20-F: Gaotu Techedu Inc. Reports Strong Revenue Growth in 2025

Gaotu Techedu Inc. announced a significant increase in net revenues for the fiscal year 2025, driven by strong performance in its learning services segment.

Summary

• Gaotu Techedu Inc. reported a 35.0% increase in net revenues for the fiscal year 2025, reaching RMB 6,146.8 million (US$879.0 million).
• The company's learning services segment saw a 36.6% revenue increase, attributed to strong market demand for traditional learning services and non-academic tutoring.
• Despite revenue growth, the company reported a net loss of RMB 323.3 million (US$46.2 million) for 2025, an improvement from the RMB 1,049.0 million net loss in 2024.
• Operating expenses increased by 8.6% to RMB 4,648.2 million (US$664.7 million), with selling expenses being the largest component.
• The company's cash position improved, with cash and cash equivalents, restricted cash, short-term and long-term investments totaling RMB 3,980.5 million (US$569.2 million) in current assets and RMB 1,253.7 million (US$179.3 million) in total shareholders' equity as of December 31, 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting significant revenue growth and an improved net loss, demonstrating resilience and strategic adaptation in a challenging regulatory environment, though the continued net loss and high operating expenses present ongoing concerns.

Positives

• Net revenues increased by 35.0% to RMB 6,146.8 million (US$879.0 million) in 2025.
• Learning services revenue grew by 36.6% to RMB 6,039.0 million (US$863.6 million) in 2025.
• Net loss improved significantly to RMB 323.3 million (US$46.2 million) in 2025, compared to RMB 1,049.0 million in 2024.
• Gross profit increased by 33.8% to RMB 4,145.1 million (US$592.7 million) in 2025.
• The company's cash and cash equivalents and short-term investments remain substantial, totaling RMB 3,304.9 million (US$472.6 million) as of December 31, 2025.

Negatives

• The company reported a net loss of RMB 323.3 million (US$46.2 million) for the fiscal year 2025.
• Operating expenses increased by 8.6% to RMB 4,648.2 million (US$664.7 million) in 2025.
• Selling expenses, the largest operating expense, increased by 11.0% to RMB 3,289.1 million (US$470.3 million) in 2025.
• Gross margin slightly decreased from 68.0% in 2024 to 67.4% in 2025.
• The company continues to face significant risks related to regulatory changes in China's private education industry.

Risks

• Significant risks exist in relation to the interpretation and implementation of, or proposed changes to, the laws, regulations and policies of mainland China regarding the private education industry.
• The cessation of compulsory education academic subject tutoring services has materially and adversely affected and will materially and adversely affect the business, financial condition, results of operations and prospect.
• The company's corporate structure, relying on VIE agreements, involves unique risks to investors and may not be as effective as direct ownership in providing operational control.
• Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of the current corporate structure.
• The company faces risks related to cybersecurity, data security, and privacy regulations in mainland China, with potential for claims, changes to business practices, and legal proceedings.
• The company's ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
• The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
• Failure to meet NYSE's continued listing requirements could lead to delisting, reducing liquidity and causing further declines in the market price of the ADSs.

Future Outlook

The company expects to continue to invest in developing new course offerings and digital products to attract new students and strengthen its technologies and data analytics capabilities. However, the cessation of compulsory education academic subject tutoring services is expected to continue to have an adverse effect on financial condition and results of operations in 2026 and subsequent periods.

Management Comments

• Our mission is to make learning better. We believe education is a lifelong journey of curiosity, growth and transformation.
• We put learners at the heart of all we do and grow alongside them every step of the way.
• Staying true to this purpose, we reimagine learning with the power of technology, creating experiences that are learner-centric, AI-powered and product-led.
• Building on a proven track record of innovation, we continue to push technological boundaries to elevate learning, making it more accessible, engaging and effective.

Industry Context

StockSavvy.ai notes that Gaotu Techedu Inc.'s performance reflects the ongoing transformation within China's education sector, particularly the shift away from compulsory education tutoring towards non-academic and adult education services, driven by regulatory changes. The company's focus on AI and technology integration aligns with broader industry trends aiming to enhance personalized learning experiences and operational efficiency.

Comparison to Industry Standards

• Gaotu Techedu Inc.'s revenue growth of 35.0% in 2025 outpaces the general growth rate of the online education sector in China, which has been impacted by regulatory shifts.
• The company's net loss, while still present, has narrowed significantly, indicating a potential path to profitability that is more favorable than some competitors who have struggled to adapt to the new regulatory environment.
• The company's investment in AI and technology, as detailed in its business overview, positions it competitively against other ed-tech firms that are also leveraging these advancements for personalized learning and operational efficiency.

Corporate Governance

Legal Proceedings

• A putative shareholder class action lawsuit (Wu v. GAOTU Techedu Inc., et al.) filed in April 2020 is ongoing, with the Court denying the defendants' motion to dismiss the Second Amended Complaint in June 2024.
• Another putative securities class action (Zhang v. Gaotu Techedu Inc. et al.) filed in December 2022 is also ongoing, with the Court denying the defendants' motion to dismiss in February 2025.

Related Party Transactions

• In May 2023, Mr. Larry Xiangdong Chen acquired a 60% equity interest in Beijing GaoTuJiaPin Technology Co., Ltd. for RMB 15.0 million, diluting the Group's interest to 40% and losing control.
• In April 2025, the Company acquired 100% equity interest of Zhengzhou Weizhen Culture Technology Co., Ltd. from a related party controlled by the CEO for RMB 166,000.
• In November 2025, the Company acquired 100% equity interest of Zhengzhou Youai Culture Technology Co., Ltd. from a related party controlled by the CEO for RMB 206,600, with an outstanding obligation of RMB 181,736 as of December 31, 2025.

Stakeholder Impact

• Shareholders may experience volatility in ADS prices due to market factors and company-specific events.
• The dual-class share structure concentrates voting power with Mr. Larry Xiangdong Chen, potentially limiting shareholder influence on corporate matters.
• Employees are subject to government-mandated social insurance and housing fund contributions.
• Investors face risks associated with the VIE structure and potential regulatory changes in China's education sector.

Next Steps

• Continue to focus on offering and developing traditional learning services, non-academic tutoring services, and college student and adult education services.
• Expand educational content and digitalized learning products.
• Continue to improve the ability to convert sales leads into paid course enrollments cost-effectively.
• Monitor and adapt to evolving regulatory requirements in mainland China's private education industry.
• Continue to invest in technology infrastructure and AI capabilities.

Key Dates

Recommendation

While Gaotu Techedu Inc. has demonstrated strong revenue growth and improved its net loss, the company continues to operate at a loss and faces significant regulatory and operational risks in the Chinese education market. The substantial increase in selling expenses and the ongoing legal proceedings also warrant caution. Therefore, a 'hold' recommendation is appropriate, pending further evidence of sustained profitability and a clearer regulatory landscape.

Keywords

Gaotu Techedu Inc., SEC Filing, Form 20-F, Annual Report, Financial Results, Revenue Growth, Net Loss, Education Industry, China, VIE Structure, Regulatory Risks, Cybersecurity, Share Repurchase