GOTU - Earnings call 3 2023 | Gaotu Techedu Inc.

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Operator

Hello, and welcome to the Gaotu Techedu Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Catherine Chen, Head of Investor Relations. Please go ahead.

Unknown Executive

operator. you, Thank everyone. Good evening, for Call. joining XXXX you Third Gaotu's Conference Earnings Thank Quarter My host I'll today. and name Catherine, is help the call earnings

Gaotu's IR quarter available the Newswire services. well earnings earlier PR release is and as was through on at website distributed company's ir.gaotu.cn as the for

provide management Larry Shen, Chairman our business the Executive and Shannon the Joining senior Officer; with will Gaotu's Larry quarter. Mr. and afterwards, more tonight me is call Shannon Chief financial detail. Chief Officer. Financial Chen, first Gaotu Ms. the then for from team Gaotu's in highlights performance Founder, And discuss will

Following their questions to prepared floor remarks, will the analysts. open from we

and under I'd Before statements contained conditions, are of beyond this market all remind provision predict, beliefs and call may Litigation the the which as like U.S. that as Private made statements. upon current Act based materially you or unknown and of forward-looking they achievements results, safe to and These we expectations difficult many actual company's forward-looking those and to uncertainties operating control company's of which XXXX. well or Securities are harbor will begin, cause from current of conference and the management's other in Reform are performance statements contain forward-looking to factors, any involve known the the differ risks,

the not with required company's as any Further information undertake law. statements, update filings in to company other applicable regarding obligation forward-looking public included under and U.S. is any SEC. this the risks The does except

comparison will measures management also non-GAAP call, for During purpose only. certain today's discuss

financial please third to release our earlier quarter GAAP measures to financial For a refer non-GAAP definition and today. results, published earnings non-GAAP reconciliation of of

this reminder, recorded. conference a is As being

call available please. pleasure now will founder, In live Gaotu's conference introduce website. of is to Larry, and archived on my It IR be addition, our this a webcast Larry.

Larry Chen

XXXX Quarter Gaotu's industry. all you of I like for of Thank to Earnings to joining for would us opportunity in Good education take to Third good you interest everyone. morning, gratitude and broader this support Conference the your evening, on Call. my and Gaotu express

Before remind are everyone figures unless to in today stated financial discussed quoted would RMB, I start, that otherwise. I like all

rising by our focus the and delivery strongest, aim speed students, and business the student's the meet learning and a needs and from at continuously race to product cycle, on Benefiting ] of to where enriching offerings needs learning on their continues efficiency [ life enhance learning capabilities their formats. we

months on iteration X are optimization dedicated in development path up currently rapid building forward, into initiatives. tracking directions a we business new of -- diving After operation and organizational competitiveness well-defined the and to continuously core XXXX, focused first defining our clear and

continue services company's strategically services cardio in We success, will are the for for learning and areas students invest and refine going tutoring important Gaotu products and to appetite. organization build and robust a services, educational for to resilient and traditional non-academic that to services

RMB reached reserves. XXX.X the as quarter coming and confident in billings and we of end to by profit third year-over-year decline in profitability than for million historical remain [indiscernible] well grew XXX.X year, improving strategies the our XX.X% In XXXX, segment the revenue in growth X.X% into clearly defined and point of constraints 'XX, a growth to net and RMB constantly of kind our million, that the Despite our operational prospects up year-over-year. driven each our seasonality gross due

aspects. highlights quarter share during will our repurchase continued demonstrating across third from discuss unwavering in also program we the meantime, competency X quarter, now our I our business growth the In projects. our the

first, we the learning products, educational teaching services. quality our to students putting continue the in First, and and user invest

our expanded and services tutoring we offer. the the further our product we grab, precise that knowledge alignment For our and and students' and academic cost between net traditional needs optimized the ensure metrics services, learning

refinement of market noticed of a the our and teaching in the users of and learning of and a rate. idea and an the services that our both Following We curriculum as services continuous our significant whole. results quality such gained have the of reflects non-academic retention improvement indicators the trust tutoring as

In XX% terms third of achieved of over year-over-year the traditional revenue growth services, revenue in quarter.

clients, scalability the well a We the tries our diverse and of met learning product students broadened variety and personalized or to online as our as existing we offerings, of sustainability students including have large-class, the levels. of services, at all needs as portfolio have enhanced introduced dual teaching our the of expand tutor offerings new adjacent which demands

nearly organizational of Second, by well college losses students by quality. and strategy, on adult, our structure turnaround enterprise. create we services have mouth the third to quality strategically service the growth back anchoring of lines educational signs drive as effective certain second to and dynamic more promising word on within the demand focus benefit acquisitions, quarter, for high and show customer quarter, optimized a areas scaled enhancing advantage our segment competitive highly we our with of This in terms growth. XXX% further a on Since our content referrals as focusing rapid premiumize in to

motivated sustainable I and will outstanding brand talent -- pool. efforts talents and Third, force drive and cultivate to our [indiscernible] a enable of employees consistently and is to driving professional growth. the business our success accumulating further replicate Building onboard [indiscernible] best and depth expansion. could skilled behind our practices and our and team team of a to we our expand us quantified exceptional

universities. The a our to we our record Their pool opportunity top-notch track provide into a we of seasoned gain of the program business traces number expansion targeted all have restructuring, the sophisticated industry beneficial with strategic our leading and Fostering recruitment track to talent development allows Talent [indiscernible] collaboration and a the for them the and highly Meanwhile, veterans. in called us with have XXXX Gaotu insight full of to successful brought business. initiated of proven the program the is prospectiveness industry. program in Since season candidates of the

So it's acquisition talent a efficiency. deepen understanding and increased mutual

acquisition Fourth, on in enhancing our we customer diversifying and on channels fortifying by treatment content edge competitive our treated acquisition strategies.

our private efficiency. overall initiatives, acquisition improving through leveraging So short off-line health a streaming model presence combination the form of business of improve sales in live to including our expanding book aim and and engaging our traffic, we video,

centers not particular, efficiency centers quality, study format. offline in enable service acquisition set delivery deliver entrance and visibility. content and off-line for collaboration online exam our acquire services. improve to or the also overseas business enhance up services These we related customers but In postgraduate and have multiple only We brand can us

strong Next, growth confidence company's it's development. and field we have in our

repurchased XXXX, we million and a approximately our cumulative total XX, ADS As of repurchase plan share X.X XXXX. of November November adopted had in

our pursuant through Board authorized In repurchase the upsizing may of which of November XX existing program, share XX, USD Directors today repurchase we of to to worth XXXX. ADS up addition, our million

our will repurchase value. program to long-term We promote shareholder our to enhance long-term continue

We growth. rapid efficiency, high-quality We initiatives see through our will growth these efforts the tremendous ongoing confident and organizations. services put and talents growth fostering Gaotu fast and customer deliver potential offering improve products for to our on Gaotu our believe of our services educational and refine acquisition and track ability to operations efficient are to

remarks. much. of my end very prepared is This you Thank the

to you of the the operational and pass CFO, the will I call over to quarter. our walk through financial Shannon, Now details

Nan Shen

XXXX. I Thank note unless third terms performance you, today in that thank the Larry, walk today. our for for operating quoted Please RMB everyone, our stated. financial joining of you quarter and you, call financial will through discussed all figures otherwise now and are

company increased XX.X% growth of million. the The Net year-over-year XXXX. during by RMB third to XXX.X maintained momentum quarter revenues

million. maintained the rose continue year-over-year RMB same development driving last a This strong increased to million RMB ample our resources of While by have cash than XXX.X which We that we year. business. gross the time highlights of XXX.X billings of X.X% higher to the position,

services Coordinating students online be efficiency of making scale ROI. Operations aligned and summer schedules operational customer benefit on quarter demonstrate from season of of to third seasonality. school coincides acquiring the with us for to acquisition. peak limited efforts of allowed school, new Educational capitalize maximize the and need to the targeted economies high And from salient for with year primary the it our vacation, a window customers. to opportunity also group

tutors the allocate and marketing During market in expenses with line we period, demand. could

quarters such, quarter. gross billings peak a to with first have impacting our our To fourth expenses notably designated been for and the during little retention third third amount As typically selling the higher during season, quarter, the when compared as the customer year which main our and good second schedules, profitability. the align overall

higher a of and marketing in operations learning We enhance X period, we to enrollment Throughout plan from also this ability observed effectiveness quarter's response. our on students. demand following find robust puts This efficiency ways. the and a the adapt our on in to efforts summer demand

in to recruitment, are of ] a [ taking more terms approach proactive acquire First, we tutor talent. Kenford

leading For universities. initiated called Gaotu and Talent we program a Fostering recruitment strategic collaborations universities in the XXXX targeted fall season, Program with normal

completing project the fostering align customer process. experience in As recruitment in day schedules. with and grasp fully equity and the and manner It allows result us selection order a candidates deepens, our and also the timely X-way to can culture progress us from engage X, with to acquisition

diverse front, profile, as at short range market to From to by effectiveness the expanding innovative, channels customer our to expand we time, continue same boost seminars. platforms which a At of on high-quality proprietary and lease. content-driven ROI our customer the refining help live presence video channels. could across such our improve our on-campus acquiring and aim Second, streaming platforms, acquisition will we

AI we sales internal by efficiency empower technologies the tutoring and research, Lastly, customer and services. enhance leveraging advanced on operational technology the field, legislate to our teams across will

approximately quarter. driver tutoring of will our through solidifying breaking have over increase revenue, in of increase over of walk contributed Learning services, year-over-year. I of an net we progress revenues a An the during came it services non-academic learning services and XX% from representing as role down the Next, you total XX% made traditional business. segment XX% other the key

refinement The product services have in students help learning the driver. non-academic middle underscoring segment scalable. develop year, made the spark problem-solving a considerable we more our to years in Our their utilizations, progress of annual its thinking passion growth content. for and quarter and independent key year-over-year recorded multiple sustainable a and growth tuning revenue and is skills engaging offerings position double-digit achieve double-digit making as high nearly fine After and X tutoring through expected and full it for

investing and which the during business quarter. component revenues areas The is We huge and our and other by rapid for adults, strategic discontinuing rate. certain educational segment accounted of services to a students for of growth college total made XX% in this services learning services crucial adjustments with potentials market around

as During the acquisition the year-over-year. mouth XXX% innovative quarter, we remaining growth by losses significantly strategies and the through services referrals, drove nearly customer reduced of organic word

Within the billings. XX% private graduate the segment, exam revenues net year-over-year business saw increase gross a posted in both more than and of entrance

test overseas present study our year-over-year achieved growth net of will overseas gross I price our revenues financials both and in Some now and businesses in billings. consulting triple numbers. detailed

this was of Gross profit revenues was XXX.X XX.X%. gross profit and quarter Our million year-over-year increased RMB million. to RMB XX.X% margin XXX.X cost

investments to Total quarter million. demand revenues. expenses of our million, This XXX.X selling attributable XXX.X address to season. operating summer marketing down, to was primarily XX% the increased year-over-year XX% the RMB it year-over-year during increased net XX.X% during the for robust expenses accounting RMB to increased Breaking

development increased investment increased to for expenses to XX.X% XX.X% This net million, XXX.X fees. RMB primarily accounting was and year-over-year research in revenue. on, AI-related attributable Moving of

accounting net loss RMB was XX.X year-over-year million, X% XX.X%. operations margin million Result net increased net to million, expenses XX.X%. X.X%. XXX.X margin was non-GAAP Net was was margin operating loss and net loss XX.X RMB negative increased year-over-year Non-GAAP margin year-over-year negative of income and non-GAAP XX.X negative to narrowed was revenues. XX.X% income RMB million, administrative operations RMB negative was and XX.X% million, Non-GAAP and XX% to and for X.X%. XX.X RMB ] General [ from operating from

was operating million. XXX.X cash outflow RMB Our net

balance Turning our to sheet.

year. As X.X a out of X.X billion, million of XXX.X than XX, same September time cash we investments. and in to last equivalents X.X in RMB RMB RMB This cash, short-term in higher and XXXX, investments long-term restricted the along billion with approximately total million RMB billion comes RMB XXX.X held of cash,

repurchase As program of the our over revenue that RMB of provisions share our Board a million, is XX XX-month primarily consists of million differed XXXX, XX, XXX.X of XX, XXXX, authorized Directors which loan. received on September November USD was balance worth It up in mentioning to period. a

XX, from open approximately aggregate market. approximately XXXX, repurchased XX.X have million November of we USD million X.X an for of ADS As the

of million, aspiration that Moreover, his long-term commitment million announce original our share in board prospects. using we existing pleased management's Larry which to program the to are XXXX to upsizing unfavoring approximately demonstrates X.XX our repurchase ADS purchased authorized our education. to funds today confidence demonstrate personal growth to unwavering XX also in

keep needs the and of original Going customers order sustainable company value user to forward, its outcomes to and will enhancing goal learning for create addressing shareholders. in long-term its

materially control from outlook which the everyone me involve cause and risks allow please could for that results beyond business predictions. which quarter, our forward-looking provide and statements, to next actual I contains our remind the are uncertainties, differ our Before to this

revenues are quarter for of to an be fourth on total RMB XXX million, Based X.X% the expected RMB representing net on basis. X.X% XXX increase between a current year-over-year million XXXX our of to estimates, and

remarks. concludes for ready we This are my Q&A you, prepared for section. the listening. Operator, everyone, now Thank

Operator

from Instructions] China [Operator the Renaissance. comes Yiwen first And with Zhang question

Yiwen Zhang

So enrollment. someone student everybody who time for done two know, had

us of more summer? what and perform enrollment we strategy how does -- on discuss details how to update our our last an So during was give

Nan Shen

Thanks, Yiwen. Thanks for your question.

financials are of operations reflected the the during partially summer So the break. QX

have the growth an maintained growth, terms we over In rate revenue of of XX%. overall

which adults. tutoring into services and services revenues of is traditional services for students college further Our primarily and and educational learning consist divided learning services, nonacademic

mentioned students from in strategic So a to sequential evolved advertises as strategy remarks, quarter last shift. and I like services is learning has for I expansion my college prepared the and for adult in mentioned there the The on a profitability. scale

strategic have some this units. and direction, phased So adjusted out we operational and gradually -- unprofitable

the adults last is actually year, in So as of last total the has of revenue, growth around like I our contributed rate third compared quarter for this And XXXX. the to college period XX% quarter same in over services revenue was segment in in And quarter, XXXX to grow somewhat from the and why we XXXX learning this than same dynamic QX the our our slower of year. XX%. mean, or that's influenced see third revenue revenue which guidance also, fourth less for the of and students

XX% nonacademic maintained still of tutoring and our however, K-XX-related income which And services, year-over-year the if traditional increase. we business, exclusively learning examine growth services it includes an over

process strong observed capable And break. from availability been service customers the demand high limited. summer have qualified during which the of We providers, is has of delivering high-quality

relatively As a a high has result, the revenue rate growth our in maintained QX.

the traditional behind quarter, third was The primary to were revenue X%. mainly a due the rate X gross the overall was and decrease firstly, actually, of more major to in like supply K-XX approximately the In acquisition than grow students the rate, business revenue. in summer last billing drivers to billings, the however, billings was slowly gross And gross year. significant the reasons: impressive the but is growth growth. growth our and the new our there during business growth of the rate contributor increase, a grade efficiency scale the compared drove Therefore, a meaningful year-over-year customer net

gross the And to strong level of secondly, We sufficient reserve demand billing some supply leading demand at a treasuries fully situations of be not where, not in break. point, met, could summer did less tutors, customer a resulting during collection.

achieve summer, self-reflecting So I we rate higher mean few and measures. next implemented after growth to XXXX, a a in have in

hand, up expect by to highly students traffic middle for and especially learners, aim related if providing operated and and of in like we build of students next the We you the services private from level. grade in even policy of acquired to attract the a boundaries year's pool within last On to planning students on. engage one or proactively compliance, pool the so constraints and we engaged the the and spring raise consulting technological the school and next to middle, see

student pool provide a growth. like of gross our kind summer's can next that so sufficient And billing for

hand, engaging just And meet and improve those the institutions mentioned normal like Larry of demands the fall schools And and communication collaborated this year better worked. efficiency other earlier, summer top also some in break. for supply during this new with recruitment year's tutor do process, next X-way graduations mentioned, we next on I with actually and to the we and recruitment

the the current growth So in progress on business to as of year-over-year nearly gross quarter, fourth basis. K-XX billings the of our has rate rebounded XX% a

that to want And details, your vacation. summer last address I for question, share Yiwen. we So hope really the

Yiwen Zhang

Yes, very that's clear.

Nan Shen

Thanks.

Operator

call this And question-and-answer any like for concludes closing Catherine session. Chen to the the would return I comments. to

Unknown Executive

the for operator. joining you, everyone, you, call today. Thank Thank

further any department management our questions, the e-mail contact directly. to Relations don't you our have at please or ir@gaotu.cn If hesitate Investor

are IR time. Have again welcome a on alert news to website. for night. company's Thank also great You subscribe the much our very your you to

Operator

Thank you.

has conference for now presentation. you concluded. the Thank mentioned, As attending today's

now disconnect may You your lines.

Gaotu Techedu (GOTU) 22 Nov 232023 Q3 Earnings call transcript