New Oriental Education & Technology Group (EDU) Q4 2024 earnings summary

Executive summary

• Fiscal year 2024 net revenues rose 43.9% year over year to $4,313.6 million, with Q4 revenues up 32.1% to $1,136.7 million, driven by strong demand and innovative business ventures.

• Operating income for FY2024 increased 84.4% to $350.4 million; Q4 operating income fell 78.1% year over year to $10.5 million due to expansion and integration costs.

• Net income attributable to shareholders for FY2024 was $309.6 million, up 74.6% year over year; Q4 net income was $27.0 million, down 6.9%.

• New business initiatives, including non-academic tutoring and intelligent learning systems, saw strong momentum, with 50.3% revenue growth year over year in Q4.

• The number of schools and learning centers reached 1,025 as of May 31, 2024, up from 748 a year earlier.

Financial highlights

• Q4 FY2024 net revenues: $1,136.7 million (+32.1% YoY); FY2024: $4,313.6 million (+43.9% YoY).

• Q4 operating income: $10.5 million (-78.1% YoY); FY2024: $350.4 million (+84.4% YoY).

• Q4 net income: $27.0 million (-6.9% YoY); FY2024: $309.6 million (+74.6% YoY).

• Q4 non-GAAP net income: $36.9 million (-40.5% YoY); FY2024: $381.1 million (+47.2% YoY).

• Cash, term deposits, and short-term investments totaled $4,944.4 million at Q4-end.

Outlook and guidance

• Q1 FY2025 net revenues (excluding East Buy/private label and livestreaming) expected at $1,254.7–$1,283.5 million, up 31–34% year over year.

• Expect operating margin (excluding East Buy) to expand year-over-year in Q1 FY2025 and deliver satisfactory operating profit for FY2025.

• Plan to increase capacity by 20%-25% in FY2025, focusing on cities with strong performance.

• Anticipate margin expansion of 200 basis points year-over-year in Q1 FY2025 for the educational business (excluding East Buy).

• Tourism business expected to reach RMB 1.2 billion revenue in FY2025, with a projected loss of RMB 100 million.