The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results Financial Impact by the Divestiture In December 2023, we entered into an equity transfer agreement to dispose of our equity interests in the professional education business. The Divestiture had been consummated at the end of March 2024. Upon the consummation of the Divestiture, the professional education business, including the business operated by the former VIE, had been divested, and the STEM education business operated by the former VIE had been transferred to the current VIE. As a result of the Divestiture, the professional education business has been reclassified as discontinued operations and our remaining business after the Divestiture has been reclassified as continuing operations. See note “Item 4. Information on the Company—A. History and Development of the Company” for more details. After the Divestiture, we no longer generate any revenue from the tuition fees collected at the divested professional education learning centers, or the divested entities. Accordingly, assets, liabilities, results of operations, and cash flows related to professional education business have been reflected in the accompanying consolidated financial statements as discontinued operations for all periods presented. The consolidated balance sheets as of December 31, 2023 and 2024, consolidated statements of comprehensive (loss) income and consolidated statements of cash flows for the years ended December 31, 2022, 2023 and 2024 have been adjusted to reflect this change. For the year ended December 31, 2022, 2023 and 2024, the net revenues that we generated from discontinued operations is RMB1,068.2 million, RMB624.6 million and RMB111.9 million (US$15.3 million), respectively, which represented approximately 43.3%, 31.2% and 8.7% of our total consolidated net revenues in these periods. Total gross profit from the divested entities is RMB740.6 million, RMB398.4 million and RMB70.5 million (US$9.7 million), respectively, representing approximately 52.4%, 39.0% and 14.3% of our consolidated total gross profit in these periods. As of December 31, 2023 and 2024, total assets of the divested entities are RMB275.6 million and nil, respectively, which represented approximately 27.1% and nil of our consolidated total assets as of these dates. See note 3 to our audited consolidated financial statements included in this annual report for additional information regarding the financial impact by the Divestiture. Key Components of Results of Operations for our Continuing Operations Net Revenues We derive substantially all of our net revenues from tuition fees that we charge students. In 2022, 2023 and 2024, we generated net revenues from continuing operations of RMB1,399.8 million, RMB1,375.2 million and RMB1,170.9 million (US$160.4 million), respectively. We record tuition fees that we collect in advance as deferred revenue. Our net revenues from continuing operations are presented net of business tax and surcharges. Number of Student Enrollments Student enrollments in our STEM education programs increased from approximately 209,400 in 2022 to approximately 210,600 in 2023, and decreased to approximately 191,200 in 2024. Our total student enrollments are affected by the continuing popularity of our existing courses and programs and the number and popularity of new courses and new programs we offer. In 2024, our STEM robotics programming and computer programming courses were the two most popular courses in our courses and programs offering portfolio. 92 Table of Contents Tuition fees Our net revenues from continuing operations are affected by the tuition fees for each of our courses. Courses under STEM education programs typically are composed of multiple levels, with each level consisting of 64 to 120 learning hours in one year. For our STEM education programs, our standard tuition fees are between RMB8,000 and RMB23,400 in 2024. We recruit students primarily through our direct marketing efforts. Our tuition fees for STEM education programs are paid up-front to the extent permitted by applicable laws and regulations. Cost of Revenues Our cost of revenues from continuing operations primarily consists of payroll and employee benefits for our instructors (as apportioned based on the amount of time that they devote to teaching) and teaching assistants, as well as rental payments for our learning centers, and to a lesser extent, depreciation relating to property and equipment used at our learning centers. The following table sets forth a breakdown of our cost of revenues from continuing operations in absolute amounts and as percentages of net revenues from continuing operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2022 2023 2024 ​ ​ ​ ​ % of net ​ ​ ​ % of net ​ ​ ​ ​ ​ % of net ​ RMB revenues RMB revenues RMB US$ revenues ​ ​ (in thousands, except percentages) Personnel cost and welfare ​ 474,312 ​ 33.8 ​ 465,921 ​ 33.9 ​ 435,557 ​ 59,671 ​ 37.2 Rental cost 128,875 9.2 129,877 9.4 131,039 17,952 11.2 Depreciation expenses 55,911 4.0 38,026 2.8 28,013 3,838 2.4 Others 69,318 5.0 117,016 8.5 152,547 20,899 13.0 Cost of revenues 728,416 52.0 750,840 54.6 747,156 102,360 63.8 ​ Our cost of revenues from continuing operations is primarily affected by the number of our learning centers. In terms of the STEM education business, we had a total of 217, 220 and 218 learning centers for students aged between three and eighteen as of December 31, 2022, 2023 and 2024, respectively. Operating Expenses Our operating expenses consist primarily of selling and marketing expenses, general and administrative expenses and, to a lesser extent, research and development expenses. The following table sets forth our operating expenses related to continuing operations in absolute amounts and as percentages of net revenues from continuing operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2022 2023 2024 ​ ​ ​ ​ % of net ​ ​ ​ % of net ​ ​ ​ ​ ​ % of net ​ RMB revenues RMB revenues RMB US$ revenues ​ ​ (in thousands, except percentages) Selling and marketing expenses ​ 280,093 ​ 20.0 ​ 268,399 ​ 19.5 ​ 221,829 ​ 30,390 ​ 18.9 General and administrative expenses 397,440 28.4 330,848 24.1 689,144 94,412 58.9 Research and development expenses 20,248 1.4 11,654 0.8 19,101 2,617 1.6 Total operating expenses 697,781 49.8 610,901 44.4 930,074 127,419 79.4 ​ Our selling and marketing expenses primarily consist of compensation expenses relating to our personnel involved in selling and marketing, including our enrollment advisors based at our learning centers, advertising expenses relating to our marketing activities, and, to a lesser extent, rental expenses relating to our selling and marketing functions. Our general and administrative expenses primarily consist of compensation expenses related to our management, administrative personnel and impairment of assets. To a lesser extent, our general and administrative expenses include office expenses relating to administrative functions. Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time that they devote to research and development-related activities, as well as the personnel costs of our software engineers. 93 Table of Contents Seasonality Seasonal fluctuations have affected, and are likely to continue to affect, our business. Historically, we typically generate the highest net revenues in the third and fourth quarters because of the increased student enrollments during summer vacation. We generally generate less tuition fees in the first quarter of each year due to the Chinese New Year holiday. Taxation Canada Our wholly owned subsidiary in Canada, Techarena Canada Inc., is subject to Canada corporate tax pertaining to its activities conducted in Canada. No provision for Canada corporate tax has been made in the consolidated financial statements as Techarena Canada Inc. had no assessable income since its inception to December 31, 2024. Cayman Islands We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands. Hong Kong Our wholly owned subsidiaries in Hong Kong, Tarena Hong Kong (HK) Limited and Kids IT Education (HK) Limited, are subject to Hong Kong profits tax on its activities conducted in Hong Kong. No provision for Hong Kong profits tax has been made in the consolidated financial statements as Tarena Hong Kong (HK) Limited and Kids IT Education (HK) Limited have no assessable income since its inception to December 31, 2024. Mainland China Pursuant to the EIT Law and its implementation rules, which became effective on January 1, 2008, and amended on December 29, 2018 and April 23, 2019, respectively, foreign-invested enterprises and domestic companies are subject to enterprise income tax at a uniform rate of 25%. From January 1, 2021 to December 31, 2021, 12.5% of the first RMB1.0 million of the assessable profit before tax is subject to the tax rate of 20% for our subsidiaries and the VIEs that are qualified as “Small Profit Enterprises,” and the 50% of the assessable profit before tax exceeding RMB1.0 million but not exceeding RMB3.0 million is subject to the tax rate of 20%. From January 1, 2022 to December 31, 2022, 12.5% of the first RMB1.0 million of the assessable profit before tax is subject to the tax rate of 20% for our subsidiaries and the VIEs that are qualified as “Small Profit Enterprises,” and the 25% of the assessable profit before tax exceeding RMB1.0 million but not exceeding RMB3.0 million is subject to the tax rate of 20%. From January 1, 2023 to December 31, 2027, the 25% of the assessable profit before tax less than RMB3.0 million is subject to the tax rate of 20% for our subsidiaries and the VIEs that are qualified as “Small Profit Enterprises”. Subject to the approvals from the tax authorities in certain locations in mainland China, our subsidiaries and the VIEs that are based in these locations are required to use the deemed profit method to determine their income tax. 94 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ 2022 2023 ​ 2024 ​ ​ ​ ​ % of net ​ ​ ​ % of net ​ ​ ​ ​ ​ % of net ​ RMB revenues RMB revenues RMB US$ revenues ​ ​ (in thousands, except percentages) Net revenues ​ 1,399,844 100.0 1,375,192 100.0 1,170,858 160,407 ​ 100.0 Cost of revenues(1) ​ (728,416) (52.0) (750,840) (54.6) (747,156) (102,360) (63.8) Gross profit ​ 671,428 48.0 624,352 45.4 423,702 58,047 36.2 Operating expenses(1): ​ ​ ​ ​ ​ ​ ​ ​ Selling and marketing ​ (280,093) (20.0) (268,399) (19.5) (221,829) (30,390) (18.9) General and administrative ​ (397,440) (28.4) (330,848) (24.1) (689,144) (94,412) (58.9) Research and development ​ (20,248) (1.4) (11,654) (0.8) (19,101) (2,617) (1.6) Operating (loss) income ​ (26,353) (1.9) 13,451 1.0 (506,372) (69,372) (43.2) Interest income, net ​ 1,962 0.1 1,089 0.1 (78) (11) (0.0) Other income, net ​ 8,150 0.6 723 0.1 ​ 2,847 390 (0.2) Foreign currency exchange loss, net ​ (325) 0.0 (901) (0.1) ​ (334) (46) (0.0) (Loss) income before income taxes ​ (16,566) (1.2) 14,362 1.0 ​ (503,937) (69,039) (43.0) Income tax benefit (expenses) ​ 14,504 1.0 7,972 0.6 ​ (31,492) (4,314) (2.7) Net (loss) income from continuing operations, net of income tax ​ (2,062) ​ (0.1) ​ 22,334 ​ 1.6 ​ (535,429) ​ (73,353) ​ (45.7) Net income/(loss) from discontinued operations, net of income tax ​ 87,295 ​ 6.2 ​ (11,980) ​ (0.9) ​ (51,673) ​ (7,079) ​ (4.4) Net income (loss) ​ 85,233 6.1 10,354 0.8 ​ (587,102) (80,432) (50.1) Notes: (1) Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31 ​ 2022 2023 ​ 2024 ​ RMB RMB RMB US$ ​ ​ (in thousands) Cost of revenues 244 19 24 3 Selling and marketing expenses 227 24 3 0 General and administrative expenses 10,179 2,551 1,314 180 Research and development expenses 734 149 — — ​ The Year Ended December 31, 2024, Compared to the Year Ended December 31, 2023 Net revenues Our net revenues from continuing operations decreased by 14.9% from RMB1,375.2 million in 2023 to RMB1,170.9 million (US$160.4 million) in 2024. This decrease was primarily driven by a slowdown in course consumption, mainly due to a reduction in student enrollments of STEM education from approximately 210,600 in 2024. Cost of Revenues Our cost of revenues from continuing operations decreased by 0.5% from RMB750.8 million in 2023 to RMB747.2 million (US$102.4 million) in 2024, primarily driven by a decrease in personnel cost and welfare resulting from our personnel optimization measures. 95 Table of Contents Gross Profit and Gross Margin As a result of the foregoing, our gross profit decreased by 32.1% from RMB624.4 million in 2023 to RMB423.7 million (US$58.0 million) in 2024. Our gross profit margin decreased from 45.4% in 2023 to 36.2% in 2024, primarily driven by the decreased net revenues coupled with relatively stable fixed costs, which limited our ability to offset the revenue decline. Operating Expenses Our operating expenses increased by 52.2% from RMB610.9 million in 2023 to RMB930.1 million (US$127.4 million) in 2024, primarily due to increases in selling and marketing expenses and research and development expenses. ● Selling and Marketing Expenses. Our selling and marketing expenses decreased by 17.4% from RMB268.4 million in 2023 to RMB221.8 million (US$30.4 million) in 2024. This decrease was primarily due to a decrease in compensation expenses as a result of our cost control initiatives, including personnel optimization measures. ● General and Administrative Expenses. Our general and administrative expenses increased by 108.3% from RMB330.8 million in 2023 to RMB689.1 million (US$94.4 million) in 2024. This increase was primarily due to the significant increase in impairment of long-lived assets, including right-of-use assets, intangible assets, goodwill and fixed assets other than the building. ● Research and Development Expenses. Our research and development expenses increased by 63.3% from RMB11.7 million in 2023 to RMB19.1 million (US$2.6 million) in 2024. This increase was primarily due to an increase in personnel cost related to our instructors, reflecting our enhanced course development efforts aimed at maintaining competitiveness and innovativeness. Interest Income Our interest income consisted of interest earned on our cash, cash equivalents and time deposits in commercial banks. Our net interest income was RMB1.1 million in 2023 and RMB0.1 million (US$0.0 million) in 2024, primarily due to a decrease in time deposits in commercial banks. Income Tax Benefit(expense) We recorded income tax benefits of RMB8.0 million in 2023 and income tax expenses of RMB31.5 million (US$4.3 million) in 2024. This change was primarily due to an increase in deferred income tax expenses resulting from the impairment of deferred income tax assets. The effective income tax rate of (6.3)% in 2024 was lower than the statutory income tax rate of 25.0% primarily because of (i) the preferential income tax rate enjoyed by our certain subsidiaries, and (ii) the tax impact from debt exemption. The effective income tax rate of (55.3)% in 2023 was lower than the statutory income tax rate of 25.0% primarily because of the impact of the reversal of valuation allowances for deferred income tax assets of certain subsidiary, which was making profit in 2023. Considering that the future profitability of the STEM education business is likely to offset some of the accumulated losses already incurred, a portion of the valuation allowance for deferred tax assets of most STEM education business entities was released in 2023, which was partially offset by the impact of non-deductible expenses. Net Income (Loss) from Continuing Operations As a result of the foregoing, we incurred a net loss from continuing operations of RMB535.4 million (US$73.4 million) in 2024 as compared to a net income for continuing operations of RMB22.3 million in 2023. 96 Table of Contents The Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Net revenues Our net revenues from continuing operations decreased by 1.8% from RMB1,399.8 million in 2022 to RMB1,375.2 million (US$193.7 million) in 2023. The decrease was primarily because the course consumption slowed down of this year led by a decreased cash collection, caused by economic headwinds earlier this year, which was partially offset by a relatively stable growth in student enrollments of STEM education from 209,400 in 2022 to 210,600 in 2023. Cost of Revenues Our cost of revenues from continuing operations increased by 3.1% from RMB728.4 million in 2022 to RMB750.8 million (US$105.8 million) in 2023. This increase was mainly due to an increase in rental costs, resulting from the expansion of some of our learning centers, and increased costs incurred in certain extracurricular challenges or competitions. Gross Profit and Gross Margin As a result of the foregoing, our gross profit decreased by 7.0% from RMB671.4 million in 2022 to RMB624.4 (US$87.9 million) in 2023. Our gross profit margin decreased from 48.0% in 2022 to 45.4% in 2023, as the decrease in net revenues due to the economic headwinds in early 2023 while the fixed cost was relatively stable. Operating Expenses Our operating expenses decreased by 12.5% from RMB697.8 million in 2022 to RMB610.9 million (US$86.0 million) in 2023, as a result of the decrease in selling and marketing expenses and general and administrative expenses due to the efficient cost control in our operations. Selling and Marketing Expenses Our selling and marketing expenses decreased by 4.2% from RMB280.1 million in 2022 to RMB268.4 million (US$37.8 million) in 2023. This decrease was mainly due to a decrease in the number of sales staff and decrease in communication expenses resulting from the personnel optimization and cost control in 2023. General and Administrative Expenses Our general and administrative expenses decreased by 16.8% from RMB397.4 million in 2022 to RMB330.8 million (US$46.6 million) in 2023. The decrease was primarily due to a decrease in personnel-related costs associated with headcount reduction. Furthermore, a one-time provision for the amount of the anticipated settlement of a class action lawsuit was recognized in the previous period, while no such expenditure was incurred in 2023. Besides, shared-based compensation costs decreased due to the decrease in the number of outstanding share options. Research and Development Expenses Our research and development expenses decreased by 42.4% from RMB20.2 million in 2022 to RMB11.7 million (US$1.6 million) in 2023. The decrease was primarily due to the decrease in personnel-related expenses in 2023. Interest Income Our net interest income was RMB2.0 million in 2022 and RMB1.1 million (US$0.2 million) in 2023. Our interest income in both periods consisted of interest earned on our cash, cash equivalents and time deposits in commercial banks. The decrease in interest income was primarily because the interest rates applicable to us declined in 2023. Income Tax Benefits Our income tax benefits decreased from RMB14.5 million in 2022 to RMB8.0 million (US$1.1 million) in 2023. The decrease in tax benefits was mainly due to a decrease in provision allowance made to the deferred income tax assets which was derived from the unutilized tax loss, as it was more likely than not that the tax loss will be utilized within the corresponding deduction period. 97 Table of Contents The effective income tax rate of -55.3% in 2023 was lower than the statutory income tax rate of 25.0% primarily because of the impact of the reversal of valuation allowances for deferred income tax assets of certain subsidiary, which was making profit in 2023. Considering that the future profitability of the STEM education business is likely to offset some of the accumulated losses already incurred, a portion of the valuation allowance for deferred tax assets of most STEM education business entities was released in 2023, which was partially offset by the impact of non-deductible expenses. The effective income tax rate of 87.6% in 2022 was higher than the statutory income tax rate of 25.0% primarily because of (i) the impact of the non-deductible investment loss; and (ii) reversal of valuation allowances for deferred income tax assets of certain subsidiaries, which were expected to make profits in future. Considering that the future profitability of the STEM education business is likely to offset some of the accumulated losses already incurred, a portion of the valuation allowance for deferred tax assets of STEM education business entities was released in 2022. Net Income (Loss) from Continuing Operations As a result of the foregoing, we incurred a net income from continuing operations of RMB22.3 million (US$3.1 million) in 2023 as compared to a net loss for continuing operations of RMB2.1 million in 2022. Impact of Foreign Currency Fluctuation See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Risk.” Impact of Governmental Policies See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China” and “Item 4. Information on the Company—B. Business Overview—Government Regulations.” B. Liquidity and Capital Resources Cash Flows and Working Capital Our principal sources of liquidity have been cash generated from operating activities and proceeds from bank borrowings. As of December 31, 2024, we had RMB46.5 million (US$6.4 million) in cash and cash equivalents, time deposits and restricted cash. Our cash consists of cash in bank and deposits placed in third-party payment processors. Cash of the VIEs, in the amount of RMB2.5 million (US$0.3 million) as of December 31, 2024, can be used only to settle obligations of the VIEs. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. The restricted cash primarily consists of tuition fees in the escrow account supervised by the state and provincial education bureaus. We believe that our current cash, cash equivalents, time deposits, restricted cash and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months. See “Summary of Significant Accounting Policies—Cash, cash equivalents, time deposits and restricted cash” under note 2(e) to our audited consolidated financial statements included in this annual report for information regarding the currencies in which cash, cash equivalents, time deposits and restricted cash were held as of December 31, 2024. 98 Table of Contents The following table sets forth a summary of our cash flow for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31 ​ ​ 2022 ​ 2023 ​ 2024 ​ RMB RMB RMB US$ ​ ​ (in thousands) Net cash provided by /(used in) operating activities from continuing operations ​ 1,046 ​ 21,468 ​ (104,941) ​ (14,378) Net cash used in operating activities from discontinued operations ​ (28,574) ​ (140,403) ​ (16,514) ​ (2,262) Net cash used in investing activities from continuing operations ​ (28,818) ​ (34,544) ​ (89,208) ​ (12,221) Net cash provided by/(used in) investing activities from discontinued operations ​ 6,109 ​ 106,592 ​ (1,835) ​ (251) Net cash (used in)/provided by financing activities from continuing operations ​ (24,105) ​ (33,781) ​ 18,632 ​ 2,553 Net cash provided by/(used in) financing activities from discontinued operations ​ 22,000 ​ (2,000) ​ (7,792) ​ (1,067) Effect of foreign currency exchange rate changes on cash and cash equivalents ​ 2,288 ​ (1,447) ​ 93 ​ 13 Net decrease in cash and cash equivalents ​ (50,054) ​ (84,115) ​ (201,565) ​ (27,613) Cash, cash equivalents and restricted cash at the beginning of the year ​ 424,021 ​ 373,967 ​ 289,852 ​ 40,825 Cash, cash equivalents and restricted cash at end of the year ​ 373,967 ​ 289,852 ​ 88,287 ​ 12,095 Less: Cash, cash equivalents and restricted cash of discontinued operations ​ 175,438 ​ 62,588 ​ 41,768 ​ 5,722 Cash, cash equivalents and restricted cash at the end of the year from continuing operations ​ 198,529 ​ 227,264 ​ 46,519 ​ 6,373 ​ Operating Activities Net cash used in operating activities from continuing operations amounted to RMB105.0 million (US$14.4 million) in 2024. It was primarily due to (a) a net loss from continuing operations of RMB535.4 million, mainly adjusted by depreciation and amortization of RMB41.1 million, amortization of right-of-use asset of RMB87.8 million, bad debt provision of RMB72.4 million, impairment of goodwill of RMB49.4 million, impairment of long-lived assets of RMB 272.6 million, impairment of Long-term Investment of RMB20.6 million, and share based compensation expense of RMB1.3 million; (b) a decrease in operating lease liabilities of RMB81.2 million; and (c) a decrease in deferred income tax assets of RMB28.0 million; and (d) a decrease in deferred revenue of RMB92.8 million due to a slowdown in business activities of our STEM education segment; and (e) a decrease in prepaid expenses and other current assets of RMB 28.1 million. Net cash provided by operating activities from continuing operations amounted to RMB21.5 million in 2023. It was primarily due to (a) a net income from continuing operations of RMB22.3 million, mainly adjusted by depreciation and amortization of RMB46.9 million, amortization of right-of-use asset of RMB121.3 million, loss on disposal of property and equipment of RMB1.3 million, and share based compensation expense of RMB2.7 million; (b) a decrease in operating lease liabilities of RMB147.7 million; and (c) an increase in deferred income tax assets of RMB9.8 million; and (d) a decrease in deferred revenue of RMB104.3 million due to the reduced collections of our STEM education business. Net cash provided by operating activities from continuing operations amounted to RMB1.0 million in 2022. It was primarily due to (a) a net loss of RMB2.1 million, mainly adjusted by depreciation and amortization of RMB67.7 million, amortization of right-of-use asset of RMB136.9 million, loss on disposal of property and equipment of RMB0.6 million, and share based compensation expense of RMB11.4 million; (b) a decrease in operating lease liabilities of RMB142.6 million; and (c) an increase in deferred income tax assets of RMB18.3 million; and (d) a decrease in deferred revenue of RMB109.3 million due to the reduced collections of our STEM education business. Investing Activities Net cash used in investing activities from continuing operations was RMB89.2 million (US$12.2 million) in 2024, consisting of the purchase of property and equipment, including computers and servers, of RMB65.6 million for the replacement of obsolete items and loan provided to related parties of RMB33.4 million, partially offset by loan collected from related parties of RMB7.8 million. Net cash used in investing activities from continuing operations was RMB34.5 million in 2023, consisting of the purchase of property and equipment, including computers and servers, of RMB34.7 million for the replacement of obsolete items and the proceeds of RMB0.5 million received from disposal of property and equipment. Net cash used in investing activities from continuing operations was RMB28.8 million in 2022, consisting of purchase of property and equipment, including computers and servers, of RMB29.4 million for the replacement of obsolete items, partially offset by the proceeds of RMB0.6 million received from the disposal of property. 99 Table of Contents Financing Activities Net cash provided by financing activities from continuing operations was RMB18.6 million (US$2.6 million) in 2024, which was primarily attributed to the repayment of bank borrowings of RMB26.3 million and the repurchase of treasury stock of RMB7.4 million. Net cash used in financing activities from continuing operations was RMB33.8 million in 2023, which was primarily attributed to the repayment of bank borrowings RMB30 million and the repurchase of treasury stock of RMB2.4 million. Net cash used in financing activities from continuing operations was RMB24.1 million in 2022, which was primarily attributed to the repayment of bank borrowings RMB 30.0 million, the repurchase of treasury stock of RMB 17.1 million, and the prepayment of acquiring noncontrolling interests of RMB 7.1 million, partially offset by the proceeds from bank borrowings of RMB30.0 million. Material Cash Requirements Capital Expenditures Our capital expenditures are primarily related to purchase of property and equipment, leasehold improvements and investments in computers, network equipment and software. Our capital expenditures were RMB29.4 million, RMB34.7 million and RMB65.6 million (US$9.0 million) in 2022, 2023 and 2024, respectively. Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2030 and ​ Total 2025 2026 2027 2028 2029 thereafter ​ ​ (RMB in thousands) Operating lease commitments(1) ​ 208,736 ​ 115,565 ​ 60,935 ​ 23,305 ​ 8,456 ​ 475 ​ — Note: (1) Represents our non-cancelable leases for our offices and learning centers. Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of December 31, 2024. Holding Company Structure We are a holding company with no material operations of our own. We conduct our operations primarily through our subsidiaries and the variable interest entities in mainland China. As a result, our ability to pay dividends depends upon dividends paid by our mainland China subsidiaries and service fees paid by the variable interest entities in mainland China. If our wholly owned subsidiaries or any newly formed subsidiaries incur any debt in the future, the instruments governing their debt may restrict their ability to pay dividends to us. To the extent cash or assets in the business is in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong as we, our subsidiaries, and the consolidated variable interest entities are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their cash or assets offshore, and there is no assurance the PRC government will not intervene in or impose restrictions on the ability of us, our subsidiaries, and the consolidated variable interest entities to transfer cash (or assets). See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China to fund any cash and financing requirements we may have. To the extent cash or assets in the business is in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong as we, our subsidiaries, and the consolidated variable interest entities are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their cash or assets offshore, and any such restriction could have a material and adverse effect on our ability to conduct our business.” In addition, our mainland China subsidiaries and the variable interest entities are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. 100 Table of Contents Our mainland China subsidiaries, being foreign-invested enterprises established in mainland China, are required to make appropriations to certain statutory reserves, such as a general reserve fund, which is appropriated from net profit as reported in their PRC statutory accounts. Each of our mainland China subsidiaries is required to allocate at least 10% of its after-tax profits to a general reserve fund until such fund has reached 50% of its respective registered capital. The variable interest entities must make appropriations from their after-tax profits as reported in their PRC statutory accounts to non-distributable reserve funds, namely a statutory surplus fund and a discretionary surplus fund. Each of the variable interest entities is required to allocate at least 10% of its after-tax profits to the statutory surplus fund until such fund has reached 50% of its respective registered capital. Appropriations to the discretionary surplus fund are at the discretion of the variable interest entities. As a result of these laws and regulations of mainland China, as of December 31, 2024, we had RMB153.8 million (US$21.1 million) in statutory surplus reserves that are not distributable as cash dividends. We are required to set aside an additional RMB414.6 million (US$56.8 million) to satisfy the maximum requirement of statutory surplus reserves for all of our subsidiaries and the VIEs in mainland China as of December 31, 2024. In addition, our private schools requiring reasonable returns are required to appropriate no less than 25% of their net income to a statutory development fund, whereas in the case of private schools requiring no reasonable return, this amount shall be no less than 25% of the annual increase of their net assets. As of December 31, 2024, we had RMB56.4 million (US$7.7 million) in statutory development fund that is not distributable as cash dividends. C. Research and Development, Patents and Licenses, etc. Research and Development Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, 61it.cn and the various services that we provide to our students. We manage our lecture delivery system, TTS and 61it.cn using a combination of commercially available software, hardware systems and proprietary technology. Since 2006, we have established a powerful online platform that enables thousands of students to simultaneously log onto our TTS and participate in activities online. Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time that they devote to research and development-related activities, as well as the personnel costs of our software engineers. Our research and development expenses were RMB20.2 million, RMB11.7 million and RMB19.1 million (US$2.6 million) in 2022, 2023 and 2024 respectively. Intellectual Property Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of our competitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we require certain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utility models, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to job assignments or using our materials and technology, or during the one year after their employment that relates to their employment with us, are our property and they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights. As of March 31, 2025, we had registered 30 domain names relating to our continuing operations, including our www.tctm.cn, www.it61.cn and www.61it.cn websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center and held three software copyrights and 116 trademarks related to our continuing operations. D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period beginning on January 1, 2025 and ending on the date of this annual report that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 101 Table of Contents E. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on available information, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include the following: (i) revenue recognition; (ii) operating leases; (iii) income taxes; and (iv) fair value measurements. See “Summary of Significant Accounting Policies” under note 2 to our consolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements. Impairment of Long-Lived Assets We periodically review our long-lived assets for impairment indicators to identify any events that may lead the carrying value to be irrecoverable. Such events include a historical or projected trend of net cash outflow or a future expectation that we will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, we group our long-lived assets into professional education asset group and STEM education asset group, which are the lowest possible level that identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates, which could be material to our financial position and results of operations. During the year ended December 31, 2024 for IT-focused supplementary STEM education asset group, we recorded goodwill impairment losses of RMB49.4 million (US$6.8 million). The IT professional education asset group, along with other assets such as receivables and goodwill, has been treated as a disposal group accounted as discontinued operations during the year ended and as of December 31, 2024. When assets other than long-lived assets are present within the disposal group, it is necessary for us to follow a required order for testing the assets within the disposal group when recognizing the disposal group at the lower of its carrying amount or fair value less cost to sell. We performed such assessment and determined there was no significant impairment indicator for the assets in IT professional education disposal group. For impairment of long-lived assets, we recorded impairment of long-lived assets on intangible assets of RMB4.0 million (US$0.6 million), property and equipment of RMB60.9 million (US$8.3 million) and right-of-use assets of RMB207.7 million (US$28.5 million) in the year ended December 31, 2024. Allowance for credit losses We maintain an allowance for credit losses by estimating the expected credit and collectability trend of our customers. Accounts receivable is considered past due based on its contractual terms. In estimating the allowance for credit losses, we consider various factors, including historical experience, credit-worthiness of customers, current and reasonable forecasted future economic conditions, aging of the accounts receivable balances, payment patterns, and the forecasted information in pooling basis upon the use of the Current Expected Credit Loss Model, or the CECL Model, in accordance with ASC topic 326—Financial Instruments—Credit Losses. We also consider to provide specific allowance for credit losses for those accounts receivable balances when facts and circumstances have emerged to indicate that these receivables are unlikely to be collected. Changes in these estimates and assumptions could materially affect the quantity of credit losses, which could be material to our financial position and results of operations. 102 Table of Contents Prepaid expenses and other current assets primarily represent prepaid advertising deposits, loans made to employees, prepaid value-added tax, professional fee, prepaid rental expenses and so on. Prepaid expenses and other current assets which are due over one year as of the balance sheet date are presented as other non-current assets. The Company maintains an allowance for credit losses for the part that is not expected to be recovered. In establishing the allowance, management considers overdue employee loan upon the use of the CECL Model in accordance with ASC topic 326. Prepaid expenses and other current assets that are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted. There was no allowance of credit losses for accounts receivable as of December 31, 2023 and 2024. The allowance of credit losses for prepaid expenses and other current assets associated with continuing operations totaled approximately RMB0.4 million and RMB49.7 million as of December 31, 2023 and 2024, respectively. The allowance of credit losses for other non-current assets associated with continuing operations totaled approximately nill and RMB23.1 million as of December 31, 2023 and 2024, respectively. Taxation We are required to make estimates and apply our judgements in determining the provision for income tax expenses for financial reporting purpose based on tax laws in various jurisdictions in which we operate. In calculating the effective income tax rate, we make estimates and judgements, including the calculation of tax credits and the timing differences of recognition of revenues and expenses between financial reporting and tax reporting. These estimates and judgements may result in adjustments of pre-tax income amount filed with local tax authorities in accordance with the local tax rules and regulations in various tax jurisdictions. Although we believe that our estimates and judgments are reasonable, actual results may be materially different from the estimated amounts. Changes in these estimates and judgements may result in material increase or decrease in our provision for income tax expenses, which could be material to our financial position and results of operations. Deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry forwards. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. When we determine and quantify the valuation allowances, we consider such factors as projected future taxable income, the availability of tax planning strategies, the historical taxable income/losses in prior years, and future reversals of existing taxable temporary differences. The assumptions used in determining projected future taxable income require significant judgment. Actual operating results in future years could differ from our current assumptions, judgments and estimates. Changes in these estimates and assumptions may materially affect the tax position measurement and financial statement recognition. If, in the future, we determine that we would not be able to realize our recorded deferred tax assets, an increase in the valuation allowance would decrease our earnings in the period in which such determination is made. As of December 31, 2023 and 2024, our balance of deferred tax assets for continuing operations, net of RMB135.4 million and RMB170.9 million (US$23.4 million) valuation allowance, were RMB28.5 million and nil, respectively. ​