New Oriental Education & Technology Group Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2025

Key Takeaways

  • Positive Sentiment: Q4 net revenue excluding Easter buy grew 18.7% YoY and non-GAAP operating margin improved by 410bps to 6.5%, driven by cost controls and operational consistency.
  • Positive Sentiment: New ventures showed strong momentum with new educational initiatives up 33% and integrated tourism business up 71% year-over-year in Q4.
  • Neutral Sentiment: Q1 revenue is guided at $1.46–1.51B (+2–5% YoY) and full-year at $5.15–5.39B (+5–10%), reflecting conservatism amid seasonality and macro headwinds.
  • Positive Sentiment: Company approved a three-year shareholder return plan to allocate at least 50% of annual net income to dividends or buybacks, after repurchasing $700M of ADSs.
  • Negative Sentiment: GAAP net income fell 73.7% YoY to $7.1M in Q4, partly due to a $58.3M goodwill impairment in the kindergarten segment.
AI Generated. May Contain Errors.
Earnings Conference Call
New Oriental Education & Technology Group Q4 2025
00:00 / 00:00

There are 4 speakers on the call.

Operator

Good evening, and thank you for standing by for New Oriental's FY twenty twenty five Fourth Quarter Results Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may now disconnect at this time.

Operator

I would now like to turn the meeting over to your host for today's conference, Ms. Sissy Gao. Thank you. Hello, everyone, and welcome to New Oriental's fourth fiscal quarter twenty twenty five earnings conference call. Our financial results for the period were released earlier today and are available on the company's website as well as on newswire services.

Operator

Today, Stephen Young, Executive President and Chief Financial Officer, and I will share New Oriental's latest earnings results and business updates in detail with you. After that, Stephen and I will be available to answer your questions. Before we continue, please note that the discussion today will contain forward looking statements made under the safe harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995.

Operator

Forward looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward looking statements, except as required under applicable law. As a reminder, this conference is being recorded.

Operator

In addition, a webcast of this conference call will be available on New Oriental's Investor Relations website at investor.neworiental.org. I'll now first turn the call over to Mr. Yang. Susan, please go ahead.

Speaker 1

Thank you, Sisu. Hello, everyone, and thank you for joining us on the call. It's that time of the year again. We're pleased to announce that Q4 performance exceeded expectations, demonstrating our strong commitment and capabilities to enhance operational consistency and drive long term value creation. This quarter's total net revenue, excluding revenues generated from Easter by private label products and the live streaming business, increased by 18.7% year over year, mainly contributed by the continued expansion of our new ventures.

Speaker 1

Bottom line wise, we are delighted to see that our efforts to reduce costs and improve efficiency have proven effective with non GAAP operating margin, again, excluding operating margin generated from Easter buy, reached 6.5% this quarter, representing a year over year improvement of four ten basis points. Our key remaining business remains solid, while our new initiatives have also shown positive momentum. Breaking down, for the 2025, overseas test prep business recorded a revenue increase of 15% year over year. Overseas studies consulting business reported revenue increase of about 8% year over year. Our adults and university students business recorded a revenue increase of 17% year over year.

Speaker 1

At the same time, our continued investments in new education business initiatives primarily centered on facilitating students all around development, have also delivered consistent progress, further driving the company's overall momentum. Firstly, the non academic tutoring business which focus on cultivating students' innovative ability and comprehensive quality, has shown being rolled out to around 60 cities. Market penetration has significantly increased, particularly across higher tier cities. The top 10 cities contribute over 60% of this business. Secondly, the intelligent learning system and device business, which utilize our passive teaching experience, data, and technology to provide personalized and targeted learning and exercise content to improve students' learning efficiency, has been happening around 60 existing cities.

Speaker 1

We're happy to see improved customer retention and scalability of this new business. The top 10 cities contribute over 50% of this business. In summary, our new educational business initiatives reported a revenue increase of 33% year over year for the 2025. Moving to our integrated tourism related business line, which includes study tour, research camp business for student of k 12 and university students, and tours targeting middle aged and senior audience, recorded a revenue increase of about 71 percent year over year for the 2025. Breaking down, both domestic and international study tours and the research camp for k 12 and university students was conducted across 65 cities nationwide with the top 10 cities contributing over 50% of the revenue.

Speaker 1

We also provided a series of premium tourism offerings, primarily designed for middle aged and senior audience across 30 feature products in China and internationally. Our product range has also been expanded now includes culture travel, China study tour, global study tour, and camp education. With regard to our OMO system, we continue our efforts in developing and revamping our online merge offline teaching platform while leveraging our educational infrastructure and technological strengths across our key business lines and new industries. These efforts aim to deliver more advanced and diversified education service to our customers of all ages. A total of $28,000,000 has been invested during the quarter to upgrade and maintain our OMO teaching platform.

Speaker 1

Beyond OMO, I would like to take this opportunity to highlight our investments in AI and how we integrate it into our teaching ecosystem. Leveraging a combination of open source large models, such as DCS and GPT, along with our self developed AI technologies, we have developed new innovative education solutions for our students. Recently, we launched the two new products. First, a new generation for AI powered intelligent learning devices. This product features deep AI integration and equipped K Math students with multifunctional tools, including open language coaching, automated essay grading, dictation exercises, classical text recitation, and voice assessment functionality.

Speaker 1

All designed to enhance learning outcomes while saving the time for both teachers, students, and parents. Second, a new AI driven step smart study solution. This product combines premium content from global sources. Our very own accumulated teaching and researching experience in AI technology. These achievements mark key progress in our customer focused education products, positioning us as a leader in applying AI to the education field.

Speaker 1

We will continue investing in AI to drive future innovation. Not only does AI help enhance our offerings, but also improves internal efficiency. We have launched an AI content creation platform and student performance feedback application, which helps support lesson planning and strengthen homeschool communication. These tools also provide valuable insights into learning habits and user engagement. Additionally, an AI powered FAQ databases has been created built from our day to day sales conversations, which have significantly reduced training costs for our sales team and improved sales efficiency and conversion rates.

Speaker 1

Now I would like to to take a moment to talk about the Easter buy. As I know, many of you are interested in it. In the fiscal year 02/2025, Easter buy continues to invest in private label product strategy centered around green, healthy, and quality high quality, while enriching its product portfolio and exploring new categories. It also achieved breakthroughs in its blockbuster products and product upgrades. With consistent quality and broad consumer appeal, if the buy private label products have become household stables, gaining greater market's resignation.

Speaker 1

During the reporting period, Easter by further advanced its multichannel strategy and implemented enhancements with Easter buy app and Easter buy mini store, all of which have provided users which improved experience. As the business continues to develop steadily, Easter buyers place greater emphasis on improving operational efficiency and profitability levels to align with the group's overall strategy. Now I would like to take this opportunity to talk about our share repurchase actions. As of 05/31/2025, the company repurchased an aggregate approximately 14,500,000.0 ADSs for approximately $700,000,000 from the open market. Now I will turn the call over to Cece to share with you about the key financials.

Speaker 1

Cece, please go ahead.

Operator

Yeah. Thank you, Steven. Now I'd like to share our key financial details for this quarter. Operating cost expenses for the quarter were $1,251,800,000 representing an 11.2% increase year over year. Cost of revenues increased by 5.1% year over year to $569,900,000 Selling and marketing expenses increased by 1.8% year over year to $211,900,000 G and A expenses increased by 9.1% year over year to $409,800,000.

Operator

Impairment of goodwill was $50,300,000 compared to nil in the same period of the prior fiscal year. Total share based compensation expenses, which were allocated to related operating costs and expenses, increased by 11% to $28,600,000 in the 2025. Operating loss was $8,700,000 compared to operating income of $10,500,000 in the same period of the prior fiscal year. Non GAAP operating income, excluding share based compensation expenses, amortization of intangible assets resulting from the business acquisitions, and impairment of goodwill assigned to the reporting unit of kindergarten business was $81,700,000, representing a 116.3% increase year over year. Net income attributable to New Oriental for the quarter was $7,100,000 representing a 73.7% decrease year over year.

Operator

Basic and diluted net income per ADS attributable to New Oriental were $04 and $04 respectively. Non GAAP net income attributable to New Oriental for the quarter was $98,100,000 representing a 59.4% increase year over year. Non GAAP basic and diluted net income per ADS attributable to New Oriental were $0.62 and $0.61 respectively. Net cash flow generated from operations for the 2025 was approximately $399,100,000, and capital expenditure for the quarter were $65,900,000. Turning to the balance sheet.

Operator

As of 05/31/2025, New Oriental had cash and cash equivalents of $1,512,400,000, $1,447,800,000 in term deposits and $1,873,500,000 in short term investments. New Oriental's deferred revenue, which represents cash collected upfront from customers and related revenue that will be recognized as the services or goods were delivered at the end of the 2025 was $1,954,500,000 an increase of 9.8% as compared to $1,780,100,000 at the end of the 2024. Now I'll hand over to Stephen to go through our outlook, guidance and our new shareholder return plan.

Speaker 1

Thank you, Siti. As we look ahead for fiscal year twenty twenty six, we remain optimistic and committed to not only driving revenue growth, but also placing greater emphasis on upholding profitability across all business lines, supported by various cost control and efficiency enhancements measures. To better reflect our long term strategic priorities and align with the nature of the education industry, characterized by longer business cycles with seasonality, we are now providing full year guidance in addition to our quarterly outlook. We believe this standard guidance offers a more meaningful and accurate reflection of our business performance and strategy as it smooths out short term seasonal volatility. We encourage investors to focus on this long term indicator, which provides a clearer and more comprehensive view of our business, operational progress, and growth trajectory.

Speaker 1

We expect total net revenue for the group, including Easter buy, in the 2026, 06/01/2025 to 08/31/2025 to be in the range of to be in the range of $1,464,100,000 to $1,507,200,000, representing a year over year increase in the range of 2% to five percent. As for the total net revenue of the pool, also including Easter buy for the full year 02/1926, 06/01/2025 to 05/31/2026. We expect to be in the range of $5,145,300,000 to $5,390,300,000 representing a year over year increase in the range of 5% to 10%. You may notice that our fiscal year twenty six Q1 guidance looks relatively conservative. This is primarily because the group has now entered a more stable and sustainable phase, and we're comparing against the high base of the last year q one.

Speaker 1

Unlike two years ago when we were still undergoing major transformation. Moreover, Easter by restructuring have not yet taken place in fiscal year twenty five q one either. Additionally, the earlier timing of the Chinese New Year this year led to temporary class rescheduling, which boosted the revenue recognition in 2025, but will reduce revenue recognition in fiscal year twenty six q one. As a result, we expect the year over year revenue growth will accelerate since the second quarter and throughout the rest of the year. Hence, as I mentioned earlier, I would encourage all of you to focus on our annual guidance.

Speaker 1

Before ending this quarter's earnings summary, I would like to announce that the board approved the three year shareholder return plan plan yesterday, effective from fiscal year two thousand twenty six as a gesture of appreciation for our shareholders unwavering support. Under this plan, no less than 50% of the company's net income attributable to New Oriental for the preceding fiscal year will be allocated to returning value to shareholder through dividend distribution and or share repurchase. For fiscal year twenty six for for fiscal year two thousand twenty six, the board will determine the implementation of the plan based on the net income attributable to New Oriental for fiscal year ended in 05/31/2025 in due course. Now to conclude, New Oriental remain committed to delivering premium offerings for our customers who are pursuing sustainable growth and profitability and sharing the fruits of our success with our shareholder. We're also in close collaboration with the government authorities in various province and and and province in China, issuing compliance with the relevant policies, guidelines, and the the related implementation, and adjusting our business operation as required.

Speaker 1

This is the end of our fiscal year 02/2004 summary. At this point, I would like to open the floor for questions. Operator, please open the call for this. Thank you.

Operator

Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask a question, we will take one question at a time from each caller. If you have more than one question, please request to rejoin the queue again after your first question has been addressed. To ask a question, please press star one one on your telephone keypad and wait for your name to be announced.

Operator

To withdraw your question, please do the same and press star 11 again. Please stand by as you compile the q and a roster. Just a moment for our first question. First question comes from the line of Felix Liu from UBS. Your line is now open.

Speaker 1

Good evening. Thank you, management, for taking my question. My question is on your q one and the f one twenty six guidance. We noticed that q four the new rental core business actually grew pretty fast. But then as you mentioned, there was a seasonal slowdown in Q1.

Speaker 1

So may I just ask for more breakdown of your Q1 as well as full year guidance? What are the, you know, drag on the business that led to this slowdown? And the main concern about the driver for the recovery in growth in, you know, after q one? Thank you. Okay.

Speaker 1

Thank you for that. Yeah. The as for the q one guidance, yeah, and there's a whole year guidance of fiscal year twenty six. You know, in the coming q one, we we give the guidance of the the revenue growth will be in the range of 2% to 5%. I must mention, firstly, that we're using the conservative method to give the guidance.

Speaker 1

And there there were some in there's following reasons. Number one, to some extent, I think our business adversely affects by the economic environment and the international relation changes. So in the coming q one, we we are comparing the the against the high base last year of q one. Both of the core educational business and the East of us. And number two, you know, as for the k 12 business, we have some the cutoff issue.

Speaker 1

Because, you know, in this this year's Chinese New New Year was earlier than than before. So that means, you know, some that means, you know, the in the second half of fiscal year twenty five, we had more revenue. And the results is that the in the coming q one, we have less revenue. So this is a cutoff issue. And and and but, you know, as we expect, the k 12 revenue growth will be accelerate in the coming q two and the rest of the year in q three and q four.

Speaker 1

Because based on our current estimation of this of the forecast for the for the whole year and the cash will collect already for the q two courses. So that's why that has that has that we expect the revenue acceleration since q two for the k twelve business. And and the the last reason is, you know, last year q one, used to buy restructuring has not yet taken place in q one. So we have we will have a hard comparison for Easter buy in in the coming q one. But in the since q two, it will be better.

Speaker 1

And, yeah, this time, it it seems this quarter, we start to give the the whole year's guidance. We do the guidance of the 5% to 10% year over year growth for the for the whole group. And it shows that the the revenue growth acceleration since q two. And breakdown of the the the different business lines. I think the overseas related business, yeah, it will negatively impact by the economic environment and international situation change.

Speaker 1

So we expect the revenue will be down by roughly four or 5%. And the k 12 business, I think the k nine business for the q one, the revenue growth will be somewhere around 16% year over year. But we do expect the whole year revenue growth, the k nine business will be somewhere around 20%. High school business, q one and the whole year will be around year over year growth will be around 11 to 12% or even a little bit more. And the college business, the growth rate will be 10% in the q one and the coming new year.

Speaker 1

Correct. Okay. Thank you. That's very clear.

Operator

Thank you. Just a moment for our next question, please. Next, we have Lucy Yu from Bank of America. Your line is now open, Lucy. I think I have actually a follow-up question on the guidance that you just gave.

Operator

What is the latest that you're having revised this quarter versus last quarter when you did the guidance for FY '26. So what has changed in terms of line of business? And secondly, just to clarify on the sorry, shareholder return program, is it based on reported net income or non GAAP net income? Thank you.

Speaker 1

Oh, second question, answer first. You know, the capital allocation for the next three years is calculated based on the net income. The net income, as we go to GAAP net income, as we go to New Oriental. And I think yeah. This time, we changed the guidance from the the nine used buy to the whole group, yeah, including the used to buy.

Speaker 1

Because, you know, used to buy started to to restructure the business since last year, q one. So in the past in past of four quarter quarter, I think the management of the Easter buy fixed the the operations. And, you know, Easter buy still, we will control this buy. So I think it's a good time for us to give the guidance of the whole group including the the East buy. And I I think going forward, we will give the guidance for the whole group including the East buy.

Speaker 1

We'll see.

Speaker 2

Thank you, Steven. One more follow-up.

Operator

So the our guidance revenue growth is all in US dollar or renminbi? Dollars. In dollars. And you are using current rate?

Speaker 1

Yeah. We we're yeah. We're using the the current the current the exchange rate in the first it's the the forty five fifty days of this quarter.

Operator

Okay. Thank you so much.

Speaker 1

Thank you, Lucy.

Operator

Thank you. Next, we have Yuchen Zhang from Citi. Your line is now open.

Speaker 1

Hello. Good evening, Steven and sister. Thank you for taking my question. My question is about the acceleration of our revenue. So what is the main reason for our revenue deceleration, especially for the nonacademic nonacademic business?

Speaker 1

But is it because of the competition or it's just our own adjustment? And if we, like, look in our long term, like, in the next few years, how do you think of our growth rate in next few years? Thank you. I think the revenue is slowing down. It's mainly due to the the the economic environment and the international relationship change.

Speaker 1

Because, you know, we have seen some transparents, you know, some of them doesn't want to send their kids to study abroad in the future. So it will negatively impact our the overseas related business. And as for the competition, the k 12 field, I think, yeah, the competition is a little bit stronger than that of last year. But I think it's okay. You know?

Speaker 1

If you compare the competition level now with those a couple of years ago, you know, before the policy, it's much it's much less. And so the I think, you know, the market is is still huge, especially for the k nine, not dynamic courses of the the business. So we feel that the the k nine business grow by 10% in the coming year. I think, you know, during this macro economic situation, I think it's it's still good. And going forward and the yeah.

Speaker 1

The Q1 is a little bit weak. But the the yeah. Based on our current estimate, I think the q q two and q three, q four will be better. And in the longer term, I do think the okay. For our business will be the key growth driver of the whole group.

Speaker 1

Yes. Can I have a follow-up question? Is that because Yes. If we if we look at revenue growth before the policy, maybe our k k 12 revenue growth rate can be over 20%. But but for now, maybe it's just, like, around 15%.

Speaker 1

So if you look at the next few years, would the growth rate for k twelve business, like, going up to the over 20% or or just around, like, 10 to 20%? I think the k nine business, know, we do believe we can get the revenue growth by 10%, you know. It it it it still be very good. And and the the high school business, because we we got the all time high in last fiscal year. So we have a high base.

Speaker 1

So going forward, I think the the revenue growth will be somewhere around 10 to 15% going forward. Okay. Thank you.

Operator

Thank you. Just a moment for our next question, please. Next, we have Alice Chao from bank Citibank. Your line is now open, Alice.

Speaker 2

Good evening, Steven. Have two questions. And first one is on the margin trend. Mhmm. How should we think about the operating margin trend for FY twenty fifth for the core education business and also the whole business?

Speaker 2

Because since that we started to provide guidance for the whole business. Right? And my second question is on the goodwill impairment. Can you please give us some more color on this? Why is there was there a good goodwill associated with kindergarten business to begin with?

Speaker 2

And will the company continue to guide that or feel that non non core business and also, like, cultural tourism? Thanks. Okay. Thank you, Alex. You know, you

Speaker 1

are a margin question. You know, let us start with the this quarter's margin analysis. You know, in in the in the q four, in this quarter, we we we got the four hundred four hundred and ten basis for the margin expansion. I think the margin expansion, even for the q four and the whole year, fiscal year twenty five, was mainly due to the operating leverage and the the efficiency headset and the cost control. As you know, we started to do the cost control since March, and we have seen the good results, which helps to drive the margin up.

Speaker 1

And I do believe the cost control will help the margin profile in the coming year, even the q one and the whole year, fiscal year twenty six. As we look at the margin of the q one, we remain optimistic about the the margin profile in q one, even though we're facing some revenue slowing down, but we still expect the margin expansion in the coming q one. And the whole year margin, I think it's a little bit early to make a forecast of the New Year margin. And but, you know, we're doing the cost control. We care more.

Speaker 1

We focus more about the profitability than the revenue growth. And so I think we will strive to achieve the margin, you know, profile, the healthy margin profile in the in the whole year of the fiscal year '26. And so let me summarize. You know, revenue is a little bit slowing down, and we care more about the the bottom line. And we will do more cost control and care more about the efficiency enhancement and the or our future leverage to drive the margin up in the coming quarter and the new year.

Speaker 1

And so your second question is about the goodwill impairment of the kindergarten. Oh, you know, we we acquired the some kindergarten so many years ago. It's roughly 18 years old. And, you know, be careful with some reasons, the policy and the the new the new boards, you know, decrease. So I think we discussed with the the auditors, and I you know, we think the good role impairment should be done at this time.

Speaker 1

So we we did the impairment loss of $60,000,000 in this quarter, but it's all. It's one time.

Speaker 2

K. May I have a follow-up question? Would like to know more about this culture. Is there any plans to steal back the business? Thing?

Speaker 2

What was that? Can you repeat again? Can you repeat it? Is there any yes. Is there anything to steal back the cultural tourism?

Speaker 1

Tourism business. Oh, tourism business. Yeah. We started with the the tourism business one and half years ago. And the the revenue growth in last fiscal year, fiscal year twenty five, was, you know, extremely high.

Speaker 1

And, you know, most of the rep most of the business, the tourism business are, you know, relate to the summer camp studies were both domestic and and and internationally. And but going forward, I think the we still need time to build the business model of the tourism. And I think the revenue growth of the tourism business will be slowed down in the in the new year. And, anyway, it's a new business. We need more time to to fix the bid business model of the tourism business.

Speaker 1

K? Thank you.

Speaker 2

Okay.

Operator

Thank you. Just a moment for our next question, please. Next, we have Timothy Zhao from Goldman Sachs. Your line is now open.

Speaker 3

Sure. Thank you, Steven, for taking my question. I think my question is regarding the profitability and the margin outlook. I think one is regarding the 4.1 percentage point margin increase for the core business for the past quarter. Just wondering if you can help quantify the impact on the cost control measures that you have done since March.

Speaker 3

And going forward into the new year, like how much room that you have for cost control? And secondly, also on the margin related question on the capacity expansion. Just wondering, I think, the May, how many new unit centers were newly opened? And what is your learning center or the capacity expansion plan into fiscal year twenty nineteen? Thank you.

Speaker 1

The the margins yeah. Yeah. The q four, we we saw the margin expansion by four hundred four hundred and ten basis points up. And it's really hard for us to to justify how much from the cost control. But it's a anyway, it's a good result, the cost control, and the the to speak to the high operating leverage.

Speaker 1

And going forward, even in the q one, coming q one and the new year, I think the cost control will help us to drive the margin up. And and roughly, it's the cost control will give us the the let's say, the one one hundred to 150 basis points might be up. So this is the roughly estimation. And your second question is about the extension. Right?

Speaker 1

Yeah. Yeah. This thing I think the in the q in the q four, the net add is 9%. It's eight to 9% in learning centers. And and going forward, in the coming new year, I think our our our plan is to monitor the capacity expansion to ensure alignment of revenue growth.

Speaker 1

So I think as the whole group, we will control the learning center expansion compared to the revenue growth. So we do hope we can have the leverage from the high utilization rate of the new learning centers. So roughly, we originally, we're planning to open 10 to 15% of the new learning center. It it depends on the revenue growth. And the and, you know, typically, we set up new learning centers, new learn new learning centers in second half of the year.

Speaker 1

So it's, you know, back loaded. And so I think we have one or two quarters to wait to decide how many learning centers we set up in the second half of the year to prepare for the new year. And so and I must mention that we only allow the cities with the best with the better top line growth and mark good margins to allow them to open the learning centers, especially for the paid office. Tim, thank you.

Speaker 3

Thank you, Steve.

Operator

Thank you. Just a reminder, please make sure to ask one question. And if you have more questions, please re queue. Next, we have Diaz Kim from JPMorgan. Your line is now open.

Speaker 1

Hi. Thank you. Thanks, Steven and sister, for taking my question. I just have a few follow ups from the previous comment, if that's okay. So you earlier mentioned margin could go up in the first quarter.

Speaker 1

Were you referring to the group level or for educational need? That's the first follow-up to all your point. And second, can I just double check when you say a quick control can give us about, like, hundred hundred fifth 50 bps of margin expansion? Is it regarding first quarter or full year? Just as a follow-up.

Speaker 1

And I have one more question. For the full year, the cost control. And, you know yeah. As I we because we we we start we we we go back to give the guidance for whole group. So the margin not as the guidance is for the group.

Speaker 1

So what I'm saying is the whole group's margin expansion will be happened in q one. Got it. Thank you. And, again, this is kind of follow-up, but I did a very rough calculation based on the numbers that you gave us to break down. And I think we are essentially guiding core education, excluding espai, to grow about 11%, 12% in fiscal twenty six versus, I think, last quarter, you mentioned 15% growth.

Speaker 1

Am I right about this? Or can you comment on education on the apples to apples guidance versus last quarter? Just want to double check. The the full year '26. Right?

Speaker 1

Or '26. Yes, sir. '26, sir. Yeah. It it seems to be a little bit lower than, you know, we we get the guidance, you know, last quarter.

Speaker 1

Because, you know yeah. As I said, the overdue related business, you know, where we I think, you know, it will negatively impact by the micro economy and the the the the international relationship change. And so we revised the guidance of the fiscal '26. I think the overseas end of business will be down by, let's say, the 5%, four or 5% year over year. This is for the whole year.

Speaker 1

So this is the a new change compared to the Got it. Last yeah. Thank thank you. So I I think that's probably in place 12% if you have the number. If not, that's totally fine.

Speaker 1

And final question is in terms of the buyback and dividend, can you give us a little bit of color on how you are thinking about between the two? Like, is it depend is it is it gonna be depend on the level of your prices? Or do you have certain, you know, pockets within that 50% in mind for dividend at least this much? Any sort of qualitative color would be appreciated, and that's it. Thank you, sir.

Speaker 1

I think, you know, first of all, we finished $700,000,000 share buyback in this quarter in in q four. And also, we we paid $100,000,000 special dividend in last year, in this fiscal year last year last year of September. And so, you know, we had a board meeting yesterday. And, you know, I'm I'm happy to see the board approve the new capital allocation program, not only for this year, but also for next three years from fiscal year twenty six to fiscal year twenty eight. So which amounted to the, let's say, the 50% of the net debt, net income.

Speaker 1

And now, you know, we haven't yet decide the the dividend or the share buyback. I think I will discuss with the board, even Michael, to to make a decision to to to justify either the dividend or share buyback or both. But, you know, one more information. I think we still need the the auditors to to give us the final Audi report of the fiscal year '25. And I think we will file the the twenty eighth.

Speaker 1

The at the end at the end of nothing. At the September. So by then, I think we will decide, you know, how much amount to do the capital allocation and waste. Yep. Thank you.

Speaker 1

And if I just make a comment, another question, I I think many or most investors may prefer, you know, dividend rather than buyback because dividend seems a little more feasible and sustainable. So please please consider, you know and especially if it is a regular dividend, not in the form of special that we did pre pre pre COVID. So just assistance from me, and thank you so much for your call. Okay. Thank you.

Speaker 1

You. You're advised. You.

Operator

Thank you. Just a moment for our next question, please. Next, we have Charlotte Wei from HSBC. Your line is now open.

Speaker 2

Thank you, Steven and Su Su for taking my question. I have a question regarding the non academic enrollment. So we I noticed that this quarter's enrollment growth slowed down quite meaningfully. Can I understand can can could you please provide some color on the reasons? And also, can you share with us the summer enrollment growth for the k nine non academic tutoring?

Speaker 2

And how does it compare to the industry growth trend? Thank you.

Speaker 1

Industry growth. Yeah. As I said, you know, there is some seasonality impact. Yeah. As I said, you know, because of the early Chinese New Year and, you know, some revenues were reported in in in q three and q four last year.

Speaker 1

And so it will negatively impact the q one revenue enrollment. And, yeah, q one is a it's low, you know, it's it seems to be low. But I think, you know, based on our the numbers, the cash and the student enrollment, we have already got from the from customers for the q two courses. I think the numbers are just higher than the q one. So that's why, as I said, we expect the revenue growth will be accelerate in the q two since q two.

Speaker 1

And that's why we we gave the guidance of a whole year higher than the q one. And the industry growth sorry. Sorry. I have no idea about the whole industry growth, and it it's really hard for for me to make a comparison between us and the other competitors. And yeah.

Speaker 2

Thank you.

Operator

Thank you. Just moment. More questions. Thank you.

Speaker 1

K. Thank you.

Operator

Thank you. Just a moment for our next question. Next, we have Alicia Chen from CLFL. Your line is now open.

Speaker 2

Hi. Thank you, Steven and sister. So my question is about the summer. So we we we are now in the summer, so I would like to see if you have any color on the summer student recruitment. For example, like, the new student enrollment growth and also, like, retention rate.

Speaker 2

And do you observe any changes on the demand side? Thank you.

Speaker 1

The demand, it's a little less than we expected, you know, a compared to one quarter ago. Yeah. Because of the the whole the economic situation. And but, you know, the but but it's not but but I I think it's still good, you know, for the k 12 business, you know, for the industry. And I don't believe the whole industry is still well.

Speaker 1

And I think we are we're still taking the market share. And and yeah. As of that, I don't think for q two, the revenue growth will be accelerate again. And so yeah. And the free enrollment number in the summer.

Speaker 1

We we we have we haven't finished the enrollment window for the summer. So I think next next quarter's earnings call, I will share with the number. Show you the number. Enrollment for the whole time.

Speaker 2

Okay. Thank you. And about the retention rate?

Speaker 1

The return is still going up. Hopefully, the the the whole the k nine business and high school business is still going up.

Speaker 2

Okay. Got it. Thank you.

Speaker 1

Thank you.

Operator

Thank you. We are now approaching the end of the conference call. I will now turn the call over to New Oriental's executive president and CFO, Stephanie Young, for his closing remarks.

Speaker 1

Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representative. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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