NEW ORIENTAL(EDU) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Operating costs and expenses for the quarter were $629.7 million, representing a 52.1$600.9 million, representing a 53.6% decrease year-over-year [28] - Cost of revenue decreased by 57.2% year-over-year to $247.8 million [29] - Net loss attributable to New Oriental for the quarter was$189.3 million, compared to the loss of $45.5 million in the same period last year [31] - Cash and cash equivalents, term deposits, and short-term investments totaled approximately$4.2 billion by the end of the quarter [26] Business Line Data and Key Metrics Changes - The overseas test prep business recorded a revenue increase of 6% in dollar terms for fiscal year 2022 [7] - The overseas study consulting business recorded a revenue increase of about 16% in dollar terms year-over-year for fiscal year 2022 [7] - The adults and university students business recorded a rapid growth of approximately 30% year-over-year for fiscal year 2022 [7] - The non-academic tutoring business has been rolled out in over 50 cities, contributing more than 60% of its revenue from the top 10 cities in China [9][17] - The intelligence learning system and device business has shown improved customer retention rates and scalability, with over 60% revenue contribution from the top 10 cities [10][16] Market Data and Key Metrics Changes - The deferred revenue balance at the end of the quarter was $933.1 million, a decrease of 51.6$1,926.4 million at the end of the previous quarter [34] - The company has reduced the total number of schools and learning centers to 744 by the end of the fiscal year [19] Company Strategy and Development Direction - The company is focusing on new business opportunities that encourage all-round development of students while generating profit for shareholders [6] - The OMO (Online-Merge-Offline) system has been emphasized as a key component during the restructuring process and is expected to provide flexibility in learning [20] - The company is committed to investing in R&D to enhance its educational services and adapt to regulatory changes [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainable profitability of remaining key businesses and the growth potential of new initiatives [35] - The company expects total net revenues in the first quarter of fiscal year 2023 to be in the range of $641.3 million to$680.6 million, representing a year-over-year decline of 51% to 48% [37] - Management believes that the overall impact of the pandemic on business and financials will be limited due to the OMO system [36] Other Important Information - The company authorized a share repurchase program of up to $400 million from July 28, 2022, through May 31, 2023 [26] - The company invested$36 million in the quarter and $166 million in the full fiscal year to improve and maintain the OMO teaching platform [21] Q&A Session Summary Question: Revenue breakdown for guidance by major categories - Management indicated that a breakdown of revenue would be provided in the next quarter [39] Question: Outlook for the number of learning centers - Management noted that the number of learning centers is higher than previously expected, indicating resilience in traditional business lines [40] Question: Revenue contribution from new initiatives - Management expects the new business initiatives to contribute around 20% of total revenue, excluding DONG FANG ZHEN XUAN [52] Question: GP margin expectations - Management anticipates higher gross margins in the upcoming quarters, driven by revenue growth and operational leverage [58] Question: Competition with public schools - Management believes that their extensive data and teaching experience will provide a competitive edge against public schools [63]