TAL Education Group (NYSE:TAL) reported first-quarter fiscal 2027 revenue growth and a substantial improvement in profitability, supported by its offline Peiyou learning programs, learning-device business and lower sales and marketing expenses.
The company reported revenue of RMB5.19 billion for the quarter, up 25% year over year in RMB terms. Management cited different U.S. dollar revenue figures during the call: President and Chief Financial Officer Alex Peng said net revenue was $758 million, while Deputy Chief Financial Officer Jackson Ding cited $658 million. Both figures were associated with RMB5.19 billion and 32% year-over-year growth in U.S. dollar terms.
Offline Programs Remain Largest Revenue Contributor
Peng said the company’s offline Peiyou learning programs continued to post healthy growth, with the business delivering double-digit year-over-year growth during the quarter. Peiyou remains TAL’s largest revenue contributor, Ding said.
TAL attributed the performance to steady demand, service quality, user recognition and its network of learning centers. The company operates in 44 cities in mainland China and select international markets, with more than 600 learning centers in total.
Peiyou retention remained above 80% in the first quarter, consistent with the prior year, Peng said. The company is continuing to expand its learning-center network at what management described as a measured pace, focusing on local demand, user receptivity, organizational capabilities and business health.
Management said it was strengthening classroom technology, including its dual smart large- and small-screen system. Peng said the smaller screens allow students to participate in interactive learning games, earn points and record performance throughout lessons.
Looking ahead, Peng said TAL expects offline Peiyou programs to grow at a healthy pace over the longer term, citing demand for offline learning and a fragmented market.
Learning Devices Grow Despite Volatile Market
TAL said revenue from learning devices increased year over year, while the business also improved its bottom-line performance. The company launched its T6 series of learning tablets in July, featuring upgrades to AI capabilities, content and hardware.
The T6 series includes an AI learning companion for recorded courses that offers pre-class guidance, real-time feedback, post-class summaries, question-and-answer support, diagnostics, study plans and AI-generated notes, according to management.
Weekly active learning devices exceeded 2 million during the quarter. The weekly active rate was around 80%, and users averaged about one hour of daily active usage per device, Peng said.
Management acknowledged that the learning-device market faces heightened competition, changing consumer sentiment and rising component costs, including higher memory-chip costs. TAL said it has responded by optimizing inventory, streamlining stock-keeping units and refining its product portfolio. The company expects market volatility to persist through fiscal 2027.
Margin Expansion and Capital Allocation
Cost of revenue rose 23% year over year to $320 million, while gross profit increased 39% to $438 million. Gross margin expanded to 57.8% from 54.9% a year earlier.
Selling and marketing expense declined 5% to $172 million, falling to 22% of revenue from 31% in the prior-year period. General and administrative expense increased 7% to $129 million but declined as a share of revenue to 16% from 20%.
As of May 31, 2026, TAL held approximately $1.6 billion in cash and cash equivalents, $1.2 billion in short-term investments and $306 million in restricted cash. Deferred revenue totaled approximately $1.2 billion, while operating cash flow was $478 million for the quarter.
Ding said increased valuations of some investment holdings were the primary driver of higher other income during the period, cautioning that such gains were driven by market movements and may not recur.
The board extended TAL’s share-repurchase program for 12 months in July. The company may repurchase up to approximately $393.7 million of common shares through July 28, 2027. Between April 23 and July 28, TAL repurchased approximately 1.2 million shares for about $41 million.
For fiscal 2027, management said it expects revenue growth to moderate as the business scales, while continuing to pursue improved operating margin, disciplined execution and sustainable profitability.
About TAL Education Group (NYSE:TAL)
TAL Education Group is a leading provider of after-school tutoring services in China, specializing in K-12 academic instruction. The company offers a range of programs designed to help primary and secondary school students strengthen their core competencies in subjects such as mathematics, English, Chinese language and science. TAL leverages both in-person learning centers and digital platforms to deliver its curriculum, aiming to support student progress through interactive lessons and personalized study plans.
Founded in 2003 and headquartered in Beijing, TAL Education Group has grown into one of China’s largest private education firms.
