NEW ORIENTAL(EDU)2024-01-24 16:18Financial Data and Key Metrics Changes - New Oriental reported a significant increase in net income attributable to the company, reaching 21.3 million compared to a loss of 4.8 billion [12] Business Line Data and Key Metrics Changes - The overseas test prep business saw a revenue increase of 47% in dollar terms or 50% in RMB terms year-over-year [6] - The overseas study consulting business recorded a revenue increase of about 32% in dollar terms or 35% in RMB terms year-over-year [6] - The adults and university students business experienced a revenue increase of 43% in dollar terms or 46% in RMB terms year-over-year [6] - New educational business initiatives reported a revenue increase of about 68% in dollar terms or 72% in RMB terms year-over-year [8] Market Data and Key Metrics Changes - The top 10 cities in China contributed over 60% of the revenue from non-academic tutoring courses [7] - The intelligent learning system and devices business reported approximately 181,000 active paid users [8] - The cultural tourism business, which includes study tours and research camps, conducted activities in over 50 cities, with the top 10 cities contributing over 55% of revenue [9] Company Strategy and Development Direction - The company plans to moderately increase learning center capacity by about 20% year-over-year, focusing on cities with better performance [19] - New Oriental aims to integrate AI and ChatGPT technologies into its educational offerings to enhance growth and operational efficiency [20] - The company is committed to maintaining a healthy market share growth and creating sustainable value for customers and shareholders in the long term [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand in the education sector and the reduced competition due to market consolidation during COVID [24][53] - The company expects total net revenue for the next quarter to be in the range of 1,093.5 million, representing a year-over-year increase of 42% to 45% [19] - Management highlighted the importance of balancing top-line growth with margin expansion, indicating a cautious approach to rapid expansion [32] Other Important Information - Operating costs and expenses for the quarter increased by 32.4% year-over-year, primarily due to growth in East Buy's private-label products and live-streaming e-commerce business [14] - The company has authorized a share repurchase program of up to $500 million, extending it through May 31, 2024 [13] Q&A Session Summary Question: What is driving the strong growth in the third quarter guidance? - Management indicated strong demand in the education sector and less competition due to market consolidation as key drivers for the expected revenue growth of 42% to 45% [24] Question: What considerations are there for the learning center expansion? - Management noted that the expansion will be moderate, focusing on cities with better performance, and will monitor the pace of new openings based on operational results [28] Question: What are the bottlenecks for faster expansion? - Management mentioned that the OMO model allows for better utilization of existing resources, balancing growth with margin expansion [32] Question: Can you provide insights on margin expansion? - Management highlighted that the non-GAAP operating margin expanded due to improved utilization rates and higher margins from new business initiatives [37] Question: How is the cultural tourism business conducted? - Management explained that the tourism business includes study tours and research camps, with revenue recorded separately from educational services [42] Question: What are the long-term margin expectations for new education businesses? - Management expects the margin for new education businesses to exceed 20% in the future, driven by lower fixed costs and higher utilization [47]