2026-01-28 14:02Financial 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 [14] - Net cash flow generated from operations was approximately $323.5 million [15] - Deferred revenue increased by 10.2% year-over-year to $2.1615 billion [16] 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 [6] - Overseas study consulting business revenue slightly decreased by about 3% year-over-year [6] - Adults and university students business revenue increased by 13% year-over-year [6] - Revenue from non-academic tutoring grew 22% year-over-year [6] Market Data and Key Metrics Changes - The top 10 cities contributed over 60% of revenue from non-academic tutoring [7] - The top 10 cities contributed over 50% of revenue from intelligent learning systems and devices [7] - Domestic and international study tours were held in 55 cities, with the top 10 cities contributing over 50% of revenue [7] 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 [6] - The company is exploring opportunities in the health and wellness sector for seniors [8] - A strategic approach to capacity expansion and hiring is being pursued to ensure quality is not compromised [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational resilience and growth trajectory, expecting total net revenue for Q3 FY 2026 to be in the range of $1.3132 billion to $1.3487 billion, representing a year-over-year increase of 11%-14% [18] - For the full fiscal year 2026, total net revenue guidance was raised to $5.2923 billion to $5.4883 billion, reflecting an 8%-12% year-over-year increase [19] - Management emphasized the importance of cost discipline and sustainable profitability across all business lines [17] Other Important Information - The company announced a share repurchase program to buy back up to $300 million of its ADS or common shares over the next 12 months [20] - As of January 27, 2026, approximately 1.6 million ADS had been repurchased for about $86.3 million [21] Q&A Session Summary Question: Can management provide a breakdown on the segment growth? - Management noted that K-12 business is expected to grow around 20% year-over-year in Q3, while overseas-related business may see flat growth due to external pressures [25][26] Question: What is the expected margin expansion from the merge of test prep and consulting units? - Management indicated that merging these units aims to provide better service and reduce costs, with specific savings to be detailed in future calls [30][33] Question: What is driving the margin expansion in Q2? - Margin expansion was driven by better utilization, higher operating leverage, cost control, and profit contributions from East Buy [36] Question: What is the sustainable growth rate for the new education business? - Management believes that with improved quality and student retention, sustainable growth of 20%+ is achievable [49][51] Question: Any updates on AI initiatives? - Management reported progress on new AI offerings, which are expected to contribute to revenue and improve efficiency [56][58]