Gaotu Techedu Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Gatu Tech EDU second quarter 2023 earnings conference call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be a question and answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that today's 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 Galtu's second quarter 2023 earnings conference call. My name is Catherine, and I'll help host the earnings call today. GoTo's earnings release for the quarter was distributed earlier and is available on the company's IR website at ir.goto.cn, as well as through PR NewsWare services. Joining the call with me tonight from GoTo's senior management is Mr. Larry Chen, GoTo's founder, chairman, and chief executive officer, and Ms. Shannon Shen, GoTo'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'd like to remind you that this conference call will contain forward-looking statements made under the safe harbor provision of the U.S. Private Security 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 statement. Further information regarding this and other risks is included in the company's public with the U.S. SEC. The company does not undertake any obligations 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 a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our seven-quarter 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 GAL2's IR website. It is now my pleasure to introduce our founder, Larry. Larry, please.

Thank you, Catherine. Good evening and good morning, everyone. Thank you for joining us on GAL2's second quarter to the Summit 23 Earnings Conference Call. I would like to take this opportunity to express my gratitude to all of you for your interest in and support for GoTo and the education industry. Before I start, I would like to remind everyone that all financial figures discussed today are quoted in RMB, unless stated otherwise. During the second quarter of 2023, we continued to execute our effective growth strategy. We grew gross billions substantially on both an annual and sequential basis while also recording our third consecutive quarter of profitability and generating a sizable positive net of reaching cash flow. Our net revenues grew 30.7% year-over-year to $703.1 million. and our gross billions reached $882.3 million, up by 63.7% quarter-over-quarter and 44.2% year-over-year. Thanks to ongoing improvements in our organizational and operational efficiency, we delivered a triple-digit year-over-year increase in both income from operations and net income. Our non-GAAP net income margin for the quarter reached 9%, and we generated a positive net operating cash flow of $288.5 million. Backed by ample cash reserves, we've been steadily racking up our investments in talent, continuously refining our executional content services, and persistently improving teaching quality and learning efficiency through artificial intelligence, technological innovation, and organizational upgrades. These efforts have strengthened our competitive edge in terms of content-driven content acquisition and teaching quality, creating a flywheel effect. As the flywheel started to turn, our customer acquisition experienced ongoing improvement in efficiency and operating leverage began to grow, resulting in increasing clarity for our growth trajectory. Our focus remains on two major business lines, learning services and educational content and digitalized learning products. Learning services continues to serve as the core pillar of our business and the predominant revenue contributor. It mainly includes non-academic tutoring services and other traditional learning services, educational services for college students and adults, and overseas study related services. I will now discuss business highlights of the quarter from three aspects. First, Propelled by the dual engines of the product, process, and organizational capability, we remained laser-focused on enhancing our products and services. While all of our core business segments continued a healthy development trajectory, our cost, delivery, quality, and operational efficiency also improved during the quarter. With a strong focus on building organizational capacity, we not only cultivated a large pool of highly talented instructors and tutors internally, but also forged a long-term partnership with prominent universities to continuously source passionate teaching professionals. By fostering an innovative and cohesive workforce, we aim to internally drive business breakthroughs. Meanwhile, Our relentless pursuit of excellence in educational products, teaching quality, and learning services is best represented by the compelling results our students are able to achieve. I will now share some of the progress and accomplishments we have achieved in this aspect during the second quarter. To start, our non-academic tutoring services book roughly 75% year-over-year increase in revenue and generated a positive net of reaching cash flow during the quarter. We continuously optimize the product value and service quality and diversify the delivery format to cater to customer needs. As a result, the business delivered a double-digit increase in gross billions on both annual and sequential basis in the second quarter, operationally, we are glad to see increased user satisfaction as well. In particular, in non-academic tutoring services, core offerings, our retention rate improved remarkably compared to the same period of last year. Educational services for college students and adults, another key component of our learning services, also deliver the solid performance Within the segment, the postgraduate entrance exam prep business saw a nearly 40% year-over-year increase in net revenues. According to our survey results, the success rate was more than twice that of the national average for the national graduated school entrance exam class of 2023. In addition, some of our overseas test prep and overseas study consulting business, such as the IELTS prep, business achieved nearly triple-digit revenue growth quarter-over-quarter. Finally, our well-established traditional learning services business also delivered robust performance. According to our preliminary data, more than 210 GoTo students were admitted to the top two universities in 2023. Going forward, we expect all of our main business lines to sustain healthy growth momentum while maintaining a high standard of instruction and delivering improved learning outcomes. Second, we're constantly pushing the boundaries through business innovation, expanding into a diverse range of new channels to acquire customers and improve conversion efficiency. Since the beginning of this year, we have been actively exploring innovative customer acquisition channels, including short-form videos and live streaming platforms, aiming to reinforce our competitive advantage in channels by delivering premium content, boosting user engagement, and reducing acquisition costs. We are happy to share with you that the contribution ratio from our self-operated traffic channels increased significantly within certain business segments this quarter. Meanwhile, certain key business lines also achieved breakthroughs in scaling customer acquisition through short video and live streaming. In June, the number of monthly transactional users of the IELTS business acquired through a live streaming platform surged by more than 300% compared to six months prior. The improved efficiency of customer acquisition further contributed to our overseas past prior fitness positive monthly net operating cash flow and operating profit. Furthermore, there has been a significant surge in domestic demand for studying abroad as the pandemic's impact gradually recedes and countries around the world ease entry restrictions. It's worth mentioning that in terms of the specific efficiency indicators. Our selling expenses RI for this quarter saw a nearly 20% improvement compared to the same period last year. Looking ahead, we will continue to build upon our experience and know-how to further optimize our diverse China layout. Moreover, we will continue to leverage our lean operations management model to elevate overall operational efficiency. Third, by cultivating talents and investing in emerging technologies, we are able to amplify the impact and value our exceptional instructors and tutors have. This, in turn, unlocks greater front-end productivity and strengthens our organizational capabilities. Recent developments in artificial intelligence and reliably present significant opportunities and raise expectations for the education industry. We have applied artificial intelligence technologies into numerous user case scenarios for our products and services to continuously improve the efficiency of our teams across front-end teaching, back-end research, customer service, and design, ultimately enhancing the overall learning experience for our students. In closing, I would like to emphasize that making learning better will always be God's willing mission, and we are willing to embrace all opportunities and challenges that lie ahead. Our dedication to addressing customer needs prioritizing teaching quality and enhancing learning outcomes will remain unchanged. Our continued investment in technological innovation and organizational capability will remain unchanged. Our commitment to our original aspiration to educate will remain unchanged. Guided by our effective growth strategy, we are confident in our ability to create long-term value for our shareholders, customers, and society at large, while contributing to the educational development of China. 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 the quarter.