New Oriental Education & Technology Group NYSE: EDU reported fiscal 2026 third-quarter results that management said exceeded expectations again, driven by continued growth in its core education businesses, margin expansion, and profit contributions from East Buy.
Stephen Zhihui Yang, executive president and chief financial officer, said the company delivered “another quarter of solid results and consistent growth,” adding that the quarter “has once again surpassed expectations,” reinforcing management’s confidence in its strategy and outlook.
Quarterly results and profitability trends
Yang said total net revenue grew 19.8% year over year to $1.42 billion. Profitability improved as well, with non-GAAP operating income up 42.8% to $202.9 million and non-GAAP net income attributable to New Oriental up 34.3% to $152.2 million.
Investor Relations Director Sisi Zhao provided additional financial detail, noting operating income of $180.3 million, up 44.8% year over year, while net income attributable to New Oriental rose 45.3% to $126.8 million. Basic and diluted net income per ADS attributable to New Oriental were $0.80 and $0.79, respectively. On a non-GAAP basis, basic and diluted net income per ADS were $0.97 and $0.95.
Zhao said operating costs and expenses were $1.24 billion, up 16.9% year over year, including:
- Cost of revenue of $656.2 million, up 23.4%
- Selling and marketing expense of $198.8 million, up 9.1%
- General and administrative expense of $382.1 million, up 10.8%
- Share-based compensation of $21.1 million, up 30.9%
Net cash outflow from operations was approximately $7.5 million for the quarter, and capital expenditures were $68.8 million, Zhao said.
Segment performance: education, new initiatives, and tourism
In prepared remarks, Yang broke out performance across major lines of business. He said overseas test preparation revenue increased 7% year over year, while overseas study consulting revenue decreased about 4%.
Yang said the adults and university students business recorded 15% year-over-year revenue growth. New education initiatives—including non-academic tutoring and the company’s intelligent learning system and devices—grew revenue 23% year over year.
On rollout and concentration, Yang said non-academic tutoring had expanded to around 60 existing cities, with the top 10 cities contributing over 60% of that business. Intelligent learning system and devices had also launched in around 60 cities, with the top 10 cities contributing over 50%.
Yang also highlighted the company’s integrated tourism-related business. He said student programs, including study tours and research camps, were operating in approximately 55 cities nationwide, with the top 10 cities generating over 50% of the revenue. Adult tourism offerings span around 30 provinces domestically plus select international destinations, he said.
Yang added that New Oriental is expanding into senior health and wellness tourism through partnerships with over 40 wellness facilities in Hainan, Yunnan, and Guangxi using an “asset-light model” to pilot the opportunity.
Margin expansion drivers and restructuring impacts
During Q&A, Yang attributed the company’s operating margin expansion to “better realization [of] operating leverage and the cost control,” as well as “more profit contribution from East Buy.” He said New Oriental began cost controls in March 2025 and has seen “very good result” over the past 11 months.
Looking to the fiscal fourth quarter, Yang said the company expects to realize greater cost control as a result of restructuring and consolidation of its overseas business. He cautioned that there will be one-off expenses tied to these structural adjustments but said management remained confident in fourth-quarter profit margins.
In response to questions about the magnitude of the restructuring impact, Yang estimated the negative margin impact at roughly 50 to 100 basis points, or about $10 million to $15 million. He later clarified that the “majority” of the one-off expenses are expected to occur in Q4 and characterized the actions as including workforce and staff optimization, with the goal of reducing fixed costs going into next year.
Yang also said the company expects selling and marketing expense as a percentage of revenue to decline next year, as it focuses more on product quality enhancements and relies less on heavy marketing spending.
Capacity expansion and K-12 outlook
On expansion plans, Yang said New Oriental initially planned to add 10% to 15% of new capacity during the fiscal year. He said net additions of new learning centers in the first three quarters were 8%, and he expects full-year net expansion to be “somewhere around 10%-13%, 14%.” He told analysts the capacity measure he referenced was in square meters and that most new capacity is being built for the K-12 business.
Discussing K-12 trends, Yang said the company “beat the guidance again” for the segment in Q3 and has done so “two to three quarters in a row.” For Q4, he said he was “very optimistic” about K-12 revenue growth, attributing momentum to a strategy shift toward product quality enhancements that improved retention and utilization. He described expectations for Q4 K-12 revenue growth of about 15% to 20%, including “K-9” growth of “20% plus” and high school growth of 15% to 20%.
For longer-term growth, Yang said New Oriental plans to continue opening “somewhere around 10% or even a little bit more” learning centers next year, while also leveraging online and OMO offerings that do not always require additional physical centers.
OMO investment, AI initiatives, and “New Oriental Home” strategy
Yang said the company invested $30.6 million during the quarter to enhance and maintain its online-merge-offline (OMO) teaching platform, aimed at delivering personalized learning across age groups.
On artificial intelligence, Zhao said the company is implementing AI across key business lines, embedding AI functions into online and hardware products such as intelligent learning devices, and incorporating AI into offline classes by collecting and using data alongside its teaching experience. She also said AI is being used to improve internal productivity across roles including teachers, salespeople, assistants, and functional staff, and that some labor costs or labor hours have already been reduced. Zhao added that New Oriental has pilot teams exploring new AI-driven education products designed to rely less on human resources while delivering experiences closer to face-to-face teaching.
Yang also introduced a strategic shift toward serving customers at the family level rather than as individuals. He said the company launched “New Oriental Home,” a private domain platform integrating education services, East Buy offerings, and cultural tourism products into a unified ecosystem. He said the pilot is live in 12 cities, including Hangzhou, Suzhou, Xi’an, and Wuhan, with more than 330,000 registered families and campaign activation rates of 10% to 15%.
East Buy updates and shareholder returns
Yang said East Buy is executing a multi-platform, multi-account approach by launching specialized vertical livestreaming channels on Douyin, including East Buy Home, East Buy Fruit & Vegetables, and East Buy Nutrition & Health. He said the unit has also worked on optimizing livestream content and engagement initiatives such as streamer recruitment campaigns and supplier conferences. Looking ahead, Yang said East Buy plans to expand private label offerings, strengthen product R&D and quality control, develop its app membership ecosystem, and grow offline presence through vending machines and experience stores.
On capital returns, Yang reiterated the company’s fiscal 2026 ordinary dividend of $0.12 per common share (or $1.2 per ADS) to be paid in two installments. He said the first installment has been paid, and the second installment of $0.06 per common share (or $0.6 per ADS) will be paid to holders of record as of May 15, 2026, with expected payment dates around June 2, 2026 for common shareholders and June 5, 2026 for ADS holders.
Yang also updated the company’s share repurchase program authorizing up to $300 million in repurchases over 12 months. As of April 21, 2026, he said New Oriental had repurchased approximately 3.3 million ADS for an aggregate consideration of about $184.3 million.
Guidance raised for fiscal 2026
For the fiscal fourth quarter, Yang guided for total net revenue of $1.43 billion to $1.47 billion, representing year-over-year growth of 15% to 18%.
He said the company raised full-year fiscal 2026 total net revenue guidance to a range of $5.56 billion to $5.60 billion, representing year-over-year growth of 13% to 14%.
In closing remarks, Yang said New Oriental remains focused on “balanced growth,” expanding capacity and talent while maintaining quality and disciplined resource allocation, and continuing cost discipline to support sustainable profitability across business lines.
About New Oriental Education & Technology Group NYSE: EDU
New Oriental Education & Technology Group NYSE: EDU is one of China's leading providers of private educational services, specializing in language training, test preparation and consulting for overseas study. The company's offerings span a range of subjects, including English language instruction, preparatory courses for examinations such as the TOEFL, GRE and GMAT, and K-12 after-school tutoring. New Oriental's curriculum is delivered through a combination of in-person learning centers and digital platforms, enabling students across various regions to access its educational resources.
Founded in 1993 by Michael Yu Minhong in Beijing, New Oriental began as a small language school and quickly expanded its footprint.
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