Group 1 - The article highlights issues with the clarity of ingredient lists in food products sold through live streaming platforms, specifically mentioning brands like "Haidilao," "Dongfang Zhenxuan," and "Gaotu Jiapin" [1] - A specific incident is reported where a product labeled as "Huiqi Fresh Sheep Scorpion Hot Pot 1260g" had a blurry ingredient list, and accurate allergen information was only provided after customer inquiry [1] - Another product, "Gaotu Exclusive Inner Mongolia Direct Delivery Grassland Sauce Beef," sold 910,000 bags without disclosing the ingredient list in the product details, with customer service acknowledging the issue [2]

交银国际研究 每日晨报 2025 年 9 月 1 日 今日焦点 每月金股 九月研选-宏观环境趋稳+流动性宽松，港股有望 延续向好态势 交银国际研究团队 宏观不确定性持续消退，全球风险偏好明显回升。8 月以来海外宏观环境的 不确定性延续降温态势，美国与主要经济体就贸易框架达成初步共识，同时 宣布将对华关税措施延迟 90 天实施并继续推进双边谈判。与此同时，欧洲 地缘冲突相关谈判有所转机，整体局势边际缓解。 "反内卷"政策效应持续释放，流动性波动对交投活跃度形成扰动。"反内卷" 政策持续推进，相关预期继续推动传统周期行业及部分新兴产业龙头企业的 估值修复进程。 海内外流动性宽松周期下，港股有望延续向好势头。当前我国流动性延续宽 松，A 股市场情绪活跃，亦有望提振港股交易氛围。南向资金对港股科技等 板块的配置需求保持旺盛，资金净流入态势有望延续。海外方面，美联储主 席鲍威尔杰克逊霍尔释放 9 月降息大门敞开的信号，港股有望受益于外资流 入的增加。 九月研选 | 全球主要指数 | | | | | --- | --- | --- | --- | | | 收盘价 | 升跌% | 年初至今 升跌% | | 恒指 | 25, ...

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to $5.20, indicating a potential upside of 30.7% from the current closing price of $3.98 [2][4][3]. Core Insights - The company reported better-than-expected Q2 performance, with a revenue increase of 38% year-on-year to 1.4 billion RMB, surpassing market expectations by 5%. The K12 segment showed strong growth, with revenues increasing by over 50% [8][3]. - Adjusted operating losses narrowed by 49% year-on-year to 230 million RMB, reflecting improved operational efficiency and cost structure optimization [8][3]. - The company is expected to continue its upward trajectory, with projected revenues of 6.13 billion RMB in 2025 and a return to profitability in 2026 [3][7]. Financial Forecast Adjustments - Revenue forecasts for 2025-2027 have been adjusted upwards, with 2025 revenue now expected at 6,133 million RMB, a 3.2% increase from previous estimates. The growth rate for 2025 is projected at 34.7% [7][3]. - Adjusted net profit for 2025 is forecasted to be a loss of 176 million RMB, improving to a profit of 213 million RMB in 2026 [7][3]. - The gross profit margin is expected to stabilize around 67.7% for 2025, with operational improvements anticipated to enhance profitability [7][3]. Performance Metrics - The company’s market capitalization stands at approximately 529.34 million USD, with a year-to-date stock price increase of 81.74% [6]. - The stock has a 52-week high of $4.37 and a low of $1.88, indicating significant volatility and potential for growth [6]. - The average daily trading volume is reported at 1.78 million shares, reflecting active market interest [6].

Core Viewpoint - Gaotu Group reported a revenue of approximately 1.39 billion RMB for Q2 2025, marking a year-on-year growth of 37.6%, exceeding the guidance of 1.32 billion RMB set in the previous quarter. This is the sixth consecutive quarter of revenue growth exceeding 30% [2][4][6]. Revenue Performance - The revenue growth was primarily driven by strong market demand and the recognition of high-quality educational products and services. The learning services segment accounted for over 95% of total revenue, with non-subject training for K12 students contributing nearly 40% and achieving triple-digit year-on-year growth for the fifth consecutive quarter [8][12][16]. - Cash revenue reached 2.25 billion RMB, reflecting a year-on-year increase of 36.2%, and operating cash flow was nearly 590 million RMB [6][9]. Profitability and Losses - Despite the strong revenue performance, Gaotu reported a net loss of 216 million RMB, marking the seventh loss in the last eight quarters. This was a disappointment for the capital market, especially after a profitable previous quarter [4][12][15]. - The primary reason for the loss was high operational costs, which increased by 50.9% year-on-year to 470 million RMB, significantly outpacing revenue growth [15][17]. Cost Structure - The increase in costs was attributed to a rise in the number of teachers, higher rental costs, and increased depreciation and amortization expenses. The company is focusing on offline expansion, which is expected to fill the demand gap in the offline education market [15][16]. - The operational expenses decreased by 0.2% year-on-year, with marketing expenses down by 1.7%, indicating improved operational efficiency [9][10]. Market Strategy and Future Outlook - Gaotu's CFO indicated that the company had set a revenue growth target of approximately 30% for the year, but the actual growth in the first half exceeded 47.3%. The company plans to raise its full-year revenue growth expectations accordingly [9][10]. - The company is exploring the integration of celebrity IPs with real-time AI correction technology to enhance its marketing effectiveness and operational efficiency [10][19]. Seasonal Trends - The company’s financial performance is influenced by seasonal fluctuations in the K12 education sector, with significant differences in cash income and profitability between different quarters. The first and third quarters typically see lower cash income due to new student registrations, while the second and fourth quarters benefit from both new and returning students [18][19].

Core Viewpoint - The company reported a significant revenue growth of 37.6% year-on-year for Q2 2025, reaching approximately 1.39 billion RMB, but still faced a net loss of 216 million RMB, marking the seventh loss in eight quarters, which disappointed the capital market [1][3][10]. Revenue Performance - As of June 30, 2025, the company's revenue for Q2 was approximately 1.39 billion RMB, with cash income of 2.25 billion RMB, reflecting a year-on-year growth of 36.2% [3][6]. - The company has maintained over 30% revenue growth for six consecutive quarters, with an average growth rate of 51.7% [3][6]. - The main driver of revenue growth was the strong market demand and high-quality educational products, with learning services accounting for over 95% of total revenue [6][7]. Business Segmentation - The learning services business includes non-subject training for K12, traditional services for high school students, and services for college students and adults, with the first two segments contributing over 85% of revenue [6][7]. - The non-subject training for K12 has been a significant growth driver, with revenue share close to 40% and achieving triple-digit year-on-year growth for five consecutive quarters [6][7]. - The traditional high school business saw a 12.1% year-on-year revenue growth, while the college and adult education services accounted for over 10% of revenue, with significant improvement in operating losses [6][7]. Operational Efficiency - The company’s operational expenses decreased by 0.2% year-on-year, with marketing expenses down by 1.7%, ending a streak of eight consecutive quarters of significant increases [7][8]. - The return on investment (ROI) improved from 1.99 to 2.75 year-on-year, indicating a 38.6% increase in operational efficiency [8]. Cost and Loss Analysis - The company reported an operational cost of 470 million RMB for the quarter, a 50.9% increase year-on-year, which outpaced revenue growth [10][13]. - The increase in costs was attributed to a rise in the number of teachers, rental costs, and depreciation [13]. - Despite the revenue growth, the company faced a net loss due to high operational costs and a decrease in revenue from the previous quarter [10][14]. Seasonal Revenue Fluctuations - The company’s cash income is significantly affected by seasonal fluctuations, with Q2 typically seeing lower cash income compared to Q1 and Q3, which are peak registration periods [15]. - The management anticipates that the net loss in Q2 aligns with seasonal trends and is expected, with a goal of achieving annual profitability by 2026 [15].

Core Insights - Gaotu Group (NYSE:GOTU) reported Q2 2025 financial results, with revenue approximately 1.39 billion yuan, representing a year-over-year growth of 37.6% [2] - This marks the sixth consecutive quarter of revenue growth exceeding 30% for Gaotu [2] - The "Learn English with Daniel Wu" course launched in February received strong positive feedback, enhancing brand reputation [2] - Marketing expenses for the quarter saw a rare year-over-year decline, indicating improved operational efficiency due to the brand effect of celebrity IPs [2] - Despite the revenue growth, Gaotu reported a net loss of 216 million yuan, although this reflects a nearly 50% improvement, marking the seventh loss in the last eight quarters [2]

Core Viewpoint - Gaotu Group reported a revenue of approximately 1.39 billion RMB for Q2 2025, marking a year-on-year growth of 37.6%, exceeding the guidance provided in the previous quarter [1][2] - Despite strong revenue growth, the company recorded a net loss of 216 million RMB, marking the seventh loss in the last eight quarters, which disappointed the capital market [1][8] Revenue Growth - As of June 30, 2025, Gaotu's Q2 revenue was approximately 1.39 billion RMB, with a year-on-year increase of 37.6% and cash revenue of 2.25 billion RMB, up 36.2% [2] - The company has maintained over 30% revenue growth for six consecutive quarters, with an average growth rate of 51.7% [2] - The main driver of revenue growth was the strong market demand and high-quality educational products and services [4] Business Segmentation - Gaotu's main business is learning services, which accounted for over 95% of revenue in Q2 [4] - The K12 non-subject training business contributed nearly 40% of total revenue, achieving triple-digit year-on-year growth for the fifth consecutive quarter [4][5] - The traditional business for high school students saw a year-on-year revenue increase of 12.1%, although growth slowed due to fewer classes during the Spring Festival [5] Cost and Profitability - The company reported an operating cost of 470 million RMB, a year-on-year increase of 50.9%, which outpaced revenue growth [11] - The increase in costs was attributed to a rise in the number of teachers, rental costs, and depreciation [12] - Despite the increase in costs, the company aims for long-term growth, with offline learning center revenue growing over 20% year-on-year [13] Operational Efficiency - Gaotu's return on investment (ROI) improved from 1.99 to 2.75 year-on-year, reflecting significant operational efficiency gains [7] - Marketing expenses decreased by 1.7% year-on-year, ending a streak of eight consecutive quarters of growth [6] Seasonal Trends - The company experienced a net loss in Q2, which aligns with the seasonal fluctuations typical in the K12 education sector [16] - Cash income is generally higher in the first and third quarters due to new student registrations, while the second and fourth quarters benefit from both new and returning students [15][16]

Investment Rating - The report maintains a "Buy" rating for the company [4][5]. Core Insights - The company reported Q2 2025 earnings with revenue of approximately 1.389 billion RMB, a year-on-year increase of 37.6%, significantly exceeding the guidance upper limit of 30.5% [1] - Adjusted operating loss was approximately 233 million RMB, better than the consensus estimate of 277 million RMB, while non-GAAP net loss was 207 million RMB, a year-on-year reduction of 50.5% [1] - The company is actively enhancing its core business growth while integrating AI technology to optimize service models, innovate products, and improve operational efficiency, with expectations of a significant reduction in annual losses [1] Revenue and Growth Expectations - The K12 business revenue grew approximately 50% year-on-year in Q2, with traditional learning services experiencing a healthy growth of 12.1% despite a reduction in class hours due to the earlier Spring Festival [2] - Non-academic training business has seen triple-digit growth for five consecutive quarters, becoming a new growth engine for the company [2] - Deferred revenue reached nearly 2.2 billion RMB, a year-on-year increase of 38.9%, laying a solid foundation for continued revenue growth in the second half of the year [2] - The company guides for Q3 total revenue growth of 28.9% to 30.6%, with an expected annual revenue growth close to 35%, better than the initial guidance of 30% [2] AI Strategy and Operational Efficiency - The company has proposed an "All with AI, Always AI" strategy for 2025, deeply integrating AI into all aspects of internal operations and customer experience, leading to efficiency improvements [3] - The sales, R&D, and management expense ratios improved year-on-year by 23.6, 5.4, and 2.6 percentage points respectively, with ROI increasing from 1.99 in Q2 2024 to 2.75 in Q2 2025 [3] - Despite expected slight increases in R&D expenses in the second half of the year due to ongoing investments in AI capabilities and talent density, these are anticipated to be offset by profits from core business [3] Financial Projections and Valuation - The revenue forecasts for 2025-2027 have been raised to 6.147 billion, 7.768 billion, and 9.215 billion RMB, reflecting a 7% upward adjustment for each year [4][10] - The target price is set at 5.24 USD, based on a 1.5x 2025E PS, up from a previous target of 4.84 USD [4][11] - The report anticipates a non-GAAP operating loss of approximately 350 million RMB for the year, significantly reduced year-on-year, with expectations of non-GAAP net profits turning positive in 2026 and 2027 [11][12]

Group 1 - Nongfu Spring (09633) reported a 22% year-on-year increase in net profit for the six months ending June 30, 2025, with packaged drinking water revenue growing by 10.7% [1] - Gu Ming (01364) saw a more than 120% year-on-year increase in net profit for the same period, with steady expansion in store count and impressive GMV performance [1] - China Longgong (03339) reported a 37.83% year-on-year increase in net profit, with the loader business being the largest contributor to revenue and profit [1] - AI concept stocks generally rose, with SenseTime (00020) up over 11% and Fourth Paradigm (06682) up over 9%, following the State Council's release of opinions on implementing "AI+" actions [1] - Cao Cao Mobility (02643) reported a 53.5% year-on-year increase in net profit, with gross margin improving from 7.0% to 8.4% [1] Group 2 - H&H International Holdings (01112) experienced a nearly 77% year-on-year decrease in net profit and proposed an interim dividend of HKD 0.19 per share [2] - NIO (09866) saw its stock price rise over 6% this month, benefiting from strong orders for the Onvo L90 and ES8 SUV models [2] - Chip stocks continued their upward trend, with SMIC (00981) up over 6% and Huahong Semiconductor (01347) up over 3%, as institutions remain optimistic about the domestic chip market [2] - Beike (02423) reported a 7.2% year-on-year decrease in net profit for the mid-year results, with Nomura indicating that its third-quarter guidance was below expectations [2] Group 3 - Gaotu (GOTU.US) reported a more than 37% year-on-year increase in revenue for Q2, alongside a new stock buyback plan worth up to USD 100 million [3] - NIO (NIO.US) rose 10.02% as Morgan Stanley highlighted strong orders for the ES8 and a shift in market sentiment towards next year's models [3] - XPeng Motors (XPEV.US) increased by 5.46% as it announced the official launch of the new P7 model on August 27 [3] - Boeing (BA.US) rose 3.51% after Korean Air announced a purchase order for aircraft valued at approximately USD 36.5 billion [4]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Second Quarter 2025 Key Financial and Operating Data](index=1&type=section&id=Second%20Quarter%202025%20Key%20Financial%20and%20Operating%20Data) The company reported strong Q2 2025 revenue growth, narrowed losses, and increased net operating cash inflow | Metric | Q2 2024 (RMB thousands) | Q2 2025 (RMB thousands) | Pct. Change | | :--- | :--- | :--- | :--- | | Net revenues | 1,009,797 | 1,389,388 | 37.6% | | Gross billings | 1,653,692 | 2,252,387 | 36.2% | | Loss from operations | (464,750) | (241,865) | (48.0)% | | Net loss | (429,550) | (215,994) | (49.7)% | | Non-GAAP net loss | (418,040) | (206,849) | (50.5)% | | Net operating cash inflow | 386,184 | 588,797 | 52.5% | [First Six Months 2025 Key Financial and Operating Data](index=2&type=section&id=First%20Six%20Months%202025%20Key%20Financial%20and%20Operating%20Data) The first half of 2025 saw substantial revenue growth and reduced net loss despite lower operating cash inflow | Metric | 6M 2024 (RMB thousands) | 6M 2025 (RMB thousands) | Pct. Change | | :--- | :--- | :--- | :--- | | Net revenues | 1,956,682 | 2,882,431 | 47.3% | | Gross billings | 2,383,052 | 3,141,112 | 31.8% | | Loss from operations | (542,452) | (207,092) | (61.8)% | | Net loss | (441,847) | (92,003) | (79.2)% | | Non-GAAP net loss | (415,001) | (69,510) | (83.3)% | | Net operating cash inflow | 188,748 | 111,560 | (40.9)% | [Management Commentary](index=2&type=section&id=Management%20Commentary) [CEO Remarks](index=2&type=section&id=CEO%20Remarks) The CEO highlighted solid growth, AI integration, and improved efficiency leading to narrowed losses - Maintained solid growth momentum in core business and harnessed AI to enhance service models, foster product innovation, and strengthen organizational capabilities[7](index=7&type=chunk) - Refined operational execution and improved organizational efficiency led to a **50.5% year-over-year narrowing of non-GAAP net loss**[7](index=7&type=chunk) - Achieved a net operating cash inflow of **RMB588.8 million**, an increase of RMB202.6 million from the same period last year[7](index=7&type=chunk) - Dedicated to advancing educational innovation, delivering best-in-class learning experiences, creating long-term shareholder value, and advancing social impact and commercial success[8](index=8&type=chunk) [CFO Remarks](index=3&type=section&id=CFO%20Remarks) The CFO emphasized a successful 'healthy growth' strategy, with revenues exceeding guidance and improved efficiency - Net revenues **exceeded the upper end of guidance by 5.4%**[9](index=9&type=chunk) - Year-over-year growth rate of gross billings **outpaced that of last quarter by 14.4 percentage points**[9](index=9&type=chunk) - Customer acquisition efficiency reached its **best level in the past four years**[9](index=9&type=chunk) - G&A and R&D expenses decreased year-over-year for the second consecutive quarter as a percentage of net revenues, reflecting **growing operating leverage**[9](index=9&type=chunk) - Maintained an ample cash position, with cash, cash equivalents, restricted cash, and short-term and long-term investments totaling **RMB3.8 billion** as of June 30, 2025[9](index=9&type=chunk) [Detailed Financial Performance (Second Quarter 2025)](index=3&type=section&id=Detailed%20Financial%20Performance%20(Second%20Quarter%202025)) [Net Revenues](index=3&type=section&id=Net%20Revenues) Net revenues increased by 37.6% year-over-year, driven by strong market demand and service recognition | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Net revenues | 1,009.8 | 1,389.4 | 37.6% | - Increase mainly due to continued year-over-year growth in gross billings, resulting from sufficient and effective response to strong market demand[10](index=10&type=chunk) - Improved recognition of high-quality educational products and learning services contributed to revenue growth[10](index=10&type=chunk) [Cost of Revenues](index=3&type=section&id=Cost%20of%20Revenues) Cost of revenues rose by 50.9% year-over-year due to workforce expansion and higher operational costs | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Cost of revenues | 313.4 | 472.8 | 50.9% | - Increase mainly due to expansion of instructors and tutors workforce, higher rental cost, as well as increased depreciation and amortization cost[11](index=11&type=chunk) [Gross Profit and Gross Margin](index=3&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit grew by 31.6%, though gross margin declined as cost of revenues outpaced revenue growth | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Gross profit | 696.4 | 916.5 | 31.6% | | Gross profit margin | 69.0% | 66.0% | (3.0) ppts | | Non-GAAP gross profit | 696.3 | 917.9 | 31.8% | | Non-GAAP gross profit margin | 69.0% | 66.1% | (2.9) ppts | [Operating Expenses](index=3&type=section&id=Operating%20Expenses) Total operating expenses decreased slightly by 0.2% due to reduced marketing expenditures | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Total operating expenses | 1,161.1 | 1,158.4 | (0.2)% | - Decline primarily due to precise efficiency management, resulting in year-over-year decreases in expenditures for branding and marketing activities[13](index=13&type=chunk) - Expansion of selling and general and administrative workforce partially offset the decline of marketing expenditures[13](index=13&type=chunk) [Selling Expenses](index=4&type=section&id=Selling%20Expenses) | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | | :--- | :--- | :--- | | Selling expenses | 835.4 | 820.9 | [Research and Development Expenses](index=4&type=section&id=Research%20and%20Development%20Expenses) | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | | :--- | :--- | :--- | | Research and development expenses | 162.1 | 148.2 | [General and Administrative Expenses](index=4&type=section&id=General%20and%20Administrative%20Expenses) | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | | :--- | :--- | :--- | | General and administrative expenses | 163.6 | 189.3 | [Loss from Operations](index=4&type=section&id=Loss%20from%20Operations) The company significantly narrowed its loss from operations by 48.0% year-over-year | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Loss from operations | (464.8) | (241.9) | (48.0)% | | Non-GAAP loss from operations | (453.2) | (232.7) | (48.6)% | [Interest Income and Realized Gains from Investments](index=4&type=section&id=Interest%20Income%20and%20Realized%20Gains%20from%20Investments) Combined interest income and realized gains from investments decreased year-over-year | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | | :--- | :--- | :--- | | Interest income and realized gains from investments | 29.0 | 19.1 | [Other Income, net](index=4&type=section&id=Other%20Income%2C%20net) Other income, net, saw a slight increase in the second quarter of 2025 | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | | :--- | :--- | :--- | | Other income, net | 4.6 | 5.6 | [Net Loss](index=4&type=section&id=Net%20Loss) Net loss significantly narrowed by 49.7% year-over-year, reflecting improved financial performance | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Net loss | (429.6) | (216.0) | (49.7)% | | Non-GAAP net loss | (418.0) | (206.8) | (50.5)% | [Basic and Diluted Net Loss per ADS](index=4&type=section&id=Basic%20and%20Diluted%20Net%20Loss%20per%20ADS) Basic and diluted net loss per ADS decreased significantly in the second quarter of 2025 | Metric | Q2 2025 (RMB) | | :--- | :--- | | Basic net loss per ADS | (0.88) | | Diluted net loss per ADS | (0.88) | | Non-GAAP basic net loss per ADS | (0.84) | | Non-GAAP diluted net loss per ADS | (0.84) | [Financial Position and Cash Flow](index=4&type=section&id=Financial%20Position%20and%20Cash%20Flow) [Cash Flow (Second Quarter 2025)](index=4&type=section&id=Cash%20Flow%20(Second%20Quarter%202025)) The company generated a substantial net operating cash inflow in the second quarter of 2025 | Metric | Q2 2025 (RMB millions) | | :--- | :--- | | Net operating cash inflow | 588.8 | [Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments](index=5&type=section&id=Cash%2C%20Cash%20Equivalents%2C%20Restricted%20Cash%2C%20Short-term%20and%20Long-term%20Investments) The company maintained a strong cash and investment position, though slightly decreased from year-end 2024 | Metric | As of Dec 31, 2024 (RMB millions) | As of June 30, 2025 (RMB millions) | | :--- | :--- | :--- | | Total Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments | 4,094.3 | 3,824.1 | [Share Outstanding](index=4&type=section&id=Share%20Outstanding) As of June 30, 2025, the company had over 162 million ordinary shares outstanding | Metric | As of June 30, 2025 | | :--- | :--- | | Ordinary shares outstanding | 162,382,842 | [Corporate Actions](index=5&type=section&id=Corporate%20Actions) [Share Repurchase Program](index=5&type=section&id=Share%20Repurchase%20Program) The company has an ongoing US$80 million share repurchase program and has authorized a new US$100 million program - Existing share repurchase program authorized up to **US$80 million** (increased from US$30 million in November 2023), effective until November 22, 2025[23](index=23&type=chunk) - As of August 25, 2025, approximately **24.8 million ADSs** were repurchased for approximately **US$76.9 million** under the existing program[24](index=24&type=chunk) - A new share repurchase program was authorized in May 2025 for up to **US$100 million** over a three-year period, commencing upon the completion of the existing program[24](index=24&type=chunk) [Business Outlook](index=5&type=section&id=Business%20Outlook) [Third Quarter 2025 Guidance](index=5&type=section&id=Third%20Quarter%202025%20Guidance) The company expects Q3 2025 net revenues to increase by 28.9% to 30.6% year-over-year | Metric | Q3 2025 Guidance (RMB millions) | YoY Increase | | :--- | :--- | :--- | | Total net revenues | 1,558 to 1,578 | 28.9% to 30.6% | [Supplemental Information](index=5&type=section&id=Supplemental%20Information) [About Gaotu Techedu Inc.](index=6&type=section&id=About%20Gaotu%20Techedu%20Inc.) Gaotu Techedu Inc. is a leading technology-driven education company in China focused on lifelong learning - Leading technology-driven education company in China[28](index=28&type=chunk) - Focuses on enabling lifelong learning through AI-powered solutions that cultivate interest and drive continuous growth[28](index=28&type=chunk) - Provides AI-powered, product-led learning solutions for learners from pre-school to adulthood[28](index=28&type=chunk) - Utilizes AI and data analytics throughout operations to adapt content and teaching methods to individual learner needs, enhance efficiency, and drive sustained learning progress[28](index=28&type=chunk) [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Details for the Q2 2025 earnings conference call and replay are provided for investors - Earnings conference call scheduled for **8:00 AM U.S. Eastern Time on Tuesday, August 26, 2025**[26](index=26&type=chunk) - Dial-in details provided for International, United States, Hong Kong, and Mainland China, with Passcode: 4836755[26](index=26&type=chunk) - A telephone replay will be available through September 2, 2025, with Passcode: 3429136[26](index=26&type=chunk) - Live and archived webcast available at https://ir.gaotu.cn/home[26](index=26&type=chunk) [Safe Harbor Statement](index=6&type=section&id=Safe%20Harbor%20Statement) This announcement contains forward-looking statements involving inherent risks and uncertainties - Contains forward-looking statements under the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995[27](index=27&type=chunk) - Forward-looking statements involve inherent risks and uncertainties, including the company's ability to attract students, recruit teachers, improve courses, maintain brand, improve teaching results, and compete effectively[27](index=27&type=chunk) - The company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law[27](index=27&type=chunk) [About Non-GAAP Financial Measures](index=6&type=section&id=About%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures to evaluate performance, which have specific definitions and limitations - The Company uses gross billings, non-GAAP gross profit, non-GAAP income (loss) from operations, and non-GAAP net income (loss) for evaluating operating results and financial decision-making[29](index=29&type=chunk) - Gross billings are defined as the total cash received for course offerings, net of refunds, providing insight into sales and business performance[30](index=30&type=chunk) - Non-GAAP measures exclude share-based compensation expenses to provide meaningful supplemental information regarding performance and liquidity from a cash perspective[31](index=31&type=chunk) - A limitation of non-GAAP measures is the exclusion of significant recurring share-based compensation charges, and they are not intended as a substitute for GAAP financial information[31](index=31&type=chunk)[32](index=32&type=chunk) [Exchange Rate](index=7&type=section&id=Exchange%20Rate) The announcement uses an exchange rate of RMB7.1636 to USD1.0000 for convenience - All translations from RMB to USD are made at a rate of **RMB7.1636 to USD1.0000**[34](index=34&type=chunk) - The rate is the effective noon buying rate for June 30, 2025, as set forth in the H.10 statistical release of the Federal Reserve Board[34](index=34&type=chunk) - No representation is made that RMB amounts could have been, or could be, converted, realized, or settled into USD at that rate on June 30, 2025, or at any other rate[34](index=34&type=chunk) [Investor Relations Contact](index=7&type=section&id=Investor%20Relations%20Contact) Contact information for investor relations inquiries is provided for the company and its communications firm - Gaotu Techedu Inc. Investor Relations: E-mail: ir@gaotu.cn[35](index=35&type=chunk) - Piacente Financial Communications contacts: Brandi Piacente (Tel: +1 212 481-2050) and Jenny Cai (Tel: +86 10 6508-0677, E-mail: Gaotu@tpg-ir.com)[35](index=35&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Balance Sheets](index=8&type=section&id=Balance%20Sheets) The balance sheets present the company's financial position as of December 31, 2024, and June 30, 2025 Unaudited Condensed Consolidated Balance Sheets (Selected Items) | Metric | As of Dec 31, 2024 (RMB thousands) | As of June 30, 2025 (RMB thousands) | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | 3,639,812 | 4,017,795 | | Total non-current assets | 2,288,165 | 1,950,107 | | **TOTAL ASSETS** | **5,828,077** | **5,868,499** | | **LIABILITIES** | | | | Total current liabilities | 3,260,603 | 3,615,989 | | Total non-current liabilities | 634,009 | 648,749 | | **TOTAL LIABILITIES** | **3,894,613** | **4,264,738** | | **SHAREHOLDERS' EQUITY** | | | | **TOTAL SHAREHOLDERS' EQUITY** | **1,933,464** | **1,603,761** | [Statements of Operations](index=10&type=section&id=Statements%20of%20Operations) The statements of operations detail revenues, costs, and net loss for the three and six-month periods Unaudited Condensed Consolidated Statements of Operations (Selected Items) | Metric | Q2 2024 (RMB thousands) | Q2 2025 (RMB thousands) | 6M 2024 (RMB thousands) | 6M 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | 1,009,797 | 1,389,388 | 1,956,682 | 2,882,431 | | Cost of revenues | (313,433) | (472,840) | (584,847) | (925,301) | | Gross profit | 696,364 | 916,548 | 1,371,835 | 1,957,130 | | Total operating expenses | (1,161,114) | (1,158,413) | (1,914,287) | (2,164,222) | | Loss from operations | (464,750) | (241,865) | (542,452) | (207,092) | | Net loss | (429,550) | (215,994) | (441,847) | (92,003) | | Basic net loss per ADS | (1.65) | (0.88) | (1.71) | (0.37) | [Reconciliations of Non-GAAP Measures](index=11&type=section&id=Reconciliations%20of%20Non-GAAP%20Measures) This section reconciles non-GAAP financial measures to their most comparable GAAP measures Reconciliation of Gross Billings | Metric | Q2 2024 (RMB thousands) | Q2 2025 (RMB thousands) | 6M 2024 (RMB thousands) | 6M 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | 1,009,797 | 1,389,388 | 1,956,682 | 2,882,431 | | Less: other revenues | 29,233 | 22,092 | 56,500 | 36,916 | | Add: VAT and surcharges | 62,586 | 85,782 | 119,993 | 179,158 | | Add: ending deferred revenue | 1,582,135 | 2,196,993 | 1,582,135 | 2,196,993 | | Add: ending refund liability | 85,520 | 133,308 | 85,520 | 133,308 | | Less: beginning deferred revenue | 1,003,314 | 1,444,967 | 1,237,621 | 2,085,893 | | Less: beginning refund liability | 53,799 | 86,025 | 67,157 | 127,969 | | **Gross billings** | **1,653,692** | **2,252,387** | **2,383,052** | **3,141,112** | Reconciliation of Non-GAAP Profit/Loss Measures | Metric | Q2 2024 (RMB thousands) | Q2 2025 (RMB thousands) | 6M 2024 (RMB thousands) | 6M 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Gross profit (GAAP) | 696,364 | 916,548 | 1,371,835 | 1,957,130 | | Share-based compensation expenses in cost of revenues | (43) | 1,353 | 2,278 | 3,463 | | **Non-GAAP gross profit** | **696,321** | **917,901** | **1,374,113** | **1,960,593** | | Loss from operations (GAAP) | (464,750) | (241,865) | (542,452) | (207,092) | | Share-based compensation expenses | 11,510 | 9,145 | 26,846 | 22,493 | | **Non-GAAP loss from operations** | **(453,240)** | **(232,720)** | **(515,606)** | **(184,599)** | | Net loss (GAAP) | (429,550) | (215,994) | (441,847) | (92,003) | | Share-based compensation expenses | 11,510 | 9,145 | 26,846 | 22,493 | | **Non-GAAP net loss** | **(418,040)** | **(206,849)** | **(415,001)** | **(69,510)** |