EDU - Earnings call transcript Q2 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 Second 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 would now like to turn the meeting over to your host for today's conference, Ms. Sisi Zhao. you. Thank ahead. go Please

Sisi Zhao

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

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

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

Forward-looking statements and involve inherent risks uncertainties.

materially from may such, expressed results As the different our today. be view

outlined SEC. with public A number in of our potential the are filings risks uncertainties and

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

being this reminder, conference a As is recorded.

New available Relations In website call will addition, be investor.neworiental.org. of conference a Oriental's Investor this on webcast at

the Mr. I first over Yang. ahead. go will turn Stephen, please now call to

Zhihui Yang

continued believe excluding We forward. moving revenues, growth revenue. the live further year-over-year. of revenues which Thank streaming which Revenue new bolstered products encouraged everyone, and growth inform on to net you call. will private thank Oriental the company's our label We're our East Hello, surpassed financial Buy's and progress for business year-over-year, pleased us that quarter's by performance, achieved generated and from this joining a XX.X% We're increased in New has by grew healthy they XX.X% has expectations. you Sisi. have total positively you, ventures,

shown we our New better East the for margins have Oriental's for generated line also core bottom Oriental's core To education business, quarter. performance reflect this business Buy operating from excluded education returns. New solid has

margin our shown and operating that these efforts from substantial and X.X% respectively. operating offerings been effective. investing reached non-GAAP in X.X%, Results and platforms margin Our have

continue to as aim market customers healthy creation Our for our share shareholders. for profitability and sustaining remains value and commitment long-term we strong to

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

remaining the a Our in across down, for prep trend have adjacent business overseas it our showcased quarter to increase momentum test businesses. the new promising of XX% Breaking of recorded key positive fiscal revenue second XXXX. year-over-year business a

new business consulting for for on the XX% thrive education business The quarter students this the year-over-year a quarter. At our of company's adults the overseas of focused XXXX. development, The XX% also study increase revenue business have initiatives, facilitating growth increase students primarily same all year-over-year with second a about investment fiscal recorded the the in of and revenue around momentum. university to ongoing time, fueling steady continued recorded

existing to XX cities, the now Firstly, on which comprehensive ability have students' we tutoring expanded around innovative business, focused and cultivating quality. non-academic

We of reported student The XXX,XXX have of quarter. this XX% high attracted interest top enrollments approximately cities in with over XX a business. contribute total this

thereby improving our learning technology content, business personalized and students' the and learning learning data Secondly, targeted efficiency. past provide to utilizes teaching and intelligent system device exercise experience

have We are existing in new of to tested pleased XX business improved adoption this around the scalability. cities see and

cities from of around China XX business The in revenue this contribution XX%. is top

smart smart study continued education educational and materials business, digitalized development. Our solutions healthy have

for recorded In revenue about the new quarter. a increase have initiatives business of summary, year-over-year education second our XX%

second and serving study business collectively quarter. for XXX% campuses our our as newly students which and line, year-over-year recorded In a senior university increase rooted K-XX business tour for middle-aged includes well tourism related revenue have audience tourism addition, of integrated our as research the and

a in this across operating featured across and and over now of top-notch the in province also new the XX% of revenue tourism XX individuals including China around are age to groups, the facilitating middle-aged in XX with cities the all campuses offering cities China share offerings of research country, top elderly globally. number business. and tour We're Study XX

With infrastructure and to all diversified our strength to advanced, order have provide regards our ages. technology OMO educational to leveraging our our system, education service in revamping persisted customers we in of platform,

this million improve teaching enhanced quarter, our and OMO the experience platform, maintain During our we which education $XX.X invested offerings. users of supports and to growth

some Now performance. updates let me Buy's share on East

Buy XX% label ending snacks period, food launching to of the XXXX. new range East During its and fresh private November and the November XXX This pet for GMV SKUs food includes XXXX. total Chinese-spell diversified months X contributing to healthcare products product reporting approximately portfolio, from by expanded foods, in clothing

expanded to with pleased the and brand are online awareness mini like store, live We streaming have Rednote. Taobao, increased platforms [indiscernible] on and approach and growth product its see products enrich which has base multi-platform JD, rapid shops consumer multichannel program, label mini has strategy products. driven This to --

strategy machines app New in offering advanced increased Simultaneously, The necessities to learning East and contributions high-quality begun leading vending loyalty. exploring company's strong with daily centers. Oriental's off-line Buy products, has user and quickly has channels

common $XXX cash company's dividend in as million. holders common announced Board status holders of position, time, ADS. of Time per per X, business and The and Directors ADS was cash cash September with XX, pleased $X.XX healthy September common $X.X of the XXXX, Kong special XXXX on Beijing record to equivalents, or term or holders a $X.X billion approved On a shares shares Hong the The for payment its the August I'm York XXXX, September was investments approximately on of in of total of New New XXXX, that and distributed close date regard approximately to around and and dividend financial With latest to totaling respectively. the deposits XX, share financial for of share of Oriental company ADS short-term XX, is

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

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

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

Sisi Zhao

Stephen. you, Thank

$X,XXX.X XX.X% to -- allocated expenses compensation primarily increase year-over-year. XX.X% and $XXX.X for compensation expenses like for exclude year-over-year. representing XX.X% G&A by quarter to were which G&A $XXX.X million, to accelerated cost expenses for were decreased XX% the increased I'd the XX.X% year-over-year, million to Operating were expenses quarter. and by costs increase to related The Non-GAAP compensation cost fiscal expenses, to expenses representing Now were year-over-year businesses education which increase year-over-year share-based this $XXX.X cost cost share for operating XX.X% $X.X key newly $X,XXX.X to and by million. year-over-year. expansion expenses quarter, increased year-over-year marketing in quarter tourism-related capacity a which quarter. $XXX.X expenses, related share-based by expenses and expenses financial operating details expense representing the integrated for business. Cost a a to Non-GAAP exclude Selling revenue the share-based was the this million. increase our Total million, and XX.X% increased million, million. of due

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

to ] diluted a Non-GAAP [ attributable New to for net the $XX.X income quarter respectively. and attributable and ADS million, income New year-over-year. $X.XX, were Oriental per $X.XX Non-GAAP XX.X% increase net were Oriental representing basic

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

Turning balance to sheet. the

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

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

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

hand will over guidelines Stephen I outlook Now go -- our through guidance. and to to

Zhihui Yang

business to the income. X.X% net the I attributable was income remain we 'XX Oriental year light quarter growth respectively. About Basic paragraph core and Net per economic for outlook the representing In $X.XX, uncertainties, New a ADS steady repeat committed current the fiscal $XX.X and attributable mentioned for of income million, net to coming $X.XX diluted increase the New the in to year-over-year. quarter. were our educational Sisi QX sustainable the guidance. achieving Oriental in of that

is guidance efforts. recently latest with establishing Chinese the extensive our and confidence plan diverse from the of including solid the lines high-quality dedicated to and a the system resources performance by unlocking potential action announced education Our our business educational our innovative across lines diligently of to bolstered the adhering authorities and the were national business goal

plan the revenue with growth, year. a and development robust new profitability emerging our to rest the focus to balance our support in in Euro a pace of manage with our and our economy. developing [ ventures. capacity offerings business carefully to this invest To strategies expansion on follow capacity we will local We hiring we to education increase cities Simultaneously, will continue ] in tourism-related of

we've established progress have we achieved our foundation our and The future so strengthen in the performance. far confidence

East the net $X,XXX.X coming XX% our generated X, the representing XX% of XX, from of $X,XXX.X XXXX XX%. the to the of in to is XX% December total XXXX, Renminbi excluding million, functional range be increase projected be the to February revenue a revenue, third range fiscal year-over-year of to expect in currency year quarter of increase in the in to In for to revenues We the million expected XXXX. The quarter, range Buy.

To and capabilities. through customers is advanced our including We'll continue offerings offering. sustainable technologies, investing product conclude, and blend educational ChatGPT delivering to New pursuing growth applications strategic premium Oriental of of a research our dedicated to to and while enhance AI

our is Our and driving operating strengthen competencies, growth efficiency. to aim

the regulations, relevant authorities, with any guidelines cooperate will also from and policies, required. and the continue operations business related as We seek measures adjust government to our and guidance complied with

further education to strengthen we leading lines so will the diligently work enhance vision. always, level unveil business realizing As position our as to nation's our to potential across its and

This XXXX Thank you. At fiscal please QX this to end Sisi and open questions. our open for for I the year summary. these. like Operator, is floor of call the point, the

Operator

question first Renaissance. of from the Our China line Instructions] from [Operator comes Zhang Yiwen

Yiwen Zhang

RMB in we mentioned is question XX%. which year? is actually I center bit terms QX that my So think trend? about rest well? about you the light guidance, And part new driving the decelerating. the revenue is our understand this we how Now a business the Can seems XX% of in guidance, also, more to think It how about learning should should as we think pace expansion of of

Zhihui Yang

X we that reasons as the Yiwen to I of impact situation on our XX% in revenue one-on-one prep bit macroeconomy QX, as the conservative number QX educational business in the revenue demand year-over-year overseas some I in we test the a in little base . also the the the for has of of QX. with the of number method years, to business, the business; you, and guidance range education negative the such using last growth rapid are high-end the in guidance RMB of two, terms. revenue yes, the and to certain is uncertainty mention of Yes, XX% Thank are the growth the one, X is think guidance And increasing. gradually follows: business, must related the the slowdown of about business gave give of recovery and which high-end a

we growth XX% dollar gave revenue of approximately number I to point. rate the in the the little X% impact three, QX is terms. will down; slow the think exchange of XX% That's guidance I in range the in bit around and think So why be a

will yes, try And of change, uncertainty think I grow though best but we're the macroeconomy the to management the facing I revenues. even the our to situation think

the And QX. so gave in beat to we we the expect to guidance investors

for I the on And between efficiency the about growth and I think time operating the more balance the think term. at hand, revenue the the will same we care long other

left. the And -- As for to XX% second plan, was of the year half EDU expansion opened we we XX% of have the centers. X% in plan learning for the whole in the the expansion quarter, QX. the this in this expansion we Q-on-Q year, -- And quarter, the year, QX, whole to open

think the of the the as last centers. Oriental we care line cities well, centers -- to still in top year New the we and will more performance in learning bottom open but utilization them new I we open only the centers. more learning line And and that about allow

that's why I more the we line growth margins. the yes, So top care about said and

Operator

question Liu from of Felix Next from line is the UBS.

Felix Liu

competition businesses? growth management landscape May lines? business issues across that impacting services, your competition observing of on one more macro the any Do the you risk the which I up your higher-end that role potential can And just the deceleration? into on see follow on in business. the the comment mass-market new to education mentioned, Has you're you ground played such as is a

Zhihui Yang

still in we new term year-over-year QX guide guidance I RMB business, think growth. about XX% for the the

is we have think the competition, market. for some fine. a we so competition very are bit And And strong. -- strong yes, it the But seen little still as in I

So more the taking because high we're because of Felix. the of XX% year-over-year market the still QX, guided term base the we share RMB growth market. in in And base, from

Operator

Bank the comes line of Securities. Lucy of question Yu America from Next from

Lucy Yu

guidance Stephen, quarter, given are so around for you I remember the year Buy, gave that So XX% earlier, next excluding growth, or revenue you full to XX% the East XX%. like XX% forecasting

growth fourth our or -- So a to the expansion spending revenue this quarter, growth are year? have that aiming in for we slower we revenue accelerate

Zhihui Yang

Yes.

we of the situation, QX I you need see the As one more quarter to macroeconomy think give the uncertainty to I guidance. said,

RMB whole got by, terms, the the bit slowing for RMB of growth year, but I we're say, the Lucy. line the guidance, in for the down we year let's for more year, top whole yes, in a or So think think facing little year-over-year QX, growth XX% the in still whole terms I

Operator

Timothy question next Our from comes Goldman Sachs. of Zhao

Timothy Zhao

your My noticed the student when quarter, I that I question for report you is number, was growth education initiative. this XX%. enrollment tutoring regarding your think new enrollment non-academic around

further non-academic I you center question, enrollment also of think, on follow-up what could elaborate expect more for And growth wondering, the tutoring. normalized terms learning on we ramp-up. Just And student that? is a that in the the the

a stage in latest of mentioned see competition and center utilization I you time think I ramp-up learning -- the share, mature on to a time breakeven more you is the ground. you rates also like that you Could slightly see ground? what pace the the think, terms for more reach that on the

Sisi Zhao

Timothy, full quarterly question, look impacted the your actually, will the enrollment number Okay. you like regarding cetera. because et window, roughly, enrollment at registration year be if by

comfortable tutoring. enrollment if is by you that the number X%, faster. be increase, there maybe we our similar driven And increase. And the growth. including volume can XX% And So with -- a see plus some are from rest should roughly release. growth business ASP actually, this which will about new non-academic for the X% year-over-year, roughly fluctuation of are And deduct X% the even business about mostly to or grow of that, you

Operator

comes from Elsie question from Sheng Next CLSA. of line the

Yiran Sheng

the want mentioned follow that just more I business. business, and up pressure to you overseas the the on one-on-one premium on

So how understand education magnitude this type more other nature the from of usually, do measure impact macro? than you should resilient of in consumption. we be Because that

relatively if business a forward macro you risk this in do status? forward how we see going So to for going the that continue assume remain weak

Zhihui Yang

some the some macroeconomy kids business than their idea future we study by abroad seen quarter, of to because the And parents Last we send XX%. changed of their the less guidance situation to in test overseas the gave because prep change. parents -- have grown

overseas say, by, QX, test the let's the in somewhere grow XX%. think will around business prep I So

the little And And bit so -- the K-XX year-over-year is give okay. is guidance And it's situation. a but of QX. in business decelerated. growth -- but XX% this real And we

And another earnings guidance will call. so next see for for we the let's in quarter, QX give

Operator

from Cai Alice from comes question Next Citibank.

like would I Alice, from question. take hearing next the not I'm As to

We Kim question D. the S. of have from JPMorgan. line our next from

D. S. Kim

of Kim. for versus the you guidance I expect remarked, is -- up growth name term the in again. Renminbi S. full we as kind Can I My D. on think briefly full guess year over now follow year XX% management kind XX%, can about to But how XXX of about sense. of year or business. up a X-point expect the margin core margin, about OP so lot deceleration expected markets about still previously, can for makes bps expansion our full education we I

revenue and more the growth wanted to the in the business? And there, full especially little segment if new double a year but guidance, also segment okay, on albeit XX%-plus I details? Sisi help baked can check think just other elaborate remarked, you growth number

Zhihui Yang

because Yes, quarter think margin The which in this mainly this non-GAAP we growth D. excluding started S., I year, business, last center year. the half learning basis due in in line the year-over-year. QX. expanded to analysis expansion was points quarter to the reasons by OP top of of some of And Buy are educational good second with bear last for quarter, East especially it's this let's XX start the margin fruit and the

So operational expense as and to up leverage. And yes, and said, get we control the rates utilization make more it's some cost company. driving within I started

drive -- year, we the margin second of get margin operating So half we for And the I overseas-related the outlook this as of for are the leverage said, some I as the up. facing think business. the slowing quarter, and the down

margin the half drive tourism of second the overseas newly will in of the business. half will the think year. second from the the in also year [indiscernible] I related So business drag And the market the

second think for And outlook company. And margin of year. as be in the will so we And expenses the expect year the expansion for will the some be the in the better the expanded this meet second in I well. second half of new as overseas-related this in will well. of of still will the margin the year pressure. cut to I cost whole next and the tourism year, year we as next we will the K-XX half margin half than business and the And we year expect And started -- profile Because this margin of think year, the margin business.

So this analysis... is the margin

Operator

have from from we again, Citi. the Once Alice Cai line

Yijing Cai

opportunity... management for the you Thank

Sisi Zhao

there side. Alice, some is in echo your

cannot you clearly. hear we So

better. is it Now,

Yijing Cai

have I today. X questions

which the ask The to a it like first in given right? is you any dividend policy going interesting I'd strong anticipated duration this considering forward. does is I In are demand one therefore, CapEx market quite regard, softening noticed regular demand, that signal and a in spending planned current more

Additionally, do how this Furthermore, when business dividend expansion balance estimated might line you have do this declared. shareholder policy an you returns. view time be for between and

Just time like I breakeven to recently learning future centers, improvement for recent centers? opened we learning levels -- know, opened new regarding in shall similar the reported would efficiency expect for line

Zhihui Yang

first. answer question Second

-- the learning X we new spend will breakeven the to centers. think get of typically, I months point the

So not for the we'll share buyback pace shareholders' open And keep share and buyback. think million announced ramp-up the now as $XXX.X $XXX capital we buying market. has allocation, I And million. the changed. finished we And in the

And value dividend, management in September capital it anyway, shareholders the as but more on new will create But to in the I And capital market we policy return. to discuss think as the year dividend. the stock July. -- the the price. special as the paid we depends million Directors have a cap, aim Typically, Board allocation will special of for $XXX yes, the --

Operator

[indiscernible] Next come line will the of question from Group.

Unknown Analyst

Yes.

core in see businesses, -- is perceive business. landscape there Do the my heightened lessen do those business how tourism you any regulatory noncore such areas? regulatory So the you as on question or risks there are and your about

Zhihui Yang

open centers okay change And the side, from On think government. learning we're is no now. there get I to the regulation license the local the new to

change And to our of so that's why plan year. this we want expansion

neutral And on front, on to the attitude regulation side, is our positive.

things on change. the I X as will policy government for requirement of the since years apply call ago, this think the

has situation change the that's Now recently, so no it. more

Operator

questions. for the you Thank

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

Zhihui Yang

Again, thank us for you joining today.

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

Operator

That participation. Thank conclude call. for your today's you conference does

your You lines. disconnect may now

New Oriental Education & Technology (EDU) 21 Jan 252025 Q2 Earnings call transcript