New Oriental Education & Technology Group, Inc.

Good evening, and thank you for standing by for New Orientals FY 2022 Third Quarter Results Earnings Conference Call. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Ms. Cici Zhao.

Thank you. Hello, everyone, and welcome to New Oriental's third fiscal quarter 2022 earnings conference call. Our financial results for the period were released earlier today and are available on the company's website as well as on NewsWare services. Today, you will hear from Stephen Yeung, Executive President and Chief Financial Officer. After his prepared remarks, Stephen and I will be available to answer your questions. Before we continue, please note that The discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public findings with the SEC. New Oriental does not undertake any obligation to update any forward-looking statements, except as required under applicable law. As a reminder, this conference has been recorded. In addition, a webcast of this conference call will be available on New Oriental Investor Relations website at investor.neworiental.org. I will now turn the call over to Mr. Yang. Stephen, please go ahead.

Thank you, Cici. Hello, everyone. Thank you for joining us on the call. Before we begin, I would like to convey our sympathy to all the people who have been impacted by the pandemic, and thank all the healthcare heroes and local authorities for their hard work and commitment during this difficult time. It's been a while since our last Earnings Conference call, and we would like to take the opportunity to extend our gratitude gratitude to those who have been supporting and believing in New Oriental. While our business in the previous quarters was perhaps characterized by the significant cost incurred from cancellation of class, closure of the schools and learning centers, and employee layoffs as a result of government policy introduced last year, this quarter was about turning over a new leaf with new and decisive endeavors in innovative business opportunities as the company embarks on a fresh journey that strives to encourage all-round development of students. Despite the challenges the company is facing during this restructuring phase, we are pleased to see a promising trend in our key remaining businesses and positive momentum emerging across many of our new initiatives as we announced the latest settled financial results. Our key remaining business have shown remarkable resilience as oversea test drive business and oversea study consulting business recorded the year-over-year revenue growth of about 8% and 26%, respectively, for the first nine months of the current fiscal year. In same period, our adult and university students' business has performed exceptionally and recorded a rapid growth of approximately 59% year-over-year. Simultaneously, our management team's entrepreneurial spirit has come to the forefront at such time of the change. And we have been exploring new business opportunities, including non-academic tutoring, intelligent learning system device, study tour and research camp. educational material and digitalized smart study solutions, as well as exam prep courses designed for the students with junior college diplomas to obtain a bachelor's degree. Now I would like to spend some time to talk about this quarter's performance across our remaining business lines and introducing our new initiatives in detail. Our key remaining business got a promising trend, breaking it down. The overseas test drive business recorded the revenue increase of about 8% in dollar terms for the first nine months of this fiscal year. The overseas study consulting business recorded revenue increase about 26% in dollar terms year-over-year for the first nine months of this year. The domestic test drive business targeting adults and the university students recorded the rapid growth of approximately 59% year-over-year for the first nine months of this year. As for our new business initiatives, we have launched five new initiatives in the past month, which mostly revolve around facilitating students all around development. I'm glad to share with you that these new initiatives have shown positive momentum. Firstly, the non-dynamic children business which we have rolled out in over 60 existing cities, focused on cultivating students' innovative ability and comprehensive quality, we're happy to see increased market penetration in those markets we have tapped into. The top 10 cities in China have contributed more than 60% of the revenue of this business. Secondly, the intelligence learning system and device business It's a service designed to provide a tailored digital learning experience for students. It utilized our past teaching experience data and technology to provide personalized and targeted learning and exercise content together with our teachers monitoring and accessing the learning curve for our students as a backend system. The new educational service not only greatly improves students' learning efficiency, but also cultivates students' proactive learning habits. We have tested its adoption in over 50 existing cities and are delighted to see improved customer retention and scalability of this new initiative. The revenue contribution of these initiatives from the top 10 cities in China is over 65%. Meanwhile, the study tour and research camp business is an initiative that aims at offering students the opportunity to fully leverage their free time and holidays to broaden the scope of knowledge and cultivate subject interest. We have conducted the study tours and the research camp in over 50 cities across the country. The revenue contribution of these initiatives from the top 10 cities in China is over 55%. We're also very excited about the prospect of the educational material and digitalized smart study solutions. A self-learning system leveraging advanced technology that enables students to have complete control over the pace and flexibility of learning in an age where remote learning becomes increasingly mainstream. In addition, Murento's smart education business comprise the smart teaching, smart hardware, science and technology innovation education, and other service, providing high quality educational resources and comprehensive services for local governments, educational authorities, primary and secondary schools and kindergartens. The products and services related to scientific enlightenment, aerospace feature, and artificial intelligence, smart education business, have presence in over 2,000 kindergartens and over 500 primary and secondary schools across the country. Last but not least, one other new initiative I would like to share is exam prep course designed for students with junior college diplomas to obtain bachelor's degrees. It has become a very common goal among many associate degree holders in the country to progress further in their education ladder by applying to university and we saw this gap in the market is providing them prep service to these diplomas and college students who would require support in taking that leap forward to the university level. We're piloting such courses in some higher tier cities now and plan to roll it out to more cities in the next fiscal year. During the last two fiscal quarters, we have been fully committed to complying with government policy. As a result, the total number of schools and learning centers was reduced to 847 by the end of this fiscal quarter. The significant change in our structure has underscored the importance of our industry-leading OMO system. which have been one of the consistent during the company's restructuring phase as we remained committed to investing in the R&D of the technology. The OMO has been instrumental during the restructuring process as well as the COVID-19 outbreaks in certain part of China where strong flexibility is required in migrating students between online and offline classes to minimize learning disruption. We continue to our efforts in developing and revamping our OMO teaching platform and kept leveraging our education infrastructure and technology strengths across our remaining key business and new initiatives to prove more advanced and diversify the education service to our customers for all ages. We invested $27 million in a quarter and $129 million in the first three quarters of this fiscal year. to improve and maintain our OMO teaching platform, which ensured that our high-quality service to students during the pandemic is uncompromised. Regarding the performance of our pure online platform Cooler, in light of the changing landscape of the education industry in China, Cooler has been actively seeking new market opportunities by leveraging existing infrastructure and technology, shifting strategic focus, and adjusting existing business lines and service offerings. On the other hand, CoolLearn continued to expand the development of existing college and institution business segments, as well as online education products and service offerings. On the other hand, it's implementing structural changes to meet the needs of the changing regulatory and educational environment by actively exploring new initiatives to broaden customer base and offerings. Some of the new initiatives that Cooler have been exploring, including livestream marketing of the traditional Chinese culture and high-quality agriculture, and other products from different places of our region in China, seeking institutional cooperation and developing new intelligent learning innovations. After the introduction of the government policy on after-school children last year, which has no doubt posed a direct impact to our business, we have received many inquiries and concerns from investors over the company's financial position. As a company with longstanding heritage, we have always made sure that we are prepared for and capable in weathering changes in the market. And that is reflected in our ability to maintain a strong cash position throughout the whole process. By the end of the quarter, our cash and cash equivalent term deposits and short-term investments totaled approximately $4.4 billion. In the second and third quarter of this fiscal year, the company incurred considerable costs from the termination of its leasing agreements in relation to the closure of the learning centers and employee layoffs. We believe that these costs generated during a restructuring phase are temporary as they are non-recurring losses. With the process of school closure now largely completed, It signals that the company has now entered the stage of starting afresh, exploring new opportunities with greater flexibility and strong cash flows. We're confident that in the sustainable profitability of all the remaining key business, as well as the growth and profit potential of our new initiatives. the company's management team will continue to work together to seek profitable growth. We believe our continued commitment to high quality service and operational efficiency will generate more values to our customers, society, and shareholders over the long term. Now, I will turn the call over to Cici to go through our key financials. Cici.