Seeing value in resilience, Gaotu rewrites the education technology narrative with long-termism

On March 5, 2026, Gaotu (GOTU.US) delivered a “hardcore” performance report for fiscal year 2025.

In 2025, the company recorded revenue of 6.15 billion yuan, a 35% increase, nearly 4 billion yuan in cash reserves, and achieved five consecutive quarters of operating leverage release.

Gaotu Group founder, Chairman, and CEO Chen Xiangdong straightforwardly stated: 2025 was a year for Gaotu to maintain high-quality development, driven by improvements in teaching quality, breakthroughs in operational efficiency, and a comprehensive enhancement of organizational capabilities, which helped us surpass our annual scale targets.

In the current macro environment full of uncertainties and industry transformation entering deep water, this financial report not only demonstrates the recovery of an education company but also tells a story about strategic resolve, financial wisdom, and long-term value.

Counter-cyclical Resilient Growth

In 2025, Gaotu’s core financial indicators showed a highly valuable “resilient growth.”

Looking at the fourth quarter alone, revenue increased by 21.4% year-over-year to 1.69 billion yuan, while net profit and loss improved by 38.0% year-over-year.

This “increased revenue and profit” situation marks that Gaotu has completely bid farewell to the rough stage of simply pursuing scale, and has officially entered a new cycle of “efficiency-driven” high-quality growth.

Five consecutive quarters of operating leverage release is the most eye-catching aspect of this financial report, indicating that revenue growth outpaced the growth of costs and expenses. It reflects the health of the business model, organizational efficiency, and management’s refined operational capabilities.

The continuous release of operating leverage over five quarters proves that this optimization is not just a coincidental financial adjustment but has become an internalized, sustainable operational capability of the company. From “scale growth” to “efficiency-driven,” Gaotu has found its own new engine for profitable growth amid fierce market competition.

As of December 31, 2025, Gaotu held nearly 4 billion yuan in cash and cash equivalents, short-term investments, and long-term investments. This is a strategically significant figure.

First, it provides a sense of security. In an industry requiring long-term investment and continuous innovation, ample cash flow is the company’s “ballast” to navigate cycles. Even after excluding the impact of ongoing share repurchases on cash, the company’s cash reserves still increased by 220 million yuan year-over-year, indicating the company’s endogenous “blood-making” ability (operating net cash flow of 420 million yuan) is sufficient to cover business expansion and shareholder returns, forming a healthy financial positive cycle.

Second, it is an “ammunition depot” for offensive moves. In 2025, Gaotu clearly proposed the strategy of “All with AI, Always AI.” The deep implementation of AI, whether through attracting top talent, developing proprietary large models, or co-building laboratories with universities, requires real financial investment.

The nearly 4 billion yuan in cash reserves provide Gaotu with ample “grain” and strategic trial-and-error space in the AI education era, allowing the company to make long-term, correct investments without being constrained by short-term financial pressures.

In the face of capital market volatility, the most direct reflection of management’s confidence and emphasis on shareholder value is genuine share repurchases.

The financial report shows that under current and previous repurchase plans, Gaotu has repurchased approximately 670 million USD worth of American depositary shares, accounting for 12.8% of the company’s total equity.

This is not just a simple number game. Share buybacks and cancellations directly enhance the value of each remaining share and are a rational choice when management believes the company’s value is significantly undervalued.

For long-term investors, this sustained, large-scale repurchase activity sends a clear signal: management is not only the company’s operator but also a value co-creator deeply aligned with shareholders’ interests. In uncertain times, this “unity of knowledge and action” in feedback is the strongest voice in stabilizing market confidence.

From “Single-Point Breakthrough” to “Synergistic Coexistence”

Gaotu’s steady growth is not reliant on a single business breakthrough but is built on a healthy ecosystem of multi-business collaboration.

The “Quality and Literacy Business” is undoubtedly the strongest growth engine in 2025. The full-year revenue growth exceeded 90%, with cash income and revenue in the fourth quarter increasing by over 30% and 45% year-over-year, respectively.

More notably, as scale expands, the profitability of online businesses continues to climb, with the autumn semester retention rate exceeding 75%. This not only proves the product’s user stickiness but also validates that the online quality and literacy track can sustain a “scale and profitability” business model.

The high school business continues to serve as the “stabilizer.” Focusing on “quality and efficiency,” it deepens localized content, and with 267 students achieving dreams at Tsinghua and Peking University, and a 1.5 percentage point increase in new student retention rate, it demonstrates its dominance at the top of the pyramid. The high school business is not only a stable source of cash flow but also a strong support for Gaotu’s brand reputation.

The college student and adult education businesses show endogenous growth under synergistic effects. By building product matrices around the different needs of college students at various stages, they effectively extend user lifecycle. In the fourth quarter, cash collection growth exceeded 15%, contributing over 15% of total revenue, and achieving full online profitability in 2025. The full-year revenue grew by double digits, with profit margins steadily improving.

This business structure—“K-12 literacy as the growth pole, high school as the stabilizer, college and adult as the second curve”—gives Gaotu strong resilience and confidence to navigate cycles.

When one business faces market fluctuations, others can quickly fill the gap, forming a virtuous cycle of multi-round driving.

Additionally, 2025 was also a year for Gaotu to deepen the “AI + Education” strategy comprehensively.

“Education as the foundation, technology as the tool,” founder Chen Xiangdong defined AI strategy as “a must-answer question for survival,” and Gaotu’s answer is to build a “famous teacher-led + secondary teaching services + AI learning companion” three-teacher closed loop.

In this model, AI is precisely positioned as a “super partner” for teachers.

It penetrates all touchpoints before, during, and after class, undertaking intelligent assessments, pathway planning, learning situation analysis, and even emotional companionship, thereby freeing teachers from tedious repetitive work and allowing them to focus more on nurturing, motivating, and personalized tutoring.

Achieving “human-machine wisdom”—amplifying teachers’ influence with AI’s computing power—aims to make education both “efficient” and warm, returning to the fundamental goal of nurturing people.

Gaotu’s AI advancement path is also clear: technically, by attracting top talent and co-building laboratories with universities; organizationally, by promoting “all-staff AI,” driven by data for decision-making.

While peers are still debating whether AI can replace teachers, Gaotu is already exploring how to enhance teachers with AI and how to reshape the entire teaching operation chain with vertical AI technologies.

Based on this, in the outlook for 2026, Gaotu is expected to advance further in all aspects, with profitability becoming a key driver of growth. Product refinement will focus on user needs, continuously pushing innovation in teaching products and services.

Technologically, innovative technologies will further deeply integrate into business, operations, and organizational levels, becoming crucial for operational efficiency and user experience. By continuously strengthening the “good teacher” moat, Gaotu aims to build a comprehensive lifelong learning service platform.

As Chen Xiangdong said, Gaotu is building a more resilient, sustainable, and profitable business model—anchored by a healthy unit economics model, based on stable operational quality, and oriented toward long-term user value growth.