NEW ORIENTAL(EDU)2023-07-26 15:08Financial 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 105.6 million in the same period last year, while non-GAAP income from operations was 76.9 million [18][19] - Net income attributable to New Oriental for the quarter was 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 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 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]