#China #Beijing #Q3 Results #New Oriental #Education Group

New Oriental Education Reports Q3 Results

New Oriental Education & Technology Group Inc., a major player in China's private education sector, has recently disclosed its unaudited financial results for the third fiscal quarter, which ended on February 28, 2025. This release comes amidst a period of mixed performance as the company navigates fluctuating revenue streams and operational changes. Let's break down the main financial highlights and insights from this report.

Financial Overview

For the third quarter of fiscal year 2025, New Oriental reported net revenues of $1,183.1 million, reflecting a 2.0% decline from the same period last year. However, when excluding revenues from the East Buy private label products and livestreaming segments, the net revenues exhibited a remarkable 21.2% increase, amounting to $1,038.3 million.

Operating Income and Profitability

Operating income for the quarter rose by 9.8% to reach $124.5 million. Notably, the operating income, excluding the losses in the private label and livestreaming businesses, saw an even greater increase of 5.0%, totaling $125.5 million. The company’s net income attributable to its shareholders saw a negligible increase of 0.1%, amounting to $87.3 million.

Year-to-Date Performance

For the first nine months of fiscal year 2025, New Oriental enjoyed a 15.1% year-over-year growth in net revenues, which amounted to $3,657.1 million. Operating income surged by 28.5% during this period, a testament to the company's strong performance across various educational sectors.

Strategic Insights

Michael Yu, Executive Chairman of New Oriental, expressed optimism regarding the performance, highlighting a 21.2% increase in revenues from key sectors excluding East Buy. Specifically, overseas test preparation and study consulting revenues saw respective increases of 7.1% and 21.4%. Additionally, the domestic test preparation services targeting adults and university students grew by 17.0%.

Chenggang Zhou, the Company's CEO, emphasized ongoing efforts towards revamping the educational platform and enhancing AI-driven tools to improve both digital and offline learning experiences. With new applications being integrated into their education products, New Oriental aims to boost operational efficiency and service satisfaction as it scales its operations.

Stephen Zhihui Yang, the CFO, acknowledged the pressures on margins due to varying revenue growth but expressed confidence that these challenges will ease as cost-containment measures take effect.

Share Repurchase Program

In an interesting movement regarding shareholder value, the Board approved an extension to its share repurchase program, increasing the allocation from $400 million to $700 million. By April 22, 2025, the company had repurchased about 14.4 million ADSs at a total of $695.5 million, which is indicative of its commitment to maintaining shareholder interests amidst changing profitability metrics.

Looking Ahead

New Oriental projects its total net revenues for the upcoming fourth quarter, excluding the East Buy products, to be between $1,009.1 million and $1,036.6 million, expecting a year-over-year growth of 10% to 13%. The anticipation of revenue growth, influenced by ongoing strategic initiatives in core education services, sets a positive outlook as the company moves forward.

This fiscal year has presented both challenges and opportunities for New Oriental, and with proactive strategies in place, the company aims to leverage its strong educational foundation for sustainable growth and profitability in the future.

Conclusion

In summary, New Oriental Education & Technology Group's latest quarterly results reflect a mixed performance characterized by overall revenue challenges juxtaposed with significant growth in its core educational services. With strategic changes and a robust repurchase program, management aims to strengthen its market presence while maximizing shareholder value. As the company prepares for future quarters, eyes will remain on its ability to innovate and adapt in an ever-evolving educational landscape.