GSX Announces Third Quarter 2020 Unaudited Financial Results

BEIJING,Nov. 20,2020 --GSX Techedu Inc. (NYSE: GSX) ("GSX" or the "Company"),a leading online K-12 large-class after-school tutoring service provider in China,today announced its unaudited financial results for the third quarter ended September 30,2020.

Third Quarter 2020 Highlights[1]

Net revenueswas RMB1,965.8 million,a 252.9% year-over-year increase.

- Net revenues of online K-12 courses increased 282.7% year-over-year to RMB1,757.2 million.

Gross billings[2]was RMB2,086.2 million,a 137.1% year-over-year increase.

- Gross billings of online K-12 courses increased 140.8% year-over-year to RMB1,793.5 million.

Paid course enrollments[3]increased 133.5% year-over-year to 1,256 thousand.

- Paid course enrollments of online K-12 increased 140.5% year-over-year to 1,147 thousand.

Net losswas RMB932.5 million,compared with the net income of RMB1.9 million in the same period of 2019.

Non-GAAP net losswas RMB863.6 million,compared with the non-GAAP net income of RMB20.1 million in the same period of 2019.

Deferred revenue was RMB1,964.8 million,compared with RMB1,337.6 million as of December 31,2019.

Third Quarter 2020 Key Financial and Operating Data

(In thousands of RMB,except for paid course enrollments and percentages)

Three Months Ended September 30,

2019

2020

Pct. Change

Net revenues[4]

556,994

1,965,809

252.9%

K-12 courses

459,105

1,757,180

282.7%

Foreign language,professional and interest

90,521

203,469

124.9%

Gross billings[5]

880,042

2,086,193

137.1%

K-12 courses

744,786

1,793,462

140.8%

Foreign language,professional and interest

124,402

292,554

135.2%

Paid course enrollments(In thousands)

538

1,256

133.5%

K-12 courses

477

1,147

140.5%

Foreign language,professional and interest

61

109

78.7%

Net income (loss)

1,902

(932,512)

NM

Non-GAAP net income (loss)

20,141

(863,583)

NM

[1] For a reconciliation of non-GAAP numbers,please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" at the end of this press release. Non-GAAP income (loss) from operations,non-GAAP net income (loss) exclude share-based compensation expenses.

[2]Gross billings is a non-GAAP financial measure,which is defined as the total amount of cash received for the sale of course offerings in such period,net of the total amount of refunds in such period. See "About Non-GAAP Financial Measures" and "Reconciliations of non-GAAP measures to the most comparable GAAP measures" elsewhere in this press release.

[3]Paid course enrollments for a certain period refer to the cumulative number of paid courses enrolled in and paid for by our students,including multiple paid courses enrolled in and paid for by the same student. Paid courses refer to our courses that are charged not less than RMB99.0 per course in fees.

[4] The breakdown does not include amount generated from other services because it is negligible.

[5]The breakdown does not include amount generated from other services because it is negligible.

Nine Months Ended September 30,2020 Highlights

Net revenueswas RMB4,913.7 million,a 316.5% year-over-year increase.

- Net revenues of online K-12 increased 356.5% year-over-year to RMB4,262.2 million.

Gross billingswas RMB5,861.6 million,a 229.4% year-over-year increase.

- Gross billings of online K-12 increased 241.4% year-over-year to RMB5,080.1 million.

Paid course enrollmentsincreased 229.6% year-over-year to 3,596 thousand.

- Paid course enrollments of online K-12 increased 245.2% year-over-year to 3,290 thousand.

Net losswas RMB765.9 million,compared with the net income of RMB52.2 million in the same period of 2019.

Non-GAAP net losswas RMB600.1 million,compared with the non-GAAP net income of RMB89.1 million in the same period of 2019.

First Nine Months of 2020 Key Financial and Operating Data

(In thousands of RMB,except for paid course enrollments and percentages)

Nine Months Ended September 30,

2019

2020

Pct. Change

Net revenues

1,179,828

4,913,703

316.5%

K-12 courses

933,682

4,262,237

356.5%

Foreign language,professional and interest

228,146

638,026

179.7%

Gross billings

1,779,510

5,861,588

229.4%

K-12 courses

1,488,133

5,080,131

241.4%

Foreign language,professional and interest

264,184

774,259

193.1%

Paid course enrollments(In thousands)

1,091

3,596

229.6%

K-12 courses

953

3,290

245.2%

Foreign language,professional and interest

138

306

121.7%

Net income (loss)

52,167

(765,897)

NM

Non-GAAP net income (loss)

89,089

(600,130)

NM

Larry Xiangdong Chen,GSX's founder,Chairman and CEO,commented,"We achieved another robust quarter,with net revenues hitting an all-time-high of RMB 1.966 billion,which is 3.5 times that of the same quarter of last year. These outstanding results speak to our continued focus of providing the highest quality services to our students and parents,our consistent training to frontline employees and our unwavering efforts to improve the operational efficiencies and organizational capabilities. In the face of competition and rising customer acquisition costs,we remain committed to pursuing effective traffic acquisition through high ROI channels,sticking to efficient sales and marketing spending,and executing an LTV-based effective growth strategy. In the meantime,we continued to invest extensively in our teaching staff,product design,content development and technology innovations,raise overall compensation for our tutors and attract more top-tier talents- we view all of this spending as an important investment for the long-term future. We recently integrated our K-12 business under our Gaotu Ketang brand to focus on delivering the educational products and services with the quality of a large class,the learning experience of a small class,and the feeling and educational results of one-on-one tutoring. Through Gaotu Ketang,we aim to further enhance our customer experience and implement our effective growth strategy. Regardless of the intense competition today,we still see vast potential in the online education industry and are fully prepared to explore all possibilities based on the solid foundation that we have built over the past years. We are looking forward to generating value and sharing the future of online education with you."

Shannon Shen,CFO of GSX,added,"We achieved just shyofRMB 2 billion in net revenues in the third quarter of 2020,which squarely positions us as one of the top leaders in the online live large class service sector. Our core K-12 business grew to a remarkable 3.8 times compared with that of the same quarter of last year and remained a key driver of net revenues growth. Looking back over the past three years,ever since we have transitioned our business to focus exclusively on the online live large-class model,the scale of our enrollments has exploded and we have generated industry-leading operating margins. All of these achievements were made possible by our laser focus on the satisfaction of our students and parents,and constant improvement of organizational capabilities."

"The summer vacation of 2020 was significantly shorter than usual as different provinces adopted various holiday schedules in response to the delayed middle school and high school entrance exams. As a result,our course cycles and recruitment pace were also affected.Nevertheless,we were still able to achieve strong growth in topline. In addition,throughout this summer,our student structure has grown sustainable,with the students of non-graduate grade significantly increased,which lays solid foundation for our future retentions." Shannon noted.

Financial Results for the Third Quarter of 2020

Net Revenues

Net revenues reached RMB1,a 252.9% increase from RMB557.0 million in the third quarter of 2019. The increase was mainly driven by the growth in paid course enrollments for K-12 courses. The number of online K-12 paid course enrollments increased 140.5% year-over-year to 1,147 thousand,which was contributed by both first-time paid course enrollments and retention of existing students. The increase in first-time paid course enrollments was primarily driven by our effective investment in sales and marketing efforts and the increase in retention was primarily driven by high teaching quality and optimized services that we provided.

Cost of Revenues

Cost of revenues rose 220.5% to RMB502.3 million from RMB156.7 million in the third quarter of 2019,mainly due to the increase in compensation for instructors and tutors,learning materials,rental expenses,as well as server and bandwidth costs.

Gross Profit

Gross profit increased 265.6% to RMB1,463.5 million from RMB400.3 million in the third quarter of 2019.Gross profit margin increased to 74.4% from 71.9% in the same period of 2019,primarily as a result of economies of scale.

Non-GAAP gross profit increased 265.1% to RMB1,481.4 million from RMB405.7 million in the same period of 2019. Non-GAAP gross profit margin increased to 75.4% from 72.8% in the same period of 2019.

Operating Expenses

Operating expenses were RMB2,453.7 million,increasing from RMB411.1 million in the third quarter of 2019.

Selling expenses increased to RMB2,055.8 million from RMB330.4 million in the third quarter of 2019. The increase was primarily a result of higher marketing expenses to expand the user base and enhance our brands,and an increase in compensation to sales and marketing staff.

Research and development expenses increased 286.0% to RMB220.4 million,from RMB57.1 million in the third quarter of 2019. The increase was primarily due to an increase in the number of course professionals and technology development personnel,as well as an increase in compensation for such staff.

General and administrative expenses increased to RMB177.4 million from RMB23.6 million in the third quarter of 2019. The increase in general and administrative expenses was mainly due to an increase in the number of general and administrative personnel,an increase in compensation paid to general and administrative staff,and an increase in fees for investigation purpose.

Income (Loss) from Operations

Loss from operations was RMB990.1 million,compared with the loss from operations of RMB10.8 million in the third quarter of 2019. The increase was primarily due to higher investment in sales and marketing activities to extend volume growth and strengthen brand perception.

Non-GAAP[6] loss from operations was RMB921.2 million,compared with the income from operations of RMB7.4 million in the third quarter of 2019.

[6] For a reconciliation of non-GAAP numbers,exclude share-based compensation expenses.

Interest Income and Realized Gains from Investment

Aggregation of interest income and realized gains from investments this quarter,representing the income received from cash,cash equivalents,short-term and long-term wealth management investments,increased 253.8% to RMB18.4 million,from RMB5.2 million in the third quarter of 2019. This increase was primarily due to increase of cash,cash equivalents and short-term wealth management investments,as well as the realization of gains generated from short-term and long-term wealth management investments during this quarter.

Other Income

Other income increased to RMB49.9 million,from RMB1.5 million in the third quarter of 2019. The increase was primarily due to the value-added tax exemption offered by the government,partially offset by the related cost,during the COVID-19 outbreak,which amounted to RMB51.5 million,net of other expenses of RMB1.6 million.

Net Income (Loss)

Net loss was RMB932.5 million,compared with the net income of RMB1.9 million in the third quarter of 2019.

Non-GAAP net loss was RMB863.6 million,compared with the net income of RMB20.1 million in the third quarter of 2019.

Cash Flow

Net operating cash outflow for the third quarter of 2020 was RMB678.8million. The outflow of net operating cash this quarter was primarily due to higher marketing expenses paid to improve our market share and brand awareness,an increase in compensation paid to fast-growing staff,and increased server and bandwidth expenses paid to support our rapid growth of students and daily operation activities.

An installment of RMB24.1 million of the Zhengzhou properties purchases,along with payments for other capital expenditures amounting to RMB99.1 million,were made during the period.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were RMB3.91 and RMB3.91,respectively,in the third quarter of 2020.

Non-GAAP basic and diluted net loss per ADS,were RMB3.62 and RMB3.62,in the third quarter of 2020.

Share Outstanding

As of September 30,2020,the Company had 158,960,025 ordinary shares outstanding.

Cash and Cash Equivalents,Short-term Investments and Long-term Investments

As of September 30,the Company had cash and cash equivalents,short-term investments and long-term investments of RMB2,130.8 million in the aggregate,compared with a total of RMB2,735.7 million of cash and cash equivalents,short-term investments and long-term investments as of December 31,2019.

Inventory

As of September 30,the Company's inventory amounted to RMB50.0 million,compared with RMB8.8 million as of December 31,2019. This increase was primarily resulting from the increase of learning materials to support the rapid growth of students.

Accrued expenses and other current liabilities

As of September 30,the Company's accrued expenses and other current liabilities balance was RMB745.5 million,increasing from RMB228.8 million as of December 31,2019. This increase was mainly resulting from the consideration of purchasing the Zhengzhou properties,as well as the increase of salary and welfare payables.

Deferred Revenue

As of September 30,the Company's deferred revenue balance was RMB1,increasing 46.9% from RMB1,2019. Deferred revenue primarily consisted of tuition collected in advance.

Other Payables

As of September 30,other payables in non-current liabilities totaled RMB63.9 million,all of which were payables to purchase the Zhengzhou properties.

Recent Development

Independent Review Update and SEC Investigation

As previously disclosed,prior to the Company being contacted by the SEC regarding the SEC's ongoing investigation,the Audit Committee of the Board of Directors of the Company had engaged third party professional advisers to conduct an internal independent review into the allegations in a number of short-seller reports about the Company. The independent review is ongoing. As of the date of this announcement,based on the agreed scope and procedures that the professional advisers have performed so far,the Company has not been advised of findings that the Company believes would have a material adverse financial impact on the Company's reported financial performance. The professional advisers will report its findings and conclusions to the Audit Committee and the Company upon the conclusion of the review.

The Company is continuing its cooperation with the SEC and cannot predict the timing,outcome,or consequence of the SEC investigation.

Business Outlook

Based on the Company's current estimates,total net revenues for the fourth quarter of 2020 are expected to be between RMB2,076 million and RMB2,116 million,representing an increase of 122.0% to 126.3% on a year-over-year basis. These estimates reflect the Company's current expectations,which are subject to change.

Conference Call

The Company will hold an earnings conference call on Friday,November 20,at 8:00 AM U.S. Eastern Time (9:00 PM on the same day,Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:

International:

1-412-317-6061

US:

1-888-317-6003

Hong Kong:

800-963976

Mainland China:

4001-206115

Passcode:

9334890

A telephone replay will be available two hours after the conclusion of the conference call through November 27,2020. The dial-in details are:

International:

1-412-317-0088

US:

1-877-344-7529

Passcode:

10149617

Additionally,a live and archived webcast of this conference call will be available at http://gsx.investorroom.com/.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the outlook for the fourth quarter of 2020 and GSX's strategic and operational plans,contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with,or furnished to,the U.S. Securities and Exchange Commission,in its annual reports to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: the Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit,train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with,or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release,and GSX undertakes no duty to update such information or any forward-looking statement,except as required under applicable law.

About GSX Techedu Inc.

GSX is a technology-driven education company and leading online K-12 large-class after-school tutoring service provider in China. GSX offers K-12 courses covering all primary and secondary grades through the brand Gaotuketang as well as foreign language,professional and interest courses through the brand Genshuixue. GSX adopts an online live large-class format to deliver its courses,which the Company believes is the most effective and scalable model to disseminate scarce high-quality teaching resources to aspiring students in China. Big data analytics permeates each aspect of the Company's business and facilitates the application of the latest technology to improve teaching delivery,student learning experience,and operational efficiency.

About Non-GAAP Financial Measures

The Company uses gross billings,non-GAAP gross profit,non-GAAP income (loss) from operations and non-GAAP net income (loss),each a non-GAAP financial measure,in evaluating its operating results and for financial and operational decision-making purposes.

The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period,net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered over usually no more than 60 classes for K-12 courses. For some courses,the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings have material limitations as an analytical metrics and may not be calculated in the same manner by all companies,it may not be comparable to other similarly titled measures used by other companies.

Non-GAAP gross profit,non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude share-based compensation expenses,and such adjustment excludes the impact on income tax. GSX believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. GSX believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to GSX's historical performance. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("USD") solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to USD are made at a rate of RMB6.7896 to USD1.00,the effective noon buying rate for September 30,2020 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been,or could be,converted,realized or settled into USD at that rate on September 30,or at any other rate.

For further information,please contact:

GSX Techedu Inc.

Ms. Sandy Qin,CFA

E-mail: ir@genshuixue.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-10-5900-1548

E-mail: Eyuan@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@christensenir.com

GSX Techedu Inc.

Unaudited condensed consolidated balance sheets

(In thousands of RMB and USD,except for share,per share and per ADS data)

As of

December 31,

As of September 30,

2019

2020

2020

RMB

RMB

USD

ASSETS

Current assets

Cash and cash equivalents

73,967

187,796

27,659

Short-term investments

1,473,452

1,387,360

204,336

Inventory

8,822

49,956

7,358

Prepaid expenses and other current assets

252,660

448,286

66,025

Total current assets

1,808,901

2,073,398

305,378

Non-current assets

Operating lease right-of-use assets

264,909

725,038

106,787

Property,equipment and software,net

81,860

639,805

94,233

Land use rights,net

-

29,184

4,298

Long-term investments

1,188,286

555,651

81,839

Deferred tax assets

30,716

131,544

19,374

Rental deposit

18,719

44,234

6,515

Other non-current assets

1,141

1,640

242

Total ASSETS

3,394,532

4,200,494

618,666

LIABILITIES

Current liabilities

Accrued expenses and other current liabilities

(including accrued expenses and other current

liabilities of the consolidated VIE without

recourse to the Groupof RMB188,975 and

RMB455,410 as of December 31,2019 and

September 30,respectively)

228,753

745,455

109,795

Deferred revenue,current portion of the

consolidated VIE without recourse to the Group

1,331,962

1,958,579

288,468

Current portion of operating lease liabilities

(including current portion of operating lease

liabilities of the consolidated VIE without

recourse to the Groupof RMB59,982 and

RMB104,174 as of December 31,respectively)

59,982

126,872

18,686

Income tax payable of the consolidated VIE

without recourse to the Group

16,093

-

-

Amounts due to related parties of the

consolidated VIE without recourse to the Group

460

-

-

Total Current liabilities

1,637,250

2,830,906

416,949

GSX Techedu Inc.

Unaudited condensed consolidated balance sheets

(In thousands of RMB and USD,

As of September 30,

2019

2020

2020

RMB

RMB

USD

Non-current liabilities

Deferred revenue,non-current portion of the

consolidated VIE without recourse to the

Group

5,674

6,206

914

Non-current portion of operating lease liabilities

(including non-current portion of operating

lease liabilities of the consolidated VIE without

recourse to the Groupof RMB194,228 and

RMB475,651 as of December 31,respectively)

194,228

577,796

85,100

Deferred tax liabilities of the consolidated VIE

without recourse to the Group

25

73,499

10,825

Other payables

-

63,934

9,416

TOTAL LIABILITIES

1,837,177

3,552,341

523,204

SHAREHOLDERS' EQUITY

Ordinary shares

106

106

16

Treasury stock,at cost

(86,739)

(206,804)

(30,459)

Additional paid-in capital

1,899,059

1,902,356

280,187

Accumulated other comprehensive income (loss)

17,829

(8,708)

(1,283)

Statutory reserve

6,921

6,921

1,019

Accumulated deficit

(279,821)

(1,045,718)

(154,018)

TOTAL SHAREHOLDERS' EQUITY

1,557,355

648,153

95,462

TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' EQUITY

3,666

GSX Techedu Inc.

Unaudited condensed consolidated statements of operations

(In thousands of RMB and USD,per share and per ADS data)

For the three months ended September 30,

For the nine months ended September 30,

2019

2020

2020

2019

2020

2020

RMB

RMB

USD

RMB

RMB

USD

Net Revenues:

556,994

1,809

289,532

1,828

4,703

723,710

Online K-12 Courses

459,180

258,805

933,237

627,760

Foreign language,469

29,968

228,026

93,971

Other services

7,368

5,160

759

18,000

13,440

1,979

Cost of revenues

(156,691)

(502,274)

(73,977)

(339,925)

(1,146,185)

(168,815)

Gross profit

400,303

1,463,535

215,555

839,903

3,767,518

554,895

Operating expenses

Selling expenses

(330,352)

(2,055,820)

(302,790)

(598,919)

(4,017,857)

(591,766)

Research and development expenses

(57,128)

(220,436)

(32,467)

(128,698)

(459,724)

(67,710)

General and administrative expenses

(23,638)

(177,395)

(26,127)

(64,148)

(348,895)

(51,387)

Total operating expenses

(411,118)

(2,453,651)

(361,384)

(791,765)

(4,826,476)

(710,863)

(Loss) Income from operations

(10,815)

(990,116)

(145,829)

48,138

(1,058,958)

(155,968)

Interest income

3,282

1,580

233

6,923

2,099

309

Realized gains from investments

1,903

16,831

2,479

3,368

53,069

7,816

Other income

1,463

49,884

7,347

2,087

199,537

29,388

(Loss) Income before provision for income

tax and loss from equity method

investments

(4,167)

(921,821)

(135,770)

60,516

(804,253)

(118,455)

Income tax benefits/(expenses)

5,471

(10,435)

(1,537)

(9,086)

40,093

5,905

Income (Loss) from equity method investments

598

(256)

(38)

737

(1,737)

(256)

Net income (Loss)

1,902

(932,512)

(137,345)

52,167

(765,897)

(112,806)

Less: Series A convertible redeemable preferred

shares redemption value accretion

-

-

-

16,772

-

-

Less: Undistributed earnings allocated to the

participating preferred shares

-

-

-

3,851

-

-

Net income (Loss) attributable to GSX

Techedu Inc.'s ordinary shareholders

1,345)

31,544

(765,806)

Net income (loss) per ordinary share

Basic

0.01

(5.87)

(0.86)

0.25

(4.82)

(0.71)

Diluted

0.01

(5.87)

(0.86)

0.23

(4.82)

(0.71)

Net income (loss) per ADS

Basic

0.01

(3.91)

(0.57)

0.17

(3.21)

(0.47)

Diluted

0.01

(3.91)

(0.57)

0.15

(3.21)

(0.47)

Weighted average shares used in net income

per share

Basic

157,090,261

158,934,937

158,937

125,462,376

159,061,256

159,256

Diluted

166,702,637

158,937

134,511,454

159,256

Note: Three ADS represents two ordinary shares.

GSX Techedu Inc.

Reconciliations of non-GAAP measures to the most comparable GAAP measures

(In thousands of RMB and USD,

2019

2020

2020

2019

2020

2020

RMB

RMB

USD

RMB

RMB

USD

Net revenues

556,710

Less: other revenues(1)

-

216

32

-

1,215

179

Add: VAT and surcharges

37,176

117,916

17,367

73,227

294,820

43,422

Add: ending deferred revenue

778,312

1,964,785

289,382

778,382

Add: ending refund liability

31,351

81,698

12,033

31,033

Less: beginning deferred revenue

503,655

1,961,103

288,839

272,041

1,337,636

197,012

Less: beginning refund liability

20,136

82,696

12,180

11,167

54,567

8,037

Gross billings (non-GAAP)

880,042

2,193

307,263

1,510

5,588

863,319

Note (1): Include miscellaneous revenues generated from services other than courses.

For the three months ended September 30,

2019

2020

2020

2019

2020

2020

RMB

RMB

USD

RMB

RMB

USD

Gross profit

400,895

Share-based compensation

expense in cost of revenues

5,381

17,902

2,637

10,241

47,490

6,995

Non-GAAP gross profit

405,684

1,481,437

218,192

850,144

3,815,008

561,890

(Loss) Income from

operations

(10,829)

48,138

(1,958)

(155,968)

Share-based compensation

expenses

18,239

68,929

10,152

36,922

165,767

24,415

Non-GAAP income (loss)

from operations

7,424

(921,187)

(135,677)

85,060

(893,191)

(131,553)

Net income (Loss)

1,345)

52,167

(765,897)

(112,806)

Share-based compensation

expenses

18,415

Non-GAAP net income

(Loss)

20,141

(863,583)

(127,193)

89,089

(600,130)

(88,391)

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