Net revenues were RMB1,114.9 million, compared with RMB1,965.8 million in the third quarter of 2020. Gaotu said the decrease was mainly due to the cessation of K-9 service as a result of the impact of the new regulations announced in July and August.
Cost of revenues rose by 42.4% to RMB715.2 million from RMB502.3 million in the same period of 2020, which included severance costs for the reduction of instructors and tutors due to the impact of the new regulations.
Gross profit was RMB399.7 million, compared with RMB1,463.5 million in the third quarter of 2020. Gross profit margin decreased to 35.9% from 74.4% in the same period of 2020.
Net loss was RMB1,044.6 million, compared with RMB932.5 million in the third quarter of 2020.
Gaotu said it will turn its focus on its professional education service, vocational education service and digital products.
Shannon Shen, CFO of the company, added, "As of the end of the third quarter, our cash, cash equivalents, restricted cash and short-term wealth management investments totaled RMB3.5 billion, which is sufficient to support both our current operating scale and the exploration into new businesses. We expect to achieve profitability and positive operating cash flow as early as the fourth quarter of 2021."