17EdTech's Q2 2025: Contradictions Emerge on Revenue Decline, Margins, and AI Strategy

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

Date of Call: September 4, 2025

Financials Results

• Revenue: RMB 25.4M, down 62.4% YOY (vs RMB 67.5M); up 17.3% QoQ
• Gross Margin: 57.5%, compared to 16% in the prior year
• Operating Margin: -112% of revenue, compared to -89.2% in the prior year

Business Commentary:

* Revenue Decline and Strategic Shifts: - 17 Education & Technology (YQ) reported net revenues of RMB 25.4 million in Q2 2025, a 62.4% decrease year-on-year from RMB 67.5 million in Q2 2024. - The decline was due to prioritizing resources on school-based projects and the subscription model, which leads to a longer revenue recognition period.

• Improved Gross Margin and Cost Control:
• The company's gross margin for Q2 2025 was 57.5%, compared to 16% in Q2 2024.

• This improvement was driven by a commitment to cost control, which restored the gross margin to a normalized level.

• Operational Efficiency and Cost Reduction:

• Operating expenses in Q2 2025 decreased by 39% year-on-year, from RMB 71 million in 2024 to RMB 43.1 million in 2025.

• This reduction was attributed to improved operating efficiency and strategic resource allocation.

• AI Integration and Product Innovation:

• 17EdTech launched the Yiqi Tongxue intelligent agent and upgraded AI solutions in Shanghai Minhang District.

• These enhancements in AI capabilities are aimed at delivering more efficient solutions to customers and expanding the company's customer base.

• Shareholder Value and Financial Discipline:

• The company's Board of Directors approved a share repurchase program, authorizing the repurchase of up to USD 10 million of the company's ADS and common shares in the next 12 months.
• This decision reflects the company's commitment to financial discipline and creating value for shareholders.

Sentiment Analysis:

• QoQ top line grew 17.3% and gross margin improved to 57.5% (from 16%). Net loss narrowed to RMB 26M, down 53.4% YOY. However, net revenues declined 62.4% YOY to RMB 25.4M due to reduced district projects and longer recognition cycles under the subscription model. Company authorized up to $10M share repurchase and emphasized ongoing AI-driven product enhancements.