Q2 FY2026
Filed Aug 27, 2026Second-quarter revenue and gross billings grew by more than 19%, operating losses narrowed, and third-quarter revenue guidance calls for further year-over-year growth.
Net revenues increased by 20.2%, gross billings increased by 19.4%, gross margin expanded, and operating and net losses narrowed substantially year over year. Operating cash inflow also increased by 46.3%. The first-half net loss and non-GAAP net loss widened year over year, while third-quarter guidance calls for 16.4% to 17.7% revenue growth.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenuesGAAP | RMB1,670.1 million | – | 20.2% |
| Gross billingsnon-GAAP | RMB2,689.1 million | – | 19.4% |
| Cost of revenuesGAAP | RMB559.2 million | – | 18.3% |
| Gross profitGAAP | RMB1,110.8 million | – | 21.2% |
| Gross profit marginGAAP | 66.5% | – | – |
| Non-GAAP gross profitnon-GAAP | RMB1,111.5 million | – | 21.1% |
| Non-GAAP gross profit marginnon-GAAP | 66.6% | – | – |
| Selling expensesGAAP | RMB913.2 million | – | – |
| Research and development expensesGAAP | RMB154.8 million | – | – |
| General and administrative expensesGAAP | RMB192.6 million | – | – |
| Total operating expensesGAAP | RMB1,260.6 million | – | 8.8% |
| Loss from operationsGAAP | RMB149.8 million | – | (38.1)% |
| Non-GAAP loss from operationsnon-GAAP | RMB143.0 million | – | (38.5)% |
| Interest income, netGAAP | RMB3.7 million | – | – |
| Realized gains from investmentsGAAP | RMB4.4 million | – | – |
| Other income, netGAAP | RMB4.8 million | – | – |
| Net lossGAAP | RMB135.8 million | – | (37.1)% |
| Non-GAAP net lossnon-GAAP | RMB129.1 million | – | (37.6)% |
| Basic net loss per ADSGAAP | RMB0.57 | – | – |
| Diluted net loss per ADSGAAP | RMB0.57 | – | – |
| Non-GAAP basic net loss per ADSnon-GAAP | RMB0.54 | – | – |
| Non-GAAP diluted net loss per ADSnon-GAAP | RMB0.54 | – | – |
| Net operating cash inflowGAAP | RMB861.2 million | – | 46.3% |
| Net revenues, first six monthsGAAP | RMB3,359.5 million | – | 16.6% |
| Gross billings, first six monthsnon-GAAP | RMB3,685.3 million | – | 17.3% |
| Loss from operations, first six monthsGAAP | RMB142.9 million | – | (31.0)% |
| Net loss, first six monthsGAAP | RMB101.3 million | – | 10.1% |
| Non-GAAP net loss, first six monthsnon-GAAP | RMB87.6 million | – | 26.1% |
| Net operating cash inflow, first six monthsGAAP | RMB32.8 million | – | (70.6)% |
third quarter of 2026 outlook
- Revenuebetween RMB1,838 million and RMB1,858 million
- Noterepresenting an increase of 16.4% to 17.7% on a year-over-year basis
Capital returns
- As of August 26, 2026, the Company had cumulatively repurchased approximately 36.5 million ADSs for approximately US$103.5 million under the aforesaid two share repurchase programs.
- As of August 26, 2026, the Company had repurchased RMB741.8 million under its aggregated share repurchase programs.
- The 2025 Share Repurchase Program authorizes repurchases of up to an aggregate value of US$100 million during the three-year period beginning upon the completion of the Company’s 2022 Share Repurchase Program.
What drove it
- Net revenue growth was mainly due to continued year-over-year growth in gross billings as a result of the Company's sufficient and effective response to strong market demand.
- High-quality educational products and learning services resulted in improved recognition of the Company's product and service offerings.
- Cost of revenues increased due to expansion of the instructors and tutors workforce, increased server and bandwidth cost, higher rental cost, and increased depreciation and amortization cost.
- Operating-expense growth reflected higher expenditures on marketing and branding activities and expansion of the employees workforce.
- The Company cited AI and digital tools as supporting efficiency gains across the user-acquisition funnel and middle- and back-office operations.
Concerns
- The Company remained loss-making, reporting a GAAP net loss of RMB135.8 million and a non-GAAP net loss of RMB129.1 million in the second quarter of 2026.
- Selling expenses increased to RMB913.2 million from RMB820.9 million in the second quarter of 2025.
- First-half GAAP net loss increased to RMB101.3 million from RMB92.0 million, and first-half non-GAAP net loss increased to RMB87.6 million from RMB69.5 million.
- First-half net operating cash inflow was RMB32.8 million, compared with RMB111.6 million in the same period of 2025.
- Interest income, net and realized gains from investments in the aggregate were RMB8.1 million, compared with RMB19.1 million in the second quarter of 2025.
What to watch
- Execution against third-quarter 2026 total net revenue guidance of between RMB1,838 million and RMB1,858 million.
- Whether gross-billings growth and product-and-service recognition continue to support revenue growth.
- The trajectory of selling expenses, marketing and branding spending, and operating losses.
- Whether AI and digital-tool initiatives continue to improve service efficiency and operating leverage.
- Cash flow performance following RMB861.2 million of second-quarter net operating cash inflow and RMB32.8 million for the first six months of 2026.
Balance sheet and cash flow
- As of June 30, 2026, cash and cash equivalents were RMB872,542 thousand.
- As of June 30, 2026, restricted cash was RMB57,069 thousand.
- As of June 30, 2026, short-term investments were RMB2,420,350 thousand.
- As of June 30, 2026, long-term investments were RMB642,908 thousand.
- As of June 30, 2026, cash and cash equivalents, restricted cash, short-term and long-term investments were RMB3,992.9 million in aggregate, compared with RMB3,972.5 million as of December 31, 2025.
- As of June 30, 2026, short-term borrowings of the consolidated VIEs without recourse to the Group were RMB380,098 thousand.
- As of June 30, 2026, long-term borrowings of the consolidated VIEs without recourse to the Group were RMB155,171 thousand.
- Net operating cash inflow in the second quarter of 2026 was RMB861.2 million.
Analysis
Gaotu reported a stronger second quarter on top-line growth and operating leverage. Net revenues increased by 20.2% to RMB1,670.1 million and gross billings increased by 19.4% to RMB2,689.1 million. Management attributed revenue growth to gross-billings growth, its response to strong market demand, and improved recognition of its educational products and learning services.
Gross profit increased by 21.2% to RMB1,110.8 million, while GAAP gross profit margin increased to 66.5% from 66.0%. Non-GAAP gross profit margin increased to 66.6% from 66.1%. Cost of revenues increased by 18.3%, below net-revenue growth, despite higher instructor and tutor headcount, server and bandwidth costs, rental cost, and depreciation and amortization.
Operating expenses increased by 8.8% to RMB1,260.6 million, materially slower than revenue growth. Selling expenses increased to RMB913.2 million, research and development expenses increased to RMB154.8 million, and general and administrative expenses increased to RMB192.6 million. This expense profile supported a narrower GAAP loss from operations of RMB149.8 million versus RMB241.9 million and a narrower non-GAAP loss from operations of RMB143.0 million versus RMB232.7 million. GAAP net loss narrowed to RMB135.8 million and non-GAAP net loss narrowed to RMB129.1 million.
Cash generation was a notable second-quarter strength, with net operating cash inflow increasing by 46.3% to RMB861.2 million. Cash and cash equivalents, restricted cash, short-term and long-term investments totaled RMB3,992.9 million as of June 30, 2026, compared with RMB3,972.5 million as of December 31, 2025. The Company also reported cumulative repurchases of approximately 36.5 million ADSs for approximately US$103.5 million as of August 26, 2026. The first-half figures warrant attention because net loss increased to RMB101.3 million from RMB92.0 million and net operating cash inflow declined to RMB32.8 million from RMB111.6 million.
For the third quarter of 2026, Gaotu expects total net revenues between RMB1,838 million and RMB1,858 million, representing year-over-year growth of 16.4% to 17.7%. The outlook indicates continued revenue growth, though the filing provides no guidance for profitability, gross margin, operating expenses, or cash flow. The key reported operating themes are demand response, offline expansion supported by online brand equity, and deeper AI deployment intended to improve product experience, service efficiency, and organizational productivity.
Management, verbatim
Our sustained, user-focused investments in educational products, learning services, and organizational capabilities are steadily translating into healthier unit economics and a more efficient operating system.
Larry Xiangdong Chen, Founder, Chairman and CEO
Our net operating cash inflow increased by 46.3% year over year to RMB861.2 million during the quarter, reflecting the broad-based improvements in our organizational capabilities and operating efficiency.
Robin Bin Luo, COO
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported second-quarter metrics
- Segment revenue and segment profitability disclosure
- Free cash flow
- Dividend declaration or dividend payment
- Third-quarter gross-margin guidance
- Third-quarter operating-expense guidance
- Third-quarter tax-rate guidance
- Third-quarter profitability guidance
- Prior-quarter cash flow comparison
- Prior guidance, which was not provided in the input document
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.