New Oriental Education & Technology Group Q2 Earnings Call Highlights

Core Insights - New Oriental Education & Technology Group reported strong fiscal Q2 2026 results, highlighting significant profit growth, improved margins, and successful new initiatives alongside steady performance in its core education business [4] Financial Performance - Total net revenue increased by 14.7% year-over-year to $1.19 billion [5] - Non-GAAP operating income more than tripled, rising 206.9% to $89.1 million, while non-GAAP net income increased by 68.6% to $72.9 million [5][3] - On a GAAP basis, operating income rose 264.4% to $66.3 million, and net income attributable to New Oriental increased by 42.3% to $45.5 million [2] Margin Expansion - The non-GAAP operating margin expanded by 470 basis points, with approximately 300 basis points of margin expansion attributed to businesses excluding East Buy [1] - The company's focus on operational efficiency, cost control, and better utilization contributed to this margin improvement [1][3] Cost Management - Operating costs totaled $1,125.1 million, up 10.4% year-over-year, with cost of revenues increasing by 11.8% to $556.9 million [6] - Selling and marketing expenses decreased by 1.1% to $194.0 million, while general and administrative expenses rose by 15.2% to $374.3 million [6] Business Highlights - K-12 educational business and high school tutoring showed accelerated revenue growth compared to the previous quarter [8] - The company shifted its strategy to slow learning center expansion to about 10%, focusing more on product and service quality, resulting in higher student retention rates [8] International and New Initiatives - Overseas test preparation revenue increased by 4% year-over-year, while the adults and university students business grew by 13% [10] - New initiatives in non-academic tutoring and intelligent learning systems saw a revenue growth of 22% year-over-year [11] Shareholder Returns and Guidance - Management raised FY26 revenue guidance to $5.29–$5.49 billion, reflecting an 8%–12% year-over-year growth [5][16] - The company announced a dividend of $0.12 per common share and has a $300 million share repurchase authorization, with approximately $86.3 million utilized so far [17]