Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's first quarter and 2025 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 would 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 purposes only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our first 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 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 first quarter of fiscal year 2025 earnings conference call. I would like to take this opportunity to express my gratitude to each of you for your interest in 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. Over the past year, we have consistently executed on our strategic priorities, providing meaningful progress across product innovation, organizational development, technological advancement, and operational excellence. These efforts have built a transformative business expansion, while also comprehensively enhancing our organizational capabilities. As we entered 2025, we sustained our robust growth momentum, delivering results that surpassed market expectations across revenue, profitability, user growth, and organizational efficiency. Notably, our substantial profit realization represents the culture's most significant milestone, validating the effectiveness of our efforts to enhance regional leverage and improve cost efficiency. In the first quarter of 2025, our revenue increased by about 58% year-over-year to nearly 1.5 billion, exceeding the upper end of items. Operating profit reached 34.8 million, with a net income of 124.0 million. On a non-GAAP basis, net income reached 137.3 million, with a net margin of 9.2%. These financial results not only reflect strong top-line momentum but also underscore our disciplined approach to high-quality growth and marginal improvement. In addition, we consistently prioritize shareholder returns and remain committed to creating long-term value for our shareholders. During the quarter, we initiated approximately 136 million to our share repurchase program under the current buyback plan, and the accumulated total amount of stock buybacks has reached 460 million. The pure mutative number of ADS we purchased represents 9.0% of our total outstanding shares as of March 31st, 2025, serving as an effective measure to enhance shareholder returns. As of the same date, we held cash and cash equivalents, short-term and long-term investments totaling about 3.5 billion, underpinning our future strategic initiatives and sustainable growth. These robust financial achievements are the direct outcome of the strategic investments and transformative initiatives we have pursued over the past three years, particularly last year. The investment in products, users, and offline businesses are now becoming key engines, driving revenue growth, operational efficiency, and profitability. By embedding AI deeply into our educational products and services, we are accelerating the formation of a technology-empowered value loop in education. This has led to tangible advancements in user experience and learning outcomes, thereby laying a solid foundation for the company's field growth and profitability. Next, I would like to share our strategic progress and key highlights this quarter from four dimensions. First, we remain deeply user-centric, driving both the scale and value through continuous product innovation. Our traditional learning services continue to grow steadily with strong performance in both student enrollment and user satisfaction. Building on this foundation, we have broadened our offerings to address diverse user needs, ranging from online and offline academic tutoring services to breakthroughs in personalized learning solutions for high school students, as well as expanding services for college students and study abroad consulting and test preparation. These new products are steadily amplifying our network effects and economies of scale as they evolve into a replicable growth model that effectively elevates our brand awareness and market penetration. Second, we are leveraging our core advantages as a digital native education company, continually advancing the wider brand application and innovation of AI technology across multiple aspects. In terms of product branding, we capitalize on the appeal of our star instructors and successfully launched the Learn Spoken English program, a groundbreaking upgrade that reimagined the learning experience by seamlessly integrating flagship instructor IP with AI technology. By combining the magnetic influence of renowned instructors with AI instructive capabilities, we deliver a highly immersive and personalized learning experience that greatly boosts student motivation and engagement. On the service side, we have leveraged our outstanding tutors' best practices to train our AI models and develop our intended diagnostic functions. This feature helps tutors identify student learning gaps and generate personalized learning reports, thereby enhancing service efficiency and precision while enabling the scalable replication of high-quality learning services. The tool has already demonstrated tangible impacts in real-world learning settings, paving the way for cross-domain and multi-grade expansion. In operations, we are harnessing AI to optimize the user traffic operations, sharpen segmentation, and implement tailored strategies. By matching the optimal operating models to the characteristics of each user segment, we are improving both traffic value and workforce productivity. The broad adoption of AI technology has also considered workflow optimization across departments, further enhancing internal management efficiency and amplifying operational leverage. At the strategic level, we continue to actively advance our AI transformation initiative. We have deepened our forward-looking positioning and decision-making capabilities in the AI field, initiating joint AI laboratory development and collaboration with top universities and leading pilots. Through these partnerships, we are pioneering a bridge through innovations that balance technological advancements with practical implementation across diverse operational applications. We aim to drive educational innovations through AI, building a more intelligent, personalized, and scalable educational ecosystem that delivers a premium learning experience for users while creating sustainable growth and enduring value for the company. Third, we continue to invest in building long-term competitiveness by enhancing organizational efficiency and strengthening our talent pipeline. Outstanding teachers are at the core of our educational edge. We are committed to advancing talent acquisition, professional development, and incentive mechanisms while emphasizing teaching excellence and service orientation. While leveraging AI tools, we continuously enhance employee satisfaction and reduce repetitive work, allowing teachers to fully convey the human touch and care that is essential to effective teaching. We truly believe that a warm, well-structured teaching force is the bedrock for delivering consistent educational quality and elevating user satisfaction. Fourth, we remain dedicated to social responsibility while enhancing shareholder value over the long run. Rewarding shareholders has always been a central part of our developmental strategy. Building on our previous buyback plan, our Board and Directors today approved a new share repurchase program of up to US$100 million over the next three years, effective upon the completion of the current program. Moving forward, we will continue to optimize our capital structure and enhance shareholder returns while ensuring adequate funding for our strategic objectives. Today's Gaotu is the result of sustained investment, continuous efforts, and unwavering commitment. Throughout this journey, we have navigated market cycles and made pivotal strategic choices, always guided by our fundamental belief in the value of education and our dedication to future innovation. Looking ahead, we are confident that while sustaining profitable growth, we possess the resources and capabilities to invest in the future, push boundaries, and unleash innovations. Thank you very much, everyone. This is the end of my prepared remarks. Now I will pass the call over to our CFO, Shannon, to walk you through the quarter’s financial and operational details.

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 first quarter of fiscal year 2025. We started the year strongly with a high-quality performance in the first quarter, achieving profitability at scale while maintaining robust growth momentum. Revenue maintained its rapid growth trajectory, marking the third consecutive quarter with year-over-year growth exceeding 50%, and the core business has demonstrated a stronger growth momentum. Through strategic enhancement of customer value, efficient task management, and refined operational improvements, we have fully unleashed our operational leverage, providing robust support for continued profit growth. Our operating margin and net income margin rose by 10.5 and 9.6 percentage points on an annual basis, further affirming the continuous improvement of our profit quality. Meanwhile, deferred revenue amounted to over 1.4 billion, representing a year-over-year increase of 4.0%, offering a solid foundation for sustained revenue growth in the subsequent quarters. Driven by the dynamic evolution of customer needs, we have strategically invested in improving product quality, expanding our user base, and delivering more personalized and diversified learning solutions in prior years. With effective execution of these strategies, our revenue structure has become more growth-oriented and sustainable. Notably, our portfolio of non-academic children services, which generated superior customer lifetime value, has emerged as a significant growth engine alongside our traditional learning services. Next, let me walk you through the progress we made during this quarter. Learning services contributed over 95% of net revenues. Breaking it down, more than 85% of total revenues came from net academic tutoring services and our traditional learning services, representing over 80% year-over-year growth. Combined, gross earnings from these two segments increased by approximately 30% year-over-year. Our new initiatives focused on online and offline academic tutoring services delivered exceptional growth this quarter, with cross-fillings in this segment jumping nearly 90% year-over-year and cross-fillings from new enrollments surging by more than triple digits. Net revenues grew at a triple-digit rate year-over-year, accounting for over 35% of total revenues. This business has achieved triple-digit growth in both revenue and gross billings from new enrollments for four consecutive quarters. Importantly, as enrollments expanded and educational product quality improved, this segment achieved profitability. We remain focused on users' needs, continuously refining curricula with actionable educational insights while optimizing both our course delivery and service responsiveness. We take our programming courses as an example, where we achieved a retention rate exceeding 90%, a compelling testament to the strong synergy between our value proposition and user trust. Our traditional learning services maintain healthy growth, with revenue growing over 35% year-over-year, as student enrollments steadily increase. Our diverse offerings have increasingly mapped the needs of different user groups, establishing a positive word-of-mouth referral that has created a solid foundation for sustained growth, particularly as the proportion of new enrollments acquired through referrals and private channels increased markedly this quarter, further strengthening brand recognition and market penetration. This progress also highlights our dedicated efforts and accomplishments in driving user expansion and creating long-term value. The other crucial component of our learning services is educational services for college students and adults. Each segment contributed 10% of total revenues this quarter, and its net operating cash inflow increased by over 84% year-over-year. These results speak volumes about the success of our strategic recalibration and resource optimization. Specifically, educational services for college students recorded high double-digit year-over-year growth in both revenue and gross billings. By equipping tutors with AI tools, we have substantially improved response time and engagement quality, resulting in daily improvements in user satisfaction and reinforcing our market leadership in the online learning services for the college student sector. Additionally, our AI-powered English learning program, Learn English with Daniel Wu, has already become profitable shortly after its launch, serving as another endorsement for the commercial viability of integrating content innovation with AI technology, providing a proven model for future initiatives. The education business exhibits distinct seasonality, closely coupled with users' learning behavior. Consequently, the gross billings vary across different quarters, consisting primarily of new enrollments and retentions. In the first quarter of 2025, gross billings were driven primarily by new enrollments, while in the fourth quarter of the prior year, retentions contributed significantly more to gross billings. Although the quarter-on-quarter gross billing figures showed a decline in absolute terms, the new enrollment figures reflect a healthy growth trend both quarter-on-quarter and year-on-year. This solid performance lays a strong foundation for growth in retentions in the second quarter. From an operational leverage perspective, our general and administrative expenses combined with research and development expenses remain stable this quarter. While ensuring critical investments in AI, educational products, innovation, and core technology infrastructure, we are continuously leveraging AI tools to drive efficiencies. This allows us to eliminate low-value, repetitive tasks, enhance employee satisfaction, and reallocate time and resources toward more creative work. Looking ahead, we expect sustained revenue growth in subsequent quarters, projecting that G&A and R&D expenses will remain relatively scalable, thereby enhancing the positive impact of operating leverage on our margin profile and overall financial performance. I will now present our financials in more detail. Our cost of revenue this quarter was 452.5 million. Gross profit increased 64.1% year-over-year to over 1.0 billion, with a gross margin of 69.7%. The year-over-year decrease in gross margin was primarily due to changes in our product mix. Total operating expenses during the quarter increased 33.5% year-over-year to 1.0 billion. Breaking it down, selling expenses increased 40.1% year-over-year to 709.4 million, accounting for 47.5% of net revenues. Research and development expenses decreased 0.8% year-over-year to approximately 150.4 million, accounting for 10.1% of net revenues. General and administrative expenses increased 53.3% year-over-year to 145.9 million, accounting for 9.8% of net revenues. Income from operations was 34.8 million, and operating margin was 2.3%. Non-GAAP income from operations was 48.1 million, and non-GAAP operating margin was 3.2%. Net income was 124.0 million, and net income margin was 8.3%. The GAAP net income was 124.0 million. Non-GAAP net income was 137.3 million, with a non-GAAP net income margin of 9.2%. Our net operating cash outflow was 477.2 million. Now turning to our balance sheet, as of March 31st, 2025, we held over 1.0 billion in cash, cash equivalents, and restricted cash, along with more than 1.4 billion in short-term investments and 995.9 million in long-term investments. This totals about 3.5 billion. Our deferred revenue balance was over 1.4 billion, primarily consisting of tuition received in advance. As of May 14th, 2025, we have repurchased approximately 22.3 million ADS for around RMB 460 million. Today, our Board of Directors also approved a new share repurchase program of up to US$100 million for a period of 36 months, which will take effect upon the completion of the existing program. The new repurchase program is based on management's long-term confidence in the company's stable operations, profit growth, and sustained healthy operating cash flow. We'll continue to execute share buybacks according to the Board of Directors' guidance to 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, including risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on our current estimates, total net revenues for the second quarter of 2025 are expected to be between 1,298 million and 1,380 million, representing an increase of 28.5% to 35% 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.

For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. Our first question comes from Crystal Li from CMS.

Thanks, management for taking my questions, and congratulations on the very strong results. We saw you achieve a very solid margin in the first quarter. May we know more about the drivers behind this margin extension, and could you give us some color on your full-year guidance? Thank you.

Pardon me, ladies and gentlemen, it appears we have lost the connection to our speakers. Please stand by while we reconnect. We thank you for your patience. Pardon me, everybody. We are now rejoined with the speakers. You may now go ahead.

Sorry, we ran into some technical issues, and, thanks, Crystal for your question, and let me rephrase your question. First is about the margin proportion of the first quarter. The second question was the guidance for the whole year. Is that right?

Yes, that's correct. Thank you.

Yeah, thanks, Crystal. Also, before discussing the annual guidance, it's necessary to first explain the seasonality as it helps to better understand the underlying data and build more confidence in our business. The education business has distinct seasonality from the perspective of gross billings. The first and the third quarters are peak new enrollment registration seasons, with gross billings primarily from new students. Meanwhile, the second and fourth quarters are supported by both new enrollments and retentions. Gross billings in the second and fourth quarters are significantly higher than those in the first and third quarters, and this is affected by holidays and course scheduling in each quarter. It is highly recommended to analyze the revenue growth rate by the first and the second half of the year respectively, instead of just looking into one single quarter. Taking the first half of 2025, for example, our revenue in the first quarter was approximately 1.5 billion, and the upper end of the revenue guidance for the second quarter is 1.3 billion. Taken together, this represents a 44% year-on-year increase compared to the first half of last year, especially considering that the college students and adult business is still in the adjusting cycle, and it shows a decrease year-over-year in revenue. This indicates that the growth rate for our non-academic tutoring business and traditional business is at a high double-digit level, which far exceeds the industry average. In terms of profits, the first and fourth quarters are key stages for concentrated profitability release, which is closely related to revenue recognition and new enrollment recruitment cycles. Regarding our gross billings in the first quarter, I want to add more color. We had 2.16 billion in gross billings generated in Q4 2024 last year. Retentions accounted for a considerable portion of this amount. If we make an apple-to-apple comparison, the growth rate in Q1 2025 is remarkable considering this high base. Together with the increase in college students and adults impacting the growth rate, while the core business remains strong, the gross billing performance in the first quarter is solid, even with the core business growing nearly 40%. It is also important to emphasize the continuous improvement in teaching quality, which is consistently reflected by the application of AI technology that has improved timeliness, accuracy, and personalization of educational products. Our retention rates, especially among new students, are continuously improving. Looking at the whole year, our user base has reached a new level, which will support the achievement of our growth targets for 2025. The layout of our offline business over the past years will also begin to bear fruit and become an important part of the growth engine. Our product innovation and customer acquisition efforts have formed a strong reputation that has led to a significant number of referrals. The growth rate has exceeded 100% for four consecutive quarters in the past, and we expect this momentum to continue, achieving an industry-leading growth rate in 2025. In terms of profit guidance, we are continuously improving profit quality in several aspects. The first is the sustained quality improvement of teaching products and services, leading to sustained improvement in metrics such as retention and conversion rates. The second is building high-quality customer acquisition channels to optimize customer acquisition efficiency. The third is making full use of investments in AI technology to enhance operational efficiency, strengthen operating leverage, and increase employee satisfaction, which addresses part of your question about first quarter profitability. The margin in the first quarter is also driven by higher customer acquisition efficiency as well as the operating leverage. We expect the profitability of each quarter in 2025 to improve significantly compared with the same period last year, ultimately driving the overall fulfillment of annual bottom line targets.

Thank you. That's very clear.

The next question comes from Elsie Chang from CLSA. Please go ahead.

Thank you, management. Thank you for taking my question, and congratulations on the strong growth momentum and profitability. I have a question related to the sector demand side. We know that we are now facing a relatively weak cycle, but we also know that education demand remains more resilient. I would also be interested to check if you observe any changes on the consumer side, compared to maybe one year ago? Are there any changes in parents’ preferences regarding course formats or content?

Thanks, Elsie. This is an excellent question. As a customer-oriented company, we always focus on the demand from our customers, and indeed, we have observed several changes in students and parents alongside changes in macroeconomics, parents' expectations, approaches to education, and technological involvement. First, the demand for children's comprehensive development has been continuously increasing beyond traditional academic performance. Parents are gradually increasing investments in their children's all-around growth, including critical thinking, problem-solving abilities, responsibility, teamwork, and especially physical and mental health. Gaotu has keenly captured this trend and continues to actively promote high-quality content through multi-scenario coverage of online and offline channels. We create immersive learning experiences for students to cultivate their creativity, collaboration, and critical thinking, and our non-academic training is gradually becoming a core driver of business growth, reflecting this shift in customer demand. Second, parents and students have shown increasing acceptance of technology-driven educational solutions, driving us to accelerate the deep integration of AI technology with teaching scenarios. We've noticed that parents are preparing small sessions for their children using AI tools, showcasing this trend. We've also innovated our educational products, empowered by AI, and significantly improved response timeliness and quality of interactions between teachers and students, enhancing overall satisfaction. Third, there is a growing demand for more personalized education among students and parents, with a noteworthy preference for one-on-one sessions, which feel more personalized and diverse. However, we also observe that parents' pursuit of high-quality educational resources remains constant, particularly for excellent teachers and premium teaching content. This is an ongoing focus for us as we continue to build strong offerings to meet these expectations. Thank you, Elsie.

The next question comes from Eunice Liu from Goldman Sachs.

Good evening, Larry, and Shannon. Thanks for taking my question, and congrats on further results. My question is on the operating cash flow. I noticed that the operating cash flow this quarter was negative, and was more than twice its level for the first quarter last year. Could management elaborate on the reason behind this? Thank you.

Thanks. This is also a very good question, and thanks for diving into these details. The increase in operating cash outflow in the first quarter compared to the same period last year is primarily due to the payment of 2024 annual bonuses and incremental labor costs. As our business has scaled, the number of our teachers has correspondingly increased as well. However, the cash we invest in employees in the first quarter will leverage and contribute to larger cash inflows in the following quarters. Based on our efficiency improvements and profit enhancements, we expect the operating cash inflow of 2025 to be at least three times that of the full-year of 2024, which implies a net operating cash inflow of over US$100 million this year. This is the source of confidence for the board and management to additionally approve an extra US$100 million share repurchase plan today. We appreciate shareholders' and investors' long-term support, and we will continue to create greater value for shareholders. Leveraging the positive cash flow we expect to generate this year, we will do a better job on this task. Thank you.

As there are no further questions now, I'd like to turn the call back over to the company for closing remarks.

Operator, thank you everyone for joining the conference today. If you have any further questions, please don't hesitate to contact our investor relations department or our management via email at [email protected] directly. You are also welcome to subscribe to our news alerts on the company IR website. Thank you very much again for your time. Have a great time.

This concludes today's conference call. You may now disconnect your line. Thank you.