Q4 2020 New Oriental Education & Technology Group Inc Earnings Call

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All participants to open the listen only mode. After managements 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.

I would now like the true the meeting over to you host for today's conference Ms. SIFI Zhao. Thank you. Please go ahead.

Thank you [laughter] Hello, everyone and welcome to new Orientals fourth fiscal quarter. Two is on 20 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 mute newswire services today, you'll hear from Stephen Yang Chief Financial Officer.

During his prepared remarks, Stephen 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 Security Litigation Reform Act of 90 95 for all looking statements involve inherent risks and uncertainties as such.

Our results maybe materially different from the views expressed today a number of potential risks and uncertainties are outlined in our public filings with the FCC New Oriental 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 away.

Half of this conference call will be available on your rentals Investor Relations website at your Investor Dot New Oriental don't work.

I'll now turn the call over to Mr. Young Stevens. Please go ahead.

Thank you.

Hello, everyone. Thank you for joining us on the call. Just finally, all brickell Colby large <unk> dynamics, starting from March pulls the continuing pressure on old business across the globe usually hours.

We're pleased to report a set of financial resolved in the fourth quarter over the this fiscal year.

A few line with our expectation.

No not revenue was $798.5 million, a slight decrease of 5.3% million dollars arm were 1% you RMBS from a mix of resolved most viruses line were reported which I will elaborate as usual them shortly.

Total student enrollments <unk> donnelley subjects tutoring and her front of course assumed the fourth quarter fiscal year, two loved clinic deeper the by 6.2% year over year two pumps approximately 2 million 585. So all the 600 you more of a normal increasing the number.

Three enrollment is primarily due to the old rigs will be koby my team, which has made new customer acquisition in the quarter much more challenging.

While the enrollment for the summer and allow them houses.

Well she will be delayed.

The bottom line performance.

For the entire physical your.

Oh, two loved 20 women's is to deliver extensional non-GAAP also to merger 70 basis point year over year to 12.9% compared to 12.2% for the prior fiscal year. However for the fourth quarter told them funny due to the not your view not.

From a Dominic our topline performance and reinforce the spending from offering free cautious to promote our poor Jude law, Florida classes with the aim of taking more market share. Our gross margin recorded for the quarter was 51% Dom on that this point year over year.

Oh, no data offering to murder fourth quarter was were 21% down 810 disappointing year over year on non-GAAP not margin for the quarter was 6.1% down by 520 basis points year over year, you order to minimize the negative impacts cost about koby 19.

Thanks to our bottom line, we actively adjusted our operational strategy and the made more effort on cost control and reducing expenses, especially for business lines prison bigger negatively impact in the near term, we believe that our continuous efforts will sustain oh.

Well the crisis and hopefully by the adverse effects on our business from academic will subside readily.

Her proven blended ASP, which has cash revenue divided by total student enrollments decreased by 14.8%. Your view in dollar terms as for already plans. The S.P. Richards gosh revenue divided by the total teaching hours decreased by approximately 3.5% yield.

A year in RMB terms.

To provide the breakdown of the already blended ASP. Please know that you can't top.

Chris to buy 0.2%, you can't where he classes increased by 3.5% pop kids increased by 6.4% and Oversea test prep program increased by 16.1% or year over year. The army terms.

Comparing with the normal price increase of 5% to 8%. This quarter's already blended ASP decreased but was lower than normal level, mainly because of the bigger decline of the over oversea test prep per one and you can where if you personalized process business, which already planned SP a much higher.

Other programs as well as the usage of the two path as we provided to the customer to support the migration from offline class to all I Amo class during the winter.

No I would like to spend some time to talk about fourth quarter performance across our individual business line in detail.

And then this impressive pure as we see a mix of the results amongst the use of the business line.

Our key revenue our Q2 hour after school tutoring business achieved a year over year global revenue growth of approximately 4% in dollar terms were 8% R&D terms breaking down the U can middle School High school all subjects after school tutoring business reported revenue increase.

Of approximately 1% in dollar terms were 5% in army terms for the quarter. So enrollments grew approximately 0.1% year over year for the quarter.

Excluding VIP one of our business you can slow club business grew by approximately 15% in dollar terms were 20%.

If measuring RMB.

Our pop Kids program delivered outstanding results with revenue up by about 10% in dollar terms or 14% in RMB terms for the quarter.

Roland decreased by 9% for the quarter low ask the operator of the Colby 19 has caused the challenges.

Acquire new customer in the quarter, while the enrollment for the summer thousand clubs have being delayed.

Our oversea test match related oversee related business, including test prep and consulting business faced with the most difficult.

Challenges due to the cancellation of the oversee exams suspensions the overseas schools and restriction on high levels.

The overseas Haswell business revenue declined by approximately 52% in dollar terms or 50% if measuring RMB. However, despite the challenges the consulting business grew by approximately 6% in dollar terms were 11% in RMB terms.

And finally, we MP personalized passes business reported revenue decline of about 36%.

Year.

In dollar terms were 44% the army terms year over year for the quarter.

Summer promotion strategy also delivered outstanding results, we offer low price experimental courses from up multiple subjects in total of about 60 niceties targeting entry Grace of primary and secondary school students customers before the start this new square.

Sure.

The promotion price is similar to last year at around 400, RMB, even though we launched the summer promotion campaign almost a one month later langworthy last year due to the epidemic situation. This summer promotion remains very.

Well received by the market.

We're pleased to see last promotion enrollments, we brought in before the start of the summer holiday by mid July this year achieved a 20% increase comparing the same period of last year, reaching 986000 see enrollments.

Three encouraging results have proven that such sound and highly profitable strategy enables us to capture and increase our market share in high growth could well as after school tutoring market also puts us in a more favorable position during this market consolidation periods as certain players.

I mean like financial or digital capabilities to solicit sustain their operation during this challenging times.

Our this students move to the higher grades we expect the continually improvements in retention rates and the customer loyalty will drive revenue growth in the next three to six years.

We continue to be guided the power optimized market strategy in this quarter and carrying out capacity expansion is cities, where we see potential for rapid growth and strong profitability.

This quarter, we added a natural 44 learning centers existing Ses opened a new training school in the city of we hire as well as for dual teacher model schools in the city of who will be seen type two mandiant and issue term altogether.

This increase the total square meter of class, where by approximately 26% year over year, 5% quarter over quarter by the end of this quarter.

This time, such challenging times, we didn't grow dollars expended expansion plan on hold as we wanted to ensure that were fully prepared when the pandemics or.

And our our service will resume with strong presence across different Chinese cities.

As outbreak of Kobin lighting has highlighted the importance importance and demand of all application. We have placed a more resources in this area and the invested $36 million in the quarter to improve can maintain our omo integrated education ecosystem.

Three management's also supported the migration of our offline class two small sized online clubs during the permit.

Apart from the optimal infrastructure would have allocates part of the resources in advance to training programs for our teachers Treehouse their online offline equal to two skills in response to be growing demand in market.

At the same time, we continue to upgrade our technology platforms and will broaden the usage of the online tools and content.

More system flow business lines through the whole network as well further developed the task to teaching contents and courseware.

Peter on online offline.

Integrates application members, we're glad to see that our industry, leading automotive ecosystem has not only successfully managed to cushion most of the impacts our service operation cost about dynamic.

But we also see the refund rate from the cancellations have been stabilized at a normal level as we entered into the spring semester.

Well, our customer retention rates from winter to spring semester and from spring to summer Master work.

We are trending higher than same period last year.

Which further delay demonstrated that our customer satisfaction and the effectiveness of our online course through our formal systems.

To further tapping into the huge markets opportunity online education, we continue to placing more resources in cooler I mean excusing new initiatives in our K 12 online after school tutoring business in fiscal year 2020.

This includes constant development teachers recruiting training sales marketing R&D and other necessary comp expenses to drive the growth of the new online programs.

With these programs, we're able to reach out to more students in low tier cities and interactive and scalable approach.

We believe this will help cooler and welcome to gain new market share in online education space and 12, our topline growth in the past quarter cooler NT the larger scale market promotion by offering for a large slides I'll elaborate casting classes to public and attract several times more traffic.

The normal time.

Cooler also added a minimal amount of customer service representatives and marketing staff to support the new initiatives. The in Q2 trial for our tutoring.

These moves have raised our spending on the marketing for us, but I would believe those are necessary and understandable measures as we found ourselves and Europe had a dynamic situation.

The two teacher class model has been offers for pop Kids program in 48 existing cities you can program in 29 existing cities and for both top casing you can't get lost business in 10, New cities, we're glad to see the model has proven to be successful as there is the interest.

Market penetration in those markets, we have tapped into.

We also saw improved the customer retention and scalability weve been proven results. We will continue this strategy going forward.

Now, let me walk through through the other key financial details for the fourth quarter.

Operating cost and expenses for the quarter was $788.2 million, representing a 2.9% increase year over year non-GAAP operating cost expenses for the quarter, which excludes share based compensation expenses were $765.9 million representing.

3.5% increase year over year comparable revenue increased by 5.3% year over year to $391.1 million, primarily due to increased the teachers compensation former teaching hours and higher rental cost for the increased number of the schools and learnings and sourcing operation.

Selling marketing expenses increased by 11.4% year over year to $118.0 million, primarily due to the addition of a number of customer our sales.

Customer service Representatives and marketing staff with the aim of capturing the new market opportunity during the pandemic, especially for the new initiatives into 12 children are pure online advertising platform core and dotcom.

General and administrative expenses for the quarter decreased by 3.3, 0.3% I'm, sorry decreased by 3.3% year over year to $279.2 million.

Non-GAAP general administrative expenses, which excludes share based compensation expenses were $261.10 million.

Representing a 1.3% decrease year over year total share based compensation expenses, which were allocated for relief operating cost and expenses decreased by 13.5% to $20 million to $23 million in the first quarter fiscal year 2020.

Operating income was $10.3 million.

Since.

Hey, 86 between 7% decreased from $77 million in San Pedro.

Prior fiscal year.

Non-GAAP operating income for the quarter was $32.5 million.

60, a 23% decrease from $102.7 million in simply Rhopressa fiscal year.

Operating margin for the quarter was 1.3% compared to 9.1% in same period prior fiscal year, non-GAAP operating margin, which excludes share based compensation expenses for the quarter was 4.1% compared to 12.2% in same period or preference for years.

The old twins zero $8, respectively.

Non gaps net income attributable to new rental for the quarter was 48.5 million representing a 49%.

Chris from the same period of prior fiscal year, Nunca basic and follow the earnings per ADF attributable to new rental were zero three 103 $0 respectively.

Net margin for the quarter was one 7% compared to five 1% against imperial preference call year.

Non gas and margin for the Porter was six 1% compared to 11, 3% San Pierre It'll Pryor for school year.

Not operating cash flow for the fourth quarter of 2020 was approximately $185 million <unk>.

Capital expenditures for the quarter worth 80 917 and.

Which were primarily attributable opening of 73 facility and renovations, having the system learning centers.

Turning off of the balance sheet.

As well Mayfair literally one to 2020, new rental have cash in the cash equivalents of 915 one minute.

Compared to 1400.

Unfortunately $2 million as solve May 31 of 2019.

And the company has 284 $8 million in term deposits and 2318 $3 million in short term investments.

Newer until stiffer, Robyn a balance which is cash clutched from graduate students four courses and recognized proportionally as revenue as are the instruction on delivered at the end of the fourth quarter I'll typically are told them 20.

Was 1324 $4 million, an increase of a one 8% from all 1000.

301 $1 million at the end of the fourth quarter of prior fiscal year.

We are now approaching too new fiscal year, despite the continuing talented from the Kobe 19 polemics.

Expect to be remain.

We're we're steel optimistic towards the company's business in the long run and will continue to focus on the following Trs first we will continue to expand our offline business, we aimed at the round, 20% to 25% capacity, including.

Learning centers, and expanding class, where Maria of some interest in learning centers full kids as well business would believe it will prepare us for further take more mercury sure from other players postal Colgate as we believe some small players without strong financial position, an online class capability and may not be able.

To sustain.

It's business during the hard Karen.

And we expect with industry, where under goal of wave of market consolidation upon the pandemic phase.

The fact that we are a major player with strong financial capacity and fresh offline facility enable us to further splenda or mercury, leading position and the penetration.

Second.

What will continue to leverage.

Investments.

Digital technologies and reintroduce hour more system more offline language training on task offerings, especially for our kitchen Paul business.

The usage of the online tools and accountants.

Or more system for August fly and 12, a whole network will be hands.

To at least with a whole lot more teaching experience will will play it's more effort in developing the pastor teaching counting the courseware and also developing more advanced training programs 12 of teachers.

For some who might not be very familiar with hour or more of this model allow me to spare a few minutes.

Now too elaborates the floor key or more strategy happy in place number one the online system is mainly use the to supplement.

Some demands b offline closets, we had in existence cities with a heavily format number two for the city's we have positive but might not have enough learning centers to get an hour all our customers are all animal system enable us to reach.

Two more students in customers number three.

For some provinces.

I don't have center seeing all of the city's auto immune system allow us to recharge two students off the us running smell a C D 's.

Number four we offer a series of complimentary low costly experimental online classes for people are students to experience our classes, hoping to attract new customers here I have to highlight of all of this or more products are supported power awfully.

Closets.

Faith supplements each other.

Have a teaching content courseware materials as well the hour teacher, some technology development and.

Ah resonated from our existing offline Centerpoint resources.

We believe that the above mentioned a lot more initiatives will be one of our both engines to increase our customer acquisition post Colby and.

And the enabling us to capture the markets consolidator opportunity.

This revamps new business model will also axillar accelerates how're margin recovery and the rest of the year and further extend our loans from margin target.

Furthermore, we will continue to be investing in and implements new initiatives, including.

Product.

Development teachers recruiting training R&D as well as sales marketing <unk> after-school tutoring business, our coolers dot com.

Third our top priority will remain as to focus on controlling cost and reducing expenditures across the company to minimize the negatively impacted from the pedantic Bottomline. We believe we'll resume the extension of overall, none gas operating margins year over year as clothing, 19th subside.

<unk>.

Here I would like to stress that we have great.

Confidence and the fundamentals of our business, which will belief will continues remains strong.

Although we are facing Virosis short term negative impact us on the Pandemics.

We have been increasing already management and different strategy will remain optimistic alpha brighter.

Prospect of our business and I believe I'll <unk> now with Britain us for the full Retrenched Malone run.

Where certain thoughts with Newland post leading brand superior education product some system in the past the teachers resources will have the ability to take further market share in channels huge after school children market.

And deliver longterm value for our customers and shareholders.

Well look you haven't near term and our expectations for the next quarter, we have factors embarrassed considerations, including the one last delay of national call call and John call. The delay enrolment for summer in autumn classes. This year in many major cities and the shortening of the summer holiday.

In many major city is 5122 weeks some resources into lie in August will be trend Dong 2324 terms, only which we typically have 425 terms she's properly.

Recent.

Ever since the recent re emergence of the Kobe 19 cases in cities such as the Beijing has delay.

The both public schools and our children schools in these areas.

Happy to Bali oldies, and president situation have cost a lower visibility all our business that performance data for the summer quarter hand, with most conservative approach to make our forecast for Q1 21.

We expect total revenue to be in the range of 911 $2 million to 953 5 million.

Representing a year over year decline in the range of 15% to 11% in terms, if not taking into consideration.

Of the impact of potential change insinuates between RMB.

Dollar the projects of the revenue decline rates.

Expect to be in the range of 14%, 10% for the fourth quarter physically or to 11 21.

To provide a breakdown expects the top and goals for key business line K to 12, all subjects. After school children business is expect to be Grove, 3% two 7%.

Oversee task prep program.

Packed chewed declined 55% 251%.

And oversee study consulting business.

Is expect to decline, 7% to 11% all year over year RMB terms.

With also expect to oversee relates business, including oversee Tesla.

And consulting service will continue to decline due to the paradigm X around the globe caused by the cancellation of the oversee exams and suspension already overseas schools and restriction on travels.

Negatively impacts on those oversee relates to business will affect the entire education.

The the overseas has flat.

Relates to industry in China, not only new rental and the main last over becoming one or two quarters. That's that's in contrast tennis effective control. After epidemic situation has said a more positive lights on our business domestically. We're pleased to see that we have <unk>.

Willie resumed narrow offline accretion over 90%.

City is that we are in and the vast majority students in this city is perhaps successfully mankiewicz back to our learning centers from <unk> online classes.

We have also seen significant pick off in the year over year turnover student enrollment and test proceeds from students in July of this month for the summer quarter.

Which is positive sign of recovery.

To conclude we are now taking all canceled.

Operational actions to boost enrollments in costume utilization for the summer and ultimate Samantha and speed up recovery old business. After the resumption of the schools and learning centers.

We're confident that demand full after school children. This will pick up Bradley in the summer and the and the rest of the fiscal year.

I Must've mentioned that these expectations reflect new rentals current preliminary reveal which is subject to change.

At this point I will take your questions a printer. Please open the call for these thank you.

Thank you so much.

She didn't answer session of which kind of things.

And a moment.

To be fair to our callers who wish to ask questions. We will take one question at the time from each color.

I have more than one question. Please request to join the question Q again I'll pay you first question has been addressed.

To ask a question. Please pass star in one on your telephone Keith.

Again, it's star N. One if you wish to ask a question.

And Albert first question comes from the line and flung from each species can you lines now open.

Hi, Thank evening Steven interesting. Thank you for taking my questions. So in terms of.

That's a new guidance the outlook essentially the tip of salt.

Can you help us to understand the assumptions behind and then also I think that'll be it took I felt like give me a couple of the internet ongoing.

And I think that's a very interesting point Steven nation since like last quarter call.

The consolidation of Vermont, Okay. So just.

See if there's any Ah number that you can quantify insight on the English pizza.

I don't know like number Sanchez.

Institution, something like along the lines to help us.

To understand with it like how much the consolidation has been.

<unk>.

Thank you so much.

I think companion, yes, yes, due to the last visibility of the of the the performance data for the summer quarter. Yes, we were using the most of the conservative way to make the forecast of the cure I think there are several key reason the number one.

We have us the <unk> electric 5122 weeks the in summer holiday.

Typically typically we have we have the four five terms of the.

Summer courses within the summer vacation, one summer vacation, but now we only have we only happy.

Three five terms sauce and also the cartoon call. We're delighted by one month so that means.

The the enrollment the window for the summer for the summer.

Hi had to be postponed by what at least one month and number two.

The recently.

<unk>, South Dakota, 19 in Beijing, and Hebei Province.

Last week.

All of them with you and.

I think the impact as a gas but.

I must medicine that.

The the Beijing in the summer I think it's really hard for us to to make the new to acquire the news doing enrolment for the summer. So can you feel take off that Beijing.

The impact all the other schools Street Kids talk business will roll by 11% so.

And.

Okay and.

<unk> rella business.

The <unk> cancelled and they still that's kind of travel and developed hill.

Volatile.

Thailand.

<unk> relationship. So we just wait and yeah. There's so many reasons, but I think we I think we are confident about the future because you know so far 90% of city.

Most most of the students of the 90 cities were in.

Went back to our learning centers and so we do believe we do believe we can take more market share from the the consolidate consolidated potentially because yeah. We we have seen a lot of small players disappear for the market I don't have the number but yeah.

It is what it is and.

That's why we open the 26, 26% expansion last year and physical your plenty and we plan to open 20th 25% New extension expansion in Fisk later planning what so Avenue.

Sure.

<unk>.

The confidence to take more mark sure from the small players.

And I also wanted to add that that successful results by far for the summer promotion also indicated the potential opportunity to keep taking market share from smaller players that fitting much bigger challenges during the pandemic period that nice.

Kind of a promotion increased total volume increased by Fox is already 20% increase in year over year, and it's very likely that when we finish the whole summer.

Totally enrollments will be even increased higher than that so these are all indicators for for the <unk>.

Potential <unk> market consolidation frat.

Thank you. Thank you <unk> just a quick follow up in terms of there's some more promotion course prices, how does that completed lucky as well.

Yes.

We we've got we've got 986 solvency enrollment.

Till the meaning to lie and it's close to one vanilla so documents.

We got the 20% of your walls and we keep the same price.

400, RMB and what believe the retention rate will be higher than last year.

So.

I do hope, we kind of gathering 5% higher of the retention rates after the summer promotional so.

Where do you have a good job and we do believe it or both of students we got from the summer promotion.

This year.

Stay with us for for for three O six more years.

Okay. Thank you. Thank at this very helpful and I think the Security's Clinton understandable. Thank you.

I think of any.

Thank you so much and as a reminder, we will take one question at that time from each.

From each color.

And the next question comes from the line of cheating from New research.

Your line no open.

Hey, good morning, good evening, everyone, Steven Steven and see see thanks for taking my question.

I guess.

Yes, my questions has.

Related to your capacity expansion of 20% to 25%.

With that guidance that you gave some of these.

Some of these.

That you're seeing underperformance and things like overseas test prep have you moved capacity work from these underperforming segments to your better performing segments already and is the capacity expansion already in.

Already counting for the shifting capacity that you are potentially scene.

And your classrooms already going from less performing two more performing type of classrooms, and so if I guess the reason I ask that is that the cost of capacity expansion. If it's net.

A lot of this I guess.

Shifting expand it shipped in capacity already should we expect the actual capacity expect the cost of it to be materially less than what we've seen in the past. Thanks.

Yeah, we we still have the beep access and plan that 22, 25%.

Physically are plenty y as I did it all.

Ask where they are they allowed to here yeah.

Yes, we do have the plan to mix a shift off the southern nonperforming learning center to close down where to move it move it from the opposite <unk> and but you know.

With all the numbers in I think we'll we'll keep the same guidance of the expense and planned by titled 225%, because we do believe absolute postal Colby, we do have a lot of.

The market potential to pick more mortgage or from the small player and two field more students into the new learning centers.

Afterward, you don't even after the a decor in 19.

Happens in January and February after that.

Three four months, we open at night.

10% of you'll learn center I think we are quite.

Already.

Prepared for the for the.

Market consolidation opportunity.

Got it thanks Steven.

Thank you day.

Thank you so much.

Next question comes from the line education Cow from Catz. Your line is that what time.

Hey, Steven.

<unk>.

Long ago question.

Situations given this has been will be 19 shreds.

Maybe it's fluctuate.

Portion.

Online.

Either your pure online.

Okay.

Oh, how are you seeing this will extra margin profile.

Alright, thank you.

Okay, Yeah, I think great cuesta.

I think those the going forward.

More we care both the online <unk> I didn't know.

In terms of the revenue contribution or more class. The will continue to be our primary our business model, but I'm gonna will learn a lot from the from the pandemic and I think we start we started to barefoot from the hubby invest in and lots of 23 years.

Oh, I won't model and it's.

As I sat.

Wherever seeing the highest good and retention rates and the customer satisfaction.

Still going to retention way, it's huh.

A higher than that.

Similar last year, so going forward I think we will.

Will do more and more on the last hour or more system and the kids globally almost almost system.

That means.

But we built the entree higher for the whole industry would have the most advanced or more system and going forward I think we almost system boitnott more student enrollment.

Whoa twice that murder up by the new our new or more model.

The Pew all in cooler Hello point, just only 4% to 5% of October revenue Buddy.

The last quarter I don't have the data very good.

M a promoter and also we.

We started to spend more money, especially on the R&D at all the teacher training and something like Vida.

And we spend a little bit more money on the marketing as well, but we do believe we can take more market share from the even from the very heavy competition among the.

Big players, but we do we will have a good future for the cooler. So we have to add the growth Andrea Oh ammo and the cooler.

Sure.

Platform understood.

Very helpful. Thank you.

Thank you.

Thank you so much.

Next question comes from the lines of my please from CD, Mike You May know ask you questions.

Hi, Eva.

Thanks for your sharing.

I wanted to ask for pizza quota we have.

Like in the P&l's the gross margin impacted by a few back that you mentioned I go online I also.

And then also a couple with a higher.

Et cetera.

The driver May I know in a short term view, let's say in the next few quarters, how would you sing.

Why was to move and how about like that in the coming.

A few years small medium tub by which part of the piano you'd think you'll have better.

Okay.

Yeah.

A hard time for for especially for a quarter for the Q4 and then maybe in the in the cure why you're floral guidance, but.

We're doing.

The two things are the same time number one.

We we <unk>, we're focusing on the the cost control so.

And reduce and reduce the expenditures.

The company to minimize forget the negative impact of of the Kobe 19. So this number one and number two.

We do believe the revamped <unk> model.

Accelerated our margin recover right in the rest of.

A year and further extend our margin profile going forward. So as for the the cure set up the fiscal year 21, Q1 murder with believe the margin decline in Chihuahua will be narrowed down compared to Q4 lost their compared to this quarter.

And we're confident that won't be able to deliver continue the marketing furniture.

After the pet that makes solar.

Four physically or 21, we expect a margin won't be recovered.

And the second half the year, Eli, especially and.

Me long term would want to $10 guidance of the hour long term Martin guidance, the non gap operating margin.

Mkay long term should be somewhere around 17%, but I must mention that.

<unk> more and more or more model, we are into our learning centers I do believe someday, we'll race hour long term modern guidance.

Okay because of the new model.

Thank you Mark.

Okay. Thank you very much fever.

Thank you so much.

And your next question comes from the line of.

P. S. So next your line is now open.

Hi, Thank and management for taking that question. My question is on the online site.

I'm very happy to see some positive.

So could you may be sure like.

How well the topic for kolar maintaining into summer and also for the online I notice.

No model as well as there in three teacher penetrating fairly successfully into lower case studies, so how would your balance.

<unk>.

And.

Similar.

On a personal business models. Thank you.

Yes.

Do last quarter cooler large skills market.

[noise] promotion by offering the free.

Large sized online classes.

And I think that we attract several times more traffic than.

And that of last year, but.

Great I'm not.

I think that.

I don't think that I can I can see something indeed, halewood number of student detailed the coolant because.

They haven't not their results.

But what I can say so we'll do believe.

Very good job.

Last quarter of the the the promoter after the probably the 19th and week, we spend more money on the R&D and the teachers training site as well as a marketing site, but.

I do believe we will us I think I do believe they are cooler.

I woke up.

Healthy.

The fat Tata and goals and the the provided the better quality product to the students going forward.

Alright, Thank you is Steven.

How would you balance lemmo.

<unk>.

Going forward it to say, it's on my longer term.

Yeah.

I think there is a two way we're using a same time yolo cooler court, so 100% ally, Okay, and Oh I'm always the liberation offline.

The resources trial online platform that.

Help us to reach off for three enrollment so, but you know all the <unk> cosworth content and even the future a reasonable.

Really lettuce.

Our offline learning center in schools and.

And the soul.

<unk>.

<unk> maybe.

There might be like internal competition.

In the same city by the.

Cooler and our model, but I think the market is huge enough. So we care more about taking more mercury are from the others. So.

I do believe fee.

Cannibalization between the two parts will be very minimal.

Okay Alex.

Okay. Okay. Thank you very much part of color that that's great. Thank you.

Thank you.

Thank you so much.

And your next question comes from the line of China.

P H capital China. Your line is now open.

Hi, Stephen King.

Thank you for picking up picking my question.

Regarding.

O M O.

<unk>.

Very effective two two.

Delivered to court in the area.

Right or.

Leave but of course, so when we have this as a pet that Nathan So we'll mix them together and so what.

So what do you think.

To the growth Martin I expect to be positive and what is the impact on that.

So when students.

Mccosh online offline and will there be a.

Price difference for them.

Also.

Right.

And to into New 50 code you is the price going to be higher than last year.

Question. Thank you.

Oh animal model will bring us more revenue comparatively traditional way. So this is number one number two.

I think the older model I think.

The students in parents locked in new or more model.

I think that the the new model is.

Progress better than than the traditional a lot. So it's drive the retention rate up and the learning center utilization right. So to some extra time and we can we can save some customer rentals. So it will drive the margin going forward by the way more model.

And.

The second time, all the price.

Thing, which are the same for the Alamo classes are with the truth. This fall offline causes and we will use the same classic energy going forward.

Yeah. This quarter I don't know the price of.

Little bit weird because of that the coupons because of the.

One O one.

The one on one business day impact after USP, that's you know going forward.

I think the hourly rates, our asp's will be.

Increased by 5% to 8% as normal so wouldn't want to $10 plus strategy going forward it won't be very.

Stay at all.

Yeah, Okay. Thank you Steven.

Yeah.

Okay. Thank you so much.

Sure.

As a reminder, we will take one question at the time from edge colors.

And your next question comes from the line of Alexey from Credit Suisse, Alex Yeah, Michelle open.

Hi, Steven.

For taking my questions.

So first of all you're very quick question you shared the guidance for kids traveling next quarter will be about 3% to 7%.

And what about the difference between pop Keith and you can and you and you can VIP.

In your assumptions for the next quarter and then.

Secondly.

If we assume.

The pandemic in Beijing in other cities, what well controlled before the start over the next academic year.

What's your expectations for the recovery.

Pace of our kids to our business.

In the rest of the fiscal year when do we expect the videos to get the normal.

Both rates.

FY 21.

Okay.

Yes.

The.

The roughly guide us.

Indeed, killing Chihuahua.

So sad.

We are using the most conservative way approach to make the forecast because of the uncertainty and even within this week.

Enrolment window is still opening okay. So it's.

Delayed by 1122 months and.

The different business lines.

You can program I think macewen in most of the conservative way.

The revenue growth will be 7272, 8% and I think that we have tape.

<unk> business in Q way.

Should be recovered should be better than with did in Q4 because.

I think about the parents will push their teeth to study more to make the up.

For the for the last quarter and the the pop case I think the revenue growth.

Will be somewhere.

Around 5% to 6%.

What I'm, saying, it's in RMB term.

And the recovery pace.

I think yeah as a side of 90% of our city is the hour learning centers.

<unk>.

Lots of one or two months and I think the trend will be better and I do believe would work better better yeah.

In stop at that in physically or 20 y and.

So I think yeah, I just want to persuade your guide to be a little bit more patient.

<unk>.

In the Q1, there are some like some uncertainty yellow like the Beijing.

Okay do you want to have a province by the going forward I do believe hour, okay, well business, what will be recovered established that especially for for the Q2 Q3 Q for.

Yeah actually to share more details with you further Q1 guidance for a kid 12, because of that second roundhouse newly identified Kobe 19 cases in Beijing.

More pressure on the recovery outside Beijing City, so the new customer acquisition in Beijing are facing bigger challenges than other cities that'll have for any receive them in the offline operation safe to take out Beijing.

All the other cities K to 12.

Look at our forecast in Q wants the trend.

Gross trend are similar to Q for us So I think the business.

They started to recover.

For indicated 12 business, Yeah, and I do believe our business school will real power learning centers in September.

Okay.

Sure. Thank you very helpful.

Thank you. Thank you very much.

Thank you so much.

And.

Question comes from the line of John Choice.

Capital markets John Your line is now okay.

Hey, guys. Thanks for taking the question I have a quick question on your overseas.

Some.

Type of consulting I know, it's a very difficult time due to the uncertainty and also pendelikon globally, but do you think this on the recent Cobra situations, we will have like <unk> like more of a long term fundamental tough on your overseas Taskwork business.

Obviously beds quarter, you guys cited a pretty.

Conservative figure, but I'm just wondering for the remaining part of this year and also in long term how should reasons about this business. Thank you.

Okay.

Yes.

Okay for a business.

We saw the significant decline in Q4 and would give the.

The conservative guidance of the cure and because of the Kobe 19, and cancellation of the exact exam sounded like the total G. R E LS and substantial.

Overseas schools and the.

<unk>.

And we have seen.

In subsidy is like the Beijing.

829 cities, the house and tofu path will be reopen the end of this month, we know.

This news and we do hold our overseeing your task Fibrilla business can be recovered step at that but.

Very hard time because of the the volatile the China United States.

Relationship between the two countries. So it sounds good sounds good and some parents choose to.

Hold there to hold a time to make the final decision to study abroad or not so yeah, and but I do believe the.

Arbenz can be recovered established that is depends on the the the the students in China low.

Most of the exam exact time of the the oversee.

The college or University to will be real opens and the only events can be relevant something like that and yeah, but it's a hard time, we just wait and see okay.

Thank you.

Oh say one more thing is I was going all the oversee password <unk>.

I didn't mean in the queue. Indeed, Q4 P. O T revenue contribution off the overseas tub task, perhaps was only 5.6% and what to believe because of the hard time. The revenue contribution Q1 off from the over the past lab.

Should be Lola, 10%.

So the revenue Extravisual from.

<unk> will be smaller and smaller.

Thank you.

Thank you so much.

And your next question comes from the line of changed from Morgan County.

Okay.

Hi, Thank you for taking that question just one question.

K two love.

<unk>.

Kim.

We are into one in familiar link for.

Actually the same holiday in sharpened.

Yeah that is.

Okay and normal.

Awesome.

Uh huh.

So can we say back.

Hi, Baby K 12 real Ralph.

During the summer Steven.

Chili.

Two.

Nick too high points.

Thank you.

To some extent, she and pro forma basis, because yeah yard crushed.

<unk>, we have the <unk>.

30%.

30% time loss of this summer.

The summer holiday and the.

Absolutely pro forma basis, I think the topline growth of the Kid while business.

The actual.

Topline growth, but give our business she'll be over.

10%.

And.

And I do believe in.

Quarters after like a Q2 and a Q3 Q for I think I do believe the Ah Caillois business of the growth, we'll go back to normal us with it and lots of the year.

Alaska.

The zip out things.

Come back again.

The Kobe 19, and some major cities.

Gotcha.

Thank you very much.

Thank you Joshua.

And please so much and your next question comes from the line.

Kim from J P. Morgan.

Okay.

Hi, Thank you Steven insists if we're taking my question pick one for me on VIP I'll need.

Anything I may have missed this all year, but can you remind us how much did the VIP revenue drop in fourthquarter in Tyler Tomorrow <unk>, what's implied in the guidance and the follow from here see that I'm. Just wondering why the second one is so bad into the suburbs still is this just a function of high price.

Like people are reluctant to convert to online or spending less because last cash flow and whatnot or.

Is there anything else more structure E. How much of this VIP track is structure in your view versus temporary encyclical setback. Thank you.

Yeah, the reacted business.

Do you can VIP a business seeing through for was down by 21% year over year.

I think.

It's easy to to understand the the parents in the case.

<unk>.

They pay to or a lot of money and we move the.

Offline cost to ally and some students choose to postpone their study plan by wet.

Bye Bye one O one business into war, but in the Q1 based on our full Cup I think b.

One O one business recovered a very quickly, especially after.

Especially in drawing.

We have seen a lot of new student enrollment enroll enrolled hour of VIP classes to prepare for the.

Gordon phone call. So I do believe the web business will be recovered.

Okay.

Thank you.

Follow up how much of the but yet so when you say recovery are we talking about year over year growth or is still down but much less than what we clearly as well.

Don't believe we will get the.

You can we ask that business grow in the coming Chihuahua.

Year over year. Thank you very much. Thank you very right. So that answers my old your question that.

The downturn this more temporary and sickly click on structural thank you.

Thank you.

Thank you so much.

And your next question comes from the line of Alex from China arrangements. Alex Your line is open.

Thanks.

Steven.

So my first question is on the <unk> strategy, specifically I noticed some small cost courses in fall semester are now.

Per cent online. So we obviously no tell has up your online business, but then it's pay on settlements. So I was just wondering.

So linear talking about or a mall.

How should we think about the importance of pure online small cost program, but then you can pop kids in the longer term.

And quick follow up how should we think about a revenue growth.

Charles different segments in the fiscal year 2021, Thank you.

Yes.

The <unk>.

Court, so chihuahua platform by the <unk> the the.

More supplemental tool to our online business, but yeah, you're right last quarter in the cure for when moved to 100%.

Offline hospital ally, but afterwards <unk> students went back to our.

Offline learning centers, and but we will put more and more we'll keep some like the ally elements going forward and.

And so yeah.

Both the pure I and the or more site all of the Marcus huge enough for both part of the potential growth and <unk> I think the competition interval competition will be very small okay and.

So yeah.

And.

Second Avenue.

So the revenue growth in 2021.

2010 minutes.

I think.

This time, it's very special and.

And for the Q1 guidance we.

Spend a lot of time and.

Society, we're still in the off the.

Still student enrollment Wendell and this week and next week. So I'll put the question to the next quarter earnings call, but I do believe our business will be recovered established that staff, especially for the seemed to the queue true and.

I think the old old business won't be recovered as normal.

Yeah, I understand take care of him lunch.

Thank you Alex.

Thank you so much and your next question comes from the line of Tummy, one from China merchants Cherokee.

The lines not open.

Okay. Thank you hi, Steven S. A C. I just have a general question.

If you looked at the overall market, which is C. A lot of the online players like you know.

<unk> sure places really really box and when I looking at her smelling expenses. It seems has not really increase a lot I was I kind of I was kind of expecting to increase a little bit for the four corners, but actually has an increase.

I I'm kind of concern to re not being aggressive enough and maybe if you can talk about yourselves in marketing kind of breakdown between.

Oh, and Moline versus cooler and and what's your strategy going forward I I'm, just kind of concerned that we're not being aggressive. Thank you.

Yeah, I think we should spend a little bit more money.

On the on the coolers dot com and last quarter.

Did the FERC.

I think with the preferred time.

The free cause for living large side cloth in the spring semester, but our society and they have lots of several lost earnings call would want to spend equivalent money Martin sites.

Leather spend more money.

Randy.

Teachers training and some.

Like the core product.

And.

But yeah I know there was some players spend a lot of money on the magnified, but I think the market. It's huge enough and we are a special because we have the number of education brand name in China, and I think the cooler and can.

<unk> <unk> benefit from the hour <unk>.

Brand name to acquire the new student enrollment this is very unique.

Okay. Thank you Jason.

And also our coolers dot com.

Have the <unk> the small size online broke casting classes.

This other special and I think we are one of the fuel players can do the small size of pure online classes and I think the business model. Thus work with testified in lots of two to three years and it's going very fast.

And.

Yeah.

That's a.

There's a clear.

Thank you. Thank you.

Yeah. Thank you very much.

Thank you so much.

We are now approaching the end of the conference call I will now trying to call.

CFO Mr. Steven Yes, please closing remarks.

Again, thank you for joining us today, if you have any further questions pleased to know hazardous to contact me or any of our Investor Relations Representatives. Thank you.

[music].

[music].

Good evening and thank you first time buyer for new or young adults as well I tried to 24th quarter results earnings conference call. At this time, although it's a bunch, okay listen only mode outgrew management's prepared remarks, there will be a question did exercise.

Today's conference is being recorded if you have any objections you may disconnect at this time I.

I would now like to true the meeting over to your host for todays constraints.

He's seen Zhao. Thank you. Please go ahead.

Thank you.

Everyone and welcome to new Oriental fourth fiscal quarter to Sun 20 earnings Conference call. Our financial results for the period were released our there today and are available on the company's website as well as on mute newswire services today, you'll hear from Stephen Yang Chief Financial Officer. After his prepared remarks.

They've done there will be available to answer your questions before we come to you know please note that the discussion today will contain forward looking statements made under the safe Harbor provisions of the U.S. Private Security Litigation Reform Act 90, 95 for a looking statements involve inherent risks and uncertainties as such our results may be materially differ.

Rent from the views expressed today, a number of potential risks and uncertainties are outlined in our public filings with the FCC New Oriental 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.

I will be available on your rentals Investor Relations website at the Investor Dotting, the Oriental Dot work.

I'll now turn the call over to Mr., Yeah Stephens. Please go ahead.

Thank you [laughter].

Hello, everyone. Thank you for joining us on the call.

Finally, alberico Koby, Nike shoes dynamics, starting from Merck post the confectionery pressure all business across the globe.

Hours.

We're pleased to report a set of financial resulting in the fourth quarter over the this fiscal year.

As you line with our expectation.

Total net revenue was $798.5 million like do you, Chris or 5.3 personally in dollar terms or 1% RMBS or.

A mix of resolved milestone Merus business line were reported which I will elaborate you sold them shortly.

Do you want to see a donning subjects tutoring and her for of course assumed the fourth quarter fiscal year, two lumped winning deeper the by 6.2% year over year to pump approximately 2 million 585600 do more of a normal increasing the number of green woman.

It's primarily due to the outbreak <unk> of the Colby My team, which has made new customer acquisition in the quarter much more challenging.

While the enrollment for the summer and all of them houses have also been delayed.

In terms of the bottom line performance.

Putting our physical your Oh, Oh look funny when management, the lever and expansion of non-GAAP operating margin of 70 basis points year over year to 12.9% compared to 12.2 present for the prior fiscal year, However for the fourth quarter two.

Alan Fleming Doodled I'm, not sure Im not fun adamec, our topline performance.

The input spending from offering free cost to promote our who are too long, Florida classes with the aim of taking more market share. Our gross margin recorded for the quarter was 51% Dol on at this point year over year, our non-GAAP often to murder fourth quarter West were point.

1% Dollarseight hundred 10 disappointing year over year on non-GAAP net margin for the quarter was 6.1% down by about 120 basis points year over year, you also to minimize the negative impact cost about Colby 19 dynamic to our bottom line, we actively adjust.

Our operational strategy and the made more effort on cost control and reducing expenses, especially for business lines. This in bigger necessarily impact in the near term.

Believes that our continuous efforts were suspended.

Absolutely process and hopefully that the adversely impact our business from a pandemic will subside widely.

Her pro blend the ASCII, which is cash revenue divided by total student enrollment.

He brings the by 14.8% you'll be in dollar terms asfour already blends the ASP, which is GAAP revenue divided by the total teaching hours deeper is the by approximately 3.5% you'll be hearing RMB terms.

We might be brick Donald the already blended ASP. Please know that you can't half.

Interest to buy 0.2% you kind of where he classes includes the by 3.5% pop kids inputs, the by 6.4% and Oversea test prep program increased by 16.1% or year over year the Army's arms.

Comparing with the normal pricing crystals, 5% to 8% this quarter's already blended ASP depots, but was lower than normal level, mainly because of the bigger decline of the over overseas test prep for one and you can we add be personalized classics business with already planned ASCII a much higher.

The other programs as well as the use of the two path as we provided to the customer to support the migration from offline class to all IMO class during the winter.

No I would like to spend some time to talk about fourth quarter performance across our individual business line in detail.

And then this end president Prs, we see a mix of the results amongst the usual Dave business line.

Our Q revenue our acute while after school tutoring business achieved a year over year Walsall revenue growth of approximately 4% in dollar terms or 8% RV terms.

Breaking down the you come in school High School subjects. After school tutoring business reported revenue increase of approximately 1% in dollar terms or 5% Army terms for the quarter. So enrollments grew approximately 0.1% year over year for the quarter.

Excluding VIP Wonderland business, you kind of slow club business grew by approximately 15% in dollar terms work 20%.

Measuring RMB.

Our pop Kids program delivered outstanding results with revenue up by about 10% in dollar terms or 14% in RMB terms for the quarter Roland decreased by 9% for the quarter low ask the operator of the Colby 19 has caused the challenges.

Our new customer in the quarter, while enrollment for the summer house on cost being delayed.

Our oversea test much Lilith oversee related business, including test prep and consulting business faced with the most difficult.

Challenges due to the cancellation of the oversee exams suspension of the overseas schools and restriction on high levels.

The oversea test prep business revenue declined by approximately 52% in dollar terms or 50% if measuring RMB. However, despite the challenges the consulting business grew by approximately 6% in dollar terms were 11% RMB terms.

And finally, we actually personalized possums business reported revenue decline of about 36%.

We are.

In dollar terms were 34% army terms year over year for the quarter.

Our summer promotion strategy also delivered outstanding results, we offer low price experimental courses from up multiple subjects in total of about 60 niceties targeting entry Brasil primary and secondary school students customers before this does this new.

School year.

The promotion price is similar to last year at around 400, RMB, even though we launched the summer promotion campaign almost a one month later langworthy last year due to the predominately to Asia. This summer promotion remain very.

Well received by the market.

We're pleased to see that's the promotion enrollment we brought in before the start of the summer holiday by mid July this year achieved a 20% increase comparing the same period of last year, reaching 986000 see enrollments.

The encouraging results have proven that such sound and highly profitable strategy in Nevada to capture and the increase our market share in high growth could well after school children markets also puts us in a more favorable position during this market consolidation periods as certain players.

May lack financial or digital capabilities to solicit sustain their operation during this challenging times.

Our this students move to the higher grades we expect the continually improvements in retention rates and the customer loyalty worldwide revenue growth in the next three to six years.

We continue to be guided Bauer optimized market strategy in this quarter encourage us capacity expansion is cities, where we see potential for rapid growth and strong profitability.

This quarter, we added a natural 44 learning centers. It lives in sees opened a new training school in the city of we hire.

As well as for dual teacher model schools in the city of could be seen tied to Mafia and issue Tom altogether.

This includes the total square meter of crossing where but approximately 26% year over year, 5% quarter over quarter by the end of this quarter.

Response, such challenging times with even grow dollar extended a extension plant on hold as we wanted to ensure that of our fleet repair will depend dynamics or.

And the World our service will resume with strong presence across different timing cities.

Uh-huh outbreak of Colby 19, I have highlighted the important importance on demand of all application. We have placed a more resources in this area and the invested $36 million during the quarter to improve their maintained our omo integrated education ecosystem.

The management also supported the migration of our offline class two small sized online clubs during the past timing.

Apart from the old demo infrastructure would have allocated part of the resources in advanced the training programs for our teachers Treehouse, they're all I offline equal to two skills, Israel is bound to be growing demand in the markets.

At the same time, we continue to upgrade our technology platforms and will broaden the usage of the online tools and content.

More system focuses line through the whole network as well as further develop the staff to teaching contents and courseware.

Peter on online offline.

Graveside location matters, we're glad to see thus our industry, leading automotive ecosystem has not only successfully managed to.

Cushion most of the impacts our service operation cost about timing.

But we also see the refund rate from the cancellations have been stabilized at a normal level as we entered into the spring semester.

Well, our customer retention rates from winter to spring semester and from spring to summer Master work.

We are trending higher than same period last year.

Which further demonstrated that our customer satisfaction and the effectiveness of our online course through our whole animals.

To further tapping into the huge markets opportunity online education, we continue to placing more resources in cooler I mean, excusing New initiative see our K 12, Ani After school tutoring business in fiscal year 2020.

This includes constant developments teachers recruiting training sales marketing R&D and other necessary comp expenses to drive the growth of the new online programs.

With these programs, we're able to reach out to more students do low tier cities and interactive and scalable approach.

We believe this will help cooler and welcome to gain new market share in the online education space and web topline growth in the past quarter cooler entity, the larger scale market promotion by offering very large size, all and level of casting classes to public and attract several times more traffic.

The normal time.

Cooler also added a minimal amount of customer service representatives and marketing staff to support the new initiatives. The in Q2 trial for our children.

These moves.

Raised our spending on the marketing Fraph buff would believe those are necessary and understandable measures as we found ourselves and Europe had the may have amex situation.

The two teacher class model has been offers for pop Kids program in 48 existing cities you can program in 29 existing cities and for both top casing, you can't and wealth business intend new cities, we're glad to see the model has proven to be successful as areas. They increased.

Market penetration in those markets, we have tapped into.

We also saw improved to customer retention and scalability.

The proven results, we will continue this strategy going forward.

Now, let me walk through through the other key financial details for the fourth quarter.

Operating cost and expenses for the quarter was $788.2 million, representing a 2.9% increase year over year non-GAAP operating costs and expenses for the quarter, which excludes share based compensation expenses were $765.9 million representing.

3.5, percents nucleus year over year.

<unk> revenue increased by 5.3% year over year to $391.1 million, primarily due to increase the teachers compensation, former teaching hours and that higher rental cop four being pressed number of the schools and learning centers the operation.

Selling marketing expenses increased by 11.4% year over year to $118.0 million, primarily due to the addition of a number of customer our sales customer service Representatives and marketing staff with the aim of capturing the new market opportunity during the.

A dynamic, especially for the new initiatives seem to our children ARPU, all I could get and platform core and dotcom.

General and administrative expenses for the quarter decreased by 3.3, 0.3% I'm sorry.

With the by 3.3% year over year to $279.2 million non-GAAP general administrative expenses.

Which excludes share based compensation expenses were 261, putting zero million dollars.

Representing a 1.3% decrease year over year total share based compensation expenses, which were allocated for related operating cost and expenses decreased by 13.5% to $22.3 million in the first quarter fiscal year 2020.

Operating income was $10.3 million.

Ends.

Hey, 86.7% decreased from $77 million in San Pedro.

Prior fiscal year.

Non-GAAP operating income for the quarter was $32.5 million.

60, a 23% decrease from $102.7 million in San Pedro prior fiscal year.

Operating margin for the quarter was 1.3% compared to 9.1% in the same period prior fiscal year non-GAAP operating margin, which excludes share based compensation expenses for the quarter was 4.1% compared to 12.2 person in same period or private school year.

Net income attributable to new Oriental for the quarter was $13.2 million, representing a 69.5% decrease from the same period of prior fiscal year basic and diluted earnings per Mcf attributable to new Oriental were 0.08, and 0.0 $8 risk.

Actively.

Non-GAAP net income attributable to new rental for the quarter was $48.5 million, representing a 49%.

Decreased from the same period of prior fiscal year, non-GAAP basic and diluted earnings per adss attributable to new rental were 0.31, and 0.3 $0 respectively.

Net margin for the quarter was 1.7% compared to 5.1% chance Imperial preference go year.

Non-GAAP net margin for the quarter was 6.1% compared to 11.3% CNS Imperial preference Collier.

Net operating cash flow for the fourth quarter of 220 was approximately $108.5 million.

Capital expenditures for the quarter worth $89.7 million, which were primarily attributable opening of 73 facility and renovations of existing learning centers.

Turning to the balance sheet.

As with Mayfaire may 31 to 220, new rental had cash cash equivalents of $915.1 million compared to 1400.

A fortune point $2 million as sort of on May 31 from 2019. In addition, the company has $284.8 million in term deposit and 2000 $318.3 million in short term investments.

New Oriental stiffer, rather than a balance which is cash Clark from dredges students for courses and recklessness proportionately as revenue as are the instruction on delivered.

End of the fourth quarter of nuclear fuel and 20.

Working 1320 $4.4 million, an increase of 1.8% from our 1003, hundreds and $1.1 million at end of the fourth quarter prior fiscal year.

We are now approaching two new fiscal year. Despite the continued talent from the covenants into that mix I expect to be remain.

We are we're still optimistic towards the company's business in the long run and we'll continue to focus on full Ntrs first we will continue to expand our offline business, we aim to add around 20% to 25% capacity, including new.

Learning centers and expanding classroom area of some interesting learning centers focus while business. We believe it will prepare us for further take more murky share from other players post to cultivate as we believe some small players without strong financial position and unlike glass capability in may not be able to.

Sustain.

As business during the hardware.

And we expect the industry aware and our goal a wave of market consolidation upon the to them into phase two.

The fact rights we are a major player with strong financial capacity and a fresh offline facility enable us to further expand our market leading position in the penetration.

Second.

We will continue to leverage.

Our investments in should.

Digital technologies and introduce our most system you more offline lumber training and test offerings, especially for our kids Paul business.

The usage of the online tools and the confidence.

A lot more system for office clients, while the whole network will be enhanced.

Two up at least the whole lot more teaching Crs will place more efforts in developed in the past the teaching covered in the courseware and also developing more advanced training programs to our teachers.

For some who might not be very familiar with our oil business model allow me to spare a few minutes now to elaborate on the floor key almost strategy. We have taken place number one the online system is mainly use the to supplement.

Supplements the offline classes, we have in existing cities with Henry format number two for the cities, we have positive but must not have enough learning centers to cater our all our customers are almost system enables us to reach out to more students and customers.

Number three for some provinces.

Where we don't have center seeing all of the is cities are oil system allows us to reach out to students of the surrounding Fella Cds.

Number four will offer a series of complementary low coffee experience experimental online classes for people and students to experience our classes, hoping to attract new customers here I have to highlight that all along with all our more products are supported power.

Offline classes.

This supplements each other.

On the teaching countenance courseware materials as well the our teachers on technology developed and.

Our originated from our existing offline centers and resources.

We believe that the above mentioned allow more initiatives will be one of our growth engines to increase our customer acquisition politically.

And enabling us to capture the markets consolidation opportunity.

This rate them new business model, we're also accelerate accelerates our margin recovery in the rest of the year and further extend our long term margin targets.

Furthermore, we will continue to be investing in and implement new initiatives, including our product with Teva accounts of development Tejas recruiting training R&D as well sales marketing income 12 after school tutoring business, our pool and dotcom.

Third our top priority will remain as to focus on controlling cost and reducing expenditures across the company to minimize the negative impact from the permit our bottom line. We believe will resume the extension of overall non-GAAP operating margin year over year over year as Colin nineties.

Upside grower.

Here I'd like to stress test we have great.

Confidence in the fundamentals of our business, which will believe will continue as remains strong.

Overall, we are facing versus short term negative impact from our dynamics and we have been increasing our investment in different strategy, we remain optimistic off a brighter.

Prospective of our business and believe our investments now with Breanna through the full return Sema Laura.

We're certain that with new orientals, leading brands superior execution products and system and the past the teachers resources would have the ability to take further market share in chance huge after school tutoring market.

And deliver long term value for customers and shareholders.

When looking at or near term and our expectation for the next quarter, we have factors embarrassed considerations, including the wellness delay of National account, our Undrawn call the delay enrollments for summer and outcome classes. This year in many major cities and shortening of the summer holiday.

In many major cities by one to two weeks summer courses in July and August will be trends down to three to four terms only which we typically have four to five terms she struggling.

As the recent of the with the recent throughout the recent re emergence of the koby matching cases in cities such as Beijing has delayed the risk resumed from the both public schools and our children schools in these areas.

The Habitability oldies and prison situation have cost and lower visibility or business performance data for the summer quarter Hannes Wittig, most conservative approach to make our forecast for Q1 21.

We expect total revenue to be in a range of $911.2 million to $953.5 million representing year over year decline in the range of 15% to 11% in dollar terms, if not taking into consideration.

Of the impact of potential change in turn rates between R&D and trust US dollar the projected revenue decline rates is expect to be in the rent of 14%, 10% for the first quarter fiscal year 2021.

To provide a breakdown of the effects the topline growth for key business line K through 12, all subjects. After school tutoring business is expect to be grow 3% to 7%.

Oversea Test Prep program is X X chewed declined 55% to 51%.

And oversee study consulting business.

Is expect to declined 7% to 11% all year over year RMB terms.

We also expect to oversee roulette business, including Oversea test prep and consulting service will continued to decline due to the per dynamics around the globe caused by the cancellation of the oversee exams and suspension will be overseas schools and restriction on travels connectivity impacts on those oversee related.

Business will affect the entire aggregation.

The the oversea test prep.

Relates to industry in China, not only new rental and may last to over the coming one or two quarters. That's that in contrast, tightness effective control of the pandemic situation has shed more positives lights on our business domestically.

We're pleased to see that we have gradually resumed our offline accretion the over 90%.

LCD instead, we are in and vast majority students in this cities have successfully migrates back to our learning centers from one or more online classes.

We have also seen significant pick up in the year over year trend I was doing enrollment and cash proceeds from students in July this month for the summer quarter, which is positive sign of recovery.

To conclude where now taken all kinds of the operational actions to boost the enrollments and costume Utilizations will summarize the ultimate semester and speed up recovery of business. After the resumption of the schools and learning centers.

We're confident that demand for after school tutoring business will pick up gradually in the summer and in the Russell the fiscal year.

I must mention that this expectations, reflecting rentals current and produce preliminary view, which is subject to change at this point our take your questions. Operator. Please open the call. These thank you.

Thank you so much the question and answer session of this conference call. This spike in a moment.

To be fair to our colleagues who wish to ask questions. We will take one question at the time from each color.

If you have more than one question. Please request to join the question Q again. After your first question has been addressed.

To ask question. Please press star in one of your Thompson keep.

Again, it's star in line, if you wish to ask your question.

And our first question comes from the line and inflow from HSBC Penny.

Okay.

Hi, Good evening, Stephen and Sisi. Thank you for taking my questions. So in terms of fee revenue guidance outlook since of the tip of soft right can you help us to understand the assumptions.

And then also I think we're talking about like every couple of the Internet ongoing.

And I think as it's an interesting point as Steven mentioned since last quarter or.

The consolidation of from Ken So just wanted to see if at any age on London that that you can quantify in spot on the industry site.

I don't like number of centers on the bulk of institution something like along the lines to help us.

To understand what how much the consolidation has been.

Speeds focusing on thank you so much.

I think if anything yet, yes, due to the less visibility of the of the performance data for the summer quarter. Yes. We are we're using the most conservative way to make the forecasts of the Q1 I think there were several key reason number one you know.

We will help us before turning back to buy one to two weeks in summer holiday.

Typically typically we have we have for how to five terms of the at the summer courses, where the in the summer vacation one summer vacation, but now with only half we only half the.

3.5, a terms.

And also in all the call our don't call. We're delighted by one month so that means.

The the enrollment window for the summer for this summer.

Hi had to be postponed by what at least one month and number two you know.

The recent arrayed emergency optical the night in Beijing, and Hobby Province.

Lastly, in Dalia and along with it and you know.

I think the impact asset gap, but you know I must mention that you know the Beijing in the summer I think it's really hard for up to to make the new too to acquire the new student enrollment for the summer. So if you will take up the Beijing.

The impact all the other schools that kids will talk talk business will grow by 11%. So yes.

And saw Okay added glass overcapacity relative weakness in our view the they all the exact council and the so thats kind of travel and they developed hill the volatile.

Thailand unit they saw the two tenants relationship. So, we'll just wait and yes, theres. So many reasons, but I think we I think we are confident about future declare seamless sofar, 90% of cities in on the most most of the students of the 90 cities where our Ian.

I went back to our learning centers and so we do believe we do believe we can take more market share from the Deconsolidate consolidates and potentially because yes. We we have seen a lot of small player disappear from market I don't have the numbers, but yes. It has one of this ends up.

Thats why we opened 26 per tonnage, 6% expansion last year in fiscal year plenty and we plan to open 20, and 25% new expansion.

Spansion in fiscal year 20 watt so having this shows our source out count the confidence to take more market share from the small players.

Yes, and I also want to add that that's successful results by far for the summer promotion also indicated the potential opportunity to keep taking market share from smaller players that are facing much bigger challenges during the economic period that not our seven promotion increased total volume.

Increased by far is already 20% increase year over year, it's very unlikely that one we finished the whole Samar. The total enrollments will be then increase higher that that these are all indicators for our for the.

Potential application, if our market consolidation for AD.

Thank you. Thank you second season, just a quick follow up in terms of the some more promotion cost prices are hard to say compared to last year as well.

Yes, you know all we we've got or we call 986 solvency enrollment so.

To the mid July and close to 1 million. So that means we got the 20% year over year wells and signal we keep the same price at 400, RMB and we're pleased the retention rate will be higher than last year.

I saw your all we do hope we can have a 5% higher of the retention rates. After the summer promotion. So it's a WIDIA verbal job and we do believe there or the both those students we got from this summer promotion.

This year will stay with us for four for three or six more years.

Thank you think at this very helpful and I think the seems quite understandable. Thank you.

Thanks.

Thank you so much and as a reminder, we will take one question at the time from each.

From each other and the next question comes from the line gene from used the search.

Right now open.

Hey, good morning, good evening, everyone, Steven Thanks, Stephen and Sisi. Thanks for taking my question I.

I guess was I guess my question has is is related to your capacity expansion of 20% to 25%.

With that guidance that you gave some of these.

Some of these.

Segments that you are seeing underperformance in things like overseas test prep have you moved capacity or from these underperforming I guess segments to yield better performing segments already and is the capacity expansion R&D in cat already counting for the shifting capacity that you are potentially seeing.

In your classrooms already going from less performing to more performing type of classrooms, and so if I guess the reason I asked that is that the cost the capacity expansion. If thats net of allows us I guess.

Shifting to expand its shipping capacity already should we expect the actual capacity spent a cost of it to be materially less than what we've seen in the past. Thanks.

Yes, we.

We will start of the deep access and planned that 20% to 25%.

In fiscal year plenty why as I did it all is as same as without a lot the year yes.

Yes, we do have the plan to make a shift off the southern nonperforming learning center to close downward to move it moving to from the over the past wrapped tool kit Robertson and but no.

With all the numbers in I think we will share the same guidance of the expense and planned by title to 25% because we do believe opposite up post the Colby. It we do have a lot of.

The market's potential to take more market share from the small player and to feel the more students into the new learning centers and.

After that you don't even after the becoming nitin.

Happens in general add federal rate and after that in the lack of three format. We open like were 10% New learning centers I think we are quite ready.

Prepare for the for the new market consolidation opportunity.

Good.

Got it thanks Steven.

Thank you again.

Thank you so much and the next question comes from the loan accretion cow from Sidoti. Your line is now open.

Hey, Steven the same as an opportunity so I think.

Longer term question.

Situation given this is Dan will be 19 stress.

Maybe structurally higher and a meaningful portion.

Yeah enrollment will be from online.

Pure online forum.

How are you seeing this will.

Margin profile long from thank you.

Okay, Yes, great pasta, you know I think those the going forward you are we carry more we care both the ROI and the though our mall I think note you know in some of the revenue contribution oil cost will continue to be our up from our business model per unit will learn a loss.

The from the pandemic Angie I think we start we started to bear fruit from the heavy in less than the last two three years.

Of the all our model added value alone yes.

With that.

We were seeing the higher student retention rates and the customer satisfaction and the student retention ways Huh.

Higher than that.

Let me hear of last year, so going forward I think we will.

Well, a little more and more on while our Calamos system and the key if you don't really almost the automotive from you know that means we will be of the power on higher for the whole industry. What happened most advanced almost system and go forward I think the automotive from we're putting us more to enrollment and then.

Its world class at margin up by the new our new or more model and the Q, all and cooler and of course, just the only 4% to 5% over our total revenue but in.

The last quarter or not the data very good the summer promoter and also we we started to spend more money aldi, especially on the R&D and on the teacher training for power Battle of Ana and we spend a little bit more money on the marketing as well, but we do believe we can't take more market share from even or from.

The very heavy competition among the the big player, but we do we will have a good future for the cooler.

So we have to add the growth engine or more as the cooler the pure online.

Platform.

Very helpful. Thank you.

Thank you.

Thank you too much.

Your next question comes from the line Mike.

Mike Let me know ask your question.

Hi, Stephen.

Thanks for your sharing.

I want to ask for pizza quota we have the.

Like PML the gross margin is impacted by a few factors you mentioned on.

Direct news and then also coupled with a higher selling expense.

You also paying that driver now I know in a short term do let's say in the next few quarters, how would we sing drivers to move.

About like that in the coming.

A few years small medium term by which part of.

Now you think you'll have better upsized improvement thanks.

Yes.

Our time for four especially for for first quarter for the Q4 and maybe in the cure wise, So our guidance, but you know how we're doing.

The two things are the same time number why you know we are we're focused we are focusing on the the cost control, so ill and reduced and reduced expenditures.

The company to minimize forget the negatively impact of the koby Nitin. So this number one and number two we do believe the revamps all our model will accelerate our margin recovery in the rest of the year and a further extend our margin profile going forward.

So for the Arctic shore up the fiscal year.

The one the Q1 Marder, we believe the margin decline in Q1 will be narrowed down compared to Q4 last year compared to this quarter and we're confident thats won't be able to deliver continued margin expansion up after the pandemics over.

For fiscal year 21 weeks type of margin will be recovered.

In the second half the year, especially and.

You may long term wed want to attend our guidance of the our main long term Martin data as you know the non-GAAP operating margin.

The long term should be somewhere around 17%, but you know I must mention that I'll wait more and more and more model. We are into our learning centers I do believe Sunday were raised our mid long term margin guidance.

Because of the new model.

Thank you Mark.

Okay. Thank you very much Steven.

Thank you so much.

Your next question comes from the line of Kim.

Yes, the mix your line is now open.

Hi, Thanks in management by taking my question. My question is on that line side.

Yes, Matt in very happy to see some positive.

So could you maybe share like that and how well the traffic.

Color and maintain into summer and also by the online I notice that our model as well as VP trades penetrating fairly successfully into Lloyd case studies, how would you balance that was that the with the brand that Colette ransacked vans.

Similar.

On April similar business models. Thank you.

Yes.

You know do last quarter quarantine large scale from marketing promotion by offering the free.

Large sized online classes.

And I think the we attract several times more traffic than the last than that of last year, but you know I'm afraid I am not seen I think that you know.

I don't think I can I can say something entirely our numbers in detail of the color because you don't have a they havent not our results.

But what I can say so we do believe.

Within a very good job in last quarter of the the promoter after the probably nitrogen and weak we spend more money on the R&D and the teachers trading side as well as some marketing side, but.

I do believe we will cause I think I believe the our cooler.

We'll look at the of the healthy top of the the fat topline growth and the the provided the better quality product to the students going forward.

Thank you as state and local how how would you balance del Amo ways that the goal going forward to say some a longer term.

Yes, you know.

I think there's a two way we're using our same time, you'll know core core as our 100% ally.

And that the oil I'm always the fresh offline or risk resources to our online platform that will help us to recharge or three enrollment so.

All the almost half housework content and even the future our recently.

Regional license from our offline learning center and schools and.

And the so.

And I know in some serious maybe.

There might be like internal competition.

In the in the same say by the.

Cooler and our model, but I think you know of the market is huge enough. So we care more about our taken more market share from the others. So I do believe C. R.

The cannibalization between the two part will be very minimal.

Okay Alex.

Okay. Thank you very much by the color that thats great. Thank you.

Thank you.

Thank you. Thank you so much.

And your next question comes from the loan of China.

Now from Th capital.

Your line is now open.

Hi, Stephen Cc.

Thank you for picking that picking my question is regarding that.

And Oh.

It's a very effective to Q.

Yes.

Delever the courses in that area heart to reach or.

But of course is what may happen flipping them.

So we'll main mix them together and yet so what's been resolved. So what do you think you impact to the growth margin I expect to be positive and given what does it impact on that also when still doing it came to cash and bank oversight and will be a.

You know price expense for the.

And also.

We are entering into physical again is that price grew to be higher than last year. So thats. The question. Thank you.

I think the oil model will bring us more revenue compared with traditional way. So this is number one number two.

No I think the all our model I think they cannot be the students and parents love the new our model.

The thing, but the the new model as progress better than than the traditional watt. So its drive the retention rate up and the learning center utilization right. So to some extent and we can we can save some custom rentals. So it will drive the margin going forward by the or more model.

And.

These.

On the prior we target vein, which we try to same for though ammo classes or with the trust install offline classes and we will use the same facility going lower no.

Yes, this quarter it on prices.

Please be aware because of the two parts because of the the the ueno on the the one on one business the impact of the ASP. That's you know going forward.

I think the hourly rate our ASP will be.

Increased by 5% to 8% as normal so would want to attend our plus strategy going forward it will be very.

Stable.

Yes, Okay. Thank you Stephen yes.

Thanks, Thanks, so much.

[music].

As a reminder, we will take one question at the time from edge.

And your next question comes from line of Alex from Credit Suisse, Alex Yes, Hello.

Hi, Thanks.

For taking my questions.

So firstly, a very quick question your shareholder.

The guidance for kids trolley next quarter will be about 3% to 7% growth.

Gross.

And what about the difference between pop Keith and you can.

And you and you can VIP.

In your assumptions for the next quarter and there's an.

Most of those secondly.

If we assume.

Q pandemic in Beijing, and other cities were well controlled before the start of the next academic year.

What's your expectations for the recovery.

Hey offer kits to our business.

In the rest of the fiscal year when do we expect the good news to get the normal growth rates.

Slide 21.

Right.

You know the.

The rather guide us.

In the coming show, our you know assets that.

We are using the most the conservative way approach to make the forecast because the certainty and.

Within this week worst our enrollment went always see opening okay. So it is delayed by one one to two months and saw.

The different business line, you know that you can approach I think in the Q1 in most conservative way.

Revenue growth will be seven to 7% to 8% and I think that we are paid business the VIP business in Q1.

Should be recovered through the better than with that in Q4, because you know.

But the parents will push their teeth to study more coming up.

For the for the last quarter and the the pop Keith I think the revenue growth will be somewhere.

Around 5% to 6%.

One thing it's in RMB term and the recovery pace.

I think the assets at a 90% of our cities our learning centers.

Where we opened.

Lots of one or two months and I think the trend will be better and so I do believe we'll do a better better in Q.

Sorry about that in fits we are planning wire and.

So I think yes, I just want to persuade youre guiding to be a little bit more patients.

In the queue and this will in into Q1 or something like the some uncertainty I will let the Beijing.

Worthy abating or hobby province, but going forward I believe our marketing while business what will be recover a stab at that especially for for the Q2 Q3 and Q4.

Yeah actually to share more details for the for the Q1 guidance for K 12, because of that said around our newly identified cobot 19 cases in Beijing and put more pressure on the recovery outside Beijing City. So the new customer acquisition I in Beijing are facing bigger challenges than that.

Our cities that have already we assume they are fly operation They did take how Beijing.

All the other cities cater 12.

Look at our forecast in in Q1 the trend.

Our growth trend are similar to Q4 setting that business are already started to recover on for predicated 12 business, Yeah, and I do believe the our page of school, where we hope our learning centers in September.

Okay.

Sure. Thank you very helpful.

Thank you. Thank you very much.

Thank you so much.

Your next question comes from the line of churn choice some by what capital markets. John Your line is now open.

Hey, guys. Thanks for taking my question I have a quick question on your overseas.

Business increased travel consulting I know, it's a very good or time due to the uncertainty and also pandemic going globally, but do you think this on the recent cobot situation will have better in past like more of long term fundamentals impact on your overseas test prep business.

Obviously bets quarter, you guys cited a pretty.

Conservative figure, but im just wondering for the remaining part of this year and also in long term how should we think about this business. Thank you.

Yes, the over the order to cover business you know when we say we saw the significant decline in Q4, and we'll give the.

The conservative guidance of the Q1, and because the koby Nike and cancellation of the exact exams I'd like to topple GRT ALS and suspension of the the overseas schools and the vis vis the threeish around title.

And Tom and but we have seen.

No in some cities like Beijing, and an eight to nine cities the hours and the total path will be reopen the investments. We know we read this news and we do hope our oversea test prep or led business business can be recovered it will step up that that's you know as a very hard time because.

The balance how the China United's plays a relationship between the two countries. So some still some students and parents choose to our to hold there to hold the time to make the final decision to study abroad or not so and but I do believe the.

The our Vince can be recovered established that as depends on the the.

The students in China, low our north the exams exact to time of the the oversee.

The college and universities will be real opens and the only events can be relevant if something like that and yes, but it's hard time, which have weighed on C. Act.

Okay.

Oh, sorry, one more thing as you know the overseas half.

First as you know I personally in the queue into Q4 FY all key revenue contribution off the oversea test prep was only 5.6% and talk with to believe because of the hard time see revenue contribution in the Q1.

Our from the over the past lapse should be below 10%.

So the revenue contribution from the obvious obviously that will be smaller smaller.

Thank you.

Thank you so much.

And your next question comes from the line of change from Morgan Stanley. Your line is now open.

Hi. Thanks next question just one question a banking take home.

Thank you mention beach and I'm, sorry painting, a similar way in Q1 intermittently Q4.

But the actually the summer holiday shutdowns.

Dan Appia ready.

And then to perform and normal summer.

It's a bit.

Okay.

So can we say that in some of my baby K 12 real crowd.

Who can attend the cadence is actually a high points to 22.

Two high teens.

Thank you.

To some extent CN pro forma basis, because yes youre correct.

Also we have the.

30%.

30% higher loss.

This summer.

The summer holiday and the yes.

Yes, absolutely pro forma basis, I think the topline growth of the Kid while business.

The actual the real topline growth because of our business should be over.

10%.

Yeah.

And.

And I do believe in the quarters after like Q2, and a Q3 Q4, I think with I do believe the acute ptwop business. The growth will go back to normal as within Lumpier.

Alaska, the the strip out things.

Back again like with the Koby 19 in some major cities.

Contracts.

Thank you very much.

And your contract.

Thank you so much and your next question comes from the line.

Kim from JP Morgan.

Right.

Hi, Thank you Stephen and Sisi for taking my question pick one from me on VIP needs.

I think I may have missed this all year, but can you remind us how much did the VIP revenue drop in fourth quarter in dollar terms of MBS, what's implied in the guidance and the follow from here will be that.

I'm just wondering why this segment is sold that into the summer still is this just a function of high price said you know like people are reluctant to convert to all nine or spending less because last cash flows and what that or is.

Is there anything else more structure E. How much of the south we IP track is structure in your view versus temporary and cyclical setback. Thank you.

Yes.

Yes, the we added business, you'll you'll do you can VIP business in Q4 was down by 21% year over year.

I think this is say, it's easy to understand the the parents and Keith.

Towards you know they pay the rollout of money and we move the.

Offline to online and the you know some students choose to postpone their study plan by wet.

Bye bye when no one business in Q4, but in the Q1 based on our forecast I think we'll be doing one on one business recovered a very quickly, especially after.

Especially in drew on you know we have seen a lot of new student enrollment enroll enrolled our VIP classes to prepare for the.

Got onto long haul so I do believe the where I think business will be recovered.

Okay.

Thank you let me I just follow up how much of double yet. So when you say recovery are we talking about year over year growth or still down but much less than what we currently are well yes.

We will get the.

You can be asset business grow in the.

In Q1.

Year over year. Thank you very much. Thank you very much so that answers my old your question that.

The downturn is more temporary and simply click on structural thank you.

Thank you.

Thank you so watch.

Your next question concerns in line of Alex.

China reasons Alex.

Thanks.

Steven.

So my first question is on the hormone strategy, specifically I know that.

On small class courses in fall semester are now 100% online. So we obviously know tell as pure online business within its Payor segment. So I would I was just wondering.

So when you're talking about oil and low.

How should we think about the importance of pure online small class program. So thank you can pop kids in the longer term.

And quick follow up how should we think about a revenue growth.

Different segments in the fiscal years 21, thank you.

Yes.

The dips you all why.

Core assets you all our platform, but also our most of the the the more supplemental true to our offline business, but youre right. When you last quarter in the Q4 will move the 100% the offline class walleye, but afterwards unit, 90% of our steel as well.

Back to our.

Offline.

Centers, and but we don't wait we will put more and more we'll keep some like the ROI elements going forward and ER and so yes, that's out in a both the pure API and all our mall site all the markets huge enough for both part of the potential.

Gross and as a family I think the competition internal competition will be very small okay and.

So yeah and was cigarettes.

[music].

Yes, so the revenue growth in 2021.

Two anytime soon.

I think Europe.

Yeah.

This time, it's very special and ER.

For the Q1 guidance, we we've spent a lot of time and FSRU unaware steel in the.

Stuart Stuart student enrollment went all in this way and next week. So I will pose the question to the next quarter earnings call, but I do believe our business will be recovered status that staff, especially for the since the Q true and.

Dick I think the oldest of this will be recovered as normal.

Yes, I understand thank you very much thank you Alex.

Thank you so much and your next question comes from line up 21 from China merchant security.

Tony Your line is now open.

Okay. Thank you Hi, Stephen Stacy I, just have a general question.

If you looked at the overall market, we can see a lot of the online players like Keno Youre now just actually the surplus really worthwhile.

And when I look at your selling expenses.

James has not really increase a little I was a kind of I was kind of expecting to increase a little bit for the fourth quarter, but actually has an increase.

How concerned are we not being aggressive enough and maybe if you can talk about your sales and marketing kind of breakdown between the OEM owned versus core learn and what's your strategy going forward I'm, just kind of concern that were not being aggressive. Thank you.

Yeah, I don't we will spend a little bit more money.

On the on the cooler and outcome in last quarter, you know our we did the first.

I think with their preferred time.

If we of course 40, the large size class in the spring semester, but our society unveil lots of several last earnings call. You know, we don't want to spend quizzing money, our marketing side, we would rather spend more money on the R&D and futures trading and some.

Yes, like the core product developments.

And.

But yeah I know, there's some players you know spend a lot of money on the marketing side, but I think market is huge enough and we are especially because we have been number one education brand name in China, and I think cooler and can the cooler and can benefit from the our new entrants.

Brand name to acquire the new student enrollment this very unique.

Okay. Thank you.

And also our pool or they'll come in a week, we have the two DFE you'll be the small size on line broadcasting classes.

This other special and I think we are one of the fuel player can do the small size are pure online classes and I think the business model does work with testified in lots of two to three years and say, it's growing very fast and Uh huh.

That's a.

There's a clear.

Thank you. Thank you.

Thank you very much.

Thank you so much.

We are now approaching the end of the can think how I will now trending very key oriented CFO Mr. Stephen Yang Please close will be Mike.

Okay. Thank you for joining us today, if you will have any further questions. Please. So now have it is to contact me or any of our Investor Relations Representatives. Thank you.