Gaotu(US:GOTU) 2 1 Shi Ji Jing Ji Bao Dao·2025-05-17 14:03Core Viewpoint - Gaotu Education Technology Group has reported a significant turnaround in its financial performance, achieving profitability in Q1 of FY2025 after six consecutive quarters of losses, driven by aggressive investments and a strategic shift in its operational model [1][2][3]. Financial Performance - In Q1 FY2025, Gaotu's revenue reached approximately 1.5 billion RMB, marking a year-on-year growth of nearly 58%, with a net profit of 124 million RMB compared to a loss of 12.3 million RMB in the same period last year [1][4]. - The company had previously incurred losses exceeding 1.2 billion RMB over the last two years, with a total loss of over 1 billion RMB in the last quarter alone [1]. Strategic Investments - Gaotu's workforce saw a dramatic increase, with total employees rising from 7,767 at the end of 2023 to 14,381 by the end of 2024, particularly in market sales personnel, which surged from 3,516 to 6,656 [2][9]. - The aggressive hiring strategy was a response to strong demand in the K12 market, allowing the company to capitalize on market opportunities [3]. Revenue Breakdown - Learning service revenue, including non-subject training and traditional business, contributed over 95% of total revenue, with K12 non-subject training and traditional high school business accounting for over 85% of revenue, both showing significant year-on-year growth [6][7]. - Non-subject training revenue alone accounted for over 35% of total revenue, with a year-on-year growth rate in the triple digits, while traditional business revenue grew by over 35% [7]. Operational Changes - The diversification of course formats has led to a substantial increase in the number of main instructors, from 319 in 2020 to 1,692 in 2024, reflecting a shift towards online and offline small classes and one-on-one tutoring [10]. - The number of tutoring staff has decreased significantly due to changes in class formats and the efficiency gains from AI, which have reduced the need for a large number of tutors [10]. Marketing and Sales Strategy - The increase in market sales personnel indicates a shift in Gaotu's customer acquisition strategy, moving away from low-cost private traffic to more substantial external marketing investments [11]. - Sales expenses surged to 3 billion RMB in 2024, a year-on-year increase of approximately 100%, although the sales expense growth rate has moderated in the latest quarter [12]. Future Outlook - The company aims to balance expansion and profitability, with a focus on sustainable growth and efficiency improvements in 2025, as stated by the founder and CEO [12].