Gaotu Techedu (GOTU) 4 Dec 242024 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Gaotu Techedu Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Katherine Chen, Head of Investor Relations. Please go ahead, Katherine.

Thank you, operator. everyone. evening, Good joining for Quarter Earnings XXXX Thank Gaotu's Call. Conference you Third help Katherine, earnings is name host and My I'll the call today. Gaotu's distributed earlier Company's the quarter available Newswire through for ir.gaotu.cn, the as at IR earnings on website services. well PR and release is as was

Chen, the and Larry call Larry for Ms. business and Gaotu's Financial me Officer. Shannon first Shannon our is with and provide will highlights Chairman the more financial from Gaotu Shen, Founder, Joining Management then afterwards, performance Chief will the Senior detail. quarter, tonight Mr. Gaotu's Executive Officer; discuss Chief in

Following their questions will the from floor prepared to remarks, we analysts. open

except of Further are and and from many other required U.S. Company's not to statements, U.S. contained Before risks update under These is materially and you does public of included statements Private that beliefs Reform we risks, applicable forward-looking Act statements contain forward-looking in market performance the The as SEC. or which remind safe current forward-looking known operating like as made the this based management's will predict begin, to beyond achievements differ are and upon control to forward-looking uncertainties, the expectations this other under are the conference the those any in may or harbor Securities information as to well of they any the I'd regarding and Litigation all XXXX. conditions cause call Company which filings involve statements. with Company's the undertake obligation of law. unknown difficult and any and Company's current provision factors,

measures also purpose will comparison management call, only. for today's certain discuss non-GAAP During

today. GAAP financial non-GAAP to and reconciliation please to earlier earnings quarter a definition refer financial release measures published For non-GAAP of our third results, of

is recorded. reminder, a conference this As being

Officer, Gaotu's Larry. Chairman, available pleasure addition, a Executive will conference and our to Larry, introduce Founder, archived is on live webcast and my this website. It Chief IR be of call In please? now

XXXX and Call. Third evening, would Thank gratitude interest to to everyone. Gaotu. of your joining like on Earnings my for you Conference good for us opportunity Gaotu's you and of Year I support express this each to morning, Good Fiscal of Quarter in take

to financial today Before in that I remind unless figures everyone discussed like stated are RMB all would I quoted start, otherwise.

past continuous RMB the to attributed steady year-over-year approximately continued core quarter, with to billings optimization XX.X% our and by strategy trends X.X During understanding increasing billion, execution. market growth This our revenue businesses X.X progress billion. the of is of XX.X% and to our to and over growing RMB year-over-year gross by make keen

As our upgrading business improving management scales our on the with product particular practices. a we matrix rapidly up investments enhancing organizational gradually, capabilities systems, focus and educational and enriches ramped

and commitment and of while also seasoned we XXX development We industry. also team's intensified environment in to enhanced RMB share the refinement, the broader and shareholder strong underscoring buybacks, improve the business promoted talent professional training. In and development complex navigate attracting various more frontline talent professionals execution we managerial to business have high-performing has nurtured than for course efforts from ability quarter, within, efficiency. In this million This our returns. our allocated and from

position has liquidity cash While our our and robust. share remains solid impacted this balance, repurchase

a total As long-term priorities short-term and of cash, X.X strategic long-term our and cash foundation of XXXX, held and we XX, a firm cash in restricted growth. September providing equivalents, over billion for RMB investments,

the will we provide an achieved Next, quarter. have I update progress this on

users. the outcomes by First, for that our seamlessly instructors, services and outstanding leads enhanced student expertise integrating teaching learning to our quality products, we [ educational experience learning ] our of top-tier further learning tangible

clear, is time, through the engaging presented best and the to our user insight emerging to efficient enabling by comprehensive content in into deep student's way. each efficiency. training ensuring we to learning assessment, empowering and tutors individual systematic engagement them such For and strive course needs, knowledge development the support a same team, as and technologies provide and boost achieve our targeted accurate teaching AI our complex instructors, tailored practices with to At refinement are students learning plans

system students the Universities from quarter, Meanwhile, of highlighting at of provided college alumni scale, educational of diverse the our services at invited Dream meet significant out needs a career emotional educational a have This for and our designed students, rate multi-tiered growing and support has breakthrough established of value rolled share we a strong the student we and recognition their learning practical learning Furthermore, experiences, advice journey. students stages both to further serving as guidance to support different provide brand. referral of and achieved endorsement content Peking to engagement. are Tsinghua been outstanding and where current our enhancing Coach their program the offer

Despite traffic market the we our our significant billings This evolving can customer environment, through macro approach effectively we and changes channel customer external and to customer landscape consistently diversifying in and our focused market expanding steadily on industry-leading. acquisition and channels, the risks. Second, driven advanced reduce acquisition actively and efficiency has content-driven and that building mitigate strategies. gross self-operated and embraced channels, comprehensive market our encompasses exposure capabilities. share. Since This and have system market growth acquisition live acquisition activation streaming the resilient decentralized other proactively volatility in remains increased private a XXXX,

traffic further into a forward, investments and increase engagement efficiency emphasis Going strong conversion will private proprietary and on their maintaining efforts, and channels we effectiveness.

supports acquisition long robust the more to Our run. and goal in traffic is that build growth sustainable our steady system a

value committed responsibility remain long-term dedication. social with and to creating we Third,

by pursue Xin'an advance we students first County, education year to Henan to with and This journeys. awarding quarter, continued Province educational scholarships their college dreams in underprivileged equity promote their

representing environment. In generate made all progress a books we delivering with supported we in schools for resources education reading alignment Gansu have of From regional mission building providing for USD X.X the with the through the XX.X brings collection shareholder also better X, a This donating of approximately to more USD of in and aggregate December million. of end of students XXXX. returns. substantial ADS educational the by stakeholders, cumulative the start local of under Additionally, enhanced Province, outstanding to program our repurchased year libraries shares approximately approximately as million, total to value and an we X.X% shares million XX.X repurchased of value than

and remarks. my our high-quality much, we the is you will while everyone. ahead, sustainable societal to By long-term very uphold shareholder our prioritizing progress, responsibilities Looking we values aim to company. Thank business to creating This and continue drive for value. growth contributing prepared end of social

call CFO, quarter. to details Shannon, through you our the pass will financial and the over walk I operational to Now of the

you for our vacation gross Larry, performance and operating third on demand quarter, achieving you, during you, the Thank rapid summer financial targets thank the quarter of market year fiscal meaningful period, everyone, our and successfully now for share. driving walk robust market and our I will business aimed the today. XXXX. In past call through the student billing and in enrollments growth we capitalized increases joining

rise XX our XX.X% the each With in of enrollments, in year-over-year quarter, quarters. In line percentage revenue accelerated third X has by and sequentially increased top continuous the approximately past grew growth sequentially. our the points in student

balance year-over-year $X.X As over our increased revenue deferred to of billion. September XX, XX.X% XXXX,

core year-on-year further market position the set consolidating strong broader anticipate to we future online for the to growth. businesses growth and in industry, the with a peak ahead, Looking leading our our revenue outpace quarter foundation in laying fourth

better market helps continuing of educational us core to user online offerings. the engagement. we needs competence various resources approach diverse products, enhancing While actively into and to This explore addressable learning scenarios, across strengthen address our expand our deploying are expanding and students'

We business are to with demand, on and pay user models. focusing strong segments clear willingness proven

to utilizing are both quality efficiency. we like continuously teaching operational artificial and Additionally, advanced optimize technologies intelligence

balance investments believe revenue our expansion value remain financial offerings great educational investments dynamically market brand business refining supporting short-term, the metrics potential Although share long-term and our key further our users. weigh to may operations on and these We returns. recognition, will creation with boost in tracking and results our these to growth and committed for we effectively

total have the came and traditional made of Learning year-over-year. nonacademic during through an Next, I revenues. services quarter. walk of learning contributed progress tutoring Breaking down, services increase will of XX% other XX% XX% revenues you representing the services, net than it more from we

in and conduct curriculum learning to initiatives development. tutoring at nonacademic experienced new align around development, with and This our services students that grounded provide better needs systematically analysis their path. different students' their centered structured product quarter. In and we graphs growth of this that course approach remarkable courses Our in-depth scientifically our knowledge with refine of are arrangements ensures stage consistently

careful front, system a screening, delivery scalable the standardized developed we performance rigorous development evaluation. On talent through training and ongoing have

triple our student by Notably, digits compared same revenues net from and As to surged a result billings of last by XXX% than gross new enrollments from initiatives these year. more gross period new billings over soared the efforts, year-over-year.

maintained Our steady traditional growth. services learning

we composition quarter, grades, optimized further the student entry operations for strengthening foundation development. sustainable for During future the key by our refining

influence our we on by on quality, our education study and emphasis of holistic of have needs tutors. to comprehensive leveraging Building improvement offering also guidance encompassing quality While development. plan and greater service solutions of the professional instructors, we family top-tier the have enhanced addressing students' teaching expertise the foster placed user

provided. have the grew we trust XX% gross for segment regard As students the in underscoring a than result, billings value high quarter, more year-over-year this have of by and the

college for adults, crucial learning resource optimized our of business and areas other The and of mix services which students clear to and demand profitability. under our is the strong focus educational on revenues with XX% services market total to path component quarter. We in contributed allocation

achieved quarter, present high the now further optimization in services Similarly, momentum. cash segment financials year-over-year will achieved for demonstrating revenue flow increase adjustment along college in During the with double-digit of overseas more this generated double-digit offerings and flow. the services and profit product our maintained growth positive students and detail. revenue quarterly positive success quarter, our high business for core year-over-year study-related growth, efforts. I healthy cash Educational

to million Our a expenses revenue period approximately academic Gross year-over-year RMB quarter XX.X% new cost in XX.X%. not to with our quarter acquisition XXX.X is XXX.X RMB operating margin a increased of of businesses. customer Total million. quarter billion. traditional profit From typically perspective, gross increased for and year-over-year the the seasonal a XX.X% peak was X.X this fourth during RMB

was to to selling during RMB summer was primarily increased As expenses driven XXX year-over-year to RMB selling revenue. for for vacation marketing was plan operating net and was expenses XXX.X to negative for XXX.X from market year-over-year margin million, this in margin net million, operations XX.X%. operating response RMB expenses such, negative Non-GAAP million, loss XXX.X Net XX.X% heightened administrative revenue. net non-GAAP and negative Breaking margin expenses higher year-over-year and down, quarter our the XX.X%. of This XXX.X% XX.X% and development was RMB increased net XX.X% million, increased was to and revenues. negative we net accounting by XXX.X margin Loss RMB it million, RMB demand XX.X% accounting income General and loss of RMB was was from of income XX.X%. Non-GAAP XX.X%. loss million, XXX.X XXX.X period. Research expenses net adjust XX.X% accounting million, accordingly. non-GAAP was operations

Our net million. operating XXX.X cash was outflow RMB

our turning sheet. balance Now to

XX, and September with equivalents cash RMB we billion. in long-term short-term XXX.X RMB RMB of XXXX, As held XXX.X billion total along restricted of X.X comes This cash, in investments. RMB to investments in a and X.X cash, million over million

our was tuition received RMB XXXX, X.X XX, September advance. of consisting billion, of revenue balance in primarily over As deferred

open approximately XX.X XX.X the of the over As X, of existing ADS million we repurchase December program. aggregate under for share USD on XXXX, an million market repurchased approximately

execute will shareholders. our continue the accordance in create guidance of share Board value long-term We to to with for buybacks Directors'

Based Thank current to contains may everyone business our like results actual outlook revenues net the prepared remind a million, materially involve Operator, my expect estimates, ready and the we XXXX to remarks. section. for quarter, listening. RMB for that everyone, fourth beyond and to total next this on risks forward-looking concludes Q&A now X,XXX of our to our year-over-year provide for control, between expectations. from which representing I XX.X% uncertainties differ that I are Before the our statements we the cause would quarter on for basis. This you, X,XXX XX.X% RMB an million be of increase

CMS. [Operator The with first comes Li Instructions] question today Crystal from

the you outlook? growth us And business provided guidance group the XXXX in fourth on could different quarter. color revenue about the you by saw I for growth give segments? growth some How

primary deviations Thanks, Crystal. the we in expectations From we beginning perspective, of looking at overall XXXX, performance this X the operational year. at the current observed the from set

to traditional which adjustments led of resource of by some to also the investment inefficiencies at the operations within psychological First, innovative shortfall projections provided. And our segment of requirements, business of the growth, one in our at on economic and for And of the the the the second contributed by the on increased eventually and returns of efforts services opportunities spending current the these value navigating decisions growth And together also recovery half during year. And platforms, loss to environment, our better will did rapid in as are year, expectations. the in the widened. coupled college believe pressure, students revenue create the in education creating more period of short-term with consulting generate the we educational accompanied loss not and in other On subdued hand, the compared consumer we gap. explosive our our the shareholders beginning social certification strategic the a also adults, cautious services, the we offline first and students XXXX handling in the efforts further the second, overseas period We with aimed exceed services our impacted of in study fully a allocation which half performed handled a while actually long-term hand, growth. year, well. has for switch

XXXX, we So ahead investment and profitability. to dynamic looking to approach scaling more take will a balancing

And the and will also at in fixed as and and improving the business. operating be be our expenses. we and Our expanding improvements. driving G&A structure profit will optimizing time, continuously Also focus we be cost margins cost base expenses profit our same reductions research will such development efficiency on our existing

of gross to share will under enhance growth in reduction we continue the your both significant achieve plan value And addresses and that expect with XXXX to losses. also questions. hope Directors. repurchase of And shareholder we revenues guidance Board So billings this to steady execute a and the Crystal. in period, Thanks, strive I our during

to like turn Katherine conference any the concludes to remarks. over back This for our question-and-answer I session. closing would Chen

Thank you, thank you, call everyone, and today. operator, joining for the

to Relations have any via don't hesitate you department contact ir@gaotu.cn If our further at directly. e-mail management please questions, or our Investor

again great the our to also very You to are alert news Thank much for IR you a welcome time. company's website. subscribe night. your on Have

The concluded. now conference you presentation. has today's attending Thank for

may You disconnect. now