Gaotu Techedu NYSE: GOTU reported fourth-quarter and full-year fiscal 2025 results that management said reflected a shift toward “refinement” in operations, with a greater emphasis on profitable growth and the integration of artificial intelligence across the business.
Founder, Chairman, and CEO Larry Chen said 2025 was marked by resilience and a systematic elevation of operational execution, while CFO Shannon Shen highlighted ongoing optimization of the product portfolio and channel mix aimed at improving revenue quality and efficiency.
Quarterly and full-year performance
For the fourth quarter, Gaotu said revenue rose 21.4% year-over-year to RMB 1.7 billion. Chen said the company maintained top-line expansion while realizing operating leverage, with “the bottom line” improving by 38.0% on efficiency gains.
For the full year 2025, the company reported revenue growth of 35.0% to RMB 6.1 billion, which Chen said exceeded initial expectations set at the beginning of the year. The company’s net operating cash inflow for the full year was RMB 416 million, a net increase of RMB 158 million year-over-year, which management framed as evidence of improved operational quality and efficiency.
Shen said Gaotu has delivered operating leverage for five consecutive quarters, driven by revenue scale expansion and operating efficiency gains. She also pointed to improvements in user acquisition efficiency, which the company measured as gross billings divided by selling expenses, rising 10.8% year-over-year in 2025.
Business mix and operating metrics
Shen said learning services contributed over 95% of net revenues in the quarter. Academic tutoring services and traditional learning services, described as core segments, contributed over 80% of total revenues.
- Academic tutoring services: Shen said new initiatives spanning online and offline sustained strong growth momentum. In the fourth quarter, gross billings increased by over 30% year-over-year and revenue grew by 45%. On a full-year basis, revenue in the segment rose by 9% year-over-year. She added that the online business posted margin expansion and achieved a “middle single-digit” margin for the full year, supported by expanding enrollments and improved product competitiveness.
- Retention and product updates: Shen said retention of existing students exceeded 75% in the quarter. She noted continued investment in content development centered on comprehensive capabilities and core competencies, and said new offerings, including AI-related courses, enriched the product and content portfolio.
- Traditional business: Shen said the traditional business maintained stable enrollment growth in the quarter while improving service quality and efficiency. She described upgraded tutor service standards, a stronger focus on learning process management and learner engagement, and course optimization aligned to students’ proficiency levels. For full-year 2025, she said revenue from the traditional business grew nearly 15% year-over-year, with profitability for both online large classes and one-on-one tutoring improving year-over-year.
- College students and adults: Shen said this segment’s gross billings grew over 15% year-over-year in the fourth quarter and contributed over 15% of total revenues. She said the segment achieved full-year profitability across online offerings in 2025 and entered a “consecutive growth trajectory.” For educational services for college students specifically, she said the company shifted from standalone products to “stage-aligned solutions” with adaptive learning pathways, while further integrating online courses and AI technologies. She added the college-student business delivered “mid-to-double-digit” growth in revenue for the full year and reached profitability at the business-line level.
On the balance sheet, Shen said deferred revenue rose 23.0% year-over-year to RMB 2.6 billion as of Dec. 31, 2025, primarily consisting of tuition received in advance, which she said provided visibility into future revenue growth.
Margin and expense details
Shen reported fourth-quarter cost of revenue of RMB 540.9 million. Gross profit increased 20.7% year-over-year to over RMB 1.1 billion, with a gross margin of 67.9%.
Total operating expenses rose 15.0% year-over-year to nearly RMB 1.3 billion. Selling expenses increased 20.3% year-over-year to RMB 885.3 million, representing 52.5% of net revenues. Research and development expenses increased 14.0% year-over-year to RMB 165.4 million, while general and administrative expenses decreased 2.1% year-over-year to RMB 211.8 million.
The company reported a loss from operations of RMB 118.0 million, with an operating loss margin of 7.0%. Shen said GAAP net loss was RMB 84.2 million, while non-GAAP net loss was RMB 76.8 million. Net operating cash inflow increased 23.1% year-over-year to RMB 964.8 million in the quarter, according to Shen.
As of Dec. 31, 2025, Shen said the company had RMB 712 million in cash equivalents and restricted cash, RMB 2.7 billion in short-term investments, and RMB 551.6 million in long-term investments, totaling nearly RMB 4.0 billion.
Capital returns and share repurchases
Management reiterated its focus on shareholder value through capital allocation. Chen said that under the company’s aggregated share repurchase authorization, Gaotu had repurchased a total of RMB 670 million of shares, representing 12.8% of total outstanding shares, including RMB 343 million in buybacks during 2025. Shen added that as of March 4, 2026, the company had repurchased approximately 30.6 million ADS on the open market for nearly RMB 670 million.
Outlook and offline expansion commentary
For the first quarter of 2026, Shen guided total net revenue to a range of RMB 1,578 million to RMB 1,598 million, representing year-over-year growth of 5.7% to 7.0%. She attributed the single-digit growth rate to seasonality and said the company expects the increase rate to return to double digits in the second quarter of 2026.
In the Q&A session, management provided additional detail on offline learning centers. Shen said Gaotu began expanding offline learning centers in 2023 and described offline as a “second growth curve” and a top strategic priority at the group level. She said integrating online and offline is intended to enhance learning efficiency and the overall learning experience, while improving product metrics.
Shen said the offline business has achieved “clear economics of scale,” with the learning center network and revenue scale growing steadily and rapidly through continued investment and operational refinement. Based on current plans, she said the company expects the revenue scale of offline operations to surpass that of “several independently listed peers” in the coming year. She also emphasized execution requirements and barriers to entry for offline operations, including management effectiveness, organizational alignment, systems and processes, and the supply of top-tier teachers.
Looking ahead, Shen said the company expects to achieve profitability at the school level during the year, and that it foresees the offline business becoming profitable next year including headquarters overhead.
About Gaotu Techedu NYSE: GOTU
Gaotu Techedu Inc NYSE: GOTU, formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu's rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects.
The company's main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations.
Further Reading
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