NEW ORIENTAL(EDU)2020-04-22 01:50Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was 845.7 million, a 16.3% increase year-over-year [7] - Non-GAAP operating income 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 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 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]