TAL Education Group Q4 2026 Earnings Report

TAL Education Group EPS Results

• Actual EPS: $1.35
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

TAL Education Group Revenue Results

• Actual Revenue: $802.39 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

TAL Education Group Announcement Details

• Quarter: Q4 2026
• Date: 4/14/2026
• Time: Before Market Opens
• Conference Call Date: N/A
• Conference Call Time: N/A

TAL Education Group (NYSE:TAL) is a leading provider of after-school tutoring services in China, specializing in K-12 academic instruction. The company offers a range of programs designed to help primary and secondary school students strengthen their core competencies in subjects such as mathematics, English, Chinese language and science. TAL leverages both in-person learning centers and digital platforms to deliver its curriculum, aiming to support student progress through interactive lessons and personalized study plans.

Founded in 2003 and headquartered in Beijing, TAL Education Group has grown into one of China’s largest private education firms. The company went public on the New York Stock Exchange in 2010 and has since expanded its footprint across hundreds of cities. TAL’s branded offerings include small-class courses, one-on-one tutoring programs, and comprehensive test‐preparation services for key academic milestones such as the Zhongkao and Gaokao examinations.

In recent years, TAL has invested in educational technology to enhance classroom experiences and streamline learning outcomes. Its online platform integrates live teaching, adaptive exercises and extensive learning resources, enabling students to access quality instruction outside of traditional classroom settings. TAL also develops proprietary tools for teachers to monitor progress, tailor lesson plans and provide real-time feedback.

Serving major metropolitan and regional centers throughout mainland China, TAL Education Group continues to pursue growth through a combination of physical learning centers and digital expansion. The company is guided by a leadership team of education professionals and business executives focused on innovation, regulatory compliance and long-term student success.

TAL Education Group Q4 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q4 net revenues were $802.4 million (up 31.5% YoY in USD) and non‑GAAP net income attributable to TAL was $254.5 million, marking a clear swing to profitability and quarter‑over‑quarter margin improvement.
• Neutral Sentiment: Offline Peiyou small‑class remains the largest revenue driver with ~80% retention and measured expansion into five new cities (now covering >40 cities), but management expects revenue growth to gradually moderate in FY2027 as expansion prioritizes density and quality.
• Neutral Sentiment: The learning devices business grew year‑over‑year and launched the X5 Ultra (≈80% weekly active users, ~1 hour daily use), though device growth is shifting from rapid expansion to moderate pace and management is mitigating memory cost pressure via SKU, inventory and mix optimization.
• Negative Sentiment: Q4 other income jumped to $275.0 million due to fair‑value gains on investments, which management called a one‑time event and warned should not be treated as a baseline for future profitability.
• Neutral Sentiment: Balance sheet liquidity is strong with about $1.524 billion cash and $1.715 billion short‑term investments (deferred revenue ~$882.2 million), but operating cash used was ~$215.0 million in the quarter and share repurchases to date have been minimal (~$3.3 million).

Presentation

[Operator]

Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Q4 and fiscal year 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please be informed today's conference is being recorded. I would like to hand the conference over to Ms. Fang Liu, Investor Relations Director. Thank you. Please go ahead.

[Fang Liu, Director of Investor Relations at TAL Education Group]

Thank you all for joining us today for TAL Education Group's Q4 and fiscal year 2026 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website, or through the Newswires. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and Mr. Jackson Ding, Deputy Chief Financial Officer. Following the prepared remarks, Mr. Peng and Mr. Ding will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC.

[Fang Liu, Director of Investor Relations at TAL Education Group]

For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I would like to turn the call over to Mr. Alex Peng. Alex, please go ahead.

[Alex Peng, President and CFO at TAL Education Group]

Thank you, Fang, and thanks to all of you for joining today's conference call. As we reflect on fiscal year 2026, it is worth stepping back to consider the progress we've made over the past several years. That progress has been built on more than two decades of experience in education, along with continued investment in our capabilities and innovation. Together, these efforts have enabled us to continuously refine our offerings and better serve the evolving needs of students and society. With that context in mind, let me now turn to our learning services business. Learning services business remains our largest revenue contributor. We are committed to delivering quality learning experiences to our user base. We're also building our content solutions business, including learning devices. These products significantly expand the accessibility and customer reach of our proprietary and third-party content.

[Alex Peng, President and CFO at TAL Education Group]

They work alongside our learning services to create a more integrated learning experience, driving longer, deeper, and stronger user engagement. Beyond our domestic operations, we also expanded into select international markets, leveraging our R&D capabilities and operational know-how to serve educational needs globally. While our businesses are at different stages of maturity, we are beginning to see meaningful improvement in company-level profitability. This underscores our ability to optimize core operations and build a more efficient operating model, further strengthening our foundation for sustainable growth and long-term value creation. With that overview, let me walk you through our business progress for the fourth fiscal quarter and full year 2026. Our offline Peiyou enrichment programs demonstrated continued year-over-year growth in both the Q4 and the full fiscal year.

[Alex Peng, President and CFO at TAL Education Group]

Throughout the past year, we've maintained a disciplined and consistent approach to expanding our offline learning center network with a strong focus on service quality, operational health, and sustainable growth. Our expansion decisions are guided by a holistic assessment of factors, including local market demand, receptivity to our offerings, our operational capabilities, and our commitment to maintaining high service quality. This approach supported solid growth and healthy operating performance throughout fiscal year 2026. In our online enrichment learning business, we continue to enhance user experience and service quality through technology. During the Q4 and throughout fiscal year 2026, we upgraded key products with richer content and technology-enabled features, creating a more engaging learning experience. Together, these efforts strengthen the value proposition of our online enrichment offerings and support a sustained user growth and user engagement over time. Our learning device business achieved year-over-year revenue growth this quarter.

[Alex Peng, President and CFO at TAL Education Group]

In the last couple of quarters, this business has transitioned from its rapid expansion phase to a more moderate growth. We believe product quality and go-to-market capabilities will be critical to this business' long-term success. In March 2026, we introduced the X5 Ultra Classic, a device incorporating enriched content and upgraded AI capabilities. With the X5 Ultra now integrated into our learning devices portfolio, we are positioned to address a broader spectrum of at-home self-directed learning needs. As we expand our install base, our key user engagement metrics remain strong, with around 80% weekly active users and an average daily active usage time of about one hour per device. This allows us to serve customers beyond our physical presence and enhance at-home engagement. Next, let me turn to our financial performance for the quarter.

[Alex Peng, President and CFO at TAL Education Group]

In the Q4, our net revenues were $802.4 million, or RMB 5,590,000,000, representing a year-over-year increase of 31.5% and 25.8% in U.S. dollar and RMB terms, respectively. Our non-GAAP income from operations was $82.2 million, and non-GAAP net income attributable to TAL reached $254.5 million for the quarter. I will now hand the call over to Jackson, who will provide an update on the operational developments across our four business lines and a review of our financial results for the fiscal Q4. Jackson, over to you.

[Jackson Ding, Deputy CFO at TAL Education Group]

Thank you, Alex. I am pleased to update you on our progress during the fourth fiscal quarter and full year across all core business lines. Our Peiyou Small Class enrichment programs continued its operational momentum during this quarter. As we grow, we continue to uphold our service quality and operational efficiency. In terms of physical footprint, we expanded our learning center network at a measured pace. Our operational discipline is reflected in our key performance indicators, with Peiyou Small Class maintaining a generally stable retention rate of around 80% across fiscal year 2026, with certain quarters exceeding that level. Turning to our online enrichment learning business. We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats such as immersive online classrooms and role-playing activities.

[Jackson Ding, Deputy CFO at TAL Education Group]

By offering both offline and online enrichment programs, we aim to address the evolving needs of students and support their holistic development. Next, our learning devices business delivered year-over-year growth in the Q4 as well as the full fiscal year. This reflects our progress in product development and go-to-market execution. Over the past year, we have also broadened our content library and incorporated AI-driven features to support a more engaging and effective self-directed learning experience. As Alex mentioned, last month, we launched the X5 Ultra. This device expands our pricing points while offering more content, a unified learning interface, and improved AI tools, among them the upgraded AI Think 101 tutoring feature. To complement these upgrades, we've also improved the hardware. The X5 Ultra includes a faster processor and a 13.2-inch eye comfort display, ensuring solid performance across different learning activities.

[Jackson Ding, Deputy CFO at TAL Education Group]

While technology itself is important, we believe the true value lies in how it integrates curriculum-aligned content, scenario-based AI, and seamless hardware into a cohesive learning system, one that is intended to be more intuitive and practical for students. By organizing fragmented learning materials and tools into a clear structured progression, it helps students monitor their progress and identify next steps. With these efforts, we aim to gradually evolve our learning device into a personalized learning companion designed to foster independent learning over time. I would now like to walk you through our financial results for the fourth fiscal quarter. Our net revenues were $802.4 million, or RMB 5,590,000,000, an increase of 31.5% and 25.8% year-over-year in U.S. dollar and RMB terms, respectively. Cost of revenues increased by 28.2% to $375.2 million from $292.6 million for the same period last year.

[Jackson Ding, Deputy CFO at TAL Education Group]

non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 28.5% to $374.8 million from $291.7 million for the same period last year. Gross profit increased by 34.5% to $427.2 million from $317.6 million in the Q4 of fiscal year 2025. The gross margin for the Q4 of fiscal year 2026 was 53.2%, compared to 52.0% in the same period the prior year. Turning to operating expenses. Selling and marketing expenses this quarter were $220.9 million, representing an increase of 1.4% from $218.0 million for the same period last year. non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 2.0% to $218.5 million from $214.3 million for the same period last year. non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35.1% to 27.2% year-over-year.

[Jackson Ding, Deputy CFO at TAL Education Group]

General and administrative expenses increased by 15.7% to $133.8 million from $115.6 million in the Q4 of fiscal year 2025. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 19.7% to $126.8 million from $106.0 million in the Q4 of fiscal year 2025. Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 17.4% to 15.8% year-over-year. Total share-based compensation expenses allocated to related operating costs and expenses decreased by 31.9% to $9.8 million in the Q4 of fiscal year 2026 from $14.3 million in the same period of fiscal year 2025. Income from operations was $72.5 million in the Q4 of fiscal year 2026, compared to loss from operations of $16.0 million in the Q4 of fiscal year 2025.

[Jackson Ding, Deputy CFO at TAL Education Group]

Non-GAAP income from operations, which excluded share-based compensation expenses, was $82.2 million compared to non-GAAP loss from operations of $1.7 million in the same period of the prior year. Other income was $275.0 million for the Q4 of fiscal year 2026, compared to other income of $13.0 million in the Q4 of fiscal year 2025.

[Jackson Ding, Deputy CFO at TAL Education Group]

The change in other income for the Q4 was mainly driven by fluctuations in the fair value of certain investments. Net income attributable to TAL was $244.8 million in the Q4 of fiscal year 2026, compared to net loss attributable to TAL of $7.3 million in the Q4 of fiscal year 2025. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was $254.5 million, compared to non-GAAP net income attributable to TAL of $7.0 million in the Q4 of fiscal year 2025. Moving on to our balance sheet.

[Jackson Ding, Deputy CFO at TAL Education Group]

As of February 28th, 2026, the company had $1,523.9 million of cash and cash equivalents, $1,715.4 million of short-term investments, and $262.2 million in current and non-current restricted cash. Our deferred revenue balance was $882.2 million as of the end of the fourth fiscal quarter. Now turning to our cash flow. Net cash used in operating activities for the Q4 in fiscal year 2026 was $215.0 million. Finally, I would like to briefly address our share repurchase program. On July 28th, 2025, the company's board of directors authorized a share repurchase program under which the company may purchase up to $600 million of the company's common shares over the next 12 months. Between January 29th, 2025, and April 22nd, 2026, the company has repurchased 101,371 common shares at an aggregate consideration of approximately $3.3 million. That concludes the financial section.

[Operator]

I will now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

[Alex Peng, President and CFO at TAL Education Group]

Thanks, Jackson. Before turning to fiscal 2027, I want to take a moment to speak to the responsibility and mission we carry in serving students and families, particularly in the K-12 sector. At TAL, this is not a peripheral consideration. It is at the heart of how we think about our products, our services, and the standards to which we hold ourselves. It shapes not only what we build, but also how we grow. As we move into fiscal 2027, our strategy is centered on three priorities. First, we aim to drive quality growth across our businesses. We expect learning services to remain our largest revenue contributor, and we will continue emphasizing quality across both digital and in-person offerings so that we can serve more users effectively while preserving a strong user experience.

[Alex Peng, President and CFO at TAL Education Group]

In content solutions, we will focus on expanding through stronger product capabilities, richer content offerings, and more effective go-to-market execution. Second, AI remains key to our long-term strategy, and we're approaching it with a clear sense of focus and discipline. Our approach is application-first. Rather than pursuing foundation models ourselves, we are focused on deploying AI in ways that meaningfully enhance the user experience, improve operational efficiency, and strengthen our products and services. In learning, that means helping students find the right content more effectively, staying engaged more deeply, and learning more efficiently. Across the company, it also means applying AI to improve how we operate, from customer service and content production to software development, enabling us to grow with greater leverage over time. Finally, we remain focused on disciplined execution as we scale.

[Alex Peng, President and CFO at TAL Education Group]

By continuing to strengthen execution across content, product, operations, and go-to-market, we can further improve efficiency and enhance profitability over time. That concludes my prepared remarks. Operator, I think we are ready to open the call for questions.

[Operator]

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

[Fang Liu, Director of Investor Relations at TAL Education Group]

Hello, operator. Before we take the first question, we'd like to make one correction. We just talked about we have repurchased at an aggregate consideration of approximately $3.3 million. This happened between January 29th, 2026 and April 22nd, 2026. Okay. That's the correction we'd like to make. Now please open to analyst questions. Thank you.

[Operator]

The first question comes from the line of Jenny Yuan with UBS. Please go ahead.

[Jenny Yuan, Analyst at UBS]

Thank you for taking my question. First of all, congrats on another solid quarter. My question is related to other income. Could you please provide more color on what drove this? Thank you.

[Jackson Ding, Deputy CFO at TAL Education Group]

Jenny, thank you for the question. This is Jackson. Let me take this one. Look, from time to time, we make financial strategic investments, right? To either generate capital return for shareholders and/or to accelerate business growth. These investment targets vary from the classic wealth management products to minority equity investments to sometimes outright full-on mergers and acquisitions, all of which, as you've seen in the last few years. Right? Specifically what happened in this quarter is that a couple of investments in our portfolio experienced an increase in valuation. This resulted in an investment gain on our financial statements, which is booked under other income. I would also like to mention that this is a one-time event. Therefore, we don't recommend using this quarter's other income as a baseline for future performance projections. Jenny, I hope that answers your question.

[Jenny Yuan, Analyst at UBS]

Thank you, Jackson. That was clear. Thank you.

[Operator]

The next question comes from the line of Timothy Zhao with Goldman Sachs. Please go ahead.

[Timothy Zhao, Equity Research Analyst at Goldman Sachs]

Great. Good evening. Thank you for taking my question and congratulations on the solid quarter. My question is related to the offline Peiyou small class business. Just wondering if management can share some color on the most recent developments of this business, in the Q4 of last year, and what was the growth rate look like on the revenue side. Looking forward into the fiscal year of 2027, what is your strategic approach in expanding the learning center network, and what kind of capacity growth that we can expect? Thank you.

[Alex Peng, President and CFO at TAL Education Group]

Thanks, Timothy Zhao. This is Alex Peng. Let me take that one on. I'll first talk about our Q4 performance, and then share our approach to expanding the learning center network in the new fiscal year. Okay? In the Q4, Peiyou Small Class enrichment business, as we mentioned earlier on the call, really had steady growth. Revenue increased year-over-year, which is primarily driven by higher enrollment, which reflects both our learning center network expansion and continued effort to enhance the learning experience for our students. Right? We talked earlier about the key operational metrics. They remained healthy in the Q4. For example, retention, we talked about retention rate of over 80%. This really underscores the trust our students and families place in our programs and the consistent quality, I should say the consistent high quality we maintain in our service delivery.

[Alex Peng, President and CFO at TAL Education Group]

From our day-to-day offline operations, we really continue to see steady demand for enrichment learning, which is driven by, I think, the evolving parental and educational priorities of this new generation of parents. To align with these changing needs, we're really increasing capacity and refining our offerings, both of which we believe will support the business' long-term growth projection. You asked about our network expansion. Network expansion in the Q4, we really stick to the disciplined approach that we follow throughout the year and throughout this past several years, right? For the full year, we entered five new cities, which brings our total coverage to over 40 cities across China. Looking ahead to the new fiscal year, we'll continue to prioritize the business' long-term health and sustainability.

[Alex Peng, President and CFO at TAL Education Group]

Our expansion strategy will remain disciplined, focusing primarily on consolidating our presence in existing cities, rather than pursuing aggressive geographical coverage expansion. Operating from a higher baseline, we talked about that a little bit earlier. We're really operating from a much higher baseline. We need to prioritize sustainable development over expansion for its own sake. We expect the revenue growth for this business to gradually taper in FY 2027 relative to its rate of growth in FY 2026. Timothy, I hope that answered your question.

[Timothy Zhao, Equity Research Analyst at Goldman Sachs]

Sure. Thank you.

[Operator]

The next question comes from the line of Eddy Wang with Morgan Stanley. Please go ahead.

[Eddy Wang, Executive Director at Morgan Stanley]

Hi, Alex and Jackson. Thank you for taking my questions and congratulations on a very strong quarter. My question is regarding the learning devices. Could you give me some color on the performance of the learning devices business in this quarter, and how did you mitigate the memory cost hike? Also, how do you view the current competitive landscape in the learning devices sector, and what's your strategy to navigate and strengthen your position? Thank you.

[Alex Peng, President and CFO at TAL Education Group]

Thanks, Eddy. This is Alex Peng. Let me first share some color on our learning device performance in the Q4 and then our views on the competitive landscape. Our learning device business achieved year-over-year revenue growth in the Q4. This really reflects the consistent execution of our strategy, which has always been prioritizing improving product capabilities, and refining our go-to-market approach. Sales volume also increased compared to the same period last year, which is supported by an expanded and more diversified product portfolio, which meets a broader range of customer segments, and their needs. We also see that the blended average selling price was over RMB 3,000, which is consistent with our current product mix. There's a lot of talk about memory cost pressures. Really, this is an industry-wide challenge that many consumer electronics companies are facing.

[Alex Peng, President and CFO at TAL Education Group]

The sector has pretty extensive experience managing these kind of cycles through operational adjustments, and we're applying those lessons alongside strategies tailored to our business model, right? Our key initiatives include optimizing inventory turnover, stock management for greater efficiency, as well as refining our product portfolio, by streamlining SKUs and really adjusting our product mix where it's appropriate. These steps are helping us mitigate the impact of rising cost cycle, while maintaining our focus on long-term competitiveness. The question on competition. I think the learning devices sector remains pretty highly dynamic, with competitors advancing in hardware, content offerings, and AI-driven features. In this kind of environment, our strategy is to really focus on continued innovation across our own product and user experience, while staying responsive to shifting market conditions. If you look at the past year, we've really expanded our lineup to serve different user segments.

[Alex Peng, President and CFO at TAL Education Group]

We talked about the recent launch of the X5 Ultra. We continue to enrich our content offering to enhance the learning experience. We've also maintained a pretty good cadence of software updates. I think we delivered something like 19 major operating system upgrades, and introduced nearly 300 new features over the last fiscal year. Together, these efforts really help us reinforce our integrated approach combining hardware, software, and distribution to create a cohesive learning solution, and at home learning solution. We believe building innovation and product capability is really the key to navigating the competitive landscape. I think our progress to date in market share really aligns with our expectation and that approach we've adopted.

[Alex Peng, President and CFO at TAL Education Group]

Really beyond devices, we also see content solutions as a strategic initiative that extends learning beyond the classroom and deepens and provides longer engagement for us, between us and our users at home. We think this can really build together as an integrated learning experience for our students, across learning services and content solutions. Really, our long-term goal is to make quality learning resources more accessible, while supporting students' holistic development along their journey of learning and development. I hope that answer your question.

[Eddy Wang, Executive Director at Morgan Stanley]

Thank you, Alex, much appreciate.

[Operator]

The next question comes from the line of Jin Wang with CICC. Please go ahead.

[Jin Wang, Executive Director at CICC]

Good evening, Alex and Jackson. Thanks for taking my question, and congratulations on this strong quarter. My question is about the bottom line profitability. Could you walk us through the primary driver behind this quarter's bottom line growth, and what were the key factors contributing to the improved profitability? Thanks.

[Jackson Ding, Deputy CFO at TAL Education Group]

Thank you for the question. This is Jackson. Let me take this one. First of all, I would just like to say profitability is a priority for us, and we continue to take measures to drive profitability improvement. Right? When we think about profitability, we see profitability as a manifestation of the value we create for customers and society as a whole, combined with our operating efficiency. Right? When we think about measures we take to improve profitability, it's really measures along the lines of, one, value creation, but two, also operating efficiency. Now let's break down the drivers. I think there are several contributing factors to profitability momentum this past quarter. One, as Peiyou Small Class continue to grow, its operating leverage, its margin profiles remain steady and has generated more absolute profit dollar.

[Jackson Ding, Deputy CFO at TAL Education Group]

Other business lines including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well. In addition to business unit level profitability improvement, the overall company is also unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well. I'd like to also comment a bit on the overall trend of our profitability. If we look at non-GAAP operating income margin, for the last few quarters, I think for every single quarter this past fiscal year, our non-GAAP operating margin improved compared to the same period of last year. We really see this as a result of all the profitability improvement measures we're taking, discussed above. I hope that answers your question.

[Jin Wang, Executive Director at CICC]

Great. Thanks. Thanks for the color.

[Operator]

The next question comes from the line of Candis Chan with Daiwa. Please go ahead.

[Candis Chan, Equity Research Analyst ofChina Internet and Education at Daiwa]

Hi, Jackson, Alex, and Fang. Thanks for taking my question, and also congrats on this very strong set of results. Can you provide us a breakdown of the top-line growth performance across the major business lines this quarter? Additionally, what is the outlook of the growth for these business lines in the coming fiscal year? One more question, if I may, is that we do observe a very solid margin expansion for three consecutive quarters, staying at above 10%. What is the potential for the further margin improvement going forward? Thank you.

[Alex Peng, President and CFO at TAL Education Group]

Thanks, Candis. This is Alex Peng. Let me take that on. Let me unpack that. First of all, let's look at the first part of the question, which really is a breakdown of the top-line growth performance across our major business lines this quarter. Right? Let's start with the Peiyou offline enrichment business, which, as we mentioned on this call, remains our largest revenue driver. It really continued its solid growth this quarter. This was supported by, as we said, the ongoing expansion of our learning center network and the consistent improvement to service quality. Moving into fiscal year 2027, the expansion strategy remains disciplined. We're going to focus on increasing center density within existing cities to ensure we maintain high operational standards. We anticipate this business continue to grow at a healthy rate.

[Alex Peng, President and CFO at TAL Education Group]

As the operations grow larger and the baseline becomes larger, we've seen the year-over-year revenue growth rate moderate naturally, which is a trend that we expect to continue into the next fiscal year. Second, the online enrichment learning business. We remain committed to delivering high-quality interactive learning experiences. We continue to enhance the user experience by introducing more interactive features and leveraging AI, in both content production and our internal workflows. This product and user-centric approach really support user engagement over time. In terms of the online enrichment learning business' channel strategies, we balance between growth objectives and return on investment to build long-term operational capabilities. Next, learning device business. It delivered year-over-year revenue growth this quarter, driven by increased sales volume and a higher contribution from deferred revenue recognition.

[Alex Peng, President and CFO at TAL Education Group]

The market, as we discussed, is evolving toward a more sustainable growth path, and we are focused on strengthening our long-term competitiveness through the kind of investment in product innovation and channel development. Our product strategy focuses on creating integrated learning solutions that really combine hardware, proprietary software, content, and AI-enhanced experiences. We often talk about channel development. Here, the plan is really to further diversify distribution by balancing investment across both online and offline channels to effectively reach and serve our users. If I put all of that together, when we look at a company holistically, as our operations scale with an increasingly larger baseline, we anticipate that our year-on-year growth rate will gradually moderate. With growing maturity, we also expect operational efficiency to improve and will remain focused on driving profitability.

[Alex Peng, President and CFO at TAL Education Group]

We may see some quarterly fluctuations, but improving overall profitability remains a top priority for fiscal year 2027. Looking ahead, we'll continue advancing our strategic initiatives and also strengthen core capabilities to support sustainable margin improvement over time. Candis, I hope that answered your question.

[Candis Chan, Equity Research Analyst ofChina Internet and Education at Daiwa]

Yes. Very helpful. Thank you.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

[Alex Peng, President and CFO at TAL Education Group]

Thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Alex Peng, President and CFO
• Fang Liu, Director of Investor Relations
• Jackson Ding, Deputy CFO

Analysts

• Candis Chan, Equity Research Analyst ofChina Internet and Education at Daiwa
• Eddy Wang, Executive Director at Morgan Stanley
• Jenny Yuan, Analyst at UBS
• Jin Wang, Executive Director at CICC
• Timothy Zhao, Equity Research Analyst at Goldman Sachs