2025-10-28 13:02Financial Data and Key Metrics Changes - Total net revenue increased by 6.1% year over year, reaching $1,412.6 million [4] - Non-GAAP operating margin improved to 22%, a year-over-year increase of 100 basis points [4] - Operating income rose by 6% year over year to $310.8 million [11] - Net income attributable to New Oriental decreased by 1.9% year over year to $240.7 million [12] - Non-GAAP net income decreased by 1.6% year over year to $258.3 million [12] - Deferred revenue increased by 10% year over year to $1,906.7 million [14] Business Line Data and Key Metrics Changes - Overseas test prep business revenue increased by about 1% year over year [5] - Overseas study consulting business revenue increased by about 2% year over year [5] - Adults and university students business revenue increased by 14% year over year [5] - New educational business initiatives recorded a revenue increase of about 15% year over year [7] Market Data and Key Metrics Changes - Non-academic tutoring business expanded to around 60 cities, with top 10 cities contributing over 60% of revenue [6] - Intelligent learning system and device business tested in around 60 cities, with top 10 cities contributing over 50% of revenue [7] - Integrated tourism-related business connected across 55 cities, with top 10 cities contributing over 50% of revenue [7] Company Strategy and Development Direction - The company is focused on enhancing operational resilience and sustainable profitability [4] - Plans to increase presence in cities with stronger performance while managing resources carefully [15] - Continued investments in AI and OMO (online merging offline) systems to improve educational services [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving margins and operational efficiency while maintaining cost control [15] - Guidance for total net revenue in Q2 2026 is projected to be between $1,132.1 million and $1,263.3 million, representing a year-over-year increase of 9% to 12% [16] - Full fiscal year 2026 revenue guidance remains between $5,145.3 million and $5,390.3 million, indicating a year-over-year increase of 5% to 10% [16] Other Important Information - The company announced a cash dividend of $0.12 per common share and a share repurchase program of up to $300 million [17][18] - The effective tax rate for Q1 was higher due to special circumstances, expected to normalize in future quarters [54] Q&A Session Summary Question: Competition landscape in K-12 business - Management noted increased competition during summer but highlighted improved student retention and enrollment in autumn classes [22][23] Question: Share-based compensation increase - The increase in share-based compensation was attributed to grants issued in the previous fiscal year, expected to remain at similar levels in upcoming quarters [28][29] Question: Overseas business growth breakdown - Management indicated that younger age groups in overseas test prep grew over 25% year over year, while consulting business saw strong growth in non-U.S. and U.K. markets [34][35] Question: Operating margin outlook - Management expects continued margin expansion driven by cost control and operational efficiency, with optimism for Q2 [49][50] Question: Tax rate expectations - The effective tax rate was higher in Q1 due to special circumstances, with expectations for it to normalize in future quarters [54]