New Oriental Education & Technology Group Reports Strong Revenue Growth and Expansion Plans
2024-01-30
New Oriental recently held a conference call to discuss its FY 2024 second quarter results and provide business updates. The call was hosted by Ms. Sisi Zhao, Director of Investor Relations, and attended by Stephen Yang, President and CFO, who shared the company's latest earnings results and business updates.
During the call, New Oriental addressed several important business questions. One of the key topics covered was the company's commitment to market share growth. Positive trends were reported in its key remaining businesses and new initiatives. The overseas test prep business experienced a revenue increase of 47% in dollar terms or 50% in RMB terms year over year. Similarly, the overseas study consulting business recorded a revenue increase of about 32% in dollar terms or 35% in RMB terms year over year. The adults and university students business also saw a revenue increase of 43% in dollar terms or 46% in RMB terms year over year.
In addition to its existing businesses, New Oriental launched two new initiatives: nonacademic tutoring courses and an intelligence learning system and device business. The nonacademic tutoring courses attracted approximately 786,000 students, while the intelligence learning system and device business had approximately 181,000 active paid users.
Another important topic discussed during the conference call was New Oriental's subsidiary, East Buy. The company shared that East Buy has implemented new initiatives to drive growth, including the development of private label products and improvements in customer service. New Oriental's financial status was reported as healthy, with cash and cash equivalents totaling approximately $4.8 billion. The board of directors also authorized a share repurchase program of up to $500 million.
New Oriental's deferred revenue at the end of the second quarter of fiscal year 2024 was $1,645 million, representing a 44.4% increase compared to the second fiscal quarter of 2023. The company expects total net revenue in the coming quarter to be in the range of $1,070.9 million to $1,093.5 million, reflecting a year-over-year increase of 42% to 45%.
The company plans to increase its learning center capacity by about 20% year over year and is actively researching and applying new technologies such as AI and ChatGPT into its educational and product offerings. New Oriental also expressed its intention to seek guidance from government authorities to ensure compliance with relevant policies and regulations.
The demand for overseas test prep and consulting business was highlighted as being driven by strong demand and less competition in the market. New Oriental's revenue contribution from key business lines includes 20% to 21% from overseas-related business, 2% to 3% from domestic test prep, and over 41% to 42% from newly developed educational initiatives.
New Oriental expects margin expansion to continue in the education business due to operating leverage and higher utilization control. The company also announced a $400 million share buyback program and expressed the possibility of considering special dividends and additional share buybacks in the future.
Overall, the conference call covered a wide range of topics related to New Oriental's business performance, growth initiatives, and financial outlook. The company remains focused on driving growth, expanding market share, and delivering value to its shareholders.