TAL Education Group (TAL) Q1 FY27 earnings call: guidance and Q&A

Could you please share some color on Peiyou's business momentum, including current revenue growth trends, overall business health, learning center expansion plans and also summer enrollment performance? And looking ahead, how should we think about Peiyou's growth trajectory over the next 2 to 3 years and what are the key growth drivers behind?

Alex Peng stated Peiyou offline delivered double-digit YoY growth, maintained over 80% retention, and is expanding learning centers in 44 cities with over 600 centers. He emphasized human-centric learning enhanced by technology (e.g., dual smart screen solution) and curriculum development. He expressed confidence in continued healthy long-term growth due to product capabilities, solid demand, and a fragmented market.

“So in the first quarter, our Peiyou offline business really continued to deliver double-digit year-over-year growth. That's the first thing I want to register.”

asked by Jenny Yuan · answered by Zhuangzhuang Peng

Just wondering how do you view the overall demand trend for this fiscal year in this specific market? What are the strategic priorities and the profitability level of your learning device business? And this year, we are seeing a softer consumer electronics market, including the learning devices demand and also the BOM cost increased quite a bit. Just wondering what is your latest strategy in this business segment and how do you prioritize volume, pricing and margins within this learning devices segment?

Alex Peng confirmed YoY revenue growth and bottom-line improvement for learning devices despite a volatile market with competition, shifting sentiment, and rising component costs. He outlined measures to optimize inventory, streamline SKUs, and improve operating efficiency to mitigate cost pressures. He reiterated commitment to strategic investment in the segment due to its value in AI-driven personalization and content access, citing over 2 million active devices with 80% weekly active usage.

“The learning device market continues to be shaped by respectable competition, shifting consumer sentiment and, as you said, rising component costs. So we really see all of these result in increased market volatility and we expect these dynamics to persist into fiscal year 2027.”

asked by Timothy Zhao · answered by Zhuangzhuang Peng

Could you provide more color on revenue growth and profitability? In addition, could you share any further color for the rest of this fiscal year?

Jackson Ding explained that revenue growth is normalizing and expected to moderate. Peiyou offline, the largest contributor, showed double-digit YoY growth. Learning devices face market volatility, with focus on product experience and operating efficiency. He emphasized profitability as a key priority, noting operating leverage and expense discipline. He stated the company aims for continued operating margin improvement in FY27, building on an 8 percentage point improvement in FY26 vs FY25.

“As the scale of the business expands, you have seen our growth rate normalizing over the last few quarters and we expect growth rate to continue to moderate in the next quarter.”

asked by Jing Yuan · answered by Jackson Ding

I noticed there is a big increase in other income this quarter. Could you explain on that as well as the significant increase in the long-term investment if you look at the balance sheet?

Jackson Ding attributed the increase in other income primarily to higher valuations for some investment holdings, noting these are market-driven and may not recur. The increase in long-term investments reflects both higher valuations and ongoing capital deployment into the company's portfolio, which includes wealth management products, equity stakes, and acquisitions.

“In this past quarter, valuations for some of our investment holdings increased and that's the primary driver of an increase in our other income.”

asked by Yiran Sheng · answered by Jackson Ding

My question is regarding the shareholder return. I want to ask on top of the annual share buyback plan, do we have a more formal and holistic capital return policy? And especially, I think in the past 6 to 12 months, the pressure on the U.S. listed Chinese stocks actually are pretty high so prices are very volatile. sentiment has been changed a lot. So will we have any plan to increase the size or faster pace of share repurchase in the next year or in the longer term?

Jackson Ding affirmed that returning value to shareholders is important. He mentioned $210 million in buybacks over the last 12 months, with $41 million in the past quarter. He stated the company intends to implement a more systematic and regular approach to capital returns, focusing on a stable stream of value for long-term shareholders, while continuing prudent execution of the current program.

“Ultimately, our focus is on delivering an ongoing and relatively stable stream of value to reward those who hold long-term conviction in our company.”

asked by Eddy Wang · answered by Jackson Ding