Two leading companies in the education and training industry have recently released their latest financial reports, with both companies achieving significant revenue growth in their latest fiscal quarter.
New Oriental's Q4 2024 financial report, as of May 31, 2024, shows that the company's net revenue for the quarter reached $1.137 billion, a year-on-year increase of 32.1%. On the evening of August 1st, TAL Education announced its first quarter financial report for the fiscal year 2025 ending May 31, 2024. The company's net revenue for the quarter reached $414 million, a significant increase of 50.4% year-on-year.
New Oriental's revenue continues to grow
After the "double reduction" policy, major education and training institutions have generally entered a stage of transformation. New Oriental has achieved great success in live streaming sales through its subsidiary Dongfang Zhenxuan, but its education business has also developed well.
According to the financial report, New Oriental's net revenue for the fourth quarter of fiscal year 2024 was 1.137 billion US dollars, a year-on-year increase of 32.1%; However, its operating profit decreased by 78.1% year-on-year to $10.5 million, and the net profit attributable to shareholders decreased by 6.9% year-on-year to $27 million. New Oriental stated that the revenue growth was mainly driven by new education related businesses, as well as Dongfang Zhenxuan's self operated products and live streaming e-commerce business, which contributed to the increase in revenue.
New Oriental announced at the end of November 2021 that it will shift its business focus and resources towards educational products and services unrelated to K9 subject training services, such as exam preparation courses, adult language training courses and textbooks. After more than 2 years of development, New Oriental has made significant progress in these businesses.
According to the financial report, in this fiscal quarter, New Oriental's overseas exam preparation and consulting services increased by about 17.7% and 17.3% respectively year-on-year, while its domestic exam preparation business for adults and college students recorded a year-on-year growth of about 16.4%.
New Oriental also stated that its education new business maintained strong growth momentum this fiscal quarter, with revenue increasing by 50.3% year-on-year. Among them, non disciplinary tutoring services were launched in nearly 60 cities this fiscal quarter, with approximately 875000 registrations. Intelligent learning systems and devices were also adopted in about 60 cities, with 188000 active paying users this fiscal quarter.
In the fiscal year 2024 (June 1, 2023 to May 31, 2024), New Oriental's total revenue was $4.314 billion, a year-on-year increase of 43.9%. The operating profit was 350 million US dollars, a year-on-year increase of 84.4%. As of May 31, 2024, New Oriental held cash and cash equivalents of $1.39 billion, in addition to a fixed deposit of $1.49 billion and a short-term investment balance of $2.07 billion.
Over a thousand teaching points have been reopened
New Oriental's financial report continues to disclose the situation of its schools and learning centers. The number of schools and learning centers under New Oriental reached its peak in 2021. On February 28, 2021, before the "double reduction" policy, the total number of schools under New Oriental was 118, and the total number of schools and learning centers reached 1625.
After the implementation of the "double reduction" policy, New Oriental closed a large number of schools and learning centers. As of February 28, 2022, the number of company schools and learning centers has decreased by nearly half to 847. Afterwards, the data further decreased, reaching a minimum of only 706 households.
With the growth of New Oriental's overseas exam preparation and consulting services, the number of schools and learning centers under New Oriental will resume growth from early 2023.
The latest financial report shows that as of May 31, 2024, the total number of New Oriental schools and learning centers has rebounded to 1025, an increase of 114 compared to 911 on February 29, 2024; Compared to 748 as of May 31, 2023, there has been an increase of 277 companies.
Due to the growth of Dongfang Zhenxuan's related businesses and the increase in related costs and expenses caused by the accelerated expansion of teaching space, Dongfang Zhenxuan's revenue cost increased by 38.5% year-on-year in this fiscal quarter, and sales and marketing expenses increased by 40.9% year-on-year. Adding factors such as improving management and employee compensation and rewards has to some extent dragged down the company's performance.
However, Yang Zhihui, Executive President and Chief Financial Officer of New Oriental, stated that these have a short-term impact on operating profit margins, and it is expected that the profit pressure on the company's education business will decrease in the next fiscal year as facility utilization and operational efficiency continue to improve.
According to the outlook for the first quarter of fiscal year 2025 (June 1, 2024 to August 31, 2024) released by New Oriental, the company's net revenue for the quarter (excluding Dongfang Zhenxuan's self operated products and live streaming e-commerce business) will reach between $1.255 billion and $1.284 billion, a year-on-year increase of 31% to 34%.
Good future, significant increase in income
Another giant in the education and training industry disclosed its latest financial report on the evening of August 1st. As of May 31, 2024, in the first quarter of the fiscal year 2025, TAL Education's net revenue reached $414 million, a year-on-year increase of 50.4%.
The operating loss of TAL Education for this fiscal quarter was $17.33 million, a significant decrease from the operating loss of $57.773 million in the same period last year. The net profit attributable to TAL Education was 11.402 million US dollars, compared to a net loss of 45.037 million US dollars in the same period last year. As of May 31, 2024, the total balance of cash, cash equivalents, and short-term investments held by TAL Education is $3.419 billion.
In this fiscal quarter, TAL's revenue growth rate was faster than that of New Oriental, but overall, the recovery pace of TAL is slower than that of New Oriental, which is supported by its live streaming e-commerce business.
From March to May 2021, prior to the "double reduction" policy, TAL Education's quarterly revenue reached $1.385 billion. However, from March to May 2022, after the "double reduction" policy, TAL Education's revenue plummeted to $224 million. At present, the company's revenue is still some distance away from its peak period.
After the "double reduction" policy, TAL Education has also adjusted its business direction. At present, the company's main business layout includes quality education products such as Xueersi Literacy and Xueersi Online School, as well as intelligent learning hardware and software such as learning machines. In TAL's financial report, the specific revenue situation of the company's various businesses was not introduced.
On August 2nd, Bank of Communications International stated in its research report that the quality education revenue of TAL Education in this fiscal quarter increased by over 50% year-on-year, accounting for over 45% of the total revenue, mainly benefiting from the high double-digit growth of Peiyou offline. The company has over 400 offline teaching points, and the expansion speed exceeds expectations. High school income maintains double-digit growth, accounting for approximately 15% of total income.
Recently, the sales of AI learning machines have been booming, and Xueersi learning machines are currently one of the main sales varieties in the market. According to a research report by Bank of Communications International, the sales revenue proportion of TAL Education (Xueersi) learning machines continues to increase and maintain a high growth rate. In the first quarter, the sales volume was nearly 100000 units, and it is expected that the sales proportion will increase in the next 1-2 quarters.
In the financial report, Peng Zhuangzhuang, President and Chief Financial Officer of TAL Education, stated that the company remained focused on providing high-quality products and managing online and offline operational efficiency to efficiently serve users for this quarter. In the future, the company will continue to invest in providing users with high-quality learning experiences, seize market opportunities based on the company's product capabilities and operational efficiency.