Chinese online tutoring firm Gaotu briefly disclosed its recent operations in a letter published on its official WeChat account on Monday. On Tuesday, the share price of Gaotu closed at $3.625/share, with a total market value of $929 million.
The letter indicates that Gaotu now has a cash balance of 5.487 billion yuan($858 million). The company explained the move, saying that “in response to the introduction of the Duble Reduction policy, Gaotu has taken positive measures such as depositing tuition collected in advace into designated bank accounts supervised by the government, as required by national policies. The tuition is well protected by the state, thus more effectively protecting the legitimate rights and interests of parents”.
The company’s financial report shows that in Q2 of 2021, Gaotu achieved revenue worth 2.232 billion yuan, a year-on-year increase of 35.3%. The company’s gross profit and gross profit margin was 1.508 billion yuan and 67.6% respectively. Meanwhile, its net loss was 918 million yuan, while that in the same period last year was 18.6 million yuan.
In Q2, the number of users paying for Gaotu K12 courses was 1.563 million, a year-on-year increase of 4.5%. Revenue from its online K12 courses was 2.091 billion yuan, up 51% year-on-year, accounting for 93.68% of the company’s total revenue.
Regarding business revenue, the Q2 financial report shows that the business consists of K12 online courses, language training, vocational training, and postgraduate training. Among them, revenue from K12 online courses totaled 3.908 billion yuan, accounting for 93.65% of the total revenue.
Gaotu said it is a commercial company but also a social organization. In the letter, it has reviewed its activities for charity, such as the Taiyuan Center of Gaotu which supports the education system in Shanxi Province by sponsoring high-quality courses worth 10 million yuan, its public welfare strategic partnership with China Charities Aid Foundation for Children, and a special fund for Gaotu under China Charities Aid Foundation for Children.