Revenue Growth - Net revenues increased by 43.6% to RMB1,009.8 million in Q2 2024 compared to RMB703.1 million in Q2 2023[2][7] - Total net revenues for Q3 2024 are expected to be between RMB1,188 million and RMB1,208 million, representing a 50.5% to 53.0% year-over-year increase[16] - Net revenues for the six months ended June 30, 2024, were RMB1,956,682 thousand, compared to RMB1,410,386 thousand for the same period in 2023[30] - Net revenues for Q2 2024 increased to RMB 1,009,797 (USD 138,953), up 43.7% from RMB 703,094 in Q2 2023[31] Gross Billings - Gross billings surged by 87.4% to RMB1,653.7 million in Q2 2024 from RMB882.3 million in Q2 2023[2][3] - Gross billings for Q2 2024 reached RMB 1,653,692 (USD 227,555), an 87.4% increase from RMB 882,325 in Q2 2023[31] - Gross billings for H1 2024 increased to RMB 2,383,052 (USD 327,919), up 67.7% from RMB 1,421,276 in H1 2023[32] Profit and Loss - Net loss was RMB429.6 million in Q2 2024, compared to a net income of RMB56.2 million in Q2 2023[2][13] - Net loss for the six months ended June 30, 2024, was RMB441,847 thousand, compared to a net income of RMB170,014 thousand for the same period in 2023[30] - Net loss for Q2 2024 was RMB 429,550 (USD 59,108), compared to a net income of RMB 56,161 in Q2 2023[34] - Net loss for H1 2024 was RMB 441,847 (USD 60,801), compared to a net income of RMB 170,014 in H1 2023[34] Gross Profit - Gross profit margin decreased to 69.0% in Q2 2024 from 73.8% in Q2 2023[9] - Gross profit for the six months ended June 30, 2024, was RMB1,371,835 thousand, compared to RMB1,066,024 thousand for the same period in 2023[30] - Gross profit for Q2 2024 was RMB 696,364 (USD 95,823), a 34.2% increase from RMB 518,714 in Q2 2023[34] - Gross profit for H1 2024 was RMB 1,371,835 (USD 188,770), a 28.7% increase from RMB 1,066,024 in H1 2023[34] Non-GAAP Metrics - Non-GAAP gross profit, non-GAAP income (loss) from operations, and non-GAAP net income (loss) exclude share-based compensation expenses, which the company believes provides meaningful supplemental information regarding its performance and liquidity[22] - Non-GAAP gross profit for Q2 2024 was RMB 696,321 (USD 95,817), up 33.3% from RMB 522,299 in Q2 2023[34] - Non-GAAP net loss for Q2 2024 was RMB 418,040 (USD 57,524), compared to a non-GAAP net income of RMB 63,159 in Q2 2023[34] - Non-GAAP gross profit for H1 2024 was RMB 1,374,113 (USD 189,083), up 28.0% from RMB 1,073,599 in H1 2023[34] Operating Expenses - Operating expenses increased by 144.2% to RMB1,161.1 million in Q2 2024 from RMB475.4 million in Q2 2023[10] Cash Flow and Liquidity - Net operating cash inflow increased by 33.8% to RMB386.2 million in Q2 2024 from RMB288.5 million in Q2 2023[2][14] - Cash and cash equivalents increased from RMB636,052 thousand as of December 31, 2023, to RMB1,414,853 thousand as of June 30, 2024[25] Deferred Revenue - Deferred revenue reached RMB1.6 billion as of June 30, 2024, a 71.5% increase from the same period last year[5] Share Repurchase - The company repurchased approximately 7.9 million ADSs for approximately US$27.0 million under its share repurchase program as of August 26, 2024[15] Currency and Geographic Focus - The company primarily conducts its business in China, with revenues predominantly denominated in RMB, and uses an exchange rate of RMB7.2672 to USD1.0000 for currency conversions[24] Assets and Liabilities - Total current assets increased from RMB3,586,707 thousand as of December 31, 2023, to RMB3,830,532 thousand as of June 30, 2024[25] - Total liabilities increased from RMB1,973,284 thousand as of December 31, 2023, to RMB2,604,074 thousand as of June 30, 2024[25] Earnings Per Share - Basic net loss per ADS for the six months ended June 30, 2024, was RMB1.71, compared to a net income per ADS of RMB0.65 for the same period in 2023[30]

Core Viewpoint - Gaotu Techedu Inc. reported significant growth in net revenues and gross billings for the second quarter of 2024, despite incurring substantial operational losses, indicating a strong market demand for its educational services [1][2][6]. Financial Performance - Net revenues for Q2 2024 reached RMB1,009.8 million, a 43.6% increase from RMB703.1 million in Q2 2023 [2][3]. - Gross billings for Q2 2024 were RMB1,653.7 million, up 87.4% from RMB882.3 million in the same period last year [2][3]. - The company reported a loss from operations of RMB464.8 million, compared to an income of RMB43.3 million in Q2 2023 [2][3]. - Net loss for Q2 2024 was RMB429.6 million, a significant decline from a net income of RMB56.2 million in Q2 2023 [2][3]. - Non-GAAP net loss was RMB418.0 million, compared to a non-GAAP net income of RMB63.2 million in the same period last year [2][3]. - Net operating cash inflow increased by 33.8% to RMB386.2 million from RMB288.5 million in Q2 2023 [2][3]. Operational Insights - The cost of revenues increased by 70.0% to RMB313.4 million, primarily due to the expansion of the instructor workforce and higher costs of learning materials [9]. - Operating expenses surged by 144.2% to RMB1,161.1 million, driven by increased employee headcount and marketing expenditures [11]. - Gross profit rose by 34.3% to RMB696.4 million, but the gross profit margin decreased to 69.0% from 73.8% in Q2 2023 [10]. Business Outlook - For Q3 2024, total net revenues are expected to be between RMB1,188 million and RMB1,208 million, reflecting a year-over-year increase of 50.5% to 53.0% [17]. - Deferred revenue as of June 30, 2024, reached RMB1.6 billion, a 71.5% increase from the previous year, indicating strong future revenue support [6]. Shareholder Actions - The company has a share repurchase program authorized for up to US$80 million, with approximately 7.9 million ADSs repurchased for about US$27.0 million as of August 26, 2024 [16].

Investment Rating - The report assigns a "Buy" rating for the company, with a target price of $7.50, indicating a potential upside of 64.5% from the current price of $4.56 [1][10]. Core Insights - The company is expected to exceed revenue expectations in Q2 2024, with projected collections of 16.1 billion RMB, a year-on-year increase of 82%, driven primarily by the K12 business, which is expected to double in growth [1]. - The report anticipates a significant increase in marketing expenses due to strong collection growth and customer acquisition efforts during the summer, leading to an adjusted operating loss of 455 million RMB for Q2 2024 [1][2]. - The company is expected to maintain a high growth rate of over 60% in collections during Q3 2024, although revenue growth may be lower than collections due to various factors [1]. Financial Summary - Revenue projections for the company are as follows: 2,961 million RMB in 2023, 4,368 million RMB in 2024, 5,323 million RMB in 2025, and 6,291 million RMB in 2026, with year-on-year growth rates of 18.5%, 47.5%, 21.9%, and 18.2% respectively [3][11]. - The company is expected to incur a net loss of 675 million RMB in 2024, with a projected recovery to a profit of 237 million RMB by 2026 [3][11]. - The report highlights a significant increase in marketing expenses, projected to reach 2,684 million RMB in 2025, which will impact profitability [3][11]. Valuation - The valuation for the company's education business is adjusted to $7.50 per share based on a 20x P/E ratio for 2025, down from a previous estimate of $9.10 [2].

Core Viewpoint - The recent changes in China's after-school tutoring market, particularly the government's shift in regulatory stance, are seen as positive for Gaotu Techedu (GOTU), leading to an upgrade in the stock rating to "buy" [2][11]. Industry Overview - The Chinese government has historically been inconsistent in its regulatory approach, particularly in the after-school tutoring sector, which faced a crackdown in 2021 due to concerns over "disorderly development" [3]. - The economic downturn following the real estate bubble burst has led to a significant rise in youth unemployment, reaching 21.3% in June 2023, prompting the government to reconsider its stance on the after-school tutoring industry as a potential source of employment [3][4]. Regulatory Changes - The Ministry of Education released draft regulations on February 2, 2024, which clarified rules for high school tutoring, marking the first step towards regulatory easing [4]. - On August 3, 2024, the State Council issued guidelines aimed at boosting service consumption, indirectly signaling support for the after-school tutoring sector [5]. Company Performance - GOTU's revenue is increasingly driven by non-academic tutoring services, which accounted for over 75% of total revenues in Q1 2024, reflecting a 3.5% year-over-year increase [6]. - Financial projections estimate a 30% growth rate for GOTU in 2024, with potential upside from regulatory changes not factored into the model [7]. Financial Metrics - GOTU's revenue has fluctuated significantly, with projections showing a recovery from RMB 2,961 million in 2023 to an estimated RMB 4,850 million in 2025, representing a growth rate of 30% [8]. - The company's gross margin is expected to stabilize around 72% in the coming years, with a projected net income of RMB 96 million in 2024 and RMB 243 million in 2025 [8]. Valuation - Applying a 1.2 times EV/Sales multiple to the estimated 2025 revenue suggests a target market cap of approximately USD 1,171 million, indicating a potential upside of 3.7% from the current market cap of USD 1,130 million [9].

Company Overview - Gaotu Techedu Inc. is a technology-driven education company and online large-class tutoring service provider in China, offering learning services, educational content, and digitalized learning products [3] - The company utilizes an online live large-class format to deliver courses, aiming to effectively disseminate high-quality teaching resources to students in China [3] - Big data analytics is integrated into the company's operations to enhance teaching delivery, improve student learning experiences, and increase operational efficiency [3] Financial Reporting - Gaotu will report its financial results for the second quarter ended June 30, 2024, before U.S. markets open on August 27, 2024 [1] - An earnings conference call will be held on August 27, 2024, at 8:00 AM U.S. Eastern Time, with dial-in details provided for participants [2]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of $9.5, representing a 67% upside from the previous closing price [1][4]. Core Insights - The company reported a revenue of 947 million RMB for FY24Q1, a year-on-year increase of 33.9%, exceeding the company's guidance of 908-928 million RMB [1]. - Non-GAAP operating profit was -62 million RMB, down from a profit of 110 million RMB in the same period last year, while Non-GAAP net profit was 3 million RMB compared to 13 million RMB last year [1]. - The company has a cash reserve of 3.8 billion RMB and no interest-bearing debt as of FY24Q1 [1]. - The K12 business segment showed strong growth, with cash revenue growth exceeding 70%, and non-academic training cash revenue more than doubling year-on-year [1]. - For FY24Q2, the company expects revenue growth of 29%-32%, with guidance of approximately 908-928 million RMB, slightly lower than Q1 due to seasonal impacts [1]. - The company is experiencing a decline in gross margin due to rapid expansion and increased sales expenses, with a gross margin of 71.3% in FY23Q4, down 6.1 percentage points year-on-year [1]. Summary by Sections Financial Performance - FY24Q1 revenue reached 947 million RMB, up 33.9% year-on-year, surpassing guidance [1]. - Non-GAAP operating profit was -62 million RMB, compared to a profit of 110 million RMB last year [1]. - Cash reserves stood at 3.8 billion RMB with no interest-bearing debt [1]. Business Segments - K12 business achieved significant growth, with cash revenue growth over 70% [1]. - Non-academic training cash revenue more than doubled year-on-year [1]. - Adult and college student business revenue accounted for nearly 20%, with a cash revenue growth of 30% [1]. Future Outlook - FY24Q2 revenue guidance is set at 29%-32%, approximately 908-928 million RMB [1]. - Cash revenue growth is expected to continue at a high rate, supporting Q3 performance [1]. Cost Structure - Gross margin decreased to 71.3% in FY23Q4, down 6.1 percentage points year-on-year due to changes in revenue mix [1]. - Sales expense ratio increased to 53.5%, up 14.3 percentage points year-on-year, driven by increased recruitment efforts [1]. - R&D expense ratio was 16%, up 2.3 percentage points year-on-year [1].

教培行业研究系列（六）：高途（GOTU.N）深度研究 在线业务趋势强劲，线下布局重回管理层擅长领域 2024年05月26日 ➢ 高途：K12在线教育领军者，“双减”后快速调整。公司成立于2014年，通过聚焦 在线直播大班课，成为国内首家实现规模化盈利的K12在线教育公司，2019年6月在美 国纽交所上市。2020年营收一度超过70亿元。“双减”后，公司组织和业务迅速调整， 剥离义务教育阶段学科培训业务（已登记为非营利机构，与上市公司完全独立），保留合 [Table_Author] 规高中业务，重点发展K9素养、成人及大学生业务。2021Q4公司净利率转正，重组成 本基本出清，账面类现金总额37亿元，为业务转型提供坚实基础。 ➢ 经营近况：营收恢复较快增长，现金收入增速加快，趋势强劲。2023年公司营收30 亿元/yoy+19%，恢复增长，在线培训收入占比仍在95%+，其中K12业务收入超20亿 元，预计增速较快，成人及大学生业务战略调整，优化盈利能力较弱的品类，已初显成效。 趋势来看，2023Q4公司现金收入创“双减”调整后新高，同增28%，2024Q1现金收入 分析师 易永坚 同增 35%，环比加快。202 ...

Gaotu Techedu Inc. (NYSE:GOTU) Q1 2024 Earnings Conference Call May 21, 2024 8:00 AM ET Company Participants Catherine Chen - Head of IR Larry Chen - Founder, Chairman and CEO Shannon Shen - CFO Conference Call Participants Alice Cai - Citi Research Jeffrey Chan - CLSA Operator Ladies and gentlemen, thank you for standing by and welcome to the Gaotu Techedu [Fourth Quarter and Fiscal Year 2023] (ph) Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note t ...

Exhibit 99.1 Gaotu Techedu Announces First Quarter 2024 Unaudited Financial Results Beijing, China, May 21, 2024 —Gaotu Techedu Inc. (NYSE: GOTU) ("Gaotu" or the "Company"), a technology-driven education company and online large-class tutoring service provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2024. First Quarter 2024 Highlights[1] • Net revenues were RMB946.9 million, increased by 33.9% from RMB707.3 million in the same period of 2023. • Gross b ...

BEIJING, May 21, 2024 /PRNewswire/ -- Gaotu Techedu Inc. (NYSE: GOTU) ("Gaotu" or the "Company"), a technology-driven education company and online large-class tutoring service provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2024.First Quarter 2024 Highlights[1]Net revenues were RMB946.9 million, increased by 33.9% from RMB707.3 million in the same period of 2023.Gross billings[2] were RMB729.4 million, increased by 35.3% from RMB539.0 million in the s ...