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    GOTU
    Earnings call· Mar 2026(Q1 FY26)

    Gaotu Techedu Q1 FY26 earnings call GOTU

    Jun 2, 2026 Source

    Executive summary

    Gaotu Techedu Inc. Q1 FY26 — Continued Profitable Growth and AI Integration

    Gaotu Techedu delivered a strong first quarter, continuing its profitable growth strategy with robust revenue expansion and improved non-GAAP profitability. The company is deeply integrating AI across its operations and curriculum to enhance efficiency and user experience, while also expanding its offline service offerings to build local trust and drive long-term value. Management remains confident in sustained operational quality throughout the year, focusing on disciplined execution and resource allocation.

    Highlights

    5

    • Revenue grew by 13.2% year-over-year to approximately RMB 1.7 billion.

    • Non-GAAP operating profit reached RMB 13.8 million, with a 0.8% margin.

    • Non-GAAP net profit reached RMB 41.4 million, with a 2.5% margin.

    • Deferred revenue totaled nearly RMB 1.8 billion, up 24.1% year-over-year, providing strong revenue visibility.

    • Offline non-academic tutoring services saw gross billings increase by over 20% year-over-year, contributing over 35% of total gross billings.

    Concerns

    2

    • Net operating cash outflow increased 73.6% year-over-year to RMB 828.4 million.

    • Selling expenses increased 19.0% year-over-year to RMB 844.1 million, accounting for 50.0% of net revenue.

    Guidance & targets

    1
    CategoryTargetConfidence
    Total net revenue
    between RMB 1,578 million and RMB 1,598 million
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Learning Services (Overall)
    This segment forms the vast majority of the company's net revenues.
    Net revenues contribution: over 95%
    		————
    Non-academic Tutoring Services (Online and Offline)
    This segment, including both online and offline initiatives, demonstrated strong product-market fit and operational resilience, with its online component achieving profitability for the second consecutive first quarter.
    Gross billings growth: over 20% YoYGross billings contribution: more than 35% of totalRevenue contribution: nearly 40% of total
    		over 15% YoY growthover 15%—Q1 profitability for the second consecutive year (online business)
    One-on-One Tutoring Business
    This business maintained a healthy growth trajectory, supported by professional capabilities and service stability, with AI playing a role in improving personalized learning efficiency.
    Gross billings growth: more than 20% YoYTotal revenues contribution: over 45%
    		more than 20% YoY growthmore than 20%——
    Educational Services for College Students and Adults
    This segment sustained solid growth momentum, reflecting a focus on user needs and optimization of product offerings and service management.
    Gross billings growth: over 15% YoYGross billings contribution: over 25% of total
    		10% of total revenue———
    Educational Services for College Students
    A sub-segment of the broader college and adult services, this area showed strong revenue growth and improved cash flow, emphasizing high-quality engagement and AI integration in daily operations.
    Operating cash flow: improved YoY
    		more than 20% YoY growthmore than 20%——
    Civil Service Exam Preparation Business
    This business achieved strong growth in both revenue and gross billings, reflecting ongoing enhancements in user value and operational efficiency.
    Gross billings growth: double digit YoY growthCaptive productivity: continuing to improve
    		double digit YoY growthdouble digit——

    Operational metrics

    13
    Non-GAAP Operating Profit
    RMB 13.8 million
    Q1 FY26

    Achieved as part of the profitable growth strategy.

    Non-GAAP Net Income
    RMB 41.4 million
    Q1 FY26

    Reflects the company's focus on operational quality and efficiency.

    Cash position increase
    RMB 69.7 millionYoY
    Q1 FY26

    Increase in cash position after excluding the impact of share repurchases, providing support for ongoing investments.

    Deferred revenue
    RMB 1.8 billion24.1% YoY
    As of March 31, 2026

    Primarily consists of tuition received in advance, providing clear visibility into future revenue recognition.

    Net operating cash outflow
    RMB 828.4 millionincreased 73.6% YoY
    Q1 FY26

    Represents the cash used in operating activities during the quarter.

    Cash, cash equivalents and restricted cash
    RMB 691.2 million
    As of March 31, 2026

    Part of the total liquid assets on the balance sheet.

    Short-term investments
    RMB 2.1 billion
    As of March 31, 2026

    Part of the total liquid assets on the balance sheet.

    Long-term investments
    RMB 501.4 million
    As of March 31, 2026

    Part of the total liquid assets on the balance sheet.

    Total cash and investments
    RMB 3.3 billion
    As of March 31, 2026

    Aggregate of cash, cash equivalents, restricted cash, short-term and long-term investments.

    R&D and G&A expenses as percentage of revenue
    declined0.7 percentage points YoY
    Q1 FY26

    Demonstrates ongoing gains in management efficiency and organizational collaboration.

    Selling expenses as percentage of net revenue
    50.0%
    Q1 FY26

    Selling expenses totaled RMB 844.1 million, increasing 19.0% YoY.

    R&D expenses as percentage of net revenue
    9.4%
    Q1 FY26

    R&D expenses totaled RMB 159.0 million, increasing 5.7% YoY.

    G&A expenses as percentage of net revenue
    9.7%
    Q1 FY26

    G&A expenses totaled RMB 164.7 million, increasing 12.9% YoY.

    Industry KPIs

    8
    MetricValueDetails
    RevenueRMB 1.7 billionRMB
    Net incomeRMB 34.5 millionRMB
    Gross margin69.5%%
    Free cash flowRMB 828.4 million outflowRMB
    Sg a OPEX ratio0.7 percentage points declinepercentage points
    Adjusted EBITDA ebitaRMB 13.8 millionRMB
    Operating income EBITRMB 6.9 millionRMB
    Share buyback capital returnRMB 704 millionRMB

    Risks & headwinds

    2
    Increased net operating cash outflowQ1 FY26

    increased 73.6% year-over-year to RMB 828.4 million

    Mitigation: Continued focus on operational efficiency and resource allocation, leveraging AI to improve productivity.

    High selling expenses relative to revenueQ1 FY26

    RMB 844.1 million, accounting for 50.0% of net revenue, increased 19.0% year-over-year

    Mitigation: Optimizing channel mix for higher quality acquisition channels and relying on traffic and word-of-mouth referrals to improve user quality, conversion efficiency, and retention rates.

    Q&A highlights

    2

    The analyst asked for more details on the latest operational updates and future plans for the offline business, which was mentioned as progressing in line with expectations.

    Management views offline business as a key part of its long-term strategy, building local trust and creating a second growth curve. Investments in localized curriculum, teams, and data systems are now yielding results, with improving retention and classroom utilization. Brand recognition and word-of-mouth are scaling efficiently in mature cities. For summer enrollment, offline business is tracking within expectations, with gross billing and revenue maintaining strong growth in H1. Future expansion will be disciplined, focusing on product quality, consistent service, and local trust.

    “For Gaotu, offline is an important part of our long-term learning service strategy. It is not just another revenue stream. It can help us build deeper local trust, provide more direct service to student and parents and create a meaningful second growth curve over time.”

    asked by Yiran Sheng · answered by Mike Xu

    2 min read5 chapters

    Detailed Narrative

    01

    Profitable Growth and Operational Quality

    Gaotu continued to strengthen its operational quality and long-term capabilities, achieving profitable growth with revenue up 13.2% year-over-year to RMB 1.7 billion. Non-GAAP operating profit reached RMB 13.8 million, and non-GAAP net profit was RMB 41.4 million. The company emphasized optimizing its operating structure and resource allocation, aiming for increasingly healthy and sustainable growth, with confidence in continued improvement in operational quality throughout 2026.

    02

    AI Integration and Scalability

    AI is evolving into a fundamental capability for Gaotu, integrated across curriculum development, content creation, and learning services. AI enhances question banks, knowledge graphs, and assists teachers with repetitive tasks, improving efficiency. On the user side, AI-powered product formats include learning tools, AI-enhanced one-on-one tutoring, and AI-integrated online large classes, establishing a framework to scale expertise and service models efficiently.

    03

    User Experience and Talent Development

    The company remains focused on user needs and learning experiences, optimizing feedback mechanisms and service frameworks. Weekly feedback loops in online large classes capture student pain points and progress, ensuring content alignment. Gaotu is also reinforcing its talent pipeline through campus recruitment at prestigious universities, building a strong foundation for product innovation, teaching excellence, and organizational development.

    04

    Offline Expansion and Brand Building

    Offline service offerings are progressing as expected, enhancing user engagement and brand equity. Educational services for college students now span 7 cities, with the Zhengzhou Dream Center validating an integrated service model. This model, which achieved high utilization rates, will expand to Wuhan in 2026. The company plans further offline presence expansion across all business segments to sharpen service delivery and deepen user trust.

    05

    Social Impact and Capital Allocation

    Gaotu is committed to creating lasting social impact and sharing benefits with shareholders through disciplined capital allocation. As of June 1, 2026, the company repurchased 33.1 million ADS for approximately RMB 704 million. Additionally, the Gaotu Foundation's AI science class project has reached 33 rural schools and empowered over 23,000 teachers, with plans for further expansion to bridge educational resource gaps.

    AI-generated summary of the company’s earnings call. Not investment advice.