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• Total Net Revenue Growth: 33.5% year over year, excluding East Buy private label products and live streaming business.

• Operating Margin: 23.7%, a 370 basis point improvement year over year.

• Non-GAAP Operating Margin: 24.4%, a 220 basis point improvement year over year.

• Overseas Test Prep Revenue Growth: 19% year over year.

• Overseas Study Consulting Revenue Growth: 21% year over year.

• Adults and University Students Business Revenue Growth: 30% year over year.

• New Educational Business Initiatives Revenue Growth: 50% year over year.

• Study Tour and Research Camp Revenue Growth: 221% year over year.

• Operating Costs and Expenses: $1,142.3 million, a 27.6% increase year over year.

• Cost of Revenues: $583.5 million, a 32.3% increase year over year.

• Selling and Marketing Expenses: $193.7 million, a 42.3% increase year over year.

• G&A Expenses: $365.1 million, a 15% increase year over year.

• Operating Income: $293.2 million, a 42.9% increase year over year.

• Net Income: $245.4 million, a 48.4% increase year over year.

• Net Cash Flow from Operations: $183.2 million.

• Capital Expenditure: $80.2 million.

• Cash and Cash Equivalents: $1,147 million.

• Term Deposit: $1,513.8 million.

• Short Term Investments: $2,248.6 million.

• Deferred Revenue: $1,733.1 million, a 23.7% increase year over year.

• Warning! GuruFocus has detected 1 Warning Sign with EDU.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• New Oriental Education & Technology Group Inc (NYSE:EDU) reported a 30.5% top-line growth for the first fiscal quarter of 2025, with net revenues excluding East Buy increasing by 33.5% year over year.

• The company's operating margin and non-GAAP operating margin improved significantly, reaching 23.7% and 24.4%, respectively, marking a 370 basis point and 220 basis point improvement year over year.

• The overseas test prep, overseas study consulting, and adults and university students business segments all recorded strong revenue increases of 19%, 21%, and 30% year over year, respectively.

• New educational business initiatives, including non-academic tutoring and intelligent learning systems, saw a revenue increase of 50% year over year, with strong student enrollments and active user growth.

• The newly integrated tourism-related business line achieved a remarkable 221% revenue increase year over year, indicating successful diversification efforts.

Negative Points

• Operating costs and expenses increased by 27.6% year over year, primarily due to accelerated capacity expansion and new business initiatives.

• Selling and marketing expenses rose by 42.3% year over year, which could impact profitability if not managed effectively.

• The company anticipates margin pressure in the second quarter due to seasonality and increased investments in new business lines.

• Despite strong growth in the tourism business, it is expected to be loss-making for the full fiscal year, indicating potential challenges in achieving profitability.

• The company faces inherent risks and uncertainties related to forward-looking statements, which could impact future performance.