PART I [ITEM 3. KEY INFORMATION](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents selected consolidated financial data for GSX Techedu Inc. from 2017 to 2020, highlighting significant revenue growth alongside a substantial increase in net loss in 2020, and details a comprehensive list of risks related to the company's business, corporate structure, operations in China, and its American Depositary Shares (ADSs) [Selected Financial Data](index=6&type=section&id=A.%20Selected%20Financial%20Data) The company experienced exponential revenue growth, increasing from **RMB 397.3 million** in 2018 to **RMB 7.12 billion** in 2020, but after achieving profitability in 2018 and 2019, it reported a significant net loss of **RMB 1.39 billion** in 2020, with total assets growing substantially to **RMB 10.69 billion** by the end of 2020, primarily funded by operating cash flow and financing activities Selected Consolidated Statements of Operations (2018-2020) | Indicator | 2018 (RMB) | 2019 (RMB) | 2020 (RMB) | | :--- | :--- | :--- | :--- | | **Net revenues** | 397,306 | 2,114,855 | 7,124,744 | | **Gross profit** | 254,553 | 1,578,943 | 5,362,196 | | **Income (Loss) from operations** | 19,154 | 215,734 | (1,755,033) | | **Net income (loss)** | 19,650 | 226,630 | (1,392,930) | | **Net (loss) income per ordinary share (Basic)** | (0.21) | 1.42 | (8.72) | | **Net (loss) income per ordinary share (Diluted)** | (0.21) | 1.35 | (8.72) | Selected Consolidated Balance Sheet Data (as of Dec 31) | Indicator | 2019 (RMB) | 2020 (RMB) | | :--- | :--- | :--- | | **Total current assets** | 1,808,901 | 8,457,248 | | **Total assets** | 3,394,532 | 10,685,792 | | **Total current liabilities** | 1,637,250 | 4,197,392 | | **Total liabilities** | 1,837,177 | 4,955,937 | | **Total shareholders' equity** | 1,557,355 | 5,729,855 | Selected Consolidated Cash Flow Data (2018-2020) | Indicator | 2018 (RMB) | 2019 (RMB) | 2020 (RMB) | | :--- | :--- | :--- | :--- | | **Net cash generated from operating activities** | 241,869 | 1,285,054 | 603,273 | | **Net cash used in investing activities** | (198,720) | (2,504,566) | (5,596,304) | | **Net cash (used in) generated from financing activities** | (29,193) | 1,246,065 | 5,272,100 | [Risk Factors](index=8&type=section&id=D.%20Risk%20Factors) The company identifies numerous risks, including intense competition in China's online education market, challenges in managing rapid growth, and reliance on attracting and retaining students and high-quality teachers, facing significant regulatory uncertainties regarding online private education in China, with its VIE structure carrying inherent risks related to PRC government interpretation, and additionally being subject to risks from short-seller reports, potential delisting under the HFCA Act, and other financial and operational risks - The company incurred a net loss of **RMB 1.39 billion** in 2020 after being profitable in 2018 and 2019, and there is no assurance of future profitability due to continued investment in growth[31](index=31&type=chunk) - Selling expenses increased dramatically from **RMB 1.04 billion** in 2019 to **RMB 5.82 billion** in 2020, representing a significant portion of operating expenses and a key risk to profitability if marketing efficiency does not improve[35](index=35&type=chunk) - The company has been the subject of short-seller reports, leading to an SEC investigation and a shareholder class action lawsuit, which could result in significant legal costs and reputational damage[38](index=38&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Significant regulatory uncertainty exists regarding new PRC legislation for online private education, including filing requirements, fee collection limits, and instructor qualifications, which could adversely affect business operations[40](index=40&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) - The company's ADSs may be delisted from U.S. exchanges under the Holding Foreign Companies Accountable Act (HFCA Act) if its auditor, located in China, cannot be inspected by the PCAOB for three consecutive years[98](index=98&type=chunk)[99](index=99&type=chunk) - The company utilizes a VIE structure to operate in China due to foreign ownership restrictions, and this structure relies on contractual arrangements which may be deemed non-compliant by PRC authorities, posing a significant risk to operations[115](index=115&type=chunk)[116](index=116&type=chunk) - A dual-class share structure gives founder, chairman, and CEO Mr. Larry Xiangdong Chen **88.3%** of the aggregate voting power, limiting the influence of other shareholders on corporate matters[172](index=172&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=41&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details the company's history, business model, organizational structure, and properties, founded in 2014, GSX Techedu is a technology-driven education company focusing on online K-12 courses in China, which constituted **87.5%** of its 2020 revenue, operating a scalable online live large-class model with a dual-teacher system, and relying on a VIE structure to comply with PRC regulations on foreign investment in the telecommunications and education sectors [History and Development of the Company](index=41&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) GSX Techedu Inc. commenced operations in 2014 and was incorporated in the Cayman Islands, going public on the NYSE under the symbol "GSX" on June 6, 2019, raising **US$196.3 million**, with key developments in 2020 including a **US$150 million** share repurchase program, a **US$870 million** private placement of Class A ordinary shares, and the acquisition of Tianjin Puxin Online School Education Technology Co., Ltd - The company completed its IPO on the NYSE on June 6, 2019, raising net proceeds of **US$196.3 million**[202](index=202&type=chunk) - In May 2020, the board authorized a **US$150 million** share repurchase program, under which approximately **1.1 million** ADSs were repurchased for **US$39.8 million**[203](index=203&type=chunk) - In December 2020, the company raised **US$870 million** in net proceeds from a private placement of newly issued Class A ordinary shares[203](index=203&type=chunk) [Business Overview](index=41&type=section&id=B.%20Business%20Overview) GSX Techedu is a technology-driven education company specializing in online K-12 courses, which accounted for **87.5%** of total revenues in 2020, utilizing an online live large-class format with a dual-teacher system (instructor and tutors) to ensure scalability and personalized attention, with total paid course enrollments growing from **2.19 million** in 2019 to **5.87 million** in 2020, and the business being subject to extensive PRC regulations covering private education, online content, data privacy, and advertising - The company's core business is online K-12 courses, which contributed **87.5%** of total revenues in 2020, up from **80.7%** in 2019[206](index=206&type=chunk)[213](index=213&type=chunk) Paid Course Enrollments (in thousands) | Year | Total Paid Course Enrollments | | :--- | :--- | | 2018 | 552 | | 2019 | 2,187 | | 2020 | 5,871 | - The business model is based on online live large-classes, with average K-12 enrollments increasing from approximately **1,200** per course in 2019 to **2,200** in 2020[210](index=210&type=chunk)[211](index=211&type=chunk) - A dual-teacher system, comprising instructors and tutors, is employed to facilitate an interactive learning environment in a large-class setting, and as of December 31, 2020, the company had **392** instructors and **15,291** tutors[208](index=208&type=chunk)[222](index=222&type=chunk) - The company faces intense competition from other online education providers in China, competing on factors such as teaching quality, technology, brand recognition, and scope of offerings[251](index=251&type=chunk)[252](index=252&type=chunk) [Organizational Structure](index=68&type=section&id=C.%20Organizational%20Structure) Due to PRC restrictions on foreign ownership in value-added telecommunication services, GSX Techedu Inc., a Cayman Islands holding company, conducts its primary business in China through a Variable Interest Entity (VIE), Beijing BaiJia Technology Co., Ltd., with control over the VIE maintained via a series of contractual arrangements, including Powers of Attorney, Equity Interest Pledge, Exclusive Management Services, and Exclusive Call Option agreements, allowing the company to consolidate the VIE's financial results - The company operates in China through a VIE structure to comply with PRC laws restricting foreign investment in its industry[363](index=363&type=chunk) - Effective control over the VIE is established through several contractual arrangements, including Powers of Attorney from VIE shareholders, an Equity Interest Pledge Agreement, an Exclusive Management Services and Business Cooperation Agreement, and an Exclusive Call Option Agreement[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[368](index=368&type=chunk)[370](index=370&type=chunk) - As a result of these arrangements, GSX is considered the primary beneficiary of the VIE and consolidates its financial results under U.S. GAAP[364](index=364&type=chunk) [Property, Plant and Equipment](index=70&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) The company's principal executive offices are located in leased premises in Beijing, totaling **67,272 square meters**, and it also leases approximately **148,394 square meters** in 14 other provinces and municipalities, in addition to owning commercial real estate in Zhengzhou, including two completed office buildings and one under construction, with a combined gross floor area of **63,273 square meters** - The company leases a total of approximately **215,666 square meters** of office space across China, with the main offices in Beijing[373](index=373&type=chunk) - The company owns commercial real estate in Zhengzhou with a combined gross floor area of **63,273 square meters**, which includes two completed office buildings and one under construction[375](index=375&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=71&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides a detailed analysis of the company's financial performance and condition, highlighting a **236.9%** revenue increase in 2020, driven by a **177.3%** growth in K-12 paid course enrollments, however, this growth was accompanied by a shift from a net income of **RMB 226.6 million** in 2019 to a net loss of **RMB 1.39 billion** in 2020, primarily due to a **460%** surge in selling expenses, and the discussion also covers liquidity, capital resources, R&D efforts, and contractual obligations [Operating Results](index=72&type=section&id=A.%20Operating%20Results) In 2020, net revenues grew **236.9%** to **RMB 7.12 billion**, driven by a significant increase in K-12 paid course enrollments, and despite a slight improvement in gross margin to **75.3%**, the company swung to an operating loss of **RMB 1.76 billion** from an income of **RMB 215.7 million** in 2019, caused by a **422.1%** increase in operating expenses, with selling expenses skyrocketing from **RMB 1.04 billion** to **RMB 5.82 billion** due to aggressive marketing and brand promotion Comparison of Operating Results (2019 vs. 2020) | Metric | 2019 (RMB Million) | 2020 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | 2,114.9 | 7,124.7 | +236.9% | | *K-12 Courses* | 1,706.5 | 6,237.4 | +265.5% | | **Gross Profit** | 1,578.9 | 5,362.2 | +239.6% | | **Gross Margin** | 74.7% | 75.3% | +0.6 p.p. | | **Selling Expenses** | 1,040.9 | 5,816.2 | +458.8% | | **Total Operating Expenses** | 1,363.2 | 7,117.2 | +422.1% | | **Income (Loss) from Operations** | 215.7 | (1,755.0) | - | | **Net Income (Loss)** | 226.6 | (1,392.9) | - | - The increase in K-12 net revenues in 2020 was primarily driven by a **177.3%** increase in paid course enrollments (from **1.96 million** to **5.43 million**) and a **7%** increase in the medium level of standard tuition fees[426](index=426&type=chunk)[427](index=427&type=chunk) - In 2019, net revenues grew **432.3%** to **RMB 2.11 billion** from **RMB 397.3 million** in 2018, and net income increased significantly from **RMB 19.7 million** in 2018 to **RMB 226.6 million** in 2019[438](index=438&type=chunk)[452](index=452&type=chunk) [Liquidity and Capital Resources](index=84&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is strong, with cash and cash equivalents of **RMB 355.2 million** and short-term investments of **RMB 7.33 billion** as of December 31, 2020, with net cash from operating activities being **RMB 603.3 million** in 2020, a decrease from **RMB 1.29 billion** in 2019, net cash used in investing activities being **RMB 5.60 billion**, mainly for short-term investments, and net cash from financing activities being **RMB 5.27 billion**, primarily due to a **US$870 million** private placement in December 2020 Cash and Investments (as of Dec 31, 2020) | Item | Amount (RMB Million) | Amount (USD Million) | | :--- | :--- | :--- | | Cash and cash equivalents | 355.2 | 54.4 | | Short-term investments | 7,331.3 | 1,123.6 | | **Total** | **7,686.5** | **1,178.0** | Summary of Cash Flows (Year ended Dec 31, 2020) | Cash Flow Activity | Amount (RMB Million) | Amount (USD Million) | | :--- | :--- | :--- | | Operating Activities | 603.3 | 92.5 | | Investing Activities | (5,596.3) | (857.7) | | Financing Activities | 5,272.1 | 808.0 | - Capital expenditures increased significantly to **RMB 490.6 million** in 2020 from **RMB 61.3 million** in 2019, primarily for commercial real estate, leasehold improvements, and IT equipment[472](index=472&type=chunk) [Research and Development, Patents and Licenses, etc.](index=87&type=section&id=C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses%2C%20etc.) The company emphasizes its technology-driven approach, with a dedicated R&D team of **1,928** professionals as of year-end 2020, and key technological assets include a proprietary live broadcasting technology capable of supporting up to **500,000** simultaneous students with low latency, a stable network infrastructure hosted on third-party cloud services, and extensive use of big data and AI for personalized recommendations and operational efficiency, also utilizing an internal Business & Operations Support System (BOSS) to automate workflows - As of December 31, 2020, the technology research and development team consisted of **1,928** professionals[475](index=475&type=chunk) - Proprietary live broadcasting technology can support up to **500,000** students simultaneously in a single class with an average delay of less than **300 milliseconds**[476](index=476&type=chunk) - The company leverages big data and AI to predict student behavior, optimize marketing, and enhance the learning experience through features like personalized exercise recommendations[478](index=478&type=chunk)[479](index=479&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=89&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on the company's leadership, compensation, board structure, and employee base, with the board consisting of four directors, including three independent directors who staff the audit, compensation, and nominating committees, and employee count surging from **6,435** in 2019 to **22,570** in 2020, with tutors making up the largest group, and share ownership being highly concentrated, with founder Larry Xiangdong Chen controlling **88.4%** of the voting power through a dual-class share structure [Compensation of Directors and Executive Officers](index=90&type=section&id=B.%20Compensation%20of%20Directors%20and%20Executive%20Officers) For the fiscal year 2020, the company paid approximately **RMB 1.5 million** in cash to its executive officers and **RMB 2.7 million** to its non-executive directors, and the company has a Share Incentive Plan adopted in March 2019, under which it can grant options, restricted share units, and restricted shares to employees, directors, and consultants, with **7,346,311** options and **2,172,085** restricted share units outstanding as of February 28, 2021, under the plan - In fiscal year 2020, aggregate cash compensation was approximately **RMB 1.5 million** for executive officers and **RMB 2.7 million** for non-executive directors[499](index=499&type=chunk) - The 2019 Share Incentive Plan allows for the issuance of up to **28,400,000** ordinary shares, with an automatic increase mechanism to maintain a reserve pool[505](index=505&type=chunk) [Board Practices](index=92&type=section&id=C.%20Board%20Practices) The Board of Directors consists of four members, and the company has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, all composed of the same three independent directors: Xin Fan, Yiming Hu, and Ming Liao, with Xin Fan designated as the audit committee financial expert - The board has four directors and has established three key committees: Audit, Compensation, and Nominating and Corporate Governance[514](index=514&type=chunk)[515](index=515&type=chunk) - All three committees are composed entirely of independent directors Xin Fan, Yiming Hu, and Ming Liao[516](index=516&type=chunk)[517](index=517&type=chunk)[518](index=518&type=chunk) [Employees](index=95&type=section&id=D.%20Employees) The company's employee base grew dramatically from **6,435** at the end of 2019 to **22,570** by December 31, 2020, with the majority of employees being tutors, numbering **15,291**, reflecting the company's dual-teacher operational model, and the company also engaged **319** full-time instructors and **73** full-time exclusive contracted instructors Employee Count by Function (as of Dec 31, 2020) | Function | Number of Employees | | :--- | :--- | | Tutors | 15,291 | | Technology and content R&D | 2,896 | | General and administrative | 2,029 | | User growth | 1,105 | | Sales | 930 | | Instructors | 319 | | **Total** | **22,570** | - Total employee count increased by **250%** from **6,435** in 2019 to **22,570** in 2020[523](index=523&type=chunk) [Share Ownership](index=95&type=section&id=E.%20Share%20Ownership) As of February 28, 2021, the company had **170,392,812** ordinary shares outstanding, consisting of Class A and Class B shares, with Founder, Chairman, and CEO Mr. Larry Xiangdong Chen beneficially owning all **73,305,288** Class B shares, granting him **88.4%** of the total voting power due to the dual-class structure where Class B shares have **ten votes** per share, and other significant shareholders including Goldman Sachs & Co. LLC (**18.6%** of shares, **3.8%** voting power) and Nomura Global Financial Products, Inc. (**6.3%** of shares, **1.3%** voting power) - Founder, Chairman, and CEO Mr. Larry Xiangdong Chen holds **43.5%** of total ordinary shares but controls **88.4%** of the aggregate voting power through his ownership of all Class B shares[530](index=530&type=chunk) - The company has a dual-class share structure: Class A ordinary shares have **one vote** per share, while Class B ordinary shares have **ten votes** per share[171](index=171&type=chunk)[530](index=530&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=97&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section reiterates the major shareholder structure detailed in Item 6.E and outlines related party transactions, with the primary related party transactions involving the contractual arrangements with the company's VIE, which is necessary for its operations in China, and also notes a past loan from CEO Larry Xiangdong Chen, which was fully repaid by year-end 2020, and transactions with a former investee company, Beijing Youlian, which was dissolved in June 2020 - The company's operations are dependent on the contractual arrangements with its VIE, which is a significant related party relationship[535](index=535&type=chunk) - A loan from CEO Mr. Larry Xiangdong Chen, which had an outstanding balance of **RMB 35.3 million** at the end of 2018, was fully repaid by the end of 2020[536](index=536&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=99&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers legal proceedings and dividend policy, with the company facing an SEC investigation and a putative shareholder class action lawsuit, both stemming from short-seller reports published in early to mid-2020, and the company states it does not have any present plan to pay cash dividends, intending to retain earnings for business expansion - Following short-seller reports in 2020, the SEC requested financial and operating records from the company, and an investigation is ongoing[548](index=548&type=chunk) - A putative shareholder class action lawsuit was filed against the company, its CEO, and CFO in April 2020, alleging material misstatements in public filings, and the company believes the case is without merit[549](index=549&type=chunk) - The company has no present plan to pay cash dividends and intends to retain future earnings to fund business growth[554](index=554&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=100&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides details on the company's memorandum and articles of association, material contracts, exchange controls, and taxation, with key features including a dual-class share structure with disparate voting rights, and a summary of Cayman Islands corporate law, and the taxation summary discusses potential PRC tax liabilities if the company is deemed a 'resident enterprise' and U.S. federal income tax considerations for investors, including the risk of being classified as a Passive Foreign Investment Company (PFIC) - The company's ordinary shares are divided into Class A (**one vote** per share) and Class B (**ten votes** per share), and Class B shares are convertible to Class A, but not vice versa[559](index=559&type=chunk)[560](index=560&type=chunk)[562](index=562&type=chunk) - There is a risk that PRC tax authorities could classify the Cayman Islands holding company as a 'resident enterprise,' which would subject its global income to a **25%** PRC enterprise income tax and potentially require withholding tax on dividends paid to non-PRC shareholders[606](index=606&type=chunk)[608](index=608&type=chunk) - For U.S. investors, the company does not believe it was a Passive Foreign Investment Company (PFIC) for 2020 but notes that the determination is factual and made annually, and PFIC classification would result in adverse U.S. federal income tax consequences[617](index=617&type=chunk)[620](index=620&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=114&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are foreign exchange risk and interest rate risk, and since all revenues and expenses are in RMB, the main foreign exchange risk relates to the translation of the RMB-denominated business value into the U.S. dollar-traded ADSs, with the company beginning to use derivative financial instruments to hedge this exposure in January 2021, and interest rate risk being related to income from cash and investments held in interest-bearing accounts and products - The company's primary market risk is foreign exchange risk, as its business is denominated in RMB while its ADSs are traded in USD, and the company started using derivatives to hedge this risk in January 2021[639](index=639&type=chunk) - As of December 31, 2020, the company held **RMB 1.50 billion** in RMB-denominated cash and short-term investments and **US$948.3 million** in USD-denominated cash and short-term investments[641](index=641&type=chunk) [ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](index=115&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section details the fees and charges applicable to holders of the company's American Depositary Shares (ADSs), including fees for issuance, cancellation, and cash distributions, as well as expenses related to currency conversion and other administrative services performed by the depositary bank, and in 2020, the company received **US$682,000** from the depositary for expenses related to maintaining the ADS program - ADS holders are subject to various service fees payable to the depositary bank, such as up to **US$0.05** per ADS for issuance, cancellation, and cash distributions[644](index=644&type=chunk)[645](index=645&type=chunk) - The company received **US$682,000** from the depositary in 2020 as reimbursement for expenses related to the ADS program[650](index=650&type=chunk) PART II [ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](index=116&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) This section confirms there have been no material modifications to the rights of security holders, and it also details the use of proceeds from the June 2019 Initial Public Offering, with the company receiving net proceeds of **US$196.3 million**, and as of December 31, 2020, **US$30.0 million** had been used for general corporate purposes, including technology, marketing, and working capital, with the remainder held in wealth management products and bank accounts - The company raised net proceeds of **US$196.3 million** from its June 2019 IPO[653](index=653&type=chunk) - As of December 31, 2020, **US$30.0 million** of the IPO proceeds had been used for general corporate purposes, with the remaining balance invested in wealth management products and held in bank accounts[654](index=654&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=117&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2020, and management also assessed the internal control over financial reporting using the COSO framework and concluded it was effective, with the independent registered public accounting firm, Deloitte Touche Tohmatsu, issuing an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2020 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[656](index=656&type=chunk) - Management assessed internal control over financial reporting based on the COSO framework and concluded it was effective as of December 31, 2020[661](index=661&type=chunk) - The independent auditor issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[665](index=665&type=chunk) [ITEM 16.A-G. Corporate Governance and Other Information](index=119&type=section&id=ITEM%2016) This section covers various corporate governance topics, with the board determining that Xin Fan is an audit committee financial expert, and the company adopting a code of ethics applicable to all personnel, with principal accountant fees totaling **RMB 31.1 million** in 2020, and the company repurchasing **US$39.8 million** of its shares in May 2020, and the CEO announcing an intention to purchase up to **US$50 million** of shares in March 2021, and as a foreign private issuer and a 'controlled company,' GSX follows certain home country governance practices, which may differ from NYSE standards - The board has designated independent director Xin Fan as the audit committee financial expert[672](index=672&type=chunk) Principal Accountant Fees (Deloitte) | Fee Type | 2019 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Audit fees | 11,080 | 13,960 | | Audit related fees | — | 13,586 | | Tax fees | 1,276 | 1,776 | | All other fees | — | 1,743 | - In May 2020, the company repurchased approximately **1.1 million** ADSs for **US$39.8 million**, and in March 2021, CEO Larry Xiangdong Chen announced his intent to personally purchase up to **US$50 million** of company shares[678](index=678&type=chunk) - The company is a 'controlled company' under NYSE rules due to the CEO's majority voting power and follows certain home country corporate governance practices, which may offer less protection to shareholders than U.S. domestic standards[679](index=679&type=chunk)[680](index=680&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=121&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the audited consolidated financial statements for GSX Techedu Inc. for the fiscal years ended December 31, 2018, 2019, and 2020, prepared in accordance with U.S. GAAP, including the report of the independent registered public accounting firm, Deloitte Touche Tohmatsu, which issued an unqualified opinion, and the report highlights revenue recognition as a critical audit matter due to the high volume of transactions processed through the company's IT systems [Report of Independent Registered Public Accounting Firm](index=125&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte Touche Tohmatsu Certified Public Accountants LLP issued an unqualified opinion on the company's consolidated financial statements for the three years ended December 31, 2020, stating they present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP, and the firm also issued an unqualified opinion on the effectiveness of internal control over financial reporting, with revenue recognition for online tutoring services identified as a Critical Audit Matter due to the high volume of transactions and reliance on IT systems - The independent auditor, Deloitte, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[690](index=690&type=chunk)[691](index=691&type=chunk) - Revenue recognition for online tutoring services was identified as a Critical Audit Matter, due to the high volume of transactions and the audit's heavy reliance on the company's IT systems for verifying the occurrence of transactions and service delivery[696](index=696&type=chunk)[697](index=697&type=chunk) [Consolidated Financial Statements](index=127&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, with total assets of **RMB 10.7 billion** and liabilities of **RMB 5.0 billion** as of December 31, 2020, and for the year 2020, the company generated net revenues of **RMB 7.1 billion** but incurred a net loss of **RMB 1.4 billion**, and the notes to the financial statements provide further detail on accounting policies, including the consolidation of the VIE, revenue recognition methods, and share-based compensation Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Account | Amount (RMB thousands) | | :--- | :--- | | Cash and cash equivalents | 355,224 | | Short-term investments | 7,331,268 | | **Total Assets** | **10,685,792** | | Deferred revenue, current | 2,724,614 | | **Total Liabilities** | **4,955,937** | | **Total Shareholders' Equity** | **5,729,855** | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2020) | Account | Amount (RMB thousands) | | :--- | :--- | | Net revenues | 7,124,744 | | Cost of revenues | (1,762,548) | | **Gross profit** | **5,362,196** | | Selling expenses | (5,816,214) | | **Loss from operations** | **(1,755,033)** | | **Net loss** | **(1,392,930)** | - The company's VIE and its subsidiaries accounted for **33.02%** of the Group's consolidated total assets and **83.14%** of its consolidated total liabilities as of December 31, 2020[741](index=741&type=chunk)

GSX Techedu Inc. (GSX) Q4 2020 Earnings Conference Call March 5, 2021 8:00 AM ET Company Participants Sandy Qin - Senior Manager-Investor Relations Larry Xiangdong Chen - Chief Executive Officer Shannon Shen - Chief Financial Officer Conference Call Participants Mark Li - Citigroup Inc. Christine Cho - Goldman Sachs & Co. DS Kim - JPMorgan Chase & Co. Alex Xie - Credit Suisse Felix Liu - UBS Securities Co., Ltd. Operator Ladies and gentlemen, thank you for standing by, and welcome to the GSX Techedu, Inc. F ...

GSX Techedu Inc. (GSX) Q3 2020 Earnings Conference Call November 20, 2020 8:00 AM ET Company Participants Sandy Qin - Senior Manager-Investor Relations Larry Chen - Founder, Chairman and Chief Executive Officer Shannon Shen - Chief Financial Officer Conference Call Participants Gregory Zhao - Barclays Mark Li - Citi Maggie Zheng - Haitong International Felix Liu - UBS D. S. Kim - JPMorgan Tian Hou - T.H. Capital Alex Xie - Credit Suisse Operator Ladies and gentlemen, thank you for standing by, and welcome t ...

GSX Techedu, Inc. (GSX) Q2 2020 Earnings Conference Call September 2, 2020 8:00 AM ET Company Participants Sandy Qin - Investor Relations Senior Manager Larry Chen - Chairman, and Chief Executive Officer Shannon Shen - Chief Financial Officer Conference Call Participants Gregory Zhao - Barclays Capital Alex Xie - Credit Suisse Mark Li - Citi Mengqi Zheng - Haitong International Securities Group Limited Felix Liu - UBS Operator Ladies and gentlemen, thank you for standing by, and welcome to the GSX Techedu ...

Financial Data and Key Metrics Changes - For Q1 2020, the company achieved a net revenue of RMB1.298 billion, representing a 382% year-over-year increase [14] - Gross billings reached RMB1.374 billion, a 358% growth year-over-year [15] - GAAP net income was RMB148 million, while non-GAAP net income increased by 406% year-over-year to RMB190.7 million [26] Business Line Data and Key Metrics Changes - K-12 revenue grew by 448% year-over-year to RMB1.12 billion, accounting for 86% of net revenues [17] - Paid enrollments for K-12 courses increased by 315% year-over-year to 647,000 [18] - Revenue from foreign language, professional, and interest courses rose by 188% year-over-year to RMB174 million, representing 13% of net revenues [19] Market Data and Key Metrics Changes - The primary school segment showed the fastest growth among K-12 segments, indicating a healthier student structure [10] - Average enrollments per class increased from 1,700 in Q4 2019 to around 2,000 in Q1 2020 [19] - The company noted that the majority of new enrollments were first-time students, which is crucial for future revenue growth [15] Company Strategy and Development Direction - The company plans to continue investing in customer acquisition, technology development, and talent recruitment to enhance operational efficiency [11] - A two-year stock buyback program of up to $150 million was announced, reflecting management's confidence in long-term development [32] - The company aims to maintain profitability while expanding marketing expenses to secure new customers [11] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a strong retention rate for new students acquired during the pandemic [42] - The company noted that operational metrics such as student engagement and homework submission rates reached historical highs during Q1 [42] - Management expects revenue for Q2 to be between RMB1.526 billion and RMB1.556 billion, representing a year-over-year increase of 331% to 340% [32] Other Important Information - The company donated RMB20 million worth of courses to students in Wuhan during the COVID-19 outbreak [6] - Selling expenses increased to RMB757.2 million, up from RMB99.5 million in Q1 2019, reflecting the company's investment in marketing [22] - Research and development expenses rose by 227% year-over-year to RMB99.4 million, indicating a focus on content and technology development [23] Q&A Session Summary Question: What is the percentage of brand spending in GSX's sales and marketing expenses? - Management noted that sales and marketing expenses are over seven times that of the same period last year, with a focus on building brand awareness [36] Question: Is there a referral mechanism for existing customers? - Management acknowledged that many new enrollments come from word-of-mouth referrals, but specific data could not be disclosed [39] Question: What is the plan for hiring more tutors? - The company plans to hire over 10,000 tutors to support its growth, emphasizing the importance of attracting top talent for better service [40] Question: How will the company adjust course offerings due to school rescheduling? - Management indicated that they would adjust course schedules and potentially add short-term courses to cater to students' needs [48] Question: Can you provide enrollment and revenue breakdown for primary, secondary, and high school segments? - Management highlighted that the primary school segment has shown the largest growth and strategic significance, with plans to continue improving course offerings in this area [50]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITI ...

GSX Techedu, Inc. (GSX) Q4 2019 Results Earnings Conference Call February 18, 2020 8:00 AM ET Company Participants Sandy Qin - Head of Investor Relations Larry Chen - Chairman and CEO Nan Shen - CFO Conference Call Participants Mark Li - Citi Christine Cho - Goldman Sachs Gregory Zhao - Barclays Felix Liu - UBS Alex Xie - Credit Suisse Operator Ladies and gentlemen, thank you for standing by and welcome to the GSX Techedu Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. [Operator Instructions] ...