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01/11 16:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite some positive developments like strong market feedback for new AI products and a share repurchase program, the significant revenue decline and increased losses overshadow these gains. The company's reliance on market acceptance and government policies, coupled with high R&D costs and operational efficiency challenges, present considerable risks. The Q&A section did not provide clarity on these issues, further contributing to a negative outlook. Given these factors, the stock price is likely to experience a negative movement of -2% to -8% over the next two weeks.
Net Revenues RMB 20 million in Q3 2025, a 66.4% decrease year-over-year from RMB 59.6 million in Q3 2024. The decline was primarily due to reduced revenues from district-level projects as resources were prioritized on school-based projects under a subscription model, which requires a longer revenue recognition period.
Cost of Revenue RMB 9.8 million in Q3 2025, a 58.1% decrease year-over-year from RMB 23.3 million in Q3 2024. This decrease was largely in line with the reduction in net revenues during the quarter.
Gross Profit RMB 10.2 million in Q3 2025, compared to RMB 36.3 million in Q3 2024. Gross margin decreased to 51.2% in Q3 2025 from 60.9% in Q3 2024.
Total Operating Expenses RMB 56.9 million in Q3 2025, a 1.9% decrease year-over-year from RMB 58.0 million in Q3 2024. This includes RMB 6.3 million of share-based compensation expenses.
Sales and Marketing Expenses RMB 15.9 million in Q3 2025, a 21.6% decrease year-over-year from RMB 20.2 million in Q3 2024. The reduction was attributed to improved efficiency in marketing and sales driven by enhanced customer retention.
Research and Development Expenses RMB 15.2 million in Q3 2025, a 19.2% increase year-over-year from RMB 12.8 million in Q3 2024. The increase was primarily due to higher headcount in R&D to support the rollout of new products, partially offset by a decrease in share-based compensation.
General and Administrative Expenses RMB 25.8 million in Q3 2025, compared to RMB 25.0 million in Q3 2024. This includes RMB 2.8 million of share-based compensation expenses.
Loss from Operations RMB 46.6 million in Q3 2025, compared to RMB 21.6 million in Q3 2024. Loss from operations as a percentage of net revenues was negative 233.1% in Q3 2025, compared to negative 36.3% in Q3 2024.
Net Loss RMB 44.5 million in Q3 2025, compared to RMB 17.4 million in Q3 2024. Net loss as a percentage of net revenues was negative 222.5% in Q3 2025, compared to negative 29.2% in Q3 2024.
Adjusted Net Loss (Non-GAAP) RMB 38.2 million in Q3 2025, compared to RMB 5.7 million in Q3 2024. Adjusted net loss as a percentage of net revenues was negative 191.0% in Q3 2025, compared to negative 9.5% in Q3 2024.
Cash and Cash Equivalents RMB 341.9 million as of September 30, 2025, compared to RMB 359.3 million as of December 31, 2024.
Launch of Yiqi Aixue: A new AI-powered precision learning product targeting C-end users. It integrates high-quality content resources, smart hardware, and proprietary AI capabilities to deliver personalized learning recommendations and academic performance analysis. Features include Smart Pen for real-time data collection and Tobi Smart Rabbit for emotional support and interactive learning.
Yiqi Classmate: A generative AI agent embedded in teaching and learning SaaS offerings, launched earlier in August 2025, aimed at enhancing educational digital transformation.
Market response to Yiqi Aixue: The product has received encouraging market feedback and robust user demand, indicating strong growth potential.
School-based subscription business: Achieved double-digit year-over-year growth with upselling opportunities for value-added services.
Operational efficiency improvements: Operating expenses decreased by 29.8%, and net loss narrowed by 21.5% in the first nine months of 2025, despite increased R&D investment.
Cash reserves: Maintained cash reserves of RMB 341.9 million (USD 48.0 million) as of September 30, 2025.
AI integration in education: Aligned with national strategies to integrate AI into education, focusing on innovative learning models and AI transformation.
Future strategy: Plans to expand teaching and learning SaaS product portfolio while balancing financial sustainability and innovation investment.
Revenue Decline: Net revenues decreased by 66.4% year-over-year, primarily due to a reduction in district-level project revenues as the company shifted focus to school-based subscription models, which have longer revenue recognition periods.
Increased Losses: Net loss for Q3 2025 increased significantly to RMB 44.5 million compared to RMB 17.4 million in Q3 2024, with loss from operations as a percentage of net revenues worsening to negative 233.1%.
Cash Flow Concerns: Although the company holds cash reserves of RMB 341.9 million, the significant increase in losses and reduced revenues could strain future cash flow.
Market Dependency: The company’s reliance on favorable market response to new AI products for future growth introduces uncertainty, as market acceptance is not guaranteed.
Regulatory Risks: The company’s strategy is closely tied to government policies promoting AI in education. Any changes in these policies could adversely impact the company’s operations and strategic direction.
High R&D Costs: Research and development expenses increased by 19.2% year-over-year, driven by higher headcount to support new product rollouts, which could pressure financial sustainability if revenue growth does not materialize.
Operational Efficiency Challenges: Despite efforts to reduce operating expenses, the company still faces challenges in achieving profitability, as evidenced by the widening losses.
Future AI Product Development: The company plans to continue expanding its teaching and learning SaaS product portfolio while balancing financial sustainability and innovation investment. This includes enhancing AI capabilities across the full product portfolio to improve learning efficiency and experience.
Market Trends and Government Policy Alignment: The Chinese government’s active promotion of AI integration in education aligns with the company’s long-term vision. The company plans to deepen its investment in AI transformation in response to national initiatives.
New Product Launch and Market Response: The recently launched Yiqi Aixue, an AI-powered precision learning product, has received strong market feedback and robust user demand. This product is expected to lay a solid foundation for future growth.
Revenue Growth in School-Based Subscription Model: The school-based subscription business achieved a double-digit year-over-year increase, with upselling opportunities for additional value-added services. This model is expected to strengthen customer relations and brand influence.
Financial Strategy and Cash Flow: Despite increased R&D investment, the company achieved reduced operating expenses and narrowed losses. Positive market response to new products is expected to bolster future cash flow.
Long-Term Value Creation: The company aims to foster synergies across business lines, deepen customer engagement, and expand market presence through an integrated business strategy. This is expected to create long-term value for users and shareholders.
The selected topic was not discussed during the call.
Despite some positive developments like strong market feedback for new AI products and a share repurchase program, the significant revenue decline and increased losses overshadow these gains. The company's reliance on market acceptance and government policies, coupled with high R&D costs and operational efficiency challenges, present considerable risks. The Q&A section did not provide clarity on these issues, further contributing to a negative outlook. Given these factors, the stock price is likely to experience a negative movement of -2% to -8% over the next two weeks.
The earnings call highlights significant revenue decline and ongoing profitability challenges, despite improved margins and reduced losses. The share repurchase program is a positive move, but the heavy reliance on AI integration and market penetration risks, coupled with cash reserve decline and regulatory impacts, pose concerns. The Q&A section lacks clarity, and the market may react negatively due to the substantial revenue drop and dependency on long-term revenue recognition models. Overall, the negative factors outweigh the positives, leading to a negative sentiment.
The earnings call presents mixed signals: strong revenue growth and cost optimization are positive, but the significant Q4 revenue decrease and lower gross margin raise concerns. Despite improvements in operational efficiency and AI integration, cash reserves have decreased, and regulatory impacts persist. The Q&A section lacks clarity, adding uncertainty. Overall, these factors suggest a neutral sentiment, with potential for both positive and negative market reactions over the next two weeks.
The earnings call presents a mixed picture: strong revenue growth and improved operational efficiency are positive, but there are significant concerns. Revenue decrease in Q4, gross margin decline, and cash reserve reduction present challenges. The shift to a subscription model and AI-driven initiatives offer long-term potential but may not immediately counteract short-term financial pressures. The Q&A section did not provide clarity on management's responses, leaving uncertainties. Overall, the stock price is likely to remain stable, resulting in a neutral sentiment.
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