NEW ORIENTAL(EDU) - 2025 Q4 - Annual Results

Financial and Operating Highlights Q4 FY2025 Financial Highlights In Q4 FY2025, New Oriental's net revenues grew 9.4% year-over-year to $1.24 billion, while GAAP operating loss was $8.7 million and net income decreased 73.7% to $7.1 million, contrasting with strong non-GAAP operating income and net income growth of 116.3% and 59.4% respectively Q4 FY2025 Key Financial Results (in thousands US$) | Indicator | 4Q FY2025 | 4Q FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net revenues | 1,243,155 | 1,136,679 | 9.4% | | Operating (loss)/income | (8,674) | 10,527 | -182.4% | | Non-GAAP operating income | 81,678 | 37,769 | 116.3% | | Net income attributable to New Oriental | 7,100 | 26,972 | -73.7% | | Non-GAAP net income attributable to New Oriental | 98,083 | 61,539 | 59.4% | | Net income per ADS - diluted | 0.04 | 0.16 | -72.8% | | Non-GAAP net income per ADS - diluted | 0.61 | 0.37 | 66.9% | - Total net revenues, excluding the East Buy private label products and livestreaming business, increased by 18.7% year-over-year to US$1,088.5 million for the fourth fiscal quarter of 2025[4] FY2025 Financial Highlights For the full fiscal year 2025, New Oriental achieved a 13.6% increase in net revenues to $4.9 billion, with both GAAP and non-GAAP profitability metrics showing solid growth, including operating income rising 22.2% to $428.3 million and net income increasing 20.1% to $371.7 million FY2025 Key Financial Results (in thousands US$) | Indicator | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net revenues | 4,900,262 | 4,313,586 | 13.6% | | Operating income | 428,250 | 350,425 | 22.2% | | Non-GAAP operating income | 554,228 | 478,786 | 15.8% | | Net income attributable to New Oriental | 371,716 | 309,591 | 20.1% | | Non-GAAP net income attributable to New Oriental | 517,071 | 463,956 | 11.4% | | Net income per ADS - diluted | 2.28 | 1.85 | 23.3% | | Non-GAAP net income per ADS - diluted | 3.17 | 2.76 | 14.7% | Operating Highlights & Management Commentary Management highlighted strong growth in new educational initiatives, which grew 32.5% YoY in Q4, while intensifying focus on core educational businesses, enhancing product quality, and integrating AI technology, including a new generation of AI-powered learning devices, leading to improved non-GAAP operating margin - The company's new educational business initiatives maintained strong momentum, with revenue growing 32.5% year-over-year in Q4[6] - In Q4, non-academic tutoring courses attracted approximately 918,000 student enrollments, and the intelligent learning system had about 255,000 active paid users[6] - The company is focusing on its OMO (online-merge-offline) system and investing in AI technologies, recently launching a new AI-powered Intelligent Learning Device and a Smart Study Solution[6] - The non-GAAP operating margin for the core educational business (excluding East Buy) improved by 410 basis points YoY for Q4 and 150 basis points for the full fiscal year 2025[6] Shareholder Returns Previous Share Repurchase Program The company's share repurchase program, extended and increased to $700 million, expired on May 31, 2025, with approximately 14.5 million ADSs repurchased for the full authorized amount - The Share Repurchase Program expired on May 31, 2025[7] - The company repurchased an aggregate of approximately 14.5 million ADSs for approximately US$700 million under the program[7] New Shareholder Return Plan On July 29, 2025, the Board approved a new three-year shareholder return plan, effective from fiscal year 2026, committing to return at least 50% of the preceding fiscal year's net income to shareholders through dividends and/or share repurchases - A new three-year shareholder return plan was approved, effective from fiscal year 2026[8] - The plan dedicates no less than 50% of the preceding fiscal year's net income to be returned to shareholders via dividends and/or share repurchases[8] Detailed Financial Analysis Q4 FY2025 Financial Performance In Q4 FY2025, revenues rose 9.4% to $1.24 billion, or 18.7% excluding East Buy, driven by new educational initiatives, despite a GAAP operating loss of $8.7 million due to a $60.3 million goodwill impairment, while non-GAAP operating income surged 116.3% to $81.7 million, supported by strong net operating cash inflow of $399.1 million and $1.95 billion in deferred revenue - Q4 net revenues were US$1.24 billion, a 9.4% increase YoY, with revenues excluding East Buy at US$1,088.5 million, an 18.7% increase YoY[10] - Q4 operating loss was US$8.7 million, compared to an income of US$10.5 million YoY, while non-GAAP operating income was US$81.7 million, a 116.3% increase YoY[13] - Net operating cash inflow for Q4 was approximately US$399.1 million[17] - Deferred revenue at the end of Q4 was US$1.95 billion, an increase of 9.8% YoY[19] FY2025 Financial Performance For the full fiscal year 2025, New Oriental reported a 13.6% revenue increase to $4.9 billion, with operating income growing 22.2% to $428.3 million and net income attributable to New Oriental rising 20.1% to $371.7 million, despite a $60.3 million goodwill impairment charge - FY2025 net revenues were $4.9 billion, a 13.6% increase YoY[20] - FY2025 operating income was US$428.3 million, a 22.2% increase YoY, while non-GAAP operating income was US$554.2 million, a 15.8% increase YoY[21] - A goodwill impairment of US$60.3 million was recorded in FY2025, compared to none in the prior year[22] - FY2025 net income attributable to New Oriental was US$371.7 million, a 20.1% increase YoY, and non-GAAP net income was US$517.1 million, an 11.4% increase YoY[24][25] Business Outlook Q1 FY2026 Outlook For the first quarter of fiscal year 2026 (ending August 31, 2025), New Oriental projects total net revenues to be between US$1.46 billion and US$1.51 billion, representing a year-over-year growth rate of 2% to 5% Q1 FY2026 Revenue Outlook | Period | Revenue Range (US$ million) | YoY Growth (%) | | :--- | :--- | :--- | | Q1 FY2026 | 1,464.1 - 1,507.2 | 2% - 5% | Full Year FY2026 Outlook Starting with this report, New Oriental will provide a full-year outlook, projecting total net revenues for fiscal year 2026 (ending May 31, 2026) to be in the range of US$5.15 billion to US$5.39 billion, corresponding to a year-over-year increase of 5% to 10% Full Year FY2026 Revenue Outlook | Period | Revenue Range (US$ million) | YoY Growth (%) | | :--- | :--- | :--- | | FY2026 | 5,145.3 - 5,390.3 | 5% - 10% | - The company is initiating full fiscal year guidance to better reflect long-term strategic priorities and the seasonal nature of the education industry[27] Financial Statements Condensed Consolidated Balance Sheets As of May 31, 2025, New Oriental's balance sheet shows total assets of $7.81 billion and total liabilities of $3.85 billion, maintaining a strong liquidity position with cash, cash equivalents, term deposits, and short-term investments totaling approximately $4.93 billion, and total equity at $3.95 billion Balance Sheet Summary (As of May 31, 2025, in thousands USD) | Item | 2025 (Unaudited) | 2024 (Audited) | | :--- | :--- | :--- | | Total current assets | 5,187,702 | 5,388,878 | | Total assets | 7,805,499 | 7,531,673 | | Total current liabilities | 3,289,814 | 3,000,855 | | Total liabilities | 3,851,767 | 3,482,659 | | Total equity | 3,953,732 | 4,049,014 | Condensed Consolidated Statements of Operations The statements of operations detail the company's financial performance for both the fourth quarter and the full fiscal year 2025, reporting a Q4 net income of $7.1 million on revenues of $1.24 billion, and a full-year net income of $371.7 million on revenues of $4.9 billion, showing a 20.1% YoY growth in annual profit Q4 FY2025 Statement of Operations For the three months ended May 31, 2025, New Oriental reported net revenues of $1.24 billion, an operating loss of $8.7 million (impacted by a $60.3 million goodwill impairment), and net income attributable to shareholders of $7.1 million Q4 FY2025 Statement of Operations (in thousands USD) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net revenues | 1,243,155 | 1,136,679 | | Total operating cost and expenses | 1,251,829 | 1,126,152 | | Operating (loss)/ income | (8,674) | 10,527 | | Net income attributable to New Oriental | 7,100 | 26,972 | FY2025 Statement of Operations For the fiscal year ended May 31, 2025, the company generated $4.9 billion in net revenues, leading to an operating income of $428.3 million and a net income attributable to shareholders of $371.7 million, a 20.1% increase from the prior year FY2025 Statement of Operations (in thousands USD) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net revenues | 4,900,262 | 4,313,586 | | Total operating cost and expenses | 4,472,012 | 3,963,161 | | Operating income | 428,250 | 350,425 | | Net income attributable to New Oriental | 371,716 | 309,591 | Condensed Consolidated Statements of Cash Flows The cash flow statements show that for the full fiscal year 2025, New Oriental generated $896.6 million in net cash from operating activities, used $93.4 million in investing and $585.0 million in financing, resulting in a net increase in cash of $228.0 million Q4 FY2025 Cash Flow In the fourth quarter of fiscal 2025, the company generated $399.1 million in cash from operating activities, resulting in a net increase of $227.9 million in cash, cash equivalents, and restricted cash after accounting for investing and financing activities Q4 FY2025 Cash Flow Summary (in thousands USD) | Item | Q4 2025 (Unaudited) | Q4 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | 399,122 | 376,835 | | Net cash used in investing activities | (88,292) | (864,010) | | Net cash used in financing activities | (98,477) | (109,230) | | Net change in cash, cash equivalents and restricted cash | 227,856 | (599,970) | FY2025 Cash Flow For the full fiscal year 2025, net cash from operating activities was $896.6 million, with $585.0 million used in financing activities primarily for share repurchases, ending the period with a total cash and restricted cash balance of $1.82 billion FY2025 Cash Flow Summary (in thousands USD) | Item | FY2025 (Unaudited) | FY2024 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | 896,592 | 1,122,643 | | Net cash used in investing activities | (93,428) | (1,153,922) | | Net cash used in financing activities | (584,971) | (160,438) | | Net change in cash, cash equivalents and restricted cash | 228,029 | (216,323) | Reconciliations of Non-GAAP Measures This section provides detailed reconciliations between GAAP and non-GAAP financial measures for both Q4 and the full fiscal year 2025, clarifying how non-GAAP figures like operating income and net income are derived from their GAAP counterparts through adjustments including share-based compensation, amortization of intangible assets, and a significant $60.3 million goodwill impairment in Q4 Q4 FY2025 GAAP to Non-GAAP Reconciliation (in thousands USD) | Item | Amount | | :--- | :--- | | Operating (loss)/ income (GAAP) | (8,674) | | Share-based compensation expenses | 28,636 | | Amortization of intangible assets | 1,417 | | Impairment of goodwill | 60,299 | | Non-GAAP operating income | 81,678 | FY2025 GAAP to Non-GAAP Reconciliation (in thousands USD) | Item | Amount | | :--- | :--- | | Operating income (GAAP) | 428,250 | | Share-based compensation expenses | 59,933 | | Amortization of intangible assets | 5,746 | | Impairment of goodwill | 60,299 | | Non-GAAP operating income | 554,228 |