GOTU Gaotu Techedu Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2023

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Commission File Number: 001-38923

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Gaotu Techedu Inc.

 

5F, Gientech Building, 7 East Zone,

10 Xibeiwang East Road

Haidian District, Beijing 100193

People’s Republic of China
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ___X____ Form 40-F _________

 

 

 

 

 

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Exhibit Index

 

Exhibit 99.1—Press Release

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Gaotu Techedu Inc.
By	:	/s/ Nan Shen
Name	:	Nan Shen
Title	:	Chief Financial Officer

 

Date: August 30, 2023

 

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Exhibit 99.1

Gaotu Techedu Announces Second Quarter of 2023 Unaudited Financial Results

 

Beijing, China, August 30, 2023 —Gaotu Techedu Inc. (NYSE: GOTU) (“Gaotu” or the “Company”), a technology-driven education company and online large-class tutoring service provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2023.

 

Second Quarter 2023 Highlights[1]

 

Second Quarter 2023 Key Financial and Operating Data

(In thousands of RMB, except for percentages)

 

	For the three months ended June 30,
	2022				2023				Pct. Change
Net revenues		537,799				703,094			30.7%
Gross billings		611,668				882,325			44.2%
(Loss)/income from operations		(60,493	)			43,311			171.6%
Non-GAAP (loss)/income from operations		(10,039	)			50,309			601.1%
Net (loss)/income		(49,809	)			56,161			212.8%
Non-GAAP net income		645				63,159			9,692.1%
Net operating cash inflow		93,794				288,542			207.6%

 

[1] For a reconciliation of non-GAAP numbers, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" at the end of this press release. Non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses.

[2] Gross billings is a non-GAAP financial measure, which is defined as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. See "About Non-GAAP Financial Measures" and "Reconciliations of non-GAAP measures to the most comparable GAAP measures" elsewhere in this press release.

 

 

 

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Six Months Ended June 30, 2023 Highlights

First Six Months 2023 Key Financial and Operating Data

(In thousands of RMB, except for percentages)

	For the six months ended June 30,
	2022				2023				Pct. Change
Net revenues		1,262,414				1,410,386			11.7%
Gross billings		929,763				1,421,276			52.9%
(Loss)/income from operations		(35,240	)			138,450			492.9%
Non-GAAP income from operations		54,039				165,190			205.7%
Net income		3,909				170,014			4,249.3%
Non-GAAP net income		93,188				196,754			111.1%
Net operating cash (outflow)/inflow		(387,472	)			72,134			118.6%

 

Larry Xiangdong Chen, the Company’s founder, Chairman and CEO, commented, “Guided by our “effective growth” strategy, we grew gross billings substantially on both an annual and sequential basis, while also recording our third consecutive quarter of profitability and generating a sizable positive net operating cashflow of RMB288.5 million. Thanks to ongoing improvements in our organizational and operational efficiency, we delivered a triple-digit year-over-year increase in both income from operations and net income. Backed by ample cash reserves, we have been steadily ramping up our investments in talents, continuously refining our educational content and services, and persistently improving teaching quality and learning efficiency through Artificial Intelligence technological innovation and organizational upgrades. These efforts have strengthened our competitive edge in terms of content-driven customer acquisition and teaching quality, creating a flywheel effect.

I would like to emphasize that making learning better will always be Gaotu’s unwavering mission, and we are willing to embrace all opportunities and challenges that lie ahead. Our dedication to addressing customer needs, prioritizing teaching quality and enhancing learning outcomes will remain unchanged. Our continued investment in technological innovation and organizational capability will remain unchanged. Our commitment to our original aspiration to educate will remain unchanged.”

 

 

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Shannon Shen, CFO of the Company, added, “Our business achieved profitability while maintaining robust top-line growth momentum, with operating leverage from the economies of scale becoming more evident. Our net revenues increased by 30.7% year-over-year to more than RMB703.1 million, and our gross billings increased considerably by 44.2% year-over-year to RMB882.3 million. In addition, operating expenses as percentage of revenue decreased by roughly 14 percentage points compared to the same period last year. In terms of bottom-line, net income margin improved by approximately 17 percentage points to 8.0%, marking our third consecutive quarter of positive outcomes. On the operational front, we accomplished a synchronized growth trajectory, expanding both in scale and profitability. By continuously exploring more proprietary channels to gain new customers with competitive moats, we have enhanced our autonomy over customer acquisition and improved course delivery quality and efficiency.

 

Our solid financial performance stands as the ultimate testament to our resilient business model, strong organizational cohesion and continuous endeavors in customer acquisition and operational efficiency. Going forward, we will continue to drive effective growth and create long-term value for our stakeholders.”

Financial Results for the Second Quarter of 2023

Net Revenues

Net revenues increased by 30.7% to RMB703.1 million from RMB537.8 million in the second quarter of 2022, which was mainly due to the large year-over-year growth of gross billings as a result of the improvement of customer acquisition efficiency.

Cost of Revenues

Cost of revenues increased by 15.3% to RMB184.4 million from RMB160.0 million in the second quarter of 2022. The increase was mainly due to the growth of labor cost of instructors and tutors to cope with the growing business volume, as well as the increase of learning materials cost, which was partially offset by the decline of share-based compensation cost.

Gross Profit and Gross Margin

 

Gross profit increased by 37.3% to RMB518.7 million from RMB377.8 million in the second quarter of 2022. Gross profit margin increased to 73.8% from 70.2% in the same period of 2022.

Non-GAAP gross profit increased by 31.8% to RMB522.3 million from RMB396.4 million in the same period of 2022. Non-GAAP gross profit margin increased to 74.3% from 73.7% in the same period of 2022.

 

Operating Expenses

Operating expenses increased by 8.5% to RMB475.4 million from RMB438.3 million in the second quarter of 2022. The increase was primarily due to the growth of labor expenses, as well as a higher expenditure on marketing and branding activities, which was partially offset by the decline of share-based compensation expenses.

 

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Income/(Loss) from Operations

 

Income from operations was RMB43.3 million, compared with loss from operations of RMB60.5 million in the second quarter of 2022.

Non-GAAP income from operations was RMB50.3 million, compared with non-GAAP loss from operations of RMB10.0 million in the second quarter of 2022.

Interest Income and Realized Gains from Investments

 

Interest income and realized gains from investments, on aggregate, were RMB27.4 million, compared with a total of RMB9.8 million in the second quarter of 2022.

 

Other (Expense)/Income

 

Other expense was RMB6.2 million, compared with other income of RMB0.4 million in the second quarter of 2022.

 

 

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Net Income/(Loss)

 

Net income was RMB56.2 million, compared with net loss of RMB49.8 million in the second quarter of 2022.

 

Non-GAAP net income was RMB63.2 million, compared with non-GAAP net income of RMB0.6 million in the second quarter of 2022.

Cash Flow

 

Net operating cash inflow in the second quarter of 2023 was RMB288.5 million, which was primarily due to the increase of gross billings.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were both RMB0.21 in the second quarter of 2023.

Non-GAAP basic and diluted net income per ADS were RMB0.24 and RMB0.23, respectively, in the second quarter of 2023.

Share Outstanding

As of June 30, 2023, the Company had 174,705,405 ordinary shares outstanding.

Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments

 

As of June 30, 2023, the Company had cash and cash equivalents, restricted cash, short-term and long-term investments of RMB3,742.1 million in aggregate, compared with a total of RMB3,743.8 million as of December 31, 2022.

 

Business Outlook

Based on the Company’s current estimates, total net revenues for the third quarter of 2023 are expected to be between RMB728 million and RMB748 million, representing an increase of 20.1% to 23.4% on a year-over-year basis. These estimates reflect the Company’s current expectations, which are subject to change.

 

 

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Conference Call

The Company will hold an earnings conference call at 8:00 AM U.S. Eastern Time on Wednesday, August 30, 2023 (8:00 PM on Wednesday, August 30, 2023, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:

International: 1-412-317-6061

United States: 1-888-317-6003

Hong Kong: 800-963-976

Mainland China: 400-120-6115

Passcode: 3614057

A telephone replay will be available two hours after the conclusion of the conference call through September 6, 2023. The dial-in details are:

 

International: 1-412-317-0088

United States: 1-877-344-7529

Passcode: 9732498

Additionally, a live and archived webcast of this conference call will be available at http://ir.gaotu.cn/home.

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s ability to continue to attract students to enroll in its courses; the Company’s ability to continue to recruit, train and retain qualified teachers; the Company’s ability to improve the content of its existing course offerings and to develop new courses; the Company’s ability to maintain and enhance its brand; the Company’s ability to maintain and continue to improve its teaching results; and the Company’s ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company’s reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

 

 

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About Gaotu Techedu Inc.

 

Gaotu is a technology-driven education company and online large-class tutoring service provider in China. The Company offers learning services and educational content & digitalized learning products. Gaotu adopts an online live large-class format to deliver its courses, which the Company believes is the most effective and scalable model to disseminate scarce high-quality teaching resources to aspiring students in China. Big data analytics permeates every aspect of the Company's business and facilitates the application of the latest technology to improve teaching delivery, student learning experience, and operational efficiency.

About Non-GAAP Financial Measures

 

The Company uses gross billings, non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss), each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes.

 

The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered. For some courses, the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings have material limitations as an analytical metrics and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.

 

Non-GAAP gross profit, non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company’s business.

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” set forth at the end of this release.

 

The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

 

 

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Exchange Rate

The Company’s business is primarily conducted in China and a significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("USD") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to USD are made at a rate of RMB7.2513 to USD1.0000, the effective noon buying rate for June 30, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on June 30, 2023, or at any other rate.

For further information, please contact:

 

Gaotu Techedu Inc.

Investor Relations

E-mail: ir@gaotu.cn

 

Christensen

 

In China

Ms. Vivian Wang

Phone: +852-2232-3978

E-mail: gotu@christensencomms.com

 

In the US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: linda.bergkamp@christensencomms.com

 

 

 

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Gaotu Techedu Inc.

Unaudited condensed consolidated balance sheets

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

	As of December 31,				As of June 30,
	2022				2023				2023
	RMB				RMB				USD
ASSETS
Current assets
Cash and cash equivalents		819,911				767,702				105,871
Restricted cash		22				534				74
Short-term investments		2,923,864				2,859,384				394,327
Inventory, net		22,783				23,906				3,297
Prepaid expenses and other current assets		399,897				575,588				79,377
Amounts due from related party		-				10,660				1,470
Total current assets		4,166,477				4,237,774				584,416
Non-current assets
Operating lease right-of-use assets		83,663				86,095				11,873
Property, equipment and software, net		552,032				525,756				72,505
Land use rights, net		27,373				26,970				3,719
Long-term investments		-				114,474				15,787
Deferred tax assets		15,679				11,863				1,636
Rental deposit		9,502				9,309				1,284
Other non-current assets		21,449				19,803				2,731
TOTAL ASSETS		4,876,175				5,032,044				693,951
LIABILITIES
Current liabilities
Accrued expenses and other current liabilities       (including accrued expenses and other current       liabilities of the consolidated VIE without       recourse to the Group of RMB367,477       and RMB328,749 as of December 31, 2022       and June 30, 2023, respectively)		662,189				583,694				80,496
Deferred revenue, current portion of the       consolidated VIE without recourse to the Group		906,914				796,743				109,876
Operating lease liabilities, current portion       (including current portion of operating lease       liabilities of the consolidated VIE without       recourse to the Group of RMB21,281 and       RMB13,785 as of December 31, 2022 and       June 30, 2023, respectively)		38,326				29,433				4,059
Income tax payable (including income tax    payable of the consolidated VIE without    recourse to the Group of RMB260 and nil   as of December 31, 2022 and June 30,   2023, respectively)		1,793				6,330				873
Total current liabilities		1,609,222				1,416,200				195,304

 

 

 

 

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Gaotu Techedu Inc.

Unaudited condensed consolidated balance sheets

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

	As of December 31,				As of June 30,
	2022				2023				2023
	RMB				RMB				USD
Non-current liabilities
Deferred revenue, non-current portion of       the consolidated VIE without recourse       to the Group		52,419				125,833				17,353
Operating lease liabilities, non-current       portion (including non-current portion       of operating lease liabilities of the       consolidated VIE without recourse       to the Group of RMB17,457 and       RMB31,711 as of December 31, 2022       and June 30, 2023, respectively)		44,198				56,034				7,727
Deferred tax liabilities(including deferred      tax liabilities of the consolidated VIE without      recourse to the Group of RMB74,341 and      RMB73,152 as of December 31, 2022      and June 30, 2023, respectively)		74,507				73,444				10,128
TOTAL LIABILITIES		1,780,346				1,671,511				230,512
SHAREHOLDERS’ EQUITY
Ordinary shares		115				116				16
Additional paid-in capital		7,915,899				7,961,658				1,097,963
Accumulated other comprehensive loss		(64,062	)			(15,132	)			(2,087	)
Statutory reserve		40,380				40,380				5,569
Accumulated deficit		(4,796,503	)			(4,626,489	)			(638,022	)
TOTAL SHAREHOLDERS’ EQUITY		3,095,829				3,360,533				463,439
TOTAL LIABILITIES AND TOTAL   SHAREHOLDERS’ EQUITY		4,876,175				5,032,044				693,951

 

 

 

 

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Gaotu Techedu Inc.

Unaudited condensed consolidated statements of operations

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

	For the three months ended June 30,												For the six months ended June 30,
	2022				2023				2023				2022				2023				2023
	RMB				RMB				USD				RMB				RMB				USD
Net revenues		537,799				703,094				96,961				1,262,414				1,410,386				194,501
Cost of revenues		(160,004	)			(184,380	)			(25,427	)			(372,949	)			(344,362	)			(47,490	)
Gross profit		377,795				518,714				71,534				889,465				1,066,024				147,011
Operating expenses:
Selling expenses		(268,975	)			(324,065	)			(44,691	)			(553,149	)			(601,086	)			(82,894	)
Research and development expenses		(103,872	)			(98,402	)			(13,570	)			(227,179	)			(195,379	)			(26,944	)
General and administrative expenses		(65,441	)			(52,936	)			(7,300	)			(144,377	)			(131,109	)			(18,081	)
Total operating expenses		(438,288	)			(475,403	)			(65,561	)			(924,705	)			(927,574	)			(127,919	)
(Loss)/income from operations		(60,493	)			43,311				5,973				(35,240	)			138,450				19,092
Interest income		1,763				19,780				2,728				9,445				33,073				4,561
Realized gains from investments		8,074				7,658				1,056				19,733				18,382				2,535
Other income/(expense)		397				(6,153	)			(849	)			28,401				5,913				815
(Loss)/income before provision for income tax and share of results of equity investees		(50,259	)			64,596				8,908				22,339				195,818				27,003
Income tax benefits/(expenses)		450				(4,250	)			(586	)			(18,430	)			(21,619	)			(2,981	)
Share of results of equity investees		-				(4,185	)			(577	)			-				(4,185	)			(577	)
Net (loss)/income		(49,809	)			56,161				7,745				3,909				170,014				23,445
Net (loss)/income attributable to Gaotu Techedu Inc.'s ordinary shareholders		(49,809	)			56,161				7,745				3,909				170,014				23,445
Net (loss)/income per ordinary share
Basic		(0.29	)			0.32				0.04				0.02				0.98				0.13
Diluted		(0.29	)			0.31				0.04				0.02				0.95				0.13
Net (loss)/income per ADS
Basic		(0.19	)			0.21				0.03				0.02				0.65				0.09
Diluted		(0.19	)			0.21				0.03				0.01				0.63				0.09
Weighted average shares used in net (loss)/income per share
Basic		172,188,243				174,603,256				174,603,256				171,866,239				173,839,911				173,839,911
Diluted		172,188,243				179,933,329				179,933,329				175,382,752				179,520,278				179,520,278

 

Note: Three ADSs represent two ordinary shares.

 

 

 

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Gaotu Techedu Inc.

Reconciliations of non-GAAP measures to the most comparable GAAP measures

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

	For the three months ended June 30,												For the six months ended June 30,
	2022				2023				2023				2022				2023				2023
	RMB				RMB				USD				RMB				RMB				USD
Net revenues		537,799				703,094				96,961				1,262,414				1,410,386				194,501
Less: other revenues(1)		11,829				20,634				2,846				26,416				36,356				5,014
Add: VAT and surcharges		33,857				42,406				5,848				78,307				86,950				11,991
Add: ending deferred revenue		647,867				922,576				127,229				647,867				922,576				127,229
Add: ending refund liability		42,439				57,650				7,950				42,439				57,650				7,950
Less: beginning deferred revenue		599,719				770,577				106,267				996,218				959,333				132,298
Less: beginning refund liability		38,746				52,190				7,197				78,630				60,597				8,357
Gross billings		611,668				882,325				121,678				929,763				1,421,276				196,002

Note (1): Include miscellaneous revenues generated from services other than courses.

 

	For the three months ended June 30,												For the six months ended June 30,
	2022				2023				2023				2022				2023				2023
	RMB				RMB				USD				RMB				RMB				USD
Gross profit		377,795				518,714				71,534				889,465				1,066,024				147,011
Share-based compensation expenses(1) in cost of revenues		18,630				3,585				494				36,979				7,575				1,045
Non-GAAP gross profit		396,425				522,299				72,028				926,444				1,073,599				148,056
(Loss)/income from operations		(60,493	)			43,311				5,973				(35,240	)			138,450				19,092
Share-based compensation expenses(1)		50,454				6,998				965				89,279				26,740				3,688
Non-GAAP (loss)/income from operations		(10,039	)			50,309				6,938				54,039				165,190				22,780
Net (loss)/income		(49,809	)			56,161				7,745				3,909				170,014				23,445
Share-based compensation expenses(1)		50,454				6,998				965				89,279				26,740				3,688
Non-GAAP net income		645				63,159				8,710				93,188				196,754				27,133

 

Note (1): The tax effects of share-based compensation expenses adjustments were nil.

 

 

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