Gaotu Techedu (NYSE:GOTU) reported second-quarter 2026 revenue growth and narrower adjusted losses as the education company emphasized operating efficiency, retention and disciplined investment across its online and offline businesses.
Net revenue rose 20.2% from a year earlier to nearly RMB 1.7 billion, while gross billings increased 19.4% to about RMB 2.7 billion, Chief Operating Officer Bin Luo said on the company’s earnings call. Gross profit grew 21.2% to more than RMB 1.1 billion, producing a gross margin of 66.5%.
Operating expenses and cash flow
Gaotu said its operating-expense ratio declined by 7 percentage points from the prior year as it worked to optimize user acquisition, middle-office functions and back-office operations. Total operating expenses increased 8.8% to nearly RMB 1.3 billion, a slower rate than revenue growth.
- Selling expenses increased 11.2% to RMB 913.2 million, or 54.7% of revenue.
- Research and development expenses rose 4.5% to RMB 154.8 million, or 9.3% of revenue.
- General and administrative expenses increased 1.8% to RMB 192.6 million, or 11.5% of revenue.
Net operating cash inflow increased 46.3% year over year to RMB 861.2 million. As of June 30, Gaotu had nearly RMB 4.0 billion in cash reserves, including cash equivalents, restricted cash, short-term investments and long-term investments. Deferred revenue, primarily tuition collected in advance, rose 18.9% to RMB 2.6 billion.
Growth across tutoring and learning services
Luo said non-academic tutoring services generated revenue growth of more than 30% year over year during the quarter and accounted for more than 40% of total revenue. Gross billings in the segment increased more than 20%, representing over 45% of companywide gross billings.
The company’s online business benefited from higher retention and service improvements, according to Luo. Retention for online-business enrollments during the spring season increased by more than 5 percentage points from the prior year. Gaotu has integrated artificial intelligence into tutor support and said the technology has improved the responsiveness, personalization and depth of its services.
Its traditional learning-services business recorded gross-billings growth of more than 15% and accounted for more than 40% of total gross billings. The company said it refined marketing content, adjusted acquisition channels toward higher-return areas and used AI to improve lead allocation and conversion management during the summer enrollment period.
Gaotu’s online one-on-one tutoring business posted more than 55% year-over-year growth in gross billings from new enrollments. Luo attributed the growth to investments since 2025 in talent supply and service-delivery systems.
Educational services for college students and adults grew revenue by more than 15% and represented more than 10% of total revenue. Combined revenue and gross billings from college learning programs and civil-service exam preparation businesses each increased more than 40%, Luo said.
Offline expansion remains selective
Gaotu said its two Dream Centers, located in Zhengzhou and Wuhan, had reached full capacity as of the second quarter. Management said the results support the replicability of its centralized learning-center model, though the company plans to expand carefully based on local demand and operating efficiency.
In response to an analyst question, Head of Strategy Mike Xu said offline education is becoming an important growth area, but the company will prioritize profitable growth over “blind expansion.” He said current offline improvement has been driven substantially by better renewals, classroom utilization and staff productivity rather than aggressive expansion of the physical footprint.
“Footprint growth itself is not the main KPI,” Xu said. He added that Gaotu will review performance by city and project, optimize resource allocation where needed, and potentially eliminate locations or projects that do not demonstrate the potential to meet its economic-return standards.
AI initiatives and capital returns
Founder, Chairman and Chief Executive Officer Larry Chen said AI is increasingly embedded in curriculum development, tutoring, quality control and user analysis. He said AI has improved content-development efficiency by five to eight times in certain use cases and reduced repetitive grading work, allowing tutors to focus more on guidance and personalized service.
Chen also said Gaotu’s traditional online business helped more than 200 students gain admission to China’s top two domestic universities since the beginning of 2026. The company’s offline overseas-study business helped nearly 700 students receive offers from universities ranked among the world’s top 50, he said.
As of Aug. 26, Gaotu had repurchased nearly 36.7 million American depositary shares on the open market for RMB 741.8 million, according to Senior Finance Director Willa Yao.
For the third quarter, Gaotu forecast total net revenue of RMB 1.838 billion to RMB 1.858 billion, representing year-over-year growth of 16.4% to 17.7%.
About Gaotu Techedu (NYSE:GOTU)
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.
