Financial Data and Key Metrics Changes - Total net revenue for Q2 2021 was $887.7 million, a 13.1% increase year-over-year [6] - Operating costs and expenses increased by 21% year-over-year to $919.8 million [21] - Net income attributable to New Oriental was $53.9 million, a 0.9% increase from the same period last year [23] - Non-GAAP net income increased by 21.3% year-over-year to $69.1 million [23] - Operating loss for the quarter was $32.1 million compared to a loss of $25.3 million in the previous year [22] Business Line Data and Key Metrics Changes - K-12 after-school tutoring business revenue grew approximately 26% year-over-year [11] - U-Can middle and high school tutoring revenue increased by approximately 27% [11] - POP Kids program revenue rose by about 24% [12] - Overseas test prep business revenue decreased by about 29% year-over-year, showing signs of recovery compared to a 51% decrease in the previous quarter [12] - VIP personalized class business recorded a cash revenue increase of about 20% year-over-year [13] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test prep courses increased by 10.4% year-over-year to approximately 4,183,100 [9] - Per program blended average selling price (ASP) increased by about 13% year-over-year [10] - Hourly blended ASP remained flat year-over-year, with U-Can classes increasing by 8% and overseas test prep programs increasing by 13% [10] Company Strategy and Development Direction - The company is focusing on expanding its OMO (Online-Merge-Offline) system to enhance flexibility and reach [7][8] - Plans to expand offline business capacity by 20% to 25% in fiscal year 2021 [26] - Emphasis on cost control and effective marketing strategies to cushion pandemic impacts [8][21] - The company aims to leverage digital technologies and enhance its OMO system for better service delivery [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends despite ongoing pandemic challenges [25] - The company expects total revenue for the next quarter to be in the range of $1,098.6 million to $1,144.8 million, representing a year-over-year increase of 19% to 24% [32] - Management highlighted the importance of maintaining a stable investment strategy for sustainable growth [25][30] Other Important Information - The company invested $54 million in the OMO integrated education ecosystem during the quarter [14] - Cash and cash equivalents as of November 30, 2020, were $2,643.2 million, significantly up from $915.1 million as of May 31, 2020 [24] Q&A Session Summary Question: Importance of OMO strategy for future growth - Management emphasized the OMO model's role in enhancing student retention and satisfaction, contributing to overall revenue growth [36][38] Question: FY22 guidance on revenue growth and capacity expansion - Management indicated expectations for booming revenue growth in FY22, with a focus on expanding capacity and improving service quality [40] Question: Impact of COVID-19 on guidance and enrollment growth - Management acknowledged potential negative impacts from COVID-19 but expressed confidence in better preparedness compared to previous outbreaks [42][43] Question: Pricing strategy amidst competition - Management stated that pricing strategies remain consistent, focusing on quality over price, which is valued by parents and students [50][51] Question: Capital allocation strategy going forward - Management plans to use raised funds for potential valuable investments and to continue rewarding investors through dividends and buybacks [58]

Financial Data and Key Metrics Changes - Total net revenue for Q1 2021 was $986.4 million, representing an 8% decrease year-over-year, which was better than previous guidance [4] - Net revenues from education programs and services were $935.6 million, a 6.1% decrease year-over-year [4] - Operating income was $150.3 million, a 38.9% decrease year-over-year, with a non-GAAP operating income of $166.1 million, down 35.4% year-over-year [19] - Net income attributable to New Oriental was $174.7 million, a 16.4% decrease from the same period last year [20] - Operating margin for the quarter was 15.2%, compared to 23.0% in the same period of the prior fiscal year [19] Business Line Data and Key Metrics Changes - K-12 after-school tutoring business achieved year-over-year revenue growth of approximately 8% [8] - U-Can middle and high school all-subjects after-school tutoring business recorded a revenue increase of approximately 9% and student enrollments grew 23% year-over-year [8] - POP Kids program saw a revenue increase of about 3.5% with a 17% increase in enrollment [9] - Overseas test prep business recorded a revenue decrease of about 51% due to pandemic-related challenges [9] - VIP personalized class business experienced a cash revenue decline of about 10% year-over-year [10] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test preparation courses increased by about 13.5% year-over-year to approximately 2,961,100 [5] - Deferred revenue balance increased by 17.5% year-over-year to $1,563.1 million [21] - The company opened seven new offline training schools, increasing classroom area by approximately 23% year-over-year [12] Company Strategy and Development Direction - The company is focusing on expanding its offline business by adding around 20% to 25% capacity, including new learning centers [22] - Investment in digital technologies and the OMO system will be leveraged for K-12 distance and overseas test prep offerings [24] - The company aims to capture market share from smaller players during the post-COVID market consolidation [23] - Continued investment in teacher training and technology platforms to enhance the OMO integrated education ecosystem [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends and market opportunities despite ongoing pandemic challenges [21] - The company expects total revenue for the next quarter to be in the range of $863.7 million to $887.3 million, representing a year-over-year increase of 10% to 13% [28] - Management highlighted the importance of maintaining a stable investment strategy focused on product quality and teacher salaries [22] Other Important Information - The company invested $39 million in the quarter to improve its OMO integrated education ecosystem [14] - The summer promotion campaign resulted in a 31% increase in total promotion enrollments year-over-year, reaching 1,079,000 [10] Q&A Session Summary Question: What caused the significant decline in gross margin year-over-year? - Management noted that the gross margin was down by roughly 6% due to an 8% revenue decline and increased teacher salaries [34] Question: What is the current utilization rate of offline classes? - Management indicated that it is difficult to disclose the utilization rate due to the pandemic but expects it to improve as operations normalize [38] Question: Can you discuss the outlook for the overseas test prep business? - Management acknowledged a 51% decline in overseas test prep revenue but expects gradual recovery in Q2 with a forecasted decline of 30% to 35% [41] Question: What is the guidance for FY '21 and operating margin targets? - Management provided guidance for Q2 revenue growth of 10% to 15% and indicated that margin decline will continue to narrow in Q2 [44] Question: How will the company approach capacity expansion amid the pandemic? - Management aims to add 20% to 25% new capacity in FY '21 and sees opportunities to capture market share during consolidation [74]

Executive Compensation and Benefits - For the fiscal year ended May 31, 2020, the company paid approximately US$1.8 million in cash to executive officers and non-executive directors[554]. - The company contributed US$106,000 to pension insurance, medical insurance, housing fund, unemployment, and other benefits for executive officers and non-executive directors[554]. - The company has entered into employment agreements with executive officers, allowing termination for cause without notice or remuneration[551]. - Each executive officer is required to maintain confidentiality regarding the company's trade secrets and confidential information[553]. - The compensation committee is responsible for reviewing and approving the total compensation package for the chief executive officer and other executive officers[573]. Share Incentive Plans - The 2006 Share Incentive Plan allows for a maximum of 8,000,000 shares to be issued, with additional shares added annually since 2007[555]. - The 2006 plan expired in January 2016, and no additional awards may be granted under this plan[556]. - The company has a vesting schedule where one-sixth of the common shares underlying an option will vest every six months[562]. - The exercise price of options under the 2006 plan may be fixed or variable, determined by the plan administrator[561]. - The 2016 Share Incentive Plan allows for the issuance of up to 10,000,000 shares, with 1,256,505 non-vested equity shares outstanding as of May 31, 2020[563]. - The company amended its 2006 share incentive plan in September 2012, allowing the administrator to reduce the exercise price of outstanding options without shareholder approval, provided it does not incur significant additional share-based compensation expenses[708]. - The company adopted its 2016 share incentive plan in January 2016, following home country practice and obtaining board approval without requiring shareholder approval[708]. Board of Directors and Governance - The company’s independent directors include notable figures such as Robin Yanhong Li, co-founder of Baidu, and Denny Lee, former CFO of NetEase[548][549]. - The company’s executive team includes experienced professionals with backgrounds in finance, education, and technology[543][544][545]. - The board of directors consists of six members, including three independent directors, complying with NYSE requirements for independent oversight[569]. - The audit committee held meetings or passed resolutions 14 times in the fiscal year ended May 31, 2020, ensuring oversight of financial reporting processes[572]. - The nominating and corporate governance committee is tasked with selecting nominees for the board and ensuring compliance with corporate governance standards[574]. - The company has a board of directors consisting of three independent directors and three executive officers, maintaining independent audit, compensation, and governance committees[707]. - The company has no significant differences in corporate governance practices compared to domestic listed companies as per NYSE requirements[709]. Financial Performance and Position - The company reported a net income of $1.02 billion for the year ended May 31, 2020, compared to $1.05 billion in 2019, a decrease of approximately 3%[730]. - Total assets increased from $3.98 billion in 2018 to $6.56 billion in 2020, representing a growth of approximately 64%[738]. - Cash and cash equivalents decreased from $1.41 billion in 2019 to $915.06 million in 2020, a decline of about 35%[738]. - Short-term investments rose significantly from $1.67 billion in 2019 to $2.32 billion in 2020, an increase of approximately 39%[738]. - Total liabilities increased from US$1,763,017 in 2018 to US$3,687,074 in 2020, representing a growth of 108.5%[740]. - Total equity rose from US$2,008,071 in 2018 to US$2,869,811 in 2020, an increase of 43%[742]. - Retained earnings grew significantly from US$1,352,543 in 2018 to US$1,986,411 in 2020, reflecting a rise of 46.8%[742]. - Additional paid-in capital increased from US$129,059 in 2018 to US$456,088 in 2020, marking a growth of 253.5%[742]. Legal and Regulatory Matters - The company has been involved in a putative securities class action lawsuit, with ongoing proceedings related to allegations of material misstatements in public filings[596]. - The lease agreements with Metropolis Holding were approved by all directors, including disinterested directors, ensuring compliance with related party transaction regulations[589]. - The company has not entered into any material contracts outside the ordinary course of business, except those described in the annual report[644]. - Under Cayman Islands law, the company is not required to hold annual shareholders meetings every year, and it did not hold one in the fiscal year of 2020[709]. Taxation and Financial Reporting - There are no taxes levied on profits, income, or gains in the Cayman Islands, and no inheritance tax or estate duty applies[647]. - The company may be classified as a "resident enterprise" under PRC tax law if it meets specific criteria, which could subject dividends to a 10% withholding tax[649]. - The company does not intend to determine earnings and profits based on U.S. federal income tax principles, and distributions will generally be reported as dividends[656]. - The company maintained effective internal control over financial reporting as of May 31, 2020, as confirmed by an independent audit[692]. - The company adopted new accounting standards for leases in 2020, impacting the financial reporting of operating lease liabilities[731]. Risk Management - The company has not been exposed to material risks due to changes in interest rates, but a hypothetical one percentage point decrease in interest rates would have resulted in a decrease of approximately US$33.6 million in interest income for the year ended May 31, 2020[675]. - All revenues and most expenses are denominated in RMB, with exposure to foreign exchange risk primarily related to cash and cash equivalents denominated in U.S. dollars[676]. - The company does not believe it currently has any significant direct foreign exchange risk and has not hedged exposures denominated in foreign currencies[676]. - The conversion of Renminbi into foreign currencies is based on rates set by the People's Bank of China, and fluctuations in the exchange rate can significantly impact the value of investments[677].

Financial Data and Key Metrics Changes - Total net revenue for Q4 2020 was $798.5 million, a decrease of 5.3% in dollar terms or 1% in RMB terms year-over-year [5][6] - Non-GAAP operating margin for the fiscal year 2020 expanded by 70 basis points to 12.9% compared to 12.2% in the prior fiscal year [6] - Gross margin for Q4 2020 was 51%, down 500 basis points year-over-year [6] - Non-GAAP net income for Q4 was $48.5 million, representing a 49% decrease from the same period in the prior fiscal year [21] Business Line Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test preparation courses decreased by 6.2% year-over-year to approximately 2,585,600 [5][6] - K-12 school total business achieved a year-over-year revenue growth of approximately 4% in dollar terms [9] - Overseas test preparation business revenue declined by approximately 62% in dollar terms, while the consulting business grew by approximately 6% in dollar terms [10] - VIP personalized classes reported a revenue decline of about 36% year-over-year in dollar terms [10] Market Data and Key Metrics Changes - The overseas test prep business faced significant challenges due to the cancellation of overseas exams and travel restrictions, leading to a revenue contribution of only 5.6% in Q4 [68] - The deferred revenue balance at the end of Q4 was $1,324.4 million, an increase of 1.8% from the previous year [22] Company Strategy and Development Direction - The company plans to expand its offline business by 20% to 25% in fiscal year 2021, aiming to capture more market share post-COVID [22][23] - Investments in digital technologies and the OMO (Online-Merge-Offline) system will be leveraged to enhance the learning experience and reach more students [23][24] - The company aims to develop better teaching content and training programs for teachers to improve overall educational quality [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term business prospects despite short-term challenges posed by the COVID-19 pandemic [26][27] - The company anticipates a gradual recovery in demand for after-school education services as offline operations resume in most cities [29][30] - The management expects total revenue for Q1 2021 to decline by 11% to 15% year-over-year, with specific declines in overseas test prep programs [28] Other Important Information - The company added a net of 44 learning centers, increasing classroom area by approximately 26% year-over-year [13] - Capital expenditures for the quarter were $89.7 million, primarily for opening new facilities and renovations [21] Q&A Session Summary Question: Can you help us understand the assumptions behind the revenue guidance and the market consolidation? - Management indicated that the revenue guidance is conservative due to uncertainties, including shortened summer holidays and COVID-19 impacts in major cities [34][35] Question: How is the capacity expansion plan being adjusted in light of underperforming segments? - Management confirmed that they plan to shift capacity from underperforming segments to better-performing ones while maintaining the overall expansion guidance [42] Question: What is the long-term impact of the OMO model on margins? - Management believes the OMO model will enhance revenue and retention rates, positively impacting margins in the long term [45][58] Question: How do you expect the K-12 business to recover in the next fiscal year? - Management expects a gradual recovery in K-12 business, with growth rates returning to normal in subsequent quarters [62][63] Question: What is the outlook for the overseas test prep business? - Management acknowledged significant challenges for the overseas test prep business due to COVID-19 but remains hopeful for gradual recovery as exams resume [68]

Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $923.2 million, representing a growth of 15.9% year-over-year in dollar terms or 18.7% in RMB terms [7] - Net revenues from education programs and services were $845.7 million, a 16.3% increase year-over-year [7] - Non-GAAP operating income was $134.8 million, an 18.5% increase year-over-year, with a non-GAAP operating margin of 14.6% [10][19] - Net income attributable to the company was $137.7 million, a 41.4% increase from the same period last year [19][20] Business Line Data and Key Metrics Changes - K-12 after-school tutoring courses achieved approximately 24% revenue growth in dollar terms or 27% in RMB terms [7][12] - The U-Can middle school/high school program recorded a revenue increase of about 23% in dollar terms or 26% in RMB terms [12] - The overseas test prep business saw a revenue decrease of 14% in dollar terms or 12% in RMB terms [13] - The consulting business recorded revenue growth of about 27% in dollar terms or 30% in RMB terms year-over-year [13] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test prep courses increased by 2.3% year-over-year to approximately 1,606,000 [8] - The deferred revenue balance at the end of Q3 was $1,375.0 million, an increase of 15.4% compared to the previous year [21] Company Strategy and Development Direction - The company continues to implement its "Optimize the Market" strategy, expanding capacity in cities with growth potential [7][14] - Investments of $40 million were made to enhance the OMO education ecosystem, focusing on online education capabilities [15][16] - The company plans to maintain a capacity expansion of 20% to 25% in the coming year, aiming to capture market share from smaller players post-pandemic [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business outlook despite challenges from COVID-19, expecting a recovery in demand for after-school tutoring as schools reopen [27][29] - The company anticipates a decline in revenue for Q4, projecting a range of $774 million to $806.2 million, representing a year-over-year decline of 8% to 4% [27][28] - Management highlighted the potential for market consolidation, with smaller players likely to exit the market due to financial pressures [23][37] Other Important Information - The company donated RMB20 million to Hubei province and provided free courses to children of medical staff during the pandemic [6] - Operating costs increased by 15.0% year-over-year, primarily due to higher teacher compensation and rental costs [18] Q&A Session Summary Question: Impact of overseas test prep revenue decline - Management noted a 13% revenue decline in overseas test prep for Q3 and projected a 45% decline for Q4 due to pandemic-related disruptions [32][33] Question: Market consolidation during the crisis - Management indicated that many small players are facing severe impacts, creating opportunities for larger players like New Oriental to gain market share [36][37] Question: Summer promotion campaign plans - Management plans to focus on retention and increase class offerings during the summer promotion campaign, expecting to capture more market share [40][41] Question: Expansion plans amid pandemic - Management confirmed that expansion plans remain unchanged, with a focus on adding new learning centers and maintaining capacity growth [44] Question: Online vs offline growth balance - Management stated that the cannibalization between online and offline segments is minimal, as both markets have significant growth potential [59]

Revenue Growth - In the fiscal years ended May 31, 2017, 2018, and 2019, the company generated total net revenues of $1,799.5 million, $2,477.4 million, and $3,096.5 million, respectively, reflecting a growth trend in revenue [407]. - Total net revenues increased by 26.5% from US$2,447.4 million for the fiscal year ended May 31, 2018 to US$3,096.5 million for the fiscal year ended May 31, 2019 [438]. - Net revenues from educational programs and services rose by 28.6% from US$2,165.2 million in fiscal year 2018 to US$2,785.3 million in fiscal year 2019, driven by an increase in student enrollments from approximately 6.3 million to 8.4 million [438]. - Net revenues from language training and test preparation courses increased by 28.8% from US$2,023.0 million for the fiscal year ended May 31, 2018 to US$2,605.8 million for the fiscal year ended May 31, 2019 [452]. Operating Costs and Expenses - Operating costs and expenses as a percentage of total net revenues were 85.4% in 2017, 89.2% in 2018, and 90.3% in 2019, indicating rising operational costs [417]. - Total operating costs and expenses rose by 27.9% from US$2,184.5 million in fiscal year 2018 to US$2,794.6 million in fiscal year 2019 [440]. - Cost of revenues increased from $749.6 million (41.7% of net revenues) in 2017 to $1,376.3 million (44.5% of net revenues) in 2019, reflecting higher teaching fees and operational expenses [417]. - Cost of revenues increased by 29.1% from US$1,065.7 million in fiscal year 2018 to US$1,376.3 million in fiscal year 2019, mainly due to higher teaching fees and performance-linked bonuses [440]. Marketing and Administrative Expenses - Selling and marketing expenses were $232.8 million (12.9% of net revenues) in 2017, $324.2 million (13.2%) in 2018, and $384.3 million (12.4%) in 2019, showing a consistent investment in brand promotion [418]. - General and administrative expenses rose from $554.9 million (30.8% of net revenues) in 2017 to $1,034.0 million (33.4%) in 2019, driven by increased personnel costs [418]. - Selling and marketing expenses grew by 18.5% from US$324.2 million in fiscal year 2018 to US$384.3 million in fiscal year 2019, attributed to the addition of over 3,800 new sales and marketing personnel [440]. - General and administrative expenses increased by 30.1% from US$794.5 million in fiscal year 2018 to US$1,034.0 million in fiscal year 2019, primarily due to a US$601.1 million rise in human resources expenses [440]. Student Enrollment and Market Expansion - The number of student enrollments is a significant factor affecting revenues, driven by demand for courses, marketing effectiveness, and competitive pressure [404]. - The company plans to expand its school network and increase the variety of courses offered, including smaller-size classes, to capture a larger share of the education market in China [406]. - The number of student enrollments in language training and test preparation courses increased from approximately 4.8 million in the fiscal year ended May 31, 2017 to over 6.3 million in the fiscal year ended May 31, 2018 [442]. Financial Position and Cash Flow - As of May 31, 2019, the company had US$1,414.2 million in cash and cash equivalents and US$4.0 million in restricted cash [496]. - Net cash provided by operating activities was US$805.6 million for the fiscal year ended May 31, 2019, reflecting a net income of US$227.8 million [501]. - Net cash used in investing activities amounted to US$574.7 million in the fiscal year ended May 31, 2019, primarily for the purchase of property and equipment [505]. - Net cash provided by financing activities was US$266.6 million in the fiscal year ended May 31, 2019, mainly due to proceeds from the IPO of Koolearn [508]. Acquisitions and Investments - The company acquired Hangzhou Shengshen Technology Co., Ltd for US$11.0 million and Suzhou Hongyi Education Investment Co., Ltd for US$41.7 million in recent acquisitions [433]. - Capital expenditures for the fiscal year ended May 31, 2019, were US$269.1 million, primarily for investments in facilities, equipment, technology, and operating systems to support expected growth [516]. - The company intends to allocate capital resources cost-efficiently by leasing most new facilities and may pursue acquisitions that complement operations [516]. Legal and Regulatory Matters - The company is subject to legal proceedings, including a putative securities class action filed in December 2016, which alleges material misstatements in public filings [585]. - The company relies on dividends from its subsidiaries in China, which are subject to PRC regulations regarding profit distribution [590]. Shareholder and Employee Matters - The company paid approximately US$3.2 million in cash to executive officers and non-executive directors for the fiscal year ended May 31, 2019 [540]. - Contributions to pension insurance, medical insurance, housing fund, and other benefits for executive officers and non-executive directors totaled US$133,000 [540]. - As of May 31, 2019, the company had 54,758 full-time employees and 9,569 contract teachers and staff, showing an increase from 44,531 and 9,711 in 2018 [564]. Technology and Operational Efficiency - The company has developed an O2O two-way interactive learning platform to enhance the learning experience and integrate online and offline education [410]. - The technology platform includes e-learning systems and licensed speech recognition platforms, aimed at enhancing operational efficiency and scalability [517]. - The company has established performance monitoring for key systems to ensure reliability and quick response to potential issues [518].