Sunlands Technology Group (STG) investor relations material

Executive summary

• Achieved net revenues of RMB 440.7 million in Q1 2026, down 9.6% year-over-year, with net income rising to RMB 76.9 million, marking the 20th consecutive profitable quarter.

• Net income margin improved to 17.4%, supported by disciplined cost management and a 19.5% reduction in selling expenses.

• Revenue decline was due to structural subsidies in degree programs and a shift to higher quality learner cohorts.

• New student enrollments dropped to 102,127 from 169,083 year-over-year, reflecting a focus on higher-quality learners and retention.

Financial highlights

• Gross profit was RMB 381.1 million, with gross margin expanding to 86.5% from 85.2% in the prior year period.

• Net income rose to RMB 76.9 million, with basic and diluted EPS at RMB 11.48.

• Selling expenses declined 19.5% year-over-year, the largest single-quarter reduction in recent years.

• Product development expenses increased 5.6% year-over-year, reflecting ongoing investment in AI and technology.

• Gross billings (non-GAAP) were RMB 304.8 million, down from RMB 412.3 million year-over-year.

Outlook and guidance

• Q2 2026 net revenues expected between RMB 410 million and RMB 430 million, a year-over-year decrease of 20.2%-23.9%.

• Guidance reflects current market dynamics and learner demand patterns, with substantial uncertainty.