Gaotu Techedu Announces Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results
- Increased net revenues by 20.9% to RMB761.0 million in Q4 2023 compared to the previous year.
- Gross billings rose by 28.1% to RMB1,278.1 million in Q4 2023.
- Loss from operations significantly increased to RMB187.9 million in Q4 2023.
- Net loss of RMB119.6 million in Q4 2023 compared to a net income of RMB70.6 million in the same period of 2022.
- Non-GAAP net loss of RMB104.0 million in Q4 2023 compared to a non-GAAP net income of RMB87.4 million in the same period of 2022.
- Net operating cash inflow increased by 3.1% to RMB491.5 million in Q4 2023.
- None.
Insights
The reported increase in net revenues and gross billings for Gaotu Techedu Inc. indicates a growing demand for its educational services, which is a positive signal for the company's top-line growth. However, the substantial increase in loss from operations and shift from a net income to a net loss year-over-year is concerning. This points to significant operational challenges or increased investment in growth that has yet to yield profitability. Stakeholders should evaluate the sustainability of the company's growth strategy and whether the increased losses are indicative of a strategic investment in market expansion or a sign of deeper operational inefficiencies.
Furthermore, the slight increase in net operating cash inflow, despite the net loss, suggests that the company's cash management may be effective, or there could be timing differences in cash flows. Investors should scrutinize the cash flow statement to understand the underlying reasons for this discrepancy. A detailed analysis of the company's cost structure and the competitive landscape of online education in China is also crucial to assess the long-term viability of Gaotu's business model.
The education technology sector in China has been under regulatory scrutiny, which adds a layer of risk to companies like Gaotu Techedu Inc. The reported figures reflect the company's ability to grow its revenue despite a challenging environment, which may be indicative of strong market demand or successful adaptation to regulatory changes. The increase in gross billings is a testament to the company's sales efforts and could be a result of expanded course offerings or successful marketing strategies.
However, the significant operational loss raises questions about the cost-effectiveness of these strategies. It is important for investors to consider the broader industry trends, including regulatory impacts, competitive pressures and consumer preferences, as these will play a critical role in shaping the company's future. An analysis of the company's customer acquisition costs and lifetime value of customers would provide further insights into the efficiency of its growth strategy.
From an economic perspective, the performance of Gaotu Techedu Inc. must be contextualized within the broader economic conditions of China, particularly the education sector. The increase in net revenues aligns with the growing middle class's demand for quality education. However, the transition from net income to net loss may reflect macroeconomic pressures, such as rising costs or decreased consumer spending power, which could affect the company's profitability in the long term.
The reported financials also suggest a potential for scalability, as evidenced by the revenue growth. Yet, the ability to achieve economies of scale is crucial and will depend on the company's capacity to manage costs effectively. Investors should monitor economic indicators such as consumer spending, disposable income and education policy changes, as these can significantly influence Gaotu's operational performance and future outlook.
Fourth Quarter 2023 Highlights[1]
- Net revenues were
RMB761.0 million , increased by20.9% fromRMB629.6 million in the same period of 2022. - Gross billings[2] were
RMB1,278.1 million , increased by28.1% fromRMB997.4 million in the same period of 2022. - Loss from operations was
RMB187.9 million , compared withRMB13.2 million in the same period of 2022. - Net loss was
RMB119.6 million , compared with net income ofRMB70.6 million in the same period of 2022. - Non-GAAP net loss was
RMB104.0 million , compared with non-GAAP net income ofRMB87.4 million in the same period of 2022. - Net operating cash inflow was
RMB491.5 million , increased by3.1% fromRMB476.7 million in the same period of 2022.
Fourth Quarter 2023 Key Financial and Operating Data | |||||||||
For the three months ended December 31, | |||||||||
2022 | 2023 | Pct. Change | |||||||
Net revenues | 629,631 | 761,014 | 20.9 % | ||||||
Gross billings | 997,439 | 1,278,132 | 28.1 % | ||||||
Loss from operations | (13,248) | (187,915) | 1,318.4 % | ||||||
Net income/(loss) | 70,613 | (119,649) | (269.4) % | ||||||
Non-GAAP net income/(loss) | 87,392 | (103,970) | (219.0) % | ||||||
Net operating cash inflow | 476,698 | 491,493 | 3.1 % | ||||||
[1] For a reconciliation of non-GAAP numbers, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" at the end of this press release. Non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses. |
[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 period, net of the total amount of refunds in such period. See "About Non-GAAP Financial Measures" and "Reconciliations of non-GAAP measures to the most comparable GAAP measures" elsewhere in this press release. |
Fiscal Year Ended December 31, 2023 Highlights
- Net revenues were
RMB2,960.8 million , increased by18.5% fromRMB2,498.2 million in the same period of 2022. - Gross billings were
RMB3,338.8 million , increased by31.7% fromRMB2,534.2 million in the same period of 2022. - Loss from operations was
RMB149.0 million , compared withRMB118.1 million in the same period of 2022. - Net loss was
RMB7.3 million , compared with net income ofRMB13.2 million in the same period of 2022. - Non-GAAP net income was
RMB51.1 million , compared withRMB135.8 million in the same period of 2022. - Net operating cash inflow was
RMB353.7 million , increased by548.4% fromRMB54.5 million in the same period of 2022.
Fiscal Year 2023 Key Financial and Operating Data (In thousands of RMB, except for percentages) | |||||||||
Fiscal Year ended December 31, | |||||||||
2022 | 2023 | Pct. Change | |||||||
Net revenues | 2,498,214 | 2,960,813 | 18.5 % | ||||||
Gross billings | 2,534,244 | 3,338,750 | 31.7 % | ||||||
Loss from operations | (118,052) | (149,006) | 26.2 % | ||||||
Net income/(loss) | 13,172 | (7,298) | (155.4) % | ||||||
Non-GAAP net income | 135,826 | 51,055 | (62.4) % | ||||||
Net operating cash inflow | 54,545 | 353,697 | 548.4 % | ||||||
Larry Xiangdong Chen, the Company's founder, Chairman and CEO, commented, " During the past quarter, we continued to bolster our core business strengths while simultaneously pushing the boundaries of new initiatives. We observed a notable uptick in demand for high-quality educational products and learning services and our deep industry insights, exceptional organizational capabilities and well-established teacher recruitment and training systems have provided a robust foundation for the sustainable development of our business. Our net revenues increased
We have full confidence in Gaotu's prospects for 2024 and for the further future. Moving forward, we believe that we can achieve promising topline growth while enhancing profitability by consistently delivering top-notch educational products and learning services, thus generating long-term value for both our shareholders and society."
Shannon Shen, CFO of the Company, added, " During the quarter, our business entered a healthy phase of rapid and sustainable expansion. Our traditional learning services continue to maintain a leading edge in the online space while our new initiatives focused on non-academic tutoring services have shown excellent growth momentum. For the full year of 2023, the gross billings for traditional services combined with new initiatives achieved nearly
By strengthening our core competencies, we were able to swiftly deploy resources based on changes in the market environment and user demand. We will continue to execute stock buybacks in accordance with the guidance of the board of directors, and create long-term value for our shareholders."
Financial Results for the Fourth Quarter of 2023
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
RMB465.7 million fromRMB289.8 million in the fourth quarter of 2022. - Research and development expenses increased to
RMB136.0 million fromRMB111.4 million in the fourth quarter of 2022. - General and administrative expenses increased to
RMB119.5 million fromRMB82.4 million in the fourth quarter of 2022.
(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
Other income was
Net (Loss)/income
Net loss was
Non-GAAP net loss was
Cash Flow
Net operating cash inflow in the fourth quarter of 2023 was
Basic and Diluted Net Loss per ADS
Basic and diluted net loss per ADS were both
Non-GAAP basic and diluted net loss per ADS were both
Share Outstanding
As of December 31, 2023, the Company had 172,111,890 ordinary shares outstanding.
Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments and Withdrawable Cash Balance on Third-party Payment Platforms
As of December 31, 2023, the Company had cash and cash equivalents, restricted cash, short-term and long-term investments and withdrawable cash balance on third-party payment platforms of
Withdrawable cash balance on third-party payment platforms consisted of cash payments received from students but held by third-party payment platforms such as WeChat Pay and Alipay, which are highly liquid and can be quickly converted into cash and cash equivalents.
Financial Results for the Fiscal Year of 2023
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
RMB1,501.2 million fromRMB1,179.8 million in 2022. - Research and development expenses increased to
RMB462.0 million fromRMB445.1 million in 2022. - General and administrative expenses increased to
RMB356.4 million fromRMB290.3 million in 2022.
(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
Other income was
Net (Loss)/income
Net loss was
Non-GAAP net income was
Cash Flow
Net operating cash inflow in 2023 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 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 December 31, 2023, 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 first 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: 4247479
A telephone replay will be available two hours after the conclusion of the conference call through March 5, 2024. The dial-in details are:
International: 1-412-317-0088
Passcode: 8489727
Additionally, a live and archived webcast of this conference call will be available at http://ir.gaotu.cn/home.
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 December 31, | ||||||||||
2022 | 2023 | 2023 | |||||||||
RMB | RMB | USD | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 819,911 | 636,052 | 89,586 | ||||||||
Restricted cash | 22 | 33,901 | 4,775 | ||||||||
Short-term investments | 2,923,864 | 2,253,910 | 317,457 | ||||||||
Inventory, net | 22,783 | 24,596 | 3,464 | ||||||||
Prepaid expenses and other current assets | 399,897 | 638,248 | 89,895 | ||||||||
Total current assets | 4,166,477 | 3,586,707 | 505,177 | ||||||||
Non-current assets | |||||||||||
Operating lease right-of-use assets | 83,663 | 189,662 | 26,713 | ||||||||
Property, equipment and software, net | 552,032 | 533,531 | 75,146 | ||||||||
Land use rights, net | 27,373 | 26,568 | 3,742 | ||||||||
Long-term investments | - | 1,029,632 | 145,021 | ||||||||
Deferred tax assets | 15,679 | 11,312 | 1,593 | ||||||||
Rental deposit | 9,502 | 17,742 | 2,499 | ||||||||
Other non-current assets | 21,449 | 18,155 | 2,557 | ||||||||
TOTAL ASSETS | 4,876,175 | 5,413,309 | 762,448 | ||||||||
LIABILITIES | |||||||||||
Current liabilities | |||||||||||
Accrued expenses and other current liabilities | 662,189 | 805,032 | 113,386 | ||||||||
Deferred revenue, current portion of the | 906,914 | 1,113,480 | 156,830 | ||||||||
Operating lease liabilities, current portion | 38,326 | 50,494 | 7,112 | ||||||||
Income tax payable (including income tax | 1,793 | 4,278 | 603 | ||||||||
Total current liabilities | 1,609,222 | 1,973,284 | 277,931 | ||||||||
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 December 31, | ||||||||||
2022 | 2023 | 2023 | |||||||||
RMB | RMB | USD | |||||||||
Non-current liabilities | |||||||||||
Deferred revenue, non-current portion of | 52,419 | 124,141 | 17,485 | ||||||||
Operating lease liabilities, non-current | 44,198 | 137,652 | 19,388 | ||||||||
Deferred tax liabilities(including deferred | 74,507 | 71,967 | 10,136 | ||||||||
TOTAL LIABILITIES | 1,780,346 | 2,307,044 | 324,940 | ||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Ordinary shares | 115 | 116 | 16 | ||||||||
Treasury stock, at cost | - | (85,178) | (11,997) | ||||||||
Additional paid-in capital | 7,915,899 | 7,987,957 | 1,125,080 | ||||||||
Accumulated other comprehensive loss | (64,062) | (33,209) | (4,677) | ||||||||
Statutory reserve | 40,380 | 50,225 | 7,074 | ||||||||
Accumulated deficit | (4,796,503) | (4,813,646) | (677,988) | ||||||||
TOTAL SHAREHOLDERS' EQUITY | 3,095,829 | 3,106,265 | 437,508 | ||||||||
TOTAL LIABILITIES AND TOTAL | 4,876,175 | 5,413,309 | 762,448 | ||||||||
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 December 31, | For the year ended December 31, | ||||||||||||||||||||||
2022 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||
RMB | RMB | USD | RMB | RMB | USD | ||||||||||||||||||
Net revenues | 629,631 | 761,014 | 107,187 | 2,498,214 | 2,960,813 | 417,022 | |||||||||||||||||
Cost of revenues | (159,302) | (227,719) | (32,074) | (701,050) | (790,207) | (111,298) | |||||||||||||||||
Gross profit | 470,329 | 533,295 | 75,113 | 1,797,164 | 2,170,606 | 305,724 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling expenses | (289,812) | (465,686) | (65,591) | (1,179,760) | (1,501,200) | (211,440) | |||||||||||||||||
Research and development | (111,401) | (136,046) | (19,162) | (445,117) | (462,043) | (65,077) | |||||||||||||||||
General and administrative | (82,364) | (119,478) | (16,828) | (290,339) | (356,369) | (50,194) | |||||||||||||||||
Total operating expenses | (483,577) | (721,210) | (101,581) | (1,915,216) | (2,319,612) | (326,711) | |||||||||||||||||
Loss from operations | (13,248) | (187,915) | (26,468) | (118,052) | (149,006) | (20,987) | |||||||||||||||||
Interest income | 7,600 | 18,603 | 2,620 | 21,370 | 75,829 | 10,680 | |||||||||||||||||
Realized gains from | 14,778 | 5,269 | 742 | 42,264 | 31,230 | 4,399 | |||||||||||||||||
Other income | 26,922 | 32,776 | 4,616 | 51,885 | 54,471 | 7,672 | |||||||||||||||||
Income/(loss) before | 36,052 | (131,267) | (18,490) | (2,533) | 12,524 | 1,764 | |||||||||||||||||
Income tax | 34,561 | 11,618 | 1,636 | 15,705 | (10,657) | (1,501) | |||||||||||||||||
Share of results of equity | - | - | - | - | (9,165) | (1,291) | |||||||||||||||||
Net income/(loss) | 70,613 | (119,649) | (16,854) | 13,172 | (7,298) | (1,028) | |||||||||||||||||
Net income/(loss) | 70,613 | (119,649) | (16,854) | 13,172 | (7,298) | (1,028) | |||||||||||||||||
Net income/(loss) per | |||||||||||||||||||||||
Basic | 0.41 | (0.69) | (0.10) | 0.08 | (0.04) | (0.01) | |||||||||||||||||
Diluted | 0.40 | (0.69) | (0.10) | 0.07 | (0.04) | (0.01) | |||||||||||||||||
Net income/(loss) per | |||||||||||||||||||||||
Basic | 0.27 | (0.46) | (0.07) | 0.05 | (0.03) | (0.00) | |||||||||||||||||
Diluted | 0.27 | (0.46) | (0.07) | 0.05 | (0.03) | (0.00) | |||||||||||||||||
Weighted average shares | |||||||||||||||||||||||
Basic | 172,754,938 | 172,545,719 | 172,545,719 | 172,254,080 | 173,725,790 | 173,725,790 | |||||||||||||||||
Diluted | 176,653,111 | 172,545,719 | 172,545,719 | 175,991,484 | 173,725,790 | 173,725,790 | |||||||||||||||||
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 December 31, | For the year ended December 31, | ||||||||||||||||||||||
2022 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||
RMB | RMB | USD | RMB | RMB | USD | ||||||||||||||||||
Net revenues | 629,631 | 761,014 | 107,187 | 2,498,214 | 2,960,813 | 417,022 | |||||||||||||||||
Less: other revenues(1) | 11,600 | 25,237 | 3,555 | 62,104 | 87,912 | 12,382 | |||||||||||||||||
Add: VAT and surcharges | 38,716 | 46,509 | 6,551 | 153,052 | 181,001 | 25,493 | |||||||||||||||||
Add: ending deferred revenue | 959,333 | 1,237,621 | 174,315 | 959,333 | 1,237,621 | 174,315 | |||||||||||||||||
Add: ending refund liability | 60,597 | 67,157 | 9,459 | 60,597 | 67,157 | 9,459 | |||||||||||||||||
Less: beginning deferred revenue | 638,426 | 761,301 | 107,227 | 996,218 | 959,333 | 135,119 | |||||||||||||||||
Less: beginning refund liability | 40,812 | 47,631 | 6,709 | 78,630 | 60,597 | 8,535 | |||||||||||||||||
Gross billings | 997,439 | 1,278,132 | 180,021 | 2,534,244 | 3,338,750 | 470,253 | |||||||||||||||||
Note (1): Include miscellaneous revenues generated from services other than courses. |
For the three months ended December | For the year ended December 31, | ||||||||||||||||||||||
2022 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||
RMB | RMB | USD | RMB | RMB | USD | ||||||||||||||||||
Gross profit | 470,329 | 533,295 | 75,113 | 1,797,164 | 2,170,606 | 305,724 | |||||||||||||||||
Share-based compensation expenses(1) in | 3,572 | 3,862 | 544 | 42,490 | 12,959 | 1,825 | |||||||||||||||||
Non-GAAP gross profit | 473,901 | 537,157 | 75,657 | 1,839,654 | 2,183,565 | 307,549 | |||||||||||||||||
Loss from operations | (13,248) | (187,915) | (26,468) | (118,052) | (149,006) | (20,987) | |||||||||||||||||
Share-based compensation expenses(1) | 16,779 | 15,679 | 2,208 | 122,654 | 58,353 | 8,219 | |||||||||||||||||
Non-GAAP income/(loss) from | 3,531 | (172,236) | (24,260) | 4,602 | (90,653) | (12,768) | |||||||||||||||||
Net income/(loss) | 70,613 | (119,649) | (16,854) | 13,172 | (7,298) | (1,028) | |||||||||||||||||
Share-based compensation expenses(1) | 16,779 | 15,679 | 2,208 | 122,654 | 58,353 | 8,219 | |||||||||||||||||
Non-GAAP net income/(loss) | 87,392 | (103,970) | (14,646) | 135,826 | 51,055 | 7,191 | |||||||||||||||||
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 Inc.'s net revenues in the fourth quarter of 2023?
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Did Gaotu Techedu Inc. experience a non-GAAP net loss or income in the fourth quarter of 2023?
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