New Oriental Education & Technology Group, Inc. Q1 FY2025 earnings call

• The company had top-line growth of 30.5% this quarter, total net revenues excluding East Buy and livestreaming up 33.5% year-over-year. - Core educational business operating margin 23.7%, non-GAAP operating margin 24.4%, improvement of 370 and 220 basis points year-over-year respectively. - New educational initiatives: non-academic tutoring with 484,000 enrollments, intelligent learning system with 323,000 active paid users, revenue up 50% year-over-year. - Tourism-related: study tours and research camps up 221% year-over-year, expanded to middle-aged and elderly. - OMO system: invested $24.6 million in revamping platform. - East Buy: launched 488 SKUs, expanded channels, plans offline expansion. - Financial position: cash and cash equivalents, term deposits, short-term investments total ~$4.9 billion; share repurchase program extended to May 31, 2025, authorized to repurchase up to $700 million.

Total net revenues excluding East Buy private label products and livestreaming business increased by 33.5% year-over-year. Overseas test prep business had a 19% year-over-year revenue increase. Overseas study consulting business saw a ~21% year-over-year revenue increase. Adults and university students business had a 30% year-over-year revenue increase. New educational initiatives: non-academic tutoring had ~484,000 student enrollments in around 60 cities, top 10 cities contribute over 60% of this business; intelligent learning system and device business adopted in around 60 cities, ~323,000 active paid users, top 10 cities contribute ~55%; new educational initiatives revenue up 50% year-over-year. Tourism-related: study tour and research camp for K-12 and university age up 221% year-over-year, operated in over 55 cities, top 10 cities contribute over 55% revenue share. East Buy: launched 488 SKUs in private label products since April 2022, expanded to multi-channels like Tmall, JD, etc., plans to explore offline channels.

• Total net revenues excluding East Buy in Q2 FY2025 (Sep 1, 2024 - Nov 30, 2024) expected $851.4M - $871.8M, +25% - 28% year-over-year. - Plan to increase capacity by 20% - 25% for FY2025, focusing on cities with good performance. - Q2 likely has minor margin pressure due to seasonality, but optimistic about Q3 and Q4 margins. - Tourism business profitable in Q1 but expects to be loss-making for the whole year, but confident in development.

• Seasonality affecting margins in Q2. - Uncertainties in tourism business model development. - Regulatory risks as mentioned in SEC filings.

Q: About Q2 guidance and capacity growth gap A: Stephen Yang explained Q2 is seasonally slower, but full year revenue growth expected ~30%, Q3/Q4 will see accelerated growth Q: Capacity expansion and margins A: Plan to expand capacity 20%-25% year-over-year, Q2 may have minor margin pressure but full year margins expected to expand Q: Margin improvement drivers A: Top-line growth, learning center expansion utilization, cost control Q: Tourism business revenue and profitability A: Q1 tourism revenue ~$90M, profitable in Q1 but loss-making for the whole year, confident in development Q: New business growth breakdown A: Non-academic tutoring ~half, intelligent learning device ~third of new educational business, smaller categories included Q: Q2 guidance breakdown by segment A: Overseas-related over 20%, domestic test prep/university students over 30%, high school ~20%, new businesses over 50% Q: East Buy in guidance A: Guidance excludes East Buy, East Buy's financials to be announced next quarter