EDU — New Oriental Education & Technology Group Inc.

Summary of New Oriental's Q4 FY 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total Net Revenue: $1,529.5 million, up 23% year-over-year.
• Non-GAAP Operating Income: $110 million, a 34.7% increase year-over-year.
• Operating Income: $85.8 million, compared to an operating loss of $8.7 million in the prior year.
• Net Income: $62.2 million, a 775.8% increase year-over-year.
• Basic and Diluted Net Income per ADS: $0.40 and $0.39, respectively.
• Deferred Revenue: $2,242.9 million, a 14.8% increase year-over-year.
• Operating Costs: Increased by 15.3% to $1,443.7 million, with notable increases in cost of revenues (25.9%) and selling/marketing expenses (23.9%).

2. Strategic Updates and Business Highlights:

• Core Business Growth: The overseas test prep business grew 6% year-over-year, while the adults and university students segment grew 29%.
• New Initiatives: The non-academic tutoring business and intelligent learning systems were expanded to around 60 cities, contributing to a 25% revenue increase in new educational initiatives.
• East Buy Performance: Significant strides in live streaming and customer engagement were noted, with plans for further expansion in private label products.
• New Oriental Home: A new platform integrating educational services, East Buy offerings, and cultural tourism, launched in 69 cities with strong early traction (70% participation rate).
• AI Integration: Continued investment in AI to enhance product offerings and operational efficiency.

3. Forward Guidance and Outlook:

• Fiscal Year 2027 Revenue Guidance: Expected to be between $6,453.9 million and $6,680.3 million, representing a year-over-year increase of 14% to 18%.
• K-12 Business Growth: Anticipated to grow approximately 20% year-over-year.
• Cost Management: Expected improvements in operational efficiency and margins, with a focus on sustainable profitability.
• Share Repurchase Program: Authorization to repurchase up to $300 million of shares, with a total capital return plan of approximately $500 million for FY 2027.

4. Bad News, Challenges, or Points of Concern:

• Overseas Business Growth Pressure: The overseas test prep and consulting segment is expected to experience flat or low single-digit growth due to external economic pressures.
• Regulatory Environment: While management views the regulatory landscape as neutral to positive, ongoing compliance remains a concern.
• Increased Marketing Expenses: Selling and marketing expenses rose significantly, which could impact margins if not managed effectively.
• Population Decline Impact: Potential long-term challenges due to declining student populations, although management believes larger players will capture more market share.

5. Notable Q&A Insights:

• Q1 FY 2027 Expectations: Management expressed confidence in sustaining momentum, driven by improved enrollment trends and operational efficiency.
• K-12 Revenue Guidance: Expected to see stronger revenue growth in Q1, with a focus on maintaining high margins.
• Capacity Expansion Plans: A disciplined approach to capacity expansion is planned for FY 2027, with a projected increase of 10% to 15%.
• AI Utilization: AI is being leveraged to enhance educational products, improve operational efficiency, and reduce staffing costs, positioning New Oriental competitively in the market.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by New Oriental, providing a balanced view of the company's performance and outlook.