From online expansion to offline capacity expansion, education companies are seeking the next phase of growth.

Over the past few years, AI, learning devices and online courses have continuously reshaped the product forms of education companies, but another growth line has become clear again - leading education companies have started to expand their physical classrooms.

Xueersi continues to add learning centers, Gaotu has invested tens of millions of yuan to build the Wuhan Postgraduate Entrance Exam Dream Center after its Zhengzhou site, and New Oriental is also expanding its offline capacity. While online capabilities are continuously upgraded, physical spaces that require costs for venues, teachers and local operations are regaining investment.

When courses can be delivered across regions, and AI is further integrated into Q&A, practice and content generation, why do education companies start pursuing growth from offline channels again?

Offline Expansion Resumes, Growth Comes From More Than "Opening New Stores"

The most direct change offline is that the number of learning centers has started to increase again.

As of the end of May this year, New Oriental had 1,534 learning centers, a net increase of 104 from 1,430 at the end of February. For the entire 2026 fiscal year, New Oriental's offline capacity calculated by venue area increased by about 13%. After entering the 2027 fiscal year, the company plans to continue increasing its offline capacity by 10% to 15%.

The learning center network of Xueersi is also expanding. In July 2026, the management of TAL (Good Future) disclosed at the first-quarter earnings meeting of fiscal year 2027 that Xueersi's offline learning services have covered 44 cities in Chinese mainland and some international markets, operating more than 600 learning centers. At present, Xueersi's new layouts are mainly concentrated in existing cities, and it takes over local demands by continuously adding learning centers.

In addition to learning centers, large-scale centralized teaching spaces are also on the rise.

In April this year, Gaotu's Postgraduate Entrance Exam Dream Center was launched in Wuhan, with an investment of tens of millions of yuan. The project integrates teaching, self-study, accommodation and life services in the same base, equipped with large classrooms, 1V1 tutoring classrooms, recitation rooms, dormitories, canteens and gyms, and launches all-year camps, half-year camps, summer camps and OMO online-offline integrated camps.

Gaotu's offline layout is not only focused on the postgraduate entrance exam training scenario. In October 2025, Gaotu signed a cooperation agreement with Xuhui District, Shanghai, planning to set up an AI education R&D center locally, while adding "Smart Learning Centers" integrated with AI technology or upgrading existing campuses, with the first batch of key coverage in non-academic fields such as quality-oriented education, vocational education and overseas study services. Different from the postgraduate exam dream centers in Zhengzhou and Wuhan, the Shanghai "Smart Learning Center" is planned to cover non-academic fields including quality-oriented education, vocational education and overseas study services in its first phase.

The newly added spaces are also corresponding to more clear business growth.

In the first quarter of fiscal year 2027, the revenue of Xueersi's offline quality-oriented small classes continued to achieve double-digit year-on-year growth, the number of registered students increased steadily, and the re-enrollment rate exceeded 80%. The two dream centers of Gaotu have been fully occupied, while New Oriental continues to increase the capacity of offline venues. In addition to the number of learning centers, enrollment, revenue and actual usage are also growing synchronously.

The offline forms corresponding to different businesses are not the same. Xueersi and New Oriental mainly rely on learning centers distributed in cities, while Gaotu adopts large-scale training bases that integrate teaching, self-study, tutoring and accommodation for its postgraduate entrance exam business. The former continues to increase urban teaching outlets, while the latter concentrates more learning and living links in the same space.

From the continuous increase of learning centers to the operation of large-scale training bases, the offline supply has presented forms different from single teaching outlets. More importantly, the newly added spaces have not stayed at the construction stage: Xueersi's offline business maintains growth, Gaotu's dream centers are fully occupied, and physical teaching spaces are obtaining real student demands.

Apart From Courses, Offline Spaces Start to Undertake More Services

Offline spaces are regaining investment, and an important change has taken place beyond courses.

Online education has greatly improved the coverage efficiency of courses. Live streaming, recorded courses and online question banks can reach students across regions, and AI is further integrated into Q&A, practice and content generation, making access to courses and learning resources more convenient than ever before.

However, access to courses does not equal the completion of learning. In the first quarter of fiscal year 2027, the re-enrollment rate of Xueersi's offline quality-oriented small classes exceeded 80%, which was basically the same as the same period of the previous year. When talking about offline learning services, the management of TAL specially mentioned face-to-face interaction, as well as the empathy, encouragement and emotional connection provided by teachers in the teaching process.

These links occur outside the knowledge teaching process. It is necessary to continuously follow up whether students attend classes on time, their classroom participation, and whether they can get timely feedback when their learning status changes. Especially in learning processes lasting for several months or even longer, teachers provide not only course content, but also the management of the whole learning process.

Technology is also entering this process. Xueersi's offline quality-oriented small classes adopt a large-small screen solution, where students can participate in classroom interactions and game incentives through small screens, and their learning performance can also be recorded synchronously. AI education company Galaxy Intelligence Learning has started to extend its intelligent companion learning products to offline self-study spaces.

In May this year, Galaxy Intelligence Learning launched "Star Deer Love Learning" for the off-campus independent learning scenario, and cooperated with Zhulu Future to expand the offline self-study room scenario. The recruitment information disclosed in the same period shows that the company plans to promote 1 to 2 self-operated self-study rooms to complete site selection, preparation, opening and operation within half a year, and explore cooperation with offline spaces such as self-study rooms, after-school care classes and educational institutions.

Different from traditional learning centers, this type of space does not take increasing in-class teaching as its sole purpose. Galaxy Intelligence Learning provides AI intelligent companion learning products, while offline self-study rooms provide specific scenarios for self-study and after-school consolidation, so that AI products further enter physical learning spaces from online channels.

Postgraduate entrance exam training further extends offline services to a longer time cycle.

In addition to regular teaching, Gaotu's Wuhan Dream Center is also equipped with spaces for self-study, recitation, 1V1 tutoring and accommodation, and provides all-year camps, half-year camps and summer camps. For students preparing for exams for a long time, a large amount of learning time in a day does not take place in the classroom. Review, doing exercises, recitation, self-study and Q&A also take up a long time.

These links that were previously scattered outside the classroom are concentrated in the same offline space, and then included in the service scope of institutions. From fixed class hours to all-day learning, from course teaching to self-study, tutoring and learning management, the time and links covered by offline products are increasing.

From Xueersi's classroom interaction, to Galaxy Intelligence Learning's exploration of AI companion learning self-study spaces, and then to Gaotu integrating self-study, tutoring and accommodation into its postgraduate exam bases, several models point to the extension of offline service scope. Physical spaces no longer only undertake knowledge teaching within fixed class hours, but also start to cover more links such as interaction, feedback, self-study and learning management.

Online courses are still suitable for cross-regional dissemination, and AI can undertake part of the Q&A, practice and content generation work, but there are still a large number of links that require continuous participation and management in the long-term learning process. The increased offline supply of education companies therefore presents different forms such as learning centers, AI self-study spaces and centralized training bases.

Offline Expansion Continues, The Number of Campuses Is No Longer The Sole Target

The resurgence of offline supply does not mean that education companies have returned to the expansion mode of simply pursuing the scale of campuses.

It takes a certain period of operation and market cultivation for a new learning center to generate stable revenue after being put into operation. In the first half of 2026, ThinkLabs achieved a revenue of 424 million yuan, a year-on-year decrease of 3.5%; net profit attributable to owners of the parent was 12.757 million yuan, a year-on-year decrease of 79.7%; adjusted net profit was 26.031 million yuan, a year-on-year decrease of 68.0%. In the same period, the company's sales cost increased from 289 million yuan in the same period of the previous year to 317 million yuan, a year-on-year increase of 9.8%, and the gross profit margin dropped from 34.3% to 25.2%.

ThinkLabs mentioned in its semi-annual report that the company has made certain progress in business expansion in Guangdong, the enrollment of new learning centers in Guangzhou is ideal, and the overall operating performance exceeds expectations. However, the initial operation period of some quality-oriented learning centers and the preparation time required for market penetration are longer than expected, the revenue generated in the initial operation stage is still relatively limited, while direct operating costs such as employee expenses and benefits, amortization, depreciation, utilities and property management are relatively high, which has a negative impact on the overall profitability.

The cost brought by the expansion of learning centers has been reflected in the financial data. In the first half of the year, ThinkLabs' sales cost increased by 9.8% year-on-year, mainly due to the increase in teacher compensation and the increase in amortization of right-of-use assets brought by the expansion of the learning center network. In the same period, the number of tutoring class hours of the company decreased from 4.9445 million hours to 4.7962 million hours, a year-on-year decrease of about 3%.

Offline expansion thus faces a more specific problem: new learning centers need time to generate revenue, while expenditures related to personnel and venues enter the cost side earlier. The operation progress of different cities and different campuses will also directly affect the contribution of newly added supply to current performance.

Gaotu further clarified the standards for offline expansion at its earnings meeting in the second quarter of this year. The company proposed "profit-oriented growth first, rather than blind expansion", and only increases capacity when the demand is clear and the single-city model is healthy, and makes it clear that newly added capacity itself is not the main assessment indicator.

The business priorities in different cities are also different. The management of Gaotu stated that some cities need to prioritize improving the utilization rate of existing classrooms, while some regions need to strengthen the supply of teachers or enrollment conversion. The current growth of offline business comes from both the expansion of outlets and the improvement of operational indicators such as re-enrollment rate, classroom utilization rate and employee productivity.

Xueersi's offline layout also does not take rapidly increasing the number of covered cities as the main approach. In July 2026, the management of TAL stated at the first-quarter earnings meeting of fiscal year 2027 that the newly added learning centers of Xueersi's offline learning services are mainly concentrated in existing cities. When expanding offline capacity, the company will also comprehensively consider local demands, user acceptance, organizational capabilities and overall business operation status.

Judging from the actual actions of these companies, offline supply is still increasing, but the newly added campuses themselves can no longer fully measure the expansion results. Some of ThinkLabs' learning centers are still in the revenue cultivation stage, Gaotu clearly does not take newly added capacity as the main assessment indicator, and Xueersi mainly continues to add learning centers in existing cities.

After experiencing business adjustments in the past few years, the offline investment of leading education companies is increasingly focused on the operating results of individual markets and individual campuses. Whether the newly added spaces can achieve stable enrollment, whether the existing capacity can be fully utilized, and whether the newly added revenue can cover the synchronously increased personnel and venue costs, jointly determine the actual growth brought by offline expansion.

This article is from WeChat Official Account "Duojing" (ID: DJEDUINNO), written by Si Luo, authorized for release by 36Kr.