Q2 2026 Gaotu Techedu Inc. Earnings Call Transcript
Key Points
- Gaotu Techedu Inc (GOTU) reported a 20.2% year-over-year increase in net revenues to nearly RMB1.7 billion, with gross billings up 19.4% to approximately RMB2.7 billion.
- The company significantly narrowed its adjusted operating loss and adjusted net loss by 38.5% and 37.6% year-over-year, respectively, while operating expenses as a percentage of net revenues declined by 7 percentage points.
- Gaotu Techedu Inc (GOTU) saw a 46.3% year-over-year increase in net operating cash inflow to RMB861.2 million, and cash reserves totaled nearly RMB4.0 billion as of June 30, 2026.
- The online non-academic tutoring segment remained profitable, with retention rates for spring enrollments improving by over 5 percentage points year-over-year.
- Gaotu Techedu Inc (GOTU) reported strong growth in its offline business, with revenue up high double-digits year-over-year in the first half of 2026, and its two Dream Centers reached full capacity, demonstrating scalability.
- AI integration improved content development efficiency by 5-8 times in certain scenarios and enhanced tutor productivity, with new tutor productivity up over 20% year-over-year.
- The company's traditional business saw gross billings increase over 16% year-over-year, and the college learning and civil service exam preparation businesses combined grew revenue and gross billings by over 40% year-over-year.
- Gaotu Techedu Inc (GOTU) continued its share repurchase program, buying back nearly 36.5 million ADSs for RMB741.8 million as of August 26, 2026.
- Gaotu Techedu Inc (GOTU) still reported a net loss of RMB135.8 million and a non-GAAP net loss of RMB129.1 million for the quarter, indicating ongoing profitability challenges.
- The company's operating loss margin was 9.0%, and non-GAAP operating loss margin was 8.6%, reflecting continued operational losses despite improvements.
- Selling expenses increased 11.2% year-over-year to RMB913.2 million, accounting for 54.7% of net revenues, which remains a high cost burden.
- The offline business expansion is capital-intensive and front-loaded, with management noting that it takes time for cities to mature and achieve profitability, posing a risk to near-term margins.
- The company's revenue growth guidance for Q3 2026 (16.4% to 17.7% year-over-year) is slower than the 20.2% growth achieved in Q2, indicating a potential deceleration.
- Despite improvements, the company's overall profitability is still negative, and the path to sustained profitability remains uncertain, especially with ongoing investments in new initiatives.
- The company's reliance on AI and technology integration may require significant ongoing R&D investments, which could pressure margins if not fully offset by efficiency gains.
Hello, ladies and gentlemen. Thank you for standing by and welcome to the Gaotu Techedu Inc. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Catherine Chen, Head of Investor Relations. Please go ahead, Catherine.
Thank you, and good evening, everyone. Thank you for joining Gaotu's second quarter 2026 earnings conference call. My name is Catherine, and I'll help host the earnings call today. Gaotu's earnings release for the quarter was distributed. And it's available on the company's IR website at ir.gaotu.cn, as well as through PR Newswire services. Joining the call with me tonight from Gaotu senior management is Mr. Larry Chen, Gaotu's Founder, Chairman, and Chief Executive Officer Mr. Robin Luo, Gaotu's Chief Operating Officer Mr. Mike Xu, Gaotu's Head
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