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Gaotu Techedu (GOTU)
NYSE:GOTU
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Gaotu Techedu
(NYSE:GOTU)
62Neutral
Positive Factors
Product Diversification
Gaotu is executing a strategic pivot, diversifying its product portfolio while maintaining online education as its revenue mainstay.
Negative Factors
Financial Performance
Gaotu's 2QFY24 results underscore the company's struggle to reconcile aggressive expansion with financial viability, projecting a full-year net loss of approximately RMB1bn.
Profit Margin Pressure
The high school division faces margin pressure, with profitability expected to contract to ~15% from the previous 15-20% range, partly attributable to strategic discounting for new cohorts impacting near-term revenue.
Gaotu Techedu (GOTU) vs. S&P 500 (SPY)
Market Cap
$671.44M
Dividend YieldN/A
Average Volume (3M)2.76M
Price to Earnings (P/E)―
Beta (1Y)1.51
Revenue Growth51.50%
EPS Growth-70812.50%
CountryUS
Employees7,767
SectorTechnology
Sector Strength49
IndustryEducation & Training Services
Share Statistics
EPS (TTM)-0.56
Shares Outstanding144,375,950
10 Day Avg. Volume2,029,091
30 Day Avg. Volume2,760,116
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)8.30
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2.35Price Target Upside-11.99% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
Gaotu Techedu Business Overview & Revenue Model
Company DescriptionGaotu Techedu Inc. (GOTU) is a leading education technology company in China, specializing in online learning services. The company offers a wide range of educational programs and courses designed to enhance students' academic performance across various subjects. Gaotu Techedu primarily focuses on K-12 after-school tutoring, as well as professional and vocational education services. Leveraging cutting-edge technology, the company aims to deliver high-quality educational content and a superior learning experience to students nationwide.
How the Company Makes MoneyGaotu Techedu generates revenue primarily through its online education platform, where it offers a variety of courses and educational content for different age groups and learning needs. The company's main revenue stream comes from tuition fees paid by students enrolled in its programs, particularly the K-12 after-school tutoring services. Additionally, Gaotu Techedu expands its revenue base by offering professional training courses and vocational education programs to adults seeking to enhance their skills. The company also explores strategic partnerships and collaborations with educational institutions and technology providers to broaden its service offerings and reach. These partnerships can include co-developing educational content or utilizing advanced technologies to improve the delivery and effectiveness of its courses.
Gaotu Techedu Financial Statement Overview
Summary
Gaotu Techedu shows strong revenue growth and maintains a stable balance sheet with low leverage, but profitability challenges persist as reflected in negative margins and cash flow issues. The company must focus on improving operational efficiency and cash generation to enhance financial health.Income Statement
Gaotu Techedu has experienced significant revenue growth from 2023 to 2024, with a revenue increase of 53.8%. However, the company remains unprofitable, as indicated by negative EBIT and net income margins. The net profit margin stands at -23.0%, and the EBIT margin is -25.9%. Although gross profit margins are healthy at 68.1%, the overall profitability is affected by high operating costs.45
Neutral
Balance Sheet
The company has a solid equity base with an equity ratio of 33.2%, indicating a stable financial structure. The debt-to-equity ratio is low at 0.25, reflecting conservative leverage. However, the return on equity is negative due to ongoing losses, posing a risk to shareholder value. Cash reserves remain strong, supporting liquidity.60
Neutral
Cash Flow
Gaotu Techedu's cash flow position is weak, with zero free and operating cash flow reported for 2024. Despite improvements in operating cash flow in 2023, the lack of free cash flow growth and zero cash flow in the latest period raise concerns about the company's ability to generate cash from operations.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.55B | 2.96B | 2.50B | 6.56B | 7.12B | Gross Profit |
| 3.10B | 2.17B | 1.80B | 4.16B | 5.36B | EBIT |
| -1.18B | -149.01M | -118.05M | -2.94B | -1.76B | EBITDA |
| -1.13B | -94.76M | -47.30M | -2.83B | -1.70B | Net Income Common Stockholders |
| -1.05B | -7.30M | 13.17M | -3.10B | -1.39B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.17B | 2.89B | 3.74B | 3.50B | 7.69B | Total Assets |
| 5.83B | 5.41B | 4.88B | 5.02B | 10.69B | Total Debt |
| 492.24M | 188.15M | 82.52M | 356.05M | 796.76M | Net Debt |
| -828.87M | -447.91M | -737.39M | -372.89M | 441.54M | Total Liabilities |
| 3.89B | 2.31B | 1.78B | 2.14B | 4.96B | Stockholders Equity |
| 1.93B | 3.11B | 3.10B | 2.88B | 5.73B |
| Cash Flow | Free Cash Flow | |||
| 0.00 | 312.90M | 243.88M | -4.46B | 319.20M | Operating Cash Flow |
| 0.00 | 353.70M | 373.74M | -4.19B | 603.27M | Investing Cash Flow |
| 0.00 | -423.98M | -1.09B | 4.81B | -5.60B | Financing Cash Flow |
| 0.00 | -90.48M | 0.00 | -100.61M | 5.27B |
Gaotu Techedu Technical Analysis
Negative
2.67
Price Trends
3.03
Negative
2.69
Negative
3.27
Negative
Market Momentum
0.04
Positive
41.81
Neutral
15.49
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOTU, the sentiment is Negative. The current price of 2.67 is below the 20-day moving average (MA) of 3.17, below the 50-day MA of 3.03, and below the 200-day MA of 3.27, indicating a bearish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 41.81 is Neutral, neither overbought nor oversold. The STOCH value of 15.49 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GOTU.
Gaotu Techedu Risk Analysis
Gaotu Techedu disclosed 77 risk factors in its most recent earnings report. Gaotu Techedu reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Gaotu Techedu Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $7.08B | 18.26 | 10.40% | ― | 34.42% | 28.54% | |
74 Outperform | $2.87B | 9.86 | 30.98% | ― | 5.55% | 185.01% | |
68 Neutral | $1.07B | ― | -13.11% | ― | 9.27% | 34.66% | |
62 Neutral | $671.44M | ― | -41.45% | ― | 51.50% | -70812.50% | |
57 Neutral | $19.52B | 9.58 | -12.47% | 2.79% | 5.43% | -24.71% | |
55 Neutral | $935.46M | ― | -30.77% | ― | 7.91% | 22.07% | |
54 Neutral | $810.34M | 69.86 | 25.15% | ― | 3.01% | ― |
* Technology Sector Average
Performance Comparison
GOTU
Gaotu Techedu
2.67
-3.66
-57.82%
EDU
New Oriental Education Tech
43.03
-41.69
-49.21%
LAUR
Laureate Education
19.15
5.16
36.88%
DAO
Youdao
6.79
2.98
78.22%
COUR
Coursera
6.79
-5.61
-45.24%
UDMY
Udemy Inc
6.10
-3.79
-38.32%
Gaotu Techedu Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 5.53% | Next Earnings Date: May 21, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant revenue growth, improved profitability, and strategic advancements in AI integration. Despite increased operating expenses and a net loss, the company shows a robust cash position and expects profitability in the next quarter.Highlights
Significant Revenue Growth
Revenue increased by 82.5% year-over-year to nearly RMB 1.4 billion, with gross billings up by 69.0% to over RMB 2.1 billion.
Improved Profitability
Loss from operations narrowed by 20.6% with operating margin improving by 13.9 percentage points. Net operating cash inflow was RMB 783.6 million.
AI Integration and Technological Advancements
Breakthroughs in cognitive reasoning with AGI technologies like DeepSeek, enhancing learning effectiveness and boosting organizational performance.
High Retention Rates
Improvement in retention rates for new enrollments in both nonacademic tutoring and traditional learning services.
Strong Cash Position
Cash, cash equivalents, restricted cash, short and long-term investments totaled RMB 4.1 billion as of December 31, 2024.
Share Buyback
Allocated nearly US$47.5 million for share buybacks, including over 8.1 million ADS bought back for US$28.8 million in 2024.
Projected Profitability in Q1 2025
Confident in achieving profitability at the net profit level in Q1 2025 while maintaining fast revenue growth.
Lowlights
Operating Expenses Increase
Total operating expenses increased 52.2% year-over-year to approximately RMB 1.1 billion.
Net Loss
Net loss was RMB 135.8 million, and the net income margin was negative 9.8%.
Company Guidance
During Gaotu Techedu's fourth quarter and fiscal year 2024 earnings call, the company provided robust guidance for the upcoming fiscal year. The company reported a significant year-over-year revenue increase of 82.5% for the quarter, reaching nearly RMB 1.4 billion, with gross billings up by 69.0% to over RMB 2.1 billion. Operating margins improved by 13.9 percentage points, narrowing the loss from operations by 20.6%. The company's strategic focus on AI integration was highlighted as a key driver of enhanced learning experiences and operational efficiency. Looking forward to the first quarter of 2025, Gaotu expects revenues between RMB 1,408 million and RMB 1,428 million, representing a 48.7% to 50.8% increase year-over-year, while also aiming to achieve profitability at the net profit level. The company's strong cash position, with cash and investments totaling RMB 4.1 billion, supports its strategic initiatives and long-term growth plans.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.