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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with a 30.5% revenue increase and 23.7% operating margin. The optimistic guidance and strategic initiatives, including capacity expansion and AI integration, are positive indicators. The extended share repurchase program is also a favorable signal. Despite some concerns about cost increases and unclear responses on tourism margins, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
Total Net Revenues $1,142.3 million, representing a 30.5% increase year-over-year.
Operating Margin 23.7%, representing a 370-basis-point improvement year-over-year.
Non-GAAP Operating Margin 24.4%, representing a 220-basis-point improvement year-over-year.
Operating Income $293.2 million, representing a 42.9% increase year-over-year.
Non-GAAP Income from Operations $300 million, representing a 22.6% increase year-over-year.
Net Income Attributable to New Oriental $245.4 million, representing a 48.4% increase year-over-year.
Non-GAAP Net Income Attributable to New Oriental $264.7 million, representing a 39.8% increase year-over-year.
Basic and Diluted Net Income per ADS $1.49 and $1.48, respectively.
Non-GAAP Basic and Diluted Net Income per ADS $1.61 and $1.60, respectively.
Cash and Cash Equivalents Approximately $4.9 billion.
Operating Costs and Expenses $1,142.3 million, representing a 27.6% increase year-over-year.
Non-GAAP Operating Costs and Expenses $1,135.4 million, representing a 32.8% increase year-over-year.
Cost of Revenues $583.5 million, representing a 32.3% increase year-over-year.
Selling and Marketing Expenses $193.7 million, representing a 42.3% increase year-over-year.
G&A Expenses $365.1 million, representing a 15% increase year-over-year.
Non-GAAP G&A Expenses $354.5 million, representing a 22.1% increase year-over-year.
Total Share-Based Compensation Expenses $6.9 million, a decrease of 82.7% year-over-year.
Net Cash Flow Generated from Operations Approximately $183.2 million.
Capital Expenditure $80.2 million.
Deferred Revenue $733.1 million, an increase of 23.7% year-over-year.
Non-academic tutoring courses: Approximately 484,000 student enrollments recorded in this quarter, focusing on cultivating students' innovative ability and comprehensive quality.
Intelligent learning system and device business: Adopted in around 60 cities with approximately 323,000 active paid users reported this quarter.
Cultural tourism business: Study tour and research camp business for K-12 and university age achieved a revenue increase of 221% year-over-year.
Overseas test prep business: Recorded a revenue increase of 19% year-over-year.
Overseas study consulting business: Recorded a revenue increase of about 21% year-over-year.
Adults and university students business: Recorded a revenue increase of 30% year-over-year.
Operating margin: Operating margin reached 23.7%, representing a 370-basis-point improvement year-over-year.
Investment in OMO teaching platform: $24.6 million invested to enhance educational services.
Share repurchase program: Authorized to repurchase up to $700 million of the company ADS or common shares through May 31, 2025.
Capacity expansion: Plan to increase capacity by around 20% to 25% for the fiscal year.
Regulatory Risks: The company acknowledges the impact of existing regulatory measures on its business operations and forecasts, indicating a need for compliance with relevant policies and guidelines.
Economic Environment: Management noted the influence of the current economic environment on overseas-related business, suggesting potential challenges in revenue generation from this segment.
Capacity Expansion Risks: There is a cautious approach to capacity expansion due to the seasonal nature of the business, with potential margin pressures anticipated in the second quarter.
Tourism Business Challenges: The tourism-related business is expected to incur losses in the upcoming quarters as it is still in its initial stages, requiring time to establish effective products and business models.
Market Competition: The company faces competitive pressures in the educational sector, necessitating ongoing investments in technology and service offerings to maintain market share.
Operational Costs: Increased operating costs and expenses, particularly related to capacity expansion and marketing, may impact profitability in the short term.
Top-line Growth: Achieved a top-line growth of 30.5% this quarter, with total net revenues (excluding East Buy) increasing by 33.5% year-over-year.
New Educational Initiatives: New educational business initiatives recorded a revenue increase of 50% year-over-year, with significant contributions from non-academic tutoring and intelligent learning systems.
Capacity Expansion: Plans to increase capacity by 20% to 25% for the fiscal year, focusing on cities with better performance.
Tourism-Related Business: Newly integrated tourism-related business line achieved a revenue increase of 221% year-over-year.
Investment in OMO System: Invested $24.6 million in the OMO teaching platform to enhance educational services.
Share Repurchase Program: Board approved an increase in the share repurchase program from $400 million to $700 million, extending the program to May 31, 2025.
Q2 Revenue Guidance: Expect total net revenues (excluding East Buy) for Q2 FY 2025 to be in the range of $851.4 million to $871.8 million, representing a year-over-year increase of 25% to 28%.
Operating Margin Outlook: Expect operating margin for the whole company (excluding East Buy) to expand year-over-year for FY 2025.
Full Year Revenue Growth: Anticipate steady growth of around 30% year-over-year for the full fiscal year, with Q3 and Q4 expected to accelerate compared to Q2.
Tourism Business Outlook: Expect the tourism business to be profitable in Q1 but anticipate losses for the full year as the business model is still being tested.
Share Repurchase Program: The company's Board of Directors approved a share repurchase program in July 2022, authorizing the repurchase of up to $400 million of the company's ADS or common shares over the next 12 months. This program has been extended to May 31, 2025, with the aggregate value increased to $700 million. As of October 22, 2024, approximately 9.8 million ADS have been repurchased for about $457.9 million.
The earnings call reflects a positive sentiment due to revenue growth in educational initiatives, operating income increase, and a strong shareholder return plan. Despite some declines in net income, the optimistic growth outlook in K-12 and high school segments, margin expansion, and strategic cost control measures indicate positive future performance. The Q&A insights emphasize management's confidence in overcoming competitive challenges and maintaining high shareholder returns. However, increased SBC expenses and lack of specific guidance details introduce some caution, but overall, the sentiment leans positive, predicting a stock price increase of 2% to 8%.
The earnings call presents a positive outlook with a 59.4% revenue increase and strong cash flow. The Q&A reveals challenges such as economic factors affecting guidance but also highlights optimism in margin improvements and K-12 growth. The expanded share repurchase program and expected margin expansion further support a positive sentiment. Despite some uncertainties in non-academic segments, the overall guidance and strategic initiatives indicate a favorable stock price movement.
Earnings call summary presents mixed signals: revenue miss but optimistic growth in several segments; strong share repurchase plan, but increased expenses and flat non-GAAP income. Q&A reveals concerns about overseas growth and competition, but management expects margin expansion and growth in core segments. Overall, the sentiment is balanced with both positive and negative factors, leading to a neutral prediction.
The earnings call reveals strong financial performance with a 30.5% revenue increase and 23.7% operating margin. The optimistic guidance and strategic initiatives, including capacity expansion and AI integration, are positive indicators. The extended share repurchase program is also a favorable signal. Despite some concerns about cost increases and unclear responses on tourism margins, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
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