--- title: "New Oriental (Minutes): Guidance is a conservative estimate, with the focus next year on improving efficiency." description: "Below is the earnings call $New Oriental EDU & Tech(EDU.US) FY25 Q1 Minutes. For the Quick Interpretation of the earnings report, please refer to《New Oriental: Just Out of the "Breakup Pit"" type: "topic" locale: "en" url: "https://longbridge.com/en/topics/29104499.md" published_at: "2025-04-23T15:15:36.000Z" author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # New Oriental (Minutes): Guidance is a conservative estimate, with the focus next year on improving efficiency. **Below is the** $New Oriental EDU & Tech(EDU.US) **FY25 Q1 earnings call Minutes. For Quick Interpretation of the earnings report, please refer to《**[**New Oriental: Out of the "Breakup Pit" but Hit by "Tariff Hammer", Can Non-Academic Training Hold the Fort?**](https://longportapp.cn/zh-CN/topics/29099669)**》** **1\. Key Earnings Highlights** ![Automatically generated table description](https://pub.pbkrs.com/uploads/2025/389356a0edef61371c7a0feb186e6fe8?x-oss-process=style/lg) **1\. Revenue:** Total net profit decreased by 2% YoY. Excluding revenue from East Buy business, core education revenue increased by 21.2% YoY. **2\. Operating Margin:** Operating margin was 12.1%. Non-GAAP operating margin (excluding East Buy business) was 13.3%. **3\. Segment Performance:** 1) Overseas test preparation: Revenue increased by 7% YoY in USD terms. 2) Overseas study consulting: Revenue increased by ~21% YoY in USD terms. 3) College student ancillary services: Revenue increased by 17% YoY in USD terms. 4) New education initiatives: Combined revenue increased by 35% YoY. Non-academic tutoring is mainly concentrated in Tier 1/2 cities, with Top 10 cities contributing over 60% of business; learning devices have been adopted in ~60 cities, with Top 10 cities contributing over 50%. 5) Integrated tourism-related business: Revenue increased by 85% YoY, with international/domestic study tours launched in ~55 cities (Top 10 cities contributed over 50%). **4\. Key Financial Metrics:** 1) Operating costs & expenses: $1.0585B, down 3.2% YoY. 2) Cost of revenues: Down 17.6% YoY to $531.6M. 3) S&M expenses: Up 13% YoY to $182.2M. 4) G&A expenses: Up 19.8% YoY to $344.7M. 5) Total share-based compensation: Down 41.3% YoY in Q3 to $16.1M. 6) Operating income: $124.5M, up 9.8% YoY. 7) Non-GAAP operating income: $142.1M, down 0.2% YoY. 8) Net income attributable to shareholders: $87.3M, up 0.1% YoY. 9) Basic/diluted net income per ADS: Both $0.54. 10) Non-GAAP net income attributable to shareholders: $113.3M, down 14.3% YoY. 11) Non-GAAP basic/diluted net income per ADS: Both $0.70. 12) Net cash from operating activities: ~$1M. 13) Capex: $52.4M. **5\. Balance Sheet:** 1) Cash & equivalents: $1.4188B. 2) Term deposits: $1.4117B. 3) Short-term investments: $1.8536B. 4) Total cash reserves: ~$4.7B. 5) Deferred revenue: $1.7499B, up 15% YoY. **2\. Earnings Call Details** **2.1 Management Commentary** **1\. Share Repurchase:** 1) Board approved extension of repurchase program to May 31, 2025. 2) Authorized repurchase amount increased from $400M to $700M. 3) As of April 22, 2025, repurchased ~14.4M ADS worth $695.5M (program ongoing). **2\. Guidance:** 1) For Q4 (Mar 1-May 31), expects total net revenue (ex-East Buy) of $1.0091B-$1.0366B (+10%-13% YoY in USD; +12%-15% in RMB). 3) Cost control measures initiated across all business lines this quarter, with effects expected in coming quarters. 4) Expects YoY growth in Non-GAAP operating margin for education business in Q4. **3\. Strategic Initiatives:** 1) Invested $29.7M in OMO platform upgrades. 2) Developing AI-powered educational solutions using open-source LLMs. 3) Launched AI tools for essay scoring, oral assessments, and Aero Correction notebooks. 4) Building AI-based FAQ database to reduce sales training costs. **4\. Growth Commitment:** 1) Focus on sustainable growth through strategic planning. 2) Continued investment in AI and advanced technologies. 3) Strengthening compliance with government policies. **2.2 Q&A** **Q: Drivers behind overseas test prep/consulting slowdown? Will tariffs worsen this? Outlook?** A: Slowdown due to macro conditions and geopolitical changes. Expects high-single-digit growth in Q4. For FY26: test prep +5%-10%, consulting flat (conservative estimates). **Q: Q4 growth expectations for other businesses?** A: In RMB terms: overseas +8%, college +19%, high school +16%-17%, new biz +32%-35%. USD growth ~2%-3% lower. Guidance is conservative. **Q: K9 offline enrollment +15% YoY (below expectations) vs learning devices +54% - is device adoption impacting? Is slower K9 growth due to larger base?** A: Enrollment timing differences caused discrepancy (some cities merged spring/fall enrollments). High school tutoring growing rapidly. Expects K9 biz to grow >35% YoY in Q4. **Q: Sustainability of Q4 margin expansion into FY26? Efficiency measures?** A: Expects margin growth due to: 1) cost controls initiated this quarter; 2) focus on facility utilization. Believes education biz (ex-East Buy) will achieve margin expansion in FY26. **Q: Future capital return plans (dividends/buybacks)?** A: Completed $700M buyback; paid $100M special dividend last September ($800M returned in past 2.5 years). Will discuss new capital allocation plan with board (likely combo of dividends + buybacks). **Q: FY26 growth expectations by segment?** A: Expects current growth trends to continue: overseas low-single digits, K9 +25%-30%, high school +12%-13%, tourism +15%-20%. **Q: AI/LLM strategy?** A: Using AI across teaching/learning process (tools for writing/speaking assessments). No plans to develop LLMs. AI helps reduce S&M/G&A costs. **Q: FY26 learning center capacity plans?** A: Plans +10%-15% new capacity (vs >20% in FY25), mostly in H2. FY26 focus is utilization improvement. **Q: Cost control measures? One-time restructuring charges?** A: Ongoing process (no one-time charges). Necessary given revenue slowdown. **Q: FY26 corporate expense ratio target?** A: Aiming to reduce from 6% to 5% of education revenue. **Q: Is +25%-30% FY26 growth for K9 only or all new biz?** A: Includes all new initiatives (mainly non-academic tutoring + learning devices). **Q: Strategy against cheaper learning hardware competitors?** A: Confident in online course model. Combines interactive system with AI tools to enhance stickiness. Current 22%-23% operating margin (similar to offline) has upside potential from labor savings. **Disclosures:** [**Dolphin Research Disclaimer**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [INTR.US - Inter](https://longbridge.com/en/quote/INTR.US.md) - [EDU.US - New Oriental EDU & Tech](https://longbridge.com/en/quote/EDU.US.md) - [09901.HK - NEW ORIENTAL-S](https://longbridge.com/en/quote/09901.HK.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.