New Oriental Education & Technology Group, Inc.

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Good evening and thank you for standing by for New Orientals FY 2023 First 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 first fiscal quarter 2023 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 Yang, 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 assurances. As such, our results may be materially different from the views expressed today. A number of potential risks and assurances are outlined in our public findings with the SEC. New Rental does not undertake any obligation to update any forward-looking statements, except as required under applicable law. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Rental's investor relations website at investor.newrental.org. I will now turn the call over to Mr. Yang. Stephen, please go ahead.

Thank you, Cici. Hello, everyone, and thank you for joining us on the call. This first quarter has not only marked a fresh beginning of our 2023 fiscal year, but also a new page to New Oriental. Before going into detail of our financial performance for this quarter, I would like to take this opportunity to extend our gratitude to those who have been believing and supporting New Oriental along the way. I'm delighted to share with you that the restructuring process has been largely completed, and New Rental has successfully derived a new business model combined with a certain existing business and a new innovative business opportunity. Our new business ventures have been performing well and are starting to generate positive results to New Rental. Furthermore, it's even more encouraging to see that we have achieved turnaround in profitability and better than we expect margin this quarter. Our non-GAAP operating margin for the quarter was 13%, and non-GAAP net margin for the quarter was 11.2%, both higher than last year's same period. We believe the company has embarked on a fresh journey that strives to encourage all-round development of students and customers and foster the betterment of the society, and at the same time, generate profit and fruitful returns for our shareholders. Now, I would like to spend some time to talk about this quarter's performance across our remaining business lines and the new initiatives to you in detail. Our key remaining businesses have shown remarkable resilience and achieved promising trends, breaking it down The overseas test drive business recorded a revenue increase of 2% in dollar terms year over year for the first quarter, 2023, fiscal year. The adult university students business recorded a revenue growth of about 2% in dollar terms year over year for the quarter. The overseas study consulting business recorded a revenue increase of about 21% in dollar terms year over year for the quarter. As for our new business initiatives, as mentioned in past quarter, we have launched several new initiatives, which mostly revolve around facilitating students all around development. I'm glad to share with you that these new initiatives have shown positive momentum and have started to generate revenue to the group. Firstly, the non-academic children business which we have rolled out in over 60 existing cities, focuses on cultivating students' innovative ability and comprehensive quality. We're happy to see increased market penetration in those markets we have tapped into, with 297,000 enrollments in the first quarter. The top 10 cities in China have to contribute about 60% of the revenue of this business. The intelligent learning system and device business is a service designed to provide a tailored digital learning experience for students. It's utilized our past teaching experience, data, and technology to provide personalized, targeted learning and exercise content. Together with our teachers monitoring and accessing the learning curve of the students at the back end system, the new education service not only greatly improve students' learning efficiency, but also cultivate students' proactive learning habits. We have tested in adoption in around 60 cities with 131,000 active pay users in this quarter and are delighted to see improved customer retention rate and scalability of these new initiatives. The revenue contribution of this business from the top 10 cities in China is over 60%. Meanwhile, the study tour and the research camp business is an initiative that aims at offering students of K-12 and university students the opportunity to fully leverage their free time and holidays to broaden the school's knowledge and cultivate subject interest. We have conducted the study tour and the research camp business in over 50 cities across the country. The revenue contribution of this initiative from the top 10 cities in China is over 55%. Last but not least, our smart education business, which comprises smart teaching, smart hardware, science, technology, innovation, education, and other services, serves local governments, education authorities, schools, and kindergartens. Our educational material and digitalized smart study solution A self-learning system which leverages advanced technology enables students to have complete control over the pace and the flexibility of learning in an age where remote learning becomes increasingly mainstream. We also offer exam prep courses designed for students with junior college diplomas to obtain bachelor's degrees. The above-mentioned businesses have been gaining the traction. and contribute the overall growth of the company. Our OMO system has continued to be instrumental post our restructuring process. We continued our efforts in revamping and maintaining the OMO teaching platform and kept leveraging our education infrastructure and technology strengths across key remaining business and new initiatives to provide more advanced and diversified education service to our customers at all ages. We have invested $31 million in the quarter on our OMO teaching platform to ensure that we continue to offer high quality service and flexibility to our students. In response to an evolving industry landscape in China, we have implemented structural changes to our pure online education platform, Cooler, as previously mentioned. While Cooler continues to extend its online education offerings to adults and university students, it has also actively sought business opportunities in new areas, leveraging on the technology developed for live broadcast classrooms with our existing teams of talent Cooler has established an e-commerce platform under the brand name Dongfang Zhenxuan for the sale of agriculture and other products and offer premium service for tens of millions of followers through its tight supply chain ecosystem, innovative live streaming marketing, and diversified cooperation with the suppliers and producers to maximize the full potential and social values of this new business. Cooler has placed the strategic focus to develop a high-quality and cost-effective e-commerce platform offering agriculture products and daily necessities so as to bring better quality of life and promote healthy lifestyles to its customers. During the reporting period, Dongfang Zhenxuan has broadened its product selection and SKUs. thereby continuously improving shopping experience of its customers. The platform does not only serve as an alternate outlet for farmers and local companies to sell their high-quality farmer goods and other products to a broader customer base, but also provides platform which offers a range of top-notch products with transparency in pricing to customers. leveraging the well-developed production capacity and commercial infrastructure, such as logistic centers and the communication networks in China. Cooler has also successfully launched its own During the reporting period, Dongfang Zhenxuan has broadened its product selection SKUs, thereby continuously improving shopping experience of its customers. The platform does not only serve as the alternate allies for farmers and local companies to sell their high-quality farm goods and other products to the broader customer base, but also provide a platform which offers a range of top-notch products with the transparency in pricing to customers. Leveraging the well-developed production capacity and commercial infrastructure, such as logistics centers and communication network in China, Cooler has also successfully launched its own private label products and established a high-quality supply chain management system within a short period of time. a variety of the product selection and product quality continued to grow. Dongfang Zhenxuan has earned a prominent position within the industry and gained a strong traction and brand loyalty from its customers. Looking forward, Cooler will strengthen its team of talents to continuously create positive, unique, interesting content to attract users to its platform and promote traditional Chinese culture. Cooler will also place additional investments to its products and technology upgrades, so as to concentrate on selecting and launching top-quality products from different origins in China through the third-party cooperation and private labels to create values for customers, partners, and wider society. to the company's latest financial position, I'm confident to share with you that the company is in a healthy financial status with cash and cash equivalent term deposits and short-term investments totaling approximately $4.3 billion. On July 26, 2022, the company's board of directors authorized a share repurchase plan of up to $400 million of the company ADS or common shares during the period from July 28th, 2022 through May 31st, 2023. After the October 25th, 2025, the company accumulatively repurchased and aggregates approximately 1.6 million ADS. for approximately $39.6 million from the open market and the share repurchase program. Now, I will turn the call over to Cici to share with you about the key financials. Cici, please go ahead.