Interface News reporter | Zha Qinjun
Interface News Editor | Song Jiannan
Continue to increase investment to seize market shareBestcatfishbaitThe NYSE:GOTU is still not out of the loss quagmire.
On May 21st, Gaotu released its unaudited quarterly results for fiscal year 2024. As of March 31, 2024, its first-quarter revenue was 9. 5%.Bestcatfishbait.47 billion yuan, an increase of 33% over the same period last yearBestcatfishbait.9%; the net loss was 12.3 million yuan, compared with 113.9 million yuan in the same period last year, which turned from profit to loss compared with the same period last year, and the net profit was 3.04 million yuan under non-American general accounting standards.
In terms of growth, Gao Tu created the largest increase since the "double reduction" in the second quarter of 2021. Explaining the revenue growth, the company said this was mainly due to "the full and efficient acceptance of strong market demand", resulting in sustained year-on-year growth in cash revenue in 2023.
After the implementation of the "double reduction", the non-compliant small and medium-sized training institutions in the market have been cleared out one after another, but the market demand is still strong, and the industry Matthew effect is becoming more and more significant. Not only the high road, New Oriental, good Future, University Education and other K12 non-disciplinary training and traditional learning service business have achieved rapid growth.
The reason for the change from profit to loss, Gao Tu explained at the earnings meeting that the market is expected to be further concentrated, so increase investment to undertake more market share, resulting in losses caused by "overruns" of business costs and operating expenses in the short term.
Gao Tu shares tumbled 19% to $6.61 at one point when trading opened on May 21, shortly after the results were disclosed.
At present, the high road has been transformed to quality education, vocational education, studying abroad, skills training, including postgraduate entrance examination, public entrance examination, medical finance and other vocational examinations, adult English, application for studying abroad, and so on.
Learning services remain the main source of revenue, contributing more than 95% of revenue, of which 75% come from non-disciplinary tutoring services and high school discipline training.BestcatfishbaitHis traditional learning service increased by about 35% compared with the same period last year. The company's management expects revenue to grow by more than 45% in the second quarter of this year.
Another key component is college and adult education, which accounts for about 20% of total revenue in the quarter, up more than 30% from a year earlier. The better-than-expected performance of this market segment is mainly due to the rapid growth of services related to studying abroad, which expanded the number of users through the streaming platform this quarter.
While increasing investment in online channels such as live streaming and short videos, Gaotuo is speeding up its offline expansion. At present, many business lines such as high-way postgraduate entrance examination and studying abroad are arranged in Beijing, Zhengzhou, Wuhan and other parts of the country. On the product side, the company not only provides online live broadcast of large classes, but also explores offline, online one-on-one and other forms.
But at present, the impact of offline business on financial performance is very limited. Shen Nan, CFO of Gaotu, said in the fourth quarter of 2023 that offline operation development is a long cycle, from user training to word-of-mouth recommendation, requires continuous investment.
Gao Tu is also exploring "Education + AI", but its artificial intelligence applications are mainly focused on dealing with internal efficiency rather than external tools, including student question and answer, product research and design, user service, customer center and overall internal operational coordination.
In an exclusive interview with interface education last October, Liu Wenyong, head of the business of Gao Tu University, mentioned that AI had been promoted to a strategic level within Gao Tu. In the company's internal speech on its ninth anniversary last year, founder Chen Xiangdong identified three major business directions, namely, online + offline + OMO, live short video (including Douyin, video number), and ChatGPT+ education.
Chen Xiangdong also mentioned that as a strategic project, a large amount of money will be invested in in-depth exploration of GPT-related directions, and a number of exploration teams will be set up internally, and excellent external teams will not be ruled out.
Compared with the "double reduction" in the previous two years, Gao Tu is more willing to spend money on various expenses. The cost of the main business in the first quarter reached 271.4 million yuan, an increase of nearly 70% over the same period last year, mainly due to the increase in labor costs and textbook costs for lecturers and second lecturers.
The operating expenses in the first quarter were 753.2 million yuan, an increase of 66.6% over the same period last year, mainly due to the increase in labor costs and the increase in expenditure on marketing activities.
Of this total, sales expenses were 506.4 million yuan, an increase of 83% over the same period last year; R & D expenses increased to 151.6 million yuan from 96.98 million yuan in the same period last year, an increase of 56.3% over the same period last year; the number of teaching and research staff increased by nearly 50% over the same period last year; and administrative expenses increased to 95.19 million yuan from 78.17 million yuan in the same period last year.
The gross profit of Gaotuo in the first quarter was 675.5 million yuan, an increase of 23.4% over the same period last year; the gross profit was 71.3%, compared with 77.4% in the same period last year.
Shen Nan attributed the year-on-year decline in gross profit margin to "changes in the income mix". Of all the business models, online Taipan has the highest profit margin, but now the company has expanded classes such as one-on-one and offline small classes, changing the income structure while also affecting the growth of profit margins, especially the expansion of offline learning centers.
As of March 31, 2024, the total amount of cash and cash equivalents, restricted funds, short-term investments and long-term investments held by Gaotao amounted to 3.7976 billion yuan.
In November 2023, Gao Tu raised the total amount of share buybacks, that is, to buy back up to $80 million worth of shares by November 22, 2025. As of May 20, 2024, Gaotao had repurchased about 4.87 million American depositary shares, worth about $12.44 million.
Gao Tu expects revenue of about 908 million to 928 million yuan in the second quarter of 2024, an increase of 29.1 to 32 percent over the same period last year.