Q4 2025 TAL Education Group Earnings Call
Jackson Ding, Unknown Executive, Felix Liu
Speaker Change: Ladies and gentlemen, good day and thank you for standing by. Welcome to TAL Education Group's fourth quarter and fiscal year 2025 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question in the non-succession.
Speaker Change: Please be informed that today's conference is being recorded. I would now like to hand the conference over to Ms. Fang Liu, investor relations director. Thank you, please go ahead.
Speaker Change: During this call, you will hear from Mr. Alex Tom, President and Chief Financial Officer and Mr. Jackson Ding, Deputy Chief Financial Officer
Speaker Change: Following the prepared remarks, Ms. Peng and Mr. Ding will be available to answer your questions.
Speaker Change: Before we continue, please note that today's discussions will contain four-looking statements made under the Stiff Harbor Probations of the U.S. Private Security's Litigation Reform Act of 1995.
Speaker Change: Following forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: Potential risks and uncertainties include, but are limited to those outlined in our public filings with the SEC. For more information about these risks and uncertainties, please refer to our filings with SEC.
Speaker Change: Also, our earnings release, and it's called include discussions of certain non-gaps and national measures, please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures .
Speaker Change: I would like to turn the call over to Mr. Alex Pome, Alex. Please go ahead. Thank you. I'd also like to thank all of you for participating in today's conference call. So I'll begin with an overview of our business progress for the fourth quarter and full fiscal year 2025. Next, Jackson will review our operational advancements and financial results. To conclude, I'll also provide a brief up
Speaker Change: States on our strategic priorities, and I'll work moving forward.
Speaker Change: So, with that, let's get started with our core business performance this fiscal year. To begin with, our learning services delivered steady growth in fiscal year 2025.
Speaker Change: Really empowering learners through both offline and online enrichment programs. An uptick in user demand and our relentless focus on high quality learning experiences were really the key drivers of this progress.
Speaker Change: During the past quarter, we strategically added new enrichment learning centers in the existing cities.
Providing local communities was more accessible and convenient learning opportunities.
Speaker Change: Our online enrichment learning business also remained healthy, consistently providing engaging learning experiences through technology-driven learning products.
Over the past year, we conducted in-depth analysis.
Speaker Change: of user preferences and tailor the development of new products to better meet their needs. We also continue to refine existing offerings based on user feedback, and we enhance teaching effectiveness by integrating smart interactive features.
Speaker Change: Then, for learning devices, we expanded our product offerings to reach a broader user base, making it easier for users to find the right learning solution for their needs. We also integrated more smart features and learning resources to better support users on their self-learning journeys. Through monthly feature updates and content refresh.
Speaker Change: We provide the users with an increasingly intelligent and practical study companion, making it a home self-learning, more engaging and efficient.
Speaker Change: So with this operational momentum as a backdrop, let's turn to our financial highlights for the quarter and the full year.
In the fourth quarter, we recorded net revenues of
600 and 10.2 million US dollars.
Speaker Change: Or 4.44 billion RMB, reflecting year over year growth of 42.1% and 44.3% respectively.
Speaker Change: On a non-GAF basis, loss from operations was 1.7 million US dollars, while net income attributable to TAL reached 7 million US dollars.
Speaker Change: For the fourth of the year, that revenue is total 2.3 billion US dollars.
Speaker Change: or 16.2 billion RMB, up 51.0% and 52.2% year-over-year respectively. non-GAAP income from operations amounted to 61.8 million US dollars, with non-GAAP net income attributable to TAL at 149.5 million US dollars.
Speaker Change: Before Jackson takes us through the detailed operational and financial review, I like to share a brief update from the board.
Speaker Change: We are delighted to welcome Mr. Yiwen as TAL's new independent director and chairman of the Compensation Committee Mr. Huang brings extensive experience across both the business and education factors and we are confident that his insights will further strengthen TAL's strategic direction.
Governors, and Operational Excellence [inaudible]
Speaker Change: We also want to express our deep appreciation to Dr. Wei Chen for his outstanding service and invaluable contributions over the past decade. We look forward to continuing our collaboration with Dr. Chen in his new advisory role.
Speaker Change: So with that high level overview complete, I'll now pass the call to Jackson to delve deeper into our operational execution and detailed financial performance.
Unknown Speaker 06.10.15
Speaker Change: Jackson, thank you, Alex. Before diving into the details, I'd like to know that all quarterly financial figures discussed today are unordered.
I'll start with our learning services and others business.
Speaker Change: which includes a broad range of learning programs for customers. Learning services sustained its revenue growth momentum in the fourth quarter of fiscal year 2025.
Speaker Change: Over the past few quarters, revenue from pay-o small class enrichment programs has achieved year-over-year growth.
We have consistently provided high quality services.
earning positive feedback from both the learners and their parents.
While we have expanded our learning center footprint,
We've maintained a disciplined approach.
Speaker Change: We're carefully evaluating market demand, user feedback, and operational efficiency to balance growth with quality.
Speaker Change: This approach has been further validated by key operational metrics and has directly contributed to year-over-year enrollment growth.
Speaker Change: Notably, the retention rate for pale small class reached 80% this fiscal quarter.
Speaker Change: In our online enrichment learning business, ongoing innovation has helped us navigate the ever-evolving market landscape and our user's dynamic needs.
Guided by user feedback and marketing sites,
Speaker Change: We're continually investing in strengthening our online product capabilities and refining our operational and marketing strategies.
Speaker Change: I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Through new products and interactive formats, we deliver tangible value to learners.
enhancing both learning outcomes and user experiences.
Recent initiatives include interactive learning modules and AI-powered assistants.
Speaker Change: Additionally, by building diverse customer touchpoints across multiple channels, we're expanding on market reach among current and potential users and gaining deeper insights into their
Speaker Change: Copyright © 2018 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.
This has enabled us to scale our operations.
while laying the foundation for sustained long-term competitiveness.
Next.
Let's tend to our content solutions business.
Speaker Change: Our Learning Devices business grew year-over-year in the fourth fiscal quarter, fueled by our enhanced product of an amendment and go to market capabilities.
We have expanded our learning devices product.
Speaker Change: Profolio to appeal to a wider audience in the past year.
Dr. Huang,
We also further upgraded our hardware and software, Enriching our content library.
Speaker Change: Refining the reading experience and integrating practical AI features to create more immersive, self-directed learning.
This February.
Speaker Change: We further enriched our content across our entire range of learning devices.
Speaker Change: by providing fresh and classic materials with progressively challenging exercises, we keep students engaged while developing their ability to question, analyze, and problem solve.
Speaker Change: Our unique ladder approach, which guides children step by step with tailored hints.
Help them build confidence as they master new skills.
Speaker Change: with age-appropriate tools like phonetic aids for young learners and interdisciplinary content for older students.
Speaker Change: Dr. Jackson Ding, Unknown Executive, Timothy Zhao, Yiwen Zhang
Speaker Change: Through partnerships with over 20 publishers, we have expanded our library to include thousands of titles.
Speaker Change: Thanks for enhanced product capabilities. Our learning devices have sustained solid user engagement while reaching a broader audience.
Speaker Change: Notably, as our active user base continues to grow, the weekly active rate has remained stable
Speaker Change: with an average dating time spent of approximately an hour per device throughout the quarter.
Speaker Change: Next, please let me now review our financial performance for the quarter.
Speaker Change: The company reported net revenues of $610.2 million US dollars or $4.44 billion RMB. Representing a year-over-year growth
Speaker Change: of 42.1% in U.S. dollar terms and 44.3% in RMB terms.
Speaker Change: This increases were attributable to the growth in both our learning services business and our content solutions business.
Now look at our calls.
Speaker Change: Cost of revenues rose 44.7% year-over-year to 292.6 million U.S. dollars from 202.2 million U.S. dollars.
Speaker Change: Gross Profit stood at $317.6 million, which was $39.7 above the prior year period.
Speaker Change: Gross Martin was at 52.0% compared to 52.9% from the same period last year.
Turning to Operating Expenses Dr. Huang,
Speaker Change: Selling and marketing expenses for the quarter were 218.0 million US dollars, up 73.1% from the prior year.
Speaker Change: The non-GAAP equivalent of these expenses increased 77.9% to 214.3 million US dollars
Speaker Change: As a percentage of net revenues, non-gab-celling and marketing expenses accounted for 35.1% versus 28.0% in the prior year period.
Speaker Change: With the change, mainly resulting from increased selling and marketing activities through some online channels.
Speaker Change: General and administrative expenses increased 0.8% to $118.2 million, compared to the same period last year.
Speaker Change: The non-GAAP measures showed a 3.5% rise to $108.5 million US dollars.
Speaker Change: However, as a percentage of net revenues, non-GAAP general administrative expenses decrease
Speaker Change: Total share-based compensation expenses declined 30.1% to 14.3 million US dollars from 20.5 million US dollars in the comparable period.
Speaker Change: Laws from Operations was $16.0 million US dollars for a quarter. This compares to a last from operations of $11.1 million US dollars in the same period last year.
Jackson Ding, Jackson Ding,
Speaker Change: On a non-GAAP basis, the loss from operations was 1.7 million US dollars compared to non-GAAP income of 9.4 million US dollars in the same period of last year.
Speaker Change: Net loss attributable to TAL was $7.3 million US dollars for the quarter. While in the same period last year, there was net income attributable to TAL of $27.5 million US dollars.
Speaker Change: non-GAAP nat income attributable to TAL was $7.0 million US dollars versus $48.0 million US dollars in the same period last year.
Thank you. Thank you.
Speaker Change: Regarding our cash position as a February 28th, 2025, we held 1.77 million US dollars, excuse me, we held 1.77 billion US dollars in cash and cash equivalents.
Along with $1.85 billion US dollars in short-term investments.
and 220.5 million US dollars, a restricted cash.
Speaker Change: In terms of cash flow, net cash used in operating activities was 226.3 million US dollars during the quarter.
Jackson Ding, Jackson Ding, Unknown Executive, Timothy Zhao,
Speaker Change: For the full fiscal year 2025, net revenues were 2.3 billion US dollars, or 16.2 billion RMB.
Speaker Change: Reflecting year-over-year increase of 51.0% in US dollar terms and 52.2% in R&B terms.
Gross Profit was 1.2 billion US dollars.
48.9% higher than the previous year.
Speaker Change: Laws from operations was $3.2 million US dollars in the fiscal year 2025.
Speaker Change: Compared to lots of operations of $69.2 million US dollars in fiscal 2024.
on a non-GAAP basis.
Speaker Change: Income from operations was 61.8 million US dollars versus 19.7 million US dollars in the prior fiscal year.
Day.
Speaker Change: $149.5 million US dollars, while previous fiscal year showed $85.3 million US dollars.
00.09.21 Presented by Red discouraged
Dr. Huang,
Finally, I'd like to briefly address our shared repurchase program.
Speaker Change: In April 2025, the company's Board of Directors approved a 12-month extension of its Sure Repurchase Program, originally launched in April 2021.
Speaker Change: Under the extended program, the company may spend up to approximately $490.7 million US dollars.
to repurchase its common shares through April 30th, 2026
Speaker Change: In fiscal 2025, the company had repurchased 0.5 million common shares for a total consideration of approximately 13.1 million US dollars under the program.
Speaker Change: That concludes my review of a business performance in financial updates. Alex, I'll now hand the call back to you for a outlook.
Alex Peng: Now I'd like to share insights into the company's strategy and all looks for fiscal year in 2026. So first,
Alex Peng: We remain committed to sustainable growth in our core business life.
Alex Peng: We will continue to uphold the high quality standards for both our offline and online enrichment learning products and services to deliver quality programs to an even broader user base.
Alex Peng: We anticipate that our learning services will continue to be our largest revenue stream in the new fiscal year.
Alex Peng: Beyond learning services, we're also focused on expanding our learning content solutions. We will continue scaling this distance carefully.
Alex Peng: Refining our content and device features and leveraging technological advancements, particularly AI-driven features to enhance learning outcomes.
Alex Peng: As our business continues to evolve and grow, we're actually exploring new fields and emerging sectors to extend our core business lines reach. Along the way, we're also steadily strengthening our channel capabilities, building brand recognition, and deepening our engagement with the new generation of parents and learners.
Alex Peng: Through these efforts, we're consistently cleaning valuable insights from outstanding companies across various industries, and we'll continue to refine.
Our pro-strategies, accordingly, in the upcoming fiscal year.
Secondly, we are committed to ongoing innovation.
Alex Peng: at the intersection of learning and technology. By integrating cutting edge AI with pedagogical expertise, we seek to meanfully improve both learning and teaching experiences.
Alex Peng: Looking ahead, we'll continue to enhance our product and services to meet the evolving demands of digital learning, redefining intelligent learning solutions for the AI era.
Alex Peng: Throughout history, every major technological breakthrough from television to computers and the Internet has found its way into education.
Alex Peng: Today we are discovering and shaping how AI can transform learning and integrating these advancements into our products and services. We also remain open to collaboration and knowledge sharing, ensuring that our insights into smart learning contribute meaningful value to the education community.
Alex Peng: Finally, we will focus on refining operations details to boost overall efficiency and profitability. While we expect to benefit from economies of scale as our revenue grows,
Alex Peng: Efficient management will be increasingly critical as our operations expand and become more complex.
Alex Peng: We'll closely monitor efficiency metrics across all business lives and make timely adjustments to optimize every aspect.
Alex Peng: of our operations, including content creation, product R&D, sales, marketing, and beyond.
Alex Peng: So that concludes my prepared remarks. Operator, I think we are ready to open the call for questions.
Thank you.
Speaker Change: We will now begin the question and answer session. To ask a question, please press star one on your telephone. You will then hear an automated message advising your hand is raised. To adore your question, please press star one one again.
Speaker Change: We will now take a first question from the line of Eddie Wang from Morgan Stanley , please ask your question Eddie.
Dr. Huang,
Eddie Wang: Thank you, Alex Jackson, for taking my question. My question is regarding the pale enrichment learning
Eddie Wang: Could management provide an update on the progress of the Fourth Quarter Payo Englishman learning business and how should we view the growth strategy and expansion pace for Payo in the next fiscal year? Thank you.
Thanks, Adi. This is Alex. Let me take that one.
Eddie Wang: You know, really as we've seen in recent quarters, pay you continues to deliver a steady year over your bros.
I think we've already covered the key highlights.
Eddie Wang: in our preparing marks. So let me in fact focus more on our path forward. Okay. So looking ahead to the next first school year.
Eddie Wang: You know, really, as long as our key growth drivers, which is market demand, product capability, our ability to recruit and train our instructors, as long as these key growth drivers hold up, we really expect to maintain this positive momentum for you.
Eddie Wang: But I also want to just add, technology will play an increasingly important role in our strategy, right? So, you know, you may have noticed we are expanding the role of
Eddie Wang: of our dual small and large spring solutions. It really brings smart classroom experiences to more students. I think, you know, literally it's re-imagining the classroom learning
Eddie Wang: And at the same time, we're continuing to innovate our products and refine our...
Eddie Wang: Product Markets Set to create solutions that are both students, you know, law by students, and trusted by parents. You know, we're firm.
Eddie Wang: really in our belief that sustainable growth in this market comes from developing and continuously developing these high-quality products with strong performance metrics that really truly meet user needs and it's not just user needs in a broad sense but localized user needs. And this will remain central to our product development philosophy and strategy.
Eddie Wang: I know many of you are interested in expansion regarding expansion. We're maintaining the same prudent approach that has served as well this past year. You know, each decision to open a new learning center really carefully balances multiple factors. The local market demand, you know, when I say local is truly local to a city, to a district, to a community. The customer adoption, operational capacity.
Eddie Wang: University and the efficiency target. So I think this discipline, methodology will continue to guide our business to fiscal year 26. Really, if I take a step back, I would say
Eddie Wang: We remain optimistic about industry's growth potential. In this new sector, I think I've talked about before, we truly feel the enrichment learning is hitting that the need was this new generation of parents and learners, and we're optimistic about our ability to deliver high quality products.
to meet that future needs. Get up.
Really, as we are...
Operating from...
Eddie Wang: a significantly higher baseline than a few years ago. We expect pale enrichment year on year growth rate to probably gradually taper off moving forward. But our focus really remains on what I just said before, sustainable healthy growth.
Eddie Wang: Rather than pursuing hyper growth for growth thick. So Eddie, I hope that answered your question.
Speaker Change: Thank you. I'll next question comes from the line of Timothy Zhao from Goldman Sachs. Please out your question, Timothy.
Timothy Zhao: Great, thank you management for taking my question. My question is regarding the learning devices or the learning on a solution segment. Just wondering if management can give us some color on the profitability profile of this segment in the fourth quarter and also in the fiscal year last year. And when you look into fiscal year 26, just wondering if there's any updates on your strategy on these specific segments and what are the new plans?
The measures that you are going to take to further improve the prosperity of the Lincoln and the
Thank you.
Alex Peng: Thanks, Timothy. This is Alex. Let me take this one as well.
Timothy Zhao: Look, our learning device business reported in an adjusted operating loss in our PNL in the fiscal 4th quarter and fiscal 4th year of 2025.
Timothy Zhao: It's a new product group that launched about two years ago, and we believe this person still has room to really expand access.
Timothy Zhao: to high-quality learning experience that a home self-learning experience we just talked about, really and that among a much wider range of customers.
Timothy Zhao: At this stage, our priority really remains building long-term competitiveness and capabilities. So, if I move to our strategy for fiscal 2026,
Um, um,
Timothy Zhao: Artificial Intelligence, Empower Functionality, Upgrades, Continuously, We Continuously Expand Our Content Library. We believe these are the core values we deliver to our learners, right? And, you know, I think that's been a practical occurred in the past two years of
Timothy Zhao: Regular and Continuous Updates to Functionalities and to the Compton Libraries
and expanding of the, you know, portfolio, really words.
Timothy Zhao: Improve Product Marketsfit, and Expand Access. You know, as I said, we're very convinced that there is...
ample room to expand.
Timothy Zhao: Access and thereby expand the access to high quality learning experiences, high quality content. So our expanding portfolio will aim to do that.
Timothy Zhao: I think, you know, we've been enhancing our distribution of marketing to reach more users while deepening engagement with existing customers, both are, you know,
Timothy Zhao: Very crucial. And you know, you probably have the same way and we've discussed this in
Timothy Zhao: on previous calls. You know, when we look at the go-to market, we look across different channel format, and you probably have noticed that, you know, that there are, you know, more offline, you know, channel and points of sales available. So these are a continuous effort to, I think, both expand channel capacity but also really to deepen channel capabilities. And we'll see.
Timothy Zhao: Both user growth and user engagement are really priorities as we scale the learning device
Timothy Zhao: I would also say operational efficiency, like as revenue scales will leverage economies of scale or refine cost structures and optimize operations to drive healthy and efficient business growth, I think you know.
Timothy Zhao: While I said it's new for just two years, I think we've gained experience across all these dimensions to really drive further operational efficiency gains.
Timothy Zhao: So in summary, we view this as a multi-year capability building, where every initiative was really designed to build sustainable competitiveness and pave the way for both future growth and profitability.
Timothy Zhao: So, Timothy, I hope that answered your question. Thank you. Thank you. Thank you for the company hands
Speaker Change: Next question comes from the line of Sophie Zhang from CICC. Please go ahead, Sophie.
Sophie Zhang: Thanks for taking my question. So, could you please break down the top line grows by business line for the past quarter to help us better understand the respective drivers and also could you elaborate on what led to the year over your decline in operating profit and what were the key reasons behind the growth in self and marketing spend. Thank you.
Sophie Zhang: Sophie, thanks for the question. This is Jackson. Let me take this one and let me maybe impact this question a little bit. I think you asked both about top line and bottom line. So let me address top line performance first.
Sophie Zhang: Our pale, small-caughting Richmond programs remain both the largest revenue contributor.
Sophie Zhang: and the primary growth driver within our learning services business line. Meanwhile, learning devices...
Sophie Zhang: You continue to be the largest revenue contributors, contributor within content solutions while also serving as a key growth driver. So let me maybe add additional color on these.
Felix Liu: to Businesses. Payal Enrichment Delivered Solid Quarter Over Quarter and Year Over Year Growth, this quarter and this year.
Felix Liu: While we now operate from a significantly higher baseline than in prior years, which as Alex talked about, will naturally moderate your growth rate over time, we expect continued expansion
supported by expanding market demand, and our enhanced product capabilities.
Felix Liu: Learning Devices So a Sequential for Quarter Decline, Quarter Over Quarter Reflecting Typical
Felix Liu: After a peak in Q3 due to e-commerce festivals. However, this business remained healthy when we look at year-over-year growth.
underscoring the business's momentum. When we look out,
Full Year Fiscal 2025.
Speaker Change: Both Learning Services and Content Solutions delivered year-over-year revenue growth. Maintaining a stable business mix relative to fiscal 2024. Now, let me adjust the second part of your question on margin profile. Maybe let's look at first general administrative expenses. Non-gab DNA expenses.
Speaker Change: That's primarily due to increased activities in online channels aimed at market penetrations and product visibility enhancements. That was the main reason for year-over-year decline in our adjusted operating margin. Additionally, we conducted brand-building initiatives then it may not yield immediate revenue, but expected.
to promote customer awareness and our market positioning.
Speaker Change: As part of a strategy, we are committed to establishing and strengthening multi-channel communication mechanisms with our users. For digital products
Speaker Change: such as learning devices, insurers.com, these efforts are crucial in fostering deep customer engagement, reaching more users and gaining broader acceptance.
Dr. Jackson Ding,
Speaker Change: Looking ahead, we're refining our market approach and diversifying our channels to align with business maturity, product cycles and market conditions.
Through this process,
Speaker Change: We aim to steadily strengthen our channel capabilities, enhance brand recognition and deepen connections with the next generation of parents and learners. We believe that by upgrading our channel strategies, diversify our distribution networks and driving using engagement will drive long-term business growth.
I hope that answers your question.
Dr. Huang,
Speaker Change: Thank you Jackson, and that's very helpful. So just a quick follow-up on the bottom line. So should we expect improvement in profitability going forward? Thank you.
Speaker Change: Sophie Thanks, and that's a good question. I would say moving forward, improving overall profitability remains a key priority for us.
Unknown Speaker 05. Thank you. Unknown Speaker 05.
Speaker Change: As our business continues to develop, we expect two primary drivers of profitability. First, our expanding revenue base naturally generates our operating leverage, which will allow for more efficient allocation of fixed cost. And you can probably see that in some of the financial results, we printed in
In the last few quarters, we continue to unlock our operating leverage as our business grow and us.
Speaker Change: General, for example, general administrative expenses as a percentage of revenue has largely come down in the last few quarters. The second growth driver of our profitability would be
Speaker Change: Targeted operational refinements at every stage of a workflow. This includes content creation, product R&D
Speaker Change: The service delivery and sales and marketing, right? While these efforts will take a bit of time to fully impact
Speaker Change: of or fully impact or PNL, I would just like to reiterate again that operating efficiency will remain a priority for us in the next fiscal year.
I hope that answers your questions of it.
Thank you, Jackson. That's very clear.
Speaker Change: Thank you. Our next question comes from a line of Felix Liu from UBS. Please ask your question, Felix.
Felix Liu: Delivery Management. Thank you for taking my question. My question is on AI.
Speaker Change: So, what learning scenarios does management anticipate that AI can be implemented to your business in the near term?
Speaker Change: What are the impacts that are integrating deep stick into your business model?
Speaker Change: We'll present particularly in our learning services and the learning devices business. Thank you.
Alex Peng: Thanks, Felix, this is Alex. Let me take this one on. I will actually take the step back a little bit. You know, we've been talking about the AI and I just want to go back to something that I've you know discussed maybe a year or even two ago. I think it really has multi years ago.
Alex Peng: dimensional impact on us. And look, we are, we really welcome every single
Alex Peng: AI capable of use from the foundational models. I think every single event is welcoming use to us and let me explain why. So first of all.
We think AI has a huge, huge impact.
Educational Contents Translator
Alex Peng: recording establishment unit by Jackson Ding. Jackson Ding, as he marks the final real application to the US government as a human rights defeat
Speaker Change: The entire creation process is benefiting tremendously from AI. I think number one, it has tremendous implication.
Speaker Change: Speed, Gang, and we're witnessing that every single day in the last two years. You know, I think that, you know, and it also, by the way, has made things.
Speaker Change: that previously seemed impossible to be possible, right? Loverging those capability you can develop.
Multi-language
Speaker Change: Real Time. Again, that wasn't even a cost issue. I think that was just basically not possible before. So these I think offer really, you know, raising up the top, you know, the ceiling of what's possible while doing it with a tremendously different cost structure than before, right? So I think that's just the first thing I want to really, you know, lock with everybody on the call. I think like secondly, [inaudible]
Speaker Change: With every single advance of AI, we just see more possibilities of leveraging it to enhance our services. We're a very large services provider. You know, our touch space with customers on service, it goes from instruction to customer service to after sales service across the board. I think in these areas, again, we have the, it's not even the possibility. I think we are.
Speaker Change: I think number three in terms of research and development we're really seeing
so much more, you know, code generated by AI.
Speaker Change: That is, you know, advancing speed, gaming efficiency, we are large, you know, research and development and education technology. And I think that you guys really are giving us a very different way of developing this. It's faster, it's nimble, it's you get, you know, very fast prototyping and you get more efficiency, not only from
Speaker Change: You know, using AI to code by itself, but that nimble and fast prototyping is actually removing a lot of friction in the R&D process versus before, right. So, you know, I want to lock those three, you know, those are, you know, things that we probably didn't discuss in a whole other detail in the last few calls, but I think those are actually very tangible, meaningful, and we we expect more benefit. But, uh,
Speaker Change: and more impact from those. So if going back to the...
Speaker Change: You know, integration in learning scenarios. Look, you know, I think we're we're increasingly seeing AI becoming a learning companion. I think they shall such as assistant, you know, that really embodies that factor that is there. You know, more and more students were later in this AI age are getting comfortable to get on the spot. [inaudible]
Help and support, learning support from AI as they learn.
Speaker Change: So, currently, you know, DPCB-3 services, one of the foundational models for our mass GVT, we're in Chinese Dio Gang, I'm wishing, right? You know, beyond its general intelligence capabilities, we've also finding that on learning contents, enhancing its ability to support really subjects, specific tasks, and also, you know, let me add this, I think we need to find teamwork and to support those.
You know,
Speaker Change: Pedagogical Scenarios. For a model to be able to produce the answer is one thing, for it to be able to actually make the solution more accessible, easier to understand, like by students, these are actually fundamentally vertical capabilities to an education player.
Speaker Change: lowering the barrier to accessing these AI capabilities, improving the user interface, making it easier for users to provide their input to the large language model, but also working really hard to make the output.
Speaker Change: The output from AI, not the raw, straight output from these large language models, but make the output really serve a learning purpose and serve it well. And lastly, I would just say...
You know, look, um,
Speaker Change: We'll also remain committed to contributing to the broader, you know, intelligent learning ecosystem advancing new educational paradigms.
Speaker Change: supporting future schools and per-party institutions, as we've done in the past. And we really look forward to re-imagining the future of learning and shape a more dynamic for thinking education ecosystem as a whole.
So, Felix, I hope that answers your question.
Speaker Change: Thank you. Ella next question comes from the line of Ellis Tite from City. Please as your question, Ellis.
Alice Tai: First Management for Taking My Craction. How are we considering cash usage? Could you please give us more kind of about the future investment strategy and also shareholder returns? Thank you so much.
Jackson Ding: Thank you for the question. This is Jackson. Let me take this one.
Jackson Ding: Let me maybe first address a card cash position as of February 28th, 2025
Jackson Ding: The company holds approximately $3.2 billion in cash, cash equivalence, and short-term investment and restricted cash while excluding deferred revenue.
Jackson Ding: Given all cash position, we think we're a well-positioned to fund both growth and returns.
Jackson Ding: When it comes to deploying this capital, very much like how we do a lot of things, we take a thoughtful and balanced approach when evaluating potential uses of cash. We consider multiple factors to strike the right balance between short term needs and long term development.
Re-investing strategically into the business while also delivering value to shareholders.
Given our current margin profile, which remains relatively thin,
Jackson Ding: And with a meaningful portion of all operations and businesses still in growth phases, maintaining operational flexibility is one of our key priorities.
Jackson Ding: As we assess investment opportunities for fiscal 2026, we're particularly interested in areas that enhance existing product and services. Strengthening our core capabilities and support business expansion. Additionally,
Jackson Ding: As industry evolves and new technologies emerge, we'll invest in integrating these advancements into our operations. We believe these investments will drive long-term value creation for shareholders.
Jackson Ding: Alongside of these investments, we remain equally focused on shareholder returns.
Jackson Ding: As previously mentioned, the board has extended our share of purchase program for an additional year.
Authorizing purchases of up to $490.7 million US dollars.
Jackson Ding: Going forward, will prudently evaluate market conditions our business needs.
and other relevant factors before executing photo repurchases.
Jackson Ding: So to summarize, our philosophy centers around a disciplined forward-looking approach, one of the fosters.
Jackson Ding: Sustainable development while maintaining the agility needed to navigate this dynamic market. And we'll keep you guys posted as appropriate.
I hope that answers your question, Alice.
Thank you so much.
The End
Speaker Change: We have now reached the end of the question and answer session. Thank you all very much for your questions. I'll now turn the conference back to the management team for closing comments.
Jackson Ding: So, again, thanks everybody on the call for joining us today and we'll see you next quarter. Thank you. Bye bye. Thank you for your participation in today's conference. This is conclude the program. You may now disconnect.
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