Gaotu Techedu : GOTU Techedu Inc. Second Quarter 2023 Financial Results

Exhibit 99.1

Gaotu Techedu Announces Second Quarter of 2023 Unaudited Financial Results

Beijing, China, August 30, 2023 -Gaotu Techedu Inc. (NYSE: GOTU) ("Gaotu" or the "Company"), a technology-driven education company and online large-class tutoring service provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights[1]

• Net revenues were RMB703.1 million, increased by 30.7% from RMB537.8 million in the same period of 2022.
• Gross billings[2]were RMB882.3 million, increased by 44.2% from RMB611.7 million in the same period of 2022.
• Income from operations increased by 171.6% year-over-year to RMB43.3 million for the second quarter of 2023.
• Non-GAAPincome from operations increased by 601.1% year-over-year to RMB50.3 million for the second quarter of 2023.
• Net income increased by 212.8% year-over-year to RMB56.2 million for the second quarter of 2023.
• Non-GAAPnet income was RMB63.2 million, compared with non-GAAP net income of RMB0.6 million in the same period of 2022.
• Net operating cash inflow was RMB288.5 million, increased by 207.6% from RMB93.8 million in the same period of 2022.

Second Quarter 2023 Key Financial and Operating Data

(In thousands of RMB, except for percentages)

	For the three months ended June 30,
	2022		2023		Pct. Change
Net revenues	537,799		703,094	30.7%
Gross billings	611,668		882,325	44.2%
(Loss)/income from operations	(60,493)	43,311	171.6%
Non-GAAP (loss)/income from operations	(10,039)	50,309	601.1%
Net (loss)/income	(49,809)	56,161	212.8%
Non-GAAP net income	645		63,159	9,692.1%
Net operating cash inflow	93,794		288,542	207.6%

1. For a reconciliation of non-GAAP numbers, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" at the end of this press release. Non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses.
2. Gross billings is a non-GAAP financial measure, which is defined as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. See "About Non-GAAP Financial Measures" and "Reconciliations of non-GAAP measures to the most comparable GAAP measures" elsewhere in this press release.

Six Months Ended June 30, 2023 Highlights

• Net revenues were RMB1,410.4 million, increased by 11.7% from RMB1,262.4 million in the same period of 2022.
• Gross billings were RMB1,421.3 million, increased by 52.9% from RMB929.8 million in the same period of 2022.
• Income from operations increased by 492.9% year-over-year to RMB138.5 million.
• Non-GAAPincome from operations was RMB165.2 million, increased by 205.7% from RMB54.0 million in the same period of 2022.
• Net income was RMB170.0 million, compared with net income of RMB3.9 million in the same period of 2022.
• Non-GAAPnet income was RMB196.8 million, increased by 111.1% from RMB93.2 million in the same period of 2022.
• Net operating cash inflow increased by 118.6% year-over-year to RMB72.1 million.

First Six Months 2023 Key Financial and Operating Data(In thousands of RMB, except for percentages)

	For the six months ended June 30,
	2022		2023			Pct. Change
Net revenues	1,262,414		1,410,386			11.7%
Gross billings	929,763		1,421,276			52.9%
(Loss)/income from operations	(35,240)	138,450			492.9%
Non-GAAP income from operations	54,039		165,190			205.7%
Net income	3,909		170,014			4,249.3%
Non-GAAP net income	93,188		196,754			111.1%
Net operating cash (outflow)/inflow	(387,472)	72,134			118.6%

Larry Xiangdong Chen, the Company's founder, Chairman and CEO, commented, "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-yearincrease in both income from operations and net income. Backed by ample cash reserves, we have been steadily ramping up our investments in talents, continuously refining our educational content and services, and persistently improving teaching quality and learning efficiency through Artificial Intelligence technological innovation and organizational upgrades. These efforts have strengthened our competitive edge in terms of content-drivencustomer acquisition and teaching quality, creating a flywheel effect.

I would like to emphasize that making learning better will always be Gaotu's unwavering mission, and we are willing to embrace all opportunities and challenges that lie ahead. Our dedication to addressing customer needs, prioritizing teaching quality and enhancing learning outcomes will remain unchanged. Our continued investment in technological innovation and organizational capability will remain unchanged. Our commitment to our original aspiration to educate will remain unchanged."

Shannon Shen, CFO of the Company, added, "Our business achieved profitability while maintaining robust top-line growth momentum, with operating leverage from the economies of scale becoming more evident. Our net revenues increased by 30.7% year-over-year to more than RMB703.1 million, and our gross billings increased considerably by 44.2% year-over-year to RMB882.3 million. In addition, operating expenses as percentage of revenue decreased by roughly 14 percentage points compared to the same period last year. In terms of bottom-line, net income margin improved by approximately 17 percentage points to 8.0%, marking our third consecutive quarter of positive outcomes. On the operational front, we accomplished a synchronized growth trajectory, expanding both in scale and profitability. By continuously exploring more proprietary channels to gain new customers with competitive moats, we have enhanced our autonomy over customer acquisition and improved course delivery quality and efficiency.

Our solid financial performance stands as the ultimate testament to our resilient business model, strong organizational cohesion and continuous endeavors in customer acquisition and operational efficiency. Going forward, we will continue to drive effective growth and create long-term value for our stakeholders."

Financial Results for the Second Quarter of 2023

Net Revenues

Net revenues increased by 30.7% to RMB703.1 million from RMB537.8 million in the second quarter of 2022, which was mainly due to the large year-over-year growth of gross billings as a result of the improvement of customer acquisition efficiency.

Cost of Revenues

Cost of revenues increased by 15.3% to RMB184.4 million from RMB160.0 million in the second quarter of 2022. The increase was mainly due to the growth of labor cost of instructors and tutors to cope with the growing business volume, as well as the increase of learning materials cost, which was partially offset by the decline of share-based compensation cost.

Gross Profit and Gross Margin

Gross profit increased by 37.3% to RMB518.7 million from RMB377.8 million in the second quarter of 2022. Gross profit margin increased to 73.8% from 70.2% in the same period of 2022.

Non-GAAP gross profit increased by 31.8% to RMB522.3 million from RMB396.4 million in the same period of 2022. Non-GAAP gross profit margin increased to 74.3% from 73.7% in the same period of 2022.

Operating Expenses

Operating expenses increased by 8.5% to RMB475.4 million from RMB438.3 million in the second quarter of 2022. The increase was primarily due to the growth of labor expenses, as well as a higher expenditure on marketing and branding activities, which was partially offset by the decline of share-based compensation expenses.

• Selling expenses increased to RMB324.1 million from RMB269.0 million in the second quarter of 2022.

• Research and development expenses decreased to RMB98.4 million from RMB103.9 million in the second quarter of 2022.
• General and administrative expenses decreased to RMB52.9 million from RMB65.4 million in the second quarter of 2022.

Income/(Loss) from Operations

Income from operations was RMB43.3 million, compared with loss from operations of RMB60.5 million in the second quarter of 2022.

Non-GAAP income from operations was RMB50.3 million, compared with non-GAAP loss from operations of RMB10.0 million in the second quarter of 2022.

Interest Income and Realized Gains from Investments

Interest income and realized gains from investments, on aggregate, were RMB27.4 million, compared with a total of RMB9.8 million in the second quarter of 2022.

Other (Expense)/Income

Other expense was RMB6.2 million, compared with other income of RMB0.4 million in the second quarter of 2022.

Net Income/(Loss)

Net income was RMB56.2 million, compared with net loss of RMB49.8 million in the second quarter of 2022.

Non-GAAP net income was RMB63.2 million, compared with non-GAAP net income of RMB0.6 million in the second quarter of 2022.

Cash Flow

Net operating cash inflow in the second quarter of 2023 was RMB288.5 million, which was primarily due to the increase of gross billings.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were both RMB0.21 in the second quarter of 2023.

Non-GAAP basic and diluted net income per ADS were RMB0.24 and RMB0.23, respectively, in the second quarter of 2023.

Share Outstanding

As of June 30, 2023, the Company had 174,705,405 ordinary shares outstanding.

Cash, Cash Equivalents, Restricted Cash, Short-term and Long-term Investments

As of June 30, 2023, the Company had cash and cash equivalents, restricted cash, short-term and long-term investments of RMB3,742.1 million in aggregate, compared with a total of RMB3,743.8 million as of December 31, 2022.

Business Outlook

Based on the Company's current estimates, total net revenues for the third quarter of 2023 are expected to be between RMB728 million and RMB748 million, representing an increase of 20.1% to 23.4% on a year-over- year basis. These estimates reflect the Company's current expectations, which are subject to change.