Sunlands Technology Group (NYSE: STG) reported unaudited third‑quarter 2025 results that showed net revenues of RMB 523.0 million, up 6.5 % year‑over‑year, and net income of RMB 125.4 million, a 40.5 % increase from the same period last year. The company’s net‑income margin expanded to 24.0 % from 18.2 % in Q3 2024, reflecting a stronger revenue mix and disciplined cost management.
Revenue growth was driven largely by the company’s interest‑based and professional‑skills segments. Non‑degree programs accounted for roughly 73 % of total revenue, while degree and diploma programs represented about 15 %. The higher‑margin non‑degree offerings have become the primary engine of top‑line growth, offsetting a 13.2 % decline in new student enrollments and a 24.1 % drop in deferred revenue at year‑end.
Operating expenses fell 5.5 % to RMB 324.4 million, with sales and marketing costs down 7.7 % and cost of revenues reduced by 26.5 %. The sharp decline in cost of revenues is largely attributable to the company’s shift toward higher‑margin, demand‑driven courses and the adoption of AI‑powered grading tools that have lowered instructional costs.
Basic and diluted earnings per share for the quarter were RMB 18.64, reflecting the company’s ability to generate strong cash flow from its core operations.
Management guided for fourth‑quarter 2025 net revenues of RMB 440–460 million, a 4.9–9.0 % decline year‑over‑year, and reiterated its focus on expanding the silver‑economy and AI‑powered learning platforms. The guidance signals a cautious outlook amid broader market headwinds while maintaining confidence in profitability.
CEO Tongbo Liu said, “We are pleased to see that the Company has now entered a phase of steady and healthy growth. Our performance in this quarter once again underscores the resilience of our business model and the effective execution of our strategic roadmap.” CFO Hangyu Li added, “Net revenues rose 6.5 % year‑over‑year to RMB 523.0 million, driven by strong interest‑based course performance. Gross profit climbed 13.1 % to RMB 462.7 million, with operating expenses down 5.5 %, driving net income to RMB 125.4 million.”
The company’s margin expansion to 24 % demonstrates the success of its strategic pivot away from degree‑centric offerings toward higher‑margin, demand‑driven courses. While new student enrollment fell, the average revenue per student increased, indicating a shift to more profitable course categories and a more efficient customer acquisition strategy.
Sunlands completed a share‑buyback program, repurchasing 797,615 ADSs for approximately US$4.7 million, underscoring management’s confidence in the company’s intrinsic value and its commitment to returning capital to shareholders.
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