Gaotu Techedu Inc. Q2 FY2025 earnings call

• AI Investment: Deepened investment in AI, reshaping the teaching model to a tri-teacher model (integrating instructors, tutors, and AI companions) and embedding AI across corporate operations. - New Products: Introduced products like Gaotu Reading App, The Legend of Gao Xiaotu, Maodo Love Learning, and an AI flash learning model. - Lifelong Learning Platform: Comprehensive product portfolio covering various learning scenarios, with broad user coverage and cross-category conversions. - Social Responsibility: Allocated nearly RMB 557 million to repurchase ADS and partnered with top-tier universities via the Gaotu Foundation for career support.

Learning services contributed over 95% of net revenues. Over 85% of total revenues came from academic tutoring services and other traditional learning services, which increased by 50% year over year. Combined gross billings from these two segments grew by over 40% year over year. Non-academic tutoring services in online and offline settings had strong growth, with gross billings up by over 100% year over year and net revenues from this segment recording three-digit growth, contributing nearly 40% of total revenues. Offline learning center revenue grew by more than 20% year over year and contributed over 5% of gross billings this quarter.

• Total net revenues for the third quarter of 2025 are expected to be between RMB 1.5 billion and RMB 1.578 billion, representing a year-over-year increase of 28.9% to 30.6%. - The full-year revenue growth is expected to exceed 40%, surpassing the initial upper limit set at the beginning of the year.

Forward-looking statements are based on current beliefs and expectations, involving known or unknown risks, uncertainties, and factors beyond the company's control that may cause actual results to differ materially from forward-looking statements. Further information on risks is in the company's public filings with the U.S. SEC.

Q: Please provide the latest update on the offline business, including operating metrics and future growth targets.

A: Shannon Shen stated offline learning center revenue grew by more than 20% year over year and contributed over 5% of gross billings. Leverages in-person interaction to build trust, extends online content for offline localization, benefits from brand recognition, and integrates online and offline channels. Cities and learning centers entered are performing well.

Q: Could you share more on summer enrollment and full-year growth outlook?

A: Shannon Shen mentioned summer retention rate improved, ROI in the second quarter increased to 2.75% (38.6% yoy growth). Q3 revenue guidance is positive, and full-year revenue growth is expected to exceed 40%, surpassing initial upper limits.