Gaotu Techedu Inc.

Ladies and gentlemen, thank you for standing by and welcome to the GAL2 Tech EDU 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. I would now like to turn the conference over to your first speaker today, Ms. Sherry Liu, IR Manager of GAL2. Please go ahead, Sherry.

Thank you, Officer. Good evening, everyone. Thank you for joining GAL2's first quarter 2023 earnings conference call. GAL2's earnings release for the quarter was published earlier today and is available on the company's IR website at ir.gal2.cn. Joining the call with me tonight from GAL2's senior management is Mr. Larry Chen, GAL2's founder, chairman, and chief executive officer, and Ms. Shannon Shen, GAL2'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, Larry and Shannon will be available for the Q&A session. Before we begin, I would like to try to remind you that this conference call will contain forward-looking statements as defined in the U.S. Private Security Politication 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 statement. Further information regarding these and others is included in the company's public findings with the USFDC. The company does not undertake any obligation to update any forward-looking statement except as required under applicable law. During today's call, management will also discuss certain non-GAAP measures for comparison 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 reviews 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 GALTUS IR website. It is now my pleasure to introduce Larry. Larry, please.

Thank you, Sherry. Good evening and good morning, everyone. Thank you for joining us on the first quarter of 2023 earnings conference call. Before I start, I would like to remind everyone that all financial figures discussed tonight are quoted in RMB unless stated otherwise. During the first quarter of 2023, we maintained a healthy and stable sequential growth in net revenues and drove a significant year-over-year increase in gross billions with lower selling expenses. Our net revenues increased 12.3% quarter-over-quarter to $707.3 million, and our gross billions were up 69.4% year-over-year to $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. Our non-GAAP net income margin for the quarter reached 18.9%. While favorable seasonality partially contributed to the strong start of the year, it was primarily driven by our exceptional organizational capabilities And we bring commitment to our strategy of long-term sustainable and profitable growth. And it further reinforced our confidence in achieving annual effective growth and generating a sizable positive net operating cash flow for the full year 2023. Our focus continues to remain on two 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 adults, overseas study-related services, non-academic tutoring services, and other traditional learning services. I will now discuss the business highlights of this quarter through three aspects. All of our core business segments continue to remain on a healthy 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 uptake in gross billions but more meaningfully was a confirmation of robust operational efficiency enhancement. For instance, our post-graduate entrance exam prep business saw a roughly 36% sequential increase in gross billions as well as a triple-digit year-over-year growth in marketing expense RI while positioning ads to gain further revenue growth. Moreover, some of our overseas study-related services, such as the IELTS prep business, delivered triple-digit year-over-year growth in both gross billions and revenues. Additionally, Our non-academic tutoring services also book the triple-digit year-on-year increase in growth billions. Looking forward, we expect all of our core business lines to sustain a positive momentum. Second, we continue to innovate to achieve business breakthroughs. We have been ramping up our efforts to develop a diverse range of regional and self-operated customer acquisition channels with higher conversion rates with particular focus on private traffic such as short video live streaming operations. During the quarter, I created my own account on Douyin to lead and encourage our team to explore the candidates' opportunities in the short video ecosystem. Live streaming on Douyin has already become one of the major customer acquisition channels for some of our new businesses, and live streaming sessions hosted by a number of our instructors have repeatedly ranked among the top platformers in their respective verticals in terms of gross merchandise value, or GMB. Attesting to the value of their premium content, revising presentations and their seamless collaboration with our dedicated professional and efficient backend team. Through setting up our own matrix accounts on the Zoin platform, we have dramatically improved customer acquisition efficiency and strengthened recognition of the GoTo brand, which will facilitate word-of-mouth referrals going forward, forming a positive feedback loop. Finally, we are convinced that artificial intelligence will have a tremendously transformative effect on a broad range of industries, especially the education sector. As an online education company, we will leverage our advantages in student learning statistics and the technological expertise that we have accumulated over the years to seize emerging opportunities. Accelerating the realization of AI technologies in educational settings and develop innovative and highly personalized intelligence products that exceed expectations to reinforce user engagement. 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 improvement, 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 course 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. Further, thanks to our improved customer acquisition efficiency and growing brand popularity, selling expenses ROI was up by approximately 74% year-over-year, prompting the notable year-over-year growth in gross billions. 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-shifting transformation across the education industry. We are actively embracing all the emerging changes as we push the boundaries with unremitting efforts to develop and innovate across this dynamic market landscape to create more efficient educational products with superior 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 reshaped, We will stay true to our cherished original aspiration to educate. Our pursuit of excellence in educational products, teaching quality, and learning services is unceasing. 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 outstandingly cohesive team to create sustainable value for all of our stakeholders. 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.