Gaotu Techedu Inc. reported second-quarter 2026 revenue of nearly 1.7 billion yuan ($1.67 billion), a 20.2% increase from the prior-year period and exceeding Wall Street expectations by $50 million. The company’s ADSs rose 7.51% to $1.86 in pre-market trading following the results release.
Gross billing climbed 19.4% year-over-year to approximately 2.7 billion yuan, while gross profit increased 21.2% to more than 1.1 billion yuan, yielding a gross margin of 66.5%. Despite revenue growth, the company reported a net loss of 135.8 million yuan, representing an 8.1% margin, and a non-GAAP net loss of 129.1 million yuan (7.7% margin). Operating loss totaled 149.8 million yuan, or 9.0% of revenue, with a non-GAAP operating loss of 143.0 million yuan (8.6% of revenue). Earnings per ADS missed estimates, posting a loss of $0.57 versus a consensus forecast of a $0.46 loss.
Cash reserves stood at nearly 4.0 billion yuan as of June 30, 2026, up 354.6 million yuan year-over-year excluding share buybacks. Operating cash inflow increased 46.3% to 861.2 million yuan, while deferred revenue reached 2.6 billion yuan, up 18.9% year-over-year. Adjusted operating and net losses narrowed by 38.5% and 37.6%, respectively, with operating expenses as a percentage of revenue declining by 7 percentage points.
Management highlighted growth in the company’s new initiatives segment, which includes online and offline non-academic tutoring. Revenue in this segment rose over 30% year-over-year, accounting for more than 40% of total revenue, while gross billing contributed over 45% of total gross billings. Online retention rates improved by over 5 percentage points for the spring season, and the traditional online business helped over 200 students gain admission to China’s top two universities in 2026. The offline overseas study business assisted nearly 700 students in securing offers from the world’s top 50 universities.
Gaotu also reported progress in AI integration, noting efficiency gains of five to eight times in certain curriculum development workflows. The company emphasized building “three self-reinforcing flywheels: data, experience, and brand,” according to CEO Larry Chen. For the third quarter, Gaotu guided revenue between 1.838 billion yuan and 1.858 billion yuan, implying 16.4% to 17.7% year-over-year growth.
As of August 26, 2026, Gaotu had repurchased nearly 36.5 million ADSs for 741.8 million yuan. Shares were trading below a 52-week high of $4.12 and above a low of $1.40, with a market capitalization of $411.82 million and a beta of 0.71.
