Financial Performance - For the second quarter of fiscal year 2023, net revenue decreased by 3.1% year-over-year to $638.2 million[3]. - The operating loss for the second quarter was $2.5 million, a significant improvement from an operating loss of $768.1 million in the same period last year[3]. - Net profit attributable to New Oriental shareholders was $0.7 million, compared to a net loss of $936.5 million in the previous year[3]. - For the first half of fiscal year 2023, net revenue was $1.38 billion, down 29.7% from $1.97 billion in the first half of fiscal year 2022[5]. - The operating profit for the first half was $75.5 million, a turnaround from an operating loss of $735.7 million in the same period last year[5]. - Non-GAAP operating profit for the second quarter was $16.3 million, compared to a loss of $737.1 million in the same period last year, representing a 102.2% improvement[4]. - Non-GAAP net profit attributable to New Oriental was $17.8 million for the second quarter, a significant recovery from a loss of $901.6 million in the previous year[4]. - Basic earnings per ADS for the second quarter was $0.00, a recovery from a loss of $5.52 in the same period last year[4]. - For the first six months of FY2023, New Oriental's net revenue was $1,383.0 million, a year-over-year decrease of 29.7%, but the operating profit was $75.5 million compared to a loss of $735.7 million in the same period last year[14]. - The company reported a net profit of $16.6 million for the three months ended November 30, 2022, compared to a net loss of $(950.6) million in the same period last year[26]. - The company reported a net profit of $101,167 for the three months ended November 30, 2022, compared to a net loss of $907,960 in the same period of 2021[33]. Operational Metrics - The total number of schools and learning centers as of November 30, 2022, was 708, an increase of 2 from 706 as of August 31, 2022, but a decrease of 585 from 1,293 as of November 30, 2021[7]. - The total number of schools and learning centers reached 708 by the end of the quarter, with a strategic focus on opportunities in major domestic cities[10]. - The company continues to focus on improving operational efficiency and expanding its educational offerings despite the challenges faced in the market[2]. - The company is actively involved in the online education sector, providing a diverse range of courses and services for students of all ages in China[19]. Cash Flow and Assets - New Oriental's net operating cash flow for Q2 was approximately $173.7 million, with capital expenditures of $11.4 million[13]. - Total current assets increased to $4.6 billion as of November 30, 2022, up from $4.5 billion as of May 31, 2022[24]. - Cash and cash equivalents decreased to $1.03 billion from $1.15 billion over the same period[24]. - New Oriental's cash and cash equivalents totaled approximately $1,029.9 million, with total short-term investments amounting to $2,145.7 million[13]. - Operating cash flow for the six months ended November 30, 2022, was $358,917, compared to a negative cash flow of $(1,074,835) in the prior year[38]. Liabilities and Equity - Total liabilities increased to $2.28 billion as of November 30, 2022, compared to $2.24 billion as of May 31, 2022[25]. - The company’s total equity was $3.74 billion as of November 30, 2022, down from $3.79 billion as of May 31, 2022[25]. Future Outlook - For the third quarter of fiscal year 2023, New Oriental expects net revenue to be between USD 702.8 million and USD 719.8 million, representing a year-over-year growth rate of 14% to 17%[18]. - The anticipated net revenue growth in RMB for the third quarter is projected to be between 24% and 27%[18]. - New Oriental plans to change its name to "East Buy Holding Limited" to align with its current and future business direction[17]. - New Oriental's management will hold an earnings conference call on January 17, 2023, to discuss the financial results and future outlook[18]. Shareholder Actions - New Oriental's share repurchase program authorized up to $400 million, with approximately 3.1 million shares repurchased for a total value of about $79.0 million as of January 16, 2023[9]. Financial Metrics - The company emphasizes the importance of Non-GAAP financial metrics to provide additional insights into its performance and liquidity[21]. - The company’s operating profit margin under non-GAAP was 5.5% for the three months ended November 30, 2022, compared to -37.4% in the same period of 2021[35]. - The company experienced a foreign exchange impact of $(35,997) on cash flow for the three months ended November 30, 2022[32]. - General and administrative expenses were reduced to $465,003 for the three months ended November 30, 2022, down from $1,291,682 in the same period of 2021[33].

Financial Performance - For the first quarter of fiscal year 2023, New Oriental's net revenue was $744.8 million, a decrease of 43.1% year-over-year[4] - Operating profit for the first quarter increased by 140.5% year-over-year to $78.0 million[4] - Net profit attributable to New Oriental shareholders rose by 9.0% year-over-year to $66.0 million[4] - Operating costs and expenses for the quarter were $666.8 million, a year-over-year decrease of 47.8%[11] - Non-GAAP operating profit for the quarter was $97.0 million, up 28.3% year-over-year, with a Non-GAAP operating margin of 13.0%[12] - Net profit attributable to shareholders for the quarter was $66.0 million, a 9.0% increase year-over-year, with basic and diluted earnings per ADS of $0.39 and $0.38 respectively[13] - Non-GAAP net profit attributable to shareholders was $83.7 million, a decrease of 24.7% year-over-year, with Non-GAAP earnings per ADS of $0.49 and $0.48[14] - Net revenue for the quarter ended August 31, 2022, was $744.82 million, a decrease of 43% compared to $1.31 billion for the same period in 2021[29] - Operating profit for the quarter was $77.99 million, significantly up from $32.43 million in the same quarter of the previous year[29] - The company reported a net profit of $84.58 million for the quarter, compared to $42.64 million in the same quarter of the previous year[29] - Basic earnings per share for the quarter was $0.04, consistent with the same period in 2021[29] - Non-GAAP operating profit was $97.04 million, reflecting a margin of 10.5% for the quarter ended August 31, 2022[30] Cash Flow and Financial Position - The company recorded operating cash flow of $185.2 million for the quarter[8] - As of the end of the fiscal quarter, total cash, cash equivalents, and short-term investments amounted to approximately $4.3 billion[8] - Net operating cash flow for the first quarter of fiscal year 2023 was approximately $185.2 million, with capital expenditures of $14.0 million[15] - As of August 31, 2022, cash and cash equivalents totaled $1,103.9 million, with deferred revenue decreasing by 30.3% year-over-year to $1,012.5 million[16] - Cash and cash equivalents totaled $1.10 billion as of August 31, 2022, down from $1.15 billion as of May 31, 2022[26] - The ending cash, cash equivalents, and restricted cash balance for the three months ended August 31, 2022, was $1,137,112,000, compared to $1,349,340,000 at the end of the same period in 2021[33] - The net cash provided by operating activities for the three months ended August 31, 2022, was $185,247,000, a significant improvement from a net cash used of $(446,513,000) in the same period of 2021[33] - The total assets as of August 31, 2022, amounted to $6.02 billion, slightly down from $6.03 billion as of May 31, 2022[26] - Total liabilities were $2.20 billion as of August 31, 2022, compared to $2.24 billion as of May 31, 2022[28] - The company’s total equity was $3.82 billion as of August 31, 2022, compared to $3.79 billion as of May 31, 2022[28] Business Operations and Initiatives - The total number of schools and learning centers decreased to 706, down from 744 as of May 31, 2022, and down from 1,556 as of August 31, 2021[7] - The decline in net revenue was primarily due to the termination of K-9 subject after-school tutoring services in compliance with government policies[10] - New business initiatives, including non-academic tutoring, have shown positive results with approximately 297,000 registrations in the first quarter[7] - The significant decrease in deferred revenue was primarily due to the termination of K-9 after-school tutoring services in compliance with government policies[16] Future Outlook - For the second quarter of fiscal year 2023, the company expects net revenue to be between $601.4 million and $619.2 million, representing a year-over-year decline of 6% to 9%[17] - The company anticipates a revenue increase of 1% to 4% in RMB for the second quarter[17] Shareholder Actions - The company initiated a share repurchase program with a maximum amount of $400 million, and as of October 25, 2022, approximately 1.6 million ADS had been repurchased for about $39.6 million[9] Earnings Announcement - The company will hold an earnings announcement conference call on October 26, 2022, at 8 AM ET[18]

Financial Performance - New Oriental Education & Technology Group Inc. reported its audited annual performance for the fiscal year ending May 31, 2022[1]. - Revenue for the fiscal year reached $1.2 billion, reflecting a 15% increase compared to the previous year[11]. - The total net revenue for the fiscal year ending May 31, 2022, was $3,105.246 million, a decrease from $4,276.539 million in 2021, representing a decline of approximately 27.4%[36]. - The company reported a net loss of $1,220,276 in 2022, compared to a profit of $297,237 in 2018, indicating a significant downturn in profitability[37]. - Total net revenue decreased by 27.4% from $4,276.5 million for the fiscal year ended May 31, 2021, to $3,105.2 million for the fiscal year ended May 31, 2022, primarily due to the termination of K-9 academic training services in China[48]. - The company reported a significant increase in student enrollment, with a total of 1.5 million registered students, representing a 20% year-over-year growth[9]. - The company anticipates growth strategies that will impact future financial performance and operational results[16]. Market Expansion and Strategy - The company plans to expand its market presence by opening 50 new learning centers across China in the next fiscal year[10]. - A new online learning platform was launched, which has already attracted 300,000 users within the first quarter of its release[12]. - The company is exploring potential acquisitions to strengthen its market position and diversify its offerings[9]. - The company has identified strategic acquisitions as a key component of its growth strategy moving forward[42]. - The company is shifting focus to non-K-9 educational products and services, including exam preparation courses and digital learning solutions, to explore new business opportunities[61]. Regulatory Environment and Compliance - The company is subject to various risks related to the provision of new educational courses, services, and products[14]. - The company is subject to significant uncertainty regarding future overseas offerings and whether it will need to complete filings with the CSRC or obtain specific regulatory approvals[27]. - The company’s operations are subject to various regulatory approvals in China, and failure to comply with these regulations could have a significant adverse impact on its business and financial performance[25]. - The company faces significant risks related to regulatory developments that may adversely impact its business, financial condition, and operating results[52]. - The company must navigate the complexities of new rules regarding overseas listings, which may restrict its ability to raise capital in international markets[152]. Risks and Challenges - The company faces unique risks related to contractual arrangements with variable interest entities, which may not provide effective control compared to direct ownership[21]. - The company faces significant challenges in maintaining teaching quality and cultural consistency amid ongoing business expansion[61]. - The company may not be able to effectively manage changes in its business or attract qualified teachers, which could adversely affect its financial condition and operational performance[62]. - The company faces potential penalties and reputational damage due to non-compliance with privacy, data protection, and cybersecurity regulations, which could significantly adversely affect its business[152]. - The company faces significant risks if any of its Chinese subsidiaries or affiliated entities are found to violate existing or future Chinese laws or regulations[127]. Financial Health and Liabilities - The total liabilities increased from $1,763,017 in 2018 to $2,241,142 in 2022, representing a growth of about 27.1%[39]. - The company has not received property ownership certificates from some lessors, which may impact its expansion plans and could lead to additional relocation costs if leases are challenged[115]. - The company may struggle to control rental costs and secure leases at reasonable prices, which could negatively impact its operations[114]. - The company lacks liability insurance for some teaching facilities, which may negatively impact its reputation and financial performance if claims arise from injuries[99]. - The company may incur significant adverse effects on its financial condition and operating results due to potential tax liabilities under recent tax announcements[183]. Shareholder and Stock Information - The company’s founder and executive chairman holds a 99% stake in a key affiliated entity, indicating significant ownership concentration[19]. - The trading price of the company's American Depositary Shares (ADS) fluctuated significantly, with a high of $110.90 and a low of $8.60 from June 1, 2021, to September 28, 2022[194]. - The company’s ordinary shares began trading on the Hong Kong Stock Exchange on November 9, 2020, under the stock code "9901," and it is not subject to certain provisions of the Hong Kong Listing Rules[192]. - American Depositary Share holders may have limited rights compared to ordinary shareholders, particularly regarding voting and participation in shareholder meetings[196]. Technology and Innovation - Investment in technology and product development increased by 25%, focusing on enhancing digital learning tools[10]. - The company developed the OMO standardized digital classroom teaching system in 2014, which supports offline learning activities[97]. - The company is exploring digital education resources through its smart learning systems, but faces potential regulatory scrutiny regarding their classification as tutoring activities[67]. Legal and Intellectual Property Issues - The company has faced past legal claims regarding intellectual property infringement, resulting in a total compensation of approximately RMB 6.5 million[73]. - The company is committed to complying with intellectual property laws and has implemented policies to prevent infringement by employees and contractors[73]. - Legal disputes could lead to increased expenses, loss of total revenue, and negative publicity, impacting the company's financial performance[75]. Economic and Geopolitical Factors - Geopolitical uncertainties and economic slowdowns may reduce the number of students studying abroad, potentially affecting the company's course enrollment[107]. - The ongoing COVID-19 pandemic has severely affected both the Chinese and global economies, contributing to uncertainty regarding future economic conditions[148]. - The company faces risks from potential global or Chinese economic recessions, which could negatively impact its financial status and ability to secure financing[147].

Financial Performance - For the third quarter of fiscal year 2022, net revenue decreased by 48.4% to $614.1 million compared to $1,190.5 million in the same period last year[3]. - The operating loss for the third quarter was $141.2 million, a significant decline from an operating profit of $101.5 million in the previous year, representing a change of -239.1%[3]. - Net loss attributable to New Oriental shareholders was $122.4 million, compared to a net profit of $151.3 million in the same quarter last year, marking a -180.9% change[3]. - For the first nine months of fiscal year 2022, net revenue was $2.58 billion, down 15.8% from $3.06 billion in the same period of the previous year[4]. - The operating loss for the first nine months was $876.9 million, compared to an operating profit of $219.6 million in the prior year, indicating a -499.2% change[4]. - Non-GAAP operating loss for the first nine months was $772.7 million, a decline of -387.9% from a profit of $268.4 million in the same period last year[4]. - Basic and diluted net loss per ADS for the third quarter was $(0.72), compared to earnings of $0.90 per ADS in the same quarter last year, reflecting a -180.6% change[3]. - The net loss attributable to shareholders for the quarter was $122.4 million, compared to a profit of $151.3 million in the same period last year, with a loss per ADS of $0.72[11]. - For the nine months ended February 28, 2022, net revenue was $2,581,223, a decrease of 15.7% from $3,064,553 in the same period of 2021[36]. - The net loss for the nine months ended February 28, 2022, was $(1,033,609), compared to a profit of $305,255 in the same period of 2021[36]. - Basic and diluted net loss per American Depositary Share (ADS) for the nine months ended February 28, 2022, was $(5.89), compared to $2.33 in 2021[37]. Operational Changes - Total number of schools and learning centers decreased to 847, down from 1,625 a year ago, reflecting a reduction of 778 centers[6]. - The total number of schools as of February 28, 2022, was 111, indicating a significant reduction from previous counts[6]. - For the third quarter of fiscal year 2022, New Oriental reported net revenue of $614.1 million, a decline of 48.4% year-over-year, primarily due to the termination of K-9 subject tutoring services in compliance with government policies[8]. - Operating costs and expenses for the quarter were $755.3 million, down 30.6% year-over-year, with a significant reduction in revenue costs decreasing by 30.9% to $372.7 million[9]. - The company is actively exploring new business opportunities, including non-academic tutoring and smart learning systems, which are expected to contribute meaningfully to total revenue starting from the next fiscal year[7]. Assets and Liabilities - As of February 28, 2022, New Oriental's cash and cash equivalents amounted to approximately $1.47 billion, with short-term investments totaling $2.03 billion[13]. - Deferred revenue at the end of the third quarter was $971.3 million, a decrease of 47.9% compared to $1.87 billion in the same quarter of the previous fiscal year[13]. - New Oriental's total assets as of February 28, 2022, amounted to $6.67 billion, a decrease from $10.15 billion as of May 31, 2021[22]. - Cash and cash equivalents decreased to $1.47 billion from $1.61 billion year-over-year[22]. - The total current assets were reported at $4.69 billion, down from $6.57 billion in the previous year[22]. - The company reported a net receivable of $2.03 billion, a significant drop from $3.43 billion[22]. - Total current liabilities amounted to $1,889,935 as of February 28, 2022, down from $3,471,445 as of May 31, 2021[24]. - Total liabilities were $2,564,640 as of February 28, 2022, compared to $5,132,877 as of May 31, 2021[25]. - Total equity was $4,022,771 as of February 28, 2022, compared to $4,913,275 as of May 31, 2021[26]. Financial Metrics and Management Insights - The company emphasizes the importance of Non-GAAP financial metrics for assessing performance and liquidity[19]. - New Oriental's management acknowledges inherent risks and uncertainties that may affect future performance[18]. - The company reported a non-GAAP operating loss of $(111,232) for the three months ended February 28, 2022, compared to a profit of $115,892 in the same period of 2021[32]. - The company’s non-GAAP net loss attributable to shareholders was $(95,503) for the three months ended February 28, 2022, compared to a profit of $163,236 in the same period of 2021[32]. - The company reported a significant increase in general and administrative expenses, which rose to $1,580,514 for the nine months ended February 28, 2022, from $980,342 in 2021[36]. - The company experienced a loss of $(13,251) from changes in the fair value of investments for the nine months ended February 28, 2022, compared to a loss of $(4,597) in 2021[39]. - The company’s operating loss margin under non-GAAP was -34.0% for the nine months ended February 28, 2022, compared to 7.2% in 2021[39].

Financial Performance - New Oriental Education reported a significant decline in total revenue due to the cessation of K-9 subject-related training services, impacting the six-month period ending November 30, 2021[3]. - Net revenue for the six months ended November 30, 2021, was $1,967,132, an increase from $1,874,055 for the same period in 2020, representing a growth of approximately 4.97%[9]. - Total operating costs and expenses for the six months ended November 30, 2021, were $2,702,802, compared to $1,755,897 in 2020, indicating an increase of about 53.73%[9]. - The company reported a net loss of $907,960 for the six months ended November 30, 2021, compared to a net profit of $178,613 in the same period of 2020, reflecting a significant decline in profitability[9]. - Basic and diluted net loss per American Depositary Share (ADS) for the six months ended November 30, 2021, was $(0.52), compared to a profit of $0.14 for the same period in 2020[9]. - The company experienced a loss of $(14,323) from changes in the fair value of investments for the six months ended November 30, 2021, compared to a loss of $(2,154) in 2020[9]. - Non-controlling interests accounted for a net loss of $31,980 for the six months ended November 30, 2021, compared to $49,941 in the same period of 2020[9]. - The company’s total operating loss for the six months ended November 30, 2021, was $(735,670), a significant decrease from an operating profit of $118,158 in the same period of 2020[9]. Assets and Liabilities - Total assets decreased from $10,151,053 thousand as of May 31, 2021, to $7,614,312 thousand as of November 30, 2021, representing a reduction of approximately 25.3%[4][8]. - Current assets fell from $6,574,155 thousand to $5,154,963 thousand, a decrease of about 21.5%[4]. - Total liabilities decreased from $5,132,877 thousand to $3,433,761 thousand, a reduction of approximately 33.1%[7][8]. - Shareholders' equity decreased from $5,018,176 thousand to $4,180,551 thousand, reflecting a decline of approximately 16.7%[8]. - Cash and cash equivalents were reported at $1,218 thousand, with short-term investments totaling $2,632,398 thousand as of November 30, 2021[4]. - Cash and cash equivalents, and restricted cash decreased by $581,997, ending at $1,050,130 for the six months ended November 30, 2021, down from $2,648,124 in 2020[12]. Operational Changes - The company has shifted focus towards non-K-9 educational products and services, including exam preparation courses and adult language training[3]. - The company incurred increased costs and expenses due to the termination of multiple learning center lease agreements and a layoff plan[3]. - The company plans to explore new business opportunities leveraging its operational experience and brand recognition[3]. - New Oriental will continue to seek guidance from government authorities and adjust its operations according to policy directives[3]. Cash Flow - Operating cash used for the six months ended November 30, 2021, was $(1,074,835), compared to cash generated from operations of $802,276 in the same period of 2020[12]. - The total cash flow from investing activities for the six months ended November 30, 2021, was $653,374, compared to cash used of $(796,800) in 2020[12].

Share Structure and Listing - The company reported a total of 1,690,082,150 ordinary shares with a par value of $0.001 each as of May 31, 2021[5] - The company's American Depositary Shares (ADS) are listed on the New York Stock Exchange under the ticker symbol "EDU"[3] - The company's American Depositary Shares (ADS) ratio changed from 1 ADS representing 4 ordinary shares to 1 ADS representing 1 ordinary share on August 18, 2011, with this change reflected retroactively in the annual report[9] - The company's ADS holders may have fewer rights compared to ordinary shareholders, including limited voting rights and potential delays in receiving voting materials[116] - ADS holders may face limited participation in future rights offerings, potentially leading to equity dilution[117] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's American Depositary Shares (ADS) and ordinary shares have experienced significant price volatility, with ADS prices ranging from $1.70 to $19.68 and ordinary shares ranging from HK$13.50 to HK$154.10 between June 2020 and September 2021[114] - The company's ADS and ordinary shares have experienced and may continue to experience significant price volatility, potentially causing substantial losses for shareholders[23] - The company's American Depositary Shares (ADS) may be subject to transfer restrictions, and the depositary may refuse to deliver or transfer ADS under certain circumstances[118] Financial Performance and Reporting - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP)[6] - The company's internal control over financial reporting was deemed effective by its registered public accounting firm[6] - The company's annual report includes audited consolidated financial statements for the fiscal year ended May 31, 2021[1] - The company's annual report is available on the Hong Kong Stock Exchange website and the company's investor relations website[1] - New Oriental Education & Technology Group Inc. reported selected consolidated financial data for fiscal years ending May 31, 2019, 2020, and 2021, with audited financial statements included in the annual report[13] - The company's financial statements are presented in USD, with certain financial data converted to USD for convenience using exchange rates of RMB 6.3674 to USD 1.00 and HKD 7.7610 to USD 1.00 as of May 28, 2021[9] - Net revenue from education courses and services increased from $1,608,954 thousand in 2017 to $3,936,969 thousand in 2021, representing a growth of approximately 145% over five years[14] - Total net revenue grew from $1,799,509 thousand in 2017 to $4,276,539 thousand in 2021, an increase of approximately 138%[14] - Operating income fluctuated over the years, peaking at $399,003 thousand in 2020 before dropping to $117,266 thousand in 2021[14] - Net profit attributable to shareholders decreased from $274,457 thousand in 2017 to $334,414 thousand in 2021, with a notable drop in 2021 compared to 2020[14] - Total assets increased significantly from $2,924,979 thousand in 2017 to $10,151,053 thousand in 2021, reflecting substantial growth in the company's asset base[17] - Cash and cash equivalents grew from $641,018 thousand in 2018 to $1,612,211 thousand in 2021, indicating improved liquidity[17] - Total liabilities rose from $1,204,901 thousand in 2017 to $5,132,877 thousand in 2021, reflecting increased financial obligations[17] - The company recorded goodwill impairment losses of $5.2 million in FY2019, $0 in FY2020, and $28.9 million in FY2021, along with $2.9 million in intangible asset impairment losses in FY2021[49] - The company reported a fair value loss of $3.8 million on long-term investments in FY2021, including a $5.5 million loss from its investment in Beijing Shangde[50] - The company's deferred revenue is subject to future performance obligations and may not represent actual revenue in future periods[48] - The company's financial and operating performance may not meet market expectations due to factors such as economic conditions, regulatory changes, and consumer behavior shifts[47] Regulatory and Legal Risks - The company faces significant risks related to regulatory changes in China's private education sector, particularly the "Double Reduction" policy, which has adversely impacted its business and financial performance[20] - The company's business, financial condition, and operating performance may be significantly adversely affected by changes in China's economic, political, or social conditions or government policies[22] - The company's ability to provide or continue to provide securities to investors may be severely restricted or completely hindered by Chinese government regulations, potentially leading to a significant decline in the value of such securities[22] - The company's operations and the value of its American Depositary Shares (ADS) may be significantly adversely affected by uncertainties in China's legal system, including risks related to law enforcement and rapidly evolving regulations[22] - The company's business, financial condition, and operating performance, as well as its ability to obtain financing, may be adversely affected by global or Chinese economic downturns[22] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's business, financial condition, and operating performance have been and will continue to be significantly adversely affected by compliance with China's "Double Reduction" policy and its implementation measures[24][25][26] - The company has ceased providing academic tutoring services during national holidays, weekends, and school holidays, and may take further actions, including closing some learning centers and layoffs, to comply with regulations[26] - The company may face fines, penalties, or be required to immediately terminate certain operations due to regulatory non-compliance, which could further adversely affect its business, financial condition, and operating performance[26] - The company may incur significant impairment and severance costs related to lease terminations, employee dismissals, and other actions taken in response to regulatory developments, which could adversely affect its financial condition, operating performance, and prospects[26] - The revised "Private Education Promotion Law" prohibits social organizations and individuals from controlling private schools providing compulsory education or non-profit private schools offering preschool education through mergers or control agreements[27] - Off-campus tutoring institutions must comply with regulations including course material filing, class scheduling restrictions, and teacher qualification requirements[28] - The company's revenue may decline if it fails to attract students without significantly reducing course fees[29] - The company's business heavily relies on the "New Oriental" brand, and failure to maintain or enhance it could harm operations and performance[30] - The company depends on a qualified and dedicated teaching staff, and failure to maintain consistent teaching quality could negatively impact its brand and business[31] - The company's corporate structure, involving Cayman Islands registration and variable interest entities in China, poses legal and regulatory risks that could affect its operations and investor interests[21] - The company's ability to enforce share pledge agreements with variable interest entity (VIE) shareholders may be limited under Chinese law, with registered pledged equity amounts totaling RMB 50,000,000 for New Oriental China[74][75] - The company's contractual arrangements with VIEs and their shareholders are governed by Chinese law, and disputes must be resolved through arbitration or Chinese courts, which may limit enforcement capabilities[73] - The company's consolidated affiliated entities contributed 99.9% of total net revenue in fiscal year 2021, highlighting the critical importance of these arrangements to its financial performance[73] - The company may face challenges in enforcing its rights under share pledge agreements if Chinese courts determine that the registered pledged equity amounts represent the full collateral value, potentially leaving additional obligations unsecured[75] - The company's ability to direct the activities of consolidated affiliated entities and consolidate their financial results under U.S. GAAP could be jeopardized if contractual arrangements are not enforceable[73] - The company's reliance on contractual arrangements with VIEs and their shareholders exposes it to potential legal disputes and enforcement risks under Chinese law[73] - The company's Chinese operations are subject to regulatory risks, including potential restructuring requirements or restrictions on the use of proceeds from future offerings to fund its business in China[72] - The company's ability to operate private schools may be significantly impacted by changes in Chinese laws, regulations, and policies, such as the "Double Reduction" policy[78] - Contractual arrangements with consolidated affiliated entities may be subject to scrutiny by Chinese tax authorities, potentially leading to additional tax liabilities and penalties[79] - The company depends on dividends and distributions from its wholly-owned subsidiaries to meet cash and financing needs, which could be adversely affected if payment capabilities are restricted[79] - The company relies on dividends from its wholly-owned subsidiaries in China and service fees, license fees, and other payments from New Oriental China and its schools and affiliated companies to meet its cash needs, including any potential debt obligations[80] - Chinese regulations require subsidiaries to allocate at least 10% of post-tax profits (if any) to statutory reserves until the reserve reaches 50% of registered capital, and further allocations may be required for employee welfare funds[80] - Private schools in China must allocate a minimum of 25% of annual net profits to development funds if they seek reasonable returns, or 25% of the annual increase in net asset value if they do not seek reasonable returns[80] - Loans provided by the company to its Chinese subsidiaries or New Oriental China and its schools and affiliated companies must comply with Chinese regulations, including registration with the State Administration of Foreign Exchange (SAFE)[81] - The company may face restrictions on providing loans or additional capital injections to its Chinese subsidiaries due to Chinese regulations on offshore holding companies and currency exchange controls[81] - Foreign-invested enterprises in China are subject to restrictions on the use of RMB funds converted from foreign currency registered capital, which may limit the company's ability to fund or expand its business in China[82] - The company's ability to use proceeds from offshore offerings for its Chinese operations may be restricted by Chinese laws and regulations, potentially impacting liquidity and business expansion[83] - The company operates most of its business in China through contractual arrangements with New Oriental China and its schools and affiliated companies, which hold critical assets for its operations[83] - The company does not hold priority security interests or liens over the assets of New Oriental China, which could pose risks in the event of involuntary liquidation[83] - The company closely monitors the operations and finances of New Oriental China to mitigate risks of involuntary liquidation and ensure sufficient capital[83] - The company can enforce the transfer of all equity of New Oriental China to a designated entity if shareholders attempt to liquidate without prior consent[84] - New Oriental China shareholders are restricted from distributing dividends or retained earnings without the company's approval[84] - The company's operations are significantly influenced by China's political, economic, and social conditions, with potential adverse effects from government policies[85] - China's economic growth has slowed since 2010, and COVID-19 may continue to negatively impact the economy, potentially reducing demand for the company's products and services[85] - The Chinese government's significant oversight and discretionary power over the company's operations could lead to adverse changes in its business and ADS value[86] - Additional industry-wide regulations or government actions could severely limit the company's ability to offer securities, potentially causing a significant decline in its stock value[86] - The company's business, financial condition, and ability to obtain financing may be adversely affected by a global or Chinese economic recession[87] - Uncertainties in China's legal system, including the interpretation and enforcement of new laws, could negatively impact the company's operations[88] - Legal proceedings in China may be prolonged, costly, and divert resources and management attention from business operations[88] - The implementation and interpretation of the Foreign Investment Law may impact the company's structure, governance, and operations, potentially requiring adjustments to existing contractual arrangements or even divestment of certain business operations[89] - Internet content regulations in China could lead to penalties, license revocation, or website closures if the company's online platforms are found in violation, affecting operations and reputation[90] - The company must obtain and maintain multiple licenses and permits for its education and training services in China, with non-compliance risking fines, revenue forfeiture, or operational suspension[90] - Chinese regulations on overseas special purpose companies may restrict the company's ability to inject capital into its Chinese subsidiaries or repatriate profits, potentially impacting financial operations[91] - Regulatory uncertainties around employee participation in equity incentive plans could limit the company's ability to grant stock awards to Chinese employees, affecting talent retention[92] - Foreign acquisitions in China are subject to complex procedures under the M&A regulations and other Chinese laws, potentially hindering the company's growth through acquisitions[93] - Overseas investments by Chinese-controlled entities must comply with NDRC's approval, filing, and reporting requirements, with sensitive projects requiring pre-approval[94] - Rising labor costs in China, including wages and employee benefits, are expected to continue increasing, potentially impacting profitability[95] - The company's ability to pay dividends in foreign currency may be restricted due to China's foreign exchange controls[96] - Fluctuations in the RMB exchange rate against foreign currencies, particularly the USD, could significantly impact the company's revenue, profits, and stock value[97] - Limited availability of hedging tools in China to mitigate foreign exchange risks, with potential losses exacerbated by foreign exchange control regulations[98] - The company's six wholly-owned subsidiaries in China, including Beijing Zhiyu Jiaye Software Technology Co., Ltd. and Beijing Dingshixing Education Consulting Co., Ltd., qualify as "High-Tech Enterprises" and are eligible for a preferential corporate income tax rate of 15%[99] - Four of the company's wholly-owned subsidiaries in China, including Beijing Jinghong Software Technology Co., Ltd. and Beijing Zhiyuan Hangcheng Software Technology Co., Ltd., qualify as "Software Enterprises" and are exempt from corporate income tax for the first two profitable years, followed by a reduced tax rate of 12.5% for the next three years[99] - The company's actual effective tax rates for the fiscal years ending May 31, 2019, 2020, and 2021 were 26.96%, 27.46%, and 26.53%, respectively[100] - As of May 31, 2021, 11 of the company's schools have chosen to operate as non-profit schools, while 31 have chosen to operate as for-profit schools[100] - The termination of preferential tax treatments currently enjoyed by the company, particularly in major cities, could lead to an increase in the effective tax rate, resulting in higher income tax expenses and reduced net profits[100] - The company may be classified as a "resident enterprise" under Chinese tax law, potentially requiring it to pay Chinese income tax on its global income and withhold taxes on dividends paid to non-Chinese shareholders and ADS holders[100] - Foreign enterprises established outside China but with "effective management institutions" in China may be classified as "resident enterprises" and subject to a unified corporate income tax rate of 25%[101] - The State Taxation Administration has issued notices clarifying the criteria for determining "resident enterprise" status, including the location of senior management, financial decision-making, and key assets[101] - Overseas-registered, Chinese-controlled enterprises classified as "resident enterprises" must submit classification applications to local tax authorities and are subject to taxation on dividends, profits, and other equity investment income[101] - The company may be considered a Chinese resident enterprise, subject to a 25% corporate income tax rate on global income, potentially increasing tax burden and impacting cash flow and profitability[102] - Dividends received by non-Chinese investors may be subject to a 10% withholding tax if the company is deemed a Chinese resident enterprise[102] - Dividends from Chinese subsidiaries to non-resident enterprises are subject to a maximum withholding tax rate of 20%, reduced to 10% by the State Council[103] - Dividends paid to Hong Kong entities under the double taxation arrangement may be subject to a 5% withholding tax if certain conditions are met[103] - Indirect transfers of Chinese resident enterprise equity by non-resident enterprises may be reclassified and subject to a 10% withholding tax under Bulletin 7[104] - The company faces uncertainty regarding the application of Bulletin 7 and Bulletin 37, which may require significant resources to comply with or determine tax obligations[104] - The company's online education services may require specific licenses, and failure to obtain or maintain these licenses could result in fines, legal sanctions, or suspension of services[105] - The definition of "audio-visual programs" and "broadcast television programs" is ambiguous, creating uncertainty about whether the company's online courses require specific licenses[105] - The company's U.S. depositary shares may be delisted under the Holding Foreign Companies Accountable Act (HFCAA) if PCAOB cannot inspect auditors located in China, potentially adversely affecting investment value[106] - The HFCAA requires the SEC to prohibit trading of the company's securities if it determines that the company has submitted audit reports for three consecutive years (starting from 2021) from auditors not inspected by PCAOB[106] - The U.S. Senate passed a bill on June 22, 2021, which, if enacted, would reduce the required consecutive non-inspection years for delisting from three to two under the HFCAA[106] - PCAOB cannot fully evaluate the audit and quality control procedures of the company's independent registered public accounting firm due to its inability to conduct inspections in China[107] - In 2013, PCAOB established a cooperation framework with Chinese regulators for document exchange related to investigations, but joint inspections of audit firms in China remain unresolved[108] - The SEC's administrative proceedings against China's "Big Four" accounting firms (including the company's auditor) could result in financial statements being deemed non-compliant with securities laws[109] - If the SEC restarts administrative proceedings, U.S.-listed companies with major China operations may face difficulties retaining auditors, potentially leading to delisting[110] - Overseas regulators face significant challenges in conducting investigations or evidence collection within China due to legal and practical barriers[111] - China's new regulations on cracking down on securities violations, issued on July 6, 2021, may impose additional requirements on overseas-listed Chinese companies[112] - The company's compliance costs may increase if its shares are deemed to have a dual primary listing in Hong Kong, requiring potential revisions to its corporate structure and articles of association[113] - Shareholders may face challenges enforcing judgments against the company due to its Cayman Islands incorporation and primary operations in China, as Cayman Islands and Chinese laws may not enforce foreign judgments[119] - Chinese courts may not recognize or enforce U.S. court judgments against the company or its directors, as there is no treaty or reciprocal agreement between China and the U.S. for mutual recognition of foreign judgments[120] - Shareholder rights under Cayman Islands law are more

Financial Performance - For the second quarter of fiscal year 2021, net revenue increased by 13.1% to $887.7 million compared to the same period last year[5]. - The company reported an operating loss of $32.1 million for the second quarter, compared to an operating profit of $25.3 million in the same quarter last year[5]. - Net profit attributable to New Oriental shareholders was $53.9 million, reflecting a year-on-year increase of 0.9%[5]. - The company’s total net revenue for the first half of fiscal year 2021 was $1.87 billion, a slight increase of 0.9% from the previous year[7]. - The operating profit for the first half of fiscal year 2021 decreased by 56.5% to $118.2 million compared to $271.5 million in the previous year[7]. - Basic earnings per ADS for the second quarter was $0.33, a decrease of 0.9% from $0.34 in the same quarter last year[6]. - Non-GAAP net profit for the quarter was $69.1 million, a year-over-year increase of 21.3%[16]. - The company reported a net income excluding stock-based compensation and fair value changes, which is considered a key performance metric for evaluating operational efficiency[30]. - The company reported a net profit of $178,613,000 for the six months ended November 30, 2020, down from $252,811,000 in the same period of 2019[43]. - Non-GAAP net profit for the six months ended November 30, 2020, was $253,666,000, compared to $287,149,000 in the same period of 2019[46]. Student Enrollment and Business Growth - The number of student enrollments for the second quarter rose by 10.4% to approximately 4,183,100[9]. - Total number of schools and learning centers reached 1,518, an increase of 214 from 1,304 a year ago[9]. - The K-12 after-school education business saw significant revenue growth of approximately 26%, with middle school business up 27% and children's business up about 24% year-over-year[10]. - Total student enrollments for tutoring and exam preparation courses increased by 10.4% to approximately 4,183,100 in the second quarter[11]. - Revenue from K-12 after-school education business grew by 162.9% year-over-year, with paid student enrollments increasing by approximately 143.4%[20]. - The number of enrollments for DFUB courses and Koolearn K-12 courses increased by 170.3% and 134.4% year-over-year, respectively[20]. Operating Costs and Expenses - Operating costs and expenses for the quarter were $919.8 million, a year-over-year increase of 21.0%[12]. - Total operating expenses for the three months ended November 30, 2020, were $919,836,000, up 21.0% from $759,912,000 in the same period of 2019[37]. - General and administrative expenses for the six months ended November 30, 2020, were $24.55 million, compared to $21.61 million in 2019, marking an increase of about 14%[48]. - Sales and marketing expenses for the six months ended November 30, 2020, were $5.93 million, a significant increase from $0.57 million in 2019, indicating a rise of approximately 938%[48]. Cash and Liquidity - The cash and cash equivalents as of November 30, 2020, were $2,643.2 million, up from $915.1 million as of May 31, 2020[17]. - Cash and cash equivalents increased to $2,648,124,000 as of November 30, 2020, from $1,051,365,000 as of November 30, 2019[42]. - The ending cash, cash equivalents, and restricted cash balance as of November 30, 2020, was $2.65 billion, up from $1.05 billion in 2019, indicating a significant increase of approximately 152%[49]. - Net cash provided by operating activities for the six months ended November 30, 2020, was $802.28 million, an increase from $656.33 million in 2019, reflecting a growth of about 22%[49]. Future Outlook and Strategy - The company plans to focus more resources on its OMO strategy to expand service coverage to more cities and students[10]. - New Oriental Online plans to invest more resources in K-12 education business expansion, including content development, teacher recruitment and training, marketing, and R&D[20]. - The company expects net revenue for the third quarter of fiscal year 2021 to be between USD 1,098.6 million and USD 1,144.8 million, reflecting a year-over-year growth rate of 19% to 24%[23]. Stock Market and Corporate Actions - New Oriental successfully listed on the Hong Kong Stock Exchange on November 9, 2020, raising approximately HKD 11,493.2 million (USD 1,482.8 million) from the global offering[22]. - New Oriental's management will hold an earnings conference call on January 22, 2021, to discuss the financial results and future outlook[24]. Financial Position - Total current assets reached $6,364,220 thousand as of November 30, 2020, compared to $3,756,420 thousand as of May 31, 2020, indicating an increase of about 69%[32]. - Total liabilities amounted to $4,661,432 thousand as of November 30, 2020, up from $3,687,074 thousand as of May 31, 2020, reflecting a rise of approximately 26%[34]. - The company's total equity was $4,816,528 thousand as of November 30, 2020, compared to $2,869,811 thousand as of May 31, 2020, showing an increase of around 68%[35]. - The total assets of the company reached $9,477,960 thousand as of November 30, 2020, compared to $6,556,885 thousand as of May 31, 2020, indicating a growth of approximately 44%[32]. Non-GAAP Financial Metrics - Non-GAAP financial indicators are used to provide additional insights into operational performance by excluding stock-based compensation expenses and fair value changes of long-term investments[30]. - The company believes that Non-GAAP financial indicators are more helpful for management and investors in assessing performance and making future plans[30]. - The company has emphasized the importance of transparency in financial and operational decision-making through the use of Non-GAAP financial indicators[30]. - New Oriental's non-GAAP basic and diluted net profit per ADS for the six months ended November 30, 2020, was $1.58, down from $1.81 in 2019, reflecting a decrease of approximately 13%[47].