Gaotu Techedu (NYSE:GOTU) Announces Earnings Results, Misses Expectations By $0.08 EPS

Gaotu Techedu (NYSE:GOTU) issued its quarterly earnings results on Thursday. The company reported ($0.09) earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of ($0.01) by ($0.08), Zacks reports. The company had revenue of $245.82 million during the quarter, compared to the consensus estimate of $238.45 million. Gaotu Techedu had a negative return on equity of 29.69% and a negative net margin of 6.42%.

Here are the key takeaways from Gaotu Techedu’s conference call:

• Positive Sentiment: Net revenue rose 20.2% year over year to nearly RMB 1.7 billion, while gross billings increased 19.4% to approximately RMB 2.7 billion. Adjusted operating and net losses narrowed by 38.5% and 37.6%, respectively, reflecting improved operating leverage.
• Positive Sentiment: Online non-academic tutoring revenue grew more than 30%, and spring enrollment retention increased by over 5 percentage points year over year. New-enrollment gross billings in online one-on-one tutoring rose more than 55%, suggesting stronger demand and service capacity.
• Positive Sentiment: AI adoption is improving efficiency across curriculum development, tutoring, grading, user insights, and operations; management cited five- to eightfold productivity gains in some content-development scenarios. Net operating cash inflow increased 46.3% to RMB 861.2 million, with nearly RMB 4.0 billion in cash and investments at quarter-end.
• Neutral Sentiment: Offline operations continued to deliver high double-digit first-half revenue growth, and Dream Centers in Zhengzhou and Wuhan reached full capacity. However, management emphasized selective, profitability-led expansion rather than rapid footprint growth, with underperforming sites potentially optimized or closed.
• Negative Sentiment: Gaotu remains loss-making, reporting a RMB 149.8 million operating loss and an RMB 135.8 million net loss for the quarter. Third-quarter revenue guidance of RMB 1.838 billion to RMB 1.858 billion implies slower year-over-year growth of 16.4% to 17.7%.

Gaotu Techedu Price Performance

GOTU opened at $1.81 on Friday. The business has a fifty day moving average of $1.74 and a 200 day moving average of $1.86. The stock has a market cap of $435.33 million, a P/E ratio of -7.56 and a beta of 0.70. The company has a quick ratio of 0.89, a current ratio of 0.91 and a debt-to-equity ratio of 0.10. Gaotu Techedu has a 52-week low of $1.40 and a 52-week high of $4.12.

Insiders Place Their Bets

In other Gaotu Techedu news, CEO Xiangdong Chen bought 167,051 shares of the firm’s stock in a transaction dated Thursday, June 18th. The stock was acquired at an average cost of $2.50 per share, for a total transaction of $417,627.50. Following the completion of the transaction, the chief executive officer owned 8,014,529 shares in the company, valued at $20,036,322.50. This trade represents a 2.13% increase in their ownership of the stock. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is available at the SEC website. Insiders acquired a total of 500,000 shares of company stock valued at $1,175,032 in the last 90 days. Company insiders own 44.90% of the company’s stock.

Institutional Inflows and Outflows

Hedge funds have recently made changes to their positions in the stock. Millennium Management LLC lifted its holdings in Gaotu Techedu by 602.0% during the 1st quarter. Millennium Management LLC now owns 1,996,144 shares of the company’s stock valued at $6,487,000 after buying an additional 1,711,774 shares in the last quarter. Arrowstreet Capital Limited Partnership boosted its position in Gaotu Techedu by 157.3% in the 2nd quarter. Arrowstreet Capital Limited Partnership now owns 1,568,492 shares of the company’s stock valued at $5,662,000 after buying an additional 958,782 shares during the period. Marshall Wace LLP grew its stake in Gaotu Techedu by 3,628.9% in the 2nd quarter. Marshall Wace LLP now owns 788,541 shares of the company’s stock worth $2,847,000 after acquiring an additional 767,394 shares in the last quarter. Ameriprise Financial Inc. bought a new position in Gaotu Techedu in the 2nd quarter worth about $910,000. Finally, Jump Financial LLC purchased a new position in shares of Gaotu Techedu during the second quarter worth approximately $682,000. 48.42% of the stock is currently owned by institutional investors.

Analyst Upgrades and Downgrades

Separately, Weiss Ratings downgraded shares of Gaotu Techedu from a “sell (d-)” rating to a “sell (e+)” rating in a research note on Thursday, July 23rd. One investment analyst has rated the stock with a Sell rating, According to MarketBeat.com, the company currently has an average rating of “Sell”.

Gaotu Techedu Company Profile

Gaotu Techedu Inc (NYSE:GOTU), formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu’s rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects.

The company’s main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations.