Q2 2023 New Oriental Education & Technology Group Inc Earnings Call
Speaker 4: your host for today's conference Miss Sissy Zhao.
Speaker 5: Thank you. Hello everyone and welcome to New Oriental's second fiscal quarter 2023 earnings conference call. Our financial results for the period were released earlier today and are available on the company's website as well as on Newswear services.
Speaker 6: Today, Steven Yang, Executive President and Chief Financial Officer, and I will share Nurento's latest earnings results and business updates in detail with you. After that, Steven and I will be available to answer your questions. Before we continue, please note that the discussion today will contain four looking statements and four looking statements that you will be covering later tonight.
Speaker 7: made under the safe harbor provisions of the US private security litigation reform act of 1995.
Speaker 8: Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. Nurento does not undertake any obligation to update any forward-looking statements.
Speaker 9: except as required under applicable law. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental's investor relations website at investor.neworiental.org. I'll now first turn the call over to Mr. Yang, Stephen. Please go ahead. Thank you, Sisi.
Speaker 10: Hello everyone and thank you for joining us on the call.
Speaker 11: This second quarter is a successful phase of manifestation as we have turned over a new leaf in our business and embarked on an innovative journey for rich business opportunities since the beginning of fiscal year 2023.
Speaker 12: Before going into details of our financial performance for this quarter, I would like to take this opportunity to extend our gratitude.
Speaker 13: to those who have been believing and supporting New Oriental along the way.
Speaker 14: I'm delighted to share with you that after a year of restructuring process, New Rental has successfully generated fruitful yields from our new business ventures, combined with our existing business and innovative business opportunities.
Speaker 15: Despite the seasonality of some major businesses, which has historically resulted in a slower period for every second quarter.
Speaker 16: It's immensely encouraging to see that we have achieved a meaningful profitability and better than expected margins in the second quarter. We have achieved a non-gap operating margin of 2.6% for this quarter.
Speaker 17: as compared to negative 112.0% in the same period of the prior fiscal year.
Speaker 18: which was characterized by the several significant one-off expenses incurred from class cancellations, school closures, and employee layoffs.
Speaker 19: Our key remaining business have continued to demonstrate remarkable resilience.
Speaker 20: In particular, Overseas Test-Prod Business and Overseas Study Consulting Business have recorded remarkable year-over-year revenue increase as global COVID restriction eases and Overseas Study markets is recovering.
Speaker 21: Our solid profitability, strong performing remaining business lines, and emerging new business initiatives in this quarter have again strengthened our confidence in preferring innovative endeavors and profitable growth through the rest of the year.
Speaker 22: Now, I would like to spend some time to talk about the quarter's performance across our remaining business lines and new initiatives to you in detail. Our key remaining business have achieved promising trends, while our new initiatives have shown a positive momentum.
Speaker 23: Breaking it down, the Overseas Task Force business recorded a revenue increase of 17% in dollar terms, or 30% in RMB terms year over year for the second quarter.
Speaker 24: The overseas study consulting business recorded revenue increase of about 14% in dollar terms or 27% in RMB terms year over year for the second quarter.
Speaker 25: The Ad-Als University students' distance recorded the revenue decrease
Speaker 26: of 9% in dollar terms.
Speaker 27: or 2% increase in RMB terms year over year for the second quarter.
Speaker 28: As for our new business initiatives, as mentioned in the past quarter, we have launched several new initiatives, which mostly revolve around facilitating students all around development.
Speaker 29: I'm glad to share with you that these new initiatives have further exceeded our expectations by sustaining a positive momentum and generating meaningful profits to the company.
Speaker 30: Firstly, the non-academic tutoring business, which we have rolled out in over 60 cities, focuses on cultivating students' innovative ability and comprehensive quality.
Speaker 31: We are happy to see increased market penetration in those markets we have tapped into, especially higher tier cities.
Speaker 32: with a total of 477,000 enrollments recorded in this quarter.
The top 10 cities in China have contributed about 60% of the revenue of this business.
Secondly, the intelligence learning system and device business
It's a service designed to provide a tailored digital learning experience for students.
It utilizes our past teaching experience, data, and technology to provide personalized, targeted learning and exercise content.
our continuous investment in technology
has built a competitive edge which drives our navigation amidst the change in challenges from last year.
Together with our teachers monitoring and accessing the learning curve for students at the backend system, this new innovative education service not only greatly improves students' learning efficiency, but also cultivates students' proactive learning habits.
We have tested its adoption in over 60 cities, with 108,000 active paid users in this quarter.
and are delighted to see improved customer retention and scalability of this new business.
The revenue contribution from top 10 cities in China is around 60%.
Last but not least, our smart education business, which compromise smart teaching, smart hardware, science, technology, innovation, education, and other service, serves local governments, educational authorities, schools, and kindergartens.
Our educational material and dualized smart study solution, a self-learning system, which leverages advanced technology, enables students to have complete control over the pace and the flexibility of learning at an age where remote learning becomes increasingly a maturing dream.
We also offer exam prep courses designed for students with junior college diplomas to obtain bachelor's degrees.
The above management business has been gaining wide traction and contributes the overall growth of the company.
and has attained instrumental profits since the last quarter.
Coming to our OMO system, we continuously invest in developing and reinventing our OMO teaching platform, and have leveraged our educational infrastructure and technology strengths over the remaining business and new initiatives.
to provide more advanced and diversified education service to our customers for all ages. Our OMO system has been a core support to our business, especially when some of these strict social control measures were implemented in the past months.
We have invested a total of $21 million in the quarter on our OMO teaching platform, which provides us the flexibility to continue to offer high quality service to students during the pandemic. Now I would like to give you all an update.
of cooler strategic transformation from focusing on online education to live streaming e-commerce.
to pull our strategic transformation from focusing on online education to live streaming e-commerce. In 2021, we will discuss global change with teaching graduates seeking the opportunity to successful education.
Cooler expanded its live streaming e-commerce business and established Dongfang Jinsha, which has since become a well-known platform for promoting healthy, top quality and cost effective products to the public.
The platform has formed part of the tight supply chain management and after-sales service system.
which is strictly abided by a set of relevant laws and regulations.
Leveraging our deep understanding of customer needs, Dongfang Zhenxuan continues to expand its product selection and SKUs through proactive cooperation with third parties, coupled with the development of our Dongfang Zhenxuan private label products.
The platform's business development has gratefully benefited from the maturity of China's social infrastructure and contributions and support from the community.
To summarize the Coolern, fruit bearing growth and profitability with our financial performance, for the first six months of this fiscal year, Coolern recorded the revenue of approximately 2,080.1 million RMB.
which represents a 590.2% increase from revenues from continuing operations, of 301.4 million in the same period of last prior fiscal year.
Cooler recorded 585.3 million RMB of net profit, a 638.5% increase from net loss from the continuing operation of 108.7 million in the Imperial Pride and First Court.
In the first six months of fiscal year, the gross profit of cooler reached around 982.5 million RMB, accounting for 47.2% in terms of the GP margin.
As we continuously map the platform's strategic transformation, the fast growing Dongfang engine is also committed to giving back to customers and the community.
Since its launch, Dongfang Zhenxuan has stood firm to not charge commissions from customers or NEP fees.
It has always taken close reference to industry standards, focusing on establishing the mutually beneficial long-term collaboration with the various parties so as to maximize benefits to customers.
Dongfang Zhenxue also ensures attend cost effective performance as one of its development principles.
On one hand, Dongfeng Zhenxuan focused on enhancing product capability while continuing to establish its cultural content. On the other hand, Dongfeng Zhenxuan has also organized diversifying of the diverse outdoor live streaming activities.
to promote the special agriculture products and contribute to the cultural tourism.
Through its unyielding aspiration to create value in related industries, which has also attracted and retained a larger pool of talent, cooperators, as well as followers and members, Tung Weight Centrif moderator has successfully received five years of experience in sprinter
in return millions of revenues and a loyal customer base during the reporting period.
With regard to the company's latest financial position, I am confident to share with you that the company is in a healthy financial status with cash and cash equivalent, term deposit, and short-term investments totaling approximately $2.5 million.
4.2 billion dollars.
On July 26th,
On July 26, 2022, the company's board of directors authorized the share repurchase of up to $400 million of the company ADS or common shares during the period from July 28, 2022 through May 31, 2023.
As of January 16, 2023, the company repurchased an aggregate of approximately 3.1 million ADS for approximately $79 million from the open market and on the shared repurchase program.
Now I will turn the call over to C.C. to share with you about the key financials. C.C. please go ahead.
Now, I'd like to walk you through the other key financial details for this quarter. Operating costing expenses for the quarter were $640.7 million representing a 55.1% decrease year over year. Long gap operating costing expenses for the quarter, which is school share based compensation.
Cost of revenue decreased by 31.6% year-over-year to $336.2 million.
Setting and marketing expenses decreased by 15% year over year to $95.5 million. G&A expenses for the quarter decreased by 74.6% year over year to $209 million. G Snecklchange established its winter19 capacity security Army personnel.
GNA expenses which exclude share-based compensation expenses were $190.9 million, representing a 75.7% decrease year-over-year. Total share-based compensation expenses which were allocated to related operating costs and expenses.
decreased by 39.5% to $18.8 million in the second fiscal quarter of 2023. The trading loss was $2.5 million US dollars compared to a loss of $7.5 million.
$68.1 million in the same period of prior fiscal year. non-GAAP income from operations for the quarter was $16.3 million compared to a loss of $737.1 million in the same period of prior fiscal year.
Net income attributable to new rental for the quarter was $0.7 million compared to the loss of $936.5 million in the same period of last fiscal year.
Basic and diluted net income per ADS attributable to Neurontal were zero and zero dollars respectively. non-GAAP net income attributable to Neurontal for the quarter was $17.8 million compared to the loss of $901 million.
$6.6 million in the same period of last year.
Non-gap basic and diluted net loss per ADS attributable to neuro-rental were 11 cents and 10 cents respectively.
Net cash flow generated from operation for the second fiscal quarter of 2023 was approximately 173.7 million dollars and capital expenditure for the quarter were 11.4 million US dollars.
Turning to the balance sheet, as of November 30, 2022, Nurentel has cash and cash equivalents of $1,029.9 million. In addition, the company has $1,033.2 million in term deposits.
and $2,145.7 million in short-term investments. Nurentals deferred revenue balance, which is cash collected from registered students for courses and recognized proportionally as revenue as the instructions were delivered.
at the end of the second quarter of fiscal year 2023 was $1,139.1 million, an increase of 6.9% as compared to $1,065.8 million at the end of the second quarter of fiscal year 2022.
Now, I'll hand over to Stephen again to go through our outlook and guidance with you.
Thank you, Sisi.
Looking ahead into the rest of fiscal year 2023, with the restructuring process largely completed, and our new business in the early stage, we expect our school network and geographic coverage to stabilize.
The company remains tireless in seeking new opportunities with greater flexibility and strong cash flows.
We are confident in the sustainable profitability of all our remaining key businesses, as well as the growth and prospects of our new initiatives.
for our new business.
As we observed in the first half of this fiscal year, the encouraging performance that these businesses have achieved proves that we are heading towards the right direction. And we firmly believe that businesses will be able to maintain an upward growth trajectory and generate…..
of disruption on business operations. Although we're expecting a negative impact on our financials in the coming one or two quarters, we remain confident and optimistic that overall impact will be temporary and manageable.
has
We expect total net revenue in the third quarter of the fiscal year 2023 to be in the range of $702.8 million to $719.5 million.
$3.8 million, representing yield year increase in the range of 14% to 17%.
It protects the increase of revenue in our functional currency RMB is expected to be in the range of 24% to 27%.
As the profitability we recorded in this fiscal quarter has reaffirmed our success and dedication in turning a new page and generating profits for the rest of the year. Bottom line wise, we are confident in achieving greater operating profits in the full year of 2015.
fiscal year 2023.
To conclude, we are now taking multi-pronged, operational actions to promote our key remaining businesses.
while we cautiously invest in new initiatives, which will remain new growth engines that accelerate our recovery and pursue profitable growth.
At the same time, we'll continue to seek guidance from and cooperate with government authorities in various provinces in China in alignment with the efforts to comply with the relevant policies and regulations, as well as to further adjust our business operations as required.
I must say that these expectations and forecasts reflect our considerations of the latest regulatory measure as well as our current and preliminary view which is subject to change.
This is the end of our Fiscal Year 2023 Q2 Summary.
At this point, I would like to open the floor for questions. Operator, please open the call for these.
The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed.
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Our first question comes from the line of Felix Lou from UBS. Please go ahead your line is open.
Thank you. Thank you. Hi, good evening, management. Congratulations on the strong top line as well as the guidance. My question is on the COVID impact. I know the COVID has come pretty viciously in December , but now we're past the peak.
So I'm just wondering how has COVID impacted our February quarter? If there is any quantifiable metric that would be very helpful. And my second question is on the growth expectation of our very big businesses from here.
If you were to rank the fastest to more stable business, how would you rank your various business segments? Thank you very much.
Thank you Felix. As for the evolving pandemic development in China since the last December , I know the peak in the past already. In many cities, I think some of our businesses are effectively impacted.
But as our current estimation, I think the negative impact is small. And so we remain confident and optimistic that the overall impact from the pandemic will be temporary and manageable.
You'll look at our guidance for Q3. It's very strong. The different business lines are the...
I mean the revenue outlook for ERI. Can we repeat the second question?
Yeah, yeah, so maybe for Q3 and for the whole year Which are the business lines that you think will grow the fastest and which are the ones that are more stable?
Oh, I think, you know, I think the, you know, we have two kinds of business, you know, the number one is the traditional business, the remaining business, you know, the, the Overseas related business, including the Overseas Test Lab and the consulting business, you know, which contributes
the 24, 25% of the total revenue. What I'm saying is for the whole year, 24 to 25% of the total revenue. I think the, you know, we,
we got suffered the negative impact from the last year. But this year, I think we're seeing the revenue growth is booming since two quarters ago. And the new business within the schools, we started the, we started.
the new business last year, the year before last year, right? The November 2020, yeah, the last fiscal year. And the growth is, we just started the business one year ago. The growth is extremely high. So this is the number one.
the revenue growth within all business lines. And also we don't have the dongfang zhenxue. And yeah, dongfang zhenxue, the management of dongfang zhenxue reported their first half year reports today. You saw the growth, you saw the numbers.
And so we're excited for the exciting performance for Dongfang Jinsha and so yeah, the new businesses within the EDU side, the K-12 schools and Dongfang Jinsha are the two top performers within the business line.
Thank you. Got it. Thank you and congratulations on the results again.
Thank you again.
Thank you.
We'll now move on to our next question.
Please stand by.
Our next question comes from the line of Kayne Wang from CICC. Please go ahead, your line is open.
So congrats on the profitable status for this quarter. And my question is, since COVID-19 restrictions has been lifted in China, do we expect a higher growth rate of our new business line in the next quarter and also in the next fiscal year? And if there are new opportunities for our new initiated business?
Thanks. Yeah, for the new business, as we saw in this quarter and last quarter, the encouraging performance proves that we're heading towards the right direction. And we firmly believe the new businesses will be able to maintain upward growth.
in the Q3 and Q4 and the next fiscal year. What I mean is fiscal year 2024. And we started the new business in last year, but I think we ramped up the new business very quickly.
And the good news for us is, you know, the margin for the new business in this quarter is already over 10%. So, you know, the thing about that, we started this last year and it just expanded like the two to three quarters to get the break-even point and then we make it profitable.
So it sounds very good. And I think we are on the good track. And I think the management of New Rental will pay more efforts, will create more business opportunities.
to develop the new business as we did in Dongfang Zhenxue and the new business in this year. And so we will do more to do more creative in the future.
Actually, the new pandemic situation with the gradual opening up after these recent developments of the new situation, I think probably we can see more opportunities in some certain kind of new initiatives such as the study tour and research.
domestically, but with the new situation we have confidence that there's more opportunity for this business to perform better.
Okay, thanks. That's very helpful.
Thank you....
Thank you.
Once again if you would like to ask a question you will need to press star followed by 1 and 1 on your telephone and wait for your name to be announced please stand by.
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Our next question comes from the line of Lucy Yu from Bangkok.
B-O-F-A please go ahead, your line is open.
Thank you. Thank you, Stephen, for taking the question. Congratulations on a profitable quarter. Could you please give us some color on the revenue breakdown this quarter, as well as the margin profile for different business lines? I know, Stephen, you already mentioned the new business is 10% OP margin. How about the rest? Thank you.
Okay.
For the reported quarter, the overseas related business including the overseas task rep and consulting contributed roughly about 21% of total revenue. And the domestic task rep, the adults, university students business contributed.
roughly about 6%. And the school business, including our remaining high school business, and also the new initiatives for younger students, together contributing roughly over 40% of total revenue.
and the rest are CoolLearn and some other businesses. So that's the rough contribution, yeah. Yeah, Lucy, I just want to share with you the margins by different business lines. You know, the overseas related business, overseas test labs combined with the consulting business.
the margin for the whole year, fiscal year 2023, will be around 10 to 15% margin. What I'm saying the margin is before the corporate overhead. And the AD-HOS and the university study business, I think the margin profile,
I think the business will be the break even in this year. And the school business, including the remaining business and the new initiatives, as you said, contributed 45% of total revenue. The margins should be somewhere around 20...
20 to 25% were even a little bit higher. And so the others, this is the big others, including the cooler and the foundation and the others. I think if you follow the numbers of the coolers, the first half a year report, I think you will see more the color on the margin profile.
I think it would be a revenue contribution. We talked about it in the prepared remarks. For this quarter, US dollar term, overseas tax prep business increased by roughly 17%'s 20% have added up from j jour commands
Actually, for RMB term, you should add another 10-15% more. The university student's business is stable and US dollar term is negative 8%, but RMB term is positive.
R&B term you should add another 10-15% more. The university student's business is stable and the US dollar term is negative 8% but R&B term is positive. The US dollar term is negative 8% but R&B term is negative 8% but R&B term is negative 8%
Yeah, the school business actually increased because of the new initiatives and also Cool Learn and other business increase a lot.
Thank you so much.
Thank you, we'll now take our next question.
Please stand by. Our next question comes from the line of Candice Chan from Iowa. Please go ahead, your line is open.
Hi, good evening. Congratulations on the very strong set of results and also the strong guidance for next quarter. So my first question is related to the third quarter revenue guidance and also the profitability that we are aiming for. So firstly, can you give us a rough breakdown of...
revenue for the third quarter and also in terms of the operating margin, how should we look at it for the third quarter given the strong revenue.
Thank you.
Okay, in the Q3 forecast, I think the number one, the overseas related business, test graph and consulting business will contribute 24, 25% of total revenue in Q3. And that's all for today. Thank you for watching and see you next time.
And the second, the adults and the university students business contributed 2% of the revenue because of the COVID. And the school business, including the traditional business,
remaining business and the new initiatives will contribute 43-44% of total revenue. And the other 30% comes from the cooler Zhongfang Zhenxuan and the other business like the books and the other, the 2B business.
And the margin profile, you know, I think the margins, you know, we, I think, let us start the margin analysis from this quarter. In Q2, you saw our GP margin and OP margin increase a lot compared to last year.
I think this is mainly driven by the following reasons. Number one, in the last year Q2, even for the last whole year, the first three quarters, we had the considerable one-off cost related to the class cancellation, the Learning Center closures, and the staff layoffs.
In this quarter and even in this whole year, we have no one-off cost. Number two, I think the downsides in learning center numbers led to the lower fixed cost. So it drives the margin up per learning center. Number three is, you know, the new businesses...
The margin is over 10% this year. I think it's good news for us. And also the recovery of the remaining business, for example, like the overseas related business, generate a higher margin than that of last year. And the last reason, the number four is the dongfang zhenxue, the cooler. The last stream e-commerce business enjoys higher margin.
So it makes the margin...
the price margin up for the whole group. And going forward, I think all of this business alliance, we will contribute even higher profit and drive the whole margin up year over year. So we are quite optimistic of the margin profile of the whole...
tutoring activities. So do we see any impact on our business overall like in terms of pricing and also the expansion? Thank you.
Actually, since the government has issued the policy last year, I think we have been actively exploring the new business direction and follow all the central and local government authorities' rules. You mentioned the new rules.
on to our next question.
Please stand by.
We have a follow up question from the line of Felix Lu from UBS. Please go ahead. Your line is open.
Hi, Stephen and Sushi. My follow-up question is on your Learning Center Network. I noticed you opened two centers in this quarter, so I think that's a good step forward, although a small step. Could you share some color on your expansion outlook from here maybe?
a lot on OMO system in the past so many years. And we moved a lot of class from the offline to online. So it saves the classroom, the areas. And we changed some of the traditional business classroom areas.
to the new businesses. So this is the internal change. And next year, we do hope we open more learning centers. But so far, I think it's too early to say how many learning centers we set up for the new year because we have not finished the new year budget.
I think I want to share with you the new Learning Center expansion plan next quarter earnings call.
Okay, great. Thank you.
Thanks.
Thank you.
Once again, that's star one one to ask a question. Please stand by.
Our next question comes from the line of Lian Duan from HTSC. Please go ahead, your line is open. Good evening Steve and Sisi. My question is about the ratio of teachers to students. Could you share some color on...
the teacher to student ratio on each learning series segment. Thank you.
And do you have more plan to recruit more teachers in the next two years?
I can share with you the teachers' number. By the end of this quarter, we have 26,000 teachers in total.
And because we started a new business just since the last year, so I think it's too early to calculate the teachers to students in racial. I think maybe next quarter in the new year we'll disclose the racial. And yeah, I think we're hiring new teachers because we're starting a new business.
about the utilization and the efficiency of the whole company. So I think we believe we will keep the higher utilization and the higher the operation efficiency for the whole company in the future. It's what I 9par screening says, but our grade is such that not everybody knows
Thank you. Okay. Thank you.
Thank you, we'll now move on to our next question.
Please stand by.
Our next question comes from the line of DS Kim from JP Morgan. Please go ahead. Your line is open. Hi, Steven. Hi, it's Happy New Year and congratulations on a strong result. I actually just have one quick follow up question on all your comments.
regarding margins. Can I ask how much of a corporate overhead cost shall we expect at this stage? I.e., I remember corporate overhead used to be like high single-digit ish of revenue pre double reduction policy like two years back.
But given much smaller or reasonably smaller revenue base now, I'm wondering how much of overhead we should model and expect for this year, either as percentage of revenue or dollar term, would be appreciated.
Yeah, but I think since the last year, we would cut off some fixed costs and expenses in the headquarters. So I think the headquarters expenses as the percentage of the total revenue.
will be stabilized. And roughly it's a 6%, 7% of total revenue. This is the total expense from the hardware owners. Thank you, that's a very impressive and a great margin guidance. If I may follow up.
Again, on all your comments on the expansion plan, I don't want to ask too much about the number of learning centers, but may I check for non-subject tutoring classes.
Where do we see incremental demand opportunity, say, top tier cities, top 10 cities versus the rest of the nation? Where do you see stronger demand and where do you think we'll open more centers in terms of the geographical exposure and that's all from me. Thank you again for taking my question.
I think the new business development in the top tier cities is a little bit better than the low tier cities. And this is what we have seen in the past quarters. But I do believe even in some low tier cities.
I think they will catch up because they started the business a little bit slower than the top cities. And so almost everywhere we're seeing the business opportunities for the non-dynamic courses almost everywhere.
Mmm, yeah, that's all you want. Yuck, yuck.
As I said, we don't have the capacity expansion plan. We just want to keep the same learning center numbers until the next quarter or even until the end of this fiscal year. And next year, maybe we'll spend...
expand some new learning centers. But so far we haven't finished the next year budget. I will show you the numbers next quarter.
Thank you. Thank you, sir. Thank you, sir.
Thank you. We'll now move on to our next question. Please stand by.
Our next question comes from the line of Kenny Wang from CICC. Please go ahead, your line is open.
Hi, I have a follow-up question. I noticed that there's a significant increase in non-academic tutoring enrollments in Q2. Would you like to specify the driver behind, and do we have any target for the enrollments during the whole year? Thanks.
I think the market is always there and we do have the famous brands and we do have the reply things to be really how these people feel when I speak about women being able to teach her.
and
Yeah, we started the business just a year ago. You saw the numbers. And the exciting news for us is that the profitable of the new business is exciting. It's much better than we expected.
Yeah, we started the business just a year ago. You saw the numbers and the exciting news for us is that the profitable of the new business is exciting. It's much better than we expected.
For the new business, I don't believe in the rest of this fiscal year, the new business, the revenue growth will be accelerated again. And even for the next new year, fiscal year 2024, I don't believe the business of the industry will be Nitr
the revenue growth of the new business will be high.
So we're optimistic about the next courses of business.
So we're optimistic about the pandemic course of business.
Yeah, and by the way, the non-academic tutoring business, according to our experience in the last several quarters, we think its systemality is not that apparent as some other test prep business. So, every quarter probably the enrollments will be.
It's relatively stable if you do the Q on Q comparison. Also, as new business development in all the local cities, probably you can see strong momentum as we have seen Q2's growth or...
the enrollment trends are also similar or even better than Q1.
Yeah, I see. That's very clear. Thank you.
Okay thank you we'll now go to our next question please stand by.
We have a follow up question from the line of Leon Dwan from HTSC. Please go ahead with your question.
Just one more follow-up question. Do we have any color on the retention rate for each segment?
I think the retention rate is related to the traditional K-12 business. We closed down the K-9 business last year. But for new businesses like the non-dynamic courses, we just have a trace of the retention rate.
The good news for us is we are seeing the retention rate is getting higher and higher. And for example, as for the non-academic courses, the retention rate now is between 65% to 70%.
We just started a new business and the retention rate now is better than we expected. And we believe the retention rate will get higher going forward.
And over the past five years, the university is doing business. That's one off. Yeah, that's one, roughly it's one off. Understood. Thanks. Thank you.
Thank you, it's very clear.
Thank you.
We are now approaching the end of the conference call. I will now turn the call over to New Orientals Executive President and CFO Stephen Yang for his closing remarks.
Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives.
Thank you.
Thank you.
The conference will begin shortly. To raise your hand during Q&A, you can dial star 11.
You.
Duan from HTSC, please go ahead, your line is open. Good evening Steve and Sisi. My question is about the ratio of teachers to students. Could you share some colour on the teacher to student ratio on each learning service segment? Thank you. And do you have more plan to recruit more teachers in the next two years? Thanks. I can share with you the teachers number. By the end of this quarter, we have 26,000 teachers in total. And because we started a new business just since the last year, so I think it's too early to calculate the teachers to student ratio. I think maybe next quarter in the new year we'll disclose the ratio. And yeah, I think we're hiring new teachers because we started with new businesses and for some non-academic courses or the other new businesses, we do need to hire more teachers. But the key is, we don't want to hire too many teachers.