New Oriental Education & Technology Group Inc.'s Net Income Declines 73.7% While Revenue Increases

New Oriental Education & Technology Group Inc. (EDU) reported net revenues of $1,243.2 million for the fourth fiscal quarter of 2025, an increase of 9.4% year over year. However, net income attributable to New Oriental decreased significantly by 73.7% year over year to $7.1 million for the same period. The reported revenue of $1,243.2 million surpassed the analyst estimate of $1186.86 million, indicating a beat on revenue expectations, while the reported EPS of $0.04 missed the analyst estimate of $0.29.

Key Business Drivers

The company's growth was primarily fueled by new educational business initiatives, which saw revenue growth of 32.5% year over year. Specifically, revenues from overseas test preparation and overseas study consulting businesses increased by approximately 14.6% and 8.2% year over year, respectively. The domestic test preparation business targeting adults and university students also experienced a notable increase of approximately 17.0% year over year. The company's non-academic tutoring courses attracted around 918,000 student enrollments in approximately 60 cities, while intelligent learning systems and devices recorded about 255,000 active paid users in the same number of cities.

Management Outlook and Strategy

Management highlighted a focus on solidifying long-term development strategy and intensifying efforts on the core educational business in the new fiscal year. This includes enhancing product capabilities and quality, developing educational resources, and improving operational efficiency. The company also detailed investments in revamping its OMO (online-merge-offline) teaching system and integrating AI technologies across its education ecosystem, including the launch of a new AI-powered Intelligent Learning Device and Smart Study Solution.

Financial Efficiency and Shareholder Return

Despite a slowdown in revenue growth from overseas-related businesses and investments in newly integrated tourism-related businesses, the non-GAAP operating margin, excluding East Buy's private label products and livestreaming business, improved to 6.5% for the quarter. The company plans to continue cost optimization and efficiency enhancement initiatives. Furthermore, the Board approved a new three-year shareholder return plan, effective from fiscal year 2026, committing no less than 50% of the net income attributable to New Oriental for the preceding fiscal year to be returned to shareholders through dividends and/or share repurchases.

Fiscal Year 2026 Outlook

For the first quarter of fiscal year 2026 (June 1, 2025 to August 31, 2025), New Oriental anticipates total net revenues to range from $1,464.1 million to $1,507.2 million, representing a year-over-year increase of 2% to 5%. For the full fiscal year 2026 (June 1, 2025 to May 31, 2026), the company projects total net revenues to be between $5,145.3 million and $5,390.3 million, indicating a year-over-year increase of 5% to 10%.