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    EDU
    Earnings call· May 2026(Q4 FY26)

    New Oriental Education & Technology Group Q4 FY26 earnings call EDU

    Jul 29, 2026 Source

    Executive summary

    New Oriental Q4 FY26 — Strong Revenue and Margin Growth Driven by Core Business and New Initiatives

    New Oriental delivered robust Q4 FY26 results, surpassing revenue and income expectations, fueled by its core education business and the strong performance of East Buy and new ventures. The company is strategically expanding capacity and talent while focusing on cost control and AI integration to drive sustainable profitability and enhance operational efficiency in the coming fiscal year. Management expressed confidence in accelerating revenue growth and margin expansion for FY27.

    Highlights

    5

    • Total net revenue grew 23% year-over-year to $1,529.5 million, exceeding expectations.

    • Non-GAAP operating income rose 34.7% year-over-year to $110 million, with operating margins showing healthy increments.

    • New educational business initiatives delivered a 25% year-over-year revenue increase.

    • Net income attributable to New Oriental increased 775.8% year-over-year to $62.2 million.

    • Deferred revenue increased 14.8% year-over-year to $2,242.9 million, indicating strong future revenue.

    Concerns

    4

    • Non-GAAP net income attributable to New Oriental decreased 10.5% year-over-year to $87.8 million.

    • Overseas test prep business growth slowed to 6% year-over-year, and overseas study consulting to 1% year-over-year.

    • One-off expenses of $10 million to $15 million were incurred in Q4 FY26 due to internal management restructuring.

    • New store openings were down 40% from the prior year, with 170 stores opened compared to 270.

    Guidance & targets

    13
    CategoryTargetConfidence
    Total net revenue
    $6,453.9 million to $6,680.3 million
    high materiality
    High
    Total net revenue growth
    14% to 18%
    high materiality
    High
    Share repurchase program authorization
    Up to $300 million
    medium materiality
    High
    Total capital return
    Approximately $500 million
    high materiality
    High
    Cash dividend
    Approximately $300 million
    medium materiality
    High
    Share repurchase program authorization (FY27)
    Up to $200 million
    medium materiality
    High
    K-12 business revenue growth
    Roughly 20%
    medium materiality
    High
    New capacity expansion
    10% to 15%
    low materiality
    Medium
    Overseas-related business growth
    Flattish or low single-digit growth
    medium materiality
    Medium
    Overseas-related business growth (Q1 FY27)
    Low single-digit growth
    low materiality
    Medium
    Overseas-related business margin
    Expanded
    medium materiality
    High
    Selling and marketing expenses as % of revenue
    Down
    medium materiality
    High
    Capital expenditure
    $250 million to $300 million
    low materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Overseas Test Prep Business
    Recorded a revenue increase of 6% year-over-year for Q4 FY26. Combined with overseas study consulting, the segment margin was roughly 15% in FY26 and is expected to expand in FY27 due to cost control and restructuring.
    		—6%——
    Overseas Study Consulting Business
    Recorded a revenue increase of about 1% year-over-year for Q4 FY26. Combined with overseas test prep, the segment margin was roughly 15% in FY26 and is expected to expand in FY27 due to cost control and restructuring.
    		—1%——
    Adults and University Students Business
    Recorded a revenue increase of 29% year-over-year for Q4 FY26.
    		—29%——
    Non-Academic Tutoring Business
    Market penetration has shown steady growth, particularly across high-tier cities.
    Cities rolled out: around 60Top 10 cities contribution: around 60% of business
    		————
    Intelligent Learning System and Device Business
    Leverages teaching expertise and data analytics to provide adaptive learning solutions, encouraged by enhanced customer retention and scalability.
    Cities launched: around 60Top 10 cities contribution: over 50% of business
    		————
    New Educational Business Initiatives (overall)
    Delivered a 25% year-over-year revenue increase in Q4 FY26.
    		—25%——
    Integrated Tourism-Related Business (Student Programs)
    Encompasses study tours and research camps for K-12 and university students, delivering meaningful value through knowledge generation and cultural immersion.
    Cities operated: about 55 nationwideTop 10 cities contribution: over 50% of segment revenue
    		————
    Integrated Tourism-Related Business (Adult Tourism)
    Premium adult tourism offerings span domestically and select international destinations. Expanding into senior health and wellness tourism with an asset-light model, forging partnerships across key destinations like Hainan, Yunnan, and Guanxi.
    Provinces spanned: around 30 domesticallyWellness facilities partnerships: over 45
    		————

    Operational metrics

    20
    Operating costs and expenses
    $1,443.7 million15.3% increase year-over-year
    Q4 FY26
    Cost of revenues
    $717.3 million25.9% increase year-over-year
    Q4 FY26
    Selling and marketing expense
    $262.5 million23.9% increase year-over-year
    Q4 FY26
    G&A expenses
    $463.9 million13.2% increase year-over-year
    Q4 FY26
    Share-based compensation expenses
    $22.7 million20.7% decrease year-over-year
    Q4 FY26

    Allocated to related operating costs and expenses.

    Non-GAAP operating income
    $110 million34.7% increase year-over-year
    Q4 FY26
    Net cash inflow from operations
    $518.7 million
    Q4 FY26
    Capital expenditure
    $99 million
    Q4 FY26
    Term deposits
    $1,366.8 million
    As of May 31, 2026
    Short-term investments
    $2,372.3 million
    As of May 31, 2026
    Deferred revenue
    $2,242.9 million14.8% increase year-over-year
    End of Q4 FY26

    Represents cash collected upfront from customers.

    OMO platform investment
    $31.2 million
    Q4 FY26

    Invested to improve and maintain the OMO platform.

    One-off expenses from restructuring
    $10 million to $15 million
    Q4 FY26

    Related to internal management restructuring, impacting core education margin.

    Cost savings
    Roughly $100 million
    FY26

    Achieved through cost control initiatives.

    New capacity added
    13%
    FY26
    New store openings
    170Down 40% from prior year
    Last year
    New Oriental Home registered families
    Over 950,000
    End of Q4 FY26
    New Oriental Home cumulative activity participation rates
    Around 70%
    Cumulative
    New Oriental Home latest campaign activation rate
    23%
    Latest campaign

    Significantly outperforming many public domain e-commerce platforms.

    New Oriental Home Grade 7 student retention
    10 basis pointsIncreased
    Summer to autumn

    Industry KPIs

    7
    MetricValueDetails
    EPS$0.56USD
    Revenue$1,529.5 millionUSD
    Net income$62.2 millionUSD
    Operating margin60 bpsbps
    Operating income EBIT$85.8 millionUSD
    Cash investments balance$5,560.3 millionUSD
    Share buyback capital return$274 millionUSD

    Product announcements

    2
    ProductTypeDetails
    AI-powered personalized learning platformlaunch
    New Oriental Home platformlaunch

    Risks & headwinds

    5
    Economic headwinds and external challengesOngoing

    Not quantified

    Mitigation: Relentless efforts to deliver the best to customers, focus on resilience and sustainable growth.

    Growth pressure in overseas-related businessQ4 FY26, expected to continue into FY27 (flattish or low single-digit growth)

    Overseas test prep revenue increase of 6% YoY; overseas study consulting revenue increase of 1% YoY.

    Mitigation: Restructuring of management teams, providing one-stop service, enhancing cost control, and aiming to gain market share.

    One-off expenses from internal restructuringQ4 FY26

    $10 million to $15 million

    Mitigation: These are one-time costs associated with efforts to improve operational efficiency and margin profile in the new year.

    Competition in the education marketSummer 2026

    Not quantified, but noted as less intense this summer compared to last year.

    Mitigation: Focus on product and service quality, driving student retention, and leveraging scale to take market share from smaller players.

    Impact of declining population on K-12 businessLong-term (3-5 years)

    Not quantified, but acknowledged as an 'issue'.

    Mitigation: Parents will choose quality education, allowing big players to gain market share; focus on product quality and service.

    What to watch in Q1 FY27

    5

    Total net revenue growth

    Q1 FY27
    Current23% YoY (Q4 FY26)
    TargetAccelerated growth (Q1 FY27)

    Why it matters

    Management expects to beat its annual FY27 guidance of 14-18% growth, with Q1 showing acceleration, indicating strong momentum.

    We do expect to beat our annual guidance in fiscal year '27. ... And we expect the improving summer enrollment trends that we have seen will drive accelerated revenue growth of the education business and the higher operational efficiency.

    Q&A highlights

    6

    Can you break down the FY27 revenue guidance into quarters, especially Q1 FY27, and comment on margin trends?

    Management is optimistic about FY27, guiding 14-18% revenue growth but expecting to beat it. They are changing to annual guidance to reflect long-term focus. Q1 FY27 is expected to show accelerated revenue growth due to strong summer enrollment and East Buy's contribution. Margin expansion is anticipated for FY27 and Q1, driven by cost control and operational efficiency.

    “And so given the positive momentum, I think including the healthy growth of our K-12 business and the recovery of the East Buy, I think we are now in a more optimistic position regarding our business outlook in fiscal year 2027. So we gave the guidance of the annual guidance in fiscal year 2027 in the range of 14% to 18%. I must mention that, as always, we're still conservative to give the annual guidance. We do expect to beat our annual guidance in fiscal year '27.”

    asked by Yiran Sheng · answered by Zhihui Yang

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Initiatives and Ecosystem Expansion

    New Oriental is expanding its strategic initiatives, notably with 'New Oriental Home,' a platform designed to serve the entire family unit. This platform integrates education services, East Buy offerings, and cultural tourism products into a unified ecosystem, demonstrating strong early traction with over 950,000 registered families across 69 pilot cities. It has achieved cumulative activity participation rates of around 70% and a 23% campaign activation rate, enhancing customer retention and cross-selling while lowering acquisition costs.

    02

    East Buy's Growth and Strategy

    East Buy remains a significant contributor, committed to '3 high' product standards (safety, quality, cost performance). It has expanded its multi-platform live streaming strategy to 18 channels and launched innovative operational programs. For FY27, East Buy plans to accelerate private label expansion, scale R&D, advance its app membership ecosystem, and leverage New Oriental's network for offline experience footprint expansion, optimizing supply chain and operational efficiency.

    03

    AI Integration and Product Innovation

    The company is embedding AI across its ecosystem, investing $31.2 million in its OMO platform this quarter. A proprietary AI-powered personalized learning platform has successfully completed its first deployment phase, achieving meaningful sales within 25 days. AI is used to enhance existing educational products, develop new solutions, and improve internal operational efficiency, aiming to differentiate New Oriental and save labor costs.

    04

    Capacity Expansion and Utilization

    In FY26, New Oriental added 13% new capacity. For FY27, it plans to open 10% to 15% new capacity, primarily in top-performing areas. Management expects top-line growth to outpace capacity expansion, leading to an increased average utilization rate in existing learning centers. This disciplined approach, combined with improved student retention, supports margin expansion.

    05

    Cost Control and Operational Efficiency

    New Oriental has been actively implementing cost control measures, saving approximately $100 million in FY26. The company is now entering Phase 2 of its cost control strategy, focusing on management team restructuring and leveraging AI to reduce staff costs. These efforts are expected to yield greater savings in FY27 and contribute to margin expansion across business lines, including the overseas-related business.

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