TAL Education Group NYSE: TAL reported fourth-quarter fiscal 2026 results showing double-digit revenue growth and a return to operating profitability, supported by continued expansion in its offline enrichment programs and gains from certain investments recorded in other income.
Revenue growth led by learning services
President and Chief Financial Officer Alex Peng said the company’s learning services business remained TAL’s largest revenue contributor, with the offline Peiyou enrichment programs delivering continued year-over-year growth in both the fourth quarter and the full fiscal year 2026. Peng said the quarter’s growth in the Peiyou Small Class enrichment business was “primarily driven by higher enrollment,” reflecting both network expansion and efforts to enhance the student learning experience.
Peng added that the company has maintained a “disciplined and consistent approach” to expanding its offline learning center network, guided by assessments of local demand, operational capabilities, and the need to maintain service quality. Deputy CFO Jackson Ding said Peiyou Small Class retention was “generally stable” at around 80% across fiscal year 2026, with some quarters above that level.
On the online side, Peng said TAL continued to upgrade key products with “richer content and technology-enabled features” to create a more engaging experience, while Ding highlighted interactive formats such as immersive classrooms and role-playing activities as engagement drivers.
Learning devices transition to more moderate growth, new product launch
TAL also discussed its learning device business, which Peng said achieved year-over-year revenue growth in the quarter but has shifted over the last couple of quarters “from its rapid expansion phase to a more moderate growth.” The company introduced the X5 Ultra Classic in March 2026, which Peng said incorporates enriched content and upgraded AI capabilities and is intended to address a broader range of at-home self-directed learning needs.
Peng shared user engagement metrics for the learning devices install base, citing “around 80% weekly active users” and “an average daily active usage time of about one hour per device.”
In response to a question on cost pressures, Peng said memory cost increases are an industry-wide challenge. He outlined steps TAL is using to mitigate the impact, including optimizing inventory turnover and stock management, and “refining our product portfolio” by streamlining SKUs and adjusting product mix where appropriate.
On competition, Peng said the learning devices sector remains “highly dynamic,” with competitors advancing in hardware, content, and AI-driven features. He said TAL’s approach is continued innovation across product and user experience, and noted the company delivered “19 major operating system upgrades” and “nearly 300 new features” over the last fiscal year. Peng also said management’s view of market share progress “aligns with our expectation and that approach we’ve adopted,” without providing specific share figures.
Q4 financial results: revenue up 31.5% and operating profit turns positive
Ding reported fourth-quarter net revenues of $802.4 million (RMB 5.59 billion), up 31.5% year over year in U.S. dollars and 25.8% in RMB. Cost of revenues rose 28.2% to $375.2 million, while gross profit increased 34.5% to $427.2 million. Gross margin was 53.2%, compared with 52.0% a year earlier.
Operating expenses were mixed. Selling and marketing expenses increased 1.4% to $220.9 million, while non-GAAP selling and marketing expenses rose 2.0% to $218.5 million. Ding said non-GAAP selling and marketing expenses as a percentage of total net revenues declined to 27.2% from 35.1%.
General and administrative expenses increased 15.7% to $133.8 million, and non-GAAP G&A rose 19.7% to $126.8 million. Non-GAAP G&A as a percentage of revenue declined to 15.8% from 17.4%.
Income from operations was $72.5 million, compared with an operating loss of $16.0 million in the prior-year quarter. On a non-GAAP basis, income from operations was $82.2 million versus a non-GAAP operating loss of $1.7 million a year earlier. Non-GAAP net income attributable to TAL was $254.5 million.
- Net revenues: $802.4 million (RMB 5.59 billion), +31.5% YoY in USD
- Gross margin: 53.2% vs. 52.0% prior year
- Income from operations: $72.5 million vs. -$16.0 million prior year
- Non-GAAP income from operations: $82.2 million vs. -$1.7 million prior year
- Non-GAAP net income attributable to TAL: $254.5 million
Other income surge tied to investment valuation gains; management calls it one-time
Other income was $275.0 million in the quarter, compared with $13.0 million in the prior-year period. Ding said the change was “mainly driven by fluctuations in the fair value of certain investments.”
Asked for more detail, Ding told UBS analyst Jenny Yuan that TAL makes “financial strategic investments” ranging from wealth management products to minority equity investments and, at times, mergers and acquisitions. He said that in the quarter “a couple of investments in our portfolio experienced an increase in valuation,” resulting in an investment gain booked under other income. Ding emphasized it was “a one-time event” and said the company does not recommend using the quarter’s other income as a baseline for future projections.
Balance sheet, cash flow, share repurchase update, and fiscal 2027 priorities
As of Feb. 28, 2026, Ding said TAL had $1.52 billion in cash and cash equivalents, $1.72 billion in short-term investments, and $262.2 million in current and non-current restricted cash. Deferred revenue was $882.2 million at quarter-end. Net cash used in operating activities during the quarter was $215.0 million.
Ding also reviewed the company’s share repurchase program authorized on July 28, 2025, allowing up to $600 million of common shares to be repurchased over 12 months. Fang Liu, Director of Investor Relations, made a correction during the call, stating the $3.3 million of repurchases occurred between Jan. 29, 2026, and April 22, 2026. Ding said the company repurchased 101,371 common shares for an aggregate consideration of approximately $3.3 million over that period.
Looking ahead, Peng said TAL’s fiscal 2027 strategy centers on three priorities:
- Quality growth across businesses: learning services expected to remain the largest revenue contributor, with continued emphasis on quality in both digital and in-person offerings.
- Application-first AI strategy: Peng said TAL is not pursuing foundation models, focusing instead on AI to enhance user experience and improve operational efficiency across areas such as customer service, content production, and software development.
- Disciplined execution as it scales: continued focus on execution across content, product, operations, and go-to-market to improve efficiency and profitability over time.
For the offline Peiyou learning center network, Peng said TAL entered five new cities in fiscal 2026, bringing total coverage to “over 40 cities across China.” For fiscal 2027, he said the company plans to prioritize “consolidating our presence in existing cities” rather than pursuing aggressive geographic expansion, and he expects revenue growth in the business to “gradually taper” compared with fiscal 2026.
On profitability, Ding said it remains a priority and pointed to operating leverage from Peiyou Small Class growth, improvements across other business lines, and company-level operating leverage. He added that non-GAAP operating margin improved year over year in each quarter of fiscal 2026 compared to the prior year.
About TAL Education Group NYSE: TAL
TAL Education Group 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.
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