenue was RMB 514.8 million in the quarter. Gross profit increased 12.9% year over year to nearly RMB 1.2 billion, with gross margin of 69.5%. Total operating expenses rose 16.1% year over year to nearly RMB 1.2 billion. Selling expenses increased 19.0% to RMB 844.1 million, or 50.0% of net revenue. Research and development expenses rose 5.7% to RMB 159.0 million, or 9.4% of net revenue. General and administrative expenses increased 12.9% to RMB 164.7 million, or 9.7% of net revenue. Income from operations was RMB 6.9 million, with an operating margin of 0.4%. Net income was RMB 34.5 million, with a net income margin of 2.0%. On a non-GAAP basis, operating income was RMB 13.8 million and net income was RMB 41.4 million. Yao said net operating cash outflow increased 73.6% year over year to RMB 828.4 million. As of March 31, 2026, Gaotu held RMB 691.2 million in cash equivalents and restricted cash, RMB 2.1 billion in short-term investments and RMB 501.4 million in long-term investments, for a total of nearly RMB 3.3 billion. Deferred revenue was around RMB 1.8 billion. As of June 1, 2026, the company had repurchased approximately 33.1 million American depositary shares on the open market for nearly RMB 704 million. For the second quarter of 2026, Gaotu expects total net revenue of RMB 1.578 billion to RMB 1.598 billion, representing year-over-year growth of 13.6% to 15.0%. Gaotu Techedu Inc (NYSE:GOTU), formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu's rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects. The company's main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Gaotu Techedu Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for June 2026.

This article first appeared on GuruFocus. Revenue (Q4 2025): RMB1.7 billion, a 21.4% increase year-over-year. Full Year Revenue (2025): RMB6.1 billion, a 35.0% increase year-over-year. Net Operating Cash Inflow (2025): RMB416 million, a net increase of RMB158 million year-over-year. Cash Position Increase (Excluding Share Repurchases): RMB221 million year-over-year. Share Repurchases (2025): RMB343 million, representing 12.8% of total outstanding shares. Deferred Revenue (As of December 31, 2025): RMB2.6 billion, a 23.0% increase year-over-year. Cash, Cash Equivalents, and Investments (As of December 31, 2025): RMB4.0 billion. Gross Margin (Q4 2025): 67.9%. Operating Loss (Q4 2025): RMB518.0 million, with an operating loss margin of 7.0%. Non-GAAP Operating Loss (Q4 2025): RMB110.7 million, with a non-GAAP operating loss margin of 6.6%. Net Loss (Q4 2025): RMB84.2 million, with a net loss margin of 5.0%. Non-GAAP Net Loss (Q4 2025): RMB76.8 million, with a non-GAAP net loss margin of 4.6%. User Acquisition Efficiency (2025): Improved by 10.8% year-over-year. Learning Services Revenue Contribution: Over 95% of net revenues. New Initiatives Revenue Growth (Q4 2025): Revenue grew by 45% year-over-year. Traditional Business Revenue Growth (2025): Nearly 15% year-over-year. Educational Services for College Students Revenue Growth (Q4 2025): Gross billings grew over 15% year-over-year. Business Outlook (Q1 2026): Expected total net revenue between RMB1,578 million and RMB1,598 million, representing a 5.7% to 7.0% increase year-over-year. Warning! GuruFocus has detected 4 Warning Signs with GOTU. Is GOTU fairly valued? Test your thesis with our free DCF calculator. Release Date: March 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Gaotu Techedu Inc (NYSE:GOTU) reported a 21.4% increase in revenue for the fourth quarter, reaching RMB1.7 billion. The company achieved a 35.0% revenue growth for the full year 2025, surpassing initial expectations. Net operating cash inflow increased by RMB158 million year-over-year, reflecting improved operational efficiency. Gaotu Techedu Inc (NYSE:GOTU) repurchased RMB670 million of shares, representing 12.8% of total outstanding shares, indicating strong shareholder value commitment. The company is integrating AI capabilities to enhance operational efficiency and user experience, positioning itself for long-term growth. Despite revenue growth, Gaotu Techedu Inc (NYSE:GOTU) reported a net loss of RMB84.2 million for the fourth quarter. Operating expenses increased by 15.0% year-over-year, impacting overall profitability. The company's offline business, while growing, faces high barriers to entry, including management effectiveness and teacher supply challenges. The first quarter of 2026 is expected to see only a single-digit revenue increase due to seasonality, indicating potential short-term growth challenges. The company continues to face risks and uncertainties that could impact future performance, as highlighted in their forward-looking statements. Q: Can you provide more details on the development of your offline business and future plans for this segment? A: Nan Shen, Chief Financial Officer: Our offline business is a strategic priority and represents a second growth curve for us. We have been expanding our offline learning centers, integrating them with our online offerings to enhance learning efficiency and experience. This initiative is led by our founder and has seen significant progress since 2023. We expect the revenue from our offline business to surpass that of several independently listed peers soon. Our brand has established credibility in regional markets, and we are progressing towards sustainable profitability. Q: How has the integration of AI impacted your operations and financial performance? A: Larry Chen, Chief Executive Officer: AI is central to our operations, driving improvements in business efficiency and long-term viability. In 2025, we saw a 21.4% increase in revenue and a 38.0% improvement in the bottom line, largely due to AI-driven efficiency gains. We continue to integrate AI across our business to enhance teaching effectiveness, service excellence, and operational efficiency. Q: What are your strategic priorities for 2026? A: Larry Chen, Chief Executive Officer: Our strategic priorities include maintaining profitability, driving product innovation, leveraging technology, reinforcing our competitive edge with high-caliber educators, and enhancing our lifelong learning service platform. We aim to create lasting value through superior learning outcomes and user satisfaction. Q: Can you elaborate on your financial performance for the fourth quarter of 2025? A: Nan Shen, Chief Financial Officer: In Q4 2025, revenue grew by 21.4% year-over-year to RMB1.7 billion. Operating expenses as a percentage of revenue declined, contributing to a 12.9% reduction in operating loss. Our deferred revenue balance rose by 23.0% year-over-year, providing solid visibility for future growth. We have robust cash reserves to support ongoing investments. Q: What is your outlook for the first quarter of 2026? A: Nan Shen, Chief Financial Officer: We expect total net revenue for Q1 2026 to be between RMB1,578 million and RMB1,598 million, representing a 5.7% to 7.0% year-over-year increase. This single-digit growth is due to seasonality, but we anticipate a return to double-digit growth in Q2 2026. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Revenue growth and operating leverage: Q4 revenue rose 21.4% YoY to RMB 1.7 billion and FY25 revenue grew 35.0% to RMB 6.1 billion, with management citing five consecutive quarters of operating leverage and improved net operating cash inflows despite a continued GAAP net loss. Core tutoring momentum: Learning services made up over 95% of net revenue, led by academic tutoring (Q4 gross billings +30% YoY, revenue +45%) with online margins expanding and student retention above 75%. Capital allocation and offline push: Gaotu repurchased about RMB 670 million of shares (≈12.8% of outstanding) and is accelerating offline learning-center expansion as a strategic "second growth curve" that management expects to be profitable and outgrow several peers. Interested in Gaotu Techedu Inc.? Here are five stocks we like better. Gaotu Techedu (NYSE:GOTU) reported fourth-quarter and full-year fiscal 2025 results that management said reflected a shift toward “refinement” in operations, with a greater emphasis on profitable growth and the integration of artificial intelligence across the business. Founder, Chairman, and CEO Larry Chen said 2025 was marked by resilience and a systematic elevation of operational execution, while CFO Shannon Shen highlighted ongoing optimization of the product portfolio and channel mix aimed at improving revenue quality and efficiency. → Uber and Joby Aviation Team Up: Game Changer or Hype? For the fourth quarter, Gaotu said revenue rose 21.4% year-over-year to RMB 1.7 billion. Chen said the company maintained top-line expansion while realizing operating leverage, with “the bottom line” improving by 38.0% on efficiency gains. For the full year 2025, the company reported revenue growth of 35.0% to RMB 6.1 billion, which Chen said exceeded initial expectations set at the beginning of the year. The company’s net operating cash inflow for the full year was RMB 416 million, a net increase of RMB 158 million year-over-year, which management framed as evidence of improved operational quality and efficiency. → Costco Wholesale: Buy Now, Get Paid Later as Cash and Returns Build Shen said Gaotu has delivered operating leverage for five consecutive quarters, driven by revenue scale expansion and operating efficiency gains. She also pointed to improvements in user acquisition efficiency, which the company measured as gross billings divided by selling expenses, rising 10.8% year-over-year in 2025. Shen said learning services contributed over 95% of net revenues in the quarter. Academic tutoring services and traditional learning services, described as core segments, contributed over 80% of total revenues. Academic tutoring services: Shen said new initiatives spanning online and offline sustained strong growth momentum. In the fourth quarter, gross billings increased by over 30% year-over-year and revenue grew by 45%. On a full-year basis, revenue in the segment rose by 9% year-over-year. She added that the online business posted margin expansion and achieved a “middle single-digit” margin for the full year, supported by expanding enrollments and improved product competitiveness. Retention and product updates: Shen said retention of existing students exceeded 75% in the quarter. She noted continued investment in content development centered on comprehensive capabilities and core competencies, and said new offerings, including AI-related courses, enriched the product and content portfolio. Traditional business: Shen said the traditional business maintained stable enrollment growth in the quarter while improving service quality and efficiency. She described upgraded tutor service standards, a stronger focus on learning process management and learner engagement, and course optimization aligned to students’ proficiency levels. For full-year 2025, she said revenue from the traditional business grew nearly 15% year-over-year, with profitability for both online large classes and one-on-one tutoring improving year-over-year. College students and adults: Shen said this segment’s gross billings grew over 15% year-over-year in the fourth quarter and contributed over 15% of total revenues. She said the segment achieved full-year profitability across online offerings in 2025 and entered a “consecutive growth trajectory.” For educational services for college students specifically, she said the company shifted from standalone products to “stage-aligned solutions” with adaptive learning pathways, while further integrating online courses and AI technologies. She added the college-student business delivered “mid-to-double-digit” growth in revenue for the full year and reached profitability at the business-line level. → Amprius Stock Price Gets Amped by Hyper Growth Outlook On the balance sheet, Shen said deferred revenue rose 23.0% year-over-year to RMB 2.6 billion as of Dec. 31, 2025, primarily consisting of tuition received in advance, which she said provided visibility into future revenue growth. Shen reported fourth-quarter cost of revenue of RMB 540.9 million. Gross profit increased 20.7% year-over-year to over RMB 1.1 billion, with a gross margin of 67.9%. Total operating expenses rose 15.0% year-over-year to nearly RMB 1.3 billion. Selling expenses increased 20.3% year-over-year to RMB 885.3 million, representing 52.5% of net revenues. Research and development expenses increased 14.0% year-over-year to RMB 165.4 million, while general and administrative expenses decreased 2.1% year-over-year to RMB 211.8 million. The company reported a loss from operations of RMB 118.0 million, with an operating loss margin of 7.0%. Shen said GAAP net loss was RMB 84.2 million, while non-GAAP net loss was RMB 76.8 million. Net operating cash inflow increased 23.1% year-over-year to RMB 964.8 million in the quarter, according to Shen. As of Dec. 31, 2025, Shen said the company had RMB 712 million in cash equivalents and restricted cash, RMB 2.7 billion in short-term investments, and RMB 551.6 million in long-term investments, totaling nearly RMB 4.0 billion. Management reiterated its focus on shareholder value through capital allocation. Chen said that under the company’s aggregated share repurchase authorization, Gaotu had repurchased a total of RMB 670 million of shares, representing 12.8% of total outstanding shares, including RMB 343 million in buybacks during 2025. Shen added that as of March 4, 2026, the company had repurchased approximately 30.6 million ADS on the open market for nearly RMB 670 million. For the first quarter of 2026, Shen guided total net revenue to a range of RMB 1,578 million to RMB 1,598 million, representing year-over-year growth of 5.7% to 7.0%. She attributed the single-digit growth rate to seasonality and said the company expects the increase rate to return to double digits in the second quarter of 2026. In the Q&A session, management provided additional detail on offline learning centers. Shen said Gaotu began expanding offline learning centers in 2023 and described offline as a “second growth curve” and a top strategic priority at the group level. She said integrating online and offline is intended to enhance learning efficiency and the overall learning experience, while improving product metrics. Shen said the offline business has achieved “clear economics of scale,” with the learning center network and revenue scale growing steadily and rapidly through continued investment and operational refinement. Based on current plans, she said the company expects the revenue scale of offline operations to surpass that of “several independently listed peers” in the coming year. She also emphasized execution requirements and barriers to entry for offline operations, including management effectiveness, organizational alignment, systems and processes, and the supply of top-tier teachers. Looking ahead, Shen said the company expects to achieve profitability at the school level during the year, and that it foresees the offline business becoming profitable next year including headquarters overhead. Gaotu Techedu Inc (NYSE:GOTU), formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu's rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects. The company's main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations. The article "Gaotu Techedu Q4 Earnings Call Highlights" was originally published by MarketBeat.