On May 26, 2026, Sunlands Online Education Group (STG.US) announced its unaudited financial results for the first quarter of 2026. During the reporting period, the company achieved revenue of 441 million yuan, operating profit of 96.8 million yuan, and net profit of 76.85 million yuan, with a net profit margin of 17.4%. This marks the 20th consecutive quarter of profitability. Selling expenses decreased by 19.5% year-over-year, representing one of the more significant quarterly declines in recent years and marking the third consecutive quarter of decrease. Benefiting from continued refinement of operations and optimization of resource allocation, the company's profitability remained robust, and operational quality further improved.

20th Consecutive Profitable Quarter: Ongoing Optimization of Cost Structure In Q1 2026, Sunlands' selling expenses fell by 19.5% year-over-year, declining for three consecutive quarters and reaching one of the more notable single-quarter reductions in recent years. The continuous decrease in selling expenses is closely linked to the evolution of the company's user base. In recent years, Sunlands has gradually shifted its business focus from traditional academic education to interest-based, skill-based, and senior learning courses. With the continuous improvement in the repurchase rate and retention stability of its core user groups, the role of word-of-mouth, course renewal mechanisms, and community operations in overall growth has significantly increased, correspondingly reducing the company's reliance on external traffic acquisition. The improvement in user quality has also enhanced service efficiency and course completion rates to some extent, solidifying the foundation for profitability. Maintaining profitability for 20 consecutive quarters, this performance spans multiple phases including industry policy adjustments, changes in external demand, and rising customer acquisition costs. For an adult online education enterprise, the significance of this achievement lies not only in the time span itself but also in the company's ability to maintain operational resilience and strategic flexibility across different cycle environments. Sunlands' financial officer stated: "Revenue this quarter saw a slight decline, but profitability remained relatively stable. The company's cash and investment reserves are relatively ample, providing strong support for continued technological investment and exploration of new businesses, and also enabling us to maintain a relatively stable strategic pace amidst market changes. Currently, the company's asset-liability structure remains healthy, providing a safeguard for coping with periodic market fluctuations and supporting the advancement of new businesses. In the future, the company will continue to adhere to prudent expense management and resource allocation principles, reserving reasonable space for subsequent business development while maintaining operational quality."

AI and Technology Investment: Parallel Focus on Efficiency Gains and Capability Building Sunlands stated that this quarter the company continued to increase investment in technology, particularly the application of AI across the entire chain from customer acquisition to teaching, research, and subsequent services. It is reported that Sunlands' self-developed AI-assisted customer acquisition system has achieved scaled application in key areas. In the lead follow-up stage, the system can generate personalized communication assistance suggestions based on potential students' consultation content, decision-making stage, and communication touchpoints, improving conversion efficiency while significantly reducing the human resource burden of repetitive communication. For adult learning users, the short time window after the initial consultation typically sees higher conversion willingness, making first-contact efficiency crucial to overall conversion performance. According to internal company data, since the large-scale operation of the relevant system, overall front-end sales efficiency has increased by over 50%, and the number of potential students handled per person has grown by more than 30%, while team size has not expanded proportionally. This means the same sales force can serve more potential students within the same timeframe. This efficiency improvement driven by AI is gradually translating into a decline in the selling expense ratio and continuous optimization of unit customer acquisition costs, becoming a key supporting factor for the stability of the company's profitability. On the teaching and service side, the application of AI capabilities is also progressing. The coverage of the intelligent homework grading system has exceeded 70%, with grading speed significantly faster than manual processes, reducing feedback cycles from "days" to "minutes." For adult users with fragmented learning schedules, more timely feedback helps improve learning continuity and course completion rates, thereby enhancing the user learning experience and long-term retention performance. The cost space released by improved customer acquisition efficiency has not been directly converted into short-term profit maximization but has been reinvested into deepening course content, building technological capabilities, and optimizing service experience. This resource allocation logic of "trading efficiency for space, and investing space into capabilities" reflects the company's strategic resolve for long-term development.

Industry Environment and Sunlands' Position In Q1 2026, the education industry showed significant internal divergence. Some K-12 and quality education institutions benefited from policy environment changes and demand release, experiencing a recovery in revenue growth; however, the market environment faced by adult education companies was more complex: students primarily rely on self-funded decisions, enrollment timing is more influenced by employment expectations, income expectations, and consumer confidence, and the difficulty of acquiring new students continues to rise. The demand drivers for these two tracks are fundamentally different and cannot be simply compared horizontally. However, the long-term demand in the adult learning market has not diminished but has undergone deep-seated changes in form. On one hand, user requirements for course effectiveness and learning experience continue to rise, with learning objectives accelerating the shift from goal-oriented to skill-practical and interest-driven. On the other hand, the incremental demand brought by the silver-haired population cannot be ignored—the continuous expansion of the demographic base and positive policy guidance provide solid macro support for the expansion of elderly learning consumption scenarios. Against this backdrop, enterprises that can truly meet the fragmented learning needs of adult users and provide high-quality content and companion-style services still possess significant room for development. Sunlands has been deeply cultivating the interest learning field for the silver-haired population for five years, particularly in art courses such as calligraphy, traditional painting, and vocal music, having established a relatively solid user base and brand recognition among this group, with long-term repurchase rates maintained in the 60% to 70% range. The learning needs and community belonging motivations of this user group are relatively integrated. Although the average order value is relatively low, after learning habits are formed, retention performance is generally stable. Furthermore, silver-haired users not only focus on course content itself but also value social interaction and emotional connection during the learning process, making community operations capability play a crucial role in enhancing user stickiness. Simultaneously, the company continues to iterate on courses and develop new ones, diversifying its layout in interest and literacy courses, which to some extent mitigates the impact of cyclical fluctuations that a single category might bring. For adult online education enterprises, short-term revenue fluctuations are not uncommon; the key lies in whether the company still has the ability to continuously invest in core capability building. Sunlands' current financial foundation allows it to continue advancing the deepening application of AI technology, enriching and improving the course system, and extending service scenarios, while preserving the investment capacity needed for the next phase of growth. Sunlands' management added: "Facing changes in the external environment, the company consistently adheres to advancing work around two main lines: user needs and technological capabilities. The stable performance of the silver-haired learning segment provides important structural support for the company; the continued deepening application of AI in customer acquisition provides the technical foundation for the decline in selling expenses. We will continue along this direction, accumulating momentum for subsequent development while maintaining operational quality."

Outlook: Fostering New Growth Amid Structural Adjustment Entering 2026, the competitive environment in the adult online education market remains complex, with user decision cycles lengthening and customer acquisition efficiency under pressure. Industry growth is gradually shifting from reliance solely on new traffic to the continuous deep cultivation of existing user value. In this context, Sunlands believes that new growth space needs to be explored continuously around individual users: supporting users to "learn deeper" vertically and helping users to "learn more" horizontally, thereby continuously extending learning value and ultimately enhancing per-customer contribution at the operational level. Taking the silver-haired business as an example, the company has observed that students who deeply participate in offline experiences and community activities typically exhibit higher consumption willingness and more stable retention performance. This further validates that when the learning experience can naturally extend to richer scenarios, user engagement depth and continuous learning willingness also increase accordingly. Based on this observation, Sunlands is actively promoting cooperation with offline ecosystem partners such as cultural and tourism institutions, cultural organizations, and traditional media, expanding richer learning scenarios around existing course content. Although related explorations are still in the early stages and their contribution to performance is limited, the company believes this direction strongly aligns with the learning needs of silver-haired users and possesses long-term cultivation value. Meanwhile, the company believes that AI is driving the adult learning industry from a "course-centered" supply logic gradually toward a "learning process-centered" service logic. By more promptly identifying changes in learning needs and dynamically optimizing content and service matching, AI is expected to help platforms establish longer-term, more continuous learning connections, support users in achieving deeper and broader learning extensions at different stages, and create new growth space for the industry. Sunlands' management concluded: "We maintain cautious optimism regarding medium- to long-term development. Caution stems from a clear recognition of the complexity of the external environment; optimism comes from the clear path and continuous opportunities we see in deeply cultivating user value and applying AI capabilities."