Chinese Education Company Gaotu Techedu Posts Solid Q2 Earnings On Robust Billings

Gaotu Techedu Inc GOTU reported a Q2 FY23 sales increase of 30.7% Y/Y to RMB703.1 million. In USD terms, sales totaled $96.96 million.

Gross billings rose 44.2% Y/Y to RMB882.3 million, led by an increase in customer acquisition efficiency.

Adjusted gross profit rose 31.8% Y/Y to RMB522.3 million, with margins increasing to 74.3% from 73.7% a year ago.

Adjusted operating income stood at RMB50.3 million versus a loss of RMB(10.0) million a year ago.

Adjusted earnings per ADS stood at RMB0.23 ($0.03).

Operating cash outflow stood at RMB288.54 million in the quarter. 

As of June 30, 2023, cash and cash equivalents, restricted cash, short-term and long-term investments stood at RMB3.74 billion.

"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," said Larry Xiangdong Chen, founder, Chairman and CEO.

Q3 2023 Outlook: The company expects net revenues to be RMB728 million and RMB748 million (+20.1% to +23.4% Y/Y).

Price Action: GOTU shares are trading higher by 4.27% at $3.66 premarket on the last check Wednesday.