Sunlands Technology Group (STG): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise and see the real mechanics of Sunlands Technology Group's operation, and frankly, that starts with their Business Model Canvas. As an analyst who's spent years mapping these structures, I can tell you their current strength lies in a focused revenue mix: high-margin interest-based courses accounted for about 73% of their RMB 523.0 million in net revenues for Q3 2025. We need to see how they fund that aggressive growth-remember, sales and marketing alone hit RMB 279.7 million last quarter-while maintaining that healthy RMB 601.0 million cash position. Keep reading; this nine-block breakdown shows you exactly where the value is created and where the risks are hiding.

Sunlands Technology Group (STG) - Canvas Business Model: Key Partnerships

You're looking at the structure that underpins Sunlands Technology Group's market position in China's adult online education space. The partnerships here are critical because they validate the content and provide the necessary infrastructure for a platform serving millions of learners.

The core of Sunlands Technology Group's offering involves professional certification exams and degree- or diploma-oriented post-secondary courses. This means the relationships with official bodies are non-negotiable for course credibility.

• Chinese educational and certification authorities: These relationships are essential for offering courses aimed at professional certification exams and various degree- or diploma-oriented post-secondary courses. The platform's content organizes subject matter using its proprietary knowledge management system, the Learning Outcome Trees, which must align with official standards.
• B2B corporate clients for employee training services: While specific B2B client counts aren't public, the overall scale of the business suggests a significant corporate training component supporting professional skills enhancement.
• Technology and cloud service providers for platform stability: The one to many, live streaming platform requires robust hosting to support its user base accessing services via PC or mobile applications.
• Content creators and subject matter experts (SMEs): These partners are vital for developing the vast library of educational content, including interest courses, that Sunlands offers.

Here's the quick math on the scale of the business these partnerships are supporting as of late 2025. The financial performance shows the volume these operational relationships handle.

What this estimate hides is the specific revenue split between the professional courses, which rely heavily on certification authority partnerships, and the interest courses. Still, the Q3 2025 Net Income margin was a healthy 24.0%, suggesting effective management of these partner-dependent costs.

The company's focus on high-margin courses is a direct reflection of managing the cost structure associated with content creation and platform maintenance. For instance, product development expenses increased by 48.2% in the first nine months of 2025 to RMB8.7 million (US$1.2 million), showing investment in the proprietary content systems that these SME partnerships feed into.

The reliance on the domestic market is clear, as the business is primarily conducted in China. Finance: draft 13-week cash view by Friday.

Sunlands Technology Group (STG) - Canvas Business Model: Key Activities

You're looking at the core engine driving Sunlands Technology Group's performance as of late 2025. The activities they prioritize directly translate into the financial results we see, like that 40.5% year-over-year net income growth in Q3 2025.

Proprietary content research and development (R&D)

Sunlands Technology Group invests heavily in its proprietary knowledge base, which they call Learning Outcome Trees, their knowledge management system. This commitment to R&D is clear when you look at the spending figures for the third quarter of 2025. They are defintely doubling down on innovation.

Here's the quick math on the investment in developing that content:

This expense increase, largely from compensation for headcount expansion in the product development personnel, shows where the focus is shifting, even as net revenues for the quarter were RMB 523.0 million.

Large-scale online student acquisition and marketing

Acquisition is a major cost center, but Sunlands Technology Group is showing discipline here, shifting from rapid growth to a more selective marketing approach. This is helping their bottom line, evidenced by the net income margin reaching 24.0% in Q3 2025.

The marketing spend reduction is notable:

• Sales and Marketing Expenses decreased by 7.7% in Q3 2025 compared to Q3 2024.
• Total Sales and Marketing Expenses for Q3 2025 were RMB 279.7 million.
• New student enrollments for Q3 2025 were 137,493, down from 158,395 in the prior year period.

This strategy is working to improve profitability, even if new student additions are softening.

Live-streaming platform operation and maintenance

The core delivery mechanism is the one-to-many live-streaming platform, accessible via PC or mobile applications. While direct operational costs for the platform aren't broken out separately from Cost of Revenues, we can see the impact on overall cost structure.

The cost of revenues, which includes platform delivery elements, saw a significant drop:

• Cost of Revenues decreased by 26.5% to RMB 60.3 million (US$8.5 million) in Q3 2025 year-over-year.
• This decrease was mainly due to declined cost of revenues from sales of goods like learning materials.

The company's overall operating expenses for Q3 2025 were RMB 324.4 million (US$45.6 million), a 5.5% decrease from the same quarter last year.

AI-driven grading and learning efficiency optimization

Sunlands Technology Group is actively implementing AI models to boost internal efficiency, which supports their focus on high-margin courses, which accounted for 77.6% of total revenues in Q2 2025. The company explicitly mentioned launching AI-driven models to improve grading efficiency and accuracy.

The financial result of this efficiency focus is a substantial improvement in profitability metrics:

The company also maintains a healthy pipeline of future revenue, with Deferred Revenue standing at RMB 695.5 million (US$97.7 million) as of September 30, 2025.

Sunlands Technology Group (STG) - Canvas Business Model: Key Resources

You're looking at the core assets Sunlands Technology Group (STG) relies on to run its business as of late 2025. These aren't just line items; they are the engine room of their operations, especially given their recent focus on profitability.

Proprietary Learning Outcome Trees knowledge system

STG's approach to education research and development centers on its proprietary knowledge management system, the Learning Outcome Trees. This system organizes subject content, which helps in structuring the educational offerings.

The company also integrates technology to support this content delivery:

• AI-driven automated grading now covers over 17% of assignments.
• This automation delivers a review efficiency increase of more than 8 times.
• The accuracy rate for this AI grading is maintained above 95%.

Live-streaming online education platform and mobile apps

Sunlands Technology Group delivers its content, which spans degree- or diploma-oriented post-secondary courses, professional certification prep, professional skills, and interest courses, through a robust digital infrastructure. Students access services via PC or mobile applications, utilizing a one-to-many live streaming platform.

To enhance the learning experience, STG introduced an AI-powered proprietary SaaS platform in Q2 2025, alongside a Mandarin voice-activated AI assistant for personalized interactions.

Here's a look at the financial backing supporting this technology and operations as of September 30, 2025:

That cash position of RMB 601.0 million as of September 30, 2025, shows a solid balance sheet foundation, especially when paired with the RMB 176.5 million in short-term investments.

Strong cash position of RMB 601.0 million (Q3 2025)

The financial strength is clear from the Q3 2025 results. You see the underlying operational success reflected in the balance sheet.

For context on recent performance driving this position:

• Net Revenues (Q3 2025): RMB 523.0 million.
• Net Income (Q3 2025): RMB 125.4 million.
• Net Income Margin (Q3 2025): 24.0%.
• New Student Enrollments (Q3 2025): 137,493.

The company delivered net income of RMB 125.4 million for the quarter, marking a 40.5% surge year-over-year. That's real operating leverage kicking in.

Experienced teaching faculty and dedicated mentor network

Sunlands Technology Group relies on its human capital-the teaching faculty and mentor network-to deliver its curriculum and support students across its various course categories. This network is crucial for maintaining the quality that supports their high net income margin.

While I don't have a precise headcount for the faculty and mentors as of late 2025, the investment in personnel is visible in the cost structure. Product development personnel headcount expansion contributed to a 48.2% increase in Product Development Expenses to RMB 8.7 million in Q3 2025. Finance: draft a quick comparison of R&D spend versus Sales & Marketing spend for Q3 2025 by Monday.

Sunlands Technology Group (STG) - Canvas Business Model: Value Propositions

You're looking at the core value Sunlands Technology Group (STG) delivers to its adult learners, grounded in the numbers from their latest reports as of late 2025. The strategy clearly centers on high-margin offerings and efficient delivery.

Flexible, one-to-many live-streaming adult education

The platform's delivery mechanism is built around a one-to-many, live-streaming model, which is key to scaling the value proposition. You see this scale reflected in the enrollment figures, even as the company refines its focus. For instance, in the first quarter of 2025, Sunlands Technology Group added 169,083 new students. By the third quarter of 2025, new student enrollments were 137,493. This live-streaming structure supports the overall market context, where the online adult learning market is projected to reach 242.4 billion yuan by 2027 in China. The company's ability to maintain strong profitability, like the 24.0% net income margin reported in Q3 2025, suggests this delivery method is cost-effective at scale.

Preparation for professional certification and degree exams

A significant part of the value proposition involves preparing students for formal qualifications, which includes degree- or diploma-oriented post-secondary courses. While the overall net revenues for Q3 2025 reached RMB523.0M, the strategic shift is evident in the focus areas. The decline in gross billings from post-secondary courses was a factor in the Q1 2025 net revenue dip to RMB487.6M. However, the company is doubling down on high-potential areas, which includes these core professional tracks. The deferred revenue balance, representing future recognized revenue from prepaid courses, stood at RMB695.5M as of September 30, 2025, showing a substantial commitment from learners across all course types.

High-margin personal interest and practical skills courses

This segment is explicitly mentioned as a core engine for growth and margin expansion. In the first quarter of 2025, courses in vocational skills and interests contributed 78.2% of total revenue. By the second quarter of 2025, the growth in gross billings from interest-based courses was the primary driver for a 9.5% year-over-year net revenue increase to RMB539.0M. This focus directly impacts the bottom line; net income for Q2 2025 surged 54% year-over-year to RMB126.6M, with the net margin expanding to 23.5%. This trend continued into Q3 2025, where net income hit RMB125.4M on a 24.0% net income margin, reinforcing the high-margin nature of these offerings.

Here's a quick look at the financial performance supporting the margin focus:

Personalized, interactive learning environment and community

Sunlands Technology Group cultivates a personalized, interactive learning environment. While direct metrics for community engagement are not always financial line items, the operational structure supports it. The company has 2,071 employees supporting its platform. The management's stated focus is on leveraging technology to create superior value, which includes optimizing processes and cost structures while ensuring service quality. The reduction in cost of revenues in the first nine months of 2025 to RMB202.3M (from RMB235.9M in the same period of 2024) partly reflects decreased compensation expenses related to teacher and mentor headcount reduction, suggesting a shift in how interactive support is delivered, perhaps leaning more on technology.

The platform offers services via PC or mobile applications, enabling access for learners seeking flexible interaction.

• Platform access via PC or mobile applications.
• Focus on refined management of teaching quality.
• Strategy includes deepening core courses.
• Leveraging technology as the core driving force.

Finance: draft 13-week cash view by Friday.

Sunlands Technology Group (STG) - Canvas Business Model: Customer Relationships

You're looking at how Sunlands Technology Group (STG) keeps students engaged and moving toward completion, which is key when new student enrollments are fluctuating. For instance, new student enrollments in the third quarter of 2025 were 137,493, a dip from the 158,395 seen in the third quarter of 2024. This kind of enrollment volatility puts a premium on keeping the students you already have happy and successful.

Dedicated mentors and teaching assistants for support

The structure of your support staff definitely impacts the student experience. We see evidence of adjustments in the cost structure that directly relate to teaching and mentoring staff. For example, in the second quarter of 2025, the cost of revenues decreased by 9.1% to RMB 69.6 million, which management noted was mainly due to declined compensation expenses related to headcount reduction of the Company's teachers and mentors for degree- or diploma-oriented post-secondary courses. This suggests a constant calibration of the human support layer based on course mix or efficiency targets.

Here's a snapshot of the financial dynamics impacting direct support costs:

That margin expansion to 24.0% in Q3 2025 is impressive, showing that cost control, even in support areas, is translating directly to the bottom line.

Virtual learning community fostering student engagement

Sunlands Technology Group cultivates a personalized, interactive learning environment by featuring a virtual learning community and a vast library of educational content offerings that adapt to the learning habits of its students. The focus on specific course types shows where engagement efforts are concentrated. Interest-based courses, which often rely heavily on community and engagement, accounted for 77.6% of total revenues in the second quarter of 2025. The platform is designed to be accessible via PC or mobile applications, which is fundamental for community participation.

• Virtual learning community is a core feature of the online platform.
• Content offerings adapt to student learning habits.
• Interest courses drove a significant portion of revenue in Q2 2025.
• Q3 2025 Net Revenue reached RMB 523 million, up 6.5% YoY.

High-touch, personalized retention strategies

While direct retention spending isn't itemized, the shift in revenue mix and the resulting profitability point to strategies that are working to keep students enrolled in higher-value offerings. The significant net income growth of 40.5% in Q3 2025 to RMB 125.4 million, alongside the net margin expansion to 24.0%, suggests that the personalized approach is successfully driving students through higher-margin or longer-term courses. If onboarding takes 14+ days, churn risk rises, so speed matters.

Look at the enrollment trend versus profitability:

• Q1 2025 New Enrollments: 169,083.
• Q2 2025 New Enrollments: 159,154.
• Q3 2025 New Enrollments: 137,493.
• Q3 2025 Net Income: RMB 125.4 million.

Automated, data-driven student progress tracking

The investment in the technology underpinning the learning experience is increasing, which is where the automated tracking lives. Product development expenses in the third quarter of 2025 increased by 48.2% to RMB 8.7 million. Management attributed this increase mainly to higher compensation expenses related to headcount expansion of the Company's product development personnel. This expansion is likely focused on enhancing the AI-driven models, which the company uses to improve grading efficiency and accuracy, directly feeding the data-driven progress tracking loop.

Here's how the investment in the platform is trending:

The move to expand the product development team defintely signals a commitment to improving the automated, data-driven side of the customer relationship.

Sunlands Technology Group (STG) - Canvas Business Model: Channels

You're looking at how Sunlands Technology Group (STG) gets its educational content and services into the hands of its adult learners as of late 2025. The channels are almost entirely digital, which makes tracking the associated costs, like Sales and Marketing expenses, a key part of understanding their efficiency.

Company-owned PC and mobile applications

Sunlands Technology Group delivers its services through its online platform, which students access via PC or mobile applications. This is the core delivery mechanism for their degree- and diploma-oriented post-secondary courses, as well as their professional certification and personal interest courses. The platform cultivates a personalized, interactive learning environment. A key technological component supporting this channel is the AI assistant in automated grading, which, as of the Q3 2025 earnings call, covered over 17% of assignments, achieving an accuracy rate above 95%. This efficiency gain directly impacts the quality and scalability delivered through the applications.

Direct-to-consumer digital marketing and sales channels

The acquisition of new students is heavily reliant on direct-to-consumer digital marketing and sales efforts. The financial commitment to these channels is reflected in the Sales and Marketing expenses reported quarterly. For instance, in the third quarter of 2025, Sales and Marketing expenses were reported at RMB 279.7 million (US$39.3 million). This represented a decrease of 7.7% compared to the RMB 303 million spent in the third quarter of 2024. For the first nine months of 2025, Sales and Marketing expenses saw a decrease of 2.1% year-over-year. The full-year 2024 Sales and Marketing expenses totaled RMB 1,216.9 million (US$166.7 million), which the company noted was driven by spending on branding and marketing activities focused on interest courses offerings.

Here's a look at the recent spending on these customer-facing channels:

Live-streaming classrooms for content delivery

The primary method for content delivery is the one-to-many, live streaming platform. This channel supports the delivery of professional courses and educational content. The shift in focus toward high-margin courses and away from lower-price offerings like recorded videos or short live streams (which are excluded from the New Student Enrollments metric) suggests a channel strategy prioritizing quality engagement over sheer volume from low-value interactions. New student enrollments for the core courses in Q3 2025 were 137,493, down from 158,395 in Q3 2024, but the gross billings per new enrollment for these courses grew 11.7% year-over-year, indicating the live-streaming channel is attracting higher-value students.

Enrollment and revenue recognition through this channel are also affected by service period length. For example, the 6.5% increase in Q3 2025 net revenues to RMB 523.0 million was primarily due to a shorter average service period in 2025, resulting in increased revenue recognition year-over-year from courses delivered via this platform.

Key enrollment metrics tied to content delivery channels:

• New student enrollments (Q3 2025): 137,493
• New student enrollments (Q1 2025): 169,083
• Gross billings per new enrollment (Q3 2025): Grew 11.7% year-over-year

Investor Relations website for shareholder communication

Sunlands Technology Group maintains its Investor Relations website, https://ir.sunlands.com/, as a dedicated channel for shareholder communication. This channel is used to disseminate official financial and operational updates. For instance, the Q3 2025 unaudited financial results were announced on November 20, 2025, and a live webcast and archived version of the accompanying conference call were made available on this site. The site also hosts filings with the U.S. Securities and Exchange Commission and provides details for corporate events, such as the Annual General Meeting scheduled for December 19, 2025. The company also uses this channel to provide key financial snapshots.

Financial data points communicated via this channel include:

• Q3 2025 Net Revenues: RMB 523.0 million (US$73.5 million)
• Q3 2025 Net Income: RMB 125.4 million (US$17.6 million)
• Cash, cash equivalents, and restricted cash (as of September 30, 2025): RMB 601 million

Sunlands Technology Group (STG) - Canvas Business Model: Customer Segments

You're looking at the core audience for Sunlands Technology Group (STG) as of late 2025, which is deeply embedded in China's massive and evolving adult education landscape. The overall China adult learning market was valued at $97.92 billion in 2023 and is projected to hit $195.67 billion by 2029, growing at a CAGR of 12.23% from 2024 to 2029. This market growth underpins all of STG's customer segments.

For STG specifically, the strategic focus is clearly shifting, as evidenced by their Q2 2025 revenue mix, where interest-based courses made up 77.6% of total revenues. This indicates a strong pivot toward the personal enrichment side of the market, even as they maintain their foundational offerings.

Here's how the key customer segments map to STG's business:

• China's adult learners seeking post-secondary degrees
• Working professionals focused on career upskilling and certification
• Individuals pursuing personal interest and leisure learning
• The growing senior demographic driven by the silver economy

The segment pursuing post-secondary degrees remains a core, though currently challenged, area. In Q1 2025, STG noted a year-over-year decrease in net revenues from post-secondary courses. This contrasts with the broader context where China had 54 million students in higher education in 2022, with a tertiary enrollment rate of 50.6%.

For working professionals, the demand for upskilling and certification is a major driver in the overall market. STG is actively catering to this, as the gross billings per new student enrollment for professional skills and professional certification preparation courses grew by 11.7% year-over-year in Q3 2025. This segment is crucial for the company's profitability focus.

The segment focused on personal interest and leisure learning is now the most dominant revenue contributor for Sunlands Technology Group. The expansion of interest-based courses drove a 9.5% increase in net revenues in Q2 2025. This segment is part of the individual adult learning category, which is the largest and fastest-growing segment in the China adult learning market.

The senior demographic is an emerging focus area, explicitly mentioned by management leveraging silver economy tailwinds. While specific enrollment numbers for this group aren't broken out, the general market trend supports this focus, driven by a positive cultural shift toward valuing continuous learning and personal development among older populations.

To give you a snapshot of the scale of STG's operations across these segments in the latest reported quarter:

The company's ability to generate a net income margin of 24.0% in Q3 2025, up from 18.2% in Q3 2024, suggests that the customer segments driving the current revenue mix-likely the higher-margin interest courses-are performing well financially.

Sunlands Technology Group (STG) - Canvas Business Model: Cost Structure

You're looking at the expenses Sunlands Technology Group is incurring to keep the lights on and deliver its online education services as of late 2025. Honestly, cost management is a big part of their story this quarter, given the focus on profitability. They managed to pull down some major costs while strategically increasing investment in the tech that powers their platform.

Here's a quick look at the key cost buckets for the third quarter of 2025, all in RMB, based on their latest filings:

The reduction in Cost of Revenues to RMB 60.3 million is defintely notable; that's a 26.5% drop, primarily because of lower costs associated with the sales of physical goods like learning materials and books. That's a clear win for margin expansion.

Now, let's talk about the people costs, which are always a major factor in an education business. While we don't have the exact Q3 2025 figure for teacher and mentor compensation in isolation, the nine-month results give us a hint about the trend:

• Compensation expenses for teachers and mentors declined in the first nine months of 2025.
• This nine-month decline was due to a headcount reduction of teachers and mentors.
• However, product development compensation expenses increased due to headcount expansion in that specific area.

You can see the strategic shift in spending right there. They are trimming costs in the delivery/support side (teachers/mentors) while aggressively investing in the technology side. That increased investment in Product development and IT infrastructure costs is where you see the future focus.

Product development expenses hit RMB 8.7 million in Q3 2025, a big jump of 48.2% year-over-year. The management explicitly stated this increase was mainly due to higher compensation expenses tied to expanding the product development personnel headcount. They are putting capital into their AI-driven models, which are now handling over 17% of assignments with impressive accuracy, so this spend is directly funding platform enhancement.

Finance: draft 13-week cash view by Friday.

Sunlands Technology Group (STG) - Canvas Business Model: Revenue Streams

You're looking at the core engine of Sunlands Technology Group (STG) revenue generation as of late 2025. This is where the money actually comes in, and it's heavily weighted toward specific, high-margin offerings.

The primary sources of income for Sunlands Technology Group flow directly from its educational services delivered via its one to many, live streaming platform. These streams are segmented by the type of educational outcome the student is seeking.

The major components of the revenue streams include:

• Tuition fees from professional certification courses, which help students prepare for professional certification exams.
• Tuition fees from degree- and diploma-oriented courses, catering to post-secondary education needs.

A significant strategic pivot has been towards the most profitable segment. The revenue from high-margin interest-based courses is a key driver of profitability, accounting for approximately 73% of Q3 2025 revenue. This focus on higher-margin, demand-driven categories is clearly visible in the financial results.

Here's a quick look at the top-line financial performance for the third quarter of 2025, which grounds these revenue streams in hard numbers:

The total net revenues for Sunlands Technology Group in the third quarter of 2025 reached RMB 523.0 million. This figure is up from RMB 491.3 million in the third quarter of 2024. The increase was partly due to shorter average service periods, which accelerated revenue recognition during 2025.

The composition of revenue shows a clear preference for the interest-based segment, which is yielding better economics. Still, the other streams remain part of the overall value proposition to the customer segments.

• The high-margin interest-based courses are the primary growth engine.
• Professional certification and degree-oriented courses provide a broader educational base.

Finance: draft 13-week cash view by Friday.