Gaotu Techedu Inc (GOTU) 2023 Q4 法說會逐字稿

Good day, and welcome to the Gaotu Techedu Inc. fourth quarter and fiscal year 2023 earnings conference call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Ms. Katherine Chen, Head of Investor Relations. Please go ahead.

大家好，歡迎參加高圖科技第四季及 2023 財年財報電話會議。（操作員說明）請注意，正在記錄此事件。我現在請投資人關係主管陳凱瑟琳女士主持會議。請繼續。

Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's fourth quarter and fiscal year 2023 earnings conference call. My name is Katherine, and I'll help host the earnings call today. Gaotu's earnings release for the quarter was distributed earlier, and is available on the company's IR website at ir.gaotu.cn as well as through PR Newswire services.

謝謝你，接線生。各位晚上好。感謝您參加高圖第四季及2023財年財報電話會議。我叫凱瑟琳，我將幫忙主持今天的財報電話會議。高圖本季的財報已於早些時候發布，可在該公司的投資者關係網站 ir.gaotu.cn 以及美通社服務上取得。

Joining the call with me tonight from Gaotu senior management is Mr. Larry Chen, Gaotu's Founder, Chairman and Executive Chief Officer; and Ms. Shannon Shen, Gaotu's Chief Financial Officer. Larry will first provide the business highlights for the quarter. And then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, we will open the floor to questions from analysts.

今晚與我一起參加高圖高階管理層電話會議的是高圖創辦人、董事長兼執行執行長 Larry Chen 先生；以及高途財務長沉珊女士。拉里將首先介紹本季的業務亮點。之後，香農將更詳細地討論我們的財務表現。在他們準備好的發言之後，我們將接受分析師提問。

Before we begin, I'd like to remind you that this conference call will contain forward-looking statements made under the Safe Harbor provision of the US 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.

在我們開始之前，我想提醒您，本次電話會議將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。這些前瞻性陳述是基於管理層當前的信念和預期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預期範圍。

Further information regarding this and other risks is included in the company's public filings with the US SEC. The company does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

有關此風險和其他風險的更多資訊包含在該公司向美國證券交易委員會提交的公開文件中。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。

During today's call, management will also discuss certain non-GAAP measurements for comparison purpose only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our fourth quarter and fiscal year 2023 earnings release published earlier today. 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.

在今天的電話會議中，管理階層還將討論某些非 GAAP 衡量指標，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四季度和 2023 財年收益報告。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路直播將在高圖的 IR 網站上提供。

It is now my pleasure to introduce our Founder and Chairman and Chief Executive Officer, Larry. Larry, please?

現在我很高興向大家介紹我們的創辦人、董事長兼執行長拉里。拉里，請嗎？

Good evening, and good morning, everyone. Thank you for joining us on Gaotu's Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. I would like to take this opportunity to express my gratitude to all of you for your interest and support of Gaotu. Before I start, I would like to remind everyone that all financial figures discussed today are quoted in RMB, unless stated otherwise.

大家晚上好，早安。感謝您參加高圖第四季及 2023 財年財報電話會議。藉此機會，我謹向大家對高圖的關心和支持表示感謝。在開始之前，我想提醒大家，今天討論的所有財務數據，除非另有說明，均以人民幣報價。

During the past quarter, we continued to bolster our core business strengths while simultaneously pushing the boundaries of new initiatives. We observed a notable uptick in demand for high-quality educational products and learning services and we remain focused on addressing this demand by enhancing our product offerings and channels across key business lines, including non-academic tutoring services, traditional learning services and educational services for college students and adults.

在過去的季度中，我們繼續增強我們的核心業務優勢，同時突破新舉措的界限。我們觀察到對高品質教育產品和學習服務的需求顯著上升，我們將繼續致力於透過增強跨關鍵業務線的產品供應和管道來滿足這一需求，包括非學術輔導服務、傳統學習服務和教育服務大學生和成人。

Investing in emerging technologies such as artificial intelligence allowed us to acquire a more profound and holistic insight into the fundamental needs of users and students, enabling us to provide precise and personalized offerings and services, thereby advancing user experiences and improving learning outcomes. Our deep industry insights, exceptional organizational capabilities and well-established teacher recruitment and training systems have provided a robust foundation for the sustainable development of our business.

投資人工智慧等新興技術，使我們能夠更深入、更全面地了解使用者和學生的基本需求，從而提供精準、個人化的產品和服務，從而提升用戶體驗並改善學習成果。我們深厚的產業洞察力、卓越的組織能力以及完善的師資招募和培訓體系，為我們業務的永續發展提供了堅實的基礎。

Now I'm pleased to report our results for the fourth quarter of this year and share our expectations for future business endeavors. Our net revenue increased 20.9% year-over-year to RMB761 million, exceeding our expectations. Our gross billing grew 28.1% year-over-year to approximately RMB1.3 billion, indicating an accelerating growth trend compared to prior quarter, and we expect this growth momentum of our business to continue. In the fourth quarter, our cash flow from operating activities over RMB491.5 million, and our net operating cash inflow in the full year to (inaudible), increased by approximately 5.5x year-over-year, a strong testament to the ongoing improvement of our operating efficiency.

現在，我很高興地報告我們今年第四季的業績，並分享我們對未來業務努力的期望。我們的淨收入年增20.9%至人民幣7.61億元，超出我們的預期。我們的總營收年增 28.1% 至約人民幣 13 億元，顯示與上一季相比呈加速成長趨勢，我們預期我們業務的這種成長勢頭將持續下去。第四季度，我們的經營活動現金流超過人民幣4.915億元，全年經營現金流淨流入（聽不清楚）年增約5.5倍，有力證明了持續改善我們的營運效率。

As of December 31, 2023, our deferred revenue reached over RMB1.2 billion, laying solid ground work for our further growth into 2024. Our cash balance, which includes cash, cash equivalents, restricted cash, withdrawable cash balance on third-party payment platforms as well as short and long-term investments totalled over RMB4 billion, ensuring lasting and stable support for our business development.

截至2023年12月31日，我們的遞延收入超過12億元人民幣，為我們進入2024年的進一步成長奠定了堅實的基礎。現金餘額包括現金、現金等價物、限制性現金、第三方支付平台可提取現金餘額以及長短期投資等，合計超過40億元人民幣，為業務發展提供了持久穩定的支持。

I will now discuss our business highlights from the fourth quarter across 4 aspects. First, we are diligently focused on both our educational products and services to boost learning efficiency and optimize the overall learning experience. Throughout this process, we remain laser focused on user needs and potentials and expanded our range of products and services as needed. We established an integrated online, offline offering by launching on the ground boot camps and learning centers. To give an access for our educational services for college students and adults, such as offline exam [prior to] boot camps, can better address students' needs in areas such as post-graduate entrance exams, civil service exams and overseas study preparation.

我現在從四個方面來談談我們第四季的業務亮點。首先，我們努力專注於我們的教育產品和服務，以提高學習效率並優化整體學習體驗。在整個過程中，我們始終專注於使用者的需求和潛力，並根據需要擴大我們的產品和服務範圍。我們透過推出地面訓練營和學習中心，建立了線上線下一體化的服務。為大學生和成人提供線下考試訓練營等教育服務，可以更好地滿足學生在考研、公務員考試、出國留學等方面的需求。

In addition, through collaboration with renowned publishing houses such as Foreign Language Teaching and Research Press, we developed a textbook series that have achieved major breakthroughs as comprehensive educational solutions covering instruction, learning, practice, assessment and evaluation. Several of these publications are currently used as textbooks by several major universities and high schools in China. For our traditional learning services, we saw a significant increase in retention rate during the 2023 fourth semester compared to the same period last year, thanks to our ongoing efforts to refine course content and improve delivery quality. At the same time, we proactively communicated with regulatory authorities at all levels, seeking guidance on relevant policies and compliance and integrated our educational products and learning services across the mix.

此外，我們也與外語教學與研究出版社等知名出版社合作，開發了一系列教材，取得了重大突破，成為涵蓋教學、學習、實踐、評估和評估的綜合教育解決方案。其中一些出版物目前被中國幾所主要大學和高中用作教科書。對於我們的傳統學習服務，由於我們不斷努力完善課程內容和提高交付質量，2023 年第四學期的保留率較去年同期顯著提高。同時，我們積極與各級監管部門溝通，尋求相關政策和合規指導，整合我們的教育產品和學習服務。

Second, we continued our efforts to explore diversified customer acquisition channels and enhance operational efficiency, leveraging our high-quality content and efficient operations, we have expanded into innovative channels, including live streaming and short-form video platforms as well as offline avenues, establishing our competitive edge in these channels. In the live streaming space, the substantial overlap is still faced between online teachers and livestream house gives us a competitive advantage in customer acquisition. We have grown to be a leading influencer on Douyin, particularly in certain educational categories for college students and adults, meanwhile, we actively expanded our offline channels to boost regional brand visibility.

二是持續探索多元化獲客管道，提升營運效率，憑藉優質內容和高效運營，拓展直播、短視頻平台以及線下管道等創新管道，建立我們在這些管道中的競爭優勢。在直播領域，線上老師和直播間之間仍然存在大量重疊，這使我們在獲客方面具有競爭優勢。我們已經成長為抖音上的領先影響者，特別是在針對大學生和成人的某些教育類別中，同時我們積極拓展線下管道以提高區域品牌知名度。

The comprehensive channel mix not only ensures sustained business growth but also allowed us to engage with customers through diverse channels, gaining insight into their needs, fostering deep interactions and bringing down customer acquisition costs. As a result of the measures, our customer acquisition efficiency remained at a high level in the fourth quarter, demonstrating the success of our enhanced investment in customer acquisition. Third, we leveraged our organizational capabilities and talent pool to drive consistent business growth.

全面的管道組合不僅保證了業務的持續成長，也讓我們能夠透過多元化的管道與客戶互動，洞察客戶的需求，促進深度互動，降低獲客成本。透過上述措施，第四季獲客效率維持在較高水平，反映了我們加大獲客投入的成效。第三，我們利用組織能力和人才庫推動業務持續成長。

We believe that education is a process of outstanding teachers positively influencing students, therefore, one of Gaotu's most crucial strategies is to enhance organizational capabilities to systematically nurture top-tier educators at scale and to high standards. By cultivating a team characterized by a passion for learning resilience and strong coherence, we ensure the effective and efficient operation of our organization. While the booming business has resulted in rapid organizational expansion, we continue to maintain a consistent standard of hiring the best-in-class instructors and tutors in the industry.

我們認為，教育是優秀教師積極影響學生的過程，因此，提升組織能力，系統化、規模化、高標準地培養一流教育工作者，是高圖最關鍵的策略之一。透過培養一支具有學習熱情、韌性和強烈凝聚力的團隊，我們確保我們組織的有效和高效運作。雖然業務的蓬勃發展帶來了組織的快速擴張，但我們仍繼續保持聘請業內一流講師和導師的一貫標準。

Taking our post-graduate entrance exam prep business, as an example, the percentage of our tutors with master's degree has increased to over 70%, positioning us at the forefront of the industry. Teachers with first-hand experience in post-graduate entrance exams can provide students with a (inaudible), including professionally, psychologically and emotionally, therefore, enhancing the overall effectiveness of the test preparation. Fourth, we remain committed to fulfilling our social responsibilities and actively create social value. In the fourth quarter, we organized as a Gaotu Hope, project with rural primary school principals' online forum in partnership with the China Youth Development Foundation.

以考研輔導業務為例，碩士指導教授比例已提升至70%以上，處於業界前列。擁有研究生入學考試第一手經驗的教師可以為學生提供（聽不清楚）包括專業上、心理上和情感上的幫助，從而提高準備考試的整體效果。四是堅持履行社會責任，積極創造社會價值。第四季度，我們與中國青少年發展基金會合作舉辦了「高途希望」農村小學校長線上論壇。

Over 600 rural primary school principals and teachers from 11 provinces, attended the event engaging insightful discussions on rural education in the area of artificial intelligence. In addition, we donated RMB10 million to the China Next Generation Education Foundation, aiming to improve family education and the mental well-being of young children and adolescents. We will remain steadfast in our commitment to our original educational aspirations, striving to enhance equity and access (inaudible) education. We have more confidence in Gaotu's products for 2024.

來自11個省份的600多名農村小學校長和教師參加了本次活動，就人工智慧領域的農村教育進行了深入的探討。此外，我們向中國下一代教育基金會捐贈1,000萬元人民幣，旨在改善家庭教育和幼兒青少年的心理健康。我們將堅定不移地實踐教育初心，努力促進教育公平和普及（聽不清楚）。我們對高圖2024年的產品更有信心。

And for the further future, we are prepared to devote our full efforts to executing on our strategy with a robust talent pool, a highly cohesive organization and a strong cash flow, we believe that we can achieve promising top line growth, while enhancing profitability by consistently delivering top-notch educational products and learning services, thus generating long-term value for both our shareholders and the society. 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 the financial and operational details of the quarter.

面向未來，我們準備全力以赴地執行我們的策略，憑藉強大的人才庫、高度凝聚力的組織和強勁的現金流，我們相信我們能夠實現有希望的收入增長，同時透過以下方式提高盈利能力：始終如一地提供一流的教育產品和學習服務，從而為股東和社會創造長期價值。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財務長 Shannon，向您介紹本季的財務和營運細節。

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 fourth quarter and fiscal year 2023. During the quarter, our business entered a healthy phase of rapid and sustainable expansion. We witnessed accelerated growth in the gross billings of our core business lines. while our new initiatives also demonstrated promising growth potential. In the fourth quarter, net revenues increased by 20.9% year-over-year to RMB761 million, topping the upper end of our guidance by 10.6 percentage points.

謝謝拉里，也謝謝大家今天加入我們的電話會議。現在，我將向您介紹我們第四季和 2023 財年的營運和財務表現。本季度，我們的業務進入了快速、可持續擴張的健康階段。我們見證了核心業務線總收入的加速成長。同時，我們的新措施也展現了良好的成長潛力。第四季淨收入年增20.9%至人民幣7.61億元，超出我們指導上限10.6個百分點。

The better-than-expected performance was driven by the surge in gross billings, which increased by 28.1% year-over-year to approximately RMB1.3 billion. Benefiting from ongoing improvements in operational efficiency, our net operating cash inflow reached RMB491.5 million. While, our cash, cash equivalents, restricted cash, withdrawable cash balance on third-party payment platforms as well as short- and long-term investments exceeded RMB4 billion, laying solid groundwork for the long-term growth of our business.

好於預期的業績是由總流水激增推動的，總流水年增28.1%至約人民幣13億元。受惠於營運效率的持續提升，我們的營運現金流淨流入達到人民幣491.5百萬元。同時，我們的現金、現金等價物、限制性現金、第三方支付平台可提取現金餘額以及長短期投資超過40億元人民幣，為業務的長期成長奠定了堅實的基礎。

Next, I will walk you through the progress we have made during the quarter. Learning services contributed over 95% of net revenue. Breaking it down, more than 70% of total revenues came from non-academic tutoring services and other traditional learning services, representing over 35% year-over-year growth, and solidifying the segment's growth as a key driver of our business. Our new initiative centered around non-academic tutoring. Over the past few quarters, we have been diligently designing and developing educational products tailored to students' learning needs.

接下來，我將向您介紹本季我們的進展。學習服務貢獻了超過95%的淨收入。細分來看，超過70%的總收入來自非學術輔導服務和其他傳統學習服務，較去年同期成長超過35%，鞏固了該細分市場作為我們業務關鍵驅動力的成長。我們的新措施以非學術輔導為中心。在過去的幾個季度中，我們一直在努力設計和開發適合學生學習需求的教育產品。

By sparkling students' interest in learning, we aim to enhance their fundamental critical thinking skills and learning abilities while fostering healthy study habits and self-motivation. Our course offerings undergo constant iteration and refinement, and have shown to be popular and satisfied with our students. Underpinned by a combination of top-notch educational products and high-caliber learning services, gross billings of our non-academic tutoring services increased by triple digits year-over-year. While maintaining our competitive edge in these structures, we have also consistently enhanced our tutors' service capabilities.

透過激發學生的學習興趣，我們的目標是提高他們基本的批判性思考能力和學習能力，同時培養健康的學習習慣和自我激勵。我們的課程經過不斷的迭代和完善，並受到學生的歡迎和滿意。憑藉一流的教育產品和高水準的學習服務相結合，我們的非學術輔導服務總收入年增三位數。在維持這些結構的競爭優勢的同時，我們也不斷增強導師的服務能力。

Additionally, by diversifying our educational products and learning service formats, we have established a comprehensive product metrics to meet users' varied and personalized learning needs. Our ongoing refinement of products and teaching capabilities has also contributed to further improvement in retention rates. In the meantime, we have closely monitored regulatory policy developments and engage proactively with authorities at different levels to seek compliance guidance for curriculum content and frameworks. This ensures that we can plan for long-term healthy business growth within regulatory boundaries.

此外，透過多元化的教育產品和學習服務業態，我們建立了全面的產品指標，滿足使用者多樣化、個人化的學習需求。我們對產品和教學能力的不斷改進也有助於進一步提高保留率。同時，我們密切關注監管政策的動態，並積極與各級主管部門溝通，尋求課程內容和框架的合規指導。這確保我們可以在監管範圍內規劃長期健康的業務成長。

Our traditional learning services continue to maintain a leading edge in the online space. In terms of educational products, we have developed a more targeted and personalized curriculum by taking a tiered approach to design and developing holistic learning journeys. We have also carefully curated and cultivated the most influential and reputable instructors in the industry and established a highly-competitive team of tutors. For customer acquisition, we have developed channels driven by high-quality content and efficiently gathered user feedback to derive valuable insights for our business.

我們的傳統學習服務繼續在線上領域保持領先優勢。在教育產品方面，我們透過分層設計和開發整體學習旅程，開發出更具針對性和個人化的課程。我們也精心策劃和培養了業界最具影響力和信譽的導師，建立了一支極具競爭力的導師團隊。在客戶獲取方面，我們開發了由高品質內容驅動的管道，並有效收集用戶回饋，為我們的業務提供有價值的見解。

By seamlessly integrating front-end and back-end processes, we have consistently enhanced our customer acquisition efficiency. In the fourth quarter, we achieved rapid growth in gross billings from new enrollments, while simultaneously reducing the unit acquisition cost. The other crucial component of our learning services is educational services for college students and adults, which accounted for around 25% of total revenues during the quarter, benefiting from a refined strategic focus and optimized educational products.

透過前端和後端流程的無縫集成，我們不斷提高獲客效率。第四季度，我們實現了新註冊用戶的總營收快速成長，同時降低了單位購置成本。我們學習服務的另一個重要組成部分是針對大學生和成人的教育服務，受益於精細化的策略重點和優化的教育產品，該服務佔本季總收入的 25% 左右。

Gross billings of this segment rebounded to grow by more than 10% year-over-year in the quarter, setting the stage for its contribution to our revenue growth in 2024 and beyond. Driven by robust market demand and improved operational efficiency, both our domestic exam prep business and overseas study-related business are charting a more promising growth trajectory. Particularly in the quarter, our overseas test prep business saw year-over-year growth of more than 200% in both revenue and gross billings. Thanks to our ongoing innovation and expansion efforts in the short video and live streaming space.

該部門的總營收在本季度反彈，年成長超過 10%，為 2024 年及以後的營收成長做出貢獻奠定了基礎。在強勁的市場需求和營運效率提升的推動下，國內備考業務和留學相關業務都呈現出更良好的成長軌跡。特別是在本季度，我們的海外備考業務的收入和總營收年增超過 200%。感謝我們在短片和直播領域不斷的創新和拓展。

Furthermore, our post-graduate entrance exam prep business generated positive cash flow for the second consecutive quarter. While our civil service exam prep business achieved quarterly profit. For the full year 2023, our net revenues grew by 18.5% year-over-year to approximately RMB3 billion. While gross billings grew by 31.7% year-over-year to over RMB3.3 billion. Gross margin was 73.3%, 1.4 percentage points higher than the same period of last year.

此外，我們的研究生入學考試準備業務連續第二季產生正現金流。而我們的公務員考試準備業務則實現了季度盈利。2023年全年，我們的淨收入年增18.5%至約人民幣30億元。總流水年增31.7%至超過人民幣33億元。毛利率為73.3%，較去年同期增加1.4個百分點。

Non-GAAP net income was RMB51.1 million, and non-GAAP net income margin was 1.7%. These robust operational and financial results are attributable to our year-long efforts to diversify our customer acquisition channels, upgrade our teaching and service offerings and enhance organizational and execution capabilities. By strengthening our core competencies, we were able to swiftly deploy resources based on changes in the market environment and user demand, proactively meeting diverse customer needs while remaining compliant with regulatory requirements.

非 GAAP 淨利為 5,110 萬元，非 GAAP 淨利率為 1.7%。這些強勁的營運和財務表現歸功於我們一年來努力實現客戶獲取管道多元化、升級我們的教學和服務產品以及增強組織和執行能力。透過強化核心能力，我們能夠根據市場環境和使用者需求的變化，快速調配資源，在滿足監管要求的同時，主動滿足多樣化的客戶需求。

Looking ahead to 2024, we will further unleash the untapped potential across our business lines and embrace emerging opportunities as they arise. Leveraging our diversified product metrics and service formats along with efficient customer acquisition and operational capabilities, we remain dedicated to providing students with exceptional learning experiences and excellent learning results. I will now present our financials in more detail. Our cost of revenues this quarter was RMB227.7 million. Gross profit increased 13.4% year-over-year to RMB533.3 million, and gross profit margin was 70.1%.

展望2024年，我們將進一步釋放各業務線尚未開發的潛力，並抓住新機會。憑藉多元化的產品指標和服務業態，以及高效率的獲客和營運能力，我們始終致力於為學生提供卓越的學習體驗和卓越的學習成果。我現在將更詳細地介紹我們的財務狀況。本季我們的收入成本為 2.277 億元。毛利年增13.4%至人民幣533.3百萬元，毛利率為70.1%。

Total operating expenses during the quarter increased 49.1% year-over-year to RMB721.2 million. Breaking it down, selling expenses increased 60.7% year-over-year to RMB465.7 million, accounting for 61.2% of net revenue. This was primarily attributable to our increased marketing investments to address the robust demand during the winter season, benefiting from our expanded operations in our diverse range of innovative customer acquisition channels, especially in the short video and live streaming space. Our selling expenses ROI in the quarter remained at a high level observed throughout the year.

該季度總營運費用年增 49.1% 至人民幣 7.212 億元。其中，銷售費用年增60.7%至人民幣4.657億元，佔淨收入的61.2%。這主要歸因於我們增加了行銷投資，以滿足冬季的強勁需求，並受益於我們在各種創新客戶獲取管道（尤其是短視頻和直播領域）的業務擴展。本季我們的銷售費用投資報酬率保持在全年的高水準。

Moving on. Research and development expenses increased 22.1% year-over-year to RMB136 million, accounting for 17.9% of net revenues. General and administrative expenses increased 45% year-over-year to RMB119.5 million, accounting for 15.7% of net revenues. Loss from operations was RMB187.9 million, and operating margin was negative 24.7%. Non-GAAP loss from operations was RMB172.2 million, and non-GAAP operating margin was negative 22.6%. And loss was RMB119.6 million, and net income margin was negative 15.7%. Non-GAAP net loss was RMB104 million, and non-GAAP net income margin was negative 13.7%.

繼續。研發費用較去年同期成長22.1%至人民幣1.36億元，佔淨收入的17.9%。一般及行政費用較去年同期成長45%至人民幣1.195億元，佔淨收入的15.7%。經營虧損為人民幣1.879億元，經營利潤率為負24.7%。非 GAAP 營運虧損為 1.722 億元，非 GAAP 營運利潤率為負 22.6%。虧損為人民幣119.6百萬元，淨利率為負15.7%。非 GAAP 淨虧損為 1.04 億元，非 GAAP 淨利率為負 13.7%。

Our net operating cash inflow was RMB491.5 million. Turning to our balance sheet. As of December 31, 2023, we held RMB741.7 million in cash, cash equivalents, restricted cash and withdrawable cash balance also third-party payment platform, along with around RMB2.3 billion in short-term investments and around RMB1 billion in long-term investments. This comes to a total of over RMB4.2569 billion higher than at the same time point in the last year. As of December 31, 2023, our deferred revenue balance was around RMB1.2 billion, which primarily consisted of tuition received in advance.

我們的經營現金流入淨額為人民幣491.5百萬元。轉向我們的資產負債表。截至2023年12月31日，我們持有現金、現金等價物、受限制現金和第三方支付平台可提取現金餘額人民幣7.417億元，以及約人民幣23億元的短期投資和約人民幣10億元的長期投資。總金額比去年同期增加超過42.569億元。截至2023年12月31日，我們的遞延收入餘額約為人民幣12億元，主要包括預收的學費。

As of December 31, 2023, we have repurchased an aggregate of approximately 4.9 million ADS on the open market for approximately USD12.4 million. We will continue to execute stock buybacks in accordance with the guidance of the Board of Directors and create long-term value for our shareholders. 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 which are beyond our control and could cause the actual results to differ materially from our predictions.

截至2023年12月31日，我們已在公開市場回購了總計約490萬股美國存託憑證，價值約1,240萬美元。我們將繼續按照董事會的指導，實施股票回購，為股東創造長期價值。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有重大差異。

Based on our current estimates, Total net revenue for the first quarter of 2024 are expected to be between RMB908 million and RMB928 million, representing an increase of 29.4% (sic) [28.4%] to 31.2% on a year-over-year basis. This concludes my prepared remarks. Operator, we are now ready for the Q&A section. Thank you, everyone, for listening.

根據我們目前的預測，2024年第一季的淨收入總額預計在人民幣9.08億元至人民幣9.28億元之間，年增29.4%（原文如此）[28.4%]至31.2% 。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部分。謝謝大家的聆聽。

(Operator Instructions) Timothy Zhao, Goldman Sachs.

（操作員指示） Timothy Zhu，高盛。

Congratulations on the very strong results. I have 2 questions. One is about the student acquisition history for the upcoming or the ongoing winter vacation, could management share some color on the customer acquisition progress and also the related customer acquisition costs. And secondly, I think in your prepared remarks, you mentioned the comprehensive channels to acquire customers, including the short-form videos, live streaming and off-line avenues. I think specifically on off-line, could you share some color on your plans for 2024, in terms of the number of learning centers? Or any color on your projected revenue or profit contribution, that would be very helpful.

祝賀取得了非常強勁的成果。我有 2 個問題。一是關於即將到來或正在進行的寒假的學生獲取歷史，管理層能否分享一些有關客戶獲取進度以及相關客戶獲取成本的信息。其次，我想你在準備好的演講中提到了綜合獲客管道，包括短視頻、直播和線下管道。我想特別是在線下方面，您能否分享一下 2024 年學習中心數量方面的計劃？或您的預計收入或利潤貢獻的任何顏色，這都會非常有幫助。

Sure. Thanks, Timothy, for your question. First, we are very happy to share the most recent updates for our winter vacation performance. And in terms of the customer acquisition cost, let's revisit the winter vacation performance from both supply and demand perspective. So starting with the supply side. The current operating environment imposes relatively high requirements on institutions' capability of -- deliver high-quality products including the ability of continually refining the curriculums like [statutory] reserves and like the cash position and also a very important to meet all compliance standards.

當然。謝謝蒂莫西的提問。首先，我們很高興與大家分享我們寒假演出的最新動態。而在獲客成本方面，我們從供需兩個角度重新檢視寒假表現。那就從供給面入手。目前的營運環境對機構提供高品質產品的能力提出了相對較高的要求，包括不斷完善課程的能力，例如[法定]儲備和現金狀況，並且滿足所有合規標準也非常重要。

Therefore, the supply of high-quality courses in the winter actually is very limited. So then -- but like on the demand side, we have perceived a strong demand from the students. So the scarcity of supply coupled with strong demand presents an excellent growth opportunity. And also, we were fully prepared for the winter peak season. And therefore, our winter vacation gross billings has maintained quite a high year-over-year growth rate. If we exclude the cash collection from retentions in the same period of last year, we do an apple-to-apple comparison, we foresee a high end of high double-digit year-over-year growth of our traditional learning services and non-academic tutoring services.

因此，冬季優質課程的供應實際上非常有限。那麼，就像在需求方面一樣，我們已經感受到了學生的強烈需求。因此，供應稀缺加上強勁的需求提供了絕佳的成長機會。同時，我們也為冬季旺季做好了充分的準備。因此，我們的寒假總流水年增了相當高的成長率。如果我們從去年同期的保留中排除現金收取，我們進行逐個比較，我們預計傳統學習服務和非學習服務將出現兩位數的同比高增長。

Actually, that's quite impressive. And behind all these fast growth is our high efficiency of our customer acquisitions. So we deployed certain new channels, especially for the short video live streaming platforms as well as our new explorations to some off-line channels, both these channels has really high requirement on the operations, especially for the collaboration between the front end and the back end. We need to have the abilities to target the process -- to precisely targeting our customers and fulfill their needs in a very short time.

事實上，這非常令人印象深刻。所有這些快速成長的背後是我們的高客戶獲取效率。所以我們部署了一些新的管道，特別是短視訊直播平台，以及我們對一些線下管道的新探索，這兩個管道對營運的要求非常高，特別是對前端和後端的協作。我們需要有能力瞄準流程——準確瞄準我們的客戶並在很短的時間內滿足他們的需求。

Then also that needs our back-end team, which means our tutors, to further facilitate these parents and students timely and meet their learning demands. So based on our observation, we do observed a meaningful customer acquisition cost decline in the winter vacation. And also, you asked about our off-line channels and our off-line operations, actually light -- basically in light of 2 different businesses. First, to facilitate our online business, we also have some off-line channels to support our online business to grow.

那麼也需要我們的後台團隊，也就是我們的導師，進一步及時的為這些家長和學生提供便利，滿足他們的學習需求。因此，根據我們的觀察，我們確實觀察到寒假期間的獲客成本顯著下降。另外，你問到我們的線下管道和線下運營，實際上很簡單——基本上是針對兩種不同的業務。首先，為了促進我們的線上業務，我們也有一些線下管道來支援我們線上業務的成長。

And in the other hand, we do start to deploy our operations for our off-line learning centers, and we are very happy to share with you some perspectives and insights into our off-line operations. So the reason why we start to enter into the off-line space is because in the post-pandemic era, we've keenly observed a diversification in students' learning needs. Well, many have adopted well on learning online, there is a growing desire among students to return to off-line classrooms for more connections, interactions and engagements with the teachers and their classmates.

另一方面，我們確實開始部署線下學習中心的運營，我們很高興與大家分享我們對線下運營的一些觀點和見解。所以我們之所以開始進入線下空間，是因為在後疫情時代，我們敏銳地觀察到學生學習需求的多元化。嗯，許多人已經很好地接受了線上學習，學生們越來越渴望回到線下課堂，與老師和同學進行更多的聯繫、互動和接觸。

Currently, numbers of parents opt for a hybrid approach, with some courses taken online and others off-line, aiming to enhance learning efficiency and cater to diverse learning needs. So as an educational institution, one of our most important mission is to continually meet customer demands. So when such demand arise, we naturally extend our operation to off-line and adapt the education products accordingly. And on the other hand, we delicately evaluate our management team's background and capabilities.

目前，不少家長選擇線上授課、線下授課的混合方式，旨在提高學習效率，滿足多元的學習需求。因此，作為一個教育機構，我們最重要的使命之一就是不斷滿足客戶的需求。所以當這樣的需求出現時，我們自然而然地將營運延伸到線下，並對教育產品進行相應的調整。另一方面，我們仔細評估我們管理團隊的背景和能力。

Our founder, Larry, brings years of experience in off-line business operations, very profound industry insights and considerable personal influence, which can all contribute to attract all those top talents in the space, especially after the (inaudible), when customer demands align with our organizational capabilities, we embark on the exploring and expanding our off-line operations. So that's the reason why we started to enter the off-line space. So then in -- when we operate or in the selection -- in selecting locations process or when we started to plan for expansion of our off-line operations, we employ a more of a dynamic approach.

我們的創辦人拉里（Larry）帶來了多年的線下業務運營經驗、非常深刻的行業洞察力和相當大的個人影響力，這些都有助於吸引該領域的所有頂尖人才，尤其是在（聽不清楚）客戶需求一致之後憑藉我們的組織能力，我們開始探索並拓展線下業務。這就是我們開始進入線下領域的原因。因此，當我們運營或選擇時，在選擇地點過程中或當我們開始計劃擴展線下業務時，我們採用了一種更動態的方法。

We're continuously optimizing and adjusting where we need to consider a few factors like market demand and also Gaotu's brand influence and penetration in certain areas, and also the acceptance of teaching products by the students and teachers in that specific area. And most importantly, our ability to recruit and nurture outstanding principals and teaching faculties locally. So to development of off-line operations also entails a long cycle, requiring sustained investment from user cultivation to word-of-mouth referrals, which is the reputation for the local off-line learning centers.

我們不斷優化和調整，需要考慮市場需求以及高圖在某些領域的品牌影響力和滲透率，以及該領域學生和老師對教學產品的接受度等因素。最重要的是，我們有能力在當地招募和培養優秀的校長和師資。所以線下營運的發展也需要一個很長的周期，需要從用戶培育到口碑推薦的持續投入，這就是當地線下學習中心的聲譽。

So we will be extremely patient and await for sprouting and growth of our off-line business, ultimately, no matter it's online or it's off-line, students always care most about the suitable teachers and fitting curriculum and the outstanding services. So we will continue to strive tirelessly to meet those expectations. And in the past quarter and also in the full year of 2023, off-line business showed a very limited impact on our financials. So we will update you every milestone of our off-line operations in the future. I hope that address your questions, Timothy.

所以我們會非常耐心地等待線下業務的萌芽和成長，最終，無論是線上還是線下，學生最關心的永遠是合適的老師、合適的課程和優質的服務。因此，我們將繼續不懈努力，以滿足這些期望。而且在過去的一個季度以及2023年全年，線下業務對我們財務的影響非常有限。因此，我們將向您更新未來線下營運的每一個里程碑。我希望這能解決你的問題，提摩西。

Alice Cai, Citibank.

艾麗絲·蔡，花旗銀行。

Firstly, congratulations on the company's strong performance in 4Q. And I have 2 questions regarding the guidance provided. And the first one, regarding the guidance for Q1, which seems slightly conservative, could the management share your perspective on this? Do you consider the guidance to be on the cautious side? And second, could you please share with us about a general idea of the guidance for the full year 2024?

首先，恭喜公司第四季的強勁表現。我對所提供的指導有兩個問題。第一個，關於第一季的指導，似乎有點保守，管理階層能否分享您對此的看法？您認為指導意見是否偏向謹慎？其次，您能否與我們分享 2024 年全年指導的整體思路？

Sure. Alice, thanks for your question. Let me take your second question first, so we can give the audience a whole picture of our clients for the full year of 2024. So looking into 2024, the growth in education space typically initiate from expansion of gross billings. And if we look at our Q4 results in the fourth quarter of 2023, our gross billings reached approximately RMB1.3 billion, making the highest single quarter level in the past 3 years. This metric indicates that our business is only healthy and rising trajectory of growth. And furthermore, we have been able to effectively extend the trend of accelerating growth into the first quarter of 2024.

當然。愛麗絲，謝謝你的問題。我先回答你的第二個問題，以便我們向觀眾介紹2024年全年客戶的整體狀況。因此，展望 2024 年，教育領域的成長通常始於總收入的擴張。如果我們看一下2023年第四季的第四季業績，我們的總營收達到約13億元人民幣，創下過去三年來的最高單季水準。此指標顯示我們的業務處於健康且不斷上升的成長軌道。此外，我們已經能夠有效地將加速成長的趨勢延續到2024年第一季。

And let's dive into each part of our learning services. We observed that revenue growth, especially in non-academic tutoring, continues to accelerate, given a sound unit economic model. The demand for non-academic tutoring is substantial, with clear compliance and governance guidance in place, our business growth initiates with new enrollments, and subsequently generate incremental revenue through retentions and course expansions. So we have confidence in our operational capabilities and the reputation we have established among students and parents.

讓我們深入了解學習服務的每個部分。我們觀察到，鑑於良好的單位經濟模型，收入成長，尤其是非學術輔導的收入成長，持續加速。對非學術輔導的需求很大，有明確的合規和治理指導，我們的業務成長始於新的註冊人數，隨後透過保留和課程擴展產生增量收入。所以我們對我們的營運能力以及我們在學生和家長中建立的聲譽充滿信心。

Therefore, we anticipate triple-digit year-over-year growth in our non-academic tutoring section. While for our traditional learning services, which is basically high school business, continue to maintain a leading edge in the online space. We will leverage our existing competitive advantages to further deepen this mode. We anticipate that the growth rate of our traditional business will far exceed that of 2023. And regarding learning services we provide for college students and adults, we are glad to see it rebound in Q4 2023. We always prioritize margin improvements over revenue expansion in this sector and ascertain the profitability at unit economics level and then focus on achieving effective growth as our primary strategy.

因此，我們預計非學術輔導部分將實現三位數的年增長。而我們的傳統學習服務，基本上是高中業務，繼續在線上領域保持領先優勢。我們將利用現有的競爭優勢，進一步深化此模式。我們預期傳統業務的成長速度將遠超過2023年。至於我們為大學生和成人提供的學習服務，我們很高興看到它在 2023 年第四季反彈。在該領域，我們始終優先考慮提高利潤率而不是擴大收入，並確定單位經濟水平的盈利能力，然後將實現有效成長作為我們的主要策略。

So based on all those considerations, we are willing to elevate our targets and goals for both gross billings and revenue growth in 2024, and have confidence in overall growth prospects for the whole year. And secondly, in terms of growth efficiency, our exploration of diverse customer acquisition channels have effectively lowered customer acquisition costs from high-quality content generating our short radio, live streaming platforms and to expanding into off-line customer acquisition path, our unwavering commitment to creating customer value serves as drivers for our sustainable growth.

所以基於這些考慮，我們願意提高2024年總流水和收入成長的目標和目標，並對全年的整體成長前景充滿信心。其次，從成長效率來看，我們對多元化獲客管道的探索，有效降低了獲客成本，從短電台、直播平台的優質內容生成，到線下獲客路徑的拓展，我們堅定不移的承諾創造客戶價值是我們永續成長的動力。

And in terms of the guidance for the first quarter, so in the first quarter, we are still in the phase of adjusting the revenue structure. And we have the confidence that in the more near future, like in the second quarter of 2024, we will see an accelerated growth rate for both of our gross billings and revenues. And yes, that basically address your questions. Thank you, Alice.

而且從第一季的指引來看，所以第一季我們還是處於調整營收結構的階段。我們有信心在不久的將來，例如 2024 年第二季度，我們的總帳單和收入都會加速成長。是的，這基本上解決了你的問題。謝謝你，愛麗絲。

Crystal Li, CMS.

李晶，CMS。

Congratulations on the strong results. I just noticed that your gross profit margin narrowed flat in this quarter compared to last quarter and last year. Could you please share the reason behind this? And could you give us more color on your margin outlook going forward?

祝賀取得了優異的成績。我剛剛注意到，與上季和去年相比，你們本季的毛利率持平收窄。能分享一下背後的原因嗎？您能給我們更多關於您未來利潤率前景的資訊嗎？

Yes. Thanks a lot. Yes, it's a very good observation. So we observed a 4.7 percentage points decrease in GP margin on a year-over-year basis. This year-over-year decrease in GP margin was due to a few reasons. Firstly, in terms of our revenue contributor, to meet diverse user needs, actually, we have constructed a product metrics, which primarily focused on online, large live classes complemented by one-on-one classes, smart textbooks and off-line small classes. So among these, online large live classes boosted the highest level of GP margin.

是的。多謝。是的，這是一個非常好的觀察。因此，我們觀察到毛利率年減了 4.7 個百分點。毛利率年減有幾個原因。首先，從我們的收入貢獻來看，為了滿足多樣化的用戶需求，我們實際上建立了一個產品指標，以線上、大直播課為主，一對一課、智慧教材和線下小課為輔。所以其中，線上大型直播課程拉動了GP利潤率的最高水準。

As our business expands, the proportion of revenue generated from our one-on-one classes, smart books and off-line small classes is gradually increasing, also in the revenue mix and substantially impacting the GP margin level. And secondly, in preparation for the peak season during the winter vacation, we have proactively reserved a proportion of teachers and tutors. These teachers and tutors have not yet reached their full capacity levels in the fourth quarter. Thus affecting profit margin -- gross profit margins as well.

隨著我們業務的擴展，一對一課堂、智慧書籍和線下小班的收入佔比逐漸增加，在收入結構中也逐漸增加，並對毛利率水準產生重大影響。其次，為了準備寒假旺季，我們主動儲備了一定比例的教師和導師。這些教師和導師在第四季度尚未達到其滿載水準。從而影響利潤率——毛利率也是如此。

But as always, we always need a time period for our new teachers and tutors to gradually adopt our learning methodologies and provide a sufficient training period for our teachers and tutors. So they can better serve our students. So we do see these investments as valuable. So looking forward, in the medium term as our teacher competitor increases, the GP margin and net margin are expected to improve. And also in the long run, our gross profit margin will depend on the future revenue structure. I hope that addressed your question.

但一如既往，我們總是需要一段時間讓新老師和導師逐漸採用我們的學習方法，並為我們的老師和導師提供足夠的培訓時間。這樣他們才能更好地為我們的學生服務。所以我們確實認為這些投資很有價值。因此，展望中期，隨著我們的教師競爭對手的增加，毛利率和淨利潤率預計將有所改善。而且從長遠來看，我們的毛利率將取決於未來的收入結構。我希望這能解決你的問題。

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Ms. Katherine Chen for any closing remarks.

謝謝。我們的問答環節到此結束。我想請 Katherine Chen 女士發表閉幕詞。

Thank you, operator, and 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 are 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.

謝謝接線員，也謝謝大家今天加入通話。如果您有任何其他疑問，請隨時透過電子郵件 ir@gaotu.cn 直接聯繫我們的投資者關係部門或我們的管理層。也歡迎您在公司的 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。祝你有個愉快的夜晚。

Thank you.

謝謝。

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

謝謝。會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。