AI-driven personalized learning solutions provider 17 Education & Technology Group Inc. (NASDAQ: YQ) has released its unaudited financial results for the first quarter of 2026.
The company reported a net revenue of 99.5 million yuan (approximately $14.4 million USD) for Q1 2026, a significant increase of 359% compared to the 21.7 million yuan reported in the same period of 2025.
Net loss for the quarter was 19.4 million yuan (approximately $2.8 million USD), representing a year-over-year narrowing of 37.4% from the net loss of 30.9 million yuan in Q1 2025.
Excluding share-based compensation expenses of 4.2 million yuan (approximately $0.6 million USD), the adjusted net loss (non-GAAP) was 15.1 million yuan (approximately $2.2 million USD). This compares to an adjusted net loss of 22.4 million yuan in the prior-year period.
Management Commentary on Performance
Founder, Chairman, and CEO Liu Chang expressed satisfaction with the robust quarterly performance. He attributed the triple-digit year-over-year and 155% quarter-over-quarter revenue growth primarily to the expansion of the consumer-facing personalized learning AI application service, 17 AI Learning.
Liu Chang stated that the company will continue investing in AI-driven application services that support intelligent teaching and personalized learning, leveraging over a decade of accumulated large-scale educational insights, deep user engagement, and advancing AI capabilities. He believes these efforts will strengthen the overall product ecosystem and serve as a key driver for long-term growth.
CFO Zhou Sishi highlighted the significant financial improvement achieved in Q1 2026. She noted that revenue growth, combined with stringent cost management and improved operating leverage, led to the 37.4% year-over-year and 63.5% sequential narrowing of the GAAP net loss.
Zhou Sishi added that these results underscore the growing contribution of the company's AI-driven application services and its continued focus on balancing growth with operational discipline. The company maintains a strong cash position of 352.4 million yuan (approximately $51.1 million USD), providing financial flexibility for future product innovation and strategic initiatives.
Detailed Financial Review for Q1 2026
The substantial revenue growth was primarily driven by the continued expansion of the 17 AI Learning service and ongoing contributions from regional and school-level projects.
Cost of revenues was 37.9 million yuan (approximately $5.5 million USD), a 173.7% increase year-over-year, attributed to the growth of 17 AI Learning and related service delivery costs.
Gross profit reached 61.6 million yuan (approximately $8.9 million USD), a surge of approximately 686% from 7.8 million yuan in Q1 2025. The gross margin improved significantly to 61.9%, up 25.7 percentage points from 36.2% a year ago, due to the growing contribution of AI-driven services and ongoing optimization of the revenue structure.
Total operating expenses were 82.9 million yuan (approximately $12.0 million USD), including the 4.2 million yuan in share-based compensation, representing a 98.7% increase year-over-year.
Sales and marketing expenses grew 232.0% to 43.2 million yuan to support the expansion of 17 AI Learning. Research and development expenses increased 28.5% to 16.2 million yuan, driven by continued investment in AI capability development. General and administrative expenses rose 45.9% to 23.5 million yuan, mainly due to increased personnel costs supporting business growth.
Operating loss was 21.3 million yuan (approximately $3.1 million USD), compared to 33.9 million yuan in Q1 2025. The operating loss as a percentage of net revenue improved to negative 21.4% from negative 156.3%.
The net loss as a percentage of net revenue also improved markedly to negative 19.5% from negative 142.8% in the year-ago quarter.
On a non-GAAP basis, the adjusted net loss as a percentage of net revenue was negative 15.2%, compared to negative 103.4% in Q1 2025. A reconciliation between GAAP and non-GAAP measures is provided in the financial tables.
As of March 31, 2026, cash and cash equivalents, restricted cash, and time deposits totaled 352.4 million yuan (approximately $51.1 million USD), compared to 407.0 million yuan as of December 31, 2025.
Comments