Gaotu Techedu Inc (GOTU) 2023 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Gaotu Techedu First Quarter 2023 Earnings Conference Call. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded.

女士們、先生們，感謝大家的支持，歡迎參加高圖科技 2023 年第一季度收益電話會議。今天的演講結束後，將有機會提問。請注意，今天的活動正在錄製中。

I would now like to turn the conference over to your first speaker today, Ms. Sherry Liu, IR Manager of Gaotu. Please go ahead, Sherry.

現在我想把會議交給今天的第一位發言人，高圖公司 IR 經理 Sherry Liu 女士。請繼續，雪莉。

Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's First Quarter 2023 Earnings Conference Call. Gaotu's earnings release for the quarter was published earlier today and is available on the company's IR website at ir.gaotu.cn.

謝謝你，接線員。各位晚上好。感謝您參加高圖2023年第一季度收益電話會議。高圖本季度財報已於今天早些時候發布，可在該公司的投資者關係網站 ir.gaotu.cn 上查閱。

Joining the call with me tonight from Gaotu senior management is Mr. Larry Chen, Gaotu's Founder, Chairman and Chief Executive Officer; and Ms. Shannon Shen, Gaotu's Chief Financial Officer. Larry will first provide business highlights for the quarter, and then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, Larry and Shannon will be available for the Q&A session.

今晚與我一起參加高圖高級管理層電話會議的是高圖創始人、董事長兼首席執行官 Larry Chen 先生；以及高途首席財務官沉珊女士。拉里（Larry）將首先提供本季度的業務亮點，然後香農（Shannon）將更詳細地討論我們的財務業績。在做好準備的發言後，拉里和香農將參加問答環節。

Before we begin, I would like to remind you that this conference call will contain forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current beliefs and expectations as well as the current market and operating conditions and they involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control and may cause the company's actual results, performance or achievements to differ materially from those contained in any forward-looking statements. Further information regarding these and others is included in the company's public filings with the U.S. SEC.

在我們開始之前，我想提醒您，本次電話會議將包含 1995 年美國私人證券訴訟改革法案中定義的前瞻性陳述。這些前瞻性陳述基於管理層當前的信念和期望以及當前的市場和經營狀況，涉及已知或未知的風險、不確定性和其他因素，所有這些因素都難以預測，其中許多因素超出了公司的控制範圍，並可能導致公司的實際結果、業績或成就與公司的實際結果、業績或成就存在重大差異包含在任何前瞻性陳述中。有關這些和其他信息的更多信息包含在該公司向美國證券交易委員會提交的公開文件中。

The company does not undertake any obligation to update any forward-looking statements, except as required under applicable law. During today's call, management will also discuss certain non-GAAP measures for comparative purposes only. For definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our first quarter earnings release published earlier today.

除適用法律要求外，公司不承擔更新任何前瞻性陳述的義務。在今天的電話會議上，管理層還將討論某些非公認會計準則指標，僅供比較之用。有關非 GAAP 財務指標的定義以及 GAAP 與非 GAAP 財務業績的調節，請參閱我們今天早些時候發布的第一季度收益報告。

As a reminder, this conference is being recorded. In addition, a live and archived webcast of this conference call will be available on Gaotu's IR website.

提醒一下，本次會議正在錄製中。此外，本次電話會議的現場直播和存檔網絡直播將在高圖的 IR 網站上提供。

It is now my pleasure to introduce Larry. Larry, please?

現在我很高興向您介紹拉里。拉里，請嗎？

Thank you, Sherry. Good evening, and good morning, everyone. Thank you for joining us on Gaotu's first quarter 2023 earnings conference call. Before I start, I would like to remind everyone that all financial figures discussed tonight are quoted in RMB and as stated otherwise.

謝謝你，雪莉。大家晚上好，早上好。感謝您參加高圖 2023 年第一季度財報電話會議。在開始之前，我想提醒大家，今晚討論的所有財務數據均以人民幣報價，另有說明。

During the first quarter of 2023, we maintained the healthy and stable sequential growth in net revenues and drove a significant year-over-year increase in gross billings with lower selling expenses. Our net revenues increased 12.3% quarter-over-quarter to RMB 707.3 million, and our gross billings were up 69.4% year-over-year to RMB 539 million. Moreover, the improvement in operational efficiency strengthened our profitability, which was demonstrated by the triple-digit year-over-year increase in both income from operations and net income.

2023年第一季度，我們保持了淨收入健康穩定的環比增長，並以較低的銷售費用推動了總營收同比大幅增長。我們的淨收入環比增長 12.3% 至人民幣 7.073 億元，總營收同比增長 69.4% 至人民幣 5.39 億元。此外，運營效率的提高增強了我們的盈利能力，運營收入和淨利潤同比均實現三位數增長就證明了這一點。

Our non-GAAP net income margin for the quarter reached 18.9%, while favorable seasonality partially contributed to the strong start to the year, it was primarily driven by our exceptional organizational capabilities and our unwavering commitment to our stress to have long-term sustainable and profitable growth, and it further reinforced our confidence in achieving any effective growth and generating a sizable positive net operating cash flow for the full year 2023.

我們本季度的非GAAP 淨利潤率達到18.9%，而有利的季節性因素在一定程度上促成了今年的強勁開局，這主要是由於我們卓越的組織能力以及我們堅定不移地致力於實現長期可持續和可持續發展的壓力。盈利增長，進一步增強了我們實現有效增長並在 2023 年全年產生可觀的正淨經營現金流的信心。

Our folks continue to remain on to major business lines, learning services and educational content and digitalized learning products. Learning services continue to serve as the core pillar of our business and the predominant revenue contributor. It mainly includes educational services for college students and adult overseas study related services, nonacademic tutoring services and other traditional learning services.

我們的員工繼續關注主要業務線、學習服務、教育內容和數字化學習產品。學習服務仍然是我們業務的核心支柱和主要收入來源。主要包括大學生教育服務和成人留學相關服務、非學歷輔導服務以及其他傳統學習服務。

I will now discuss the business highlights of the quarter through 3 aspects. First, all of our core business segments continue to remain on steady development trajectory. To start, our educational services for college students and adults generated positive net operating cash flow during the quarter, which not only reflected the seasonal uptick in gross billings, but more meaningfully with a confirmation of robust operational efficiency enhancement.

下面我從三個方面來談談本季度的業務亮點。首先，我們所有的核心業務繼續保持穩定的發展軌道。首先，我們為大學生和成人提供的教育服務在本季度產生了正的淨運營現金流，這不僅反映了總收入的季節性上升，而且更有意義的是，證實了運營效率的強勁提升。

For instance, our post graduate entrance exam prep business saw probably 36% sequential increase in gross billings as well as a triple-digit year-over-year growth in marketing expense ROI well positioning as to obtain further revenue growth. Moreover, some of our overseas study related services such as the IELTS business delivered triple-digit year-over-year growth in both gross billings and revenues. Additionally, our nonacademic tutoring services out booked the triple digit year-over-year increase in gross billings. Looking forward, we expect all of our core business lines to sustain the positive momentum.

例如，我們的研究生入學考試準備業務的總營收環比增長了 36%，營銷費用投資回報率也實現了三位數的同比增長，這為獲得進一步的收入增長奠定了良好的基礎。此外，我們的一些海外留學相關服務（例如雅思業務）的總賬單和收入均實現了三位數的同比增長。此外，我們的非學術輔導服務的總收入同比增長了三位數。展望未來，我們預計所有核心業務都將保持積極勢頭。

Second, we continue to innovate to achieve business breakthroughs. We have been ramping up and developed a diverse range of regional and self-operated customer acquisition channels with higher conversion rates with a particular focus on private traffic such as strong video live streaming operations. During the quarter, I created my own account ongoing to lead and encourage our team to explore the opportunity in the short video ecosystem. Live streaming ongoing has already become 1 of the major customer acquisition channel for some of our new businesses and live streaming sessions posted by a number of our instructors have repeatedly ranked among the top platformers in their respective verticals in terms of gross merchandise value or GMV.

二是持續創新，實現業務突破。我們一直在加大力度開發多元化的區域性和自營獲客渠道，轉化率更高，特別關注私域流量，例如強大的視頻直播業務。在本季度，我持續創建了自己的帳戶，以領導和鼓勵我們的團隊探索短視頻生態系統中的機會。正在進行的直播已經成為我們一些新業務的主要獲客渠道之一，我們的多位講師發布的直播課程在商品總價值或 GMV 方面多次躋身各自垂直領域的頂級平台遊戲之列。

Attesting to the value of their premium content, reaching presentations and their seamless collaboration with our dedicated professional and efficient back-end team. Through setting up our own matrix accounts on the Douyin platform, we have dramatically improved customer acquisition efficiency and strengthened the recognition of the Gaotu brand, which will facilitate word of mouth referrals going forward, forming a positive feedback loop.

證明他們優質內容的價值、進行演示以及與我們專業、高效的後端團隊的無縫協作。通過在抖音平台上建立自己的矩陣賬戶，我們極大地提高了獲客效率，增強了高圖品牌的認知度，這將有利於後續口碑推薦，形成正反饋循環。

Finally, we are convinced that artificial intelligence will have a tremendously transformative effect on broad range of industries, especially in the educational sector. As an online education company, we will leverage our advantages in student learning statistics and the technology expertise that we have accumulated over the years to see the emerging opportunities, accelerating the realization of AI technologies in educational setting and develop innovative and highly personalized intelligence products that exceed expectations to reinforce user engagement.

最後，我們相信人工智能將對廣泛的行業產生巨大的變革性影響，特別是在教育領域。作為在線教育公司，我們將利用學生學習統計的優勢以及多年來積累的技術專長，洞察新機遇，加速人工智能技術在教育場景的落地，開發創新的、高度個性化的智能產品，超出預期以增強用戶參與度。

Third, we continue to enhance our operational efficiency. On one hand, the integration of generative AI with education has already and will further expedite internal efficiency improvements, allowing our instructors and tutors to dedicate more time to assist students with tailored services and deliver more compelling results. On the other hand, we have also improved cross delivery efficiency through continuous training of instructors and tutors as well as the optimization of operational systems. As a result, we achieved the third consecutive sequential improvement in gross profit margin.

三是持續提昇運營效率。一方面，生成式人工智能與教育的融合已經並將進一步加快內部效率的提升，讓我們的教師和導師能夠投入更多時間為學生提供量身定制的服務，並交付更引人注目的成果。另一方面，我們也通過對講師和導師的持續培訓以及運營系統的優化，提高了交叉交付效率。結果，我們實現了毛利率連續第三次環比改善。

Further, thanks to our improved customer acquisition efficiency and Douyin brand popularity, setting expenses ROI was up by approximately 74% year-over-year, prompting the notable year-over-year growth in gross billings. Move forward, we will continue to boost efficiency and profitability while ensuring high standards for teaching quality and customer satisfaction. We are convinced that the rapid development of AI technology will bring about a paradigm shift in transformation across the education industry.

此外，得益於獲客效率的提高和抖音品牌知名度的提升，設定費用投資回報率同比增長約74%，帶動總流水同比顯著增長。展望未來，我們將繼續提高效率和盈利能力，同時確保高標準的教學質量和客戶滿意度。我們相信，人工智能技術的快速發展將為整個教育行業帶來範式轉變。

We are actively embracing all the emerging changes as we push the boundaries with and are making efforts to develop and innovate across this dynamic market landscape to create more efficient educational products with learning services and more convincing results and to better fulfill the educational needs of the next generation. Nevertheless, regardless of how the industry will be received, we will stay true to our cherished original aspiration to educate. Our pursuit of excellence in educational products, teaching quality and learning services is unprecedented. As we look ahead, committed to our mission of making learning better, we will continue to deepen our presence in the education sector by leveraging our outstanding cohesive team to create sustainable value for all of our stakeholders.

我們積極擁抱一切正在發生的變化，在這個充滿活力的市場格局中不斷突破界限，努力開發和創新，創造出更高效的教育產品、學習服務和更令人信服的結果，更好地滿足下一代的教育需求。一代。但無論業界如何看待，我們都會不忘教育初心。我們對教育產品、教學質量和學習服務卓越的追求是前所未有的。展望未來，我們致力於讓學習變得更好，我們將繼續深化我們在教育領域的影響力，利用我們優秀的有凝聚力的團隊，為所有利益相關者創造可持續的價值。

Thank you very much. This is the end of my prepared remarks. Now I will pass the call over to our CFO, Shannon, to walk you through our financial and operational details of this quarter. Shannon, please?

非常感謝。我準備好的發言到此結束。現在我將把電話轉接給我們的首席財務官香農，向您介紹本季度的財務和運營細節。香農，請嗎？

Thank you, Larry, and thank you, everyone, for joining our call today. I will now walk you through our operating and financial performance for the first quarter of 2023. Please note that all financial figures discussed today are quoted in RMB unless otherwise noted.

謝謝拉里，也謝謝大家今天加入我們的電話會議。現在，我將向您介紹我們 2023 年第一季度的運營和財務業績。請注意，除非另有說明，今天討論的所有財務數據均以人民幣報價。

We reported another quarter of solid financial performance. It is encouraging to see that our net revenues recorded the third quarter of consecutive sequential growth, increasing by 12.3% quarter-over-quarter to RMB 707.3 million. Additionally, gross billings increased by a considerable 69.4% year-over-year to RMB 539 million. Even more noteworthy is that during the quarter we considerably enhanced our key profit metrics on both an annual and quarterly basis.

我們報告了又一個季度的穩健財務業績。令人鼓舞的是，我們的淨收入第三季度實現連續環比增長，環比增長 12.3% 至人民幣 7.073 億元。此外，總流水同比增長69.4%，達到人民幣5.39億元。更值得注意的是，在本季度，我們在年度和季度的基礎上大幅提高了關鍵利潤指標。

Specifically, net income grew sharply by 112.1% year-over-year to RMB 113.9 million, which led to an 8.7 percentage points year-over-year increase in net income margin to 16.1%. Non-GAAP net income rose to RMB 133.6 million, accompanying a non-GAAP net income margin of 18.9%, representing the highest quarterly net income margin since our business restructuring in 2022. The substantial improvement in profitability is a testament to our sound business model, sustainable growth strategy and outstandingly cohesive organization and also underlines the effectiveness of our continuous endeavor to refine operations, optimize costs and enhance customer acquisitions and operational efficiency.

其中，淨利潤同比大幅增長112.1%至人民幣1.139億元，淨利潤率同比提升8.7個百分點至16.1%。非美國通用會計準則淨利潤增至人民幣1.336億元，非美國通用會計準則淨利潤率為18.9%，是我們自2022年業務重組以來最高的季度淨利潤率。盈利能力的大幅提升證明了我們良好的商業模式、可持續增長戰略和具有出色凝聚力的組織，也突顯了我們不斷努力改進運營、優化成本、提高客戶獲取和運營效率的有效性。

Breaking it down, more than 75% of total revenues came from nonacademic tutoring services and other traditional learning services, which remain a key priority for our business. For the education industry, non-academic tutoring services represent an emerging vertical with booming market demand and high growth potential. Our nonacademic tutoring services focused on offering holistic and systematic education for school age kids by sharpening their overall learning, logical reasoning and critical thinking abilities.

細分來看，超過 75% 的總收入來自非學術輔導服務和其他傳統學習服務，這仍然是我們業務的關鍵優先事項。對於教育行業來說，非學術輔導服務代表著一個新興的垂直領域，市場需求旺盛，增長潛力巨大。我們的非學術輔導服務專注於為學齡兒童提供全面、系統的教育，提高他們的整體學習、邏輯推理和批判性思維能力。

During the quarter, in addition to being profitable, this segment achieved a triple-digit year-over-year growth in gross billings. At present, our top priority for this business line is to develop products that exceed customer expectations by leveraging our extensive resources, conducting in-depth market analysis and driving product and technology innovation. Leaning on our competitive strength in traditional learning services, we will further refine our products and services and diversify our delivery formats to cater to customer needs, through which we aim to improve enrollments and retention to promote the substantial growth of our nonacademic tutoring business.

在本季度，除了實現盈利外，該部門的總營業額同比實現了三位數的增長。目前，我們該業務線的首要任務是利用我們豐富的資源，深入的市場分析，推動產品和技術創新，開發出超越客戶期望的產品。依托傳統學習服務的競爭優勢，我們將進一步完善產品和服務，豐富交付形式，以滿足客戶需求，從而提高入學率和保留率，推動非學術輔導業務的大幅增長。

The other crucial component of our learning services is education services for college students and adults, which accounted for nearly 20% of the quarter's total revenue. This segment generated positive net operating cash flow during the first quarter through building up a more comprehensive spectrum of educational products and a more systematic process of student retention, cost registration and referral. Efficiency in customer acquisition has also been notably improved through higher reliance on content-driven proprietary channels.

我們學習服務的另一個重要組成部分是面向大學生和成人的教育服務，佔本季度總收入的近20%。該部門通過建立更全面的教育產品以及更系統的學生保留、成本登記和推薦流程，在第一季度產生了正的淨運營現金流。通過更加依賴內容驅動的專有渠道，客戶獲取效率也得到顯著提高。

Our business demonstrates salient seasonality, chiefly through the following 3 measures: first, in terms of gross billings, which is a leading indicator of revenues in the education industry, we attained a 69.4% year-over-year increase in this measure. Gross billings for our learning services are normally recognized as revenue within 6 to 12 months. To align with school schedule, we designated the second and the fourth quarter as our main customer retention seasons, due to which gross billings are notably higher compared to the first and the third quarter. This is particularly true for the fourth quarter when our total concurrent student enrollments typically climb to the peak of the year, following customer acquisition efforts during the summer holiday period, leading to the highest quarterly level in gross billings.

我們的業務呈現出明顯的季節性，主要體現在以下三個方面：第一，在教育行業收入領先指標毛流水方面，我們實現了同比69.4%的增長。我們學習服務的總賬單通常在 6 至 12 個月內確認為收入。為了與學校日程保持一致，我們將第二季度和第四季度指定為我們的主要客戶保留季節，因此總賬單明顯高於第一季度和第三季度。對於第四季度來說尤其如此，在暑假期間的客戶獲取努力之後，我們的並發學生註冊總數通常會攀升至一年中的峰值，從而導致總賬單達到最高的季度水平。

Consecutively, gross billings in the first quarter are generally lower than in the preceding fourth quarter as it is a nonpeak season for student retention. Additionally, you may notice that our net revenues slightly declined in the quarter compared to the same period of last year. This was mainly due to the higher base in revenues of our existing traditional services as a result of regulatory adjustments in the first quarter of last year.

首先，第一季度的總賬單普遍低於去年第四季度，因為這是學生保留的非旺季。此外，您可能會注意到，與去年同期相比，我們本季度的淨收入略有下降。這主要是由於去年第一季度的監管調整導致我們現有傳統服務的收入基數較高。

Along with the ongoing steady recovery of our traditional business, we expect to see a year-over-year growth in net revenues and in gross billings next quarter as well as a meaningful profitability. According to management's current expectations, we foresee an up to 24.2% year-over-year growth in revenues and a much higher year-over-year growth rate in gross billings next quarter.

隨著我們傳統業務的持續穩定復甦，我們預計下個季度的淨收入和總營業額將同比增長，並實現可觀的盈利能力。根據管理層目前的預期，我們預計下季度收入同比增長高達 24.2%，總營收同比增長率更高。

Turning to our bottom line. We meaningfully improved our profit margins on both year-over-year and quarter-over-quarter basis during the quarter. Our margins during the first and fourth quarter are usually higher relative to the rest of the year due to reduced marketing expenses during the summer holiday period. For example, our selling expenses are normally lower in the first quarter, given the fact that it is a low season for customer acquisition, and that demand is weak during the Chinese New Year holiday, giving rise to improved profitability.

轉向我們的底線。本季度我們的利潤率同比和環比均顯著提高。由於暑假期間營銷費用的減少，我們第一季度和第四季度的利潤率通常高於今年剩餘時間。例如，我們一季度的銷售費用通常較低，因為這是獲客淡季，而且春節期間需求疲軟，從而導致盈利能力改善。

Moreover, due to a higher student-tutor ratio and tight course scheduling we will also usually witness an increase in gross margins during the first quarter. However, in the second and the third quarter, which are the most effective seasons for customer acquisition, we often allocate a higher amount of sales and marketing expense proportionate to market demand as we strive to attract and engage with potential students to expand our customer base, at the same time, enhancing efficiency. This implies relatively lower expected margins in the second and third quarter relative to the first quarter. We believe these marketing investments are essential to strengthening our competitive position, and we are firmly confident that we will maintain a meaningful profitability as we improve our market penetration rate like the quarter.

此外，由於較高的師生比例和緊張的課程安排，我們通常也會在第一季度看到毛利率的增長。然而，在第二和第三季度，即獲客最有效的季節，我們經常根據市場需求分配較高的銷售和營銷費用，因為我們努力吸引和接觸潛在的學生以擴大我們的客戶群同時，提高效率。這意味著第二季度和第三季度的預期利潤率相對第一季度相對較低。我們相信這些營銷投資對於加強我們的競爭地位至關重要，並且我們堅信，隨著我們像本季度一樣提高市場滲透率，我們將保持有意義的盈利能力。

With regard to the full year 2023, our prior projections of generating sizable positive net operating cash flow as well as achieving effective growth remain unchanged. Lastly, regarding customer acquisition efficiency, our selling expenses in the quarter decreased 2.5% year-over-year but brought about a nearly 70% year-over-year increase in gross billings, which implies that our sales and marketing expenses ROI has registered a 73.8% increase. This was mainly attained through our continued efforts to explore more innovative channels to target and acquire high-quality and motivated students at lower costs with higher returns.

就2023年全年而言，我們之前對產生可觀的正淨經營現金流以及實現有效增長的預測保持不變。最後，在獲客效率方面，本季度我們的銷售費用同比下降了 2.5%，但帶來的總賬單同比增長了近 70%，這意味著我們的銷售和營銷費用投資回報率已經實現了增長。增長73.8%。這主要是通過我們不斷探索更多創新渠道，以更低的成本、更高的回報來瞄準和獲取高質量、積極主動的學生。

First, we enhanced our autonomy over customer acquisition by expanding proprietary self-operated channels and through which we effectively lowered our customer acquisition costs and boosted user engagement across our platform through creating premium content. After months of continuous hard work, we have made promising progress with some of our key business lines, our short video platforms and will reapply the insights and know-how to other businesses.

一是通過拓展自營渠道，增強獲客自主權，有效降低獲客成本，通過優質內容提昇平台用戶參與度。經過幾個月的持續努力，我們在一些關鍵業務線、短視頻平台方面取得了可喜的進展，並將把這些見解和知識重新應用到其他業務中。

Secondly, we also have expanded into off-line channels such as hosting on-campus seminars. Third, we are also conducting personalized and localized operations to acquire and serve students more effectively. Going forward, we will continue to improve our customer acquisition efficiency to drive sustainable growth and to create long-term value for all of our stakeholders.

其次，我們還拓展了線下渠道，比如舉辦校園研討會。第三，我們也在開展個性化、本地化運營，更有效地獲取和服務學生。展望未來，我們將繼續提高客戶獲取效率，以推動可持續增長，並為所有利益相關者創造長期價值。

Now I will present our financials in detailed numbers. Our cost of revenues this quarter was RMB 160 million. Gross profit increased 7% year-over-year and 16.4% quarter-over-quarter to RMB 547.3 million. Gross profit margin was 77.4%, representing a 677 basis points increase year-over-year and a 268 basis point increase quarter-over-quarter. Non-GAAP gross profit was RMB 571.3 million and non-GAAP gross profit margin was 77.9%. The increase in gross profit margin was largely due to higher efficiency in course delivery as our inspectors and tutors became more experienced and our new initiatives continued to develop.

現在我將詳細介紹我們的財務數據。本季度我們的收入成本為人民幣 1.6 億元。毛利潤同比增長7%，環比增長16.4%至人民幣5.473億元。毛利率為77.4%，同比增長677個基點，環比增長268個基點。非美國通用會計準則毛利潤為人民幣5.713億元，非美國通用會計準則毛利率為77.9%。毛利率的增加主要是由於我們的督導員和導師經驗更加豐富以及我們的新舉措不斷發展，課程交付效率提高。

Total operating expenses during the quarter decreased 7% year-over-year and 6.5% quarter-over-quarter to RMB 442.2 million ignoring operating leverage that resulted in an increase in operating profit margins. Breaking down, selling expenses decreased 2.5% year-over-year and 4.4% quarter-over-quarter to RMB 277 million. Selling expenses margin was 39.2%, which was almost 7 percentage points lower than in the prior quarter.

忽略導致營業利潤率增加的營業槓桿，本季度總營業費用同比下降 7%，環比下降 6.5%，至人民幣 4.422 億元。其中，銷售費用同比下降2.5%，環比下降4.4%至人民幣2.77億元。銷售費用率為39.2%，較上季度下降近7個百分點。

Moving on, research and development expenses decreased 21.3% year-over-year, and 12.9% quarter-over-quarter to RMB 97 million, accounting for 13.7 percentage of net revenues. General and administrative expenses decreased 0.9% year-over-year and 5.1% quarter-over-quarter to RMB 78.2 million, accounting for 11.1% of net revenues. Accordingly, income from operations for the quarter sharply rose to 275.9% year-over-year to RMB 95.1 million. Non-GAAP income from operations was RMB 114.9 million. Operating margin increased 10 percentage points year-over-year to 13.5% and non-GAAP operating margin increased 7.4 percentage points year-over-year to 16.2%.

研發費用同比下降21.3%，環比下降12.9%至9700萬元，占淨收入的13.7%。一般及管理費用同比下降0.9%，環比下降5.1%至人民幣7,820萬元，占淨收入的11.1%。因此，本季度運營收入同比大幅增長 275.9% 至人民幣 9510 萬元。非公認會計準則運營收入為人民幣 1.149 億元。營業利潤率同比增長 10 個百分點至 13.5%，非 GAAP 營業利潤率同比增長 7.4 個百分點至 16.2%。

Net income significantly increased 112.1% year-over-year to RMB 113.9 million. Non-GAAP net income was RMB 133.6 million. Net income margin increased 8.7 percentage points year-over-year to 15.1%, and non-GAAP net income margin was 18.9%. Our net operating cash outflow this quarter was RMB 216.4 million, mainly due to annual bonus payouts and the fact that gross billing student retention seasons are generally lower than those during peak season. Seasonality wise, cash flows from operations in the second and fourth quarter are generally positive compared with those in the first and the third quarters. We expect net operating cash flow to turn positive at a meaningful scale next quarter.

淨利潤同比大幅增長112.1%至人民幣1.139億元。非美國通用會計準則淨利潤為人民幣 1.336 億元。淨利潤率同比增長 8.7 個百分點，達到 15.1%，非 GAAP 淨利潤率為 18.9%。本季度我們的運營現金流淨流出為人民幣 2.164 億元，主要是由於年度獎金支付以及學生留校季的總賬單普遍低於旺季。從季節性來看，第二季度和第四季度的經營現金流較第一季度和第三季度總體為正。我們預計下季度淨運營現金流將大幅轉正。

Turning to our balance sheet. As of March 31, 2023, we had RMB 1.2 billion of cash, cash equivalents and restricted cash and RMB 2.2 billion of short-term investments, which totaled approximately RMB 3.4 billion, providing ample resources for continued business development. Additionally, as of March 31, 2023, we had receivables from third-party payment platforms such as WeChat Pay and Alipay of RMB 86.6 million, which consists of cash payments received from our students, but held at the payment platforms. As of the date of this earnings release, we have collected almost all of the above-mentioned balance from the third-party payment platforms and converted into cash and cash equivalents.

轉向我們的資產負債表。截至2023年3月31日，我們擁有人民幣12億元的現金、現金等價物及限制性現金以及人民幣22億元的短期投資，合計約人民幣34億元，為持續業務發展提供了充足的資源。此外，截至2023年3月31日，我們來自微信支付和支付寶等第三方支付平台的應收賬款為人民幣8,660萬元，其中包括從我們的學生收到但存放在支付平台的現金付款。截至本財報發布之日，我們已從第三方支付平台收回了幾乎所有上述餘額，並轉換為現金及現金等價物。

If we count it for as balance, our cash position raised around RMB 3.5 billion nearly RMB 303 million higher than at the end of the same period of last year. As of March 31, 2023, average deferred revenue balance was RMB 770.6 million, which primarily consists of tuition received all along.

如果按餘額計算，我們的現金頭寸籌集了約35億元人民幣，比上年末增加了近3.03億元人民幣。截至2023年3月31日，平均遞延收入餘額為人民幣7.706億元，主要包括一直收取的學費。

Before I provide our business outlook for the next quarter, please allow me to remind everyone that this contains forward-looking statements, which involve risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on management's current estimates, total net revenue for the second quarter of 2023 are expected to be between RMB 648 million and RMB 668 million, representing a year-over-year increase of 20.5% to 24.2%.

在提供下一季度的業務展望之前，請允許我提醒大家，其中包含前瞻性陳述，其中涉及我們無法控制的風險和不確定性，可能導致實際結果與我們的預測存在重大差異。根據管理層目前的估計，2023年第二季度的淨收入總額預計在人民幣6.48億元至人民幣6.68億元之間，同比增長20.5%至24.2%。

This concludes my prepared remarks. Operator, we are now ready for the Q&A session. Thank you, everyone, for listening.

我準備好的發言到此結束。接線員，我們現在準備好進行問答環節了。謝謝大家的聆聽。

(Operator Instructions) The first question comes from Crystal Lee from CMS.

（操作員說明） 第一個問題來自 CMS 的 Crystal Lee。

I have 1 question regarding your margin. I noticed that your first quarter net margin improved a lot. Could you provide some impact into the margin outlook for the next few quarters? And how should we think about any potential seasonality factors impacting margins?

我有 1 個關於你們保證金的問題。我注意到你們第一季度的淨利潤率提高了很多。您能否對未來幾個季度的利潤率前景提供一些影響？我們應該如何考慮影響利潤率的潛在季節性因素？

Thanks, Crystal, for your questions. So let me recap our guidance first. Per our guidance for the next quarter, we are foreseeing an up to 24.2% revenue increase on a year-over-year basis. On top of the revenue guidance, we still anticipate gross billings to grow far more quickly than revenue in the second quarter year-over-year. Considering the nearly 70% year-on-year increase in gross billings in the first quarter and a mid-double-digit growth rate in the second quarter, we have a full and firm confidence in the scale of annual revenue growth in 2023.

謝謝克里斯托提出的問題。讓我首先回顧一下我們的指導。根據我們對下一季度的指導，我們預計收入同比增長高達 24.2%。除了收入指引之外，我們仍然預計第二季度總營收的同比增長速度將遠遠快於收入。考慮到一季度毛流水同比增長近70%，二季度中兩位數增速，我們對2023年全年收入增長規模充滿信心。

And in terms of margins, our profitability primarily depends on our operational efficiency and I will elaborate it from a few aspects. Firstly, over the past year, we've been focused on building up organizational capabilities and optimizing our cost structure. The work itself has yielded significant results leading to continuous improvements in our key profit margins.

從利潤率來看，我們的盈利能力主要取決於我們的運營效率，我會從幾個方面來闡述。首先，過去一年，我們重點抓組織能力建設、優化成本結構。這項工作本身已經取得了重大成果，導致我們的主要利潤率不斷提高。

And secondly, we have benefited from operating leverage as our total R&D and G&A expenses have remained relatively stable. With the increase in scale in revenues, operating leverage will have a more pronounced impact on profitability enhancement.

其次，我們受益於運營槓桿，因為我們的研發和一般行政費用總額保持相對穩定。隨著收入規模的增加，經營槓桿對盈利能力提升的影響將更加明顯。

And last, customer acquisition efficiency is another critical factor influencing our margin. We've been dedicated to exploring customer acquisition channels with high entry barriers, and we have gradually shifted our customer acquisition strategy from purchasing traffic from those social platforms to more like a content-driven platform such as to video live streaming platforms and off-line channels. This has resulted in a significant improvement in ROI levels. As you can see, like our first quarter results, our ROI actually increased over like 73% on a year-over-year basis.

最後，客戶獲取效率是影響我們利潤的另一個關鍵因素。我們一直致力於探索高准入門檻的獲客渠道，並逐漸將獲客策略從社交平台購買流量轉向視頻直播平台、線下等內容驅動型平台。渠道。這導致投資回報率水平顯著提高。正如您所看到的，就像我們第一季度的業績一樣，我們的投資回報率實際上同比增長了 73%。

Overall, as Larry mentioned earlier, our goal remains to achieve profitable growth, and we believe that we'll witness a meaningful level of profitability for the full year of 2023. And actually, our business shows a filling seasonality. We would stress you and other investors to put more weight on the year-over-year comparisons from now on. Taking the second quarter, as an example, we usually generate a large scale of net operating cash flow in the second quarter because it is a typical retention season. And although the summer campaign usually begins in middle June, our strategic focus on improving efficiency remains strong as ever, and we expect to see a meaningful profitability in the second quarter as well. So actually, we still see the second quarter as a quarter that will provide a meaningful profitability as well as a large deal of net operating cash flow.

總體而言，正如拉里之前提到的，我們的目標仍然是實現盈利增長，我們相信我們將在 2023 年全年實現有意義的盈利水平。實際上，我們的業務表現出充分的季節性。我們會強調您和其他投資者從現在開始更加重視同比比較。以第二季度為例，我們通常會在第二季度產生大規模的淨運營現金流，因為這是典型的保留季節。儘管夏季活動通常在六月中旬開始，但我們對提高效率的戰略重點仍然一如既往，我們預計第二季度也將實現有意義的盈利。因此，實際上，我們仍然認為第二季度將提供有意義的盈利能力以及大量淨運營現金流。

I hope that addresses your questions. Thank you, Crystal.

我希望這能解決您的問題。謝謝你，水晶。

This concludes our question-and-answer session. I would like to turn the conference back over to Sherry Liu for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給 Sherry Liu 做閉幕致辭。

Thank you, operator. Thank you, everyone, for joining the call today. If you have any further questions, please don't hesitate to contact our Investor Relations department or our management via e-mail at ir.gaotu.cn directly.. You're also welcome to subscribe to our news alert on the company's IR website. Thank you very much again for your time. Have a great night.

謝謝你，接線員。謝謝大家今天加入電話會議。如果您還有任何疑問，請隨時通過電子郵件ir.gaotu.cn聯繫我們的投資者關係部門或我們的管理層。也歡迎您在公司IR網站上訂閱我們的新聞快訊。再次非常感謝您抽出寶貴的時間。祝你度過一個愉快的夜晚。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。