Financial Data and Key Metrics Changes - Total net revenue for Q4 2020 was $798.5 million, a decrease of 5.3% in dollar terms or 1% in RMB terms year-over-year [5][6] - Non-GAAP operating margin for the fiscal year 2020 expanded by 70 basis points to 12.9% compared to 12.2% in the prior fiscal year [6] - Gross margin for Q4 2020 was 51%, down 500 basis points year-over-year [6] - Non-GAAP net income for Q4 was $48.5 million, representing a 49% decrease from the same period in the prior fiscal year [21] Business Line Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test preparation courses decreased by 6.2% year-over-year to approximately 2,585,600 [5][6] - K-12 school total business achieved a year-over-year revenue growth of approximately 4% in dollar terms [9] - Overseas test preparation business revenue declined by approximately 62% in dollar terms, while the consulting business grew by approximately 6% in dollar terms [10] - VIP personalized classes reported a revenue decline of about 36% year-over-year in dollar terms [10] Market Data and Key Metrics Changes - The overseas test prep business faced significant challenges due to the cancellation of overseas exams and travel restrictions, leading to a revenue contribution of only 5.6% in Q4 [68] - The deferred revenue balance at the end of Q4 was $1,324.4 million, an increase of 1.8% from the previous year [22] Company Strategy and Development Direction - The company plans to expand its offline business by 20% to 25% in fiscal year 2021, aiming to capture more market share post-COVID [22][23] - Investments in digital technologies and the OMO (Online-Merge-Offline) system will be leveraged to enhance the learning experience and reach more students [23][24] - The company aims to develop better teaching content and training programs for teachers to improve overall educational quality [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term business prospects despite short-term challenges posed by the COVID-19 pandemic [26][27] - The company anticipates a gradual recovery in demand for after-school education services as offline operations resume in most cities [29][30] - The management expects total revenue for Q1 2021 to decline by 11% to 15% year-over-year, with specific declines in overseas test prep programs [28] Other Important Information - The company added a net of 44 learning centers, increasing classroom area by approximately 26% year-over-year [13] - Capital expenditures for the quarter were $89.7 million, primarily for opening new facilities and renovations [21] Q&A Session Summary Question: Can you help us understand the assumptions behind the revenue guidance and the market consolidation? - Management indicated that the revenue guidance is conservative due to uncertainties, including shortened summer holidays and COVID-19 impacts in major cities [34][35] Question: How is the capacity expansion plan being adjusted in light of underperforming segments? - Management confirmed that they plan to shift capacity from underperforming segments to better-performing ones while maintaining the overall expansion guidance [42] Question: What is the long-term impact of the OMO model on margins? - Management believes the OMO model will enhance revenue and retention rates, positively impacting margins in the long term [45][58] Question: How do you expect the K-12 business to recover in the next fiscal year? - Management expects a gradual recovery in K-12 business, with growth rates returning to normal in subsequent quarters [62][63] Question: What is the outlook for the overseas test prep business? - Management acknowledged significant challenges for the overseas test prep business due to COVID-19 but remains hopeful for gradual recovery as exams resume [68]

Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $923.2 million, representing a growth of 15.9% year-over-year in dollar terms or 18.7% in RMB terms [7] - Net revenues from education programs and services were $845.7 million, a 16.3% increase year-over-year [7] - Non-GAAP operating income was $134.8 million, an 18.5% increase year-over-year, with a non-GAAP operating margin of 14.6% [10][19] - Net income attributable to the company was $137.7 million, a 41.4% increase from the same period last year [19][20] Business Line Data and Key Metrics Changes - K-12 after-school tutoring courses achieved approximately 24% revenue growth in dollar terms or 27% in RMB terms [7][12] - The U-Can middle school/high school program recorded a revenue increase of about 23% in dollar terms or 26% in RMB terms [12] - The overseas test prep business saw a revenue decrease of 14% in dollar terms or 12% in RMB terms [13] - The consulting business recorded revenue growth of about 27% in dollar terms or 30% in RMB terms year-over-year [13] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test prep courses increased by 2.3% year-over-year to approximately 1,606,000 [8] - The deferred revenue balance at the end of Q3 was $1,375.0 million, an increase of 15.4% compared to the previous year [21] Company Strategy and Development Direction - The company continues to implement its "Optimize the Market" strategy, expanding capacity in cities with growth potential [7][14] - Investments of $40 million were made to enhance the OMO education ecosystem, focusing on online education capabilities [15][16] - The company plans to maintain a capacity expansion of 20% to 25% in the coming year, aiming to capture market share from smaller players post-pandemic [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business outlook despite challenges from COVID-19, expecting a recovery in demand for after-school tutoring as schools reopen [27][29] - The company anticipates a decline in revenue for Q4, projecting a range of $774 million to $806.2 million, representing a year-over-year decline of 8% to 4% [27][28] - Management highlighted the potential for market consolidation, with smaller players likely to exit the market due to financial pressures [23][37] Other Important Information - The company donated RMB20 million to Hubei province and provided free courses to children of medical staff during the pandemic [6] - Operating costs increased by 15.0% year-over-year, primarily due to higher teacher compensation and rental costs [18] Q&A Session Summary Question: Impact of overseas test prep revenue decline - Management noted a 13% revenue decline in overseas test prep for Q3 and projected a 45% decline for Q4 due to pandemic-related disruptions [32][33] Question: Market consolidation during the crisis - Management indicated that many small players are facing severe impacts, creating opportunities for larger players like New Oriental to gain market share [36][37] Question: Summer promotion campaign plans - Management plans to focus on retention and increase class offerings during the summer promotion campaign, expecting to capture more market share [40][41] Question: Expansion plans amid pandemic - Management confirmed that expansion plans remain unchanged, with a focus on adding new learning centers and maintaining capacity growth [44] Question: Online vs offline growth balance - Management stated that the cannibalization between online and offline segments is minimal, as both markets have significant growth potential [59]

Revenue Growth - In the fiscal years ended May 31, 2017, 2018, and 2019, the company generated total net revenues of $1,799.5 million, $2,477.4 million, and $3,096.5 million, respectively, reflecting a growth trend in revenue [407]. - Total net revenues increased by 26.5% from US$2,447.4 million for the fiscal year ended May 31, 2018 to US$3,096.5 million for the fiscal year ended May 31, 2019 [438]. - Net revenues from educational programs and services rose by 28.6% from US$2,165.2 million in fiscal year 2018 to US$2,785.3 million in fiscal year 2019, driven by an increase in student enrollments from approximately 6.3 million to 8.4 million [438]. - Net revenues from language training and test preparation courses increased by 28.8% from US$2,023.0 million for the fiscal year ended May 31, 2018 to US$2,605.8 million for the fiscal year ended May 31, 2019 [452]. Operating Costs and Expenses - Operating costs and expenses as a percentage of total net revenues were 85.4% in 2017, 89.2% in 2018, and 90.3% in 2019, indicating rising operational costs [417]. - Total operating costs and expenses rose by 27.9% from US$2,184.5 million in fiscal year 2018 to US$2,794.6 million in fiscal year 2019 [440]. - Cost of revenues increased from $749.6 million (41.7% of net revenues) in 2017 to $1,376.3 million (44.5% of net revenues) in 2019, reflecting higher teaching fees and operational expenses [417]. - Cost of revenues increased by 29.1% from US$1,065.7 million in fiscal year 2018 to US$1,376.3 million in fiscal year 2019, mainly due to higher teaching fees and performance-linked bonuses [440]. Marketing and Administrative Expenses - Selling and marketing expenses were $232.8 million (12.9% of net revenues) in 2017, $324.2 million (13.2%) in 2018, and $384.3 million (12.4%) in 2019, showing a consistent investment in brand promotion [418]. - General and administrative expenses rose from $554.9 million (30.8% of net revenues) in 2017 to $1,034.0 million (33.4%) in 2019, driven by increased personnel costs [418]. - Selling and marketing expenses grew by 18.5% from US$324.2 million in fiscal year 2018 to US$384.3 million in fiscal year 2019, attributed to the addition of over 3,800 new sales and marketing personnel [440]. - General and administrative expenses increased by 30.1% from US$794.5 million in fiscal year 2018 to US$1,034.0 million in fiscal year 2019, primarily due to a US$601.1 million rise in human resources expenses [440]. Student Enrollment and Market Expansion - The number of student enrollments is a significant factor affecting revenues, driven by demand for courses, marketing effectiveness, and competitive pressure [404]. - The company plans to expand its school network and increase the variety of courses offered, including smaller-size classes, to capture a larger share of the education market in China [406]. - The number of student enrollments in language training and test preparation courses increased from approximately 4.8 million in the fiscal year ended May 31, 2017 to over 6.3 million in the fiscal year ended May 31, 2018 [442]. Financial Position and Cash Flow - As of May 31, 2019, the company had US$1,414.2 million in cash and cash equivalents and US$4.0 million in restricted cash [496]. - Net cash provided by operating activities was US$805.6 million for the fiscal year ended May 31, 2019, reflecting a net income of US$227.8 million [501]. - Net cash used in investing activities amounted to US$574.7 million in the fiscal year ended May 31, 2019, primarily for the purchase of property and equipment [505]. - Net cash provided by financing activities was US$266.6 million in the fiscal year ended May 31, 2019, mainly due to proceeds from the IPO of Koolearn [508]. Acquisitions and Investments - The company acquired Hangzhou Shengshen Technology Co., Ltd for US$11.0 million and Suzhou Hongyi Education Investment Co., Ltd for US$41.7 million in recent acquisitions [433]. - Capital expenditures for the fiscal year ended May 31, 2019, were US$269.1 million, primarily for investments in facilities, equipment, technology, and operating systems to support expected growth [516]. - The company intends to allocate capital resources cost-efficiently by leasing most new facilities and may pursue acquisitions that complement operations [516]. Legal and Regulatory Matters - The company is subject to legal proceedings, including a putative securities class action filed in December 2016, which alleges material misstatements in public filings [585]. - The company relies on dividends from its subsidiaries in China, which are subject to PRC regulations regarding profit distribution [590]. Shareholder and Employee Matters - The company paid approximately US$3.2 million in cash to executive officers and non-executive directors for the fiscal year ended May 31, 2019 [540]. - Contributions to pension insurance, medical insurance, housing fund, and other benefits for executive officers and non-executive directors totaled US$133,000 [540]. - As of May 31, 2019, the company had 54,758 full-time employees and 9,569 contract teachers and staff, showing an increase from 44,531 and 9,711 in 2018 [564]. Technology and Operational Efficiency - The company has developed an O2O two-way interactive learning platform to enhance the learning experience and integrate online and offline education [410]. - The technology platform includes e-learning systems and licensed speech recognition platforms, aimed at enhancing operational efficiency and scalability [517]. - The company has established performance monitoring for key systems to ensure reliability and quick response to potential issues [518].