Gaotu Techedu Reports Strong Q2 2025 Growth, Leveraging AI for Operational Efficiency

Gaotu Techedu Revenue Jumps 38 Percent | The Motley Fool

Gaotu Techedu(GOTU -5.95%) reported second quarter 2025 earnings on August 26, 2025, posting 37.6% year-over-year revenue growth to nearly RMB 1.4 billion and narrowing its non-GAAP net loss by 50.5% year over year. Gross billings rose 36.2% year over year to RMB 2.3 billion, and management raised full-year revenue guidance after a strong first half and continued momentum in both core and new initiatives. The following highlights focus on the company's AI-driven operating leverage, offline learning expansion, and core academic business performance. R&D expenses as a percentage of revenue dropped to 10.7% in the quarter, and operating expenses as a share of revenue decreased by 31.6 percentage points year over year, reflecting the impact of artificial intelligence (AI) integration across teaching, tutoring, and curriculum development. The company also achieved a net operating cash inflow of RMB 588.8 million, up RMB 202.6 million from the prior year period. "By streamlining procedures and unlocking data-driven insights, we are maximizing operational efficiency and enhancing strategic decision-making. Furthermore, AI empowers every Gaotu employee to transcend the boundaries, fostering both professional growth and personal fulfillment. Together, we are building long-term market advantages and a more dynamic organization positioned for sustainable growth." -- Larry Chen, Founder, Chairman and Chief Executive Officer Gaotu Techedu's rapid AI adoption is directly reducing costs, increasing scalability, and positioning the company for sustainable long-term growth in a competitive education market. Contributions from offline centers surpassed 5% of gross billings, with over 20% year-over-year growth in this emerging segment. The company leveraged its proprietary online educational content to enable operational synergies as it rolled out offline products, while maintaining strong performance in traditional online academic tutoring. "In the second quarter, offline learning center revenue grew by more than 20% on a year over year basis and has already contributed over 5% of gross billings this quarter. The reason behind that is, first, on the customer side, we are leveraging the unique advantage of in-person interaction to build deeper trust with students and parents in a more direct way." -- Shannon Shen, Chief Financial Officer Early momentum in offline learning validates Gaotu Techedu's hybrid model, broadening its revenue base and enhancing its ability to meet localized demand. The spring semester saw rising new enrollment retention rates, and customer referrals jumped 75% year over year in the second quarter, driving selling expense ROI up to 2.75% from 1.99% year over year. The number of students accepted to China's top two universities reached a cumulative total of 1,118 as of the class of 2025. "According to primary statistics, the number of students from Gaotu's class of 2025 admitted to the top two universities in China reached 267, marking five consecutive years of growth. To date, 1,118 Gaotu students have been admitted to the top two leading universities, a strong testament to our competitiveness across educational products, teaching quality, and learning services. Additionally, our referral rate for the second quarter surged by 75% compared to a year ago." -- Shannon Shen, Chief Financial Officer These results demonstrate the effectiveness of Gaotu Techedu's academic offerings and marketing strategy, supporting higher marketing ROI and reinforcing the company's competitive position in premium education outcomes. Management guided net revenues in the range of RMB 1.5 billion to RMB 1.578 billion for the third quarter, implying anticipated year-over-year growth of 28.9% to 30.6%. Leadership raised its full-year growth expectation, now projecting nine-month year-over-year revenue growth to exceed 40%, above initial targets set at 30%. No explicit margin or profit guidance was issued for subsequent quarters.

Gaotu projects Q3 2025 revenue growth of up to 30.6% while advancing AI-driven educational innovation (NYSE:GOTU)

Xiangdong Chen, CEO, highlighted "solid growth momentum in our core business, while harnessing the power of AI to enhance our service models, foster product innovation and strengthen our organizational capabilities." He emphasized the company's commitment Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.