GSX Announces Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results

BEIJING,March 5,2021 -- 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 fourth quarter and fiscal year ended December 31,2020.

Fourth Quarter 2020 Highlights[1]

Net revenueswas RMB2,211.0 million,a 136.5% year-over-year increase.

- Net revenues of online K-12 courses increased 155.6% year-over-year to RMB1,975.2 million.

Gross billings[2]was RMB3,146.5 million,a 99.3% year-over-year increase.

- Gross billings of online K-12 courses increased 109.8% year-over-year to RMB2,923.0 million.

Paid course enrollments[3]increased 107.6% year-over-year to 2,275 thousand.

- Paid course enrollments of online K-12 increased 112.8% year-over-year to 2,139 thousand.

Net losswas RMB627.0 million,compared with net income of RMB174.5 million in the same period of 2019.

Non-GAAP net losswas RMB554.4 million,compared with non-GAAP net income of RMB197.8 million in the same period of 2019.

Deferred revenue was RMB2,733.7 million,compared with RMB1,337.6 million as of December 31,2019.

Net operating cash inflowwas RMB636.4 million,compared with net operating cash inflow of RMB738.8 million in the same period of 2019.

Fourth Quarter 2020 Key Financial and Operating Data

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

Three Months Ended December 31,

2019

2020

Pct. Change

Net revenues

935,027

2,211,041

136.5%

K-12 courses

772,856

1,975,162

155.6%

Foreign language,professional,interest and

other services

162,171

235,879

45.4%

Gross billings

1,578,642

3,146,502

99.3%

K-12 courses

1,393,255

2,922,984

109.8%

Foreign language,interest and

other services

185,387

223,518

20.6%

Paid course enrollments(In thousands)

1,096

2,275

107.6%

K-12 courses

1,005

2,139

112.8%

Foreign language,interest and

other services

91

136

49.5%

Net income (loss)

174,463

(627,033)

NM

Non-GAAP net income (loss)

197,778

(554,354)

NM

Net operating cash inflow

738,758

636,367

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.

Fiscal Year Ended December 31,2020 Highlights

Net revenueswas RMB7,124.7 million,a 236.9% year-over-year increase.

- Net revenues of online K-12 increased 265.5% year-over-year to RMB6,237.4 million.

Gross billingswas RMB9,008.1million,a 168.2% year-over-year increase.

- Gross billings of online K-12 increased 177.8% year-over-year to RMB8,003.1 million.

Paid course enrollmentsincreased 168.4% year-over-year to 5,871 thousand.

- Paid course enrollments of online K-12 increased 177.3% year-over-year to 5,429 thousand.

Net losswas RMB1,392.9 million,compared with net income of RMB226.6 million in 2019.

Non-GAAP net losswas RMB1,154.5 million,compared with non-GAAP net income of RMB286.9 million in 2019.

Fiscal Year 2020 Key Financial and Operating Data

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

Fiscal Year Ended December 31,

2019

2020

Pct. Change

Net revenues

2,114,855

7,124,744

236.9%

K-12 courses

1,706,538

6,237,399

265.5%

Foreign language,interest and

other services

408,317

887,345

117.3%

Gross billings

3,358,152

9,008,090

168.2%

K-12 courses

2,881,388

8,003,115

177.8%

Foreign language,interest and

other services

476,764

1,004,975

110.8%

Paid course enrollments(In thousands)

2,187

5,871

168.4%

K-12 courses

1,958

5,429

177.3%

Foreign language,interest and

other services

229

442

93.0%

Net income (loss)

226,630

(1,392,930)

NM

Non-GAAP net income (loss)

286,867

(1,154,484)

NM

Larry Xiangdong Chen,GSX's founder,Chairman and CEO,commented,"Our quarterly net revenues hit an all-time high of RMB2.2 billion. Full-year net revenues in 2020 jumped 236.9% year-over-year to reach RMB7.1 billion. We attribute such outstanding growth and upsized scale to our highly efficient operations,as demonstrated by our net operating cash inflow of RMB636.4 million in the fourth quarter. Moreover,full-year net operating cash flow continues to be positive. Despite the intense competition over the past year,we remained dedicated to maintaining our focused strategy,refining our online live large class business model and constantly improving our educational quality and services. In the meantime,we intend to continue investing extensively in technology research and development,building distinguished organizational capabilities,sticking to a sustainable and long-term philosophy,and executing an effective growth strategy on a lifetime value basis. We believe these commitments have enabled us to achieve excellent operational efficiency in 2020,and will empower us to create more value for our students,parents,teachers,investors and society."

Shannon Shen,CFO of GSX,added,"In 2020,we achieved satisfying breakthroughs in terms of both overall development and industry position. With a relatively low spending level,we have achieved great improvements in terms of scale and operational efficiency.Our revenue of core K-12 online large class business recorded RMB6.2 billion in 2020,representing a year-over-year increase of 265.5%. This revenue grew to be more than 3.5 times of the prior year's figure for the past three consecutive years.Online education has entered an era that requires meticulous and refined operations. We will continue to invest in our educational products,teaching quality improvement and tutoring services to achieve sustainable and healthy long-term development. Meanwhile,we completed a private placement of USD870 million on December 9,2020,which gives us ample cash resources to support our efficient operations and demonstrates investors' long-term confidence in us. "

Financial Results for the Fourth Quarter of 2020

Net Revenues

Net revenues reached RMB2,a 136.5% increase from RMB935.0 million in the fourth 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 112.8% year-over-year to 2,139 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 214.5% to RMB616.4 million from RMB196.0 million in the fourth quarter of 2019,mainly due to the increase in compensation for instructors and tutors,as well as increase in learning material cost and rental expenses.

Gross Profit and Gross Margin

Gross profit increased 115.8% to RMB1,594.7 million from RMB739.0 million in the fourth quarter of 2019.Gross profit margin decreased to 72.1% from 79.0% in the same period of 2019. The decrease was primarily due to the increase in compensation for instructors and tutors,simultaneously resulting from the increased numbers and more competitive salaries provided,to attract excellent talents to improve teaching quality and students' learning experience,which would lay a solid foundation for the company's long-term development.

Non-GAAP gross profit increased 116.5% to RMB1,613.6 million from RMB745.3 million in the same period of 2019. Non-GAAP gross profit margin decreased to 73.0% from 79.7% in the same period of 2019.

Operating Expenses

Operating expenses were RMB2,290.8 million,increasing from RMB571.4 million in the fourth quarter of 2019.

Selling expenses increased to RMB1,798.4 million from RMB442.0 million in the fourth quarter of 2019. The increase was primarily a result of higher marketing expenses to expand user base and enhance our brands,and an increase in compensation to sales and marketing staff.

Research and development expenses increased 229.0% to RMB274.7 million,from RMB83.5 million in the fourth quarter of 2019. The increase was primarily due to an increase in the number of education content development professionals and technology development personnel,as well as an increase in compensation for such staff.

General and administrative expenses increased to RMB217.7 million from RMB46.0 million in the fourth 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 related to independent internal review.

Income (Loss) from Operations

Loss from operations was RMB696.1 million,compared with the income from operations of RMB167.6 million in the fourth quarter of 2019. The decrease was primarily due to higher spending in sales and marketing activities to extend volume growth and strengthen brand perception.

Non-GAAP[4] loss from operations was RMB623.4 million,compared with non-GAAP income from operations of RMB190.9 million in the fourth quarter of 2019.

[4] 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,representing income received from cash,cash equivalents,short-term and long-term wealth management investments,increased 86.0% to RMB18.6 million,from RMB10.0 million in the fourth 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 RMB54.1 million,from RMB4.2 million in the fourth 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 RMB62.8 million,net of other expenses of RMB8.7 million.

Net Income (Loss)

Net loss was RMB627.0 million,compared with net income of RMB174.5 million in the fourth quarter of 2019.

Non-GAAP net loss was RMB554.4 million,compared with non-GAAP net income of RMB197.8 million in the fourth quarter of 2019.

Cash Flow

Net operating cash inflow for the fourth quarter of 2020 was RMB636.4million. Cash used in capital expenditures was RMB162.6 million,primarily due to an installment payment of RMB85.8 million for the Zhengzhou properties purchases.Additionally,an installment payment for the acquisition of Tianjin Puxin Online School Education Technology Co.,Ltd amounting to RMB35.5 million was also made in the fourth quarter of 2020.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were RMB2.59 and RMB2.59,respectively,in the fourth quarter of 2020.

Non-GAAP basic and diluted net loss per ADS,were RMB2.29 and RMB2.29,in the fourth quarter of 2020.

Share Outstanding

As of December 31,the Company had 169,761,062 ordinary shares outstanding.

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

As of December 31,the Company had cash and cash equivalents,short-term investments and long-term investments of RMB8,217.2 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 December 31,the Company's inventory amounted to RMB48.1 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 December 31,the Company's accrued expenses and other current liabilities balance was RMB1,315.5 million,increasing from RMB228.8 million as of December 31,2019. This increase was mainly resulting from the increase in marketing expenses,salary and welfare payables,as well as the remainingconsideration of purchasing the Zhengzhou properties.

Deferred Revenue

As of December 31,the Company's deferred revenue balance was RMB2,increasing 104.4% from RMB1,2019. Deferred revenue primarily consisted of tuition collected in advance.

Other Payables

As of December 31,other payables in non-current liabilities totaled RMB26.6 million,all of which were payables to purchase the Zhengzhou properties.

Financial Results for the Fiscal Year of 2020

Net Revenues

Net revenues reached RMB7,a 236.9 % increase from RMB2,114.9 million in 2019. The increase was mainly driven by the growth in paid course enrollments for K-12 courses.

Cost of revenues

Cost of revenues increased 228.9% to RMB1,762.5 million,from RMB535.9 million in 2019. The increase was mainly due to an increase in compensation for instructors and tutors,as well as increases in learning material cost and other operating related expenses.

Gross Profit and Gross Margin

Gross profit increased 239.6% to RMB5,362.2 million,from RMB1,578.9 million in 2019. Gross profit margin increased to 75.3%,from 74.7% in 2019,primarily as a result of economies of scale. Non-GAAP gross profit increased by 240.3% to RMB5,428.6 million,595.4 million in 2019. Non-GAAP gross profit margin increased to 76.2%,from 75.4% in 2019.

Operating Expenses

Operating expenses were RMB7,117.2 million,an increase from RMB1,363.2 million in 2019.

Selling expenses increased to RMB5,816.2 million,040.9 million in 2019. The increase was primarily a result of an increase in marketing expenses to expand the customer base and for brand enhancement,as well as an increase in compensation for sales and marketing staff.

Research and development expenses increased 246.1% to RMB734.5 million,from RMB212.2 million in 2019. The increase was primarily due to an increase in the number of education content development professionals,and technology development personnel,as well as an increase in compensation paid to such staff.

General and administrative expenses increased 414.6% to RMB566.6 million,from RMB110.1 million in 2019. The increase was mainly due to an increase in the number of general and administrative personnel and an increase in compensation paid to such staff.

Interest Income and Realized Gains from Investment

Aggregation of interest income and realized gains from investments,solely representing the income received from cash,cash equivalents and short-term wealth management products,increased 263.5% to RMB73.8 million,from RMB20.3 million in 2019. The increase was primarily due to an increase in the cash generated and the efficient deployment of capital.

Income (Loss) from Operations

Loss from operations was RMB1,755.0 million,compared with income from operations of RMB215.7 million in 2019.

Non-GAAP loss from operations was RMB1,516.6 million,compared with non-GAAP income from operations of RMB276.0 million in 2019.

Net Income (Loss)

Net loss was RMB1,compared with net income of RMB226.6 million in 2019.

Non-GAAP net loss was RMB1,compared with non-GAAP net income of RMB286.9 million in 2019.

Cash Flow

Net operating cash inflow was RMB603.3 million,285.1 million in 2019. The decrease 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,payment for independent internal review,and increased expenditures paid to support our rapid growth of students and daily operation activities.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were RMB5.81 and RMB5.81 respectively,in 2020.

Recent Developments

In December 2020,the Company issued an aggregate of 10,611,072 Class A ordinary shares in a private placement that raised a total of US$870 million in proceeds.

In December 2020,the Company acquired 100% of the equity interest in Tianjin Puxin Online School Education Technology Co.,Ltd,a K-12 education institution,for a total consideration of RMB37.4 million.

Business Outlook

Based on the Company's current estimates,total net revenues for the first quarter of 2021 are expected to be between RMB1,816 million and RMB1,856 million,representing an increase of 40% to 43% 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,2021,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:

9813833

A telephone replay will be available two hours after the conclusion of the conference call through March 12,2021. The dial-in details are:

International:

1-412-317-0088

US:

1-877-344-7529

Passcode:

10152425

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 first quarter of 2021 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 RMB6.5250 to USD1.00,the effective noon buying rate for December 31,2020 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 December 31,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. Andrew MclLeod

Phone: +852-2232-3941

E-mail: gsx@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 December 31,

2019

2020

2020

RMB

RMB

USDASSETS

Current assets

Cash and cash equivalents73,967

355,224

54,440Short-term investments1,473,452

7,331,268

1,123,566Inventory8,822

48,074

7,368Prepaid expenses and other current assets252,660

722,682

110,756Total current assets1,808,901

8,457,248

1,296,130

Non-current assets

Operating lease right-of-use assets264,909

806,591

123,615Property,equipment and software,net81,860

704,338

107,945Land use rights,net-

28,983

4,442Long-term investments1,188,286

530,729

81,338Deferred tax assets30,716

48,324

7,406Rental deposit18,719

51,499

7,893Other non-current assets1,141

58,080

8,901Total ASSETS3,394,532

10,685,792

1,637,670

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

RMB623,002 as of December 31,2019 and

December 31,respectively)228,753

1,315,502

201,610Deferred revenue,current portion of the

consolidated VIE without recourse to the Group1,962

2,724,614

417,566Current portion of operating lease liabilities

(including current portion of operating lease

liabilities of the consolidated VIE without

recourse to the Groupof RMB59,982 and

RMB125,986 as of December 31,respectively)59,982

152,622

23,390Income tax payable of the consolidated VIE

without recourse to the Group16,093

4,654

713Amounts due to related parties of the

consolidated VIE without recourse to the Group460

-

-Total Current liabilities1,250

4,197,392

643,279

GSX Techedu Inc.Unaudited condensed consolidated balance sheets(In thousands of RMB and USD,

As of December 31,

2019

2020

2020

RMB

RMB

USDNon-current liabilities

Deferred revenue,non-current portion of the

consolidated VIE without recourse to the

Group5,674

9,125

1,398Non-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

RMB527,692 as of December 31,respectively)194,228

644,143

98,719Deferred tax liabilities of the consolidated VIE

without recourse to the Group25

78,697

12,061Other payables-

26,580

4,074TOTAL LIABILITIES1,837,177

4,955,937

759,531

SHAREHOLDERS' EQUITY

Ordinary shares106

113

17Treasury stock,at cost(86,739)

(139,572)

(21,390)Additional paid-in capital1,899,059

7,595,049

1,163,992Accumulated other comprehensive income (loss)17,829

(59,905)

(9,181)Statutory reserve6,921

40,380

6,189Accumulated deficit(279,821)

(1,210)

(261,488)TOTAL SHAREHOLDERS' EQUITY1,557,355

5,729,855

878,139

TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' EQUITY3,670GSX 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 December 31,

For the year ended December 31,

2019

2020

2020

2019

2020

2020

RMB

RMB

USDRMBRMBUSD

Net Revenues:935,027

2,041

338,857

2,855

7,744

1,091,915

Online K-12 Courses772,856

1,162

302,707

1,538

6,399

955,923

Foreign language,professional and interest150,119

233,830

35,836

378,265

871,856

133,618

Other services12,052

2,049

314

30,052

15,489

2,374

Cost of revenues(195,987)

(616,363)

(94,462)

(535,912)

(1,762,548)

(270,122)

Gross profit739,040

1,594,678

244,395

1,943

5,362,196

821,793

Operating expenses

Selling expenses(441,987)

(1,798,357)

(275,610)

(1,040,906)

(5,816,214)

(891,374)

Research and development expenses(83,499)

(274,726)

(42,104)

(212,197)

(734,450)

(112,559)

General and administrative expenses(45,958)

(217,670)

(33,359)

(110,106)

(566,565)

(86,830)

Total operating expenses(571,444)

(2,290,753)

(351,073)(1,363,209)(7,117,229)(1,090,763)

Income (Loss) from operations167,596

(696,075)

(106,678)215,734(1,755,033)(268,970)

Interest income1,938

1,273

1958,8613,372517

Realized gains from investments8,027

17,334

2,657

11,395

70,403

10,790

Other income4,162

54,109

8,293

6,249

253,646

38,873

Income (Loss) before provision for income

tax and loss from equity method

investments181,723

(623,359)

(95,533)

242,239

(1,427,612)

(218,790)

Income tax (expenses)/benefits(7,871)

(5,474)

(839)(16,957)34,6195,306

Income from equity method investments611

1,800

276

1,348

63

10

Net income (Loss)174,463

(627,033)

(96,096)226,630(1,930)(213,474)

Less: Series A convertible redeemable preferred

shares redemption value accretion-

-

-16,772--

Less: Undistributed earnings allocated to the

participating preferred shares-

-

-

21,698

-

-

Net income (Loss) attributable to GSX

Techedu Inc.'s ordinary shareholders174,096)188,160(1,474)

Net income (loss) per ordinary share

Basic1.10

(3.88)

(0.59)

1.42

(8.72)

(1.34)

Diluted1.05

(3.88)

(0.59)

1.35

(8.72)

(1.34)

Net income (loss) per ADS

Basic0.74

(2.59)

(0.39)

0.95

(5.81)

(0.89)

Diluted0.70

(2.59)

(0.39)

0.90

(5.81)

(0.89)

Weighted average shares used in net income

per share

Basic158,106,902

161,704,940

161,940

132,400,941

159,725,779

159,779

Diluted165,855,746

161,940

139,477,898

159,779

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

USDRMBRMBUSDNet revenues

935,915Less: other revenues(1)

-

74

11-1,289198Add: VAT and surcharges61,075

139,270

21,344134,302434,09066,527Add: ending deferred revenue1,337,636

2,733,739

418,964

1,964Add: ending refund liability54,567

120,709

18,499

54,499Less: beginning deferred revenue778,312

1,964,785

301,116

272,041

1,636

205,002Less: beginning refund liability31,351

81,698

12,521

11,167

54,567

8,363Less: deferred revenue from the

Tianjin Puxin acquisition-

11,700

1,793-11,7001,793Gross billings (non-GAAP)1,642

3,502

482,2233,1529,0901,380,549

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

For the three months ended December 31,

2019

2020

2020

2019

2020

2020

RMB

RMB

USDRMBRMBUSDGross profit739,793Share-based compensation

expense in cost of revenues6,263

18,932

2,901

16,504

66,422

10,180Non-GAAP gross profit745,303

1,613,610

247,2961,4475,428,618831,973

(Loss) Income from operations167,678)

215,734

(1,033)

(268,970)Share-based compensation

expenses23,315

72,679

11,139

60,237

238,446

36,543Non-GAAP income (loss) from operations190,911

(623,396)

(95,539)275,971(1,516,587)(232,427)

Net income (Loss)174,096)

226,630

(1,930)

(213,474)Share-based compensation

expenses23,543Non-GAAP net income (Loss)197,778

(554,354)

(84,957)286,867(1,484)(176,931)