Core Viewpoint - New Oriental Education & Technology Group Inc. reported strong financial results for the third fiscal quarter of 2024, with significant year-over-year growth in revenues and operating income, driven by its educational initiatives and e-commerce business [1][2][10]. Financial Highlights - Total net revenues for the third fiscal quarter reached US$1,207.3 million, a 60.1% increase year over year [2][10]. - Operating income increased by 70.6% year over year to US$113.4 million [2][13]. - Net income attributable to New Oriental rose by 6.8% year over year to US$87.2 million [2][14]. Key Financial Results - Non-GAAP operating income for the quarter was US$140.9 million, reflecting a 60.3% increase year over year [3][13]. - Non-GAAP net income attributable to New Oriental was US$104.7 million, a 9.8% increase year over year [15]. - Basic and diluted net income per ADS were US$0.53 and US$0.52, respectively, marking increases of 7.7% and 8.6% year over year [14][15]. Operating Highlights - The total number of schools and learning centers increased to 911, up from 843 in the previous quarter and 712 a year ago [6]. - New educational business initiatives achieved 72.7% revenue growth year over year, with non-academic tutoring courses attracting approximately 355,000 student enrollments [7]. Business Growth - The overseas test preparation and study consulting businesses grew by approximately 52.6% and 25.7% year over year, respectively [7]. - The domestic test preparation business targeting adults and university students recorded a growth of approximately 53.2% year over year [7]. Cash Flow and Balance Sheet - The company reported a positive operating cash flow of US$109.4 million for the quarter, with cash and cash equivalents totaling approximately US$4.8 billion by the end of the quarter [7][16]. - Deferred revenue increased by 30.8% year over year to US$1,521.7 million, indicating strong demand for future services [18]. Share Repurchase Program - As of April 23, 2024, the company repurchased approximately 6.0 million ADSs for about US$195.3 million under its share repurchase program [8][9]. Outlook - New Oriental expects total net revenues for the fourth quarter of fiscal year 2024 to be in the range of US$1,101.5 million to US$1,127.3 million, representing a year-over-year increase of 28% to 31% [21].

Core Viewpoint - New Oriental Education and Technology Group Inc. will report its financial results for the third quarter ended February 29, 2024, on April 24, 2024, before the U.S. market opens [1] Group 1: Financial Reporting - The earnings conference call will take place at 8 AM U.S. Eastern Time on April 24, 2024, which corresponds to 8 PM Beijing/Hong Kong Time on the same day [1] - Participants can register for the conference call in advance and will receive dial-in numbers and a unique personal PIN upon registration [3] - A live and archived webcast of the conference call will be available for access [3][4] Group 2: Company Overview - New Oriental is a provider of private educational services in China, offering a variety of educational programs, services, and products [5] - The company's offerings include educational services, test preparation courses, private label products, livestreaming e-commerce, and overseas study consulting services [5] - New Oriental is listed on both NYSE (NYSE: EDU) and SEHK (9901.SEHK), with its American Depositary Shares (ADSs) representing ten common shares [5]

Financial Data and Key Metrics Changes - New Oriental reported a significant increase in net income attributable to the company, reaching $30.1 million, which represents a 4007.4% increase year-over-year [15] - Non-GAAP operating margin improved to 5.9%, while operating income was $21.3 million compared to a loss of $2.5 million in the same period last year [15][16] - Total cash and cash equivalents, term deposits, and short-term investments amounted to approximately $4.8 billion [12] Business Line Data and Key Metrics Changes - The overseas test prep business saw a revenue increase of 47% in dollar terms or 50% in RMB terms year-over-year [6] - The overseas study consulting business recorded a revenue increase of about 32% in dollar terms or 35% in RMB terms year-over-year [6] - The adults and university students business experienced a revenue increase of 43% in dollar terms or 46% in RMB terms year-over-year [6] - New educational business initiatives reported a revenue increase of about 68% in dollar terms or 72% in RMB terms year-over-year [8] Market Data and Key Metrics Changes - The top 10 cities in China contributed over 60% of the revenue from non-academic tutoring courses [7] - The intelligent learning system and devices business reported approximately 181,000 active paid users [8] - The cultural tourism business, which includes study tours and research camps, conducted activities in over 50 cities, with the top 10 cities contributing over 55% of revenue [9] Company Strategy and Development Direction - The company plans to moderately increase learning center capacity by about 20% year-over-year, focusing on cities with better performance [19] - New Oriental aims to integrate AI and ChatGPT technologies into its educational offerings to enhance growth and operational efficiency [20] - The company is committed to maintaining a healthy market share growth and creating sustainable value for customers and shareholders in the long term [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand in the education sector and the reduced competition due to market consolidation during COVID [24][53] - The company expects total net revenue for the next quarter to be in the range of $1,070.9 million to $1,093.5 million, representing a year-over-year increase of 42% to 45% [19] - Management highlighted the importance of balancing top-line growth with margin expansion, indicating a cautious approach to rapid expansion [32] Other Important Information - Operating costs and expenses for the quarter increased by 32.4% year-over-year, primarily due to growth in East Buy's private-label products and live-streaming e-commerce business [14] - The company has authorized a share repurchase program of up to $500 million, extending it through May 31, 2024 [13] Q&A Session Summary Question: What is driving the strong growth in the third quarter guidance? - Management indicated strong demand in the education sector and less competition due to market consolidation as key drivers for the expected revenue growth of 42% to 45% [24] Question: What considerations are there for the learning center expansion? - Management noted that the expansion will be moderate, focusing on cities with better performance, and will monitor the pace of new openings based on operational results [28] Question: What are the bottlenecks for faster expansion? - Management mentioned that the OMO model allows for better utilization of existing resources, balancing growth with margin expansion [32] Question: Can you provide insights on margin expansion? - Management highlighted that the non-GAAP operating margin expanded due to improved utilization rates and higher margins from new business initiatives [37] Question: How is the cultural tourism business conducted? - Management explained that the tourism business includes study tours and research camps, with revenue recorded separately from educational services [42] Question: What are the long-term margin expectations for new education businesses? - Management expects the margin for new education businesses to exceed 20% in the future, driven by lower fixed costs and higher utilization [47]

Core Viewpoint - New Oriental Education & Technology Group Inc. reported strong financial results for the second fiscal quarter of 2024, with significant year-over-year growth in revenues and net income, indicating a robust recovery and expansion in its educational services and related businesses [1][4]. Financial Highlights - Total net revenues for the second fiscal quarter increased by 36.3% year over year to US$869.6 million [2][6]. - Operating income was US$21.3 million, a turnaround from a loss of US$2.5 million in the same period of the prior fiscal year [2][9]. - Net income attributable to New Oriental surged by 4,007.4% year over year to US$30.1 million [2][10]. - Non-GAAP operating income for the quarter was US$50.9 million, representing a 212.2% increase year over year [2][9]. - The company reported a positive operating cash flow of US$300.6 million for the quarter [4][12]. Operational Highlights - The total number of schools and learning centers increased to 843 as of November 30, 2023, up from 793 as of August 31, 2023 [3]. - The overseas test preparation and overseas study consulting businesses grew by approximately 46.5% and 31.7% year over year, respectively [4]. - Domestic test preparation for adults and university students recorded a growth of approximately 42.7% year over year [4]. - New educational business initiatives achieved a revenue growth of 68.3% year over year, with non-academic tutoring courses attracting approximately 786,000 student enrollments [4]. Cost and Expenses - Operating costs and expenses for the quarter were US$848.3 million, a 32.4% increase year over year [7]. - Selling and marketing expenses increased by 62.2% year over year to US$155.0 million [7]. - General and administrative expenses rose by 29.6% year over year to US$270.7 million [7]. Balance Sheet and Cash Flow - As of November 30, 2023, New Oriental had cash and cash equivalents totaling approximately US$1.9 billion, with total cash, cash equivalents, term deposits, and short-term investments amounting to approximately US$4.8 billion [13]. - Deferred revenue increased by 44.4% year over year to US$1.645 billion [13]. Outlook - New Oriental expects total net revenues for the third quarter of fiscal year 2024 to be in the range of US$1,070.9 million to US$1,093.5 million, reflecting a year-over-year increase of 42% to 45% [18].

Financial Performance - Total net revenues for the second fiscal quarter of 2024 increased by 36.3% year over year to US$869.6 million[2] - Operating income was US$21.3 million, compared to a loss of US$2.5 million in the same period of the prior fiscal year, representing a 957.8% increase[3] - Net income attributable to New Oriental surged by 4,007.4% year over year to US$30.1 million for the second fiscal quarter of 2024[3] - Non-GAAP net income attributable to New Oriental for the quarter was US$50.2 million, representing a 182.6% increase year over year[13] - New Oriental's net income for the three months ended November 30, 2023, was RMB30,066 (US$4.2 million), compared to RMB732 (US$0.1 million) in the same period of the prior year[30] - Non-GAAP net income attributable to New Oriental for the three months ended November 30, 2023, was $50,158 thousand, compared to $17,750 thousand in the prior year, representing an increase of 182%[32] - For the six months ended November 30, 2023, net revenues were $1,969,621 thousand, a 42.3% increase from $1,383,036 thousand in the same period of 2022[38] - The company reported a net income of $214.866 million for the six months ended November 30, 2023, compared to $101.167 million for the same period in 2022, reflecting a year-over-year increase of approximately 112.3%[52] Business Growth - The total number of schools and learning centers reached 843, an increase of 50 compared to the previous quarter[5] - The overseas test preparation and overseas study consulting businesses grew by approximately 46.5% and 31.7% year over year, respectively[5] - New educational business initiatives achieved 68.3% revenue growth year over year, with approximately 786,000 student enrollments in non-academic tutoring courses[6] - For the first six months ended November 30, 2023, East Buy recorded total revenue of RMB2,795.0 million (US$386.3 million), a 34.4% increase from RMB2,080.1 million in the same period of the prior fiscal year[19] - East Buy's net profit for the same period was RMB249.2 million (US$34.4 million), a 57.4% decrease from RMB585.3 million in the prior fiscal year[19] Cash Flow and Assets - Operating cash flow for the quarter was approximately US$300.6 million, with cash and cash equivalents totaling around US$4.8 billion[6] - New Oriental's total current assets increased to RMB4,976.9 million (US$688.5 million) as of November 30, 2023, from RMB4,413.9 million (US$610.5 million) as of May 31, 2023[29] - New Oriental's cash and cash equivalents increased to RMB1,942.6 million (US$268.5 million) as of November 30, 2023, from RMB1,663.0 million (US$230.5 million) as of May 31, 2023[29] - Cash, cash equivalents, and restricted cash at the end of the period on November 30, 2023, totaled $2,120,746 thousand, up from $1,122,824 thousand a year earlier, marking an increase of 88.9%[36] Liabilities and Equity - Total liabilities for New Oriental increased to RMB3,035.7 million (US$420.5 million) as of November 30, 2023, compared to RMB2,577.7 million (US$360.5 million) as of May 31, 2023[29] - The total liabilities as of November 30, 2023, were $3.036 billion, which is consistent with the previous reporting period[53] - The company’s total equity as of November 30, 2023, was $4.075 billion, a slight decrease from $4.096 billion as of May 31, 2023[53] Future Outlook - New Oriental expects total net revenues in the third quarter of fiscal year 2024 to be in the range of US$1,070.9 million to US$1,093.5 million, representing a year-over-year increase of 42% to 45%[20] Operating Costs - Total operating costs and expenses for the three months ended November 30, 2023, were $848,258 thousand, up from $640,702 thousand in the same period of 2022, reflecting a 32.4% increase[32] - The cost of revenues for the six months ended November 30, 2023, was $860.411 million, up from $638.174 million for the same period in 2022, representing an increase of approximately 34.7%[51] Tax and Fair Value Changes - The provision for income taxes for the six months ended November 30, 2023, was $74.231 million, compared to $26.912 million for the same period in 2022, indicating an increase of approximately 175.5%[52] - The company recognized a gain from fair value change of investments amounting to $18.166 million for the six months ended November 30, 2023, compared to a loss of $1.539 million for the same period in 2022[52] Accounting Policies - The adjustments made in the reconciliation of financial results under IFRSs reflect the different accounting treatments according to the Group's accounting policies, ensuring compliance with both US GAAP and IFRSs[49]

Core Viewpoint - New Oriental Education & Technology Group Inc. is expected to report strong growth in both earnings and net revenues for the second quarter of fiscal 2024, driven by increased demand in its test preparation and overseas study consulting businesses [1][2][3]. Financial Performance - In the last reported quarter, net revenues exceeded the Zacks Consensus Estimate by 10.2%, with year-over-year growth of 135.4% in earnings and 47.7% in net revenues [1]. - The Zacks Consensus Estimate for fiscal Q2 2024 earnings per share is 27 cents, reflecting a 170% increase from the previous year's 10 cents [2]. - The consensus for net revenues is projected at $828.1 million, indicating a 29.7% growth from $638.2 million reported a year ago [2]. Growth Drivers - The anticipated revenue growth is attributed to rising demand from both domestic and international markets, particularly among adults and university students for test preparation services [3]. - New educational initiatives, including non-academic tutoring and intelligent learning systems, are expected to contribute positively to revenue growth and the expansion of schools and learning centers [3][4]. - The company is focusing on enhancing service quality and operational efficiencies, which are likely to improve margins [4]. Earnings Prediction Model - The current model does not predict an earnings beat for New Oriental, as it lacks a positive Earnings ESP and a higher Zacks Rank [5]. - The Earnings ESP for New Oriental is 0.00%, and it holds a Zacks Rank of 3 [5].

Industry Overview - The Covid-19 crisis accelerated the digitalization of in-person functionalities, significantly impacting remote learning stocks [1] - The online education market is projected to generate revenue of $87.51 billion by the end of this year, with a compound annual growth rate (CAGR) of 11.05% through 2028, potentially reaching $133.1 billion [1] Company Analysis: New Oriental Education (EDU) - New Oriental Education is the largest comprehensive private educational company in China, with a market revenue of approximately $130 billion [2] - The company is well-positioned to benefit from the projected growth in the K-12 education sector following a downturn during the pandemic [2] Company Analysis: Stride (LRN) - Stride is a for-profit education company providing online and blended education programs, with a significant return of almost 85% in equity value over the past 52 weeks and 131% over the past five years [5] - The company has a price/earnings-to-growth (PEG) ratio of 0.65X, lower than 63.22% of its peers, and is rated a strong buy with a price target of $66.75 [6] Company Analysis: Grand Canyon Education (LOPE) - Grand Canyon Education offers online and on-campus programs and is recognized as Arizona's premier Christian university [7] - The company is fairly valued with a trailing-year earnings multiple of 19.7X, and it enjoys a strong buy rating with a price target of $145.67 [8]

Company Overview - New Oriental Education and Technology Group Inc. is a provider of private educational services in China, offering a wide range of educational programs, services, and products to a diverse student population throughout the country [5]. Financial Results Announcement - The company will report its financial results for the second quarter ended November 30, 2023, before the U.S. market opens on January 24, 2024 [1]. - An earnings conference call will be hosted by New Oriental's management at 8 AM on January 24, 2024, U.S. Eastern Time [1]. Conference Call Details - Participants can register in advance for the conference call using a provided link, which will give them access to dial-in numbers and a unique personal PIN [3]. - A live and archived webcast of the conference call will be available for access [3]. Replay Information - A replay of the conference call will be accessible via the webcast on-demand until January 24, 2025 [4].

Financial Data and Key Metrics Changes - New Oriental reported a significant increase in operating income of 163% year over year, reaching $205.1 million, while non-GAAP income from operations increased by 152.2% to $244.8 million [18][19] - Net income attributable to New Oriental was $165.4 million, representing a 150.6% increase year over year, with basic and diluted net income per ADS at $0.99 [19] - The company had cash and cash equivalents totaling approximately $4.6 billion, with a deferred revenue balance of $1.401 billion, an increase of 38.4% year over year [16][19] Business Line Data and Key Metrics Changes - The Overseas Test Prep Business saw a revenue increase of 52% in dollar terms, or 62% in RMB terms year over year [7] - The Overseas Study Consulting Business recorded a revenue increase of 27% in dollar terms, or 35% in RMB terms year over year [7] - New education business initiatives achieved a revenue increase of 103% in dollar terms, or 117% in RMB terms year over year [9] Market Data and Key Metrics Changes - The non-dynamic children business recorded approximately 438,000 student enrollments, with the top ten cities in China contributing over 60% of the revenue [8] - The Intelligent Learning System and Device Business reported approximately 181,000 active paid users, with revenue contribution from the top ten cities in China also around 60% [9] Company Strategy and Development Direction - The company plans to increase its learning center capacity by about 15% to 20% throughout fiscal year 2024, focusing on cities with strong performance [21] - New Oriental aims to leverage its brand advantage and solid foundation to capture more market share and enhance profitability through innovative educational offerings [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustainable growth for the remainder of fiscal year 2024, citing strong demand in the education sector and a favorable regulatory environment [20][31] - The company anticipates total net revenue for Q2 of fiscal year 2024 to be in the range of $785 million to $804 million, representing a year-over-year increase of 23% to 26% [21] Other Important Information - The company has authorized a share repurchase program of up to $500 million, extending it through May 31, 2024, with approximately $193.3 million repurchased as of October 24, 2023 [16] Q&A Session Summary Question: November quarter revenue guidance and growth drivers - Management clarified that the guidance reflects a conservative approach, with typical seasonality affecting Q2, but strong demand is expected to continue [25][26] Question: Capacity expansion plans - Management confirmed a 6% new capacity addition this quarter, with plans for 15% to 20% expansion for the year, focusing on top-tier cities [29][30] Question: Margin expansion analysis - The operating margin increased due to improved utilization of resources and higher margins from new business lines, with optimism for continued margin growth [33][35] Question: Long-term growth for existing businesses - Management is optimistic about top-line growth for existing businesses due to strong demand and reduced competition post-COVID [37][39] Question: Growth of Intelligent Learning Devices - The company is seeing strong demand for its Intelligent Learning Devices, with plans to enhance product quality and expand user numbers [42][44] Question: Shareholder return policy - Management reiterated commitment to the share buyback program, aiming to create value for shareholders [46][47]

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]