Sunlands Technology Group

First-quarter 2026 net revenue was RMB 440.7 million, down 9.6% from RMB 487.6 million a year ago. Gross profit was RMB 381.1 million versus RMB 415.3 million, and gross margin improved to 86.5% from 85.2%. Net income was RMB 76.8 million, up from RMB 75.2 million, with net income margin at 17.4%; basic and diluted EPS was RMB 11.48. Operating expenses fell 16.7% to RMB 284.3 million, with sales and marketing down 19.5% to RMB 241.9 million, while G&A rose 4.1% to RMB 35.9 million and product development rose 5.6% to RMB 6.6 million. Cash, cash equivalents and restricted cash were RMB 547.2 million, plus RMB 236 million of short-term investments. For the second quarter of 2026, management expects net revenue of RMB 410 million to RMB 430 million, down 20.2% to 23.9% year over year.

The CEO framed the quarter as disciplined execution rather than growth at any cost, emphasizing revenue mix improvement, profitability, and operating efficiency. He said the company is continuing to invest in AI, new learning experiences, and broader service integrations to deepen learner engagement and improve repurchase behavior. His tone was constructive but cautious, repeatedly noting that several initiatives are still early-stage and need continued refinement.

The CFO highlighted that the company deliberately prioritized revenue quality and learner cohort health, resulting in a leaner cost structure and resilient margins. He cited the 19.5% decline in sales and marketing expenses to RMB 241.9 million, gross margin of 86.5%, and net income margin of 17.4% as evidence of strong execution. He also pointed to a robust balance sheet with RMB 547.2 million of cash, cash equivalents and restricted cash, plus RMB 236 million of short-term investments, and gave second-quarter revenue guidance of RMB 410 million to RMB 430 million.

There was no analyst Q&A because no further questions were asked. As a result, management did not address additional concerns beyond the prepared remarks. The main forward-looking point left on the call was the second-quarter revenue guide, which implies continued year-over-year pressure.