New Oriental Education & Technology Group (EDU) Q1 2025 earnings summary

Executive summary

• Net revenues rose 30.5% year-over-year to $1,435.4 million for Q1 FY2025, with core education revenues up 33.5%.

• Core educational business delivered strong bottom-line results, with significant contributions from new business initiatives, including non-academic tutoring and tourism-related services.

• Expansion included 1,089 schools and learning centers as of August 31, 2024, up from 793 a year earlier.

• New educational business initiatives and tourism-related business lines showed robust momentum and material revenue growth.

Financial highlights

• Operating income was $293.2 million, up 42.9% year-over-year; non-GAAP operating income was $300 million, up 22.6%.

• Net income attributable to shareholders was $245.4 million, up 48.4% year-over-year; non-GAAP net income was $264.7 million, up 39.8%.

• Basic and diluted net income per ADS were $1.49 and $1.48, respectively; non-GAAP per ADS were $1.61 and $1.60.

• Operating margin (excluding East Buy) reached 23.7% (up 370 bps); non-GAAP: 24.4% (up 220 bps).

• Net cash flow from operations was $183.2 million; capital expenditures were $80.2 million.

• Cash, term deposits, and short-term investments totaled approximately $4.9 billion as of August 31, 2024.

Outlook and guidance

• Q2 FY2025 net revenues (excluding East Buy) expected to be $851.4–$871.8 million, up 25–28% year-over-year.

• Full-year revenue growth (excluding East Buy) expected around 30% year-over-year.

• Operating margin (excluding East Buy) for FY2025 expected to expand year-over-year.

• Capacity expansion planned at 20–25% for FY2025, with focus on cities showing strong performance.

• Margin pressure anticipated in Q2 due to seasonality and tourism business drag, but margin expansion expected for the full year.