17EdTech's Q2 2025 Earnings Call: Contradictions Emerge on Strategic Shifts, Regulatory Impacts, and Subscription Model Changes

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 4, 2025

Financials Results

• Revenue: RMB25.4 million, down 62.4% YOY; up 17.3% sequentially
• Gross Margin: 57.5%, compared to 16% in the prior year
• Operating Margin: -112% of net revenues, compared to -89.2% in the prior year

Business Commentary:

• Revenue Decline and Strategic Focus Shift:
• In the 2025 second quarter, 17x reported net revenues of RMB25.4 million, representing a 62.4% decrease from RMB67.5 million in the 2024.

• The decline was primarily due to the reduction in net revenues from district level projects as the company prioritized resources on school based projects and the subscription model, which requires longer periods of revenue recognition.

• Improved Financial Performance:

• The company reported a 53.4% reduction in net loss on a GAAP basis compared to the same period last year, with gross margin for the 2025 at 57.5% compared with 16% in the 2024.

• The improved financial performance was a result of cost control measures that restored the gross margin to a normalized level and operating efficiency improvements that led to a significant decrease in operating expenses.

• AI Integration and Product Innovation:

• 17x launched new AI solutions, such as the Intelligent Agent, to enhance customer satisfaction and engagement, and upgraded AI capabilities in Shanghai and Minghan District.

• The focus on AI integration and innovation is driven by the trend of integrating AI into the entire education process, aimed at improving teaching and learning outcomes while alleviating teachers' workload.

• Subscription Model and Strategic Market Penetration:

• The company's subscription model showed strong growth momentum, and resources were allocated towards its prioritization.
• This strategy is part of a broader effort to explore potential AI integration into the consumer market, capture new growth opportunities, and enhance customer acquisition efficiency through diversified channels.

Sentiment Analysis:

• Management highlighted 17.3% sequential top-line growth and gross margin recovery to 57.5% from 16% last year, alongside a 53.4% YOY reduction in GAAP net loss. However, net revenues fell 62.4% YOY to RMB25.4 million and operating loss margin was -112% of revenue, reflecting ongoing pressure despite efficiency gains.