Gaotu Techedu (NYSE:GOTU) Issues Earnings Results, Misses Estimates By $0.08 EPS

Gaotu Techedu (NYSE:GOTU) released its quarterly earnings results on Thursday. The company reported ($0.09) EPS for the quarter, missing the consensus estimate of ($0.01) by ($0.08), Zacks reports. Gaotu Techedu had a negative return on equity of 25.77% and a negative net margin of 5.00%.The firm had revenue of $245.82 million for the quarter, compared to analyst estimates of $236.04 million.

Here are the key takeaways from Gaotu Techedu’s conference call:

• Positive Sentiment: Net revenue rose 20.2% year over year to nearly RMB 1.7 billion, while gross billings increased 19.4% to approximately RMB 2.7 billion. Adjusted operating and net losses narrowed by 38.5% and 37.6%, respectively, reflecting improved operating leverage.
• Positive Sentiment: Online non-academic tutoring revenue grew more than 30%, and spring enrollment retention increased by over 5 percentage points year over year. New-enrollment gross billings in online one-on-one tutoring rose more than 55%, suggesting stronger demand and service capacity.
• Positive Sentiment: AI adoption is improving efficiency across curriculum development, tutoring, grading, user insights, and operations; management cited five- to eightfold productivity gains in some content-development scenarios. Net operating cash inflow increased 46.3% to RMB 861.2 million, with nearly RMB 4.0 billion in cash and investments at quarter-end.
• Neutral Sentiment: Offline operations continued to deliver high double-digit first-half revenue growth, and Dream Centers in Zhengzhou and Wuhan reached full capacity. However, management emphasized selective, profitability-led expansion rather than rapid footprint growth, with underperforming sites potentially optimized or closed.
• Negative Sentiment: Gaotu remains loss-making, reporting a RMB 149.8 million operating loss and an RMB 135.8 million net loss for the quarter. Third-quarter revenue guidance of RMB 1.838 billion to RMB 1.858 billion implies slower year-over-year growth of 16.4% to 17.7%.

Gaotu Techedu Stock Performance

Shares of GOTU opened at $1.89 on Friday. Gaotu Techedu has a 1 year low of $1.40 and a 1 year high of $4.12. The company has a debt-to-equity ratio of 0.10, a quick ratio of 0.89 and a current ratio of 0.91. The company’s fifty day moving average is $1.75 and its two-hundred day moving average is $1.86. The stock has a market capitalization of $452.12 million, a P/E ratio of -8.98 and a beta of 0.70.

Analyst Ratings Changes

Separately, Weiss Ratings cut shares of Gaotu Techedu from a “sell (d-)” rating to a “sell (e+)” rating in a report on Thursday, July 23rd. One equities research analyst has rated the stock with a Sell rating, According to MarketBeat.com, the company has a consensus rating of “Sell”.

Insiders Place Their Bets

In other Gaotu Techedu news, CEO Xiangdong Chen bought 167,051 shares of the company’s stock in a transaction on Thursday, June 18th. The shares were bought at an average price of $2.50 per share, for a total transaction of $417,627.50. Following the transaction, the chief executive officer owned 8,014,529 shares of the company’s stock, valued at approximately $20,036,322.50. This trade represents a 2.13% increase in their position. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. Over the last 90 days, insiders purchased 500,000 shares of company stock valued at $1,175,032. 44.90% of the stock is currently owned by insiders.

Institutional Inflows and Outflows

Several large investors have recently bought and sold shares of the business. Walleye Trading LLC boosted its position in shares of Gaotu Techedu by 110.1% during the 2nd quarter. Walleye Trading LLC now owns 21,722 shares of the company’s stock worth $78,000 after purchasing an additional 11,383 shares in the last quarter. HRT Financial LP increased its holdings in shares of Gaotu Techedu by 86.6% in the 4th quarter. HRT Financial LP now owns 22,020 shares of the company’s stock valued at $51,000 after purchasing an additional 10,221 shares in the last quarter. Quadrature Capital Ltd acquired a new stake in shares of Gaotu Techedu in the fourth quarter valued at about $92,000. Centiva Capital LP acquired a new stake in shares of Gaotu Techedu in the third quarter valued at about $133,000. Finally, Federation des caisses Desjardins du Quebec purchased a new stake in Gaotu Techedu during the fourth quarter worth about $104,000. Hedge funds and other institutional investors own 48.42% of the company’s stock.

About Gaotu Techedu

Gaotu Techedu Inc (NYSE:GOTU), formerly known as GSX Techedu, is a Beijing-based provider of online education services in China. Since its founding in 2014, the company has built a technology-driven platform that delivers live, interactive tutoring sessions to students primarily in the K-12 segment. Gaotu Techedu’s rebranding in 2021 underscored its commitment to leveraging cutting-edge digital tools to expand access to quality instruction across core academic subjects.

The company’s main offerings include small-group and one-on-one classes in mathematics, Chinese, English, physics and chemistry, as well as targeted test preparation for high-stakes national and local examinations.