The analyst inquired about the company's outlook on cost control and efficiency for the coming quarters, noting the great R&D expense control this quarter.

Management confirmed a focus on operational efficiency for six consecutive quarters, driven by disciplined resource allocation and customer acquisition. AI plays an increasingly important role in daily operations, content creation, and teaching services, empowering employees and increasing productivity. This has led to Q1 profitability for the non-academic tutoring services for the second consecutive year and profitability in high school tutoring. The company expects operating leverage to continue showing in upcoming quarters. “AI is playing a more and more important role in our daily operations. We're not just in the operation front, but also in the customer-facing side including content creation and also improving our teaching services, et cetera.”

GOTU

Gaotu Techedu (GOTU) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Jun 2, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Total net revenue	between RMB 1,578 million and RMB 1,598 million high materiality	Q2 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 growth	over 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 growth	more 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 growth	more 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 growth	double digit	—	—

Risks & headwinds

Increased net operating cash outflow Q1 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 revenue Q1 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

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.