TAL Education Group American Depositary Shares

Ladies and gentlemen, good day and thank you for standing by. Welcome to TEL Education Group's fourth quarter and fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be informed that today's conference is being recorded. I would now like to hand the conference over to Ms. Fang Liu, Investor Relations Director. Thank you. Please go ahead.

Thank you all for joining us today for TAO Education Group's fourth quarter and fiscal year 2025 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website or through the news wires. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and Mr. Jackson Ding, Deputy Chief Financial Officer. Following the prepared remarks, Ms. Peng and Mr. Ding will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are limited to those outlined in our public filings with the SEC. For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. I would like to turn the call over to Mr. Alex Peng. Alex, please go ahead.

Thank you, Fang. I'd also like to thank all of you for participating in today's conference call. So I'll begin with an overview of our business progress for the fourth quarter and full fiscal year 2025. Next, Jackson will review our operational advancements and financial results. To conclude, I'll also provide a brief update on our strategic priorities and outlook moving forward. So with that, let's get started with our core business performance this fiscal year. To begin with, our learning services delivered steady growth in fiscal year 2025. really empowering learners through both offline and online enrichment programs. An uptick in user demand and our relentless focus on high-quality learning experiences were really the key drivers of this progress. During the past quarter, we strategically added new enrichment learning centers in existing cities. providing local communities with more accessible and convenient learning opportunities. Our online enrichment learning business also remained healthy, consistently providing engaging learning experiences through technology-driven learning products. Over the past year, we conducted in-depth analysis of user preferences and tailored the development of new products to better meet their needs. We also continue to refine listing offerings based on user feedback. And we enhance teaching effectiveness by integrating smart interactive features to boost user engagement. Then for learning devices, we expanded our product offerings to reach a broader user base, making it easier for users to find the right learning solutions for their needs. We also integrated more smart features and learning resources to better support users on their self-learning journeys. Through monthly feature updates and content refresh, we provided users with an increasingly intelligent and practical study companion, making at-home self-learning more engaging and efficient. So with this operational momentum as a backdrop, let's turn to our financial highlights for the quarter and the full year. In the fourth quarter, we recorded net revenues of $610.2 million U.S. dollars or 4.44 billion RMB. reflecting year-over-year growth of 42.1% and 44.3% respectively. On a non-GAAP basis, loss from operations was $1.7 million, while net income attributable to TAL reached $7 million. For the full fiscal year, net revenues totaled $2.3 billion, or 16.2 billion RMB, up 51.0% and 52.2% year-over-year respectively. Non-GAAP income from operations amounted to 61.8 million U.S. dollars, with non-GAAP net income attributable total at 149.5 million U.S. dollars. Before Jackson takes us through the detailed operational and financial review, I'd like to share a brief update from the board. We are delighted to welcome Mr. E. Wang as TAO's new independent director and chairman of the compensation committee. Mr. Wong brings extensive experience across both the business and education sectors, and we are confident that his insights will further strengthen Tile's strategic direction, governance, and operational excellence. We also want to express our deep appreciation to Dr. Wei-Wu Chen for his outstanding service and invaluable contributions over the past decade. We look forward to continue our collaboration with Dr. Chan in his new advisor role. So with that high-level overview complete, I'll now pass the call to Jackson to delve deeper into our operational execution and detailed financial performance. Jackson. Thank you, Alex. Before diving into the details, I'd like to note that all quarterly financial figures discussed today are unaudited. I'll start with our learning services and others business, which includes a broad range of learning programs for our customers. Learning services sustained its revenue growth momentum in the fourth quarter of fiscal year 2025. fueled by advancements across multiple product lines. Over the past few quarters, revenue from PAO small class enrichment programs has achieved year-over-year growth. We have consistently provided high-quality services, earning positive feedback from both the learners and their parents. While we have expanded our Learning Center footprint, we've maintained a disciplined approach. We're carefully evaluating market demand, user feedback, and operational efficiency to balance growth with quality. This approach has been further validated by key operational metrics and has directly contributed to year-over-year enrollment growth. Notably, The retention rate for Payo's small class reached 80% this fiscal quarter. In our online enrichment learning business, ongoing innovation has helped us navigate the ever-evolving market landscape and our users' dynamic needs. Guided by user feedback and market insights, We're continually investing in strengthening our online product capabilities and refining our operational and marketing strategies. Through new products and interactive formats, we deliver tangible value to learners, enhancing both learning outcomes and user experiences. Recent initiatives include interactive learning modules, and AI-powered assistance. Additionally, by building diverse customer touchpoints across multiple channels, we're expanding our market reach among current and potential users and gaining deeper insights into their needs. This has enabled us to scale our operations while laying the foundation for sustained long-term competitiveness. Next, let's turn to our content solutions business. Our learning devices business grew year over year in the fourth fiscal quarter, fueled by our enhanced product development and go-to-market capabilities. We have expanded our learning devices product portfolio to appeal to a wider audience in the past year. We also further upgraded our hardware and software, enriching our content library, refining the reading experience, and integrating practical AI features to create more immersive self-directed learning. This February, We further enriched our content across our entire range of learning devices. By providing fresh and classic materials with progressively challenging exercises, we keep students engaged while developing their ability to question, analyze, and problem solve. Our unique ladder approach, which guides children step by step with tailored hints, helps them build confidence as they master new skills. To strengthen foundational literacy, we launched a seamless graded reading system covering early education through high school with age-appropriate tools like phonetic aids for young learners and interdisciplinary content for older students. Through partnerships with over 20 publishers, we have expanded our library to include thousands of titles. Thanks to our enhanced product capabilities, our learning devices have sustained solid user engagement while reaching a broader audience, notably As our active user base continues to grow, the weekly active rate has remained stable at around 80%, with an average daily time spent of approximately an hour per device throughout the quarter. Next, please let me now review our financial performance for the quarter. The company reported net revenues of $610.2 million, or 4.44 billion RMB, representing a year-over-year growth of 42.1% in U.S. dollar terms and 44.3% in RMB terms. This increases were attributable to the growth in both our learning services business and our content solutions business. Now, looking at costs. Cost of revenues rose 44.7% year over year to $292.6 million from $202.2 million. When excluding share-based compensation expenses, Non-GAAP cost of revenues moved 46.1% higher to $291.7 million compared to $199.6 million in the same quarter last year. Gross profit stood at $317.6 million, which was 39.7 above the prior year period. Gross margin was at 52.0% compared to 52.9% from the same period last year. Turning to operating expenses, selling and marketing expenses for the quarter were $218.0 million, up 73.1% from the prior year. the non-GAAP equivalent of these expenses increased 77.9% to $214.3 million. As a percentage of net revenues, non-GAAP selling and marketing expenses accounted for 35.1% versus 28.0% in the prior year period. with the change mainly resulting from increased selling and marketing activities through some online channels. General and administrative expenses increased 0.8% to $118.2 million compared to the same period last year. The non-GAAP measure showed a 3.5% rise to $108.5 million. However, as a percentage of net revenues, non-GAAP general administrative expenses decreased from 24.4% to 17.8%. Total share-based compensation expenses declined 30.1% to $14.3 million from $20.5 million in a comparable period. Loss from operations was $16.0 million for the quarter. This compares to a loss from operations of $11.1 million in the same period last year. On a non-GAAP basis, the loss from operations was 1.7 million U.S. dollars compared to non-GAAP income from operations of 9.4 million U.S. dollars in the same period of last year. Net loss attributable to Tao was 7.3 million U.S. dollars for the quarter. While in the same period last year, there was net income attributable to Tao of $27.5 million. Non-GAAP net income attributable to Tao was $7.0 million versus $48.0 million in the same period last year. Regarding our cash position as of February 28, 2025, we held $1.77 billion in cash and cash equivalents, along with $1.85 billion in short-term investments. and $220.5 million in restricted cash. Our deferred revenue balance was $671.2 million a quarter end. In terms of cash flow, net cash used in operating activities was $226.3 million during the quarter. For the full fiscal year 2025, net revenues were 2.3 billion US dollars or 16.2 billion RMB. Reflecting year over year increase of 51.0% in US dollar terms and 52.2% in RMB terms. Gross profit was 1.2 billion US dollars 48.9% higher than the previous year. Lost from operations was 3.2 million US dollars in the fiscal year 2025 compared to lost from operations of 69.2 million US dollars in fiscal 2024. On a non-GAAP basis, Income from operations was 61.8 million U.S. dollars versus 19.7 million U.S. dollars in the prior fiscal year. On the bottom line, net income attributable to TAO came to 84.6 million U.S. dollars compared to a net loss attributable to TAO of 3.6 million U.S. dollars in fiscal 2024. non-GAAP net income attributable to TAO was 149.5 million U.S. dollars, while previous fiscal year showed 85.3 million U.S. dollars. Finally, I'd like to briefly address our Shared Repurchase Program. In April 2025, The company's board of directors approved a 12-month extension of its share repurchase program, originally launched in April 2021. Under the extended program, the company may spend up to approximately $490.7 million to repurchase its common shares through April 30, 2026. In fiscal 2025, the company had repurchased 0.5 million common shares for a total consideration of approximately 13.1 million U.S. dollars under the program. That concludes my review of our business performance and financial updates. Alex, I'll now hand the call back to you for our outlook. Thanks, Jackson. Overall, we believe fiscal year 2025 laid a solid foundation for our future developments. Now I'd like to share insights into the company's strategy and outlook for fiscal year 2026. So first, we remain committed to sustainable growth in our core business lines. we will continue to uphold the high quality standards for both our offline and online enrichment learning products and services to deliver quality programs to an even broader user base. We anticipate that our learning services will continue to be our largest revenue stream in the new fiscal year. Beyond learning services, we're also focused on expanding our learning content solutions. we will continue scaling this business thoughtfully, refining our content and device features, and leveraging technological advancements, particularly AI-driven features, to enhance learning outcomes. As our business continues to evolve and grow, we're actively exploring new fields and emerging sectors to extend our core business line's reach. Along the way, we're also steadily strengthening our channel capabilities, building brand recognition, and deepening our engagement with a new generation of parents and learners. Through these efforts, we're consistently gleaning valuable insights from outstanding companies across various industries, and we'll continue to refine our growth strategies accordingly in the upcoming fiscal year. Secondly, we're committed to ongoing innovation at the intersection of learning and technology. By integrating cutting edge AI with pedagogical expertise, we seek to meaningfully improve both learning and teaching experiences. Looking ahead, we'll continue to enhance our products and services to meet the evolving demands of digital learning redefining intelligent learning solutions for the AI era. Throughout history, every major technological breakthrough from television to computers and the internet has found its way into education. Today, we are discovering and shaping how AI can transform learning and integrating these advancements into our products and services. We also remain open to collaboration and knowledge sharing, ensuring that our insights into smart learning contribute meaningful value to the education community. Finally, we will focus on refining operation details to boost overall efficiency and profitability. While we expect to benefit from economies of scale as our revenue grows, efficient management will be increasingly critical as our operations expand and become more complex. We'll closely monitor efficiency metrics across all business lines and make timely adjustments to optimize every aspect of our operations. including content creation, product R&D, sales, marketing, and beyond. So that concludes my prepared remarks. Operator, I think we are ready to open the call for questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press .11 again. We will now take our first question from the line of Eddie Wang from Morgan Stanley. Please ask your question, Eddie.

Thank you, Alex, Jackson, and Fang for taking my question. My question is regarding the Payo enrichment learning business. Could management provide an update on the progress of the fourth quarter Payo enrichment learning business? And how shall we view the growth strategy and expansion pace for PayU in the next fiscal year? Thank you.

Thanks, Adi. This is Alex. Let me take that one. You know, really, as we've seen in recent quarters, PayU continues to deliver a steady year-over-year growth. I think we've already covered the key highlights in our prepared remarks. So let me instead focus more on our path forward, okay? So looking ahead to the next fiscal year, you know, really as long as our key growth drivers, which is market demand, product capability, our ability to recruit and train our instructors, as long as these key growth drivers hold up, we really expect to maintain this positive momentum for PayU. But I also want to just add, technology will play an increasingly important role in our strategy, right? So, you know, you may have noticed we are expanding the rollout of our dual small and large screen solutions. It really brings smart classroom experiences to more students. I think, you know, literally it's reimagining the classroom learning experience. And at the same time, we're continuing to innovate our products and refine our product market fit. to create solutions that are both student, you know, loved by students and trusted by parents. You know, we're firm really in our belief that sustainable growth in this market comes from developing and continuously developing these high-quality products with strong performance metrics that really truly meet user needs. And it's not just user needs in a broad sense, but localized user needs. And this will remain central to our product development philosophy and strategy. I know many of you are interested in expansion. Regarding expansion, we're maintaining the same prudent approach that has served us well this past year. Each decision to open a new learning center really carefully balances multiple factors. The local market demand, when I say local, it's truly local to a city, to a district, to a community. The customer adoption, operational capacity, and efficiency target. So I think this disciplined methodology will continue to guide our business through fiscal year 26. um really if i take a step back i would say um we remain optimistic about industry's growth potential uh you know in this new sector i think i've talked about before we feel we truly feel the enrichment learning is hitting um that you know the need with this new generation of parents and learners You know, and we're optimistic about our ability to deliver high quality products to meet that future need. You know, really, as we are operating from a significantly higher baseline than a few years ago. We expect payload enrichment's year-on-year growth rate to probably gradually taper off moving forward. But our focus really remains on what I just said before, the sustainable, healthy growth, rather than pursuing hyper-growth for growth's sake. So Eddie, I hope that answered your question.

Thank you. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please ask your question, Timothy.

Great. Thank you, management, for taking my question. My question is regarding the learning devices or the learning content solutions segment. Just wondering if management can give us some color on the profitability profile of this segment in the fourth quarter and also in the fiscal year last year. And when you look into fiscal year 2096, I'm just wondering if there's any updates on your strategy on this specific segment, and what are the new plans or measures that you are going to take to further improve the probability of the learning content solution segment? Thank you.

Thanks, Timothy. This is Alex. Let me take this one as well. Look, our learning device business reported an adjusted operating loss in RP&L in the fiscal fourth quarter and fiscal full year of 2025. It's a new product group that launched about two years ago, and we believe this business still has room to really expand access to high-quality learning experience, the at-home self-learning experience we just talked about, really, and that among a much wider range of customers. At this stage, our priority really remains building long-term competitiveness and capabilities. So if I move to our strategy for fiscal 2026, our efforts were focused on the following few areas, right? So I would say, first, enhancing the device functionality or rollout artificial intelligence in power functionality upgrades continuously. We continuously expand our content library. We believe these are the core values we deliver to our learners, right? And, you know, I think that's been the track record in the past two years of regular and continuous updates to functionalities and to the content library. Secondly, I think we're going to expand our portfolio. Our effort in expanding the portfolio really would improve product market fit and expand access. As I said, we're very convinced that there is ample room to expand access and thereby expand the access to high quality learning experiences, high quality content. So our expanding portfolio will aim to do that. Number three is go to market. I think, you know, we've been enhancing our distribution of marketing to reach more users while deepening engagement with existing customers. Both are, you know, very crucial. And, you know, you probably have seen, and we've discussed this on previous calls, you know, when we look at the go-to-market, we look across different channel formats. And you probably have noticed that, you know, that there are, you know, more offline, you know, channel and points of sales. So these are a continuous effort to, I think, both expand channel capacity, but also really to deepen channel capabilities. And with these, both user growth and user engagement are really priorities as we scale the learning device business. I would also say operational efficiency, look at revenue scales, or leverage economies of scale, or refine cost structures, and optimize operations to drive healthy and efficient business growth. While I said it's new for just two years, I think we've gained experience across all these dimensions to really drive further operational efficiency gains. So in summary, we view this as a multi-year capability building, where every initiative was really designed to build sustainable competitiveness and pave the way for both future growth and profitability. So, Timothy, I hope that answered your question.

Thank you.

Thank you. Thank you for the comprehensive answer.

Next question comes from the line of Sophie Zhang from CICC. Please go ahead, Sophie.

Thanks for taking my question. So, could you please break down the top line growth by business line for the past quarter to help us better understand the respective drivers? And also, could you elaborate on what led to the year over year decline in operating profit and what were the key reasons behind the growth in sales and marketing spend? Thank you.

Sophie, thanks for the question. This is Jackson. Let me take this one and let me maybe unpack this question a little bit. I think you asked both about top line and bottom line. So let me address top line performance first. Similar to last quarter, our pale small class enrichment programs remain both the largest revenue contributor and the primary growth driver within our learning services business line meanwhile learning devices continue to be the largest revenue contributors contributor within content solutions while also serving as a key growth driver so let me maybe add additional color on these two businesses PAYO enrichment delivered solid quarter-over-quarter and year-over-year growth this quarter and this year. While we now operate from a significantly higher baseline than in prior years, which, as Alex talked about, will naturally moderate year-over-year growth rate over time, We expect continued expansion in this business supported by expanding market demand and our enhanced product capabilities. Learning devices saw a sequential fourth quarter decline, quarter over quarter, reflecting typical seasonality after a peak in Q3 due to e-commerce festivals. However, this business remained healthy when we look at year-over-year growth, underscoring the business's momentum. When we look at full-year fiscal 2025, Both learning services and content solutions delivered year-over-year revenue growth, maintaining a stable business mix relative to fiscal 2024. Now, Sophie, let me adjust the second part of your question on margin profile. Maybe let's look at first general administrative expenses. Non-GAAP G&A expenses have decreased from 24.4% to 17.8% this quarter, demonstrating leverage achieved through a larger revenue base. However, as you touched on, non-GAAP selling and marketing expenses rose to 35.1% of revenue, up 7.1 percentage points year over year. And that's primarily due to increased activities in online channels aimed at market penetrations and product visibility enhancements. That was the main reason for year-over-year decline in our adjusted operating margin. Additionally, we conducted brand building initiatives that may not yield immediate revenue, but are expected to promote customer awareness and our market positioning. As part of our strategy, we're committed to establishing and strengthening multi-channel communication mechanisms with our users. For digital products, such as learning devices and Shares.com, these efforts are crucial in fostering deep customer engagement, reaching more users, and gaining broader acceptance. Looking ahead, we're refining our market approach and diversifying our channels to align with business maturity, product cycles, and market conditions. Through this process, we aim to steadily strengthen our channel capabilities, enhance brand recognition, and deepen connections with the next generation of parents and learners. So we believe that by upgrading our channel strategies, diversify our distribution networks, and driving user engagement will drive long-term business growth. I hope that answers your question.

Thank you, Jackson, and that's very helpful. So just a quick follow-up on the bottom line. So should we expect improvement in profitability going forward? Thank you.

Sophie, thanks, and that's a good question. I would say moving forward, improving overall profitability remains a key priority for us. As our business continues to develop, we expect two primary drivers of profitability. First, our expanding revenue base naturally generates our operating leverage. which will allow for more efficient allocation of fixed cost. And you can probably see that in some of the financial results we printed in the last few quarters, right? We continue to unlock our operating leverage as our business grow and general, for example, general administrative expenses as a percentage of revenue has largely calmed down in the last few quarters. The second growth driver of our profitability would be us implementing targeted operational refinements at every stage of our workflow. This includes content creation, product R&D, service delivery, and sales and marketing, right? While these efforts will take a bit of time to fully impact our P&L, I would just like to reiterate again that operating efficiency will remain a priority for us in the next fiscal year. I hope that answers your question, Sophie.

Thank you, Jackson. That's very clear. Thank you. Our next question comes from the line of Felix Liu from UBS. Please ask your question, Felix.

Good evening, management. Thank you for taking my question. My question is on AI. So what learning scenarios does management anticipate that AI can be implemented to your business in the near term? What are the impacts that integrating DeepSeq into your business model will present particularly in our learning services and the learning devices business. Thank you.

Thanks, Felix. This is Alex. Let me take this one on. I will actually take a step back a little bit. You know, we've been talking about the AI, and I just want to go back to something that I've, you know, discussed maybe a year or even two ago. I think it really has multi-dimensional impact on us. And look, we are, we really welcome every single event. in AI capabilities from the foundational models. I think every single event is welcoming news to us. And let me explain why. So first of all, we think AI has a huge, huge impact on educational content creation. the entire creation process is benefiting tremendously from AI. I think number one, it has tremendous implication in terms of efficiency gain, in terms of speed gain, and we're witnessing that every single day in the last two years. And it also, by the way, has made things that previously seemed impossible to be possible. Leveraging this capability, you can develop multi-language, multi-curriculum adapted learning content material. So I think that's just something that we didn't think was quite possible. I think we're getting very close to be able to use AI to generate interactive, high-quality content real-time. Again, that wasn't even a cost issue. I think that was just basically not possible before. So these, I think, offer really, you know, raising up the top, the ceiling of what's possible while doing it with a tremendously different cost structure than before, right? So I think that's just the first thing I want to really, you know, lock with everybody on the call. I think, look, secondly, with every single advance of AI, we just see more possibilities of leveraging that to enhance our services. We're a very large services provider. Our touch space with customers on service, it goes from instruction to customer service to after sales service and across the board. I think in these areas, again, we have the, if not even the possibility, I think we're pushing those every day in terms of both raising the level of customer service while gaining more efficiency. So I think that's also been tremendously helpful. And again, I think we're just expecting more as the capability of AI you know, it gets even more advanced. I think number three in terms of research and development, we're really seeing so much more, you know, code generated by AI that is, you know, advancing speed, gaining efficiency. We are a large, you know, research and development and education technology. And I think AI is really giving us a very different way of developing this. It's faster, it's nimble, it's you get very fast prototyping and you get more efficiency not only from using AI to code by itself, but that nimble and fast prototyping is actually removing a lot of friction. in the R&D process versus before. So I want to lock those three. Those are things that we probably didn't discuss in a whole other detail in the last few calls, but I think those are actually very tangible, meaningful, and we expect more benefit and more impact from those. So going back to the you know, integration in learning scenarios. Look, you know, I think we're increasingly seeing AI becoming a learning companion. I think the Shelsu Chat Assistant, you know, that really embodies that fact that it is there. You know, more and more students who are native in this AI age are getting comfortable to get on the spot help, and support, learning support from AI as they learn. So currently, you know, DeepSeq v3 service is one of the foundational models for our MassGPT. We're in Chinese. You know, beyond its general intelligence capabilities, we're also finding that on learning content, enhancing its ability to support really subject-specific tasks And also, you know, let me add this, I think we need to fine tune it and to support those, you know, pedagogical scenarios. For a model to be able to produce the answer is one thing. For it to be able to actually make the solution more accessible, easier to understand, like by students, these are actually, we believe, fundamentally vertical capabilities to an education player. And that's how we look at it, right? That we're going to continue to work and invest on those, really lowering the barrier to accessing these AI capabilities, improving the user interface, making it easier for users to provide their input to the large language model, but also working really hard to make the output, the output from AI, not the raw straight output from these large language models, but make the output really serve a learning purpose and serve it well. And lastly, I would just say, you know, look, We'll also remain committed to contributing to the broader intelligent learning ecosystem, advancing new educational paradigms, supporting future schools and third-party institutions, as we've done in the past. And we really look forward to reimagining the future of learning and shape a more dynamic forward-thinking education ecosystem as a whole. So, Felix, I hope that answered your question.

Thank you. Our next question comes from the line of Alice Tai from Citi. Please ask your question, Alice.

Thanks, management, for taking my question. How are we considering cash usage? And could you please give us more kind of about the future investment strategy and also shareholder returns? Thank you so much.

Alex, thank you for the question. This is Jackson. Let me take this one. Let me maybe first address our current cash position. As of February 28th, 2025, the company holds approximately 3.2 billion U.S. dollars in cash, cash equivalents, and short-term investments and restricted cash. while excluding deferred revenue. Given our cash position, we think we're well positioned to fund both growth and returns. When it comes to deploying this capital, very much like how we do a lot of things, we take a thoughtful and balanced approach when evaluating potential uses of cash. We consider multiple factors to strike the right balance between short-term needs and long-term development. Our focus remains on optimizing resource allocation, reinvesting strategically into the business while also delivering value to shareholders. Given our current margin profile, which remains relatively thin, and with a meaningful portion of our operations and businesses still in growth phases, maintaining operational flexibility is one of our key priorities. As we assess investment opportunities for fiscal 2026, We're particularly interested in areas that enhance our existing products and services, strengthening our core capabilities and support business expansion. Additionally, as our industry evolves and new technologies emerge, we'll invest in integrating these advancements into our operations. we believe these investments will drive long-term value creation for shareholders. Alongside of these investments, we remain equally focused on shareholder returns. As previously mentioned, the board has extended our share purchase program for an additional year, authorizing purchases of up to 490.7 million US dollars. And going forward, we'll prudently evaluate market conditions, our business needs, and other relevant factors before executing further repurchases. So to summarize, our philosophy centers around a disciplined, forward-looking approach. one that fosters sustainable development while maintaining the agility needed to navigate this dynamic market. And we'll keep you guys posted as appropriate. I hope that answers your question, Alice.

Thank you so much. We have now reached the end of the question and answer session. Thank you all very much for your questions. I'll now turn the conference back to the management team for closing comments.

So, again, thanks to everybody on the call for joining us today, and we'll see you next quarter. Thank you. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.