Yiran Sheng

Yiran Sheng of CLSA inquired about observed changes in K-12 education demand and parent preferences regarding course content and format, given the current macroeconomic environment.

Answer

CFO Nan Shen identified three key trends. First, a rising demand for comprehensive development, which is driving growth in non-academic tutoring; for example, the coding business now has a retention rate over 90%. Second, increased acceptance of tech-driven education, prompting deeper AI integration. Third, a growing need for personalized education, although she emphasized that the demand for high-quality teachers and premium content remains the most constant and crucial factor for parents.

Yiran Sheng from Morgan Stanley inquired about Gaotu's margin outlook and full-year 2025 guidance, following the strong revenue growth forecast for Q1 2025.

Answer

CFO Nan Shen detailed that after a strong 2024, Gaotu will focus on efficiency and user experience in 2025. Shen stated the company is embedding AI across all operations to improve efficiency and expressed high confidence in enhancing profitability, anticipating a return to net profit in Q1 2025 while sustaining rapid revenue growth.

Yiran Sheng from CLSA requested an update on the growth expectations for various business segments in the next fiscal year, beyond the previously discussed overseas business.

Answer

Executive Sisi Zhao provided a conservative outlook for the next fiscal year, suggesting growth rates similar to Q4. She estimated the K-9 new business to grow 25-30%, the high school business by 12-13%, and the tourism business by 15-20%.

Yiran Sheng from CLSA requested management to quantify the macroeconomic impact on the premium overseas and one-on-one businesses and to comment on the future risk to this segment if the weak economic conditions persist.

Answer

Zhihui Yang, Executive President and CFO, specified that the overseas test prep business growth is expected to decelerate to around 15% in Q3, down from a previous expectation of under 20%. He attributed this to some parents reconsidering sending their children abroad due to the economy. He contrasted this with the K-12 business, which remains strong with 40% guided growth.