New Oriental Announces Results for the First Fiscal Quarter Ended August 31, 2024 BEIJING, Oct. 23, 2024 /PRNewswire/ – New Oriental Education & Technology Group Inc. (the "Company" or "New Oriental") (NYSE: EDU/ 9901.SEHK), a provider of private educational services in China, today announced its unaudited financial results for the first fiscal quarter ended August 31, 2024, which is the first quarter of New Oriental's fiscal year 2025. Financial Highlights for the First Fiscal Quarter Ended August 31, 2024 ...

Financial Performance - For the first quarter of fiscal year 2025, net revenue increased by 30.5% year-over-year to $1,435.4 million, while net revenue excluding the revenue from self-operated products and live e-commerce business rose by 33.5% to $1,278.2 million[3]. - Operating profit for the first quarter of fiscal year 2025 rose by 42.9% year-over-year to $293.2 million, and operating profit excluding losses from self-operated products and live e-commerce business increased by 58.4% to $303.1 million[3]. - Net profit attributable to New Oriental shareholders increased by 48.4% year-over-year to $245.4 million[3]. - Basic earnings per ADS increased by 48.6% year-over-year to $1.49, while diluted earnings per ADS rose by 49.6% to $1.48[3]. - Non-GAAP net profit attributable to New Oriental increased by 39.8% year-over-year to $264.7 million[3]. - The operating profit for the quarter was $293.2 million, representing a year-over-year increase of 42.9%[9]. - The GAAP operating profit margin was 23.7%, an increase of 370 basis points year-over-year[8]. - Non-GAAP operating profit margin was 24.4%, up 220 basis points compared to the previous year[8]. - The company reported a non-GAAP net profit of $264,732 for the three months ended August 31, 2024, compared to $189,318 in the same period of 2023[25]. Business Growth - The total number of schools and learning centers reached 1,089, an increase of 64 from 1,025 as of May 31, 2024, and an increase of 296 from 793 as of August 31, 2023[5]. - The overseas exam preparation and consultation businesses grew approximately 18.8% and 20.7% year-over-year, respectively[5]. - Domestic exam preparation business for adults and college students recorded a year-over-year growth of approximately 30.4%[5]. - New educational businesses maintained strong growth momentum with a year-over-year revenue increase of 49.8%[5]. - Active paying users for the smart learning system and equipment reached approximately 323,000 in about 60 cities during the quarter[5]. Cash Flow and Assets - The company achieved a net operating cash flow of approximately $183.2 million for the quarter[12]. - Cash and cash equivalents, along with time deposits and short-term investments, totaled approximately $4.9 billion at the end of the quarter[8]. - As of August 31, 2024, total assets amounted to $7,709,118 thousand, an increase from $7,531,673 thousand as of May 31, 2024[22]. - Total liabilities decreased slightly to $3,470,179 thousand from $3,482,659 thousand[23]. - Cash and cash equivalents were reported at $1,146,959 thousand, down from $1,389,359 thousand[22]. - The company’s total equity increased to $4,238,939 thousand from $4,049,014 thousand[23]. - The current assets totalled $5,491,293 thousand, compared to $5,388,878 thousand previously[22]. - The company experienced a decline in cash and cash equivalents, with a net change of $(237,953) for the three months ended August 31, 2024[28]. Future Outlook - New Oriental plans to achieve net revenue between $851.4 million and $871.8 million for the second quarter of fiscal year 2025, reflecting a year-over-year growth rate of 25% to 28%[14]. - The company has authorized a share repurchase plan of up to $700 million, extended until May 31, 2025, with approximately 9.8 million ADS repurchased for about $457.9 million as of October 22, 2024[6]. - Future outlook includes managing the expansion of the school network effectively while navigating regulatory uncertainties in the private education sector in China[19]. Financial Metrics and Reporting - The company reported a net income excluding stock-based compensation and investment fair value changes, providing a clearer view of operational performance[20]. - Deferred revenue stood at $1,733,126 thousand, a decrease from $1,780,063 thousand[23]. - The company emphasized the importance of Non-GAAP financial metrics for assessing performance and liquidity[20].

Company Performance - New Oriental (EDU) shares dropped by 1.87% in pre-market trading, priced at $74.36 [1] - Macquarie revised its forecast for New Oriental's non-GAAP net profit for fiscal years 2025 to 2027, reducing it by 11.6% to 13.3% [1] - The revision is based on a lowered revenue prediction and non-GAAP operating profit forecast for the company [1] Business Segments - New Oriental's non-academic K-9 business remains robust [1] - An anticipated slowdown in the growth of its overseas test preparation business during the first quarter of fiscal year 2025 [1]

Core Viewpoint - New Oriental's shares experienced a decline of approximately 9.8% in pre-market trading following a downward revision of profit forecasts by Macquarie for fiscal years 2025 to 2027 [1] Financial Performance - Macquarie adjusted its forecast for New Oriental's non-GAAP net profit downward by 11.6% to 13.3% based on lowered revenue projections and operating surplus expectations [1] - The target price for New Oriental's H shares was revised from HKD 71 to HKD 63.1, maintaining a projected price-to-earnings ratio of 25 times for fiscal year 2025 [1] Business Outlook - Despite the downgrades, Macquarie maintains an "Outperform" investment rating, anticipating that the non-academic K9 business will remain robust [1] - Growth in overseas exam preparation is expected to slow down in the first quarter of fiscal year 2025 [1]

Investment Rating - The report maintains a "Buy" rating for New Oriental [5][11]. Core Views - New Oriental's revenue for the first quarter of FY25 is expected to reach USD 1.462 billion, representing a year-on-year increase of 32.9%, with a non-GAAP net profit of USD 277 million, up 46.4% year-on-year [4][7]. - The strong growth in the education business is driven by the rapid expansion of non-academic training, overseas study test preparation, and high school subject training [8][9]. - The company is expected to open over 50 new learning centers in FY25, increasing the total to over 1,075, a growth of approximately 35.6% year-on-year [9][11]. - The e-commerce segment is projected to contribute about USD 220 million in revenue for the first quarter, accounting for 15% of total revenue, which is a decrease from 19% in the previous quarter [10][11]. Financial Data and Profit Forecast - Revenue projections for New Oriental are as follows: - FY23: USD 2.998 billion - FY24: USD 4.314 billion - FY25: USD 5.438 billion - FY26: USD 6.916 billion - FY27: USD 8.844 billion - Non-GAAP net profit forecasts are: - FY25: USD 493 million - FY26: USD 672 million - FY27: USD 891 million [6][13]. - The report anticipates a non-GAAP operating profit margin of 24.3% for the education business in FY25, an increase of 2 percentage points year-on-year [11][12].

Investment Rating - The report maintains a **Buy** rating for New Oriental Education & Technology Group (9901 HK) with a target price of **HKD 80.00**, implying a potential upside of **25.2%** [2][4] Core Views - New Oriental continues to maintain its leading position in international education, with steady expansion in its education business [2] - The company's education business is expected to achieve a **24% CAGR** in revenue from FY2024 to FY2027, driven by ongoing margin optimization [2] - The offline teaching center expansion is progressing well, with a **6% QoQ increase** in Q1 FY2025, adding **60+ new centers**, primarily in Tier 1 and New Tier 1 cities [2][5] - The education business is valued at **20x P/E** for the 12 months ending February 2026, excluding contributions from Dongfang Zhenxuan [2] Financial Performance and Forecasts Q1 FY2025 Preview - Total revenue is expected to grow **33% YoY** to **USD 1.46 billion**, in line with the company's guidance of **31-34%** [3] - Non-Dongfang Zhenxuan revenue is projected to increase **33% YoY** to **USD 1.247 billion** [3] - Adjusted operating profit is estimated at **USD 320 million**, with an operating margin of **21.9%**, driven by a **2 percentage point improvement** in non-Dongfang Zhenxuan business margins [3] - Adjusted net profit is forecasted at **USD 259 million**, with a net margin of **17.7%** [3] Segment Performance - Overseas test preparation revenue is expected to grow **21% YoY**, high school revenue **27%**, university/adult education **26%**, and new businesses **52%** [3] - Gross margin is projected to improve to **58%**, up **2.5 percentage points** from the previous forecast [4] Long-Term Forecasts - Revenue is expected to grow from **USD 4.314 billion** in FY2024 to **USD 7.646 billion** in FY2027, with a **24% CAGR** [6] - Adjusted operating profit is forecasted to increase from **USD 473 million** in FY2024 to **USD 1.196 billion** in FY2027 [6] - Adjusted net profit is projected to rise from **USD 381 million** in FY2024 to **USD 1.043 billion** in FY2027 [6] Industry and Peer Comparison - The report covers multiple companies in the internet and education sectors, with **Buy** ratings for peers like TAL Education (TAL US) and Gaotu Techedu (GOTU US) [8] - New Oriental's valuation and growth prospects are highlighted as favorable compared to its peers in the education sector [8]

Group 1 - New Oriental Education & Technology Group Inc (EDU) shares increased by 1.83% on October 2, reaching an intraday high of $87.26 before closing at $78.60, which is 19.96% below its 52-week high of $98.20 and 37.39% above its 52-week low of $57.21 [1] - The trading volume for EDU was 3,558,206 shares, which is 162.3% of the average daily volume of 2,192,581 shares [1] Group 2 - Wall Street analysts have set an average one-year price target for EDU at $93.04, indicating an upside potential of 18.37% from the current price of $78.60 [2] - The highest price estimate from analysts is $110.81, while the lowest is $75.00 [2] - The average brokerage recommendation for EDU is 1.6, suggesting an "Outperform" status on a scale where 1 is Strong Buy and 5 is Sell [2] Group 3 - GuruFocus estimates the fair value (GF Value) for EDU at $82.31 in one year, suggesting a potential upside of 4.72% from the current price [2] - The GF Value is derived from historical trading multiples, past business growth, and future performance estimates [2]

»¼½¾¿¾ÀÁÁÂà - - ! "#$%&'$() *+, -./ 0 1 - 0 / - - / / ./2 3 /2 3 0- 2 /- 0 4 56789:65;<=6>?@<;:85A;6@B58=8CDC98?E:5@F G HIJKLMNOPQRSTUV 0 / W 2 ./, XYZ[\]@[^_`aabcd <55?<=96E89;e89eDfbfg hijkilmijniopqlrsmtnuqrkjvvrjmkilqkpwqkpuiwtnxjmyijkivoiozjy{|}~}|xqvpjtvtvqrk jrotpiojvvrjmkinrmpnwqkputnkilqkptvliktqoutnoqxrivptnlkqtoiopqqrknujkiuqmoiknjn qrkjvvrjmkilqkplrknrjvppqrmi{}qwpui0 3 0 - utnoqxrivptnjjtmjsmiqvpuiisntpinqwqvqv pqxxujviuivinujvoqrkisntpiuppltvinpqkviqktivpjmqk Y\[Z_Z` | Y_\Zš[™<`6›Z—–\Z_^e[—•fb ...

Group 1: New Oriental Education (EDU) - New Oriental Education shares increased by 7.9% to close at $65, following a 7.5% loss over the past four weeks, indicating a notable recovery in stock performance [1] - The recent rally is attributed to optimism from a fiscal stimulus announced by the People's Bank of China, which includes interest rate cuts and additional funding opportunities, potentially boosting business activities and consumer confidence [1] - The upcoming quarterly earnings report is expected to show earnings of $1.14 per share, reflecting a year-over-year increase of 0.9%, with revenues projected at $1.4 billion, a 27.1% increase from the previous year [1] Group 2: Earnings Estimate Revisions - The consensus EPS estimate for New Oriental has been revised down by 58.7% over the last 30 days, which typically correlates with negative stock price movements [2] - Despite the recent stock price increase, the negative trend in earnings estimate revisions suggests caution regarding future price appreciation [2] - New Oriental currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [2] Group 3: Perdoceo Education (PRDO) - Perdoceo Education's consensus EPS estimate remains unchanged at $0.53, representing a 17.2% decrease from the previous year [3] - Perdoceo Education has a Zacks Rank of 4 (Sell), indicating a negative outlook compared to its peers [3]

Financial Performance and Results - New Oriental Education & Technology Group Inc. reported its audited annual results for the fiscal year ending May 31, 2024[1] - Net revenue for FY2024 reached $4,313.586 million, with net service revenue at $3,500.998 million and net product revenue at $812.588 million[33] - Operating profit for FY2024 was $350.425 million, compared to a loss of $982.513 million in FY2022[33] - Net profit for FY2024 was $325.218 million, a significant improvement from a net loss of $1,220.276 million in FY2022[33] - Total operating costs and expenses for FY2024 were $3,963.161 million, with revenue costs at $2,050.960 million and sales and marketing expenses at $660.586 million[33] - Interest income for FY2024 was $153.589 million, while interest expenses were only $0.298 million[33] - The company's effective tax rate for FY2024 was approximately 25.2%, with current tax provisions at $130.927 million and deferred tax provisions at $21.237 million[33] - Basic earnings per share for FY2024 were $0.19, compared to a loss of $0.70 per share in FY2022[33] - Weighted average shares outstanding for basic EPS calculation in FY2024 were 1,653,597,432[33] - The company's intangible assets and goodwill impairment losses were zero in FY2024, compared to $31.794 million in FY2021[33] - Total share-based compensation expenses for FY2024 were $122.458 million, with general and administrative expenses accounting for $76.439 million of that total[33] - Cash and cash equivalents increased from $915.057 million in 2020 to $1,662.982 million in 2023, but decreased to $1,389.359 million in 2024[35] - Total assets grew from $6,556.885 million in 2021 to $7,531.673 million in 2024[35] - Total liabilities increased from $3,687.074 million in 2020 to $3,482.659 million in 2024[35] - Total equity rose from $2,869.811 million in 2020 to $4,049.014 million in 2024[35] - Third-party net revenue for 2024 was $4,313.586 million, up from $2,997.760 million in 2023[36][37] - Operating costs and expenses totaled $3,963.161 million in 2024, compared to $2,807.714 million in 2023[36][37] - Net profit for 2024 was $325.218 million, a significant improvement from a net loss of $1,220.276 million in 2022[36][37] - Other net income increased to $143.416 million in 2024 from $118.485 million in 2023[36][37] - Income tax provision for 2024 was $109.690 million, up from $66.066 million in 2023[36][37] - Cash and cash equivalents for consolidated affiliated entities in 2024 were $1,389.359 million[38] - Total assets increased to $7,531,673K in 2024 from $6,392,458K in 2023, reflecting a growth of 17.8%[39][40] - Total liabilities rose to $3,482,659K in 2024 from $2,577,670K in 2023, marking a 35.1% increase[39][40] - Total equity grew to $4,049,014K in 2024 from $3,814,788K in 2023, showing a 6.1% increase[39][40] - Net cash generated from operating activities was $1,122,643K in 2024, compared to $971,008K in 2023, a 15.6% increase[41][42] - Net cash used in investing activities was $1,153,922K in 2024, compared to $37,411K in 2023, indicating a significant increase in investment outflows[41][42] - Net cash used in financing activities was $160,438K in 2024, compared to $246,867K in 2023, showing a 35% decrease in financing outflows[41][42] - Deferred revenue increased to $1,780,063K in 2024 from $1,337,630K in 2023, reflecting a 33.1% growth[39][40] - Property and equipment net value increased to $507,981K in 2024 from $359,760K in 2023, a 41.2% increase[39][40] - Other non-current assets grew to $1,634,814K in 2024 from $1,618,811K in 2023, a slight increase of 1%[39][40] - Total current assets increased to $5,388,878K in 2024 from $4,413,887K in 2023, showing a 22.1% growth[39][40] - Net cash used in financing activities for the year ended May 31, 2023 was $246.867 million, compared to $230.858 million for the previous year[43] - Net cash generated from operating activities for the year ended May 31, 2022 was negative $1.280 billion[43] - Net cash generated from investing activities for the year ended May 31, 2022 was $1.169 billion[43] - Long-term investment fair value changes resulted in a loss of $0.9 million for the fiscal year ending May 31, 2023, and a gain of $19.0 million for the fiscal year ending May 31, 2024[77] Regulatory and Compliance Risks - The company has submitted a report on the effectiveness of internal control over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act[6] - The company faces risks related to competition in live-streaming e-commerce and the development of new educational products and services[13] - The company anticipates changes in revenue, costs, and expenses, influenced by market trends and regulatory policies in China[13] - The company's VIEs, including Beijing Xuncheng and New Oriental China, are consolidated into financial statements despite no direct equity ownership[9] - The company's forward-looking statements are based on expectations of future events, financial trends, and regulatory impacts in China[13] - The company operates in China through a series of contractual arrangements with variable interest entities (VIEs), including equity pledge agreements, exclusive option agreements, and service agreements[15][16][17] - The company's contractual arrangements for controlling variable interest entities (VIEs) are less effective than direct ownership, posing risks of conflicts and legal uncertainties[20] - Potential changes in Chinese laws and regulations could impact the enforceability of the company's contractual arrangements with VIEs, leading to severe penalties or loss of business interests[21] - The company faces risks related to regulatory approvals, antitrust actions, education industry regulations, and cybersecurity, which could affect its operations and stock value[21] - Chinese government oversight and control over overseas listings and investments could severely limit the company's ability to issue securities, potentially causing a significant drop in their value[22] - The company's Chinese subsidiaries and consolidated affiliated entities have obtained necessary licenses and permits, including private school operation permits, ICP licenses, EDI licenses, food business licenses, publication business licenses, performance business licenses, travel agency business licenses, and healthcare licenses[23] - The company is not currently required to obtain permits or complete filings with the China Securities Regulatory Commission (CSRC) or the Cyberspace Administration of China (CAC) for past securities issuances to foreign investors[24] - The company believes it is not subject to cybersecurity review by the CAC for maintaining its listing status on the NYSE under current Chinese laws and regulations[24] - The "Overseas Listing Trial Measures" require Chinese companies seeking overseas securities issuance to file with the CSRC, but companies listed before March 31, 2023, are not required to file immediately[24] - Future overseas securities issuances by the company may require filing with the CSRC, including follow-on offerings, convertible bond issuances, and relistings after privatization[24] - The Chinese government has expressed intentions to increase supervision and control over overseas issuances and foreign investments, creating regulatory uncertainty for the company[25] - Failure to obtain necessary approvals or changes in laws and regulations could result in penalties, including fines, suspension of operations, or revocation of licenses, severely impacting the company's ability to issue securities[25] - The company faces risks related to data privacy, protection, and cybersecurity regulations, which could lead to penalties, reputational damage, and adverse effects on its business operations[23] - The company may need to obtain additional licenses, permits, or approvals in the future due to potential changes in the interpretation and enforcement of laws and regulations[23] - Regulatory uncertainties and potential government oversight could significantly impact the company's operations and the value of its securities[25] - The company may be identified as a Commission-Identified Issuer under the HFCAA if PCAOB determines it cannot fully inspect or investigate accounting firms in China and Hong Kong, potentially leading to a trading ban in the U.S. if identified for two consecutive years[26] - The company's ability to pay dividends and repay debt depends on dividends from its Chinese subsidiaries and service fees from variable interest entities, which are subject to regulatory restrictions and Chinese accounting standards[27] - Chinese subsidiaries and variable interest entities face restrictions on transferring assets or dividends overseas, including foreign exchange controls and mandatory reserve allocations[28] - The company received loan repayments of $282.1 million, $290.0 million, and $1.5 million from indirect holding companies and subsidiaries in fiscal years 2022, 2023, and 2024, respectively[28] - The company provided loans of $330.4 million, $50.0 million, and $0 to indirect holding companies and subsidiaries in fiscal years 2022, 2023, and 2024, respectively[28] - The company has no formal dividend policy or cash management policy governing fund transfers between entities, relying instead on applicable Chinese laws and regulations[30] - Under a hypothetical tax scenario, the company's net distributable profit after a 25% corporate tax rate and 10% withholding tax would be 67.5% of pre-tax profit[31] - If variable interest entities' cumulative profits exceed fees paid to Chinese subsidiaries, non-deductible transfers may occur, reducing the company's after-tax income[31] - The company's operations in China are subject to Chinese laws and regulations, which can change rapidly with little notice, potentially impacting legal protections and compliance decisions[49] - The Chinese government's significant oversight and discretionary power over the company's operations could lead to major adverse changes in its operations and the value of its American Depositary Shares (ADS)[49] - Offshore offerings by the company may require approval or filing with the China Securities Regulatory Commission (CSRC) or other Chinese government agencies, with uncertain timelines and outcomes[50] - PCAOB's inability to inspect auditors in China could lead to the delisting of the company's ADS from U.S. exchanges under the HFCAA, significantly impacting investor value[50] - The company's ADS and ordinary shares have experienced and may continue to experience significant price volatility, potentially causing substantial losses for shareholders[51] - Negative reports by securities or industry analysts could lead to a decline in the price and trading volume of the company's ordinary shares and ADS[51] - Termination of K-9 academic tutoring services in China due to regulatory changes has had and may continue to have a significant adverse impact on the company's business, financial condition, and prospects[52] - The company closed 644 schools and learning centers, reducing the total number from 1,669 as of May 31, 2021, to 1,025 as of May 31, 2024, as part of its business restructuring[52] - The company's smart learning systems and devices may be classified as subject-based after-school tutoring activities, potentially requiring compliance with the "Double Reduction" policy and other regulations[58] - The company's revenue and profitability may decline if it fails to attract students without significantly reducing course fees[59] - The company faces risks of fines, operational suspensions, or other penalties if it fails to comply with the "Double Reduction" policy and related regulations[58] - The company may need to adjust its business operations further if new rules or regulations are introduced in China[58] - The company's ongoing license applications and existing permits could be negatively affected by regulatory non-compliance[58] - The company faces risks related to recent regulatory changes in the after-school tutoring services market[63] - The company's past financial performance may not be indicative of future results due to uncertainties in new business development and acquisitions[63] - The company has been involved in intellectual property infringement claims, including a 2001 case resulting in a RMB 6.5 million damages payment[65] - The company collaborates with international education content providers such as Cambridge University Press and Oxford University Press[65] - The company faces challenges in maintaining consistent teaching quality across its school network[62] - The company must provide competitive compensation to attract and retain qualified teachers in China[62] - The company's growth may be impacted by a limited pool of experienced teachers in China[62] - The company's operations are subject to Chinese laws requiring teachers to obtain necessary qualifications[62] - The company's acquisitions may not yield expected benefits and could negatively impact business management[64] - The company faces potential legal claims and disputes related to copyright infringement and unauthorized use of third-party names, which could lead to increased expenses, revenue loss, and reputational damage[66] - The company has invested over 20 years in building the "New Oriental" brand, emphasizing quality and consistency, but faces challenges in preventing unauthorized use of its trademarks and names by third parties[67] - The company operates in a highly competitive education industry in China, with competitors potentially having more resources and faster adaptability to market changes, which could impact student enrollment and profitability[67] - The company faces competition from online education providers using advanced technologies like live streaming, which may force the company to lower course fees or increase spending to remain competitive[67] - The company's profitability may be affected by intense competition from other live-streaming e-commerce participants with stronger financial and marketing resources[68] - The company's business operations could be significantly disrupted by infectious disease outbreaks, such as COVID-19, leading to temporary closures of schools and learning centers, impacting revenue and liquidity[70] - The company experienced a decline in gross and net profit margins due to regulatory developments in the after-school tutoring sector, with operating profit margins turning positive in FY2023 and improving in FY2024[71] - New investments and acquisitions may lead to a temporary decline in profit margins until the acquired businesses are fully integrated and synergies are realized[71] - The company's total revenue and operating performance are subject to seasonal fluctuations, with the highest revenue typically recorded in the first fiscal quarter (June 1 to August 31) due to increased student enrollment during summer[72] - The COVID-19 pandemic negatively impacted the company's financial and operating performance in the third and fourth fiscal quarters of 2020[72] - The company's American Depositary Shares (ADS) and ordinary shares experienced significant price declines following the release of the "Double Reduction" policy in July 2021[73] - The company's ADS and ordinary shares also saw a sharp decline after announcing the departure of a key figure and the sale of a subsidiary in July 2024[73] - The company faces risks from changes in exam materials, admission standards, and regulations, which could reduce the attractiveness of its courses and services[74] - The company may be required to take corrective measures or suspend training materials if it fails to comply with new curriculum and training material requirements[74] - A potential reduction in reliance on admission and assessment exams by higher education institutions could decrease demand for the company's services and products[75] - The company's deferred revenue, which represents prepaid tuition, may not reflect actual future revenue due to potential changes in customer preferences or service delivery[76] - Failure to fulfill obligations related to deferred revenue could adversely affect the company's operating performance and liquidity[76] - The company's new e-commerce platform under the "Oriental Selection" brand, launched in 2022, has shown significant progress in proprietary product sales and live-streaming e-commerce during the 2023 and 2024 fiscal years[78] - The "Yu Hui Tong Xing" live-streaming account, associated with star host Dong Yuhui, gained significant popularity since its launch in January 2024, leading to a broader consumer base[80] - In August 2024, "Yu Hui Tong Xing" ceased to be a consolidated affiliate of Oriental Selection, and its financial results were no longer included in Oriental Selection's consolidated financial statements[80] - The company's total net revenue for the fiscal year ending May 31, 2024, was largely derived from operations in Beijing, Hangzhou, Guangzhou, and Nanjing[80] - The company's OMO (Online-Merge-Offline) standardized digital classroom teaching system, developed in 2014, integrates offline schools and learning centers with online education systems to enhance operational efficiency[81] - The company faces risks in maintaining and expanding its market share due to rapid technological changes and unpredictable user preferences in the online education market[81] - The company relies heavily on star hosts for its live-streaming e-commerce business, and a decline in their popularity or inability to retain them could significantly impact gross merchandise value[80] - The company's ability to adapt to evolving student needs, technological advancements, and internet operations is critical for maintaining competitiveness in the online education market[81] - The company's reliance on unobservable inputs for fair value assessments of long-term investments introduces inherent uncertainty and subjectivity, which could significantly impact valuations[77] - The company maintains effective internal controls over financial reporting as of May 31, 2024, but cannot guarantee future effectiveness[82] - Lack of liability or business interruption insurance for some teaching facilities may expose the company to financial and reputational risks[83] - The company's online course infrastructure relies on elastic cloud computing to handle increasing student demand[83] - Multiple cloud data centers are used to ensure service continuity in case of damage to on-site computer centers[83] - The company has experienced multiple cyberattacks in the past, though none caused significant operational impact[84] - Data security measures are in place