New Oriental Education & Technology Group, Inc.

Good evening, and thank you for standing by for Neil Arento's FY2025 Second Quarter Results Earnings Conference Call. At this time, all participants are in a 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 would now like to turn the meeting over to your host for today's conference, Ms. Cici Zhao. Thank you. Please go ahead.

Thank you. Hello, everyone, and welcome to New Oriental's second fiscal quarter 2025 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 Newsbird Services. Today, Stephen Yang, Executive President and Chief Financial Officer and I will share New Oriental's latest earnings results and business updates in detail with you. After that, 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 view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward-looking payments, 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 Oriental's investor relations website at investor.neworiental.org. I will now first 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. We're pleased to inform you that New Oriental has achieved a healthy growth in this quarter's financial performance, which has surpassed our expectations. Revenue grew 19.4% year-over-year, and total net revenues, excluding revenues generated from East Bay's private label products and live streaming business, increased by 31.3% year-over-year. were encouraged by the continued growth of our new ventures, which have bolstered companies' revenue. We believe they will further progress positively moving forward. New Oriental's bottom-line performance for our core educational business has also shown solid returns. To better reflect New Oriental's core educational business, we have excluded the operating margins generated from Easterbite for this quarter. Our operating margin and non-GAAP operating margin reached 2.8% and 3.2% respectively. Results from these substantial efforts invested in our offerings and platforms that have been shown effective. Our commitment to sustaining healthy profitability and market share remains strong as we continue to aim for long-term value creation for our customers and shareholders. Now, I'd like to spend some time to talk about the quarter's performance across our remaining business lines and new initiatives to you in detail. Our key remaining business have showcased a promising trend in adjacent to positive momentum across our new businesses. Breaking it down, The oversea test prep business recorded the revenue increase of 21% year-over-year for the second physical quarter of 2025. The oversea study consulting business recorded the revenue increase of about 31% year-over-year for the second physical quarter of 2025. The adults and university students business recorded the revenue increase of 35% year-over-year for this quarter. At the same time, our ongoing investments in new education business initiatives, primarily focused on facilitating students' all-around development, have also continued to thrive with steady growth, fueling the company's momentum. Firstly, the non-dynamic children's business, which we have now expanded to around 60 existing cities, focused on cultivating students' innovative ability and comprehensive quality. we have attracted high interest with a total approximately 994,000 student enrollments reported in this quarter. The top 10 cities contribute over 60% of this business. Secondly, the intelligent learning system and device business utilize our past teaching experience, data, technology to provide personalized and targeted learning and exercise content thereby improving students' learning efficiency. We have tested the adoption of this new business in around 60 existing cities and are pleased to see improved scalability. The revenue contribution of this business from top 10 cities in China is around 50%. Our smart education business, educational materials, and digitalized smart study solutions have continued healthy developments. In summary, our new education business initiatives have recorded a revenue increase of about 43% year-over-year for the second quarter. In addition, our newly integrated tourism related business line, which includes our rooted study tour and research campus for K-12 and university students, as well as our tourism business serving middle-aged and senior audience, has collectively recorded a revenue increase of 233% year-over-year. for the second quarter. Study tour and research campuses are now operating in around 55 cities across the country, with the top 10 cities in China offering over 50% of the revenue share of this new business. We're also facilitating a number of top-notch tourism offerings to old age groups, including the middle aged and elderly individuals across 30 featured province in China and globally. With regard to our OMO system, we have persisted in revamping our platform, leveraging our educational infrastructure and technology strengths in order to provide advanced diversified education service to our customers of all ages. During this quarter, we invested $30.9 million to improve and maintain our OMO teaching platform, which enhanced users' experience and supports the growth of our education offerings. Now, may I share some updates on East Bayh's performance. During the reporting period, East Bayh expanded its product range from fresh food and snacks to diversified portfolio, launching 600 SKUs in private label products by November 24th. This includes healthy care food, pet food, and new Chinese-style clothing contributing to approximately 37% of total GMV for the six months and the . We're pleased to see multi-platform strategy has expanded its consumer base and increased the brand awareness through enriched live streaming products and online shops on platforms like MiniProgram, WeChat MiniStore, Teemo, JD, Pinduoduo, and Red Note. This multi-channel approach has driven rapid growth of its product label products. Simultaneously, Easterby has begun exploring offline channels with vending machines in New Oriental's learning centers. The company's app strategy has advanced quickly, offering daily necessities and high-quality products, leading to increased user contributions and strong loyalty. With regard to the company's latest financial position, I'm pleased to share that the company is in a healthy financial status, with cash and cash equivalent term deposits and short-term investments totaling approximately $4.8 billion. On August 19, 2024, New Oriental announced its board of directors approved a special dividend of $0.06 per common share or $0.6 per ADS to holders of common shares and ADS of record as of the close of the business on September 9th, 2024, Beijing and Hong Kong time and New York time respectively. The payment date was on or around September 23rd, 2024 for holders of common shares in September 26th, for holders of ADS. The total cash dividend distributed was approximately $100 million. Now, I would like to take the opportunity to highlight that the company's board of directors approved a share repurchase program in July 2022, in which the company is authorized to repurchase up to $100 million of the company's ADS or common shares through the next 12 months. The company's board of directors further approved to extend the effective time of the share repurchase program to May 31st, 2025, and increasing the aggregate value of shares that the company is authorized to repurchase from $400 million to $700 million. As of January 20th, 2025, the company repurchased an aggregate of approximately 11.2 million ADA assets for approximately $542.8 million from the open market. Now, I will turn the call over to Cici to share with you about the key financials. Cici, please go ahead.