BEIJING, Jan. 3, 2025 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will release its unaudited financial results for the third quarter of fiscal year 2025 ended November 30, 2024, before the market opens on Thursday, January 23, 2025.The Company will host a corresponding conference call and live webcast at 7:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing Time) on Thursday, January 23, 2025.Please note that you wi ...

Investment Rating - The report assigns a **Buy** rating to TAL Education Group (TAL) with a target price of **$14.9**, representing a **48.1% upside** from the current price [4] Core Views - TAL's FY25Q2 results exceeded expectations, driven by strong growth in quality education and learning device businesses [2] - Revenue for FY25Q2 reached **$619 million**, up **50.4% YoY**, beating market expectations by **6.3 percentage points** [2] - Non-GAAP operating profit was **$64.52 million**, up **22.5% YoY**, with a margin of **10.4%** [2] - Non-GAAP net profit reached **$74.33 million**, up **25.4% YoY**, with a margin of **12.0%** [2] - The company ended the quarter with **$3.45 billion** in cash and short-term investments, with no bank debt [2] Business Performance Education Business - Education and training accounted for **~70%** of total revenue, growing over **45% YoY** [3] - Quality education contributed **~50%** of education revenue, growing **~70% YoY** [3] - High school education accounted for **~15%**, showing stable growth [3] - The company added **over 400 offline learning centers** in FY25Q2, with full-year capacity expansion expected to grow **50% YoY** [3] Content Solutions - Content solutions accounted for **~25%** of revenue, growing **over 50% YoY**, driven by learning device sales [3] - The company launched the **xPad Classic 2024** priced at **$450-500** and a lower-priced practice device, expanding its product line [3] - Learning device sales reached **~150,000 units** in the quarter, with a **weekly active rate of 80%** [3] Financial Outlook - For FY25Q3, revenue is expected to grow **39% YoY** to **$520 million**, with continued strong growth in non-academic training and learning devices [3] - The company's profitability is expected to improve as upfront investments in various businesses gradually taper off [4] Valuation - The target price of **$14.9** is based on a DCF valuation with a **WACC of 11%** and a **long-term growth rate of 3%** [4] - The company is well-positioned to benefit from a stabilizing regulatory environment and continued market demand for education services [4]

TAL Education (TAL) closed the last trading session at $10.98, gaining 1.7% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $15.16 indicates a 38.1% upside potential. The mean estimate comprises seven short-term price targets with a standard deviation of $2.28. While the lowest estimate of $10.80 indicates a 1.6% decline from the current price level, the most optimistic analyst exp ...

Investment Rating - 6-month rating: Buy (maintained) [1] Core Views - The company's FY25Q2 financial report shows significant growth with net revenue of $620 million, a 50.4% YoY increase, and operating profit of $48 million, also a 50% YoY increase [1] - Non-GAAP operating profit reached $65 million, up 23% YoY, while net income attributable to shareholders was $57 million, a 52% YoY increase [1] - For FY25H1, net revenue was $1.03 billion, a 50.4% YoY increase, with operating profit turning positive at $30 million, and Non-GAAP operating profit surging 220% YoY to $65 million [1] - Net income attributable to shareholders for FY25H1 turned positive at $69 million, and Non-GAAP net income attributable to shareholders surged 165% YoY to $100 million [1] - The growth in AI-driven learning devices has been a key driver of revenue, with the company focusing on providing high-quality learning content through these devices [1] - The company is cautiously managing its teaching center network to balance operational efficiency and growth, aiming to deliver a superior learning experience both online and offline [1] Financial Performance and Forecast - FY25Q2 net revenue: $620 million, up 50.4% YoY [1] - FY25Q2 operating profit: $48 million, up 50% YoY [1] - FY25Q2 Non-GAAP operating profit: $65 million, up 23% YoY [1] - FY25Q2 net income attributable to shareholders: $57 million, up 52% YoY [1] - FY25Q2 Non-GAAP net income attributable to shareholders: $74 million, up 26% YoY [1] - FY25H1 net revenue: $1.03 billion, up 50.4% YoY [1] - FY25H1 operating profit: $30 million (turned positive) [1] - FY25H1 Non-GAAP operating profit: $65 million, up 220% YoY [1] - FY25H1 net income attributable to shareholders: $69 million (turned positive) [1] - FY25H1 Non-GAAP net income attributable to shareholders: $100 million, up 165% YoY [1] - Revised revenue forecasts for FY25-27: $2.3 billion, $3.4 billion, and $5.1 billion, respectively (up from previous estimates of $2.1 billion, $2.6 billion, and $3.2 billion) [4] - Revised Non-GAAP net income attributable to shareholders for FY25-27: $180 million, $250 million, and $370 million, respectively (up from previous estimates of $110 million, $220 million, and $410 million) [4] - EPS forecasts for FY25-27: $0.3, $0.4, and $0.6, respectively [4] - PE ratios for FY25-27: 37X, 26X, and 18X, respectively [4] Technological Advancements - The company won the first prize in the "Data Element ×" competition in Beijing for its "Large Language Model-Assisted Intelligent Evaluation and Multi-Level Precision Tutoring Key Technology and Application" [2] - The intelligent tutoring technology integrates large language models, AI, big data, and intelligent knowledge graphs to enhance the potential of AI in education [2] - The technology addresses the "impossible triangle" in education by providing personalized, high-quality, and large-scale learning solutions [2] - The company has launched a smart math tutoring tool, "Jiuzhang Suishiwen," which helps students solve math problems by guiding them through the thought process rather than providing direct answers [2][3] Business Strategy - The company is leveraging AI-driven learning devices to drive revenue growth and provide high-quality learning content [1] - It is focusing on balancing operational efficiency and growth in its teaching center network to enhance the learning experience for both online and offline users [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company reported Q2 FY2025 revenue of $619 million, a year-over-year increase of 50.4%, exceeding expectations of 45% growth [4] - Non-GAAP operating profit reached $64.52 million, up 22.5% year-over-year, with a Non-GAAP operating profit margin of 10.42%, significantly better than the expected 3.7% [4] - The deferred revenue as of August 30, 2024, was $518 million, reflecting a 59.1% year-over-year increase [4] - The company is positioned as a leader in AI education and technology education in China, with expectations for profit release under a more favorable policy environment [4] Summary by Sections Financial Performance - FY2025 Q2 revenue was $619 million, a 50.4% increase year-over-year, surpassing the expected 45% [4] - Non-GAAP operating profit was $64.52 million, a 22.5% increase year-over-year, with a Non-GAAP operating profit margin of 10.42% [4] - The deferred revenue was $518 million, a 59.1% increase year-over-year [4] Business Expansion - The company continues to expand its offline tutoring locations, with a net increase of 31 locations in FY2025 Q2, bringing the total to over 400 [4] - The online school is focusing on STEM education, responding to national policies and increasing demand for quality learning products [4] Product Development - The company has launched new smart hardware products, with online sales reaching $1.3 billion in August and September, and a significant increase in sales volume [4] - The introduction of AI-driven educational tools is expected to enhance user engagement and willingness to pay [4] Financial Projections - The company has revised its profit forecasts for FY2025-2027, expecting Non-GAAP net profits of $138 million, $211 million, and $294 million respectively [4] - Corresponding EPS estimates are $0.20, $0.30, and $0.50 for FY2025, FY2026, and FY2027 [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company reported Q2 FY2025 revenue of $619 million, a year-over-year increase of 50.4%, exceeding expectations of 45% growth [4] - Non-GAAP operating profit reached $64.52 million, up 22.5% year-over-year, with a Non-GAAP operating profit margin of 10.42%, significantly better than the expected 3.7% [4] - The deferred revenue as of August 30, 2024, was $518 million, reflecting a 59.1% year-over-year increase [4] - The company is positioned as a leader in AI education and technology education in China, with expectations for profit release under a more favorable policy environment [4] Financial Summary and Valuation Metrics - FY2025 projected revenue is $2,149 million, with a year-over-year growth of 44.2% [5] - FY2025 projected net profit is $68 million, representing a year-over-year increase of 61.3% [5] - The projected EPS for FY2025 is $0.2, with corresponding P/E ratios of 51, 33, and 24 for FY2025, FY2026, and FY2027 respectively [5] - The company had cash and short-term investments totaling $3.454 billion as of Q1 FY2025 [4]

Investment Rating - The report maintains a "Buy" rating for TAL Education Group (TAL US) with a target price of $13.80, indicating a potential upside of 31.4% from the current price of $10.50 [1][3][6]. Core Insights - TAL Education's revenue for Q2 FY2025 reached $619 million, representing a 50% year-over-year increase, surpassing both the report's and Bloomberg's consensus estimates of 45% and 46% respectively. This growth was primarily driven by strong demand for quality education training and sales of learning machines [1]. - The adjusted operating profit for the same quarter was $65 million, with an operating margin of 10%, which is a decline of approximately 2 percentage points year-over-year but still better than expectations [1]. - The report highlights that the learning services segment saw an estimated revenue growth of around 80% year-over-year, driven by strong demand and an increase in enrollment due to the expansion of teaching points [1]. - The sales of learning machines also maintained high growth, with estimated sales of 100,000 to 150,000 units in Q2, supported by the launch of new products [1]. - Marketing expenses as a percentage of revenue increased by nearly 6 percentage points to 29%, while management expenses decreased by 9 percentage points to 19%, indicating ongoing operational efficiency improvements [1]. Financial Projections - For Q3 FY2025, which is typically a slower season for the education industry, revenue is expected to grow by 39% year-over-year to $520 million, supported by the performance of small class training and new product sales [1]. - The report projects an adjusted operating profit margin of -3.5% for Q3, compared to -2.7% in the same period last year [1]. - The financial outlook for FY2025 estimates total revenue of $2.103 billion, with a year-over-year growth rate of 41.1% [2][5][8]. Valuation - The report adjusts the FY2025 operating profit estimate to $48 million, reflecting better-than-expected performance in the current quarter, with a profit margin of 2% [1]. - For FY2026 and FY2027, the operating profit margins are expected to stabilize at approximately 6% and 10%, with absolute profit values of $146 million and $274 million respectively [1]. - The valuation methodology includes a 20x price-to-earnings ratio for the education business and a 1x price-to-sales ratio for learning machines, supporting the target price of $13.80 [1].

Investment Rating - The report maintains a "Buy" rating for TAL Education Group (TAL US) with a target price of $13.80, indicating a potential upside of 31.4% from the current price of $10.50 [1][3][6]. Core Insights - TAL Education's revenue for Q2 FY2025 reached $619 million, representing a 50% year-over-year increase, surpassing both internal and Bloomberg consensus estimates of 45% and 46% respectively. This growth was primarily driven by strong demand for quality education training and sales of learning machines [1]. - The adjusted operating profit for the same quarter was $65 million, with an operating margin of 10%, which, despite a year-over-year decline of approximately 2 percentage points, still exceeded expectations [1]. - The report highlights that the learning services segment saw an estimated revenue growth of around 80% year-over-year, driven by strong demand and an increase in enrollment due to the expansion of teaching points [1]. - The sales of learning machines also maintained high growth, with estimated sales of 100,000 to 150,000 units in Q2, supported by the launch of new products [1]. - Marketing expenses as a percentage of revenue increased by nearly 6 percentage points to 29%, while management expenses decreased by 9 percentage points to 19%, indicating ongoing operational efficiency improvements [1]. Financial Projections - For Q3 FY2025, which is typically a slower season for the education industry, revenue is expected to grow by 39% year-over-year to $520 million, supported by the performance of small class services and new product sales [1][5]. - The report projects that the adjusted operating profit margin will be -3.5% for Q3 FY2025, compared to -2.7% in the same period last year [1]. - Revenue forecasts for the fiscal years 2024 to 2027 are as follows: $1,490 million in 2024, $2,103 million in 2025, $2,444 million in 2026, and $2,797 million in 2027, with respective year-over-year growth rates of 46.2%, 41.1%, 16.2%, and 14.5% [2][8]. Valuation - The report adjusts the operating profit forecast for FY2025 to $48 million, up from breakeven, with a profit margin of 2%. For FY2026 and FY2027, the operating profit margins are expected to stabilize at approximately 6% and 10% respectively, with absolute profit values of $146 million and $274 million [1][5]. - The valuation is based on a 20x price-to-earnings ratio for the education business and a 1x price-to-sales ratio for learning machines, supporting the target price of $13.80 [1].

Exhibit 99.1 TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2024 and Issues Notice of Annual General Meeting (Beijing–October 24, 2024)—TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2025 ended August 31, 2024 and issued notice of Annual General Meeting. Highlights for the Second Quarter of Fiscal Year 2025 Hi ...

Financial Data and Key Metrics Changes - The company's net revenues for Q2 2025 were US$619.4 million (RMB 4.4739 billion), representing year-over-year increases of 50.4% in USD and 50.8% in RMB terms [7][13] - Non-GAAP income from operations was US$64.5 million, while non-GAAP net income attributable to TAL was US$74.3 million, both showing significant growth compared to the previous year [7][16] - Gross profit increased by 43.8% year-over-year to US$348.7 million, but gross margin decreased to 56.3% from 58.9% [13][14] Business Line Data and Key Metrics Changes - The learning services segment, particularly Peiyou's small class offerings, continued to drive revenue growth, supported by increased enrollment and operational capacity [9][10] - The online enrichment learning business adapted to market changes through innovation, introducing new products and interactive formats [10][11] - The content solutions business also saw revenue growth due to product optimization and enhanced user experiences [11][12] Market Data and Key Metrics Changes - The company noted a growing interest in enrichment learning among parents, indicating a shift towards holistic development for children [21][22] - The demand for online enrichment products is sufficient, with the company exploring various product formats to meet evolving user needs [52][53] Company Strategy and Development Direction - The company is focused on refining learning programs and investing in technological innovation to enhance user experiences [18][19] - There is a commitment to exploring new initiatives and differentiated products to meet customer needs while maintaining operational efficiency [19] - The learning device segment is seen as a strategic priority, with ongoing investments in R&D and content development to improve user engagement [29][30][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the upcoming fiscal third quarter is typically not a peak season for enrichment learning demand, but they remain committed to long-term growth [17][18] - The competitive landscape for learning devices is evolving, with full-stack players entering the market, which may enhance user experience and awareness [35][36] - The company is optimistic about leveraging AI technologies to improve learning devices and applications, focusing on user engagement and experience [40][41] Other Important Information - The company has extended its share repurchase program, with authorization to spend up to approximately $503.8 million through April 2025 [17] - As of August 31, 2024, the company had significant cash reserves, including $2,085.9 million in cash and cash equivalents [16] Q&A Session Summary Question: Growth momentum and operating efficiency in learning services - Management noted continued growth in the enrichment learning business, driven by increasing demand and a focus on holistic development [21][22][23] Question: Profitability of learning devices and additional revenue streams - The learning device segment is currently loss-making, but the company is investing in R&D and exploring value-added services to enhance profitability [29][30] Question: Sales and marketing expenses and competitive landscape for devices - Sales and marketing expenses have increased, reflecting the competitive landscape, but the company remains confident in its product quality and innovation [33][34][35] Question: Upcoming investment plans in AI - The company is focused on leveraging data and developing AI-powered applications to enhance learning experiences, with ongoing investments in the application layer [40][41][46] Question: Long-term growth outlook for xueersi.com - Management emphasized the importance of product quality and innovation in the online learning space, with ongoing investments to strengthen the xueersi.com platform [52][53]