New Oriental Announces Results for the Third Fiscal Quarter Ended February 29, 2024
PR Newswire
BEIJING, April 24, 2024
BEIJING, April 24, 2024 /PRNewswire/ -- New Oriental Education & Technology Group Inc. (the "Company" or "New Oriental") (NYSE: EDU/ 9901.SEHK), a provider of private educational services in China, today announced its unaudited financial results for the third fiscal quarter ended February 29, 2024, which is the third quarter of New Oriental's fiscal year 2024.
Financial Highlights for the Third Fiscal Quarter Ended February 29, 2024
-- Total net revenues increased by 60.1% year over year to US$1,207.3
million for the third fiscal quarter of 2024.
-- Operating income increased by 70.6% year over year to US$113.4 million
for the third fiscal quarter of 2024.
-- Net income attributable to New Oriental increased by 6.8% year over year
to US$87.2 million for the third fiscal quarter of 2024.
Key Financial Results
(in thousands US$, except per ADS(1) data) 3Q FY2024 3Q FY2023 % of change -------------------------------------- ---------- --------- ----------- Net revenues 1,207,286 754,153 60.1 % Operating income 113,432 66,491 70.6 % Non-GAAP operating income (2)(3) 140,902 87,895 60.3 % Net income attributable to New Oriental 87,167 81,648 6.8 % Non-GAAP net income attributable to New Oriental (2)(3) 104,716 95,362 9.8 % Net income per ADS attributable to New Oriental - basic 0.53 0.49 7.7 % Net income per ADS attributable to New Oriental - diluted 0.52 0.48 8.6 % Non-GAAP net income per ADS attributable to New Oriental -- basic (2)(3)(4) 0.63 0.57 10.8 % Non-GAAP net income per ADS attributable to New Oriental -- diluted (2)(3)(4) 0.63 0.56 11.6 % (in thousands US$, except per ADS(1) data) 9M FY2024 9M FY2023 % of change -------------------------------------- ---------- --------- ----------- Net revenues 3,176,907 2,137,189 48.6 % Operating income 339,898 141,992 139.4 % Non-GAAP operating income (2)(3) 436,559 201,242 116.9 % Net income attributable to New Oriental 282,619 148,382 90.5 % Non-GAAP net income attributable to New Oriental (2)(3) 344,192 196,818 74.9 % Net income per ADS attributable to New Oriental - basic 1.71 0.88 94.3 % Net income per ADS attributable to New Oriental - diluted 1.69 0.86 96.5 % Non-GAAP net income per ADS attributable to New Oriental -- basic (2)(3)(4) 2.08 1.17 78.4 % Non-GAAP net income per ADS attributable to New Oriental -- diluted (2)(3)(4) 2.05 1.14 79.1 %
(1) Each ADS represents ten common shares. The Hong Kong-listed shares are fully fungible with the ADSs listed on NYSE.
(2) GAAP represents Generally Accepted Accounting Principles in the United States of America.
(3) New Oriental provides net income attributable to New Oriental, operating income and net income per ADS attributable to New Oriental on a non-GAAP basis that excludes share-based compensation expenses and gain from fair value change of investments to provide supplemental information regarding its operating performance. For more information on these non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" and the tables captioned "Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures" set forth at the end of this release.
(4) The Non-GAAP net income per ADS attributable to New Oriental is computed using Non-GAAP net income attributable to New Oriental and the same number of shares and ADSs used in GAAP basic and diluted EPS calculation.
Operating Highlights for the Third Fiscal Quarter Ended February 29, 2024
-- The total number of schools and learning centers was 911 as of February
29, 2024, an increase of 68 and 199 compared to 843 as of November 30,
2023 and 712 as of February 28, 2023, respectively. The total number of
schools was 81 as of February 29, 2024.
Michael Yu, New Oriental's Executive Chairman, commented, "We are pleased to see a continued acceleration of our growth momentum that exceeded our expectation in the third quarter of fiscal year 2024, characterized by a remarkable top line growth of 60.1%. Our overseas test preparation and overseas study consulting businesses maintained a strong upward trajectory, exhibiting approximately 52.6% and 25.7% growth year over year, respectively. In addition, the domestic test preparation business targeting adults and university students recorded a growth of approximately 53.2% year over year. Moreover, it is also encouraging that our new educational business initiatives have all achieved promising results in this fiscal quarter, with 72.7% revenue growth year over year. Among these new educational business initiatives, our non-academic tutoring courses were offered in around 60 cities, attracting approximately 355,000 student enrollments in this fiscal quarter. Simultaneously, our intelligent learning system and devices were adopted in around 60 cities, with approximately 188,000 active paid users in this fiscal quarter. In addition to our robust growth momentum, our unwavering commitment to enhancing teaching quality and fostering an enriching learning experience for our students is evidenced by our continuous improvement in customer retention rate. I am confident to say New Oriental is well-positioned in its capacity to capture current and future market opportunities, leveraging its well-established brand and abundant educational resources."
Chenggang Zhou, New Oriental's Chief Executive Officer, added, "During this fiscal quarter, we continued to expand our capacity in some existing cities with greater growth potential and higher facility utilization, thereby increasing profitability at a moderate pace. Our total number of schools and learning centers increased to 911 by the end of this fiscal quarter. To support the strong recovery of our remaining key businesses and the rapid development of new educational initiatives, we continued to allocate resources to our online-merge-offline teaching system and apply new technologies to enhance the quality of our educational and product offerings. Notably, we made substantial investments in East Buy ( ), enhancing the development of its private label products and its presence in multiple channels to attract a larger customer base with its premium products and innovative livestreaming content. While East Buy continued to grow, it also implemented comprehensive measures, including strengthening its supply chain management system to better control food safety and product quality, expanding product categories and increasing SKUs, to reaffirm its commitment to delivering high-quality products with good value for money."
Stephen Zhihui Yang, New Oriental's Executive President and Chief Financial Officer, commented, "Our GAAP operating margin for the quarter was 9.4% and Non-GAAP operating margin for the quarter was 11.7%. Following the promising development in the previous quarters, our educational businesses continued a significant year over year improvement in operating margin in this quarter, driven by strong revenue growth and enhanced utilization of facilities and teaching resources. We recorded a positive operating cash flow of US$109.4 million for this quarter, and by the end of this fiscal quarter, our cash and cash equivalents, term deposits and short-term investments totaled approximately US$4.8 billion. We are confident in achieving healthy growth across all business lines while enhancing operational efficiency and creating sustainable value for our customers and shareholders in the long term."
Share Repurchase
On July 26, 2022, the Company's board of directors authorized a share repurchase program, under which the Company may repurchase up to US$400 million of the Company's ADSs or common shares during the period from July 28, 2022 through May 31, 2023. The Company's board of directors further authorized to extend such share repurchase program by twelve months through May 31, 2024. As of April 23, 2024, the Company repurchased an aggregate of approximately 6.0 million ADSs for approximately US$195.3 million from the open market under the share repurchase program.
Financial Results for the Third Fiscal Quarter Ended February 29, 2024
Net Revenues
For the third fiscal quarter of 2024, New Oriental reported net revenues of US$1,207.3 million, representing a 60.1% increase year over year. The growth was mainly driven by the increase in net revenues from our educational new business initiatives and East Buy private label products and livestreaming e-commerce business.
Operating Costs and Expenses
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