GOTU - Earnings call 4 2023 | Gaotu Techedu Inc.

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Operator

Good day, and welcome to the Gaotu Techedu Inc. Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Katherine Chen, Head of Investor Relations. ahead. go Please

Katherine Chen

earnings Good available Fourth operator. PR Call. Thank for at distributed well host you name for as earnings Thank quarter ir.gaotu.cn the the and evening, services. company's Fiscal Newswire Gaotu's was the help I'll Quarter Katherine, and Conference through today. Year joining Gaotu's is release is you, earlier, and everyone. call on XXXX as My website Earnings IR

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

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

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

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

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

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

recorded. reminder, a this As conference is being

IR Gaotu's call this a on be In will webcast available website. archived live of and conference addition,

It and introduce Larry. our Founder to Chairman is now and Officer, Executive please? Chief my pleasure Larry,

Larry Chen

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

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

a continued quarter, strengths the During educational addressing including offerings for this to enhancing of while key our college in high-quality and demand services boundaries we and services, business adults. services the product for and services business traditional products across observed past and simultaneously notable core bolster and new initiatives. pushing we by uptick demand We focused educational our students on channels lines, remain non-academic tutoring learning learning

more into Investing to provide and a in as us profound such the acquire students, improving allowed personalized intelligence of and services, needs technologies and holistic insight outcomes. and advancing us learning user users to precise thereby experiences offerings and fundamental artificial emerging enabling

of and Our training provided our robust the business. teacher a for and industry organizational development have systems exceptional foundation capabilities sustainable insights, deep well-established recruitment

of and Now our I'm endeavors. expectations year fourth share report the pleased to quarter for results our future business for this

to Our expectations. million, our revenue XXX XX.X% RMB increased net exceeding year-over-year

growth continue. growth testament a in momentum grew improvement RMB and In activities this to million, year our billion, expect to cash quarter, from RMB X.Xx of over our full to efficiency. XX.X% increased by year-over-year, X.X indicating to to inflow our operating strong approximately XXX.X our operating ongoing accelerating the billing flow cash operating gross [indiscernible], net quarter, year-over-year the Our prior we fourth approximately an compared and of trend business the

XXXX, over ground growth work XXXX. solid for our X.X our XX, revenue RMB into As further laying reached of December deferred billion,

payment third-party cash business development. equivalents, cash, balance our and totaled on as short for as over support platforms RMB which cash Our lasting billion, long-term includes stable X cash, cash ensuring well balance, investments and restricted withdrawable

discuss the across from now business I will fourth our highlights quarter X aspects.

to [ civil and give user services efficiency the learning this learning and laser To offline products educational optimize learning Throughout service for overall students and areas First, we as established experience. on products and launching for in offline ground ] needed. boot on study adults, diligently remain camps, our services are and focused overseas integrated students' offering college process, needs can educational needs our boot of we the and exams focused such our post-graduate preparation. better entrance access exam boost both expanded centers. range exams, an We services prior on such to by and address potentials online, as and camps an as

currently In major universities addition, in Language as by and used houses that such practice, covering publications and collaboration textbook have developed Research breakthroughs these are Teaching instruction, as we several Press, through textbooks renowned Several evaluation. major publishing comprehensive and of solutions learning, high as with China. a series Foreign schools educational assessment achieved

products For services, across a improve educational XXXX delivery policies to communicated we the the quality. authorities learning we At increase same efforts compliance at refine mix. content and all course our relevant semester seeking proactively to during integrated and year, services levels, same guidance and retention rate regulatory with compared time, our fourth our on period the and significant ongoing traditional the last learning saw in thanks to

the live teachers explore channels, customer these gives have high-quality efficiency, Second, efficient short-form our we us faced livestream between house well acquisition. we video and acquisition channels. and online offline platforms the streaming operations, competitive in a still operational customer competitive live advantage edge as and leveraging streaming innovative avenues, diversified establishing continued into content our and enhance is in as space, expanded including substantial overlap channels our efforts to In

influencer adults, channels for We categories expanded and we brand particularly Douyin, students on regional visibility. have grown to leading actively certain our in to a college be meanwhile, educational offline boost

gaining business with sustained only insight and bringing but their also interactions growth down customer into engage deep to needs, us fostering channels, mix ensures through channel acquisition costs. The diverse allowed not comprehensive customers

success result fourth the quarter, a remained of demonstrating our level enhanced customer high in acquisition in a the of acquisition. As investment the our customer measures, efficiency at

organizational we consistent talent our pool and business Third, growth. to leveraged capabilities drive

that strategies one educators is for Gaotu's a believe of outstanding passion to coherence, scale strong positively and efficient we enhance organizational therefore, high ensure at is resilience top-tier our By crucial process by and most of to of nurture characterized effective students, teachers organization. and We the operation standards. team influencing education learning capabilities a to cultivating a systematically

best-in-class rapid in tutors consistent and industry. a the business continue expansion, in maintain standard the to organizational we While has booming hiring resulted the of instructors

prep industry. percentage rural the increased tutors entrance the enhancing psychologically our exam therefore, and the post-graduate master's with entrance experience in post-graduate responsibilities the Over as positioning provide the and test the In Development overall social we the project business, effectiveness [indiscernible], our with of emotionally, the of including with in quarter, professionally, China to our Gaotu remain XX%, preparation. social example, Fourth, provinces, from area an primary exams create can forefront first-hand attended Teachers fourth at Taking over event a us of has degree students organized committed partnership we Hope, forum school of and a fulfilling Foundation. teachers the Youth value. intelligence. on school XXX education principals with in rural with as actively insightful artificial principals' primary discussions to engaging XX online rural

China children to XX Foundation, education Education RMB mental family young well-being donated we to million and addition, Generation adolescents. improve In the Next the aiming of and

[indiscernible] to We education. equity aspirations, our educational commitment steadfast striving will remain and enhance in to access original our

society. Thank products cash efforts believe Gaotu's growth, is our are top-notch in promising confidence for cohesive you of for strong and further prepared our end educational organization line more talent that executing strategy we by and a top have a full robust while to achieve our on for products services, the future, delivering and with value profitability thus a we very pool, We shareholders much. XXXX. This my we devote both flow, generating enhancing the to And remarks. can highly learning long-term prepared consistently the

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

Nan Shen

our you, fiscal year Larry, you, fourth joining quarter I the thank walk and for now Thank call and performance you for XXXX. and operating our today. through everyone, will financial

driven gross inflow was X.X million. of The topping performance XX.X increased in a billings, During year-over-year rapid year-over-year accelerated reached from by surge healthy We percentage gross operational approximately our phase operating RMB efficiency, XXX.X of initiatives the XX.X% our growth billings core growth business net entered fourth also to demonstrated of promising witnessed and in business million, the the potential. In by new by better-than-expected XXX upper in our sustainable XX.X% guidance improvements expansion. net quarter, ongoing billion. the the increased end our our quarter, while lines. revenues Benefiting RMB to by cash RMB points. which

exceeded on cash, solid cash While, third-party business. X well short- payment platforms long-term long-term balance our restricted as cash, the investments billion, groundwork as RMB our growth for of equivalents, laying cash withdrawable and

total progress services Breaking learning revenue. more made business. year-over-year the walk it services XX% key Next, down, through I growth representing will net from services, have segment's XX% during came driver growth, and over the tutoring of over of quarter. traditional contributed solidifying we non-academic revenues XX% you Learning a than and the as of our other

new around non-academic Our tutoring. initiative centered

fundamental in self-motivation. learning have educational the been and students' to and habits few Over students' diligently enhance sparkling their and study quarters, learning, we while critical abilities thinking aim learning skills fostering interest designing to developing we tailored past products By needs. healthy

top-notch and shown of to tutoring our students. Underpinned digits our of combination and undergo high-caliber gross satisfied by year-over-year. course educational services by services, increased and billings refinement, iteration constant learning a products and Our triple with have popular offerings be non-academic

have our in competitive our maintaining edge enhanced While we tutors' consistently service capabilities. also structures, these

we needs. comprehensive products diversifying personalized a varied to and and by service formats, Additionally, users' educational established learning meet learning our product metrics have

in ongoing levels engage also improvement long-term regulatory capabilities ensures plan rates. In for further frameworks. monitored and Our policy curriculum we and This and the developments of with regulatory can healthy we authorities products to different for closely seek that at content within growth contributed retention have refinement proactively teaching to guidance business has compliance meantime, boundaries.

a continue maintain the to edge leading space. services in learning traditional online Our

of products, taking developing terms journeys. have and learning developed In personalized we curriculum approach by targeted more educational holistic tiered design to a and a

cultivated curated and have instructors influential carefully a of the established team highly-competitive and tutors. the most We industry also reputable and in

by we and to feedback customer high-quality channels while our have the unit have we valuable By business. in content enrollments, simultaneously acquisition, fourth gross and driven rapid back-end efficiently consistently customer cost. from achieved our integrating derive acquisition front-end user gathered insights acquisition new seamlessly the billings we efficiency. In developed reducing for enhanced growth quarter, For processes,

educational efforts innovation cash gross promising efficiency, more the grow optimized our educational learning from the study-related consecutive crucial business college services quarter, total around in focus XX% for accounted expansion both of saw quarter, and products. Gross our and to business are of XX% positive which improved prep prep revenues streaming and growth a for setting both other flow adults, growth billings. generated year-over-year by business space. Furthermore, live video stage entrance quarter, overseas for a prep than robust our growth revenue The refined trajectory. the services quarter. charting XXXX ongoing test in beyond. Driven business short this Particularly demand strategic its billings in and component and exam segment operational our post-graduate and XXX% and year-over-year Thanks rebounded the of overseas to more exam our for benefiting by domestic second of the market and more revenue is in students during our in to than the contribution

While our prep exam achieved quarterly business profit. civil service

revenues For X the full RMB approximately to net year XX.X% by grew billion. XXXX, our year-over-year

environment XX.X%, Non-GAAP gross was was X.X robust points are operational and non-GAAP grew billion. and able core While and the customer and with results our to user were Gross period needs by net to requirements. income margin customer based compliant diversify income RMB RMB higher financial over XX.X margin our X.X our remaining last net acquisition demand, deploy execution the capabilities. in billings competencies, diverse proactively our year. upgrade channels, attributable same on while meeting to swiftly was strengthening changes than XX.X% offerings and efforts of and year-over-year year-long million, teaching service to market resources X.X%. These regulatory we percentage By enhance organizational

operational embrace students XXXX, lines our providing customer detail. unleash to product our diversified across remain and they ahead and dedicated with along learning Leveraging capabilities, as potential will service formats with more opportunities and now exceptional Looking business metrics we the will experiences untapped financials present arise. we efficient acquisition our excellent and emerging learning in results. I further to

of year-over-year XX.X% year-over-year Breaking was quarter to Gross profit million. increased this This XXX.X our increased revenues net gross and customer robust space. Total especially of diverse was during accounting XX.X% the XX.X% operations in primarily short operating cost was during selling million. the million, XXX.X streaming revenue. channels, demand margin quarter benefiting to investments in expenses it RMB season, for increased expenses winter XXX.X RMB to the range to expanded down, profit the live increased acquisition and Our our year-over-year attributable address innovative XXX.X of to from video marketing RMB RMB our million, XX.X% XX.X%.

selling throughout ROI the high the in a Our expenses remained observed at year. quarter level

RMB from for XXX.X margin expenses net expenses loss and XXX.X And XX.X% XXX.X and million, operating increased million, net was year-over-year XXX XX% was year-over-year of of negative accounting from million, increased and was margin income RMB non-GAAP for XX.X%. Moving RMB income operations RMB XX.X% loss net administrative XX.X% loss million, negative General net on. was Research Loss RMB margin XX.X%. to XX.X%. Non-GAAP net million, non-GAAP and revenues. XXX.X was was was was million, to and accounting margin Non-GAAP XX.X%. development operating XXX operations and RMB revenues. negative negative

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

Turning to balance sheet. our

higher XXXX, X.XXXX cash in in along third-party XX, last with investments time same in long-term held also December platform, RMB billion million short-term XXX.X withdrawable balance a of around RMB point investments. the in X.X year. total cash, over restricted equivalents, the cash to of at RMB comes we RMB As around and billion This X billion cash than payment and

of As was in primarily our billion, consisted XX, of around X.X which tuition advance. deferred December balance revenue RMB received XXXX,

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

continue for Board to value guidance the of will long-term We accordance Directors buybacks stock the shareholders. and execute create of in our with

please risks (sic) RMB and and current that business control expected on Q&A everyone, the the for be section. first for allow provide beyond predictions. Based on net materially actual of XX.X% are quarter listening. we RMB XXXX Thank remind my million our uncertainties ] XXX concludes cause XX.X% could [ differ million, Total quarter, our to an forward-looking which year-over-year for increase a prepared between XXX are representing to outlook of me Before you, I for our contains the the next this XX.X% are everyone which remarks. revenue involve and statements, Operator, to results our from basis. This ready to now estimates,

Operator

[Operator question Instructions] Timothy The from first comes Zhao Sachs. with Goldman

Timothy Zhao

very I One videos, customers, remarks, And and the for the have on history acquisition prepared progress vacation, strong color short-form the and customer costs. the customer channels acquisition about I results. the the including you related secondly, the questions. acquisition some mentioned also or the share management in student on your to is winter could acquire upcoming Congratulations X think avenues. live comprehensive off-line streaming ongoing

XXXX, your number would of profit your or centers? terms color any share in on Or on you projected on of that contribution, think revenue some helpful. learning for plans be specifically very off-line, color I could the

Nan Shen

for Timothy, your Thanks, Sure. question.

First, vacation to let's terms happy demand And most recent revisit we very customer the updates for performance. acquisition winter winter vacation from share cost, in the performance of both the supply perspective. and are our

ability the requirements supply So reserves -- side. ] courses of Therefore, the meet is supply cash standards. operating very starting deliver of all limited. to high-quality the and curriculums on a winter very products environment statutory high-quality refining the of in The imposes high [ relatively institutions' like compliance important position including actually like capability the also with current the and continually

from the demand students. but like perceived a side, -- demand on then So strong we have the

comparison, supply growth quite of that's an we fully is traditional our growth scarcity excellent high of we from billings year, double-digit these we demand Actually, non-academic opportunity. vacation also, gross an the peak do our with all growth If behind high prepared for coupled our of And And a period quite and end year-over-year of the strong cash impressive. exclude maintained tutoring learning customer winter were winter growth services in our efficiency high presents fast season. we therefore, So year-over-year last a acquisitions. rate. collection same apple-to-apple the retentions has the high And foresee of services.

need certain end to have the back fulfill to channels, We video our further and and as students timely target end. team, on So has short in facilitate deployed explorations the the to streaming especially means our the our some well back-end parents their off-line tutors, for especially and new both abilities platforms customers demands. very requirement a short we time. our that process new these front their learning between channels to live high as the which these precisely also operations, -- channels, the collaboration the really Then needs needs meet to targeting for and

our light based decline meaningful the off-line in observation, different on vacation. also, winter you of light X and in basically our customer So actually operations, our -- off-line a And we businesses. channels about observed asked do acquisition cost

very our First, off-line and And insights channels business off-line into to to operations. to other in the we for support centers, some you with learning have our online business, and our start perspectives deploy operations our our to to are online some off-line happy hand, share we grow. we facilitate also do

off-line, efficiency others to interactions cater to their hybrid Currently, learning with teachers online courses aiming to learning off-line off-line needs. observed learning many a with and Well, and online, learning a among reason space So diverse we've for a classrooms classmates. desire start diversification is on why the numbers opt is to growing era, the and approach, parents we of and there engagements enter the adopted students for connections, needs. enhance return students' to taken in post-pandemic more because have the some into in well keenly

of institution, educational most important mission to our continually one an is customer demands. meet as So

accordingly. And So evaluate the we naturally management when and operation delicately adapt such the arise, other demand to our and products our background off-line education hand, capabilities. we extend on team's

Larry, brings considerable to years the which and we with in organizational and personal experience demands founder, contribute in especially embark our insights attract very business space, Our when industry off-line exploring align all top operations. operations, influence, of after can all capabilities, [indiscernible], customer on profound our off-line the expanding talents the those

reason the that's space. enter started So to why off-line we the

few in expansion the we a we started locations need plan then more optimizing factors penetration approach. most like outstanding of or acceptance And and Gaotu's operations, teachers consider a when the the to ability also our off-line recruit in of market faculties in importantly, adjusting to demand brand operate for employ selecting in a we So teaching by -- nurture and teaching selection where and principals -- process certain that and and to we and continuously when specific We're products our also dynamic influence or area. areas, students in of locally. and

from is the centers. also off-line reputation local a to development off-line to for the So of word-of-mouth cultivation requiring entails referrals, cycle, long learning operations user which sustained investment

will and sprouting care about await and teachers the growth business, ultimately, the fitting most outstanding for no and of online our curriculum off-line off-line, So be or it's we always patient and extremely it's services. students matter suitable

quarter on also our to limited impact expectations. And in continue will to the we those off-line So strive of financials. business meet and a XXXX, very the showed full year in tirelessly past

milestone of hope our the in your questions, you future. I update So address operations we Timothy. every off-line will that

Operator

Cai of Citibank. line with the Alice from comes question Next

Yijing Cai

the the on seems the QX, side? full share congratulations And on XXXX? one, management conservative, guidance slightly share have about performance the regarding Do your of And guidance perspective the the first cautious strong the regarding year company's X the in I the which a on please idea provided. this? could consider XQ. general questions for could guidance with to Firstly, for us second, be you you guidance And

Nan Shen

Alice, thanks question. for Sure. your

full can me a Let for of question of XXXX. take give so our whole your audience year the second we first, picture clients the

our substantial, quarter And XXXX, gross billings into fourth space of to extend single we into that each education of only level of reached the if part trend to the first we tutoring, growth, RMB QX in XXXX, our model. continues course We So a accelerating accelerate, our governance and metric let's quarter especially billings. This X.X in and growth The that of been billion, in able observed expansions. our new with growth. quarter economic into learning growth given making the results the the look through and with incremental sound from enrollments, guidance is have past expansion indicates subsequently in demand in is for of effectively our typically approximately years. and revenue business growth rising XXXX. And trajectory services. And compliance gross revenue X unit of business looking place, generate initiate retentions at healthy the highest furthermore, non-academic initiates tutoring non-academic dive clear

we we we confidence operational triple-digit non-academic our anticipate Therefore, parents. have in and among our and section. capabilities have established tutoring reputation So in students the growth year-over-year

While services, high is which business, edge space. for leading online in school the our maintain continue basically learning traditional a to

this existing our we that the college students this traditional leverage will unit anticipate far primary in learning XXXX. And of deepen growth We improvements focus sector mode. strategy. our are and profitability prioritize at see rebound will achieving rate we ascertain in exceed it business our always growth regarding and on services of that over revenue We to We economics for expansion XXXX. adults, glad as provide and advantages margin then the further to competitive QX effective level

content we are our in whole have commitment and into growth to radio, expanding streaming our high-quality in growth overall prospects diverse we path, quarter, structure. of lowered the elevate first sustainable And customer the to quarter, in see acquisition phase billings growth. And live in year. And confidence both growth we revenue based of platforms costs that of that confidence so channels like creating both second still future, near more our and guidance to you, your yes, generating willing for in accelerated in the short the and as And for are have revenue value unwavering the adjusting for quarter of off-line customer exploration questions. efficiency, XXXX, for acquisition we our Alice. considerations, secondly, the first on the acquisition Thank terms all for serves terms of gross So those in and revenues. goals of address billings have drivers targets effectively growth customer the customer from an rate our and in will basically our the XXXX, gross

Operator

Crystal The next comes question from CMS. with Li

Crystal Li

on in and Congratulations the behind color I your this? give margin gross year. quarter margin flat you And last profit this that us on noticed narrowed results. reason strong Could just share compared quarter the to forward? last please more outlook could you going your

Nan Shen

Thanks it's observation. a very Yes, good Yes. a lot.

GP few we to a a in reasons. percentage due This basis. in year-over-year margin a decrease GP So margin X.X year-over-year on decrease observed points was

and needs, of to constructed contributor, Firstly, complemented in smart small product terms by which classes. diverse off-line actually, we one-on-one metrics, a textbooks large revenue live user focused our meet classes classes, on have primarily online,

online these, the classes boosted of large margin. among So level GP live highest

gradually tutors. teachers proportion expands, But books tutors. well. to revenue provide for for teachers mix These business the peak reserved tutors from not new proactively we levels have reached -- season as of teachers need time preparation substantially small level. And is increasing, and affecting always, and revenue in impacting quarter. a classes GP full teachers the proportion capacity in period their in our winter generated also we As and the for and adopt our the classes, gradually always our the smart secondly, vacation, sufficient the gross Thus margins tutors during a our and fourth a off-line period training margin as our profit and learning and have of methodologies one-on-one yet profit margin

our better So serve students. they can

So we see these investments valuable. do as

So looking teacher long also the the on hope future in margin the in GP net our expected that gross our to margin And run, profit medium margin improve. term will depend are structure. the as your I and addressed question. forward, revenue competitor increases,

Operator

the like conference over Chen to I question-and-answer concludes Katherine Thank turn back you. closing any would Ms. This remarks. session. our for to

Katherine Chen

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

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

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

Nan Shen

you. Thank

Operator

Thank you. now you attending The Thank has concluded. presentation. conference for today's

You may now disconnect. .

Gaotu Techedu (GOTU) 27 Feb 242023 Q4 Earnings call transcript