Financial Performance - Total net revenues for the second fiscal quarter of 2024 increased by 36.3% year over year to US$869.6 million[2] - Operating income was US$21.3 million, compared to a loss of US$2.5 million in the same period of the prior fiscal year, representing a 957.8% increase[3] - Net income attributable to New Oriental surged by 4,007.4% year over year to US$30.1 million for the second fiscal quarter of 2024[3] - Non-GAAP net income attributable to New Oriental for the quarter was US$50.2 million, representing a 182.6% increase year over year[13] - New Oriental's net income for the three months ended November 30, 2023, was RMB30,066 (US$4.2 million), compared to RMB732 (US$0.1 million) in the same period of the prior year[30] - Non-GAAP net income attributable to New Oriental for the three months ended November 30, 2023, was $50,158 thousand, compared to $17,750 thousand in the prior year, representing an increase of 182%[32] - For the six months ended November 30, 2023, net revenues were $1,969,621 thousand, a 42.3% increase from $1,383,036 thousand in the same period of 2022[38] - The company reported a net income of $214.866 million for the six months ended November 30, 2023, compared to $101.167 million for the same period in 2022, reflecting a year-over-year increase of approximately 112.3%[52] Business Growth - The total number of schools and learning centers reached 843, an increase of 50 compared to the previous quarter[5] - The overseas test preparation and overseas study consulting businesses grew by approximately 46.5% and 31.7% year over year, respectively[5] - New educational business initiatives achieved 68.3% revenue growth year over year, with approximately 786,000 student enrollments in non-academic tutoring courses[6] - For the first six months ended November 30, 2023, East Buy recorded total revenue of RMB2,795.0 million (US$386.3 million), a 34.4% increase from RMB2,080.1 million in the same period of the prior fiscal year[19] - East Buy's net profit for the same period was RMB249.2 million (US$34.4 million), a 57.4% decrease from RMB585.3 million in the prior fiscal year[19] Cash Flow and Assets - Operating cash flow for the quarter was approximately US$300.6 million, with cash and cash equivalents totaling around US$4.8 billion[6] - New Oriental's total current assets increased to RMB4,976.9 million (US$688.5 million) as of November 30, 2023, from RMB4,413.9 million (US$610.5 million) as of May 31, 2023[29] - New Oriental's cash and cash equivalents increased to RMB1,942.6 million (US$268.5 million) as of November 30, 2023, from RMB1,663.0 million (US$230.5 million) as of May 31, 2023[29] - Cash, cash equivalents, and restricted cash at the end of the period on November 30, 2023, totaled $2,120,746 thousand, up from $1,122,824 thousand a year earlier, marking an increase of 88.9%[36] Liabilities and Equity - Total liabilities for New Oriental increased to RMB3,035.7 million (US$420.5 million) as of November 30, 2023, compared to RMB2,577.7 million (US$360.5 million) as of May 31, 2023[29] - The total liabilities as of November 30, 2023, were $3.036 billion, which is consistent with the previous reporting period[53] - The company’s total equity as of November 30, 2023, was $4.075 billion, a slight decrease from $4.096 billion as of May 31, 2023[53] Future Outlook - New Oriental expects total net revenues in the third quarter of fiscal year 2024 to be in the range of US$1,070.9 million to US$1,093.5 million, representing a year-over-year increase of 42% to 45%[20] Operating Costs - Total operating costs and expenses for the three months ended November 30, 2023, were $848,258 thousand, up from $640,702 thousand in the same period of 2022, reflecting a 32.4% increase[32] - The cost of revenues for the six months ended November 30, 2023, was $860.411 million, up from $638.174 million for the same period in 2022, representing an increase of approximately 34.7%[51] Tax and Fair Value Changes - The provision for income taxes for the six months ended November 30, 2023, was $74.231 million, compared to $26.912 million for the same period in 2022, indicating an increase of approximately 175.5%[52] - The company recognized a gain from fair value change of investments amounting to $18.166 million for the six months ended November 30, 2023, compared to a loss of $1.539 million for the same period in 2022[52] Accounting Policies - The adjustments made in the reconciliation of financial results under IFRSs reflect the different accounting treatments according to the Group's accounting policies, ensuring compliance with both US GAAP and IFRSs[49]

Core Viewpoint - New Oriental Education & Technology Group Inc. is expected to report strong growth in both earnings and net revenues for the second quarter of fiscal 2024, driven by increased demand in its test preparation and overseas study consulting businesses [1][2][3]. Financial Performance - In the last reported quarter, net revenues exceeded the Zacks Consensus Estimate by 10.2%, with year-over-year growth of 135.4% in earnings and 47.7% in net revenues [1]. - The Zacks Consensus Estimate for fiscal Q2 2024 earnings per share is 27 cents, reflecting a 170% increase from the previous year's 10 cents [2]. - The consensus for net revenues is projected at $828.1 million, indicating a 29.7% growth from $638.2 million reported a year ago [2]. Growth Drivers - The anticipated revenue growth is attributed to rising demand from both domestic and international markets, particularly among adults and university students for test preparation services [3]. - New educational initiatives, including non-academic tutoring and intelligent learning systems, are expected to contribute positively to revenue growth and the expansion of schools and learning centers [3][4]. - The company is focusing on enhancing service quality and operational efficiencies, which are likely to improve margins [4]. Earnings Prediction Model - The current model does not predict an earnings beat for New Oriental, as it lacks a positive Earnings ESP and a higher Zacks Rank [5]. - The Earnings ESP for New Oriental is 0.00%, and it holds a Zacks Rank of 3 [5].

Industry Overview - The Covid-19 crisis accelerated the digitalization of in-person functionalities, significantly impacting remote learning stocks [1] - The online education market is projected to generate revenue of $87.51 billion by the end of this year, with a compound annual growth rate (CAGR) of 11.05% through 2028, potentially reaching $133.1 billion [1] Company Analysis: New Oriental Education (EDU) - New Oriental Education is the largest comprehensive private educational company in China, with a market revenue of approximately $130 billion [2] - The company is well-positioned to benefit from the projected growth in the K-12 education sector following a downturn during the pandemic [2] Company Analysis: Stride (LRN) - Stride is a for-profit education company providing online and blended education programs, with a significant return of almost 85% in equity value over the past 52 weeks and 131% over the past five years [5] - The company has a price/earnings-to-growth (PEG) ratio of 0.65X, lower than 63.22% of its peers, and is rated a strong buy with a price target of $66.75 [6] Company Analysis: Grand Canyon Education (LOPE) - Grand Canyon Education offers online and on-campus programs and is recognized as Arizona's premier Christian university [7] - The company is fairly valued with a trailing-year earnings multiple of 19.7X, and it enjoys a strong buy rating with a price target of $145.67 [8]

Company Overview - New Oriental Education and Technology Group Inc. is a provider of private educational services in China, offering a wide range of educational programs, services, and products to a diverse student population throughout the country [5]. Financial Results Announcement - The company will report its financial results for the second quarter ended November 30, 2023, before the U.S. market opens on January 24, 2024 [1]. - An earnings conference call will be hosted by New Oriental's management at 8 AM on January 24, 2024, U.S. Eastern Time [1]. Conference Call Details - Participants can register in advance for the conference call using a provided link, which will give them access to dial-in numbers and a unique personal PIN [3]. - A live and archived webcast of the conference call will be available for access [3]. Replay Information - A replay of the conference call will be accessible via the webcast on-demand until January 24, 2025 [4].

Financial Data and Key Metrics Changes - New Oriental reported a significant increase in operating income of 163% year over year, reaching $205.1 million, while non-GAAP income from operations increased by 152.2% to $244.8 million [18][19] - Net income attributable to New Oriental was $165.4 million, representing a 150.6% increase year over year, with basic and diluted net income per ADS at $0.99 [19] - The company had cash and cash equivalents totaling approximately $4.6 billion, with a deferred revenue balance of $1.401 billion, an increase of 38.4% year over year [16][19] Business Line Data and Key Metrics Changes - The Overseas Test Prep Business saw a revenue increase of 52% in dollar terms, or 62% in RMB terms year over year [7] - The Overseas Study Consulting Business recorded a revenue increase of 27% in dollar terms, or 35% in RMB terms year over year [7] - New education business initiatives achieved a revenue increase of 103% in dollar terms, or 117% in RMB terms year over year [9] Market Data and Key Metrics Changes - The non-dynamic children business recorded approximately 438,000 student enrollments, with the top ten cities in China contributing over 60% of the revenue [8] - The Intelligent Learning System and Device Business reported approximately 181,000 active paid users, with revenue contribution from the top ten cities in China also around 60% [9] Company Strategy and Development Direction - The company plans to increase its learning center capacity by about 15% to 20% throughout fiscal year 2024, focusing on cities with strong performance [21] - New Oriental aims to leverage its brand advantage and solid foundation to capture more market share and enhance profitability through innovative educational offerings [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustainable growth for the remainder of fiscal year 2024, citing strong demand in the education sector and a favorable regulatory environment [20][31] - The company anticipates total net revenue for Q2 of fiscal year 2024 to be in the range of $785 million to $804 million, representing a year-over-year increase of 23% to 26% [21] Other Important Information - The company has authorized a share repurchase program of up to $500 million, extending it through May 31, 2024, with approximately $193.3 million repurchased as of October 24, 2023 [16] Q&A Session Summary Question: November quarter revenue guidance and growth drivers - Management clarified that the guidance reflects a conservative approach, with typical seasonality affecting Q2, but strong demand is expected to continue [25][26] Question: Capacity expansion plans - Management confirmed a 6% new capacity addition this quarter, with plans for 15% to 20% expansion for the year, focusing on top-tier cities [29][30] Question: Margin expansion analysis - The operating margin increased due to improved utilization of resources and higher margins from new business lines, with optimism for continued margin growth [33][35] Question: Long-term growth for existing businesses - Management is optimistic about top-line growth for existing businesses due to strong demand and reduced competition post-COVID [37][39] Question: Growth of Intelligent Learning Devices - The company is seeing strong demand for its Intelligent Learning Devices, with plans to enhance product quality and expand user numbers [42][44] Question: Shareholder return policy - Management reiterated commitment to the share buyback program, aiming to create value for shareholders [46][47]

Revenue Growth - Total net revenues increased by 47.7% year over year to $1,100.0 million for the first fiscal quarter of 2024[2][3] - Net revenues for the three months ended August 31, 2023, increased to $1,100,021 thousand, up from $744,822 thousand in the same period last year[26] - New Oriental expects total net revenues in the second quarter of fiscal year 2024 to be in the range of $785.0 million to $804.2 million, representing a year-over-year increase of 23% to 26%[16] Profitability - Operating income increased by 163.0% year over year to $205.1 million for the first fiscal quarter of 2024[2][3] - Net income attributable to New Oriental increased by 150.6% year over year to $165.4 million for the first fiscal quarter of 2024[2][3] - Operating income for the three months ended August 31, 2023, was $205,124 thousand, compared to $77,989 thousand in the same period last year[26] - Non-GAAP operating income for the three months ended August 31, 2023, was $244,755 thousand, compared to $97,044 thousand in the same period last year[28] - Net income attributable to New Oriental Education & Technology Group Inc.'s shareholders for the three months ended August 31, 2023, was $165,386 thousand, up from $66,002 thousand in the same period last year[26] - Non-GAAP net income attributable to New Oriental for the three months ended August 31, 2023, was $189,318 thousand, compared to $83,706 thousand in the same period last year[28] Operating Margins - GAAP operating margin for the quarter was 18.6%, an improvement of 810 basis points year over year[6] - Non-GAAP operating margin for the quarter was 22.3%, an improvement of 930 basis points year over year[6] Business Expansion - The total number of schools and learning centers increased to 793 as of August 31, 2023, up from 748 as of May 31, 2023[4] - Overseas test preparation and overseas study consulting businesses grew by 51.7% and 26.6% year over year, respectively[5] - New educational business initiatives achieved 103.3% revenue growth year over year, with 438,000 student enrollments and 181,000 active paid users[5] Cash Flow and Liquidity - Net operating cash inflow for the first fiscal quarter of 2024 was $335.8 million[14] - Cash, cash equivalents, and restricted cash at the end of the period were $1,890,721 thousand, up from $1,137,112 thousand in the same period last year[32] - Net cash provided by operating activities for the three months ended August 31, 2023, was $335,786 thousand, compared to $185,247 thousand in the same period last year[32] Assets and Liabilities - Total assets as of August 31, 2023, were $6,674,715 thousand, compared to $6,392,458 thousand as of May 31, 2023[24] - Total liabilities as of August 31, 2023, were $2,695,194 thousand, compared to $2,577,670 thousand as of May 31, 2023[24] Share-Based Compensation - Share-based compensation expenses for the three months ended August 31, 2023, were $39,631 thousand, up from $19,055 thousand in the same period last year[30]

Company Operations - As of May 31, 2023, the company operates a physical network of 85 schools and 663 learning centers across 78 cities in China, employing approximately 26,600 teachers[301]. - The company has ceased offering K-9 Academic AST Services since the end of 2021, resulting in the closure of certain schools and learning centers[305]. - The company offers a variety of educational programs, including test preparation courses and online education, with classroom-based courses designed to be completed in 2 to 16 weeks[308]. - The company has a distribution network consisting of 9 self-operated bookstores and 241 third-party distributors, providing access to a nationwide network of online and offline bookstores[302]. - The company has implemented an OMO (Online-Merge-Offline) system to enhance operational efficiency by combining offline and online learning[301]. - The company has expanded its non-academic tutoring courses to around 60 cities in China since their launch in 2021[313]. - The intelligent learning systems and devices had 183,000 active paid users in the fiscal year ended May 31, 2023, although their contribution to the business was immaterial[314]. - The company developed and edited approximately 516 titles and distributed around 17.0 million books in China during the fiscal year ended May 31, 2023[319]. - The company’s proprietary teaching content development involved around 1,400 personnel as of May 31, 2023, ensuring consistent teaching quality across services[328]. Financial Performance - The company raised approximately US$1.48 billion in net proceeds from its listing on the Hong Kong Stock Exchange on November 9, 2020[297]. - A share repurchase program was authorized in July 2022, allowing the company to repurchase up to US$400 million of its ADSs or common shares through May 31, 2023, with an extension through May 31, 2024[299]. - The company completed a share repurchase of 952,000 ADSs for US$56.0 million at a weighted average purchase price of US$58.78 per ADS during its previous repurchase program[296]. - In the fiscal year ended May 31, 2023, the company had approximately 495,000 student enrollments in test preparation courses, with 284,000 in overseas courses and 211,000 in PRC courses[312]. - The company reported approximately 1,621,000 student enrollments in non-academic tutoring courses for the fiscal year ended May 31, 2023[313]. - The company expects seasonal fluctuations in operations, with the highest revenue from test preparation courses typically occurring in the first fiscal quarter[337]. - The company has established a strong brand recognition in the private education sector, contributing to significant organic growth through referrals[329]. - The company leverages its OMO system to enhance student acquisition effectiveness while reducing costs[329]. Regulatory Environment - The 2015 amended Education Law allows for-profit educational institutions, effective from June 2016, reversing the previous prohibition[340]. - The 2016 Amended Private Education Law introduced a classification system for private schools, allowing for-profit and non-profit categories, with compulsory education schools remaining non-profit[346]. - For-profit private schools can retain profits and set their own tuition fees without prior government approval, while non-profit schools must adhere to regulated fee structures[346]. - The Amended Implementation Rules require for-profit schools to allocate at least 10% of their audited annual net income to a development fund[351]. - The State Council's 2018 Circular 80 imposes strict regulations on after-school tutoring institutions, including safety requirements and limitations on training content[357]. - After-school tutoring institutions are prohibited from conducting advanced training outside the formal school curriculum for primary and secondary students[359]. - Local authorities are tasked with formulating standards for after-school tutoring institutions, ensuring compliance with safety and operational requirements[357]. - The 2021 Guiding Opinions prohibit after-school tutoring institutions from providing training for preschool children in violation of regulations[361]. - The Ministry of Education emphasizes the need for local governments to manage homework assignments to prevent increased burdens on students from after-school programs[361]. - The government encourages social forces to invest in private education, enhancing support through financial investment and preferential policies[347]. - The Alleviating Burden Opinion prohibits new after-school tutoring institutions for compulsory education and mandates existing ones to register as non-profit[362]. - Online academic tutoring institutions must undergo review and re-approval, with non-compliance leading to cancellation of licenses[362]. - After-school tutoring institutions are restricted from operating during national holidays, weekends, and school breaks[363]. - Fees for academic tutoring in compulsory education will be subject to government price management to prevent excessive charges[363]. - By May 15, 2022, approximately 88% of non-academic tutoring institutions had implemented third-party custodians or risk reserve funds for managing prepaid fees[375]. - The MOE requires all academic after-school tutoring institutions to complete registration as non-profit by the end of 2021, suspending student enrollment until then[368]. - Non-academic tutoring institutions must comply with safety and qualification standards, and cannot charge fees in a lump sum for more than 60 sessions or for a course length exceeding three months[380]. - The Interim Measures for Administrative Penalties on Off-campus Tutoring will take effect on October 15, 2023, imposing penalties for illegal tutoring activities[381]. - The regulations on after-school tutoring are subject to change, which may require the company to adapt its services to remain compliant[382]. - The MOE has established guidelines to strengthen supervision over after-school tutoring institutions, including the prohibition of disguised academic tutoring[377]. Online Education Regulations - The Preschool Opinions aim to achieve a pre-school gross enrollment rate of 85% by 2020 and a coverage of kindergartens with universal access of 80% by 2020[385]. - The regulations prohibit non-state capital from controlling non-profit kindergartens and restrict private kindergartens from listing as public companies[385]. - Online after-school tutoring institutions must publicly disclose teacher qualifications and maintain records of tutoring content for over one year[386]. - Each online class is limited to a maximum duration of 40 minutes, with breaks of at least 10 minutes between classes[386]. - The MOE requires that online after-school tutoring institutions obtain a private school operation permit by the end of 2021[393]. - The filing for mobile internet applications must be completed by March 2024 for apps that began operating before July 21, 2023[397]. - Internet information service providers must obtain an ICP license to operate commercial internet services in China[399]. - Educational live streaming activities are not classified as online performances, thus not requiring an Internet Culture Operation License[402]. - The MOE emphasizes the importance of data security systems for online education applications, particularly for those targeting minors[394]. - The regulations restrict online education products for minors from including links to online games or irrelevant advertisements[392]. - The company is required to obtain a License for Online Transmission of Audio-Visual Programs, but there is uncertainty regarding whether its online business falls within the definition of "Audio-visual Programs" as per the regulations[404]. - The PRC Cybersecurity Law mandates that network operators must obtain consent from individuals before collecting personal information and must not gather unrelated personal information[406]. - The company must comply with the Personal Information Protection Law, which includes handling sensitive personal information and ensuring the security of personal data[413]. - The company is subject to the Measures on Security Assessment of the Cross-border Transfer of Data, which requires security assessments for transferring personal data overseas if certain thresholds are met[418]. Permits and Compliance - The company’s subsidiaries have obtained relevant Permits for Operating Publications Business, which are subject to inspections by regulatory authorities[422]. - The company has obtained the necessary permits for outbound tourism operations through its subsidiary, Beijing New Oriental Walkite International Travel Co., Ltd[425]. - The Ministry of Education (MOE) guidelines stipulate that overseas study tours for primary and middle school students must have a study schedule comprising at least 50% of the total itinerary[426]. - The MOE's Opinions on Education Fees clarify that for-profit private schools can set their own fee levels, while non-profit schools are regulated by provincial governments[428]. - The NDRC, MOE, and SAMR have established that fees for after-school tutoring in compulsory education are subject to government-guided pricing[429]. - The MOE's Administrative Measures require that pre-paid tutoring fees be deposited into special accounts, separate from the institution's funds[430]. - The PRC Advertising Law mandates that companies engaging in advertising must obtain a business license that includes advertising in their scope[431]. - The PRC Consumer Protection Law requires business operators to provide accurate information regarding goods and services and ensure compliance with quality standards[436]. - The E-Commerce Law of the PRC emphasizes fair market competition and prohibits e-commerce operators from imposing unreasonable restrictions on transactions[442]. - The company’s livestreaming e-commerce business does not require an Internet Culture Operation License as it focuses on the sale of agricultural products[441]. - The Trial Administrative Measures for Online Livestreaming Sales mandate that channel operators ensure the authenticity of information provided and maintain records of products and suppliers[443]. Foreign Investment and Regulations - The 2021 Negative List restricts foreign investment in 12 industries, including pre-school education and senior high school education, requiring cooperative joint ventures with a dominant domestic role[449]. - Foreign investors are prohibited from holding more than 50% equity in telecommunications enterprises providing value-added services, requiring approvals from MIIT and Ministry of Commerce[458]. - The Foreign Investment Law implements a pre-establishment national treatment system, ensuring foreign investments are treated equally to domestic investments, except in prohibited industries[451]. - The Anti-Monopoly Law mandates that transactions involving concentrations with specified turnover thresholds must be cleared by SAMR before completion[444]. - Foreign investment in publishing, including books and electronic publications, is prohibited under the 2021 Negative List[456]. - The MOFCOM Order No. 4 of 2020 allows for the inclusion of foreign entities in the list of unreliable entities based on their impact on China's sovereignty and security[447]. - The Foreign Investment Law replaced previous regulations and allows existing foreign-invested enterprises to maintain their corporate forms for five years post-implementation[450]. - The 2021 Negative List requires foreign educational organizations to operate in cooperation with Chinese counterparts in restricted industries[453]. - The regulations on foreign currency exchange allow RMB to be freely convertible for current account items, but capital account items require prior approval from SAFE[464]. - The Anti-Monopoly Guidelines for the Internet Platform Economy specify circumstances under which internet platform activities may be deemed monopolistic[445]. - SAFE Circular 142 regulates the conversion of foreign currency capital into RMB for foreign-invested companies, restricting its use to approved business scopes and requiring SAFE's approval for any changes[465]. - SAFE Circular 19 allows RMB capital converted from foreign currency to be used for equity investments in China, but applications for such investments are often rejected if they exceed the business scope[466]. - SAFE Circular 28 permits foreign-invested companies to use RMB converted from foreign currency for equity investments in China, provided they comply with applicable laws and the negative list on foreign investment[466]. Taxation and Compliance - The Overseas Listing Trial Measures, effective March 31, 2023, require domestic companies seeking to list overseas to fulfill filing procedures with the CSRC[482]. - The CSRC has established a six-month transition period for companies that have obtained overseas regulatory approvals prior to the effective date of the Overseas Listing Trial Measures[483]. - The EIT Law imposes a uniform 25% enterprise income tax rate on both foreign-invested and domestic enterprises, with a preferential 15% rate for "high and new technology enterprises"[486]. - Non-compliance with SAFE regulations may lead to penalties, including restrictions on foreign exchange activities and dividend distributions[469]. - The M&A Rule requires prior notification to the Ministry of Commerce for foreign investors taking control of PRC domestic enterprises in certain situations[481]. - The implementation of employee stock ownership programs requires filing with local tax authorities before execution and exercise of share options[477]. - The regulations on labor require employers to establish labor contracts and ensure wages meet local minimum standards[472]. - Software enterprises established after January 1, 2011, are exempt from enterprise income tax for two years starting from their first profitable year, followed by a 12.5% tax rate for the next three years[487]. - Enterprises established before January 1, 2011, can continue to enjoy similar tax preferential treatments until their tax holiday expires[488]. - Software enterprises must provide filing documents for preferential tax treatments when filing annual enterprise income tax returns[489]. - The enterprise income tax law states that foreign enterprises with "de facto management bodies" in China are considered "resident enterprises" and subject to a 25% tax rate on global income[490]. - The SAT issued a bulletin in August 2011 clarifying the determination of resident status and tax withholding for PRC-controlled offshore enterprises[491].

NEW ORIENTAL(EDU) - 2023 Q4 - Annual Report ...

Financial Data and Key Metrics Changes - New Oriental reported a significant recovery in financial performance, with operating margin reaching 5.6% and non-GAAP operating margin at 9.1% for the quarter, indicating resilience across business lines [5][6] - Operating income was $48.1 million compared to a loss of $105.6 million in the same period last year, while non-GAAP income from operations was $78.6 million compared to a loss of $76.9 million [18][19] - Net income attributable to New Oriental for the quarter was $29 million, a substantial improvement from a loss of $189.3 million in the prior year [19] Business Line Data and Key Metrics Changes - The overseas test prep business reported a revenue increase of 52% in dollar terms or 62% in RMB terms year-over-year [8] - The overseas study consulting business recorded a revenue increase of about 6% in dollar terms or 13% in RMB terms year-over-year [8] - The adults and university students business saw a revenue increase of 34% in dollar terms or 43% in RMB terms year-over-year [9] Market Data and Key Metrics Changes - The deferred revenue balance increased by 43.4% year-over-year, reaching $1.34 billion, indicating strong demand and future revenue recognition [20] - Cash and cash equivalents totaled approximately $4.5 billion, reflecting a healthy financial position [16] Company Strategy and Development Direction - The company plans to increase capacity by 15% to 20% in the new fiscal year, focusing on existing cities and expanding classroom areas in high-performing locations [21][22] - New Oriental aims to leverage its brand advantage and solid foundation to capture market opportunities, particularly in overseas-related courses and non-academic offerings [21][30] - The company is committed to integrating new technologies such as AI and ChatGPT into its educational offerings to enhance operational efficiency and growth [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business trajectory, driven by post-COVID recovery and strong demand for educational services [21][30] - The company anticipates total net revenue in the first quarter of fiscal year 2024 to be in the range of $983.2 million to $1,005.5 million, representing a year-over-year increase of 32% to 35% [22] Other Important Information - The company repurchased approximately 5.9 million ADS for about $191.7 million under its share repurchase program [16] - Operating costs and expenses increased by 29% year-over-year, primarily due to growth in East Buy's private label products and live streaming e-commerce business [17] Q&A Session Summary Question: Capacity expansion plans - Management confirmed a capacity expansion of 15% to 20% for FY '24, primarily in existing cities, driven by strong demand in overseas test prep and non-academic courses [26][27] Question: Drivers of strong growth guidance - Management attributed strong growth to post-COVID recovery, increased demand for overseas-related courses, and reduced competition in the market [30][31] Question: Selling expenses increase - Selling expenses rose due to increased market demand, with expectations of continued spending in the new fiscal year while maintaining operating leverage [33][34] Question: Revenue breakdown by segments - Management provided a revenue mix for Q4, indicating overseas-related business contributed about 11% from test prep and 17% from consulting [39] Question: Cultural tourism services - Management highlighted the potential of the cultural tourism market, leveraging teacher expertise to create unique offerings for middle-aged and older demographics [43][44]

Financial Data and Key Metrics Changes - The company reported a GAAP operating margin of 8.8% and a non-GAAP operating margin of 11.7% for the quarter [6] - Operating income increased by 147.1% year-over-year to $66.5 million, while non-GAAP operating income rose by 179% to $87.9 million [17] - Net income attributable to New Oriental was $81.6 million, representing a 166.7% increase year-over-year [17] - Non-GAAP net income for the quarter was $95.4 million, reflecting a 199.9% increase year-over-year [18] - Cash and cash equivalents, term deposits, and short-term investments totaled approximately $4.3 billion [14] Business Line Data and Key Metrics Changes - The overseas test prep business recorded a revenue increase of 13% in dollar terms or 23% in RMB terms year-over-year [8] - The adults and university students' business saw a revenue decrease of 3% in dollar terms or a 5% increase in RMB terms year-over-year [8] - Non-academic tutoring courses had 218,000 student enrollments this quarter, with the top 10 cities in China contributing about 60% of the revenue [9] - The intelligence learning system and device business had 108,000 active paid users this quarter, with revenue contribution from the top 10 cities in China around 60% [9] Market Data and Key Metrics Changes - Deferred revenue balance increased by 19.8% year-over-year to $1.163 billion [19] - The company is seeing strong demand for overseas test prep and consulting business due to reduced competition in the market [25] Company Strategy and Development Direction - The company aims to sustain healthy growth in market share and pursue innovative endeavors as the economy recovers [7] - Plans to moderately increase capacity in learning centers and expand classroom areas in major cities [20] - The company is exploring opportunities in cultural tourism, leveraging its educational resources and teacher expertise [37][38] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of key business lines and the potential for further market share growth as the pandemic subsides [20] - The company expects total net revenue in Q4 FY 2023 to be in the range of $801.8 million to $822.7 million, representing a year-over-year increase of 53% to 57% [20] Other Important Information - The company invested $26.8 million in the OMO teaching platform during the reporting period [12] - The share repurchase program authorized up to $400 million, with approximately $157.6 million repurchased as of April 18, 2023 [14] Q&A Session Summary Question: Key drivers for fourth quarter growth and FY 2024 expectations - Management highlighted strong demand for overseas test prep and consulting, with less competition in the market as key drivers for growth [25][26] Question: Earnings contribution from Tung-Jung Hsieh - Management noted that East Buy has proven to be a successful business model, contributing significantly to overall revenue and profit growth [31] Question: Breakdown of new initiatives revenue and long-term business direction - The largest revenue contributor among new initiatives is non-academic tutoring, with strong demand and retention rates [34] - The intelligent learning device business is also gaining traction and expected to contribute more revenue [35] Question: Cash management and share buyback versus special dividends - Management stated that the decision on share buybacks versus special dividends will depend on the Board's evaluation [41] Question: Retention rates for non-academic tutoring - Retention rates for non-academic children's courses are over 70%, while the renewal rate for the intelligence learning system devices is over 60% [42] Question: Profitability of new businesses - Overall margins for new businesses are over 10%, with expectations for improvement in the upcoming quarters [45] Question: Growth opportunities in non-academic tutoring - Management sees growth opportunities in both top-tier and lower-tier cities, leveraging existing educational infrastructure [50]