The performance exceeded expectations, and New Oriental (NYSE: EDU) is finally able to have a good New Year.
On the evening of January 24th, New Oriental handed over its "transcript" for the second quarter of the 2024 fiscal year. From September 1st to November 30th, 2023, the company's revenue was 869.6 million US dollars, a year-on-year increase of 36.3%. The net profit was 30.1 million US dollars, a year-on-year increase of 4007.4%.
From June 1st to November 30th, 2023, New Oriental's revenue was 1.9696 billion US dollars, an increase of 42.4% year-on-year. Net profit was 195.5 million US dollars, a year-on-year increase of 192.9%.
The revenue growth is mainly driven by new education businesses, self operated products of Dongfang Zhenxuan (01797. HK), and live streaming e-commerce businesses.
"The new education business has achieved encouraging results, with a year-on-year increase of 68.3% in revenue for this quarter," said Yu Minhong, Executive Chairman of New Oriental, in the financial report.
New Oriental's new education business includes non disciplinary tutoring courses, such as story performance, eloquence, writing and other literacy courses, as well as programming, art, robotics, science and other literacy courses. Currently available in approximately 60 cities, with approximately 786000 registrations for this fiscal quarter.
Other new educational businesses also include intelligent learning systems and devices, smart education, and smart learning solutions, including learning machines. Intelligent learning systems and devices are adopted in approximately 60 cities, with 181000 active paying users in this fiscal quarter, with little change compared to the previous quarter.
New Oriental's traditional education business is also experiencing a recovery. The preparation for overseas exams and study abroad consulting services increased by approximately 46.5% and 31.7% year-on-year, respectively. The domestic exam preparation business for adults and college students increased by approximately 42.7% year-on-year.
New Oriental has not disclosed the specific revenue of its education business, but according to the latest mid-term performance of Dongfang Zhenxuan in the 2024 fiscal year, it contributed a revenue of 2.8 billion yuan from June 1 to November 30, 2023, a year-on-year increase of 34.4%, accounting for about 20% of New Oriental's total revenue. At the same time, considering that the cultural and tourism business is a new business line and is still in its early stages, the education business remains the core pillar of New Oriental.
In the latest financial report, New Oriental also revealed that the revenue structure of this quarter is very similar to the previous quarter, with education new business and high school training business accounting for a total of 40% -42%; Overseas related businesses contributed 20% -21% of total revenue, while college entrance examination and training businesses accounted for 2% -3%, totaling over 60%.
"The demand for education business is strong and the growth is good, and it is expected that the annual revenue growth will be better than initially expected, especially in overseas related businesses." New Oriental stated in its financial report that the demand for overseas study training and consulting business is very strong, and in terms of supply, some competitors have withdrawn from the market, which means that competition has decreased.
The new education business launched two years ago is also an important revenue increment. The profit margin of this business in the second quarter of fiscal year 2024 is about 19%. It is expected that the profit margin of the entire education business will further increase due to the marginal decrease in fixed costs, increased utilization of learning centers, and strengthened cost control capabilities.
As of November 30, 2023, the total number of offline schools and learning centers at New Oriental was 843, an increase of 50 compared to the previous month and 135 compared to the same period last year. As of November 30, 2023, the total number of schools is 83.
"Most newly opened learning centers will be located in high tier cities, as well as some lower tier cities with better performance." New Oriental stated that it will adjust the speed and scale of network expansion in real time based on operational and financial performance, with an expected annual network expansion of about 20%.
In terms of expenses, New Oriental's operating costs and expenses for the second quarter of fiscal year 2024 were $848.3 million, a year-on-year increase of 32.4%. Mainly due to the increase in costs and expenses related to Dongfang Zhenxuan's self operated products and live streaming e-commerce business. The revenue cost was 422.6 million US dollars, a year-on-year increase of 25.7%.
Sales and marketing, general affairs and administration, and stock incentive expenses were 155 million, 270.7 million, and 29.6 million US dollars respectively, with a year-on-year increase of 62.2%, 29.6%, and 57.3%.
As of November 30, 2023, New Oriental's total cash and cash equivalents, term deposits, and short-term investments amounted to approximately 4.8 billion US dollars. The deferred income balance was $1.645 billion, an increase of 44.4% year-on-year.
The board of directors of the company further authorized the extension of the share repurchase plan until May 31, 2024. As of January 23, 2024, it has repurchased approximately 6 million American depositary shares in the public market, with a total value of approximately $194.2 million.
New Oriental expects a total revenue of 1.0709 billion to 1.0935 billion US dollars from December 1, 2023 to February 29, 2024, a year-on-year increase of 42% -45%.
On January 24th Eastern Time, New Oriental closed at $76.16 per share, up 5.79%, with a total market value of $12.514 billion.