New Oriental Education & Technology Group Q2 Earnings Call Highlights

New Oriental Education & Technology Group (NYSE:EDU) reported fiscal 2026 second-quarter results that management described as strong, citing faster profit growth, improving margins, and traction from newer initiatives alongside steady performance in its core education business.

Quarterly results and margin improvement

Executive President and CFO Stephen Yang said the company’s focus on “operational efficiency and disciplined resource management” helped drive a significant improvement in profitability during the quarter. Total net revenue grew 14.7% year-over-year to $1.19 billion. Non-GAAP operating income more than tripled, up 206.9% to $89.1 million, while non-GAAP net income attributable to New Oriental increased 68.6% to $72.9 million.

On a GAAP basis, operating income rose 264.4% to $66.3 million, and net income attributable to New Oriental increased 42.3% to $45.5 million. Basic and diluted net income per ADS attributable to New Oriental were $0.29 and $0.28, respectively. Non-GAAP basic and diluted net income per ADS were $0.46 and $0.45, respectively.

Yang attributed the quarter’s non-GAAP operating margin expansion to “better utilization,” higher operating leverage, cost control, and profit contribution from East Buy. In response to an analyst question, he added that excluding East Buy, the remaining businesses together delivered roughly 300 basis points of year-over-year margin expansion, versus a total non-GAAP operating margin increase of 470 basis points for the group.

Expense trends and cash position

Operating costs and expenses totaled $1,125.1 million, up 10.4% year-over-year. Cost of revenues increased 11.8% to $556.9 million. Selling and marketing expenses decreased 1.1% to $194.0 million, while general and administrative expenses increased 15.2% to $374.3 million. Share-based compensation rose 156.8% to $21.4 million for the quarter.

Net cash flow generated from operations was approximately $323.5 million, and capital expenditures were $23.7 million.

On the balance sheet, as of Nov. 30, 2025, New Oriental reported:

• Cash and cash equivalents of $1,842.9 million
• Term deposits of $1,609.9 million
• Short-term investments of $1,875.2 million

Deferred revenue was $2,161.5 million, up 10.2% from $1,960.6 million a year earlier, which management noted reflects cash collected upfront from customers to be recognized as services or goods are delivered.

Business highlights: K-12 momentum, overseas resilience, and newer initiatives

Management emphasized that K-9 new educational business and high school tutoring posted accelerated revenue growth compared with the prior quarter. Yang said the company shifted strategy at the start of the fiscal year to slow learning center expansion to roughly 10% (from 20%–30% previously) and put greater focus on product and service quality. He said the company has seen higher student retention rates and improved customer feedback as a result, supporting “better word of mouth” and reducing the need for heavy marketing spend.

Within overseas-related businesses, New Oriental described resilience amid macro headwinds. Overseas test preparation revenue increased 4% year-over-year, while overseas study consulting revenue declined about 3% year-over-year. The adults and university students business grew 13% year-over-year.

Yang also discussed continued investments in non-academic tutoring and intelligent learning systems and devices, saying the combined new education initiative grew revenue 22% year-over-year. The company said non-academic tutoring had been rolled out to around 60 existing cities, with top 10 cities contributing over 60% of revenue. Intelligent learning systems and devices were launched in around 60 cities, with top 10 cities contributing over 50% of that business.

In tourism-related initiatives, the company said its domestic and international study tours and research camps for K-12 and university students were held in 55 cities, with the top 10 cities contributing over 50% of revenue. New Oriental also said a newer tourism offering for middle-aged and senior citizens was now available in 30 key provinces and international markets, and that it is exploring senior-focused health and wellness opportunities by partnering with more than 30 health and wellness spaces in locations including Hainan, Yunnan, and Guangxi, using a “light asset model.”

OMO and AI initiatives

Management said it continued to revamp its online-merge-offline (OMO) teaching platform to provide more diversified services. The company invested $28.4 million during the quarter to upgrade and maintain OMO platforms.

Yang also addressed artificial intelligence efforts, saying the company has been refining and embedding AI across offerings and using it to streamline internal operations. He told analysts that the team had worked on “new offerings” over the past three months and wanted additional time to test them, while also suggesting AI has already supported improvements in retention and may help reduce expenses through efficiency gains.

East Buy update, guidance raise, and shareholder returns

Yang said East Buy made progress in product development and supply chain enhancements and has broadened its assortment beyond fresh foods and snacks. As of period-end, private label SKUs reached 801, with added categories including seafood, healthcare products, condiments, meats, eggs and dairy, personal care, household and cleaning items, paper goods, home textiles, apparel, and underwear. He said East Buy has also begun exploring offline channels, leveraging brand recognition and New Oriental’s learning center network, noting the vending machine model was profitable in select cities and that the company plans to scale it nationwide.

For outlook, the company guided third-quarter fiscal 2026 total net revenue (including East Buy) to a range of $1,313.2 million to $1,348.7 million, representing year-over-year growth of 11% to 14%. For the full fiscal year 2026, management raised total net revenue guidance to $5,292.3 million to $5,488.3 million, implying year-over-year growth of 8% to 12%. Yang said the outlook reflects current views and considers recent regulatory developments and preliminary market conditions.

Management also provided an update on shareholder returns. The company previously announced an ordinary dividend of $0.12 per common share, or $1.2 per ADS, to be distributed in two installments for fiscal 2026; Yang said the first installment has been fully paid and that details of the second will be announced later. New Oriental also has authorization to repurchase up to $300 million of ADS or common shares over 12 months; as of Jan. 27, it had repurchased about 1.6 million ADS for approximately $86.3 million in the open market.

About New Oriental Education & Technology Group (NYSE:EDU)

New Oriental Education & Technology Group (NYSE: EDU) is one of China’s leading providers of private educational services, specializing in language training, test preparation and consulting for overseas study. The company’s offerings span a range of subjects, including English language instruction, preparatory courses for examinations such as the TOEFL, GRE and GMAT, and K-12 after-school tutoring. New Oriental’s curriculum is delivered through a combination of in-person learning centers and digital platforms, enabling students across various regions to access its educational resources.

Founded in 1993 by Michael Yu Minhong in Beijing, New Oriental began as a small language school and quickly expanded its footprint.