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    EDU
    Earnings call· Feb 2026(Q3 FY26)

    New Oriental Education & Technology Group Q3 FY26 earnings call EDU

    Apr 22, 2026 Source

    Executive summary

    New Oriental Q3 FY26 — Strong Revenue Growth and Margin Expansion

    New Oriental delivered another quarter of solid results, with revenue exceeding expectations and significant margin expansion driven by operational efficiency and cost control. The company is strategically expanding its capacity and investing in AI and new initiatives like 'New Oriental Home' to serve entire family units, aiming for sustainable profitability and enhanced customer lifetime value. Management expressed optimism for continued margin expansion and healthy growth in core education and East Buy businesses.

    Highlights

    5

    • Total net revenue grew by 19.8% year-over-year to $1,473 million, surpassing expectations for several consecutive quarters.

    • Non-GAAP operating income rose 42.8% year-over-year to $202.9 million, driven by better utilization and cost control.

    • Non-GAAP net income attributable to New Oriental increased 34.3% year-over-year to $152.2 million.

    • New education initiatives (nonacademic tutoring, intelligent learning systems) recorded strong revenue growth of 23% year-over-year.

    • Deferred revenue increased by 7.8% year-over-year to $1,885.9 million, indicating strong future revenue recognition.

    Concerns

    3

    • Overseas study consulting business recorded a revenue decrease of about 4% year-over-year.

    • Net cash outflow generated from operations for the quarter was approximately $7.5 million.

    • A one-off restructuring expense of roughly $10 million to $15 million (50-100 bps impact on margin) is expected in Q4 FY26 related to overseas business consolidation.

    Guidance & targets

    8
    CategoryTargetConfidence
    Total Net Revenue
    $1,429.6 million to $1,466.9 million
    high materiality
    High
    Full-Year Total Net Revenue
    $5,561.4 million to $5,598.7 million
    high materiality
    High
    Q4 FY26 Profit Margin
    Expansion
    medium materiality
    High
    FY27 Margin Expansion
    Up
    high materiality
    High
    Capacity Expansion (Square Meters)
    Around 10% or even a little bit more
    medium materiality
    Medium
    Marketing Expenses as % of Revenue
    Down
    medium materiality
    High
    Overseas Business Revenue Growth
    Flattish or low single digits up
    medium materiality
    Medium
    Overseas Business Margin
    Up
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Overseas Test Prep Business
    Recorded a revenue increase year-over-year for the quarter.
    		—7%——
    Overseas Study Consulting Business
    Recorded a revenue decrease year-over-year for the quarter.
    		—-4%——
    Adults and University Students Business
    Recorded a revenue increase year-over-year this quarter.
    		—15%——
    New Education Initiatives (Nonacademic Tutoring & Intelligent Learning System)
    Delivered sustainable revenue growth. Non-academic tutoring has grown steadily, particularly in high-tier cities. Intelligent learning system shows enhanced customer retention and scalability.
    Non-academic tutoring cities rolled out: ~60Non-academic tutoring revenue contribution from top 10 cities: >60%Intelligent learning system cities launched: ~60Intelligent learning system revenue contribution from top 10 cities: >50%
    		—23%——
    Integrated Tourism Related Business (Study Tours, Research Camps, Cultural Tours)
    Culture 12 China study tour, global study tour, and camp education products continue to be well received. Expanding into senior health and wellness tourism through partnerships utilizing an asset-light model.
    Student programs operating cities: ~55Student programs revenue contribution from top 10 cities: >50%Adult tourism offerings spread: ~30 provinces domestically and select international destinations
    		————

    Operational metrics

    16
    Non-GAAP Operating Income
    $202.9 millionup 42.8% YoY
    Q3 FY26

    Rose 42.8% year-over-year.

    Non-GAAP Net Income Attributable to New Oriental
    $152.2 millionincreased 34.3% YoY
    Q3 FY26

    Increased 34.3% year-over-year.

    Operating Costs and Expenses
    $1,237 millionincreased 16.9% YoY
    Q3 FY26

    Representing a 16.9% increase year-over-year.

    Cost of Revenue
    $656.2 millionincreased 23.4% YoY
    Q3 FY26

    Increased by 23.4% year-over-year.

    Selling and Marketing Expenses
    $198.8 millionincreased 9.1% YoY
    Q3 FY26

    Increased by 9.1% year-over-year.

    General and Administrative Expenses
    $382.1 millionincreased 10.8% YoY
    Q3 FY26

    Increased by 10.8% year-over-year.

    Share-Based Compensation
    $21.1 millionincreased 30.9% YoY
    Q3 FY26

    Allocated to related operating costs and expenses.

    Net Cash Outflow from Operations
    $7.5 million
    Q3 FY26

    For the third quarter of fiscal year 2026.

    Capital Expenditure
    $68.8 million
    Q3 FY26

    For the quarter.

    Deferred Revenue
    $1,885.9 millionincreased 7.8% YoY
    Q3 FY26

    Represents cash collected upfront from customers, compared to $1,749.9 million year-over-year.

    OMO Platform Investment
    $30.6 million
    Q3 FY26

    Invested to enhance and maintain the online merge offline teaching platform.

    New Oriental Home Registered Families
    330,000
    Q3 FY26

    Registered families on the private domain platform in pilot cities like Hangzhou, Suzhou, Xian, and Wuhan.

    New Oriental Home Campaign Activation Rates
    10% to 15%
    Q3 FY26

    Significantly outperforming many public domain e-commerce platforms.

    One-off Restructuring Expense Impact on Margin
    50-100 bps
    Q4 FY26

    Negative impact on margin in Q4 FY26 related to structural adjustments of the overseas business.

    K-12 Business Revenue Growth
    15% to 20%
    Q4 FY26

    Based on current estimation, with content growth at 20% or more.

    K-12 Business Revenue Growth
    20%+
    Q4 FY26

    Based on current estimation, with high school growth at 15-20%.

    Industry KPIs

    7
    MetricValueDetails
    EPS$0.95USD
    Revenue$1,473 millionUSD
    Net income$126.8 millionUSD
    Operating margin13.77%%
    Operating income EBIT$180.3 millionUSD
    Cash investments balance$3,618.3 millionUSD
    Share buyback capital return$184.3 millionUSD

    Product announcements

    2
    ProductTypeDetails
    New Oriental Homelaunch
    AI-Purely-Driven Educational Productsroadmap

    Deals & partnerships

    1
    Wellness facilities in Hainan, Una and GuangxiExpanding into senior health and wellness tourism

    Utilizing an asset-light model to pilot emerging opportunities in senior health and wellness tourism, partnering with over 40 facilities.

    Risks & headwinds

    2
    Economic and International Situation Impact on Overseas BusinessQ3 FY26

    Overseas study consulting revenue decreased 4% YoY

    Mitigation: Overseas team's resilience, consolidation of overseas test prep and consulting to provide one-stop service, cost control measures to save fixed costs.

    One-off Restructuring ExpensesQ4 FY26

    $10 million to $15 million (50-100 bps negative impact on margin)

    Mitigation: These are one-off expenses primarily contained in Q4 FY26, expected to reduce fixed costs and drive margin up in the coming year for the overseas business.

    What to watch in Q4 FY26

    5

    Q4 FY26 Total Net Revenue

    next quarter
    CurrentQ3 FY26 revenue: $1,473 million
    Target$1,429.6 million to $1,466.9 million

    Why it matters

    This will indicate if the company's growth trajectory remains strong and if the raised full-year guidance is on track.

    we expect the total net revenue for the group in the fourth quarter of fiscal year 2026 to be in the range of 1,429.6 million to $1,466.9 million

    Q&A highlights

    6

    What are the key drivers behind the 230 bps operating margin expansion this quarter, and what is the outlook for margins in Q4 and next fiscal year?

    Management attributed margin expansion to better utilization, operating leverage, cost control, and East Buy's contribution. They are optimistic about Q4 margin expansion despite one-off expenses and expect continued margin growth in the next fiscal year due to focus on profitability across all business lines.

    “I think the margin expansion was mainly due to the better utilization, operating leverage and the cost control and as well the more profit contribution from Easter Buy.”

    asked by Unknown Analyst · answered by Zhihui Yang

    2 min read5 chapters

    Detailed Narrative

    01

    Core Business Performance and Growth Drivers

    New Oriental reported solid Q3 FY26 results, with total net revenue growing 19.8% year-over-year to $1,473 million, exceeding expectations. This growth was driven by strong performance across various segments, including overseas test prep (up 7% YoY), adults and university students business (up 15% YoY), and new education initiatives (up 23% YoY). The company attributes this success to its strategic focus on operational efficiency, cost control, and product quality enhancement, leading to improved student retention and utilization rates.

    02

    New Initiatives and Strategic Expansion

    The company's new education initiatives, including nonacademic tutoring and intelligent learning systems, have been rolled out to approximately 60 cities each, with top-tier cities contributing significantly to revenue. Integrated tourism, encompassing study tours and cultural tours, operates in about 55 cities. New Oriental is also piloting 'New Oriental Home,' a private domain platform integrating education, East Buy offerings, and cultural tourism into a unified ecosystem, demonstrating strong user engagement with 330,000 registered families and 10-15% activation rates in 12 pilot cities.

    03

    East Buy's Contribution and Future Strategy

    East Buy continues to be a significant contributor, advancing its multi-platform, multi-content strategy with specialized live streaming channels and optimizing content. Future plans for East Buy include expanding its private label portfolio, enhancing product R&D, accelerating app membership ecosystem development, and growing its offline footprint through vending machines and experience stores. These initiatives are expected to drive operational efficiency and supply chain excellence, supporting sustainable long-term growth and increased profitability.

    04

    AI Integration and Efficiency Gains

    New Oriental is actively integrating AI across its offerings to strengthen core capabilities and streamline internal operations. AI technology is being embedded into online products, intelligent learning devices, and even offline classes to enhance learning experiences and improve efficiency. The company is also exploring new AI-purely-driven educational products that rely minimally on human resources, aiming to achieve significant efficiency improvements and labor cost reductions in the coming 1-2 years.

    05

    Financial Highlights and Capital Allocation

    Non-GAAP operating income increased 42.8% to $202.9 million, and non-GAAP net income rose 34.3% to $152.2 million, reflecting strong margin expansion. The company reported a net cash outflow from operations of $7.5 million and capital expenditure of $68.8 million. New Oriental continues its shareholder return plan, with a second dividend installment of $0.06 per common share ($0.6 per ADS) and an ongoing share repurchase program, having repurchased approximately $184.3 million of ADS as of April 21, 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.