17 Education & Technology Group Inc.

Second-quarter 2026 net revenue was RMB 90.1 million, up 254.6% from RMB 25.4 million a year ago; first-half 2026 net revenue was RMB 189.5 million, up 302.6% from RMB 47.1 million. Gross profit was RMB 62.3 million versus RMB 14.6 million last year, and gross margin was 69.2% versus 57.5% a year ago and 61.9% in Q1 2026. Operating loss narrowed to RMB 0.6 million from RMB 28.5 million, and the company posted GAAP net income of RMB 1.1 million versus a RMB 26.0 million net loss; adjusted net income was RMB 4.7 million versus an adjusted net loss of RMB 18.9 million. Cost of revenues was RMB 27.8 million, total operating expenses were RMB 63.0 million, and cash and cash equivalents, restricted cash and term deposits were RMB 456.9 million as of June 30, 2026, up from RMB 407.0 million at December 31, 2025. The company did not give explicit next-quarter or full-year financial guidance on the call.

Sishi Zhou framed the quarter as evidence that 17 EdTech’s transformation into an AI-powered application service provider is working, emphasizing that the company is seeing improving economics while still investing in AI capabilities and product innovation. She highlighted a strategic shift from traditional digital tools to more deeply integrated agentic services, with Minhang District as a key proof point for moving from SaaS-style deployments toward ongoing AI usage-linked service models. Her tone was upbeat and confident, but measured; she repeatedly stressed validation, scalability, and long-term ecosystem building rather than near-term extrapolation.

Lara Zhao walked through the financials and pointed to strong operating leverage: revenue grew 254.6% while operating expenses rose 46.2%, and gross margin improved to 69.2% from 57.5% last year. She noted sales and marketing rose to RMB 26.9 million, R&D to RMB 20.0 million, and G&A declined 6.1% to RMB 16.0 million, helped by lower share-based compensation and disciplined cost control. She also highlighted the stronger balance sheet, with cash and cash equivalents, restricted cash and term deposits at RMB 456.9 million, and said the higher cash was driven by return to profitability and improved cash generation. Separately, management authorized a share repurchase program of up to USD 10 million over 12 months, funded from existing cash.

Analyst William Gregozeski asked how the C-end product has performed relative to initial expectations and what growth to expect, and management said Yiqi Aixue has become an important growth engine faster than expected, but declined to extrapolate one quarter into a specific trajectory because of seasonality and quarterly fluctuations. He also asked about the B-end and G-end pipeline, and management said the more important development is a change in customer demand from SaaS-based purchases toward agentic services embedded in daily workflows. They added that district-level wins like Minhang are helping validate and productize capabilities for broader school-based adoption, while the company will remain selective on new G and B opportunities.