2026-01-28 14:00Financial Data and Key Metrics Changes - Total net revenue grew 14.7% year-over-year to $1.19 billion [4] - Non-GAAP operating income increased 206.9% to $89.1 million [4] - Non-GAAP net income attributable to New Oriental rose 68.6% to $72.9 million [4] - Operating income was $66.3 million, representing a 264.4% increase year-over-year [12] - Net cash flow generated from operations was approximately $323.5 million [13] Business Line Data and Key Metrics Changes - K-9 educational business and high school tutoring business recorded accelerated revenue growth [5] - Overseas test prep business revenue increased by 4% year-over-year [5] - Overseas study consulting business saw a slight decrease of about 3% year-over-year [5] - Adults and university students business revenue increased by 13% year-over-year [5] - Revenue from non-academic tutoring grew 22% year-over-year [5] Market Data and Key Metrics Changes - The top 10 cities contributed over 60% of revenue from non-academic tutoring [6] - The top 10 cities contributed over 50% of revenue from intelligent learning systems and devices [6] - Domestic and international study tours were held in 55 cities, with the top 10 cities contributing over 50% of revenue [6] Company Strategy and Development Direction - The company is focused on operational efficiency and disciplined resource management to support sustainable profitability [4] - Continued investments in new education initiatives, including non-academic tutoring and intelligent learning systems, are expected to deliver solid results [5] - The company is exploring opportunities in the health and wellness sector for seniors [7] - The OMO (Online Merge Offline) teaching platform is being developed to provide advanced education services [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the business outlook, expecting total net revenue for Q3 FY 2026 to be in the range of $1,313.2 million to $1,348.7 million, representing a year-over-year increase of 11%-14% [17] - For the full fiscal year 2026, total net revenue guidance has been raised to $5,292.3 million to $5,488.3 million, reflecting an 8%-12% year-over-year increase [18] - Management emphasized a balanced approach to revenue and profitability growth while maintaining cost discipline [16] Other Important Information - The company announced a share repurchase program to buy back up to $300 million of its ADS or common shares [19] - As of January 27, 2026, approximately 1.6 million ADS had been repurchased for about $86.3 million [20] Q&A Session Summary Question: Request for breakdown on segment growth and key drivers for full year guidance - Management highlighted the K-12 business growth of around 20% year-over-year and overseas test prep growth of 4% year-over-year, with expectations for college business growth of 14-15% [24][25] Question: Expected margin expansion from merging test prep and consulting units - Management indicated that merging these units aims to provide better service and reduce costs, with more details expected in the next quarter [30][31] Question: Elaboration on margin expansion in Q2 - Management noted that margin expansion was driven by better utilization, higher operating leverage, and cost control, with optimism for continued margin improvement in the second half of the year [36] Question: Future trends for overseas business - Management acknowledged challenges but expressed confidence in the team's ability to gain market share, expecting low single-digit growth in the second half of the year [42] Question: Updates on AI initiatives - Management reported progress on new AI offerings and emphasized that AI is helping improve student retention and operational efficiency [56]