Gaotu Techedu Inc.

Q2 2026 net revenues increased 20.2% year over year to nearly CNY 1.7 billion, and gross billings grew 19.4% to approximately CNY 2.7 billion. Gross profit rose 21.2% year over year to over CNY 1.1 billion, with gross margin at 66.7%. Operating loss was CNY 149.8 million, net loss was CNY 135.8 million, and non-GAAP net loss was RMB 129.1 million. Operating expenses were nearly CNY 1.3 billion, with selling expenses at CNY 913.2 million, R&D at CNY 154.8 million, and G&A at CNY 192.6 million. Net operating cash inflow increased 46.3% year over year to CNY 861.2 million, and cash plus investments totaled nearly CNY 4.0 billion as of June 30, 2026. For Q3 2026, management expects total net revenues of CNY 1,838 million to CNY 1,858 million, implying 16.4% to 17.7% year-over-year growth.

Larry Chen framed the quarter as evidence that Gaotu’s user-focused investments and AI adoption are translating into healthier unit economics and a more efficient operating system. He emphasized a long-term strategy built around user value, brand trust, disciplined resource allocation, and a multi-layered growth flywheel of data, experience, and brand. His tone was confident but measured, repeatedly stressing sustainable growth rather than scale for its own sake.

Willa Yao focused on the quarter’s margin profile, noting cost of revenue of CNY 559.2 million and gross margin of 66.7%, while total operating expenses rose 8.8% year over year to nearly CNY 1.3 billion. She highlighted operating discipline through declining expense ratios and pointed to strong cash generation, with net operating cash inflow of CNY 861.2 million and total cash, short-term investments, and long-term investments of nearly CNY 4.0 billion. She also cited share repurchases of nearly 36.5 million ADSs for RMB 741.8 million as of August 26, 2026, alongside Q3 revenue guidance of CNY 1,838 million to CNY 1,858 million.

The main analyst question focused on offline expansion, capacity growth, and the margin improvement roadmap. Management said offline is an important growth area but emphasized that profitable growth comes before blind expansion, with expansion to remain selective and tied to city-by-city economics. Bin Luo said the company will increase resources only where demand is clear and will optimize or eliminate projects that do not meet profitability standards.