#China #Beijing #Technology #Education #New Oriental

New Oriental's Second Fiscal Quarter Report

New Oriental Education & Technology Group Inc. has announced its financial results for the second quarter of fiscal year 2025, ending November 30, 2024. The educational services provider continues to show robust growth, despite challenges faced in the market. With total net revenues reaching an impressive $1,038.6 million, the company has observed a notable year-over-year increase of 19.4%. Excluding earnings from East Buy's private label products and livestreaming, revenues climbed even higher by 31.3%, reaching $894.2 million.

Financial Performance Highlights

Operating income dipped slightly by 9.8%, standing at $19.3 million, while non-GAAP operating income, which excludes specific losses from East Buy, surged by over 102% to $25.0 million. New Oriental's net income exhibited healthy growth, increasing by 6.2% to $31.9 million.

Breakdown of Key Financial Metrics

• - Net Revenues: $1,038.6 million (19.4% YoY increase)
• - Operating Income: $19.3 million (9.8% YoY decrease)
• - Net Income Attributable to New Oriental: $31.9 million (6.2% YoY increase)

Operating Costs and Trends

Operating costs escalated by 20.2% to $1,019.4 million. The surge is primarily attributed to expenses related to the expansion of educational capabilities and integration of tourism-related initiatives. Notably, the cost of revenues rose by 17.9% year-over-year.

Strategic Growth Initiatives

Executive Chairman Michael Yu emphasized the importance of prioritizing top-line growth, citing a significant uptick in overseas test preparation and consulting services. The domestic segment targeting adult learners and university students surged by 34.9%. New educational initiatives from New Oriental also reported an impressive year-on-year revenue growth of 42.6%. It's notable that the non-academic tutoring courses reached about 994,000 student enrollments across 60 cities.

Cash Flow and Future Outlook

The company further reported a positive operating cash flow of $313.3 million and cash equivalents and investments around $4.8 billion, reflecting a sound liquidity position. Moving forward, for the third quarter of FY 2025, New Oriental anticipates net revenues ranging between $1,007.3 million to $1,032.5 million, projecting a year-over-year increase of 18% to 21%.

Conclusion

This fiscal quarter's outcomes underline New Oriental's resilience and capacity to foster sustainable growth amidst a competitive market landscape. The company remains committed to leveraging its robust educational resources to enhance service quality and operational efficiency, ultimately benefiting its stakeholders and the wider community.

Conference Call: New Oriental's management will be hosting a detailed earnings conference call, scheduled for 8 AM ET on January 21, 2025, where stakeholders will receive in-depth insights and further disclosures about fiscal strategies and future goals.