Financial Performance - For the first quarter of fiscal year 2024, net revenue increased by 47.7% year-over-year to $1,100.0 million[3] - Operating profit for the first quarter rose by 163.0% year-over-year to $205.1 million[3] - Net profit attributable to New Oriental shareholders increased by 150.6% year-over-year to $165.4 million[3] - Non-GAAP operating profit for the first quarter was $244.8 million, up 152.2% year-over-year[4] - Net profit attributable to shareholders was $165.4 million, reflecting a year-over-year increase of 150.6%[11] - Non-GAAP net profit attributable to shareholders was $189.3 million, up 126.2% year-over-year[12] - Basic earnings per share for the three months ended August 31, 2023, was $0.10, up from $0.04 in the same period of 2022, representing a growth of 150%[25] - Net income attributable to New Oriental was $189.318 million for the three months ended August 31, 2023, up from $83.706 million in the same period of 2022, marking a 126.5% increase[27] - Basic net income per American Depositary Share (ADS) was $1.15 for Q3 2023, compared to $0.49 for Q3 2022, reflecting a significant growth of 134.7%[28] Operating Metrics - The total number of schools and learning centers reached 793, an increase of 45 from the previous quarter and 87 from the same period last year[6] - The overseas exam preparation and consultation business grew by 51.7% and 26.6% year-over-year, respectively[6] - Operating costs and expenses for the quarter were $894.9 million, a year-over-year increase of 34.2%[10] - Revenue cost increased by 41.4% to $441.2 million, while sales and marketing expenses rose by 37.9% to $136.1 million[10] - The total operating costs and expenses for the three months ended August 31, 2023, were $894,897, up from $666,833 in the previous year, reflecting an increase of approximately 34.1%[25] - The total operating expenses, excluding stock-based compensation, were $855.266 million for Q3 2023, compared to $647.778 million in Q3 2022, indicating a 32% increase[27] - Selling and marketing expenses rose to $7.427 million in Q3 2023 from $0.580 million in Q3 2022, a substantial increase of 1,178.4%[29] - General and administrative expenses increased to $27.232 million in Q3 2023 from $18.585 million in Q3 2022, reflecting a growth of 46.6%[29] Cash Flow and Assets - The company recorded a net operating cash flow of $335.8 million for the quarter[7] - Net operating cash flow for Q1 FY2024 was approximately $335.8 million, with capital expenditures of $132.5 million[13] - Cash and cash equivalents as of August 31, 2023, totaled $1,748.9 million, with short-term investments amounting to $1,423.9 million[13] - Cash and cash equivalents increased to $1.890721 billion at the end of Q3 2023, up from $1.137112 billion at the end of Q3 2022, showing a growth of 66.3%[30] - The company reported a net cash provided by operating activities of $335.786 million for Q3 2023, compared to $185.247 million in Q3 2022, an increase of 81.1%[30] Future Outlook - For Q2 FY2024, the company expects total net revenue to be between $785.0 million and $804.2 million, representing a year-over-year increase of 23% to 26%[14] - The company plans to continue focusing on enhancing product and service quality while leveraging its brand advantages to capture new market opportunities[6] - The company is focused on expanding its self-operated products and live e-commerce business, which contributed to the increase in operating costs[10] Deferred Revenue and Liabilities - Deferred revenue balance at the end of Q1 FY2024 was $1,401.4 million, a 38.4% increase from $1,012.5 million at the end of Q1 FY2023[13] - The company reported a significant increase in deferred revenue, totaling $1,401,420 as of August 31, 2023, compared to $1,337,630 as of May 31, 2023, which is an increase of about 4.8%[24] - Total assets as of August 31, 2023, were $6,674,715, an increase from $6,392,458 as of May 31, 2023, indicating a growth of approximately 4.4%[23][24] - Total liabilities as of August 31, 2023, were $2,695,194, compared to $2,577,670 as of May 31, 2023, reflecting an increase of about 4.6%[24] Non-GAAP Metrics - The company emphasized the importance of Non-GAAP financial metrics for providing additional insights into operational performance and liquidity, which are not reflected in GAAP measures[22] - New Oriental reported a non-GAAP operating profit of $244.755 million for the three months ended August 31, 2023, compared to $97.044 million in the same period of 2022, representing a year-over-year increase of 152.5%[27] - The non-GAAP operating profit margin improved to 22.3% in Q3 2023 from 13.0% in Q3 2022[27] - Weighted average shares used to calculate basic net income per ADS decreased to 1,651,203,885 in Q3 2023 from 1,700,829,829 in Q3 2022, a reduction of 2.9%[28]

Revenue Growth - Total net revenues increased by 47.7% year over year to $1,100.0 million for the first fiscal quarter of 2024[2][3] - Net revenues for the three months ended August 31, 2023, increased to $1,100,021 thousand, up from $744,822 thousand in the same period last year[26] - New Oriental expects total net revenues in the second quarter of fiscal year 2024 to be in the range of $785.0 million to $804.2 million, representing a year-over-year increase of 23% to 26%[16] Profitability - Operating income increased by 163.0% year over year to $205.1 million for the first fiscal quarter of 2024[2][3] - Net income attributable to New Oriental increased by 150.6% year over year to $165.4 million for the first fiscal quarter of 2024[2][3] - Operating income for the three months ended August 31, 2023, was $205,124 thousand, compared to $77,989 thousand in the same period last year[26] - Non-GAAP operating income for the three months ended August 31, 2023, was $244,755 thousand, compared to $97,044 thousand in the same period last year[28] - Net income attributable to New Oriental Education & Technology Group Inc.'s shareholders for the three months ended August 31, 2023, was $165,386 thousand, up from $66,002 thousand in the same period last year[26] - Non-GAAP net income attributable to New Oriental for the three months ended August 31, 2023, was $189,318 thousand, compared to $83,706 thousand in the same period last year[28] Operating Margins - GAAP operating margin for the quarter was 18.6%, an improvement of 810 basis points year over year[6] - Non-GAAP operating margin for the quarter was 22.3%, an improvement of 930 basis points year over year[6] Business Expansion - The total number of schools and learning centers increased to 793 as of August 31, 2023, up from 748 as of May 31, 2023[4] - Overseas test preparation and overseas study consulting businesses grew by 51.7% and 26.6% year over year, respectively[5] - New educational business initiatives achieved 103.3% revenue growth year over year, with 438,000 student enrollments and 181,000 active paid users[5] Cash Flow and Liquidity - Net operating cash inflow for the first fiscal quarter of 2024 was $335.8 million[14] - Cash, cash equivalents, and restricted cash at the end of the period were $1,890,721 thousand, up from $1,137,112 thousand in the same period last year[32] - Net cash provided by operating activities for the three months ended August 31, 2023, was $335,786 thousand, compared to $185,247 thousand in the same period last year[32] Assets and Liabilities - Total assets as of August 31, 2023, were $6,674,715 thousand, compared to $6,392,458 thousand as of May 31, 2023[24] - Total liabilities as of August 31, 2023, were $2,695,194 thousand, compared to $2,577,670 thousand as of May 31, 2023[24] Share-Based Compensation - Share-based compensation expenses for the three months ended August 31, 2023, were $39,631 thousand, up from $19,055 thousand in the same period last year[30]

Share Structure and Financial Reporting - The company has a total of 1,643,162,653 ordinary shares with a par value of $0.001 as of May 31, 2023[5] - The company is classified as a large accelerated filer according to the Securities Exchange Act rules[6] - The company follows U.S. Generally Accepted Accounting Principles (GAAP) for its financial statements[7] - The company's financial statements are consolidated under US GAAP, including the financial performance of its variable interest entities[9] - The company's financial data is presented in USD, with conversions based on exchange rates as of May 31, 2023[10] - The company's financial reporting currency is USD, with certain data converted for reader convenience[10] - The company's consolidated affiliated entities contributed 99.9%, 99.6%, and 99.5% of total net revenue for fiscal years 2021, 2022, and 2023 respectively[16] - The company's financial statements consolidate the financial performance of VIEs under U.S. GAAP[16] - The company's ability to consolidate financial statements under US GAAP may be impacted if penalties prevent it from directing activities or obtaining economic benefits from consolidated entities[113] Operational Structure and Subsidiaries - New Oriental Education & Technology Group Inc. operates through its Chinese subsidiaries, variable interest entities, and their affiliates in China[9] - The company operates in China through contractual arrangements with variable interest entities (VIEs) and their subsidiaries[16] - The company's Chinese subsidiaries and VIEs have entered into various contractual agreements, including equity pledge agreements, exclusive option agreements, and service agreements[17][18][19] - The company is considered the primary beneficiary of the VIEs due to the contractual arrangements[19] - New Oriental Education & Technology Group Inc. owns 100% of its key subsidiaries and variable interest entities as of May 31, 2023[20] - The company operates 79 schools in China through its subsidiaries[20] - Beijing Century Friendly Education Investment Co., Ltd. is 99% owned by the company's founder and executive chairman, Yu Minhong, and 1% owned by the executive president and CFO, Yang Zhihui[22] - The company's contractual arrangements with variable interest entities may not be as effective as direct ownership in providing operational control[22] - The company's Chinese operations rely on contractual arrangements, which are less effective than direct ownership in providing operational control[114] - The company operates in China through contractual arrangements with New Oriental China and its schools, which hold important assets for business operations[124] Regulatory and Legal Risks - The company faces risks related to the enforceability of its contractual arrangements with variable interest entities under Chinese regulations[23] - Changes in Chinese laws or regulations could lead to severe penalties or forced divestment of interests in certain businesses[23] - The company's American Depositary Shares and/or ordinary shares could significantly depreciate or become worthless if the variable interest entity structure is disallowed by Chinese regulators[23] - The company faces risks related to regulatory approvals for overseas offerings, antitrust actions, and data privacy regulations in China[24] - The company's operations and overseas financing activities require permits from Chinese regulatory authorities[25] - The company has obtained necessary licenses for its business operations in China, including ICP and EDI licenses[25] - The company is not currently required to undergo cybersecurity review by the Cyberspace Administration of China for overseas securities offerings[26] - The company must complete filing procedures with the China Securities Regulatory Commission for future overseas securities offerings[26] - The Chinese government has increased supervision and control over overseas listings and foreign investments[27] - Uncertainty exists regarding future regulatory approvals for overseas securities offerings in China[27] - Failure to obtain necessary approvals could result in penalties, including fines and suspension of operations[27] - The company faces risks from potential changes in college admissions and assessment exams in China and the US, which could reduce demand for its services[82] - The company may face penalties, refunds, or negative publicity if it fails to comply with regulations for tutoring services for grades 10-12[63] - The company could be required to cease tutoring services for grades 10-12, impacting its financial performance[63] - The company's smart learning systems and devices may be considered subject-based AST institutions, potentially leading to penalties, suspension of operations, or other regulatory actions if deemed non-compliant with the "Double Reduction" policy[65] - The company faces potential legal claims and disputes related to copyright infringement and unauthorized use of third-party names for marketing, which could lead to increased expenses and revenue loss[70] - The company has faced intellectual property infringement claims in the past, including a RMB 6.5 million damages payment in 2004[69] - The company is subject to Chinese laws and regulations governing data collection, storage, and privacy protection, with potential penalties for non-compliance[93] - The Data Security Law of the People's Republic of China, effective from September 2021, mandates security review procedures for data-related activities that may impact national security[94] - Network platform operators with over 1 million users' personal information must apply for cybersecurity review before listing overseas[94] - The Cybersecurity Review Measures, effective from February 2022, require critical information infrastructure operators to undergo cybersecurity review for procurement of network products and services[94] - The Personal Information Protection Law, effective from November 2021, defines personal information and sensitive personal information, imposing strict processing rules[95] - Data processors transferring important data or personal data overseas must undergo security assessments under the Data Export Security Assessment Measures, effective from September 2022[96] - Data processors transferring personal information of over 100,000 individuals or sensitive personal information of over 10,000 individuals since January 1 of the previous year must apply for security assessments[96] - The draft Data Security Management Regulations propose annual data security assessments for data processors handling "important data" or listing overseas[94] - The draft amendments to the Cybersecurity Law propose increased legal liabilities for violations of cybersecurity obligations by critical information infrastructure operators[94] - The scope of "critical information infrastructure operators" remains unclear, with potential additional obligations under Chinese cybersecurity laws[94] - The company has applied for security assessments for certain data transfers overseas under the Data Export Security Assessment Measures[96] - The company's business operations are currently in compliance with China's cybersecurity, data security, and personal data protection laws, but future regulations may become stricter and could lead to additional costs and liabilities[97] - The company faces potential fines and administrative measures if its advertising and promotional content violates Chinese laws and regulations, including restrictions on educational advertising[98] - The company cannot guarantee full compliance with all advertising and promotional content regulations, especially given increased government scrutiny[99] - The company may face legal disputes that could significantly impact its business, financial performance, and reputation[100] - The company is facing a putative shareholder class action lawsuit, which could significantly impact its business, financial condition, operating results, cash flow, and reputation[101] - The company may require additional funding for future development, including new business plans, investments, or acquisitions, but there is no guarantee it can secure financing on acceptable terms[102] - The company issued $300 million in 2.125% notes due in 2025, and failure to comply with the trust indenture or other debt agreements could lead to accelerated repayment and liquidity issues[103] - The company’s rental costs and ability to secure leases at desirable locations could significantly impact its business, with potential relocation costs and penalties for unregistered leases[104] - Some of the company’s leased properties do not fully comply with fire safety regulations, which could result in fines, relocation, and additional expenses[105] - Food safety and product quality are critical to the reputation and business success of Oriental Selection, with potential penalties for non-compliance with regulations[106] - The company's contractual arrangements with variable interest entities in China are subject to regulatory risks, potentially leading to severe penalties or loss of business interests[108] - Foreign ownership in value-added telecommunications services in China is restricted, with internet information service providers capped at 50% foreign ownership[109] - The company may be required to terminate contractual arrangements with its smart learning system entities if they are deemed as subject to the Double Reduction Policy[112] - The company could face penalties including license revocation, revenue confiscation, and operational restrictions if found in violation of Chinese laws or regulations[113] - The company’s operations may be significantly impacted by changes in Chinese laws, regulations, and policies governing private education, such as the "Double Reduction" policy[119] - The company’s use of seals (company, contract, and financial) is strictly controlled, with approvals required from legal, administrative, or financial departments to prevent misuse[118] - Misuse or unauthorized control of seals by designated legal representatives could disrupt the company’s normal business operations and require significant time and resources to resolve[118] - The company’s subsidiaries and New Oriental China may face restrictions on their ability to pay dividends or make other payments due to debt obligations or tax adjustments[120] - The company’s tax liabilities could increase if Chinese tax authorities adjust transfer pricing or impose penalties for underpaid taxes, negatively impacting net profits[119] - The company’s private schools must allocate a minimum of 25% of annual net profits or asset value increases to development funds, depending on their classification[120] - The company’s reliance on dividends and payments from its Chinese entities could limit its ability to invest, acquire, or fund its business operations[120] - Offshore holding company's ability to provide loans or additional capital to Chinese subsidiaries may be restricted by Chinese regulations and government currency exchange controls, potentially impacting liquidity and funding capabilities[121] - Loans to Chinese subsidiaries must comply with Chinese regulations, including registration with the State Administration of Foreign Exchange (SAFE) and adherence to statutory limits[121] - Capital injections into Chinese subsidiaries must be filed and reported to the Ministry of Commerce or its local departments, but are unlikely to fund New Oriental China and its schools due to regulatory constraints[122] - SAFE regulations (Circular No. 19 and No. 16) restrict the use of RMB converted from foreign currency registered capital, potentially limiting the company's ability to transfer foreign currency and impacting liquidity[122] - SAFE Circular No. 28 allows foreign-invested enterprises to use RMB converted from foreign currency for equity investments in China, provided it complies with applicable laws and the negative list for foreign investment[122] - Chinese laws and regulations may continue to limit the use of proceeds from overseas offerings, potentially affecting the company's ability to capitalize its Chinese business[123] - Bankruptcy or liquidation proceedings involving New Oriental China or its schools could result in the loss of assets, reducing operational scale and impacting revenue generation[124] - Changes in China's economic, political, or social conditions, or government policies, could significantly impact the company's business, financial condition, and operating results[126] - China's economic growth has slowed since 2010, with COVID-19 negatively impacting the economy in 2022[127] - Global economic recession and geopolitical tensions could adversely affect the company's financial performance and access to financing[128] - Uncertainties in China's legal system and regulatory changes may pose risks to the company's operations[129] - Increased Chinese government oversight of overseas listings could lead to significant adverse changes in the company's operations and stock value[130] - Future regulatory approvals for overseas securities offerings may be delayed or denied, impacting the company's ability to raise capital[131] - The company may face significant uncertainty regarding the classification of its contractual arrangements as foreign investment under the PRC Foreign Investment Law, potentially requiring the termination of existing arrangements or sale of related business operations[132] - Non-compliance with Chinese internet content regulations could lead to penalties, license revocation, and website closures, adversely affecting the company's operations and reputation[133] - The company must obtain multiple licenses and permits for its education and e-commerce businesses, including ICP, food operation, publication operation, and performance operation licenses[134] - The company is required to comply with various health, safety, and food regulations, and failure to obtain or renew necessary licenses could result in fines, legal sanctions, or service suspension[135] - Chinese residents establishing offshore special purpose companies must register with the State Administration of Foreign Exchange, and failure to do so may limit the company's ability to inject capital into its Chinese subsidiaries or repatriate profits[136] - The company must submit applications to the State Administration of Foreign Exchange (SAFE) for employees participating in equity incentive plans, with no guarantee of approval[138] - Non-compliance with SAFE regulations could result in fines, legal sanctions, and restrictions on employees' ability to exercise stock options or repatriate funds[138] - The company's offshore offerings may require approval from the China Securities Regulatory Commission (CSRC) or other government agencies, with uncertain timelines[138] - Acquisitions in China are subject to complex procedures under the Anti-Monopoly Law and may face delays in obtaining necessary approvals[138] - Overseas investments by Chinese-controlled entities exceeding $300 million in non-sensitive projects must report to the National Development and Reform Commission (NDRC)[139] - The company must comply with new CSRC regulations for overseas securities issuance and listing, including filing requirements for future offerings[140] - The company is required to establish a confidentiality and archive management system for overseas securities issuance under new CSRC rules[140] - Rising labor costs in China may significantly impact the company's profitability and operating performance[142] - The company is required to contribute to government-mandated employee welfare programs, including social insurance and housing funds, based on a percentage of employee salaries[143] - Chinese government controls on currency exchange may limit the company's ability to pay dividends to foreign shareholders[144] - Fluctuations in the RMB exchange rate could have a material adverse effect on the company's revenue, earnings, and financial condition[145] - Limited availability of hedging tools in China to mitigate foreign exchange risk[146] - Potential regulatory penalties or sanctions if the company fails to obtain necessary approvals or complete required filings for overseas issuances[141] - The company may face fines, late fees, or legal sanctions if it fails to make sufficient employee welfare payments[143] - Future restrictions on foreign currency access could hinder the company's ability to meet its currency needs[144] - The company currently has no hedging transactions in place to mitigate foreign exchange risk[146] - Regulatory uncertainty or negative reports regarding approval requirements could adversely affect the company's business and stock price[141] - The company faces uncertainty in obtaining and maintaining necessary licenses for its online business in China, particularly regarding internet audio-visual programs, broadcasting, and online education activities[153] - The company has re-submitted or is in the process of re-submitting filings for its educational mobile applications to comply with the "Double Reduction" policy[153] - The company may need additional or updated ICP licenses to cover all its current telecommunications services due to potential changes in regulatory interpretations[153] - The company's live-streaming e-commerce business through Dongfang Zhenxuan does not require an internet culture business license as it primarily involves agricultural product sales[153] - The company could face penalties, legal sanctions, or suspension of online tutoring services if it fails to obtain required licenses or permits[154] - PCAOB's inability to inspect the company's auditors in China previously deprived investors of the benefits of such inspections[155] - The company's American Depositary Shares (ADS) could be delisted from U.S. exchanges if PCAOB is unable to inspect its auditors for two consecutive years[155] - PCAOB removed China and Hong Kong from the list of jurisdictions where it cannot inspect or investigate registered public accounting firms, and the company expects not to be identified as a Commission-Identified Issuer under HFCAA after submitting its Form 20-F for the fiscal year ending May 31, 2023[156] - If the company is identified as a Commission-Identified Issuer under HFCAA for two consecutive years, its securities will be prohibited from trading on U.S. national securities exchanges or over-the-counter markets, severely impacting its ability to raise funds[156] - Overseas regulators may face difficulties conducting investigations or obtaining evidence within China due to legal procedures and the lack of effective cooperation mechanisms with U.S. securities regulators[157] - The company’s ADS and ordinary shares have experienced significant price volatility, with ADS closing prices ranging from $12.60 to $58.70 on the NYSE and ordinary shares ranging from HK$10.10 to HK$46.40 on the HKEX between June 1, 2022, and September 21, 2023[160] - The company’s organizational bylaws include provisions that differ from HKEX rules, such as requiring at least one-third of total voting rights to convene an extraordinary general meeting, which was revised to align with HKEX rules in March 2021[158] - If 55% or more of the global trading volume of the company’s ordinary shares and ADS in the most recent fiscal year occurs on the HKEX, the company will be considered dual-primary listed and lose certain exemptions, potentially increasing compliance costs[159] - The trading market of the company's ordinary shares and/or American Depositary Shares (ADS) may be negatively impacted by downgrades or cessation of coverage by securities or industry analysts, potentially leading to price and volume declines[161] - ADS holders have fewer rights compared to ordinary shareholders and must exercise their rights through the depositary, which may result in delayed or missed voting opportunities[162] - ADS holders may have limited participation in future rights offerings, potentially leading to equity dilution[163] - ADS transfers may be subject to restrictions by the depositary, including closure of transfer books or refusal to register transfers under certain circumstances[164] - Judgments obtained by shareholders against the company may not be enforceable due to the company's incorporation in the Cayman Islands and primary operations in China[165] - The recognition and enforcement of foreign judgments in China are subject to treaties or reciprocity principles, and there is no such treaty between China and the United States[166] - Shareholders of the company, as a Cayman Islands exempted company, may have more limited rights compared to shareholders of companies incorporated in the United States or Hong Kong[167] - The company's articles of association include anti-takeover provisions that may adversely affect the rights of ordinary shareholders and ADS holders[168] - The company is classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes as of May 31, 2023, potentially leading to significant tax consequences for U.S. holders of ADS or ordinary shares[169] - Differences between Hong Kong and U.S. capital markets may adversely impact the trading prices of the company's ordinary shares and/or ADS[170] - Exchange between ordinary shares and ADS may negatively affect liquidity and/or trading prices of both securities[171] - Delays in exchanging ordinary shares for ADS (or vice versa) may prevent investors from settling or selling their securities during the delay period[172] - The company's ordinary shares may not maintain an active trading market on the Hong Kong Stock Exchange, potentially leading to significant price volatility[173] - The current total stamp duty rate for transferring shares in Hong Kong is 0.2%, with 0.1% paid by each of the buyer and seller[174] - The company repurchased 952,000 ADS at a total cost of $56.0 million, with a weighted average repurchase price of $58.78 per ADS[177] - The company issued $300 million of 2.125% notes due in 2025, with net proceeds of

Company Operations - As of May 31, 2023, the company operates a physical network of 85 schools and 663 learning centers across 78 cities in China, employing approximately 26,600 teachers[301]. - The company has ceased offering K-9 Academic AST Services since the end of 2021, resulting in the closure of certain schools and learning centers[305]. - The company offers a variety of educational programs, including test preparation courses and online education, with classroom-based courses designed to be completed in 2 to 16 weeks[308]. - The company has a distribution network consisting of 9 self-operated bookstores and 241 third-party distributors, providing access to a nationwide network of online and offline bookstores[302]. - The company has implemented an OMO (Online-Merge-Offline) system to enhance operational efficiency by combining offline and online learning[301]. - The company has expanded its non-academic tutoring courses to around 60 cities in China since their launch in 2021[313]. - The intelligent learning systems and devices had 183,000 active paid users in the fiscal year ended May 31, 2023, although their contribution to the business was immaterial[314]. - The company developed and edited approximately 516 titles and distributed around 17.0 million books in China during the fiscal year ended May 31, 2023[319]. - The company’s proprietary teaching content development involved around 1,400 personnel as of May 31, 2023, ensuring consistent teaching quality across services[328]. Financial Performance - The company raised approximately US$1.48 billion in net proceeds from its listing on the Hong Kong Stock Exchange on November 9, 2020[297]. - A share repurchase program was authorized in July 2022, allowing the company to repurchase up to US$400 million of its ADSs or common shares through May 31, 2023, with an extension through May 31, 2024[299]. - The company completed a share repurchase of 952,000 ADSs for US$56.0 million at a weighted average purchase price of US$58.78 per ADS during its previous repurchase program[296]. - In the fiscal year ended May 31, 2023, the company had approximately 495,000 student enrollments in test preparation courses, with 284,000 in overseas courses and 211,000 in PRC courses[312]. - The company reported approximately 1,621,000 student enrollments in non-academic tutoring courses for the fiscal year ended May 31, 2023[313]. - The company expects seasonal fluctuations in operations, with the highest revenue from test preparation courses typically occurring in the first fiscal quarter[337]. - The company has established a strong brand recognition in the private education sector, contributing to significant organic growth through referrals[329]. - The company leverages its OMO system to enhance student acquisition effectiveness while reducing costs[329]. Regulatory Environment - The 2015 amended Education Law allows for-profit educational institutions, effective from June 2016, reversing the previous prohibition[340]. - The 2016 Amended Private Education Law introduced a classification system for private schools, allowing for-profit and non-profit categories, with compulsory education schools remaining non-profit[346]. - For-profit private schools can retain profits and set their own tuition fees without prior government approval, while non-profit schools must adhere to regulated fee structures[346]. - The Amended Implementation Rules require for-profit schools to allocate at least 10% of their audited annual net income to a development fund[351]. - The State Council's 2018 Circular 80 imposes strict regulations on after-school tutoring institutions, including safety requirements and limitations on training content[357]. - After-school tutoring institutions are prohibited from conducting advanced training outside the formal school curriculum for primary and secondary students[359]. - Local authorities are tasked with formulating standards for after-school tutoring institutions, ensuring compliance with safety and operational requirements[357]. - The 2021 Guiding Opinions prohibit after-school tutoring institutions from providing training for preschool children in violation of regulations[361]. - The Ministry of Education emphasizes the need for local governments to manage homework assignments to prevent increased burdens on students from after-school programs[361]. - The government encourages social forces to invest in private education, enhancing support through financial investment and preferential policies[347]. - The Alleviating Burden Opinion prohibits new after-school tutoring institutions for compulsory education and mandates existing ones to register as non-profit[362]. - Online academic tutoring institutions must undergo review and re-approval, with non-compliance leading to cancellation of licenses[362]. - After-school tutoring institutions are restricted from operating during national holidays, weekends, and school breaks[363]. - Fees for academic tutoring in compulsory education will be subject to government price management to prevent excessive charges[363]. - By May 15, 2022, approximately 88% of non-academic tutoring institutions had implemented third-party custodians or risk reserve funds for managing prepaid fees[375]. - The MOE requires all academic after-school tutoring institutions to complete registration as non-profit by the end of 2021, suspending student enrollment until then[368]. - Non-academic tutoring institutions must comply with safety and qualification standards, and cannot charge fees in a lump sum for more than 60 sessions or for a course length exceeding three months[380]. - The Interim Measures for Administrative Penalties on Off-campus Tutoring will take effect on October 15, 2023, imposing penalties for illegal tutoring activities[381]. - The regulations on after-school tutoring are subject to change, which may require the company to adapt its services to remain compliant[382]. - The MOE has established guidelines to strengthen supervision over after-school tutoring institutions, including the prohibition of disguised academic tutoring[377]. Online Education Regulations - The Preschool Opinions aim to achieve a pre-school gross enrollment rate of 85% by 2020 and a coverage of kindergartens with universal access of 80% by 2020[385]. - The regulations prohibit non-state capital from controlling non-profit kindergartens and restrict private kindergartens from listing as public companies[385]. - Online after-school tutoring institutions must publicly disclose teacher qualifications and maintain records of tutoring content for over one year[386]. - Each online class is limited to a maximum duration of 40 minutes, with breaks of at least 10 minutes between classes[386]. - The MOE requires that online after-school tutoring institutions obtain a private school operation permit by the end of 2021[393]. - The filing for mobile internet applications must be completed by March 2024 for apps that began operating before July 21, 2023[397]. - Internet information service providers must obtain an ICP license to operate commercial internet services in China[399]. - Educational live streaming activities are not classified as online performances, thus not requiring an Internet Culture Operation License[402]. - The MOE emphasizes the importance of data security systems for online education applications, particularly for those targeting minors[394]. - The regulations restrict online education products for minors from including links to online games or irrelevant advertisements[392]. - The company is required to obtain a License for Online Transmission of Audio-Visual Programs, but there is uncertainty regarding whether its online business falls within the definition of "Audio-visual Programs" as per the regulations[404]. - The PRC Cybersecurity Law mandates that network operators must obtain consent from individuals before collecting personal information and must not gather unrelated personal information[406]. - The company must comply with the Personal Information Protection Law, which includes handling sensitive personal information and ensuring the security of personal data[413]. - The company is subject to the Measures on Security Assessment of the Cross-border Transfer of Data, which requires security assessments for transferring personal data overseas if certain thresholds are met[418]. Permits and Compliance - The company’s subsidiaries have obtained relevant Permits for Operating Publications Business, which are subject to inspections by regulatory authorities[422]. - The company has obtained the necessary permits for outbound tourism operations through its subsidiary, Beijing New Oriental Walkite International Travel Co., Ltd[425]. - The Ministry of Education (MOE) guidelines stipulate that overseas study tours for primary and middle school students must have a study schedule comprising at least 50% of the total itinerary[426]. - The MOE's Opinions on Education Fees clarify that for-profit private schools can set their own fee levels, while non-profit schools are regulated by provincial governments[428]. - The NDRC, MOE, and SAMR have established that fees for after-school tutoring in compulsory education are subject to government-guided pricing[429]. - The MOE's Administrative Measures require that pre-paid tutoring fees be deposited into special accounts, separate from the institution's funds[430]. - The PRC Advertising Law mandates that companies engaging in advertising must obtain a business license that includes advertising in their scope[431]. - The PRC Consumer Protection Law requires business operators to provide accurate information regarding goods and services and ensure compliance with quality standards[436]. - The E-Commerce Law of the PRC emphasizes fair market competition and prohibits e-commerce operators from imposing unreasonable restrictions on transactions[442]. - The company’s livestreaming e-commerce business does not require an Internet Culture Operation License as it focuses on the sale of agricultural products[441]. - The Trial Administrative Measures for Online Livestreaming Sales mandate that channel operators ensure the authenticity of information provided and maintain records of products and suppliers[443]. Foreign Investment and Regulations - The 2021 Negative List restricts foreign investment in 12 industries, including pre-school education and senior high school education, requiring cooperative joint ventures with a dominant domestic role[449]. - Foreign investors are prohibited from holding more than 50% equity in telecommunications enterprises providing value-added services, requiring approvals from MIIT and Ministry of Commerce[458]. - The Foreign Investment Law implements a pre-establishment national treatment system, ensuring foreign investments are treated equally to domestic investments, except in prohibited industries[451]. - The Anti-Monopoly Law mandates that transactions involving concentrations with specified turnover thresholds must be cleared by SAMR before completion[444]. - Foreign investment in publishing, including books and electronic publications, is prohibited under the 2021 Negative List[456]. - The MOFCOM Order No. 4 of 2020 allows for the inclusion of foreign entities in the list of unreliable entities based on their impact on China's sovereignty and security[447]. - The Foreign Investment Law replaced previous regulations and allows existing foreign-invested enterprises to maintain their corporate forms for five years post-implementation[450]. - The 2021 Negative List requires foreign educational organizations to operate in cooperation with Chinese counterparts in restricted industries[453]. - The regulations on foreign currency exchange allow RMB to be freely convertible for current account items, but capital account items require prior approval from SAFE[464]. - The Anti-Monopoly Guidelines for the Internet Platform Economy specify circumstances under which internet platform activities may be deemed monopolistic[445]. - SAFE Circular 142 regulates the conversion of foreign currency capital into RMB for foreign-invested companies, restricting its use to approved business scopes and requiring SAFE's approval for any changes[465]. - SAFE Circular 19 allows RMB capital converted from foreign currency to be used for equity investments in China, but applications for such investments are often rejected if they exceed the business scope[466]. - SAFE Circular 28 permits foreign-invested companies to use RMB converted from foreign currency for equity investments in China, provided they comply with applicable laws and the negative list on foreign investment[466]. Taxation and Compliance - The Overseas Listing Trial Measures, effective March 31, 2023, require domestic companies seeking to list overseas to fulfill filing procedures with the CSRC[482]. - The CSRC has established a six-month transition period for companies that have obtained overseas regulatory approvals prior to the effective date of the Overseas Listing Trial Measures[483]. - The EIT Law imposes a uniform 25% enterprise income tax rate on both foreign-invested and domestic enterprises, with a preferential 15% rate for "high and new technology enterprises"[486]. - Non-compliance with SAFE regulations may lead to penalties, including restrictions on foreign exchange activities and dividend distributions[469]. - The M&A Rule requires prior notification to the Ministry of Commerce for foreign investors taking control of PRC domestic enterprises in certain situations[481]. - The implementation of employee stock ownership programs requires filing with local tax authorities before execution and exercise of share options[477]. - The regulations on labor require employers to establish labor contracts and ensure wages meet local minimum standards[472]. - Software enterprises established after January 1, 2011, are exempt from enterprise income tax for two years starting from their first profitable year, followed by a 12.5% tax rate for the next three years[487]. - Enterprises established before January 1, 2011, can continue to enjoy similar tax preferential treatments until their tax holiday expires[488]. - Software enterprises must provide filing documents for preferential tax treatments when filing annual enterprise income tax returns[489]. - The enterprise income tax law states that foreign enterprises with "de facto management bodies" in China are considered "resident enterprises" and subject to a 25% tax rate on global income[490]. - The SAT issued a bulletin in August 2011 clarifying the determination of resident status and tax withholding for PRC-controlled offshore enterprises[491].

Financial Data and Key Metrics Changes - New Oriental reported a significant recovery in financial performance, with operating margin reaching 5.6% and non-GAAP operating margin at 9.1% for the quarter, indicating resilience across business lines [5][6] - Operating income was $48.1 million compared to a loss of $105.6 million in the same period last year, while non-GAAP income from operations was $78.6 million compared to a loss of $76.9 million [18][19] - Net income attributable to New Oriental for the quarter was $29 million, a substantial improvement from a loss of $189.3 million in the prior year [19] Business Line Data and Key Metrics Changes - The overseas test prep business reported a revenue increase of 52% in dollar terms or 62% in RMB terms year-over-year [8] - The overseas study consulting business recorded a revenue increase of about 6% in dollar terms or 13% in RMB terms year-over-year [8] - The adults and university students business saw a revenue increase of 34% in dollar terms or 43% in RMB terms year-over-year [9] Market Data and Key Metrics Changes - The deferred revenue balance increased by 43.4% year-over-year, reaching $1.34 billion, indicating strong demand and future revenue recognition [20] - Cash and cash equivalents totaled approximately $4.5 billion, reflecting a healthy financial position [16] Company Strategy and Development Direction - The company plans to increase capacity by 15% to 20% in the new fiscal year, focusing on existing cities and expanding classroom areas in high-performing locations [21][22] - New Oriental aims to leverage its brand advantage and solid foundation to capture market opportunities, particularly in overseas-related courses and non-academic offerings [21][30] - The company is committed to integrating new technologies such as AI and ChatGPT into its educational offerings to enhance operational efficiency and growth [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business trajectory, driven by post-COVID recovery and strong demand for educational services [21][30] - The company anticipates total net revenue in the first quarter of fiscal year 2024 to be in the range of $983.2 million to $1,005.5 million, representing a year-over-year increase of 32% to 35% [22] Other Important Information - The company repurchased approximately 5.9 million ADS for about $191.7 million under its share repurchase program [16] - Operating costs and expenses increased by 29% year-over-year, primarily due to growth in East Buy's private label products and live streaming e-commerce business [17] Q&A Session Summary Question: Capacity expansion plans - Management confirmed a capacity expansion of 15% to 20% for FY '24, primarily in existing cities, driven by strong demand in overseas test prep and non-academic courses [26][27] Question: Drivers of strong growth guidance - Management attributed strong growth to post-COVID recovery, increased demand for overseas-related courses, and reduced competition in the market [30][31] Question: Selling expenses increase - Selling expenses rose due to increased market demand, with expectations of continued spending in the new fiscal year while maintaining operating leverage [33][34] Question: Revenue breakdown by segments - Management provided a revenue mix for Q4, indicating overseas-related business contributed about 11% from test prep and 17% from consulting [39] Question: Cultural tourism services - Management highlighted the potential of the cultural tourism market, leveraging teacher expertise to create unique offerings for middle-aged and older demographics [43][44]

Revenue and Profit Growth - Net revenue for Q4 FY2023 increased by 64.2% YoY to $860.6 million[3] - Operating profit for Q4 FY2023 rose by 145.5% YoY to $48.1 million[3] - Net income attributable to New Oriental for Q4 FY2023 increased by 115.3% YoY to $29.0 million[3] - Non-GAAP operating profit for Q4 FY2023 surged by 202.2% YoY to $78.6 million[4] - Net revenue for FY2023 decreased by 3.5% YoY to $2,997.8 million[5] - Operating profit for FY2023 improved by 119.3% YoY to $190.0 million[5] - Net income attributable to New Oriental for FY2023 increased by 114.9% YoY to $177.3 million[5] - Revenue for Q4 2023 increased by 64.2% YoY to $860.6 million, driven by new education businesses and self-operated products and live e-commerce from Dongfang Zhenxuan[10] - Net revenue for the quarter ending May 31, 2023, was $860.571 million, a significant increase from $524.023 million in the same period last year[24] - Operating profit for the quarter was $48.054 million, compared to an operating loss of $105.649 million in the previous year[24] - Net profit attributable to New Oriental shareholders was $28.959 million, a turnaround from a net loss of $189.302 million in the same period last year[24] - Non-GAAP operating profit for the quarter was $78.592 million, compared to a non-GAAP operating loss of $76.865 million in the previous year[26] - Net revenue for the fiscal year ending May 31, 2023, was $2,997.76 million, a decrease from $3,105.25 million in the previous year[30] - Operating profit for the fiscal year ending May 31, 2023, was $190.05 million, compared to an operating loss of $982.51 million in the previous year[30] - Net profit attributable to New Oriental shareholders was $177.34 million, a significant improvement from a net loss of $1,187.72 million in the previous year[30] Operating Margins and Profitability - GAAP operating margin for Q4 2023 was 5.6%, compared to -20.2% in the same period last year[11] - Non-GAAP operating margin for Q4 2023 was 9.1%, compared to -14.7% in the same period last year[11] - The company's operating profit margin improved to 5.6%, with a non-GAAP operating profit margin of 9.1%[26] - Non-GAAP operating profit margin improved to 9.3% from -27.4% in the previous year[32] Cash Flow and Financial Position - Net operating cash flow for Q4 2023 was approximately $421.6 million[13] - Total cash, cash equivalents, time deposits, and short-term investments amounted to approximately $4.5 billion as of the end of Q4 2023[13] - Deferred revenue balance increased by 43.4% YoY to $1,337.6 million at the end of Q4 2023[13] - Cash and cash equivalents increased to $1,662,982 thousand as of May 31, 2023, compared to $1,148,637 thousand as of May 31, 2022[22] - Restricted cash, current, was reported at $110,892 thousand as of May 31, 2023, compared to none in the previous year[22] - Short-term investments decreased to $1,477,843 thousand as of May 31, 2023, from $1,902,254 thousand as of May 31, 2022[22] - Total current assets slightly decreased to $4,413,887 thousand as of May 31, 2023, from $4,473,959 thousand as of May 31, 2022[22] - Property and equipment, net, decreased to $359,760 thousand as of May 31, 2023, from $402,690 thousand as of May 31, 2022[22] - Goodwill increased to $105,514 thousand as of May 31, 2023, from $70,803 thousand as of May 31, 2022[22] - Long-term investments decreased to $399,585 thousand as of May 31, 2023, from $437,919 thousand as of May 31, 2022[22] - Deferred tax assets, net, increased significantly to $55,933 thousand as of May 31, 2023, from $20,038 thousand as of May 31, 2022[22] - Total assets increased to $6,392,458 thousand as of May 31, 2023, from $6,034,666 thousand as of May 31, 2022[22] - Total liabilities increased to $2.57767 billion as of May 31, 2023, from $2.241142 billion in the previous year[23] - Deferred revenue increased to $1.33763 billion, up from $933.062 million in the previous year[23] - Cash, cash equivalents, and restricted cash at the end of the quarter were $1.805427 billion, up from $1.194527 billion in the previous year[29] - Operating cash flow for the quarter was $421.609 million, a significant increase from $29.347 million in the same period last year[29] - Cash flow from operating activities was $971.01 million, a substantial increase from a negative cash flow of $1,280.45 million in the previous year[35] - Total cash, cash equivalents, and restricted cash at the end of the fiscal year was $1,805.43 million, up from $1,194.53 million at the beginning of the year[35] Business Expansion and Operations - Total number of schools and learning centers increased to 748 as of May 31, 2023, up by 36 from February 28, 2023[7] - Total number of schools reached 85 as of May 31, 2023[7] - Non-academic tutoring business expanded to approximately 60 cities, attracting 629,000 student enrollments in the quarter[8] - Active paying users for the intelligent learning system and devices reached 99,000 in approximately 60 cities[8] Earnings and Shareholder Metrics - Basic earnings per ADS for the fiscal year ending May 31, 2023, were $1.06, compared to a loss of $7.00 per ADS in the previous year[30] - Non-GAAP basic earnings per ADS were $1.54, compared to a loss of $6.17 in the previous year[33] - Non-GAAP net profit attributable to New Oriental shareholders was $62.091 million, compared to a non-GAAP net loss of $160.339 million in the previous year[26] Costs and Expenses - Total operating costs and expenses decreased to $2,807.71 million from $4,087.76 million in the previous year[30] - Share-based compensation expenses decreased to $89.79 million from $132.97 million in the previous year[34] Future Outlook - For Q1 2024, the company expects net revenue to be between $983.2 million and $1,005.5 million, representing a YoY increase of 32% to 35%[16] Corporate Events - The company will hold its earnings conference call for the fourth quarter of fiscal year 2023 on July 26, 2023, at 8:00 AM Eastern Time[17]

Financial Data and Key Metrics Changes - The company reported a GAAP operating margin of 8.8% and a non-GAAP operating margin of 11.7% for the quarter [6] - Operating income increased by 147.1% year-over-year to $66.5 million, while non-GAAP operating income rose by 179% to $87.9 million [17] - Net income attributable to New Oriental was $81.6 million, representing a 166.7% increase year-over-year [17] - Non-GAAP net income for the quarter was $95.4 million, reflecting a 199.9% increase year-over-year [18] - Cash and cash equivalents, term deposits, and short-term investments totaled approximately $4.3 billion [14] Business Line Data and Key Metrics Changes - The overseas test prep business recorded a revenue increase of 13% in dollar terms or 23% in RMB terms year-over-year [8] - The adults and university students' business saw a revenue decrease of 3% in dollar terms or a 5% increase in RMB terms year-over-year [8] - Non-academic tutoring courses had 218,000 student enrollments this quarter, with the top 10 cities in China contributing about 60% of the revenue [9] - The intelligence learning system and device business had 108,000 active paid users this quarter, with revenue contribution from the top 10 cities in China around 60% [9] Market Data and Key Metrics Changes - Deferred revenue balance increased by 19.8% year-over-year to $1.163 billion [19] - The company is seeing strong demand for overseas test prep and consulting business due to reduced competition in the market [25] Company Strategy and Development Direction - The company aims to sustain healthy growth in market share and pursue innovative endeavors as the economy recovers [7] - Plans to moderately increase capacity in learning centers and expand classroom areas in major cities [20] - The company is exploring opportunities in cultural tourism, leveraging its educational resources and teacher expertise [37][38] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of key business lines and the potential for further market share growth as the pandemic subsides [20] - The company expects total net revenue in Q4 FY 2023 to be in the range of $801.8 million to $822.7 million, representing a year-over-year increase of 53% to 57% [20] Other Important Information - The company invested $26.8 million in the OMO teaching platform during the reporting period [12] - The share repurchase program authorized up to $400 million, with approximately $157.6 million repurchased as of April 18, 2023 [14] Q&A Session Summary Question: Key drivers for fourth quarter growth and FY 2024 expectations - Management highlighted strong demand for overseas test prep and consulting, with less competition in the market as key drivers for growth [25][26] Question: Earnings contribution from Tung-Jung Hsieh - Management noted that East Buy has proven to be a successful business model, contributing significantly to overall revenue and profit growth [31] Question: Breakdown of new initiatives revenue and long-term business direction - The largest revenue contributor among new initiatives is non-academic tutoring, with strong demand and retention rates [34] - The intelligent learning device business is also gaining traction and expected to contribute more revenue [35] Question: Cash management and share buyback versus special dividends - Management stated that the decision on share buybacks versus special dividends will depend on the Board's evaluation [41] Question: Retention rates for non-academic tutoring - Retention rates for non-academic children's courses are over 70%, while the renewal rate for the intelligence learning system devices is over 60% [42] Question: Profitability of new businesses - Overall margins for new businesses are over 10%, with expectations for improvement in the upcoming quarters [45] Question: Growth opportunities in non-academic tutoring - Management sees growth opportunities in both top-tier and lower-tier cities, leveraging existing educational infrastructure [50]

Financial Performance - For the third fiscal quarter ended February 28, 2023, net revenue increased by 22.8% year-over-year to $754.2 million[3] - Operating profit for the third fiscal quarter rose by 147.1% year-over-year to $66.5 million[3] - Net profit attributable to New Oriental shareholders increased by 166.7% year-over-year to $81.6 million[3] - Non-GAAP operating profit for the third fiscal quarter was $87.9 million, compared to a loss of $111.2 million in the same quarter last year, representing a 179.0% increase[4] - For the first nine months of fiscal 2023, net revenue was $2.14 billion, a decrease of 17.2% compared to $2.58 billion in the same period of fiscal 2022[5] - Non-GAAP net profit attributable to New Oriental shareholders for the first nine months was $196.8 million, compared to a loss of $885.9 million in the same period last year, reflecting a 122.2% increase[5] - Basic earnings per ADS for the third fiscal quarter was $0.49, compared to a loss of $0.72 in the same quarter last year, marking a 167.8% increase[4] - Non-GAAP net profit attributable to shareholders for the third quarter was $95.4 million, a year-over-year increase of 199.9%[13] - The company reported a net profit attributable to shareholders of $81.648 million for the three months ended February 28, 2023, compared to a net loss of $122.439 million in the same period of 2022[26] - Operating profit for the three months ended February 28, 2023, was $66.491 million, a significant improvement from an operating loss of $141.194 million in the same period of 2022[26] - Basic earnings per American Depositary Share (ADS) for the three months ended February 28, 2023, was $0.49, compared to a loss of $0.72 in the same period of 2022[30] - Net profit attributable to New Oriental for the nine months ended February 28, 2023, was $148,382, a significant improvement from a net loss of $(998,419) in the same period of 2022[33] - Basic earnings per American Depositary Share (ADS) for the nine months ended February 28, 2023, was $0.88, compared to a loss of $(5.89) in the same period of 2022[37] Operational Metrics - The total number of schools and learning centers as of February 28, 2023, was 712, an increase of 4 from 708 as of November 30, 2022, but a decrease of 135 from 847 as of February 28, 2022[7] - The total number of schools as of February 28, 2023, was 91[7] - The total number of schools and learning centers reached 712 by the end of the quarter, with significant investments in maintaining the OMO system to enhance operational efficiency[10] - The company achieved a net operating cash flow of approximately $190.5 million for the quarter, with total cash, cash equivalents, and short-term investments amounting to approximately $4.3 billion[11][13] - The deferred revenue balance increased by 19.8% year-over-year to $1.163 billion, reflecting strong demand for educational services[14] - Deferred revenue increased to $1.163 billion as of February 28, 2023, up from $933.062 million as of May 31, 2022, indicating a growth of approximately 24.6%[25] - The company generated a net cash inflow from operating activities of $190.482 million for the three months ended February 28, 2023, compared to a cash outflow of $234.965 million in the same period of 2022[32] - The company reported a cash flow from operating activities of $549,399 for the nine months ended February 28, 2023, compared to $(1,309,800) in the same period of 2022[39] Financial Position - New Oriental reported cash and cash equivalents of $1,329,453,000 as of February 28, 2023, an increase from $1,148,637,000 in the previous year[24] - Total current assets reached $4,700,797,000, up from $4,473,959,000 year-over-year[24] - The net value of intangible assets increased significantly to $27,534,000 from $2,800,000 in the previous year[24] - Goodwill increased to $107,717,000, compared to $70,803,000 in the previous year, indicating growth in acquisitions or market expansion[24] - Non-current restricted cash decreased to $31,175,000 from $45,890,000, reflecting changes in liquidity management[24] - The company has a total asset value of $6,164,297,000, compared to $6,034,666,000 in the previous year, showing overall growth[24] - New Oriental's net receivables increased to $28,850,000 from $16,430,000, indicating improved collection or sales performance[24] - Total liabilities as of February 28, 2023, amounted to $2.288 billion, slightly up from $2.241 billion as of May 31, 2022, indicating a year-over-year increase of about 2.1%[25] - The company’s total equity as of February 28, 2023, was $3.877 billion, an increase from $3.794 billion as of May 31, 2022, reflecting a growth of about 2.2%[25] Strategic Initiatives - The company plans to repurchase up to $400 million of its American Depositary Shares or common stock under a buyback program authorized by the board[9] - The company continues to focus on improving product competitiveness and developing diverse content, contributing to significant revenue growth in its e-commerce segment[10] - The company is focused on expanding its online education services and enhancing its brand presence in the competitive market[20] - New Oriental is actively investing in new product development and technology to enhance its educational offerings[20] - The management anticipates continued growth in the private education sector in China, despite potential risks and uncertainties[21] - The company aims to continue its market expansion and product development strategies to enhance future growth prospects[33] - The company expects net revenue for the fourth fiscal quarter to be between $801.8 million and $822.7 million, representing a year-over-year growth rate of 53% to 57%[17] Cost Management - The company’s operating expenses for the three months ended February 28, 2023, totaled $687.662 million, down from $755.285 million in the same period of 2022, showing a decrease of approximately 8.9%[29] - Total operating expenses for the nine months ended February 28, 2023, were $1,995,197, down 42.4% from $3,458,087 in the same period of 2022[33] - The company experienced a significant reduction in general and administrative expenses, which were $622,772 for the nine months ended February 28, 2023, down from $1,473,816 in the same period of 2022[36]

Financial Performance - Total net revenues for the third fiscal quarter of 2023 increased by 22.8% year over year to US$754.2 million[2]. - Operating income rose by 147.1% year over year to US$66.5 million, with a non-GAAP operating income increase of 179.0% to US$87.9 million[10]. - Net income attributable to New Oriental increased by 166.7% year over year to US$81.6 million, with non-GAAP net income rising by 199.9% to US$95.4 million[11][12]. - Net revenues for the three months ended February 28, 2023, were USD 754.2 million, an increase from USD 614.1 million in the same period of 2022, representing a growth of approximately 22.8%[29]. - Operating income for the same period was USD 66.5 million, compared to an operating loss of USD 141.2 million in the prior year[29]. - Net income attributable to New Oriental's shareholders for the three months ended February 28, 2023, was USD 81.6 million, a significant recovery from a net loss of USD 122.4 million in the same period of 2022[29]. - Non-GAAP net income for the three months ended February 28, 2023, was $95,362, compared to a non-GAAP net loss of $95,503 in the same period last year[31]. - The company reported a net income per ADS of USD 0.49 for the three months ended February 28, 2023, compared to a net loss per ADS of USD 0.72 in the prior year[29]. - The company achieved a non-GAAP net income per ADS of $0.57 for the three months ended February 28, 2023, compared to a non-GAAP net loss per ADS of $0.56 in the same period last year[31]. Cash Flow and Assets - The company reported a positive operating cash flow of US$190.5 million for the quarter, with cash and cash equivalents totaling approximately US$4.3 billion[5][13]. - Cash provided by operating activities for the three months ended February 28, 2023, was $190,482, a turnaround from cash used of $234,965 in the prior year[35]. - Total current assets as of February 28, 2023, were USD 4.7 billion, an increase from USD 4.5 billion as of May 31, 2022[27]. - The company’s cash and cash equivalents were USD 1.3 billion as of February 28, 2023, up from USD 1.1 billion a year earlier[27]. - The cash, cash equivalents, and restricted cash at the end of the period on February 28, 2023, stood at $1,431,001, compared to $1,511,242 at the end of the same period in 2022[35]. Expenses and Liabilities - Operating costs and expenses decreased by 9.0% year over year to US$687.7 million, with general and administrative expenses down by 25.4% to US$215.5 million[8]. - Total liabilities increased to USD 2.3 billion as of February 28, 2023, compared to USD 2.2 billion as of May 31, 2022[27]. - Total operating costs and expenses for the nine months ended February 28, 2023, were $1,995,197, down from $3,458,087 in the same period of 2022, reflecting a reduction of approximately 42.4%[37]. Deferred Revenue and Equity - The deferred revenue balance increased by 19.8% year over year to US$1,163.2 million as of February 28, 2023[14]. - Deferred revenue as of February 28, 2023, was USD 1.2 billion, compared to USD 933.1 million as of May 31, 2022, indicating a growth of approximately 25%[27]. - New Oriental's total equity increased to USD 3.9 billion as of February 28, 2023, from USD 3.8 billion as of May 31, 2022[27]. Business Operations and Strategy - The total number of schools and learning centers was 712 as of February 28, 2023, a decrease of 135 compared to 847 as of February 28, 2022[4]. - East Buy has achieved significant progress in its private label products and livestreaming e-commerce business, contributing to revenue growth[5]. - The company is focused on expanding its educational services and enhancing its brand presence in the competitive private education sector in China[22]. - The company has repurchased approximately 5.1 million ADSs for approximately US$157.6 million under its share repurchase program[6].

Financial Data and Key Metrics Changes - The company achieved a non-GAAP operating margin of 2.6% for the second quarter, a significant improvement from a negative 112.0% in the same period of the prior fiscal year [5][20] - Operating costs and expenses decreased by 55.1% year-over-year to $640.7 million, with non-GAAP operating costs down 55.4% to $621.9 million [18][19] - Net income attributable to New Oriental was $0.7 million compared to a loss of $936.5 million in the same period of the prior fiscal year [20] Business Line Data and Key Metrics Changes - The overseas test prep business recorded a revenue increase of 17% in dollar terms, or 30% in RMB terms year-over-year [7] - The overseas study consulting business saw a revenue increase of about 14% in dollar terms or 27% in RMB terms year-over-year [7] - The adults and university students business recorded a revenue decrease of 9% in dollar terms, but a 2% increase in RMB terms year-over-year [7] Market Data and Key Metrics Changes - The company reported a deferred revenue balance of $1,139.1 million, an increase of 6.9% compared to $1,065.8 million at the end of the second quarter of the prior fiscal year [21] - Koolearn recorded revenue of nearly RMB 2,080.1 million, representing a 590.2% increase from RMB 301.4 million in the same period of the prior fiscal year [14] Company Strategy and Development Direction - The company is focusing on innovative business opportunities and has successfully generated profits from new ventures alongside existing businesses [4][6] - The company plans to continue investing in new initiatives while promoting key remaining businesses to accelerate recovery and pursue profitable growth [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the overall impact of the pandemic will be temporary and manageable, with expectations for total net revenue in Q3 to be between $702.8 million to $719.8 million, representing a year-over-year increase of 14% to 17% [23] - The company anticipates sustainable profitability across its key businesses and expects new initiatives to maintain an upward growth trajectory [22] Other Important Information - The company has cash and cash equivalents totaling approximately $4.2 billion, indicating a healthy financial position [17] - The company authorized a share repurchase of up to $400 million, with approximately $79 million repurchased as of January 16, 2023 [17] Q&A Session Summary Question: Impact of COVID on February quarter and business expectations - Management indicated that the net impact of COVID is small and remains confident that the overall impact will be temporary and manageable [28][30] Question: Growth rates of new business lines post-COVID - Management expects upward growth in new business lines for Q3 and Q4, with significant revenue growth anticipated [33] Question: Revenue breakdown and margin profile for different business lines - The overseas related business contributed roughly 21% of total revenue, with margins expected to be around 10% to 15% for the year [38][39] Question: Third-quarter revenue guidance and profitability - The overseas related business is expected to contribute 24% to 25% of total revenue in Q3, with the school business contributing 43% to 44% [43] Question: Non-academic tutoring enrollment increase drivers - Management noted that the market is strong, and the profitability of new business lines is better than expected, with revenue growth anticipated to accelerate [59]