Ladies and gentlemen, thank you for standing by, and welcome to the Gaotu Techedu Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Catherine Chen, Head of Investor Relations. Please go ahead Catherine.

Thank you, operator. Good evening everyone. Thank you for joining Gaotu's fourth quarter and fiscal year 2024 earnings conference call. My name is Catherine 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. 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 the business highlights for the quarter, and then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, we'll open the floor to questions from analysts. Before we begin, I like to remind you that this conference call will contain forward-looking statements made under the Safe Harbor provisions of 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 this and other risks is included in the company's public filings with the U.S. SEC. 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 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 2024 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 live on Gaotu's IR website. It is now my pleasure to introduce our Founder, Chairman and Chief Executive Officer, Larry. Larry, please.

Good evening and good morning everyone. Thank you for joining us on Gaotu's fourth quarter and fiscal year 2024 earnings conference call. I would like to take this opportunity to express my gratitude to each 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. Driven by our dual pillars of strategic focus and organizational capability enhancement, the value for customers has been comprehensively improved. This quarter, we made substantial progress in both revenue growth and user expansion. Utilizing profound insights into user needs, we have developed a comprehensive spectrum of products and services that cover various learning scenarios, further enhancing the user experience and driving substantial high-quality growth. What is particularly exhilarating is the breakthrough in cognitive reasoning achieved by AGI technologies represented by DeepSeek, coupled with its outstanding cost efficiency. This innovation is not merely a technological leap, it acts as a powerful catalyst, sparkling the development of a new generation of intelligent educational resolutions. Not only does this technological advancement aligns strongly with our existing AI strategy, but it also significantly accelerates our efforts to enhance learning effectiveness and boost organizational performance. As is once years opportunity at the intersection of technology and education, we are proactively and vigorously pursuing the deep integration of AI within educational frameworks. We are steadfast in commitment to the core educational principles of providing personalized and adaptive learning experiences for every learner. Our fourth quarter financial results underscore this positive momentum and dynamic growth as well as strong resilience of our business. Revenue increased by 82.5% year-over-year to nearly RMB 1.4 billion, with gross billings significantly exceeding our expectations, up by 69.0% to over RMB 2.1 billion. Loss from operations…

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 2024. This year, we demonstrated a strong strategic perseverance in a rapidly evolving and changing market landscape, achieving key milestones in our business. As the scale of our business reaches new heights, we have established flexible and dynamic resource, allocation mechanisms to continuously calibrate and guide our approach to steer the business towards sustainable growth. We ended the year on a high note, with solid financial results and major business breakthroughs, further strengthening the competitive edge of our core operations. During the fourth quarter, our revenue grew by 82.5% year-over-year, reaching an annual peak and increased by 29.4% sequentially, driven by the continued expansion of our active user base and long-term accumulation of teaching excellence. Meanwhile, gross billings maintained strong growth momentum, rising by 69.0% year-over-year. These results not only underscore our business success in expanding market scale, but also highlight the increasing strength of our brand influence and growing market recognition. On the profitability front, a growing base of existing users contributed to improve margins, further supported by the economies of scale. As a result, loss from operations for the quarter narrowed significantly year-over-year. This progress reflects our success in maintaining a healthy unit economics model and driving greater operational efficiency, laying a solid foundation for long-term growth. For the full year, net revenues increased by 53.8% year-over-year to approximately RMB 4.6 billion, while gross billings grew by 68.1% year-over-year to over RMB 5.6 billion. We generated RMB 258.0 million in net operating cash inflow for the year. As of December 31, 2024, our total cash position, including cash and cash equivalents, restricted cash and short and long-term investments…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Elsie Sheng [ph] with CLSA. Please go ahead.

Thank you for taking my questions. And hello all, Larry, Shannon and Catherine. So my question is mainly on the guidance. You provided a strong growth -- revenue growth in first quarter. Could you also elaborate more on the margin outlook and also the guidance for 2025 full year? Thank you.

Okay. Welcome, Elsie, and thanks for your question. So during our last earnings call, we shared our expectations for the overall financial performance in 2024. So looking at the full year last year, we achieved RMB 5.6 billion in gross billings and RMB 4.55 billion in revenue. So in Q4 alone, our gross billings already exceeded RMB 2.16 billion, contributing around 39% of the year's total. At the same time, our student enrollment actually hit a record high after the new initiatives. So given the relatively fast growth targets for 2024, we gathered extensive student data and feedbacks on our products, which provided a more clear direction for enhancing our product quality. This also laid a solid foundation for our data accumulation and experience optimization in the AI era. So also through all the faster growth process, our team has undergone significant development with improvements in capabilities. A cohort of outstanding leaders has merged those who excel in teaching quality, particular services and operational excellence. These are all the most valuable assets and achievements for our organization in the year of 2024. So looking ahead to 2025, we will place greater emphasizes on enhancing the inspiration and engagement in student learning, optimizing our user experience and ensure the scientific solution of our comprehensive learning, while at the same time, our operation will be more focused on a more efficiency-driven approach. On one hand, as our business continues to expand, we want to further strengthen and refine our top teaching talent. And on the other hand, we have already embedded AI into basically all aspects of our operations from content creation, data feedback and teaching support in like real-time Q&A section, as well as internal process organization, et cetera. We've been working closely with major AI large-scale models to optimize all the above-mentioned processes. As a result, we are highly confident in achieving greater operational efficiency and enhancing profitability in 2025. So leveraging the momentum of strong growth in the Q4 in 2024, we anticipate achieving profitability at the net profit level in Q1 2025, while maintaining the fast revenue growth momentum. Thanks, Elsie. I hope that addressed your question.

Yeah, very clear. Thank you.

The next question comes from Crystal Li with China Merchant Securities. Please go ahead.

Okay. Thank you. Thanks, management for taking my question, and congratulations on your strong results. I just have one question on AI. Given the rapid development in AI, how stoutly integrating AI into your core operations? And what measurable improvements have you seen in your business? Thank you.

Thanks, Crystal, for your question. AI is a really hot topic right now, and it's become more popular after DeepSeek launched their R1 model. So AI is reshaping education in multiple ways, including personalized learning, automated assessment, intelligent tutoring and enhanced operational efficiencies. So for us, it's both an opportunity and a challenge, requiring a strategic approach to integration. AI can also provide personalized learning paths for each student by analyzing their data, dynamically adjusting content based on the students' learning progress, their interest and even their weakness. AI-driven adaptive learning platforms will significantly enhancing learning efficiency, and it can solve the problem that all the educators have been dreaming for thousands of years that we can provide a more adaptive learning content to each of the individual. And at the same time, AI can automatically generate educational content, such as exercises, course outlines, and even video lectures and continuously optimize them based on student feedback. And the cost of producing those, educational content will decrease significantly, update cycles will shorten and content quality will improve through AI-driven optimization. Right after this earnings call, we just received a message that DeepSeek that they further reduced their cost, and AI will handle more repetitive and fundamental teaching tasks, freeing teachers to focusing on individual student needs, and fostering creative thinking. AI should augment not replace educators, especially leveraging AI for efficiency, while maintaining human interactions for creativity and emotional intelligence. AI technology will profoundly reshape the education product in the medium and long-term, driving innovations and personalized learning, intelligent tutoring and content generation and data analytics. So, we would actively embrace these changes, invest in AI research and application, especially for the scientific learning solutions and address data privacy and ethics concerns to ensure that these technologies can serve the long-term interest of education. And through continuous innovation and optimization, we will maintain a competitive edge in the market and provide students with more efficient, actable, and personalized learning experience. And our investment in AI will focus on applications and solutions aiming to provide our students and parents with the learning journeys that the students really enjoy and the parents can trust and that also carry warmth and inspirations, this build upon our deep understanding of education products and our insights into the education system. And our investment will also be flexible, adapted, and adjusted in response to the development and evolution of the AI technology. And also, as I just mentioned in my prepared remarks, we actually have embedded AI into basically all aspects of our operations. We already started to leverage the power of AI to improve our learning contact and basically like all the operating processes. And hopefully, in the near future, we can develop a really innovative and really the student can really like the learning product that we provided to them. Thanks Crystal.

Thanks.

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

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.

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