Doushen(Beijing)Education&Technology Inc., a pioneer in Chinese language education systems, now faces the severe challenge of increasing revenue without corresponding profit growth.
The company recently disclosed its Q3 2025 financial report, showing revenue of RMB 776 million for the first nine months, up 39.36% year-over-year (YoY). However, net profit attributable to shareholders dropped 17.23% to RMB 91.77 million, while non-GAAP net profit plunged 59.97% to RMB 43.95 million.
In Q3 alone, revenue surged 44.05% YoY to RMB 327 million, but the company reported a net loss of RMB 12.1 million, a 128.96% decline from a profit of RMB 41.78 million in the same period last year.
**Marketing Devours Profits** Doushen Education operates five business segments: art education services, livestream e-commerce, cultural tourism and study tours, smart education services, and AI education. The revenue growth was attributed to expanded sales in educational products/services, new business models launched in late 2024, and increased marketing investments targeting both B2C and B2B clients.
Yet, profitability suffered as sales expenses skyrocketed 300.15% YoY to RMB 464 million in the first three quarters, while R&D spending collapsed 77.7% to just RMB 3.29 million. The surge in marketing costs also pushed operating cash flow to negative RMB 239 million, down 1,078.85% YoY. The company explained this was due to shifting from third-party to self-operated promotions, with upfront cash outflows outpacing delayed collections.
**Can AI Bet Pay Off?** Founded in 1999 as an office equipment firm, Doushen pivoted to education after acquiring Chinese Future Education (founded by its current chairman, Dou Xin, a renowned Chinese language educator) in 2018. Despite rebranding and ventures like livestream commerce—following rival New Oriental’s success—the company struggled under China’s "double reduction" policy crackdown on tutoring.
From 2020 to 2023, Doushen racked up cumulative non-GAAP losses of RMB 26.44 billion. After completing debt restructuring in 2024, it refocused on AI education, launching products like "AI Super Training Field," which reportedly offers personalized tutoring at scale. However, AI-related revenue contributed just 15.29% (RMB 50 million) of Q3 sales.
While Doushen vows to deepen AI integration in education, its path to sustainable profitability remains uncertain amid heavy marketing burns and unproven tech-driven transformation.
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