EDU - Earnings call transcript Q1 2025 | New Oriental Education & Technology Group Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good evening, and thank you for standing by for New Oriental's FY 2025 First Quarter Results Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Ms. Zhao. Sisi

Sisi Zhao

everyone, Conference New Call. Hello, Quarter First welcome Earnings XXXX and you. Oriental's to Fiscal Thank

available website I on Our updates and released Executive will are After company's share earlier you. results President in today well will financial for questions. Officer, Stephen to latest that, and detail available the and Chief New answer on with and Stephen Oriental's services. your business Today, Newswire periods be Financial were as and Yang, as I the results earnings

we please contain U.S. of the provisions Before continue, discussion Act note today the forward-looking safe that will of Private the Reform under Securities Litigation statements made XXXX. harbor

uncertainties. Forward-looking statements risks involve and inherent

potential results different outlined expressed As are the with such, in our materially be public may SEC. our and risks filings uncertainties number from of the view today. A

New forward-looking not any obligation statements, applicable to except Oriental update law. undertake under required does any as

is reminder, recorded. this a conference As being

Relations New ahead. call investor.neworiental.org. Mr. webcast turn will the Stephen, Investors over call a of will first I go please Oriental's conference addition, Yang. In this now available website to be on at

Zhihui Yang

Thank you, everyone, Sisi. for on the thank joining you us Hello, call. and

XXX to encouraging by which for highly pleased margin live healthy line yields. quarter to same across increased entered, our XX.X% alignment and basis the net for time, Total XX.X%, operating by key contributed core blocks the reflection generated company margin has particular, educational that endeavors business are we products margins streaming East business. the and announce East excluded has performance year-over-year, revenues growth for Buy of line performance operating Operating have private also respectively. in impressed Buy and significantly XX.X% label with representing from non-GAAP forced from point core has year-over-year. reached In the and has we building with Oriental's the margin have XX.X% of achieved business generated the growth a lines core New quarter a better The Oriental's new XXX this business of expectations quarter. this this that our operating the top are the bottom healthy New educational wise, of We growth improvement revenues company. At excluding for

the are devoted that pleased platforms We to lines. and across efforts our positive offerings our we see growth tremendous into sparking business

profitability Our shareholders and and create firm healthy market we stands term. long commitment in as maintaining to strive value share a for our the sustainable to customers

our spend business would time to existing I you to initiatives talk quarter's some in new like lines detail. and performance Now to about across the

momentum continued revenue adults the round Our propelled consulting mostly to increase our first fiscal to for of XX% students' their The the this facilitating increase business XX% revenue quarter. key having this business business all remaining this business university quarter Breaking which The secure increase around recorded quarter. The on prep test overseas strong revolve a the initiatives, respective for fiscal down, year-over-year quarter. and year-over-year of innovation, in about investments education business recorded year-over-year encouraging development students of recorded new engine a XXXX. secured company's have ongoing XX% revenue ventures. for trends study -- of overseas it

existing cities, Firstly, quality. around comprehensive the innovative have courses, in cultivating tutoring we non-academic offered students' and which XX on capability focused

The XXX,XXX solid receive cities to student this this recorded pleased XX XX% of are in China a approximately interest top with business. contribute quarter. We in total over enrollments of

revenue the this is in happy XX initiatives intelligence cities. of been adopted the elevated XX%. China users cities We're in contribution and top and approximately with business these active around quarter. system learning device payment scalability from customer in see around to retention has XXX,XXX The Secondly, XX reported

yields smart advancement year-over-year for to study business, our XX% a education material of of company. In smart new increase educational this contribute the digitalized recorded initiatives material and the revenue business have overall have to quarter. Our educational solutions summary, continued

in newly as culture camp In overseas integrated tours of our as and of line tourism-related addition, China the business diverse education. is now well study trips, comprised offerings

line, for tour tremendous study with and university-age Within quarter year-over-year the an of research our students business K-XX of quarter. business in revenue increase camp XXX% this growth this and achieved for

this in ages. a platform, our of meaningful vision new in around China this our fiscal The middle perceived this individuals system, valued technology OMO China to platform quarter, offerings research quarter of expand our study to were of our infrastructure to and age We service have our globally. across believe, also provide advanced offering tours the leveraged line top affirmed number XX customers. to revenue we premium cities remaining $XX.X notch business in initiatives year. With OMO in teaching top diversified students. this over which our has operated key from inspiring of country the revenue edge us business with unrivaled cities equips million groups, to to including revamping and total the In XX% and we have provinces XX new deliver to contribute business camp the will business. over a the This has with and on of continuously now tourism our new educational piloted in XX this age And devotion and and customers reach elderly flexibility offerings featured to service all with regards to share education all maintain been growth invested

years. In since label just East XXXX, of terms total of launched X in has in private April performance, Buy SKUs a the Buy East products XXX

to uplifts in has Our Buy's also product cost high nearest new of significance Through with product Buy the East proven well-diversified performance, our period, the current users. product the categories reiterating in of which offering-only the reporting East expanded minds and date. effective have into value

a Tmall, has base. JD, Xiahongshu, growth. of East thanks amplify to life Pinduoduo our addition, as strategy wider channels Buy's that multichannel customer to expanded our footprint from sustainable and they In the to driven our reach streaming live have

In other the off-line off-line year, rental Buy will East owned explore planning schools brands new the parties. channels by partnership by new with and

enhance to our off-line sales awareness initiate vision extent. of a As great our to network and part brand

position, short-term company term With regards is the to financial with company's cash equivalent investments healthy and status, deposits latest financial totaling approximately in a to I'm pleased and billion. share the cash that $X.X

XX, to Now, is shares highlight the repurchase company Board I XXXX, would million also program of like authorized the company extend aggregate XX to to and to further from months. Directors the and to time in a effective of the this XXXX, in that increase approved to repurchase which ADS the repurchase opportunity approved May the that company's $XXX company or company's share the shares July of through value Board million next share The of take repurchase to Directors the of $XXX million. is the up common $XXX authorized program

approximately approximately XX, repurchased As ADS an aggregate the of million XXXX, X.X for million the company open from $XXX.X market. of October

Now the about call to Sisi, you the I financials. go will turn over ahead. share key to please Sisi with

Sisi Zhao

tourism-related the increase XX.X% due exclude accelerated expansion which to representing Thank Non-GAAP educational to I'd a costs details and cost capacity business and year-over-year. the share-based expenses, this The expenses business. financial a compensation like quarter, Stephen. representing were was key increase the XX.X% share our to for increase expenses newly operating quarter related costs you, million, year-over-year. expenses for million, $X,XXX.X were for integrated for primarily $X,XXX.X quarter. Operating and

exclude to were related compensation XX.X% which expenses increased first fiscal share-based a Non-GAAP revenues by increased increase expenses, compensation year-over-year $XXX.X by million. costs of XX.X% to were operating expenses and increased share-based year-over-year. $XXX.X quarter XXXX. $X.X by XX.X% in Selling $XXX.X to million. which million, $XXX.X Total marketing allocated XX.X% Cost to G&A the of million expenses, representing expenses, the quarter G&A to expenses million. year-over-year increased by year-over-year and for XX%

quarter attributable and respectively. a attributable $XXX.X $X.XX a Non-GAAP Operating increase income Oriental million, representing attributable per XX.X% was was diluted diluted operations to to was New XX.X% respectively. income were Basic income $X.XX Net $XXX representing the increase million, $XXX.X quarter New increase net $X.XX, attributable representing income ADS were income million, basic Non-GAAP New a ADS per New XX.X% XX.X% was increase income Oriental Oriental year-over-year. and for the year-over-year. for quarter Oriental year-over-year. to a $XXX.X for net net Non-GAAP $X.XX, million, the to from and and year-over-year. representing

$XXX.X cash approximately capital flow were $XX.X XXXX Net from for generated quarter the of million operations for was and first fiscal the quarter expenditure million.

Turning to the sheet. balance

XXXX, Oriental As had of New $X,XXX cash August of XX, cash million. equivalents and

in the deposits $X,XXX.X short-term investments. million in has and million addition, In company $X,XXX.X term

to of cash fiscal recognized last of $XXX.X of a as New or as $X,XXX.X collected the will year the fiscal that increase revenue, goods at quarter million, delivered and first were representing the be an are which Oriental's the of XX.X% revenue compared million first upfront related at year. customers deferred service of end XXXX end from quarter

to Now and I'll hand Stephen over guidance. outlook go our to through

Zhihui Yang

Sisi. you, Thank

this the encouraging Simultaneously, test nourish business. inputs fiscal rollout lines, With investments for ongoing stood in maintaining have our will our resources of to that bullish our business. from will of the time, educational We we year. tours healthy believe diverse devote that expanding core tourism-related in backed our by new we're a our achieved growth solid more these performance business expansion-wise on education extensive

with The the our this inherence local We growth, openings to around closely to during educational performance. financial launched in development manage by Rest and safeguard to will bottom we of pace new performance in plan to increase capacity strive also assured, cities most XX% we scale better profitability new new expansion will year. revenue be that and and capacity openings healthy the we in will between balance line line cautiously operations While monitor and of XX% this the fiscal a year. business top year. our accordance for underpin to our the

quarter due being operating year. we seasonality steady That remain a business. a Every tends growth satisfactory year in and said, slower for our the of fiscal financial of full period to to attaining profit be our confident second the

fiscal total expect a XXXX, revenues million September to of range East to to $XXX.X XXXX in in year-over-year of We XXXX, XX, Buy XX%. excluding quarter second November generated range million, the increase XX% year representing be of the in X, net from $XXX.X the the to revenues

our that subject our company of current our Buy regulatory fiscal and reflect for will In margin East view, XXXX change. latest operating considerations measures expectations say is the except to year must and I whole addition, preliminary based for as expect for year-over-year. expand on forecasts as well which estimation, we the these current

on education customers, vision into always to and achieve AI and Oriental product our uplift ChatGPT To and resources conclude, technologies operating simultaneously continue will offerings efficiency. pursue growth. and To devote necessary growth New application as our research a achieve pursue the our such strength with sustainable to to we premium new will offerings of that, to

cooperate and related to the government from We authorities, regulations, will well as with with as guidance also business continue guidelines operation policies, relevant our adjust any comply and to seek the required. as further

diligently education XXXX lines we this as our to summary. further all so nation's fiscal the always, the for our open strengthen questions. point, our realizing year work vision. is position I level would of to leading As the floor potential This the will business like across to enhancing end unveil At and QX to

Operator, please the open call for Thank you. these.

Operator

Instructions] [Operator

first take now from question. This the our line Liu of UBS. will from We Felix is

Felix Liu

the centers. My question capacity of We noticed in year-on-year learning quarter number expansion your by first XX% the was is over guidance. quarter, on your second that

second However, quarter. than slower expansion if your first we in guidance, the look your it's capacity quarter at

management and half growth could capacity? So we to for the capacity should revenue expect between think how see growth revenue the guidance? Do your to second And we with converge about growth? share gap outlook

Zhihui Yang

Yes.

I think Felix. -- thank you,

As in XX% guidance, to the tends guidance we due confident of slower for line give But seasonality the will growth top range as -- year. XX% in you year-over-year know, of for QX to be a the will the every business. quarter around our we steady to education the attaining whole dollar growth second know But year-over-year. terms XX% in of a the be quarter the you of remain

growth the growth, revenue East QX Buy and compared of in we be the So will QX. that expect QX accelerated excluding to means

-- even around yes, environment we the be learning business. like more we fiscal ramped full the much some in year-over-year. year as we And for will but we economic growth, But East though than of have the revenue faster opened centers year, QX, the last up seen existing So have which know, you and impact seen learning will centers Buy, overseas QX except before. we XX% expect

will And -- fill in so we more think the learning QX and and students the centers learning I centers, into QX. with the especially

whole the about you, Felix. growth for So we're quite optimistic top year. line the Thank

Operator

This question. Cai next from now line will Citi. We our is from take the of Alice

Yijing Cai

low down about question a increase are have ones? rather QX be is you the for QX expansion upcoming to cities on I concentrated QX and CapEx And considering expect margins? will this to encouraging a quarters, you you existing period for Since than capacity And 'XX? do during capacity in penetration slowing season, typically focus new expansion. in entering FY

Zhihui Yang

Yes.

You know, end new by added have this QX, quarter, X% capacity. the of we around

plan I XX% And we we XX%. XX% expansion more centers coming said, I to opened pace, at learning the But so learning centers. healthy yes, whole by last year, as to for And our back increase year. the think year, we more this will open capacity to

the much said, ramped And learning before. we I up yes, than as centers faster

the for margin margin QX season. be the year is yes, the I like margin Buy. in whole the we as so margin And might year, for expanded -- like some But And we the low for think except of in be the tiny business, expanded do wise, because the you the the seasonality, think margin QX QX, year. for whole -- see believe pressure will East whole the I education in will

Operator

now We'll China Renaissance. question, and from from this take is you. Thank Zhang Yiwen next our

Yiwen Zhang

Yes, great.

my is a question margin. on follow-up the So

our So it's adjusted XXX the previous reversing dip margin the to Y-o-Y see basis, very glad quarter. bps our in increase operating

about the what the driving drivers think And the of more discuss how in rest play about out you should year? can this to So improvement? are we

Zhihui Yang

Yiwen. you, Thank

the margins. You asked the question about

business, margin OP which for East XXX analysis The basis points expanded non-GAAP this margin Let quarter. was Buy, education us Buy start excluding year-over-year. East the with of

-- high based. last As QX, you think year, margin I know, OP was

XXX means points comparison we So that this doubled basis we have quarter, a by margin still hard but year-over-year. expansion the

cost due But business whole to even is, line mainly center Number expected. educational than get more money two rate all is we top positive number perhaps new as we control still achieved see lines. make in on got fruit this for started the year. company, leverage. operating this more business three, though margin expansion last one, alliance expansion following that think utilization to even tourism in quarter, to the Buy, overhead except reasons. you we overall the business, leveraged we of spend of we are business. I the to Number the the and started growth we and more for we learning East the It's higher bear And know, the up pleased

And for season. outlook, seasonality the due business, second the margin to of the every low quarter is the

second So experience some said, pressure in I quarter. and as we to confident we're the quite But likely were QX. QX minor margin about

optimistic Buy for excluding So And we I non-GAAP will that the year. expanded the the the be OP profile margin margin on business year. expect East year, whole whole we for in the are whole educational the think

Operator

This of We Yu America. is will Bank our now take question. next from from Lucy

Lucy Yu

East see So Buy, margin contraction said second excluding to And that is a Do pressure. basis? OP the mean you tourism. my that. on be going just Stephen, on culture we're year-over-year clarify non-GAAP question actually clarify, on to Just the under margin you will quarter to

You year-over-year. TAM over mention did revenue by that XXX% up was

like So tourism may I this And business loss-making how much or this that profit that contributed revenue know quarter? segment making is quarter? for cultural

Zhihui Yang

to guided is Yes, is educational timing QX the season the of in the business. And top educational line only because QX, the XX% -- XX% margin what said and I related low the we growth to business. margin pressure the to

more I will in So QX. you that QX and leverage think see

QX. margin we're quite as so And the about -- QX so the profile in I optimistic and this is said,

the business season overseas And domestic business. for tourism the camp tour the business tour, see study study as the even we'll peak in such business. Yes, tourism and QX,

QX more first are the the revenue $XX of tourism We season. product is revenue business. time But the will of model quite think see the because year. the the year, loss just the are It's tourism. tourism business. yes, for making of whole of of need testify So around And profitable the about confident we QX. to somewhere the business. tourism This million was the QX business for we the development the But the in I peak in we and

Operator

Sachs. now take next Timothy This is Goldman from question. our We'll Zhao from

Timothy Zhao

new My regarding initiatives. K-XX is your question

by if non-academic quarter services. and down quarter can XX% the a terms the compared wondering related question for XX% revenue between devices intelligent Just you ago. quarterly close break around to And segment enrollment notice past grew growth of the the a in think learning the year-on-year specific do and tutoring I on tutoring, that to I is, non-academic the for

should I kind can growth versus this you growth elaborate quarters we quarter? expect the only if wondering of on enrollment, following for more for on what the that and the XX% think Just

Zhihui Yang

Sisi, the within revenue about you the share with new the breakdown team business.

Sisi Zhao

new non-academic the grew similar intelligent both -- learning Yes, tutoring by over business rates. device and XX% at and QX the including educational K-X in related, growing XX%, are

Zhihui Yang

And question opened quarter, enrollment. year. be Yes. enrollment second K-XX the Yes, in summer to the that low enrollment growth we than the to of the seems earlier window because your this last of about

So year is enrollment the in student QX. This difference. the that means, reported last more kind we timing of

so And QX enrollment growth whole the And keep is accelerating will we XX% be of for even the quite for QX top and same year. season, the though strong, year businesses if new in we but the low And full I the roles. combine QX think normal as guidance think even I new will line line still QX. to for the and XX% the see growth businesses, the in will top and top the QX, I confident you be absolutely. And said, line about the very the we're growth

Operator

question. HSBC. from now Wei take from We'll is the Charlotte This next

Charlotte Wei

the in more the strong your quarter? Could share growth business segments please color on different on in results. second Congratulations you

Sisi Zhao

Actually... Yes.

Zhihui Yang

Second quarter?

Sisi Zhao

Yes.

QX? guidance -- for the quarter guidance asking -- You're the

Charlotte Wei

Guidance breakdown. Yes.

Sisi Zhao

Overseas-related Yes. domestic business grow XX% will grow over Okay. XX%. test like XX% and XX%. prep -- like about school And high around university be business will -- students XX%. over business business grow will new grow And over XX%, XX% the

Operator

We'll D.S. next This take from is question. our JPMorgan. from now Kim

D. S. Kim

release did all XX.X% release, a over but your on -- past new press seems follow-up know businesses it I may. just minor correctly? to points the I made you quarter, say have from hear this Did I press that XX%, think I new grew say, I thing, on quarter. if Because businesses, a this the it's I

So just check double I'm if to looking... wanted

Sisi Zhao

growth devices, the and Yes. Yes, over tutoring intelligent that's XX%. non-academic learning for the

D. S. Kim

Okay.

initiative this as of the And may this the or So revenue current the that between subsegment? tutoring means last also, -- you is I year breakdown terms new versus in educational business revenue some And within mix here. intelligent How is else something you and have give what well. us ask could can else other? if non-academic

Sisi Zhao

quarter, contribution every Actually, is similar. the

about So the the device new intelligent about non-academic is half X/X than tutoring is smaller categories. than of educational the these business. roughly X are growing roughly rest, And learning business, and faster more the

D. S. Kim

smaller book if sales check I what just may like And have is else check. double or we here, category to may I

Sisi Zhao

business. also ] and [ books intelligent some Yes, XB

D. S. Kim

if based versus Got great. us momentum I follow for may was and growth I would could check a be Can similar you segment guidance. it. gave If whether you if that of possible. And It up quarter kindly on provide the U.S. on double between first growth, the dollar earlier, renminbi. breakdown breakdown a XQ mentioned

Zhihui Yang

share the using. QX guidance and we about rates exchange just -- are

Sisi Zhao

that exchange you guidance that with okay? the Yes. I power. and we're can using QX We quarter -- for rate share Is the

D. S. Kim

Earlier ]. Yes. based [ Yes. was growth, USA on it

Sisi Zhao

rate is exchange QX Yes, X.XX roughly. QX X.XX is and

Operator

Instructions] [Operator

the of of from America. from is line Lucy Yu Bank This

Lucy Yu

the said which margin. follow-up to you're one XX%, at you growing the season. not that still low top XX% like second know it's if it's just a line, low. looking over is at sorry, quarter Stephen, on But I

Are contract we other step or why to OP think should that margin investments? So some year-over-year up on Is reasons? the a basis? will or any going decline other there you

Zhihui Yang

lines, business. season tourism and related even overseas the the is all low QX for for K-XX the the the business Yes, business

We have tourism revenue tiny business. from the

said in loss we suffer QX. tourism will the business we So of

must historically, low company. yes, whole learning the And need we using the saw but year, margin to the every new you bring profile still as learning we guidance, of margin I And so QX the students the will in will be said, more the conservative And time the last are half Lucy. if that give second for year mention centers. -- every always, more the I into approach we the as numbers, open will to centers

Lucy Yu

Understood.

margin in follow-up Just may tourism factored that you I or in how drag second loss much like the from quarter? have

Zhihui Yang

it think we I -- think the marketing spent we some early it's but drag. on still you QX, QX. margin and we the control QX. expenses too but margin also, in other coming spend to more will the as more said, in that, I is And expenses we yes, But started margin say to in these in money the will

We the are in process. still

timing QX. margin And do expected we But wise QX. so margin better than we why will in that's we guided pressure the on expect we

Lucy Yu

Stephen. Understood,

this way. let's So put

the So will rest business in contraction margin quarter? second if excluding of we see cultural the East we're -- still excluding if Buy, tourism,

Zhihui Yang

so. think I Yes,

I think guidance I impact give line profile, except Buy the the the you will business, if the East out tourism and think the top better company margin. than by margin of overall don't for margin Buy. the East the We growth the take be of --

Operator

take Goldman now from our next Sachs. I'll Zhao from question. This Timothy is

Timothy Zhao

and Stephen Great, Sisi.

East a follow-up question on I think Buy.

the one was business there Buy's on, regarding is your I revenue guess East I I education a company, I East guidance. your previously. between transaction Buy think and think think parent EDU,

significantly think a Just for include Buy wondering basis. EDU secondly, on for I East educational previous East core, I think Q-on-Q implied revenue services, guidance, Buy, your that Buy's actually dropped business? in for education basically EDU the East quite the the does And

if can going the about behind think forward? the wondering how elaborate rationale should is background and that, the what revenue you or we Just

Zhihui Yang

Buy. latest I'm details. share education XX% report half growth the The East financial is the of hear I'm in I'm But year of next very to East Buy, guidance you question their except for line They quarter. allow Buy okay? the top XX% And results will the announce core the from of glad unable range afraid of QX to business, East to

and I quarter, the both quarter. next East next East in more status parties, will the company Buy announce So think parent Buy we financial the -- detail,

Timothy Zhao

Sure, sure.

the is think Core look you of which Buy's just education part business, business, on is USD EDU million I East their now per So around guidance, if USD XX to half financials previous XX clarify quarter. year at like million, for

Just you Core about for business. the wondering when talk EDU guidance education

when EDU the So you it basis, year the Buy's education for East last Core year-on-year a number at look education on business, includes that also right? business,

Sisi Zhao

Yes, correct, Timothy.

is understanding your totally correct. So

we do when we guidance, gave apple-to-apple comparison. So

guidance So includes both educational the business. quarter, the that of portion comparison quarter both and Buy's the clear? Is East

Operator

We D.S. take JPMorgan. is now Kim from next question. This will from our

D. S. Kim

beat horse on I a Sorry, I be investors are who would to new now again, businesses, mean thought asking this, to sorry. it better on didn't some me here. things just clarify But dead

question. then quarter was be be to devices, other that new learning or you and to of only clear, said redundant you for businesses Just the when look if how you quarter. school or growth XX% this August intelligent mean comment able Sorry next quarter? business growth quarter? over nonacademic for you next that include that? of compare number XX% next over And does we earlier businesses, as i.e., smaller you growth growth commented quarter, for high XX% -- on XX% expected How guidance to and this Would similarly, that quarter

Sisi Zhao

noneconomic the including around if the about QX's school together XX% it QX's the to And XX% is growth educational intelligent things tutoring new the make growth high key overall business XX%. XX%, all initiatives, and for is for you clear, only XX%. ones, XX%, X new device, learning -- over And To okay? is guidance, look Yes. initiatives, at

D. S. Kim

clear. That's very

for X% So is got pretty think in deceleration the new businesses of given -- the I tougher. that got which comps much the apples-to-apples, about X%, terms base great

for you clarification. thank the So

Operator

now call of I CFO, We his President over the call. New Stephen for conference turn remarks. closing will end to are the and the approaching Oriental's Yang, Executive now

Zhihui Yang

today. again us Thank for joining you

do any any Investor representatives. to have not our you. questions, Relations hesitate contact you please or If Thank me further of

Operator

now This and concludes disconnect. today's Thank conference participating, for may call. you you

New Oriental Education & Technology (EDU) 23 Oct 242025 Q1 Earnings call transcript