Gaotu Techedu Inc. has released its financial results for the first quarter of fiscal year 2026. The data reveals that for the quarter ending March 31, 2026, Gaotu achieved revenue of RMB 1.69 billion, a year-over-year increase of 13.2%. Under non-GAAP measures, the company reported an operating profit of RMB 13.78 million and a net profit of RMB 41.42 million, marking the second consecutive year of profitability in the first quarter.
As the education and training sector transitions to a new normal focused on compliance and competition within existing markets, this quarterly report, which demonstrates both revenue growth and positive profitability, not only validates the effectiveness of Gaotu's strategic shift from "scale-driven" to "efficiency-driven" growth but also signals that this technology education company, entering its 12th year, is embarking on a new cycle of value reassessment with a more mature profit model and AI technological moat.
Financial Foundation: Profitable Growth Realized, Operating Leverage Continues to Improve
The core highlight of Gaotu's financial performance this quarter is the validation of sustainable "revenue and profit growth." First-quarter revenue of RMB 1.69 billion achieved a 13.2% year-over-year increase from a relatively high base, while cash revenue grew 12.1% in sync to RMB 996 million. Gross profit reached RMB 1.175 billion, with a gross margin remaining stable at a high level of 69.5%.
More crucially, the company's non-GAAP net profit of RMB 41.42 million represents the second consecutive year of profitability in the traditionally slow first quarter. This is of landmark significance within the highly seasonal education and training industry, indicating that Gaotu has preliminarily established a viable unit economics model across multiple business lines, moving away from the past reliance on a "burn cash for scale" approach.
Improvements in operational efficiency provide the underlying support for profitability. The financial report shows that the combined proportion of R&D and administrative expenses relative to revenue for the reporting period decreased by 0.7 percentage points year-over-year, reflecting the streamlining effect on redundant processes after AI-enabled organizational restructuring.
As of the end of March 2026, the company's deferred revenue reached RMB 1.79 billion, a significant increase of 24.1% year-over-year. As a "reservoir" for future revenue recognition, this metric provides higher visibility for second and third-quarter performance. The total of cash, cash equivalents, restricted funds, and short-term and long-term investments amounted to approximately RMB 3.265 billion. The ample cash on hand is sufficient to cover technology R&D, offline expansion, and talent investment.
Furthermore, the company continues to advance its share repurchase program to return value to shareholders. As of June 1, 2026, it had cumulatively repurchased approximately 33.14 million American Depositary Shares, with a total value exceeding RMB 700 million, demonstrating management's confidence in the company's long-term value.
Luo Bin, COO of Gaotu, stated in the earnings call: "By continuing our focus on operational quality and organizational efficiency over the past year, we have achieved profitability in the first quarter for the second consecutive year. This reflects the stability and resilience of our mature business operating model, as well as the further improvement in our organizational execution and resource allocation capabilities." Management further clarified that the company's target for 2026 is to strive for cash revenue of RMB 10 billion, with second-quarter revenue guidance set at RMB 1.578 billion to RMB 1.598 billion, representing a year-over-year growth of 13.6% to 15.0%.
Business Overview: Synergy Across a Full-Cycle Education Matrix, Multiple Engines Driving Growth
After 12 years of development, from its founding in 2014 by Chen Xiangdong and his core team, pioneering the commercial closed-loop of online live-streamed dual-teacher large-class courses in 2017, to pivoting towards quality education and adult vocational training in 2021, Gaotu has now built a comprehensive education product matrix covering the entire lifecycle, including K-12 quality literacy, high school, university students and adults, and study abroad services. Each segment demonstrated differentiated growth resilience this quarter.
The K-12 quality literacy business has become a new growth engine. Leveraging localized teaching and research deeply adapted to provincial textbook and learning condition differences, this business achieved over 90% revenue growth for the full year 2025. In Q1 2026, its online segment achieved single-quarter profitability, with a student renewal rate exceeding 75%. Revenue approached RMB 670 million, a year-over-year increase of over 15%, accounting for nearly 40% of total revenue, validating the positive cycle of user retention and word-of-mouth under the "quality-first" strategy.
The high school business, as the company's core foundation, showed steady progress with revenue exceeding RMB 760 million in Q1, accounting for over 45% of total revenue and achieving profitability this quarter. The product innovates on the classic online large-class model by adding "one-on-one exclusive service from assistant teachers," combining scalable teaching with personalized experience. In 2025, 267 students from Gaotu's high school programs were admitted to Tsinghua University and Peking University, with such teaching outcomes bolstering the brand.
The university student and adult, as well as civil service examination businesses, showed strong growth elasticity. The university student learning business saw both cash revenue and revenue grow over 20% year-over-year in Q1, with its online business achieving profitability for four consecutive years. The civil service examination business achieved double-digit growth in both revenue and collections, with per capita efficiency steadily improving.
Offline expansion is also accelerating. Following the Zhengzhou Gaotu Dream Center, the Wuhan Gaotu Dream Center officially opened on April 18, 2026, creating an immersive offline test preparation base. The Online-Merge-Offline (OMO) strategy is gradually gaining momentum.
AI Strategy: "All with AI" Reshapes the Entire Education Chain, Solving Industry Efficiency Challenges
Addressing the industry pain point of balancing "high-quality delivery" with "scalable supply," Gaotu has established artificial intelligence as a core growth engine, comprehensively advancing its "All with AI, Always AI" strategy.
Currently, AI capabilities have permeated the entire chain, including teaching content generation (AIGC), intelligent learning diagnosis, personalized exercise recommendations, automated learning report generation, as well as internal operations management and customer service coordination. On the teaching front, the formation of a "main teacher + assistant teacher + AI learning companion" tri-teacher model makes truly personalized, "one-size-fits-one" teaching feasible on a large scale for the first time.
The company has recruited top AI talent, established dedicated AI units, collaborated with universities to build AI labs, and promoted company-wide AI training. The marginal cost reduction and human efficiency improvements brought by AI are directly reflected in the optimization of the administrative expense ratio and lay the groundwork for future profit margin expansion.
Founder Chen Xiangdong pointed out: "As AI capabilities become more deeply integrated into our teaching, research, learning services, and operational systems, we are accelerating the accumulation of our 'Scale with AI' capabilities, enabling high-quality teaching services to possess stronger scalable supply capabilities."
Future Outlook: A Model of Long-Termism for Navigating Cycles
On June 16, 2026, Gaotu celebrated its 12th founding anniversary. Looking back from this new vantage point, the company has experienced a complete cycle from explosive growth to industry upheaval and then rebirth. The trinity model it has currently chosen—"profitable growth + AI empowerment + full-cycle layout"—is a microcosm of the high-quality development path for China's education and training industry.
Looking ahead, several certain trends are worth noting. First, the diversified business matrix will continue to mitigate risks from any single category, with the high growth of quality literacy and adult vocational training potentially lifting the overall revenue level. Second, the dilutive effect of large-scale AI application on operating expenses will become increasingly apparent as the technology matures, leaving room for further margin improvement. Third, the orderly expansion of offline learning centers will complement the online trust chain, extending user lifetime value (LTV). Against the backdrop of clear regulations and industry consolidation, leading institutions with compliance capabilities, technological moats, and positive cash flow are poised to see further market share concentration.
"What truly enables a company to navigate cycles is not just the growth in scale itself, but the organizational capabilities, product capabilities, and user trust accumulated behind it," Chen Xiangdong summarized in the financial report. For Gaotu, the Q1 2026 report is not an endpoint but the starting point of a new phase of "resilient growth." With a solid financial foundation, technological innovation as its wings, and a commitment to education at its core, this 12-year-old tech education company is attempting to redefine the long-term value proposition for education and training enterprises.
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