This article first appeared on GuruFocus .
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Revenue:Increased by 13.2% year-over-year to approximately RMB1.7 billion.
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Non-GAAP Operating Profit:Reached RMB13.8 million.
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Net Profit:Achieved RMB41.4 million.
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Cash Position:Increased by RMB69.7 million year-over-year.
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Deferred Revenue:Totaled nearly RMB1.8 billion, up 24.1% year-over-year.
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Gross Margin:69.5%.
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Selling Expenses:Increased 19.0% year-over-year to RMB844.1 million, accounting for 50.0% of net revenue.
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Research and Development Expenses:Increased 5.7% year-over-year to RMB159.0 million, accounting for 9.4% of net revenues.
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Administrative Expenses:Increased 12.9% year-over-year to RMB164.7 million, accounting for 9.7% of net revenues.
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Net Operating Cash Outflow:Increased 73.6% year-over-year to RMB828.4 million.
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Cash, Cash Equivalents, and Investments:Totaled nearly RMB3.3 billion as of March 31, 2026.
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ADS Repurchase:Repurchased 33.1 million ADS for approximately RMB704 million.
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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.
Release Date: June 02, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Gaotu Techedu Inc ( NYSE:GOTU ) reported a 13.2% year-over-year revenue growth, reaching approximately RMB1.7 billion.
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The company achieved profitability for the first quarter for the second consecutive year, reflecting resilience and improved organizational execution.
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AI integration is enhancing curriculum development, content creation, and operational processes, contributing to scalable growth and improved user experience.
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The offline business is progressing well, with improved retention and classroom utilization, and plans for expansion in new cities.
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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.
Negative Points
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Total operating expenses increased by 16.1% year-over-year, which may impact future profitability if not managed effectively.
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Net operating cash outflow increased by 73.6% year-over-year, indicating potential cash flow management challenges.
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The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements.
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The timing of Chinese New Year affected the delivery mix and resource deployment, highlighting the impact of external factors on operations.
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Despite profitability, the operating income margin remains low at 0.4%, suggesting room for improvement in operational efficiency.
Q & A Highlights
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 .
