New Oriental Education & Technology Group (EDU) Q2 2025 earnings summary

Executive summary

• Net revenues for Q2 FY2025 rose 19.4% year over year to $1,038.6M; core education business revenue (excluding East Buy) up 31.3% year over year.

• Net income attributable to the company was $31.9 million, up 6.2% year over year; non-GAAP net income was $35.5 million, up 29.1% year over year.

• New business initiatives, including non-academic children’s programs and intelligent learning systems, recorded 42.6% year-over-year revenue growth.

• Tourism-related business line saw a 233% year-over-year revenue increase.

• Overseas test prep and study consulting grew 21.1% and 31.0% year over year, respectively; domestic adult/university test prep up 34.9%.

Financial highlights

• Operating income for Q2 FY2025 was $19.3M, down 9.8% year over year; non-GAAP operating income was $27.6M, down 45.8% year over year.

• Operating margin for Q2 FY2025 was 1.9%; non-GAAP operating margin was 2.7%.

• Operating costs and expenses rose 20.2% year over year to $1,019.4 million; cost of revenue increased 17.9% to $498.3 million.

• Cash, term deposits, and short-term investments totaled $4.8B at quarter end.

• Deferred revenue at Q2 FY2025 end was $1,960.6M, up 19.2% year over year.

Outlook and guidance

• Q3 FY2025 net revenues (excluding East Buy) expected between $1,007.3M and $1,032.5M, up 18–21% year over year in USD, or 20–23% in RMB.

• Full-year revenue growth guidance in RMB terms is 25% or more, reflecting a slight deceleration due to macroeconomic headwinds.

• Management will balance capacity expansion with operating efficiency, focusing on cities with strong local economies.