BEIJING, Sept. 09, 2026 (GLOBE NEWSWIRE) -- 17 Education & Technology Group Inc. (NASDAQ: YQ) ("17EdTech" or the "Company"), a leading AI-powered application service provider focused on personalized learning solutions, today announced its unaudited financial results for the second quarter of 2026.
Second Quarter 2026 Highlights(1)
-- Net revenues were RMB90.1 million (US$13.3 million), compared with net
revenues of RMB25.4 million in the second quarter of 2025.
-- Gross margin was 69.2%, compared with 57.5% in the second quarter of
2025.
-- Net income was RMB1.1 million (US$0.2 million), compared with net loss of
RMB26.0 million in the second quarter of 2025.
-- Net income as a percentage of net revenues was 1.2% in the second quarter
of 2026, compared with negative 102.1% in the second quarter of 2025.
-- Adjusted net income (non-GAAP), which excluded share-based compensation
expenses of RMB3.6 million (US$0.5 million), was RMB4.7 million (US$0.7
million), compared with adjusted net loss (non-GAAP) of RMB18.9 million
in the second quarter of 2025.
-- Adjusted net income (non-GAAP) as a percentage of net revenues was 5.2%
in the second quarter of 2026, compared with negative 74.3% in the second
quarter of 2025.
First Half 2026 Highlights(1)
-- Net revenues were RMB189.5 million (US$27.9 million), compared with net
revenues of RMB47.1 million in the first half of 2025.
-- Gross margin was 65.4%, compared with 47.7% in the first half of 2025.
-- Net loss was RMB18.3 million (US$2.7 million), compared with net loss of
RMB56.9 million in the first half of 2025.
-- Net loss as a percentage of net revenues was negative 9.6% in the first
half of 2026, compared with negative 120.9% in the first half of 2025.
-- Adjusted net loss (non-GAAP), which excluded share-based compensation
expenses of RMB7.8 million (US$1.2 million), was RMB10.4 million (US$1.5
million), compared with adjusted net loss (non-GAAP) of RMB41.3 million
in the first half of 2025.
-- Adjusted net loss (non-GAAP) as a percentage of net revenues was negative
5.5% in the first half of 2026, compared with negative 87.7% in the first
half of 2025.
1 For a reconciliation of non-GAAP numbers, please see the table
captioned "Reconciliations of non-GAAP measures to the most
comparable GAAP measures" at the end of this press release.
Mr. Andy Liu, Founder, Chairman and Chief Executive Officer of the Company commented, "We are pleased to report another quarter of strong progress, with net revenues increasing 254.6% year over year and both GAAP and non-GAAP profitability achieved for the first time. More importantly, these results further validate our strategic transformation into an AI-powered application service provider and demonstrate the scalability and operating leverage of our evolving business model."
"As we continue to extend our AI capabilities across the education ecosystem, we recently introduced a dedicated AI agent for teachers, designed to support key teaching workflows, including assessment, content generation and learning analytics, building upon our district-level AI agent initiatives and student-facing personalized learning services. Together, our district-level, teacher-facing and student-facing AI applications are forming an interconnected ecosystem spanning education administration, teaching and personalized learning. Going forward, we will continue to leverage AI to enhance our products and internal workflows, improve operating efficiency and support healthy, sustainable growth," he added.
Ms. Sishi Zhou, Chief Financial Officer of the Company, commented, "Our second-quarter results underscore the improving economics of our evolving business model. Gross margin expanded to 69.2%, while continued revenue growth and disciplined cost management enabled us to achieve our first quarterly GAAP net profit. We are particularly encouraged that this improvement was achieved while continuing to invest in AI capabilities and product innovation."
"With a cash position of RMB456.9 million as of quarter end, we maintain a strong financial position to support continued investment in innovation and long-term growth. We will remain disciplined in capital allocation as we balance growth investments with our commitment to sustainable profitability and long-term shareholder value creation."
Second Quarter 2026 Unaudited Financial Results
Net Revenues
Net revenues for the second quarter of 2026 were RMB90.1 million (US$13.3 million), representing a year-over-year increase of 254.6% from RMB25.4 million in the second quarter of 2025. The substantial revenue growth was primarily driven by the continued expansion of Yiqi Aixue, the Company's consumer-facing AI application service, together with ongoing contributions from district-level and school-based projects.
Cost of Revenues
Cost of revenues for the second quarter of 2026 was RMB27.8 million (US$4.1 million), representing a year-over-year increase of 157.2% from RMB10.8 million in the second quarter of 2025, which was mainly due to the increased related service delivery costs, driven by the continued growth of Yiqi Aixue.
Gross Profit and Gross Margin
Gross profit for the second quarter of 2026 was RMB62.3 million (US$9.2 million), compared with RMB14.6 million in the second quarter of 2025.
Gross margin for the second quarter of 2026 was 69.2%, compared with 57.5% in the second quarter of 2025, representing an improvement of 11.7 percentage points. The increase in gross margin was primarily attributable to the growing contribution of Yiqi Aixue, the Company's consumer-facing AI application service and the continued optimization of the Company's revenue mix.
Total Operating Expenses
The following table sets forth a breakdown of operating expenses by amounts and percentages of revenue during the periods indicated (in thousands, except for percentages):
For the three months ended June 30,
2025 2026 Year-
RMB % RMB USD % over-year
------- ----- ------ ----- ---- ---------
Sales and
marketing
expenses 13,995 55.1% 26,894 3,964 29.9% 92.2%
Research and
development
expenses 12,002 47.2% 20,025 2,951 22.2% 66.8%
General and
administrative
expenses 17,066 67.2% 16,032 2,363 17.8% -6.1%
------ ----- ------ ----- ----
Total operating
expenses 43,063 169.5% 62,951 9,278 69.9% 46.2%
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Total operating expenses for the second quarter of 2026 were RMB63.0 million (US$9.3 million), including RMB3.6 million (US$0.5 million) of share-based compensation expenses, representing a year-over-year increase of 46.2% from RMB43.1 million in the second quarter of 2025.
Sales and marketing expenses for the second quarter of 2026 were RMB26.9 million (US$4.0 million), including RMB1.1 million (US$0.2 million) of share-based compensation expenses, representing a year-over-year increase of 92.2% from RMB14.0 million in the second quarter of 2025. The increase was primarily attributable to increased sales and marketing investment activities in support of the continued expansion of Yiqi Aixue.
Research and development expenses for the second quarter of 2026 were RMB20.0 million (US$3.0 million), including RMB0.9 million (US$0.1 million) of share-based compensation expenses, representing a year-over-year increase of 66.8% from RMB12.0 million in the second quarter of 2025. The increase in research and development expenses was primarily attributable to higher personnel-related costs associated with research and development activities to support a broader range of AI application scenarios.
General and administrative expenses for the second quarter of 2026 were RMB16.0 million (US$2.4 million), including RMB1.5 million (US$0.2 million) of share-based compensation expenses, representing a year-over-year decrease of 6.1% from RMB17.1 million in the second quarter of 2025. The decrease was primarily attributable to lower share-based compensation expenses and disciplined cost management.
Loss from Operations
Loss from operations for the second quarter of 2026 was RMB0.6 million (US$0.1 million), compared with RMB28.5 million in the second quarter of 2025. Loss from operations as a percentage of net revenues for the second quarter of 2026 was negative 0.7%, compared with negative 112.0% in the second quarter of 2025.
Net Income (Loss)
Net income for the second quarter of 2026 was RMB1.1 million (US$0.2 million), compared with net loss of RMB26.0 million in the second quarter of 2025. Net income as a percentage of net revenues was 1.2% in the second quarter of 2026, compared with negative 102.1% in the second quarter of 2025.
Adjusted Net Income (Loss) (non-GAAP)
Adjusted net income (non-GAAP) for the second quarter of 2026 was RMB4.7 million (US$0.7 million), compared with adjusted net loss (non-GAAP) of RMB18.9 million in the second quarter of 2025. Adjusted net income (non-GAAP) as a percentage of net revenues was 5.2% in the second quarter of 2026, compared with negative 74.3% of adjusted net loss (non-GAAP) as a percentage of net revenues in the second quarter of 2025.
Please refer to the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" at the end of this press release for a reconciliation of net loss under U.S. GAAP to adjusted net loss (non-GAAP).
Cash and Cash Equivalents, Restricted Cash and Term Deposits
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