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Photo/Shetuwang

May 7 (NBD) -- Chinese online K-12 education company GSX Techedu Inc. (GSX, NYSE: GSX) Wednesday reported quadruple year-over-year growth in the first quarter, and once again denied fraud accusations from short sellers. 

The company said Wednesday its net revenues in the first three months of 2020 increased by 382.0 percent year-over-year to 1,297.6 million yuan (182.9 million U.S. dollars), and its Non-GAAP net income increased 405.8 percent year-over-year to 190.7 million yuan.

Notably, paid course enrollments increased 307.4 percent year-over-year to 774,000, and most of them were new GSX users, according to founder and CEO Chen Xiangdong. 

Behind the rise of new paying students was the soaring increase of marketing expenses, which stood at 757.2 million yuan in the quarter. In comparison, such expenses were only 9.95 million yuan in Q1 2019.

Along with the release of financial results, GSX said its board of directors had approved a plan to repurchase up to 150 million U.S. dollars worth of shares within two years, based on their confidence in the company's long-term prospect.

On the same day, newly established Chinese investment firm Scorpio VC released its report on GSX, questioning the latter's multiple data and practices, including a property purchase in Zhengzhou, salaries of top teachers, and employees buying courses.

GSX immediately denied these accusations. Chen Xiangdong said in the earnings call that the company's data were verified by auditors, and its outstanding performance is real. 

The Q1 results were also eagerly expected by short seller Citron Research, which released two reports in April, accusing GSX of fabricating 70 percent of revenues and 40 percent of registered users in 2019. GSX denied both reports.

Citron promised on Twitter Wednesday to release more "multiple smoking guns" after the Q1 report, and expected investigation by the U.S. Securities and Exchange Commission to follow.

 

Email: gaohan@nbd.com.cn

Editor: Gao Han