12 Years of Resilient Growth, Gaotu Reaches a New Starting Point for Profitable Growth

On March 5, 2026, Gaotu (NYSE: GOTU) released its Q4 and full-year financial reports for 2025.

Gaotu delivered an impressive performance with revenue growth. This quarter, Gaotu achieved revenue of 1.69 billion yuan (RMB), a year-over-year increase of 21.4%, marking the 11th consecutive quarter of growth; cash income was 2.57 billion yuan, up 19.1% year-over-year, the 12th consecutive quarter of growth. For the full year of 2025, Gaotu’s revenue reached 6.15 billion yuan, a 35% increase year-over-year, marking the third consecutive year of annual growth.

Profitability also improved significantly. This quarter, Gaotu’s net profit loss improved by 38% year-over-year, marking five consecutive quarters of profit improvement; operating cash flow was a net inflow of 970 million yuan. For the full year of 2025, net profit loss improved by 69.2%.

Gaotu’s founder, Chairman, and CEO Chen Xiangdong recently stated, “Gaotu should be profitable by 2026, and by 2027, we should see substantial gains.”

2026 marks the 12th year since Gaotu was founded. Over the past 12 years, Gaotu has experienced explosive growth, shocking the education technology industry, but also gone through several ups and downs, repeatedly struggling on the brink of survival. After 12 years, Gaotu has learned not just to run fast, but to run steadily and sustainably.

From a “climber” to a “profitable operator,” Gaotu’s methodology is continuous innovation, with the key being to run a unit economic model (UE). After 12 years, Gaotu stands at a new starting point, with a mature business matrix, deep integration of artificial intelligence, and resilient growth following its coming-of-age.

From “Climber” to “Profitable Operator”

Chen Xiangdong is the first among domestic entrepreneurs to propose the UE theory, which emphasizes first establishing a complete business cycle at the “smallest unit point,” then achieving large-scale profitability. Gaotu was the first in the education industry to run through the business cycle of online live large classes.

Regarding the “smallest unit point,” Chen Xiangdong emphasized, “If the unit economic model cannot be profitable, then the larger the company, the greater the disaster.”

Two months after Gaotu was founded, it assembled a video live streaming technology team. Six months later, Gaotu’s self-developed team launched an online live large class product with over 3,000 students. By 2017, Gaotu’s online live large class business, branded as Gaotu Classroom, had run through the UE, completing the first business cycle in the global online education industry. Since then, Gaotu divested all other businesses and embarked on a second venture.

The power unleashed by running through the UE was remarkable. By the first half of 2021, Gaotu’s net revenue exceeded 4 billion yuan, and the goal of 100-fold growth in Gaotu Classroom over three years was achieved ahead of schedule.

In the second half of 2021, Gaotu began its third venture. Over the past five years, Gaotu’s organizational structure, product system, and delivery models have undergone dramatic changes. In simple terms, during the second venture, Gaotu ran through the UE of online live large classes; now, it is running multiple UE cycles simultaneously.

In terms of organizational structure, Gaotu’s employee count has grown to over 20,000, divided into multiple business units. In August 2025, Gaotu underwent a new round of restructuring, dividing into eight business units including comprehensive literacy, high school, college students, and international education. The core of this restructuring is to build a more competitive teacher supply chain, better match users of all ages, and improve customer satisfaction.

In terms of product system, 70-80% of Gaotu’s current business has been newly expanded in recent years. For the core directions over the next five years—such as postgraduate entrance exams, studying abroad, AI products, offline literacy, psychological counseling, civil service exams, and programming—Gaotu has already laid out and explored in advance.

Gaotu’s CFO Shen Nan said that for businesses with mature models, Gaotu focuses on sustainable and stable growth, while increasing profit margins through scaled delivery; for businesses still in early growth stages, Gaotu emphasizes improving educational products to provide better user experiences.

In delivery models, Gaotu extends beyond online live large classes to personalized one-on-one tutoring, offline small classes, adult training centers, and other formats to meet diverse user needs.

Gaotu’s founder, Chairman, and CEO Chen Xiangdong stated, “2025 is a year for Gaotu to maintain high-quality development. Improvements in teaching quality, breakthroughs in operational efficiency, and comprehensive organizational enhancements have helped us exceed our annual scale targets. Full-year revenue was 6.15 billion yuan, with a 35% growth rate, surpassing our initial expectations for revenue scale.”

“By 2026, Gaotu will enhance business health, operational efficiency, and long-term value accumulation, aiming to become an education technology company that grows alongside learners and creates long-term value for shareholders and society,” he said.

Building a “Full Lifecycle” Education Moat

Focusing on a healthy unit economic model, the key is to amplify the scale effects of mature models. Gaotu’s strategy involves multiple driving forces to build a “full lifecycle” education moat.

In terms of revenue growth, over the past more than ten quarters, Gaotu has sustained strong momentum amid vigorous market demand during its growth phase.

Gaotu has deeply integrated online and offline (300959) operations, creating a diversified business matrix covering quality literacy education for primary and secondary students, high school study planning, college and adult learning, international exams and study abroad consulting, and book publishing, to meet user needs across all ages.

Through continuous cultivation and development, Gaotu’s various business segments have entered a high-quality growth stage, forming unique product moats and demonstrating sustained growth potential.

The literacy and quality education segment maintained strong momentum throughout the year, becoming a key growth engine for the group. In the fourth quarter, cash income and revenue grew by over 30% and 45% respectively year-over-year, with annual revenue growth exceeding 90%. The retention rate for fall semester classes increased year-over-year, with the retention rate for returning students exceeding 75%, confirming high user recognition of Gaotu’s product strength.

The high school business, centered on “quality and efficiency,” continues to lead the industry. By systematically reshaping service standards, deepening localized content and curriculum systems, the fall retention rate continued to improve, with new student retention increasing by 1.5 percentage points year-over-year; the college student learning business achieved double-digit growth in both cash income and revenue throughout the year, with steadily rising profit margins, demonstrating resilient endogenous growth.

The synergy across multiple business lines is becoming evident. Huatai Securities’ research report suggests that the maturity of some offline outlets has improved gross profit margins, and approximately 40-50% of offline outlets are expected to break even by 2026, driving overall gross margin recovery.

Firmly Promoting the “AI + Education” Deep Integration Strategy

Focusing on a healthy unit economic model, the core is to improve efficiency across the entire chain, including customer acquisition, conversion, and operations.

With efficiency gains, Gaotu’s profitability continues to improve. Net profit loss for the fourth quarter and full year 2025 improved by 38% and 69.2% respectively year-over-year, with operating leverage released over five consecutive quarters, achieving “efficiency-driven” high-quality growth.

In the fourth quarter, Gaotu’s operating net cash inflow was approximately 970 million yuan, up 23.1% year-over-year, reflecting optimized operational efficiency and steady improvement in business health.

As of December 31, 2025, the company held nearly 4 billion yuan in cash and cash equivalents, restricted funds, short-term investments, and long-term investments. After excluding ongoing share repurchases, cash increased by 220 million yuan year-over-year, providing a solid foundation for future development and AI investments.

Gaotu was among the first in the industry to benefit from private domain traffic dividends, and now it is fully advancing AI empowerment.

Chen Xiangdong recalled that in 2014, he decided to start a business because he saw the revolutionary opportunity of mobile internet. Today, AI is widely recognized as an opportunity as important as mobile internet.

Currently, Gaotu is continuously advancing the “All with AI, Always AI” strategy, aiming to enhance teaching products, quality, and services through integrated AI capabilities, thereby optimizing learning experiences and efficiency.

Gaotu has upgraded its original “dual-teacher model” to a “famous teacher-led + secondary teacher tutoring + AI learning companion” three-teacher model, promoting a shift from “teacher-centered” to “student-centered” teaching paradigms, and building a full-chain AI education ecosystem covering supply, demand, and interaction.

In products, Gaotu partnered with renowned star Wu Yanzu to create the “Wu Yanzu Teaches You Spoken English” course in 2025, which caused a sensation. Gaotu independently developed the “Smart Azou” AI learning companion system, based on deep learning speech recognition and natural language processing, providing a one-on-one private tutor experience, creating a closed loop of “star traffic—AI retention—effectiveness conversion.” Additionally, Gaotu launched AI products such as “Maodou Love Learning AI Classroom,” “AI Smart Test Prep,” and “Whale Context—Vocabulary Memorization,” covering multiple learning scenarios.

Gaotu’s CFO Shen Nan said, “In 2025, the company is firmly promoting the deep integration of ‘AI + Education.’ We are systematically optimizing product portfolios and channel structures, leveraging vertical AI technologies, centered on learning solutions, and supported by AI-driven organizational digitalization to significantly improve teaching product and full-chain operational efficiency. We focus on user experience, using AI as a tool and medium to enhance organizational strength and productivity, moving from ‘scale growth’ to ‘efficiency-driven,’ and creating a new engine for profitable growth.”

Huatai Securities’ research report believes that AI empowerment is expected to continue improving Gaotu’s profitability, with ongoing optimization of customer acquisition efficiency and cost ratios in 2026.

First Shanghai Securities also noted that Gaotu’s AI strategy lays a foundation for long-term development, with AI applications already delivering tangible efficiency improvements, and balanced operational strategies helping ensure sustainable growth.