Gaotu Techedu Announces First Quarter 2024 Unaudited Financial Results
Gaotu Techedu (NYSE: GOTU) released its unaudited financial results for Q1 2024, showing a 33.9% year-over-year increase in net revenues to RMB946.9 million. Gross billings rose by 35.3% to RMB729.4 million. However, the company reported a loss from operations of RMB77.7 million, compared to an income of RMB95.1 million in Q1 2023. Net loss was RMB12.3 million, a significant decline from the net income of RMB113.9 million in the same period last year. Operating expenses soared by 66.6%, driven by increased labor and marketing costs. Despite the financial loss, the company holds a strong cash position of RMB3.8 billion. Gaotu remains optimistic about its strategic investments and customer acquisition initiatives. The company expects Q2 2024 net revenues to be between RMB908 million and RMB928 million, reflecting a year-over-year increase of 29.1% to 32.0%.
- Net revenues increased by 33.9% to RMB946.9 million year-over-year.
- Gross billings grew by 35.3% to RMB729.4 million.
- Strong cash position of RMB3.8 billion.
- Anticipated Q2 2024 net revenues between RMB908 million and RMB928 million, up 29.1% to 32.0% year-over-year.
- Interest income and realized gains from investments increased to RMB25.2 million from RMB24.0 million.
- Other income, net was RMB43.7 million, compared to RMB12.1 million in Q1 2023.
- Loss from operations was RMB77.7 million, compared to an income of RMB95.1 million in Q1 2023.
- Net loss of RMB12.3 million, compared to a net income of RMB113.9 million in Q1 2023.
- Non-GAAP net income decreased by 97.7% to RMB3.0 million.
- Operating expenses increased by 66.6%, primarily due to higher labor and marketing costs.
- Gross profit margin decreased to 71.3% from 77.4% in Q1 2023.
- Net operating cash outflow was RMB197.4 million.
Insights
Gaotu Techedu's Q1 2024 financial results reveal a mixed bag of performance metrics. Net revenues experienced a solid increase of
One notable concern is the spike in operating expenses, which surged by
Despite these challenges, the company has a strong liquidity position with
From an investment perspective, while revenue growth is promising, the increased costs and resulting losses are concerns. Investors should monitor how Gaotu manages its expenses and whether it can translate its revenue growth into profitability.
Rating: 0
Gaotu's impressive revenue and gross billings growth reflect a strong market demand for online education in China. A 33.9% increase in net revenues and a 35.3% increase in gross billings signify that the company has successfully expanded its customer base and product offerings.
However, the decreasing gross profit margin (71.3% from 77.4%) and the steep rise in operating expenses pose questions about the sustainability of this growth. The rising costs associated with labor, marketing and R&D indicate that Gaotu is heavily investing in its future capabilities and market presence. This could pay off long-term but poses short-term profitability challenges.
The company's strategic approach of broadening its customer acquisition channels and optimizing teaching processes could enhance user experience and retention, potentially leading to higher revenues in the future. However, the current financial strain may limit their ability to execute these strategies effectively.
For retail investors, it is important to weigh the strong growth prospects against the near-term financial challenges. Observing how Gaotu manages its cost structure and leverages its cash reserves for strategic investments will be crucial.
Rating: 0
Gaotu's Q1 2024 results suggest an ongoing significant investment in technology and product development, as seen by the RMB151.6 million expenditure in R&D. This focus on tech-driven education solutions is essential for maintaining a competitive edge in the rapidly evolving online education market.
Investors should note that while these investments temporarily impact profit margins, they are important for long-term growth. Enhancing product offerings and integrating advanced technologies like AI and personalized learning solutions can substantially improve user engagement and learning outcomes. This strategic focus aligns with industry trends where digital transformation and innovation drive differentiation and growth.
For retail investors, the emphasis on tech development is a positive sign, indicating that Gaotu is positioning itself to capitalize on future market opportunities. However, the immediate financial impact of these investments needs to be carefully balanced against the potential returns.
Rating: 1
First Quarter 2024 Highlights[1]
- Net revenues were
RMB946.9 million , increased by33.9% fromRMB707.3 million in the same period of 2023. - Gross billings[2] were
RMB729.4 million , increased by35.3% fromRMB539.0 million in the same period of 2023. - Loss from operations was
RMB77.7 million , compared with income from operations ofRMB95.1 million in the same period of 2023. - Net loss was
RMB12.3 million , compared with net income ofRMB113.9 million in the same period of 2023. - Non-GAAP net income was
RMB3.0 million , decreased by97.7% fromRMB133.6 million in the same period of 2023. - Net operating cash outflow was
RMB197.4 million , compared withRMB216.4 million in the same period of 2023.
First Quarter 2024 Key Financial and Operating Data | |||||||||
(In thousands of RMB, except for percentages) | |||||||||
For the three months ended March 31, | |||||||||
2023 | 2024 | Pct. Change | |||||||
Net revenues | 707,292 | 946,885 | 33.9 % | ||||||
Gross billings | 538,951 | 729,360 | 35.3 % | ||||||
Income/(loss) from operations | 95,139 | (77,702) | (181.7) % | ||||||
Net income/(loss) | 113,853 | (12,297) | (110.8) % | ||||||
Non-GAAP net income | 133,595 | 3,039 | (97.7) % | ||||||
Net operating cash outflow | (216,408) | (197,435) | (8.8) % | ||||||
[1] For a reconciliation of non-GAAP numbers, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable | |||||||||
[2] Gross billings is a non-GAAP financial measure, which is defined as the total amount of cash received for the sale of course offerings in such | |||||||||
Larry Xiangdong Chen, the Company's founder, Chairman and CEO, commented, "We remained laser-focused on refining our educational product and expanding our customer acquisition channels. On the product front, we worked diligently to align our offerings more closely with user needs and made significant progress in diversifying our portfolio to better address user needs and improve learning efficiency. On the customer acquisition front, we expanded customer outreach by tapping into diverse channels, and boost acquisition efficiency by streamlining and optimizing teaching processes tailored to our product and content characteristics. Our cash position remained strong, with a total of
Gaotu is about to mark its tenth anniversary since founding. We have full confidence in our ability to provide long-term value for our users, shareholders, and society at large as we continue to contribute to and spearhead the sustainable development of
Shannon Shen, CFO of the Company, added, "We kicked off 2024 with a notable surge in growth momentum in the first quarter. Backed by ample cash reserves, we remained committed to enhancing the expansion of our core business. This was achieved by strengthening our portfolio and organizational capabilities, thereby reinforcing our leading position in brand recognition and competitive advantages. Our gross billings demonstrated robust growth, increasing by
We will actively explore and cultivate product optimization and channel innovation, further fortifying our core competitive moats and create lasting value for our shareholders."
Financial Results for the First Quarter of 2024
Net Revenues
Net revenues increased by
Cost of Revenues
Cost of revenues increased by
Gross Profit and Gross Margin
Gross profit increased by
Non-GAAP gross profit increased by
Operating Expenses
Operating expenses increased by
- Selling expenses increased to
RMB506.4 million fromRMB277.0 million in the first quarter of 2023. - Research and development expenses increased to
RMB151.6 million fromRMB97.0 million in the first quarter of 2023. - General and administrative expenses increased to
RMB95.2 million fromRMB78.2 million in the first quarter of 2023.
(Loss)/Income from Operations
Loss from operations was
Non-GAAP loss from operations was
Interest Income and Realized Gains from Investments
Interest income and realized gains from investments, on aggregate, were
Other Income, net
Other income, net was
Net (Loss)/Income
Net loss was
Non-GAAP net income was
Cash Flow
Net operating cash outflow in the first quarter of 2024 was
Basic and Diluted Net (Loss)/income per ADS
Basic and diluted net loss per ADS were both
Non-GAAP basic and diluted net income per ADS were both
Share Outstanding
As of March 31, 2024, the Company had 173,029,455 ordinary shares outstanding.
Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments
As of March 31, 2024, the Company had cash and cash equivalents, restricted cash, short-term and long-term investment of
Share Repurchase
In November 2022, the Company's board of directors authorized a share repurchase program under which the Company may repurchase up to
As of May 20, 2024, the Company had cumulatively repurchased approximately 4.9 million ADSs for approximately
In November 2022, Mr. Larry Xiangdong Chen, the Company's founder, Chairman and CEO, announced his plan to personally purchase up to
Business Outlook
Based on the Company's current estimates, total net revenues for the second quarter of 2024 are expected to be between
Conference Call
The Company will hold an earnings conference call at 8:00 AM
International: 1-412-317-6061
Mainland
Passcode: 9140044
A telephone replay will be available two hours after the conclusion of the conference call through May 28, 2024. The dial-in details are:
International: 1-412-317-0088
Passcode: 4270462
Additionally, a live and archived webcast of this conference call will be available at http://ir.gaotu.cn/.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
About Gaotu Techedu Inc.
Gaotu is a technology-driven education company and online large-class tutoring service provider in
About Non-GAAP Financial Measures
The Company uses gross billings, non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss), each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes.
The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered. For some courses, the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings have material limitations as an analytical metrics and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.
Non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.
The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Exchange Rate
The Company's business is primarily conducted in
For further information, please contact:
Gaotu Techedu Inc.
Investor Relations
E-mail: ir@gaotu.cn
Christensen
In
Ms. Vivian Wang
Phone: +852-2232-3978
E-mail: gotu@christensencomms.com
In the US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: linda.bergkamp@christensencomms.com
Gaotu Techedu Inc. | |||||||||||
Unaudited condensed consolidated balance sheets | |||||||||||
(In thousands of RMB and USD, except for share, per share and per ADS data) | |||||||||||
As of December | As of March 31, | ||||||||||
2023 | 2024 | 2024 | |||||||||
RMB | RMB | USD | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 636,052 | 1,201,452 | 166,399 | ||||||||
Restricted cash | 33,901 | 33,909 | 4,696 | ||||||||
Short-term investments | 2,253,910 | 1,588,129 | 219,953 | ||||||||
Inventory, net | 24,596 | 23,070 | 3,195 | ||||||||
Prepaid expenses and other current assets, net | 638,248 | 612,859 | 84,880 | ||||||||
Total current assets | 3,586,707 | 3,459,419 | 479,123 | ||||||||
Non-current assets | |||||||||||
Operating lease right-of-use assets | 189,662 | 273,356 | 37,859 | ||||||||
Property, equipment and software, net | 533,531 | 547,207 | 75,787 | ||||||||
Land use rights, net | 26,568 | 26,366 | 3,652 | ||||||||
Long-term investments | 1,029,632 | 974,074 | 134,908 | ||||||||
Deferred tax assets | 11,312 | 7,332 | 1,015 | ||||||||
Rental deposit | 17,742 | 23,189 | 3,212 | ||||||||
Other non-current assets | 18,155 | 18,104 | 2,507 | ||||||||
TOTAL ASSETS | 5,413,309 | 5,329,047 | 738,063 | ||||||||
LIABILITIES | |||||||||||
Current liabilities | |||||||||||
Accrued expenses and other current liabilities | 805,032 | 858,450 | 118,893 | ||||||||
Deferred revenue, current portion of the | 1,113,480 | 856,790 | 118,664 | ||||||||
Operating lease liabilities, current portion | 50,494 | 70,485 | 9,762 | ||||||||
Income tax payable (including income tax | 4,278 | 1,591 | 220 | ||||||||
Total current liabilities | 1,973,284 | 1,787,316 | 247,539 | ||||||||
Gaotu Techedu Inc. | |||||||||||
Unaudited condensed consolidated balance sheets | |||||||||||
(In thousands of RMB and USD, except for share, per share and per ADS data) | |||||||||||
As of December | As of March 31, | ||||||||||
2023 | 2024 | 2024 | |||||||||
RMB | RMB | USD | |||||||||
Non-current liabilities | |||||||||||
Deferred revenue, non-current portion of | 124,141 | 146,524 | 20,293 | ||||||||
Operating lease liabilities, non-current | 137,652 | 196,513 | 27,217 | ||||||||
Deferred tax liabilities(including deferred | 71,967 | 71,404 | 9,889 | ||||||||
TOTAL LIABILITIES | 2,307,044 | 2,201,757 | 304,938 | ||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Ordinary shares | 116 | 116 | 16 | ||||||||
Treasury stock, at cost | (85,178) | (59,973) | (8,306) | ||||||||
Additional paid-in capital | 7,987,957 | 7,978,088 | 1,104,952 | ||||||||
Accumulated other comprehensive loss | (33,209) | (15,223) | (2,108) | ||||||||
Statutory reserve | 50,225 | 50,225 | 6,956 | ||||||||
Accumulated deficit | (4,813,646) | (4,825,943) | (668,385) | ||||||||
TOTAL SHAREHOLDERS' EQUITY | 3,106,265 | 3,127,290 | 433,125 | ||||||||
TOTAL LIABILITIES AND TOTAL | 5,413,309 | 5,329,047 | 738,063 | ||||||||
Gaotu Techedu Inc. | |||||||||||
Unaudited condensed consolidated statements of operations | |||||||||||
(In thousands of RMB and USD, except for share, per share and per ADS data) | |||||||||||
For the three months ended March 31, | |||||||||||
2023 | 2024 | 2024 | |||||||||
RMB | RMB | USD | |||||||||
Net revenues | 707,292 | 946,885 | 131,142 | ||||||||
Cost of revenues | (159,982) | (271,414) | (37,590) | ||||||||
Gross profit | 547,310 | 675,471 | 93,552 | ||||||||
Operating expenses: | |||||||||||
Selling expenses | (277,021) | (506,381) | (70,133) | ||||||||
Research and development expenses | (96,977) | (151,607) | (20,997) | ||||||||
General and administrative expenses | (78,173) | (95,185) | (13,183) | ||||||||
Total operating expenses | (452,171) | (753,173) | (104,313) | ||||||||
Income/(loss) from operations | 95,139 | (77,702) | (10,761) | ||||||||
Interest income | 13,293 | 18,673 | 2,586 | ||||||||
Realized gains from investments | 10,724 | 6,552 | 907 | ||||||||
Other income, net | 12,066 | 43,697 | 6,052 | ||||||||
Income/(loss) before provision for income tax and share of | 131,222 | (8,780) | (1,216) | ||||||||
Income tax expenses | (17,369) | (3,517) | (487) | ||||||||
Net income/(loss) | 113,853 | (12,297) | (1,703) | ||||||||
Net income/(loss) attributable to Gaotu Techedu Inc.'s | 113,853 | (12,297) | (1,703) | ||||||||
Net income/(loss) per ordinary share | |||||||||||
Basic | 0.66 | (0.07) | (0.01) | ||||||||
Diluted | 0.63 | (0.07) | (0.01) | ||||||||
Net income/(loss) per ADS | |||||||||||
Basic | 0.44 | (0.05) | (0.01) | ||||||||
Diluted | 0.42 | (0.05) | (0.01) | ||||||||
Weighted average shares used in net income/(loss) per share | |||||||||||
Basic | 173,057,873 | 172,329,184 | 172,329,184 | ||||||||
Diluted | 179,607,924 | 172,329,184 | 172,329,184 | ||||||||
Note: Three ADSs represent two ordinary shares. | |||||||||||
Gaotu Techedu Inc. | |||||||||||
Reconciliations of non-GAAP measures to the most comparable GAAP measures | |||||||||||
(In thousands of RMB and USD, except for share, per share and per ADS data) | |||||||||||
For the three months ended March 31, | |||||||||||
2023 | 2024 | 2024 | |||||||||
RMB | RMB | USD | |||||||||
Net revenues | 707,292 | 946,885 | 131,142 | ||||||||
Less: other revenues(1) | 15,722 | 27,267 | 3,776 | ||||||||
Add: VAT and surcharges | 44,544 | 57,407 | 7,951 | ||||||||
Add: ending deferred revenue | 770,577 | 1,003,314 | 138,957 | ||||||||
Add: ending refund liability | 52,190 | 53,799 | 7,451 | ||||||||
Less: beginning deferred revenue | 959,333 | 1,237,621 | 171,409 | ||||||||
Less: beginning refund liability | 60,597 | 67,157 | 9,301 | ||||||||
Gross billings | 538,951 | 729,360 | 101,015 | ||||||||
Note (1): Include miscellaneous revenues generated from services other than courses. | |||||||||||
For the three months ended March 31, | |||||||||||
2023 | 2024 | 2024 | |||||||||
RMB | RMB | USD | |||||||||
Gross profit | 547,310 | 675,471 | 93,552 | ||||||||
Share-based compensation expenses(1) in cost of revenues | 3,990 | 2,321 | 321 | ||||||||
Non-GAAP gross profit | 551,300 | 677,792 | 93,873 | ||||||||
Income/(loss) from operations | 95,139 | (77,702) | (10,761) | ||||||||
Share-based compensation expenses(1) | 19,742 | 15,336 | 2,124 | ||||||||
Non-GAAP income/(loss) from operations | 114,881 | (62,366) | (8,637) | ||||||||
Net income/(loss) | 113,853 | (12,297) | (1,703) | ||||||||
Share-based compensation expenses(1) | 19,742 | 15,336 | 2,124 | ||||||||
Non-GAAP net income | 133,595 | 3,039 | 421 | ||||||||
Note (1): The tax effects of share-based compensation expenses adjustments were nil. | |||||||||||
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SOURCE Gaotu Techedu Inc.
FAQ
What were Gaotu Techedu's Q1 2024 net revenues?
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