A transcript of the speech by Chen Xiangdong, the founder of GaoTu, at the Q1 Earnings Reports Analyst Meeting.

On May 15, 2025, Gaotu Education Technology Group (NYSE: GOTU) $Gaotu Techedu (GOTU.US)$ released its unaudited financial report for the first quarter of 2025.

The earnings report shows that as of March 31, 2025, Gaotu achieved revenue of approximately 1.5 billion yuan in the first quarter, a year-on-year increase of nearly 58%; operating profit was approximately 34.8 million yuan, with net income exceeding 0.12 billion yuan; adjusted net income was nearly 0.14 billion yuan, with a net margin as high as 9.2%.

As of March 31, 2025, the total cash and cash equivalents, restricted funds, short-term investments, and long-term investments held by the company reached 3.5 billion yuan; as of May 14, 2025, approximately 22.3 million American depositary shares had been repurchased, amounting to approximately 0.46 billion yuan; based on the existing share buyback plan, the board has approved a new share buyback plan to repurchase up to 0.1 billion dollars worth of shares within the next three years from the end of the existing buyback plan.

The following is the transcript of the speech made by Chen Xiangdong, the founder, chairman, and CEO of Gaotu Group, at the Earnings Reports Analyst conference held on the same day.

Looking back over the past year, a firm execution of the established Global Strategy was maintained, continuously refining and accumulating in key areas such as products, organization, Technology, and Operation, successfully achieving a leap in Business scale while driving a comprehensive enhancement of organizational capabilities. As we enter 2025, a strong growth momentum continues, with revenue, profit, user growth, and organizational effectiveness delivering better-than-expected results. In particular, the substantial release of profits has become the most symbolic achievement of this quarter, reflecting the effectiveness of continuous optimization of Operation structure and business efficiency.

In the first quarter of 2025, the company achieved revenue of nearly 1.5 billion yuan, with a year-on-year growth rate of about 58%, exceeding the upper limit of guidance. Operating profit was approximately 34.8 million yuan, with net income over 0.12 billion yuan. Under Non-GAAP, net income reached 0.14 billion yuan, with a net margin of 9.2%. These financial results not only demonstrate strong Business growth momentum but also showcase the relentless pursuit of high-quality growth and business efficiency. Shareholder returns are always prioritized, and the company will continue to create long-term value for shareholders. In this quarter, the company invested nearly 0.14 billion yuan in Share Buyback, and under the current buyback plan, the cumulative total amount of Share Buyback is approximately 0.46 billion yuan. The cumulative number of repurchased ADS accounts for 9.0% of the current circulating shares, making it an effective lever to enhance shareholder returns. As of March 31, 2025, the company held cash, cash and cash equivalents, restricted funds, and short- and long-term investments totaling 3.5 billion yuan, providing strong support for the company’s future strategic investments and sustainable development.

This series of solid financial performances is a result of the strategic investments and innovative transformations over the past three years. In particular, last year's investments in products, users, and offline Business are becoming engines driving revenue growth, improving efficiency, and contributing profits. We are accelerating the construction of a value closed-loop empowered by Education Technology. Through the deep integration of AI technology with educational products and services, significant progress has been made not only in enhancing user experience and learning outcomes but also in laying a solid foundation for the company's future long-term growth and profitability.

Next, I will introduce the company’s strategic progress and highlights this quarter from four aspects:

First, always user-demand oriented, achieving dual-driven growth in scale and value through continuous product innovation.

Our traditional Business continues to maintain stable growth, with good performance in user attendance and reputation. On this basis, we expand boundaries around users' diverse growth needs: from the expansion of online and offline courses of non-subject services to breakthroughs in personalized learning planning and tutoring solutions for high school students, from services for university students to planning study abroad paths. These new products not only closely align with users' real needs but also possess network effects and economies of scale potential, initially forming a replicable growth model that effectively enhances our brand recognition and market penetration.

Second, fully leveraging the core advantages of a digital-native education company, continuously promoting the extensive application and innovation of AI technology across various dimensions.

On the product side, we fully leverage the advantages of renowned teachers, successfully launched the product "Learn Spoken English with Daniel Wu" through the integration mode of "Lead IP + AI", and innovatively upgraded the learning experience. Leveraging the powerful attraction of famous teacher IP and the interactivity of AI technology, we provide students with a more immersive and personalized learning experience, greatly stimulating their learning motivation.

On the service side, we conduct AI training based on the teaching experience of excellent secondary instructors, introducing the "Smart Diagnosis Feature" that helps teachers identify students' weak learning areas, significantly enhancing the efficiency and precision of services, achieving large-scale replication of high-quality teaching assistance services. This feature has been validated in actual learning scenarios, laying a foundation for interdisciplinary and multi-grade applications.

In operation management, we empower refined traffic operations through AI, accurately identifying potential user profiles and conducting tiered management. Based on the characteristics of different levels, we promote a dual leap in traffic value and human efficiency by matching the optimal operation model. The extensive application of AI technology has also accelerated the optimization of workflow across departments, further enhancing internal management efficiency and demonstrating operational leverage.

At the strategic level, we continuously promote the upgrade of the AI Global Strategy. We have further strengthened our forward-looking layout and decision support capabilities in the field of AI, initiated the co-construction and collaboration of AI laboratories with top Universities and top talent, and continuously explore frontier areas in terms of technology foresight and application scenarios. We hope to drive education innovation through AI, creating a more intelligent, personalized, and scalable education ecosystem, while providing users with quality learning experiences and generating sustained growth and long-term value for the company.

Thirdly, we continue to build long-term competitiveness in organizational efficiency and talent supply systems.

"Good teachers" are the core competitiveness of Education. We will continue to strengthen the selection, training, and incentive mechanisms for teaching talents, focusing not only on teaching abilities but also on service awareness. By continuously enhancing employee happiness through the application of AI tools and reducing repetitive tasks, we fully showcase the humanistic care of teachers. We believe that a warm and systematic teacher resource system is the foundation for achieving standardized education quality and improving user satisfaction.

Fourth, we continue to take on social responsibility, enhancing long-term value and returns for Shareholders.

We always regard returning to Shareholders as one of the important missions of the company's development. Building on the previous buyback, our board of directors approved a new buyback plan today, intending to conduct up to 0.1 billion USD in Share Buyback over the next three years, which will take effect after the completion of the existing Share Buyback plan. We will continue to optimize the capital structure and enhance long-term returns for Shareholders while ensuring ample funds and strategic execution.

Today's Gaotu is the result of continuous investment, constant adjustments, and ongoing perseverance. During these days, we have experienced changes in cycles and also made strategic choices. However, we have always believed in the value of Education and have never ceased exploring the future. We also see more clearly that, based on maintaining profitable growth, we have sufficient resources and capabilities to invest in the future, expand boundaries, and stimulate creativity.

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