Summary of New Oriental Education & Technology (EDU) Conference Call Company Overview - Company: New Oriental Education & Technology (EDU) - Document ID: 1 Key Financial Results - 4QFY25 Performance: - Group revenue increased by 9% year-over-year (yoy) to US$1,243 million, exceeding Goldman Sachs estimates (GSe) by 3% and consensus by 5% [7] - Core net revenues rose by 19% yoy to US$1,089 million, also above GSe by 4% and consensus by 5% [7] - Non-GAAP operating profit was US$82 million, significantly higher than the expected US$42-44 million [12] - Non-GAAP net profit reached US$98 million, surpassing GSe's estimate of US$54-56 million [12] Revenue Breakdown - New Educational Business Initiatives: Grew by 32.5% yoy [7] - Overseas Test Prep Revenue: Increased by 15% yoy [7] - Domestic Test Prep Revenue: Grew by 17% yoy [7] - East Buy Revenue: Declined by 30% yoy to US$155 million, missing GSe expectations [12] Guidance and Outlook - 1QFY26 Revenue Guidance: Expected to grow by 2-5% yoy to US$1,464-1,507 million, which is 9% below GSe [12] - FY26 Revenue Guidance: Projected to grow by 5-10% yoy to US$5,145-5,390 million, which is 3-4% below GSe and consensus [12] - Management did not provide specific revenue guidance for core operations excluding East Buy, focusing instead on total revenue [1] Shareholder Returns - A new 3-year shareholder return plan was announced, committing to return at least 50% of net profit from the previous fiscal year to shareholders, equating to no less than US$186 million for FY26 [2] - This plan follows a US$700 million share repurchase program executed from July 2022 to May 2025, during which 14.5 million ADSs were repurchased [10] Profitability Metrics - Core Non-GAAP Operating Profit Margin: Improved to 6.5%, up 4.1 percentage points yoy [12] - Deferred Revenue: Grew by 10% yoy to US$1.95 billion, indicating a 10% yoy cash billings growth [12] Risks and Considerations - Key risks include: - Weaker-than-expected offline capacity expansion and margin improvement - Regulatory changes in the education sector - Disruption to demand for overseas test preparation and tutoring due to macroeconomic or geopolitical factors - Execution challenges with East Buy - Changes in senior management [14] Price Target and Valuation - 12-month Price Target: Set at US$58 with an upside potential of 24.1% [16] - Market Capitalization: Approximately US$7.7 billion [16] Conclusion - The results for 4QFY25 were strong, but the guidance for FY26 disappointed investors, likely leading to a negative market reaction. The commitment to shareholder returns and the performance of new educational initiatives will be critical areas to monitor moving forward.
新东方：初步分析 - 2025 财年第四季度核心营收及利润超预期；2026 财年指引令人失望_ First Take_ 4QFY25 results beat on core revenue_profit; FY26 guidance disappoints