New Oriental Education & Technology Group (EDU) Q1 2026 earnings summary

Executive summary

• Net revenues rose 6.1% year-over-year to $1,523.0 million for Q1 FY2026, surpassing expectations and driven by operational resilience and sustainable profitability.

• Operating income increased 6.0% year-over-year to $310.8 million; non-GAAP operating margin improved by 100 basis points to 22%.

• Net income attributable to shareholders decreased 1.9% year-over-year to $240.7 million; non-GAAP net income was $258.3 million, down 1.6%.

• Strong growth in domestic adult/university test prep (+14.4%) and new educational initiatives (+15.3%), supported by technology investments including AI and OMO platforms.

• AI-powered learning devices and OMO system integration advanced, with 452,000 active paid users.

Financial highlights

• Operating costs and expenses rose 6.1% year-over-year to $1,212.2 million; cost of revenues up 9.3% to $637.8 million.

• Non-GAAP operating income was $335.5 million, up 11.3% year-over-year.

• Net cash flow from operations was $192.3 million; capital expenditure was $55.4 million.

• Cash and cash equivalents stood at $1,282.3 million; short-term investments at $2,178.1 million.

• Deferred revenue increased 10% year-over-year to $1,906.7 million.

Outlook and guidance

• Q2 FY2026 net revenues expected between $1,132.1 million and $1,263.3 million, up 9–12% year-over-year.

• Full fiscal year 2026 net revenue guidance reaffirmed at $5,145.3 million–$5,390.3 million, up 5–10% year-over-year.

• K-12 business projected to accelerate, with K-9 segment expected to grow over 20% and high school segment in double digits for the year.

• Margin expansion anticipated to continue in Q2 and for the full year.