TAL Education Group Q3 2026 TAL Education Group Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 TAL Education Group Earnings Call
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Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on a touch-tone phone.
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Speaker #1: Thank you. Please go ahead.
Speaker #2: Thank you all for joining us today for TAL Education Group's third quarter fiscal year 2026 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's website.
Fang Liu: Thank you all for joining us today for TAL Education Group's Q3 fiscal year 2026 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website, also the Newswire. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and Mr. Jackson Ding, Deputy Chief Financial Officer. Following the prepared remarks, Mr. Peng and Mr. Ding will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC.
Fang Liu: Thank you all for joining us today for TAL Education Group's Q3 fiscal year 2026 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website, also the Newswire. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and Mr. Jackson Ding, Deputy Chief Financial Officer. Following the prepared remarks, Mr. Peng and Mr. Ding will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC.
Speaker #2: Also, the newswire. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and Mr. Jackson Ding, Deputy Chief Financial Officer.
Speaker #2: Following the brief remarks, Mr. Peng and Ms. Ding will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the CHAPA provisions of the U.S.
Speaker #2: Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may materially cause actual results to differ from our current expectations.
Speaker #2: Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. For more information about these risks and uncertainties, please refer to our filings with the SEC.
Fang Liu: For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I would like to turn the call over to Mr. Alex Peng. Alex, please go ahead.
For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I would like to turn the call over to Mr. Alex Peng. Alex, please go ahead.
Speaker #2: Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.
Speaker #2: I would like to turn the call over to Mr. Alex Peng. Alex, please go ahead.
Speaker #3: Thank you, Fang, and thanks to all of you for participating in today's conference call. Over the past fiscal quarter, we continued to make steady progress on our strategic priorities.
Alex Peng: Thank you, Fan, and thanks to all of you for participating in today's conference call. Over the past fiscal quarter, we continued to make steady progress on our strategic priorities with a consistent focus on supporting the holistic development of our students. Our commitment to innovation, user engagement, and service quality continues to guide our efforts as we refine our offerings and adapt to the evolving learning landscape. Guided by these objectives, our core businesses have continued to operate with stability and consistency. At the same time, we recognize that changes in market demand and advances in technology continue to introduce new dynamics. Across several of our newer initiatives, including the learning devices business, we face a highly competitive environment in areas like content, hardware, and AI. In response to this evolving environment, we'll continue to advance our strategic initiatives and flexibly allocate resources to build long-term capabilities.
Alex Peng: Thank you, Fan, and thanks to all of you for participating in today's conference call. Over the past fiscal quarter, we continued to make steady progress on our strategic priorities with a consistent focus on supporting the holistic development of our students. Our commitment to innovation, user engagement, and service quality continues to guide our efforts as we refine our offerings and adapt to the evolving learning landscape. Guided by these objectives, our core businesses have continued to operate with stability and consistency. At the same time, we recognize that changes in market demand and advances in technology continue to introduce new dynamics. Across several of our newer initiatives, including the learning devices business, we face a highly competitive environment in areas like content, hardware, and AI. In response to this evolving environment, we'll continue to advance our strategic initiatives and flexibly allocate resources to build long-term capabilities.
Speaker #3: With a consistent focus on supporting the holistic development of our students, our commitment to innovation, user engagement, and service quality continues to guide our efforts as we refine our offerings and adapt to the evolving learning landscape.
Speaker #3: Guided by these objectives, our core businesses have continued to operate with stability and consistency. At the same time, we recognize that changes in market demand and advances in technology continue to introduce new dynamics.
Speaker #3: Across several of our newer initiatives, including the learning devices business, we face a highly competitive environment in areas like content, hardware, and AI. In response to this evolving environment, we'll continue to advance our strategic initiatives and flexibly allocate resources to build long-term capabilities.
Speaker #3: Consequently, we may face occasional variability and limited visibility in our financial performance due to seasonal demand shifts, competitive pressures, and deliberate resource reallocation. While these factors may cause short-term fluctuations, we remain focused on building the long-term capabilities needed to seize the opportunities in the market.
Alex Peng: Consequently, we may face occasional variability and limited visibility in our financial performance due to seasonal demand shifts, competitive pressures, and deliberate resource reallocation. While these factors may cause short-term fluctuations, we remain focused on building the long-term capabilities needed to seize the opportunities in the market. I will now provide detailed updates, starting with our Q3 FY 2026 performance. During the quarter, our learning services recorded year-over-year revenue growth across both offline paid programs and online enrichment offerings. This was driven by sustained user demand and reflects our commitment to providing students with high-quality learning experiences through a diverse portfolio of enrichment programs delivered in both offline and online formats. Meanwhile, we maintain a disciplined approach to expanding the Peiyou Learning Center network, balancing demand with operational capacity, efficiency, and long-term sustainability.
Consequently, we may face occasional variability and limited visibility in our financial performance due to seasonal demand shifts, competitive pressures, and deliberate resource reallocation. While these factors may cause short-term fluctuations, we remain focused on building the long-term capabilities needed to seize the opportunities in the market. I will now provide detailed updates, starting with our Q3 FY 2026 performance. During the quarter, our learning services recorded year-over-year revenue growth across both offline paid programs and online enrichment offerings. This was driven by sustained user demand and reflects our commitment to providing students with high-quality learning experiences through a diverse portfolio of enrichment programs delivered in both offline and online formats. Meanwhile, we maintain a disciplined approach to expanding the Peiyou Learning Center network, balancing demand with operational capacity, efficiency, and long-term sustainability.
Speaker #3: I will now provide detailed updates, starting with our Q3 FY 2026 performance. During the quarter, our learning services recorded year-over-year revenue growth across both offline payload programs and online enrichment offerings.
Speaker #3: This was driven by sustained user demand and our commitment to providing students with high-quality learning experiences through a diverse portfolio of enrichment programs, delivered in both offline and online formats.
Speaker #3: Meanwhile, we maintain a disciplined approach to expanding the Payload Learning Center network, balancing demand with operational capacity, efficiency, and long-term sustainability. Positive feedback from parents and students, alongside solid operating metrics—such as retention rates—affirms the trust placed in our products and the consistency of our service standards.
Alex Peng: Positive feedback from parents and students, alongside solid operating metrics such as retention rates, affirms the trust placed in our products and the consistency of our service standards. Our online enrichment learning programs also maintained year-over-year growth during the quarter. By leveraging technology-driven innovation, we continue to enhance users' learning experience. Building on this approach, we introduced Immersive Classroom solutions designed to improve engagement and learning outcomes. We also expanded our offerings to include more technology themes, such as 3D printing, with the goal of fostering interest in emerging technologies and supporting future skill development. Alongside our learning services, our content solutions encompass a wide range of offerings, with learning devices remaining a key focus for our long-term development. The learning device market continuously evolves, shaped by ongoing advancements in hardware, software, and AI technologies.
Positive feedback from parents and students, alongside solid operating metrics such as retention rates, affirms the trust placed in our products and the consistency of our service standards. Our online enrichment learning programs also maintained year-over-year growth during the quarter. By leveraging technology-driven innovation, we continue to enhance users' learning experience. Building on this approach, we introduced Immersive Classroom solutions designed to improve engagement and learning outcomes. We also expanded our offerings to include more technology themes, such as 3D printing, with the goal of fostering interest in emerging technologies and supporting future skill development. Alongside our learning services, our content solutions encompass a wide range of offerings, with learning devices remaining a key focus for our long-term development. The learning device market continuously evolves, shaped by ongoing advancements in hardware, software, and AI technologies.
Speaker #3: Our online enrichment learning programs also maintain year-over-year growth during the quarter. By leveraging technology-driven innovation, we continue to experience growth. Building on this approach enhances users' learning. We introduced immersive classroom solutions designed to improve engagement and learning outcomes.
Speaker #3: We also expanded our offerings to include more technology themes, such as 3D printing, with the goal of fostering interest in emerging technologies and supporting future skill development.
Speaker #3: Alongside our learning services, our content solutions encompass a wide range of offerings. With learning devices remaining a key focus for our long-term development, the learning device market continues to evolve.
Speaker #3: Shaped by ongoing advancements in hardware, software, and AI technologies, given this context, we're focused on further enhancing our three key devices across areas: user learning experience, AI-enabled capabilities, and overall effectiveness.
Alex Peng: Given this context, we are focused on further enhancing our devices across three key areas: user learning experience, AI-enabled capabilities, and overall effectiveness. Compared with general-purpose AI models, we believe an educational AI agent should go beyond simply providing students with correct answers. We believe they should focus on guiding students through the learning process, adapting explanations to their level of understanding, diagnosing learning gaps, and supporting personalized learning paths. Building on this vision, we have incorporated over two decades of educational insights into the interaction logic of our learning devices. Instead of simply providing answers, our devices are designed to apply structured instructional processes and guided teaching approaches with the aim of approximating one-on-one tutoring experiences. This design enables them to function not only as tools for problem-solving, but also learning companions that provide individualized support.
Given this context, we are focused on further enhancing our devices across three key areas: user learning experience, AI-enabled capabilities, and overall effectiveness. Compared with general-purpose AI models, we believe an educational AI agent should go beyond simply providing students with correct answers. We believe they should focus on guiding students through the learning process, adapting explanations to their level of understanding, diagnosing learning gaps, and supporting personalized learning paths. Building on this vision, we have incorporated over two decades of educational insights into the interaction logic of our learning devices. Instead of simply providing answers, our devices are designed to apply structured instructional processes and guided teaching approaches with the aim of approximating one-on-one tutoring experiences. This design enables them to function not only as tools for problem-solving, but also learning companions that provide individualized support.
Speaker #3: Compared with general-purpose AI models, we believe an educational AI agent should go beyond simply providing students with correct answers. We believe it should focus on guiding students through the learning process, adapting explanations to their level of understanding, diagnosing learning gaps, and supporting personalized learning paths.
Speaker #3: Building on this vision, we have incorporated over two decades of educational insights into the interaction logic of our learning devices. Instead of simply providing answers, our devices are designed to apply structured instructional processes and guided teaching approaches, with the aim of approximating one-on-one tutoring experiences.
Speaker #3: This design enables them to function not only as tools for problem-solving, but also as learning companions that provide individualized support. Looking ahead, we'll continue to enhance our AI functions, including capabilities in problem-solving, explanation, and other forms of learning assistance.
Alex Peng: Looking ahead, we'll continue to enhance our AI functions, including capabilities in problem-solving, explanation, and other forms of learning assistance... Our goal is to steadily evolve our learning devices into personalized AI companions that inspires thinking and support deeper learning. In addition to learning devices, we're also exploring new product formats to address a range of use cases. At CES 2026, we showcased several early-stage concepts, including our AI Buddy, which received industry CES Innovation Award. Designed for children aged 6 to 12, the smart companion uses interactive features such as voice, touch, and motion-based interactions to support age-appropriate engagement. These initiatives reflect our broader exploration of how technology can support children's development in learning-related and everyday use scenarios, and with a continued focus on responsible design and practical application. With that overview, I'd like to turn to our financial performance for the quarter.
Looking ahead, we'll continue to enhance our AI functions, including capabilities in problem-solving, explanation, and other forms of learning assistance... Our goal is to steadily evolve our learning devices into personalized AI companions that inspires thinking and support deeper learning. In addition to learning devices, we're also exploring new product formats to address a range of use cases. At CES 2026, we showcased several early-stage concepts, including our AI Buddy, which received industry CES Innovation Award. Designed for children aged 6 to 12, the smart companion uses interactive features such as voice, touch, and motion-based interactions to support age-appropriate engagement. These initiatives reflect our broader exploration of how technology can support children's development in learning-related and everyday use scenarios, and with a continued focus on responsible design and practical application. With that overview, I'd like to turn to our financial performance for the quarter.
Speaker #3: Our goal is to steadily evolve our learning devices into personalized AI companions that inspire thinking and support deeper learning. In addition to learning devices, we're also exploring new product formats to address a range of use cases.
Speaker #3: At CES 2026, we showcased several early-stage concepts, including our AI buddy, which received the industry CES PIX Award. Designed for children aged 6 to 12, this smart companion uses interactive features such as voice, touch, and motion-based interactions to support age-appropriate engagement.
Speaker #3: These initiatives reflect our broader exploration of how technology can support children's development and learning-related and everyday use scenarios, and with a continued focus on responsible design and practical application.
Speaker #3: So with that overview, I’d like to turn to our financial performance for the quarter. Our net revenues were $770.2 million, or RMB 5,480.4 million, for the quarter.
Alex Peng: Our net revenues were $770.2 million, or CNY 5,480.4 million for the quarter, representing year-over-year increases of 27.0% and 26.8% in US dollar and RMB terms, respectively. Our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were $104.0 million and $141.4 million, respectively. I will now hand the call over to Jackson, who will provide an update on the operational developments across our core business lines and a review of our financial results for the fiscal Q3. Jackson, over to you.
Our net revenues were $770.2 million, or CNY 5,480.4 million for the quarter, representing year-over-year increases of 27.0% and 26.8% in US dollar and RMB terms, respectively. Our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were $104.0 million and $141.4 million, respectively. I will now hand the call over to Jackson, who will provide an update on the operational developments across our core business lines and a review of our financial results for the fiscal Q3. Jackson, over to you.
Speaker #3: Representing year-over-year increases of 27.0% and 26.8% in US dollar and RMB terms, respectively. Our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were $104.0 million and $141.4 million, respectively.
Speaker #3: I will now hand the call over to Jackson, who will provide an update on the operational developments across our core business lines and a review of our financial results for the fiscal third quarter.
Speaker #3: So Jackson, over to
Speaker #3: you. Thank you,
Jackson Ding: Thank you, Alex. I am pleased to walk you through our operational highlights and financial results across our core businesses for the third fiscal quarter. Please note that all financial data for the quarter are unaudited. During the quarter, Peiyou Small Class Enrichment programs demonstrated stable operations, delivering year-over-year growth driven by increased enrollment. We continued to expand access to high-quality enrichment learning programs for a broader user base, supporting students' holistic development. In our online enrichment learning programs, we have embraced a technology-driven approach to enhance the learning experience. For instance, some of the humanities courses now feature immersive online classrooms, powered by virtual settings and interactive activities designed to boost student engagement and support learning outcomes. Students role-play as protagonists from classic literature and collaborate with peers to complete themed challenges, deepening their grasp of character traits and story backgrounds.
Jackson Ding: Thank you, Alex. I am pleased to walk you through our operational highlights and financial results across our core businesses for the third fiscal quarter. Please note that all financial data for the quarter are unaudited. During the quarter, Peiyou Small Class Enrichment programs demonstrated stable operations, delivering year-over-year growth driven by increased enrollment. We continued to expand access to high-quality enrichment learning programs for a broader user base, supporting students' holistic development. In our online enrichment learning programs, we have embraced a technology-driven approach to enhance the learning experience. For instance, some of the humanities courses now feature immersive online classrooms, powered by virtual settings and interactive activities designed to boost student engagement and support learning outcomes. Students role-play as protagonists from classic literature and collaborate with peers to complete themed challenges, deepening their grasp of character traits and story backgrounds.
Speaker #2: Alex, I am pleased to walk you through our operational highlights and financial results across our core businesses for the third fiscal quarter. Please note that all financial data for the quarter are unaudited.
Speaker #2: During the quarter, payroll small class enrichment programs demonstrated stable operations, delivering year-over-year growth driven by increased enrollment. We continued to expand access to high-quality enrichment learning programs for a broader user base.
Speaker #2: Supporting students' holistic development, in our online enrichment learning programs, we have embraced a technology-driven approach to enhance the learning experience. For instance, some of our humanities courses now feature immersive online classrooms powered by virtual settings and interactive activities designed to boost student engagement and support learning outcomes.
Speaker #2: Students role-play as protagonists from classic literature and collaborate with peers to complete themed challenges, deepening their grasp of character traits and story backgrounds. These immersive programs also incorporate gamified learning mechanisms during class to promote learning and comprehension.
Jackson Ding: These immersive programs also incorporate gamified learning mechanisms during class to promote learning and comprehension, followed by out-of-class challenges that encourage reinforcement of key concepts. This cyclical engagement helps students internalize the material while building the language skills and knowledge needed for effective expression. Looking ahead, we will continue to build on this foundation by further integrating technology into our engagement tools and instructional design. This effort will be supported by sustained investments in content, product development, and services. Our focus remains on the continuous improvement of learning experience, with the goal of supporting student engagement while meeting the evolving demands of online learning. Next, let's turn to our learning device business. ... Our diverse portfolio, equipped with intelligent features and learning resources, is designed to empower users on their self-learning journeys. Operationally, our learning devices delivered year-over-year growth in both revenue and sales volume this quarter.
These immersive programs also incorporate gamified learning mechanisms during class to promote learning and comprehension, followed by out-of-class challenges that encourage reinforcement of key concepts. This cyclical engagement helps students internalize the material while building the language skills and knowledge needed for effective expression. Looking ahead, we will continue to build on this foundation by further integrating technology into our engagement tools and instructional design. This effort will be supported by sustained investments in content, product development, and services. Our focus remains on the continuous improvement of learning experience, with the goal of supporting student engagement while meeting the evolving demands of online learning. Next, let's turn to our learning device business. ... Our diverse portfolio, equipped with intelligent features and learning resources, is designed to empower users on their self-learning journeys. Operationally, our learning devices delivered year-over-year growth in both revenue and sales volume this quarter.
Speaker #2: Followed by out-of-class challenges that encourage reinforcement of key concepts. This cyclical engagement helps students internalize the material while building the language skills and knowledge needed for effective expression.
Speaker #2: Looking ahead, we will continue to build on this foundation by further integrating technology into our engagement tools and instructional design. This effort will be supported by sustained investments in content, product development, and services.
Speaker #2: Our focus remains on the continuous improvement of the learning experience, with the goal of supporting student engagement while meeting the evolving demands of online learning.
Speaker #2: Next, let's turn to our learning device business. Our diverse portfolio, equipped with intelligent features and learning resources, is designed to empower users on their self-learning journeys.
Speaker #2: Operationally, our learning devices delivered year-over-year growth in both revenue and sales volume this quarter. The average weekly active rate among learning device users remained at approximately 80%.
Jackson Ding: The average weekly active rate among learning device users remained at approximately 80%, with average daily usage per active device at approximately 1 hour. These metrics reflect sustained engagement even as we expanded both our product lineup and our user base. On the product innovation front, as Alex highlighted, we are transforming learning devices into more intelligent learning tutoring AI companions, rather than simple problem-solving tools. Our AI Thinkie 1-on-1, the interactive step-by-step tutoring AI companion embedded in our learning devices, has facilitated over hundreds of thousands of hours of guided learning. Meanwhile, our AI assistant, Xiaoice, remains a trusted companion for our users. As of December 2025, students have activated Xiaoice over 1 billion times. These developments reaffirm our belief in AI's role in supporting students' learning and development.
The average weekly active rate among learning device users remained at approximately 80%, with average daily usage per active device at approximately 1 hour. These metrics reflect sustained engagement even as we expanded both our product lineup and our user base. On the product innovation front, as Alex highlighted, we are transforming learning devices into more intelligent learning tutoring AI companions, rather than simple problem-solving tools. Our AI Thinkie 1-on-1, the interactive step-by-step tutoring AI companion embedded in our learning devices, has facilitated over hundreds of thousands of hours of guided learning. Meanwhile, our AI assistant, Xiaoice, remains a trusted companion for our users. As of December 2025, students have activated Xiaoice over 1 billion times. These developments reaffirm our belief in AI's role in supporting students' learning and development.
Speaker #2: With average daily usage per active device at approximately one hour, these metrics reflect sustained engagement even as we expanded both our product lineup and our user base.
Speaker #2: On the product innovation front, as Alex highlighted, we are transforming learning devices into more intelligent learning tutoring AI companions rather than simple problem-solving tools.
Speaker #2: Our AI Thinky 101, the interactive step-by-step tutoring AI companion embedded in our learning devices, has facilitated over hundreds of thousands of hours of guided learning.
Speaker #2: Meanwhile, our AI assistant Xiao Si remains a trusted companion for our users. As of December 2025, students had activated Xiao Si over 1 billion times.
Speaker #2: These developments reaffirm our belief in AI's role in supporting students' learning and development. Earlier this month, we launched the X5 Classic Learning Device, positioned as a comprehensive solution in the mid-price segment.
Jackson Ding: Earlier this month, we launched the X5 Classic Learning Device, positioned as a comprehensive solution in the mid-price segment. This new product further expands our product lineup. Designed as an all-rounder, the X5 integrates a systematic learning platform with specialized modules, with the aim of structuring and supporting self-directed learning. Beyond our business progress, we contributed to the ongoing development of the industry. In October, the Standardization Administration of China released the national standard for mobile learning terminal function requirements. By sharing practical insights from our device ecosystem, we participated in the formation of the standard. We believe that well-defined standards help elevate product quality, protect user interests, and support the industry's sustainable development. That concludes the operational update, and I'd like to now walk you through our key financial results for the third fiscal quarter.
Earlier this month, we launched the X5 Classic Learning Device, positioned as a comprehensive solution in the mid-price segment. This new product further expands our product lineup. Designed as an all-rounder, the X5 integrates a systematic learning platform with specialized modules, with the aim of structuring and supporting self-directed learning. Beyond our business progress, we contributed to the ongoing development of the industry. In October, the Standardization Administration of China released the national standard for mobile learning terminal function requirements. By sharing practical insights from our device ecosystem, we participated in the formation of the standard. We believe that well-defined standards help elevate product quality, protect user interests, and support the industry's sustainable development. That concludes the operational update, and I'd like to now walk you through our key financial results for the third fiscal quarter.
Speaker #2: This new product further expands our product lineup. Designed as an all-rounder, the X5 integrates a systematic learning platform with specialized modules, with the aim of structuring and supporting self-directed learning.
Speaker #2: Beyond our business progress, we contributed to the ongoing development of the industry. In October, the Standardization Administration of China released the national standard for mobile learning terminal function requirements.
Speaker #2: By sharing practical insights from our device ecosystem, we participated in the formation of the standard. We believe that well-defined standards help elevate product quality, protect user interests, and support the industry's sustainable development.
Speaker #2: That concludes the operational update, and I'd like to now walk you through our key financial results for the third fiscal quarter. Our net revenues were $770.2 million, or RMB 5,480.4 million.
Jackson Ding: Our net revenues were $770.2 million, or CNY 5,480.4 million, an increase of 27.0% and 26.8% year-over-year in US dollar and RMB terms, respectively. Cost of revenues increased by 18.0% to $338.4 million from $286.7 million in Q3 of fiscal year 2025. Non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 18.4% to $338.0 million from $284.4, excuse me, from $285.4 million in Q3 of fiscal year 2025.
Our net revenues were $770.2 million, or CNY 5,480.4 million, an increase of 27.0% and 26.8% year-over-year in US dollar and RMB terms, respectively. Cost of revenues increased by 18.0% to $338.4 million from $286.7 million in Q3 of fiscal year 2025. Non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 18.4% to $338.0 million from $284.4, excuse me, from $285.4 million in Q3 of fiscal year 2025.
Speaker #2: An increase of 27.0% and 26.8% year over year in US dollar and RMB terms, respectively. Cost of revenues increased by 18.0% to $338.4 million from $286.7 million in the third quarter of fiscal year 2025.
Speaker #2: Non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 18.4% to $338.0 million from $285.4 million in the third quarter of fiscal year 2025.
Speaker #2: Gross profit increased in the third quarter of fiscal 2026, rising by 35.0% year over year to $431.8 million, from $319.8 million for the same period last year.
Jackson Ding: Gross profit increased in Q3 of fiscal 2026, rising by 35.0% year-over-year to $431.8 million from $319.8 million for the same period last year. Gross margin increased to 56.1% from 52.7% for the same period last year. Selling and marketing expenses for the quarter were $220.1 million, representing a decrease of 2.8% from $226.4 million for the same period last year. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, decreased by 2.1% to $217.6 million from $222.4 million for the same period last year.
Gross profit increased in Q3 of fiscal 2026, rising by 35.0% year-over-year to $431.8 million from $319.8 million for the same period last year. Gross margin increased to 56.1% from 52.7% for the same period last year. Selling and marketing expenses for the quarter were $220.1 million, representing a decrease of 2.8% from $226.4 million for the same period last year. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, decreased by 2.1% to $217.6 million from $222.4 million for the same period last year.
Speaker #2: Gross margin increased to 56.1% from 52.7% for the same period last year. Selling and marketing expenses for the quarter were $220.1 million, representing a decrease of 2.8% from $226.4 million for the same period last year.
Speaker #2: Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, decreased by 2.1% to $217.6 million from $222.4 million for the same period last year.
Speaker #2: Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 36.7% to 28.3% year over year. General and administrative expenses increased by 7.1% to $118.6 million from $110.7 million in the same period of last year.
Jackson Ding: Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 36.7% to 28.3% year-over-year. General and administrative expenses increased by 7.1% to $118.6 million from $110.7 million in the same period of last year. Non-GAAP general and administrative expenses, which excludes share-based compensation costs, increased by 10% year-over-year to $110.7 million from $100.6 million for the same period of last year. Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 16.6% to 14.4% year-over-year.
Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 36.7% to 28.3% year-over-year. General and administrative expenses increased by 7.1% to $118.6 million from $110.7 million in the same period of last year. Non-GAAP general and administrative expenses, which excludes share-based compensation costs, increased by 10% year-over-year to $110.7 million from $100.6 million for the same period of last year. Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 16.6% to 14.4% year-over-year.
Speaker #2: Non-GAAP general and administrative expenses, which exclude share-based compensation costs, increased by 10% year over year to $110.7 million from $100.6 million for the same period last year.
Speaker #2: Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 16.6% to 14.4% year over year. Total share-based compensation expenses allocated to related operating costs and expenses decreased by 30.2% to $10.8 million in the third quarter of fiscal year 2026 from $15.5 million in the same period of last year.
Jackson Ding: Total share-based compensation expenses allocated to related operating costs and expenses decreased by 30.2% to $10.8 million in Q3 fiscal year 2026, from $15.5 million in the same period of last year. Income from operations was $93.1 million in Q3 fiscal year 2026, compared with a loss from operations of $17.4 million in the same period of last year. Non-GAAP income from operations, which excludes share-based compensation expenses, was $104.0 million, compared with a non-GAAP loss from operations of $1.9 million in the same period last year.
Total share-based compensation expenses allocated to related operating costs and expenses decreased by 30.2% to $10.8 million in Q3 fiscal year 2026, from $15.5 million in the same period of last year. Income from operations was $93.1 million in Q3 fiscal year 2026, compared with a loss from operations of $17.4 million in the same period of last year. Non-GAAP income from operations, which excludes share-based compensation expenses, was $104.0 million, compared with a non-GAAP loss from operations of $1.9 million in the same period last year.
Speaker #2: Income from operations was $93.1 million in the third quarter of fiscal year 2026, compared with a loss from operations of $17.4 million in the same period of last year.
Speaker #2: Non-GAAP income from operations, which excludes share-based compensation expenses, was $104.0 million, compared with a non-GAAP loss from operations of $1.9 million in the same period last year.
Speaker #2: Net income attributable to TAL was $130.6 million in the third quarter of fiscal year 2026, compared to net income attributable to TAL of $23.1 million in the same period of last year.
Jackson Ding: Net income attributable to TAL was $130.6 million in Q3 of fiscal year 2026, compared to net income attributable to TAL of $23.1 million in the same period of last year. Non-GAAP net income attributable to TAL, which excludes share-based compensation expenses, was $141.4 million, compared to a non-GAAP net income attributable to TAL of $38.6 million in the same period of last year. Moving on to our balance sheet. As of 30 November 2025, we had $2,146.3 million in cash and cash equivalents, 147 - 100...
Net income attributable to TAL was $130.6 million in Q3 of fiscal year 2026, compared to net income attributable to TAL of $23.1 million in the same period of last year. Non-GAAP net income attributable to TAL, which excludes share-based compensation expenses, was $141.4 million, compared to a non-GAAP net income attributable to TAL of $38.6 million in the same period of last year. Moving on to our balance sheet. As of 30 November 2025, we had $2,146.3 million in cash and cash equivalents, 147 - 100...excuse me, $1,471.1 million in short-term investments, and $339.3 million in current and non-current restricted cash. Our deferred revenue balance was $1,162.8 million as of the end of Q3.
Speaker #2: Non-GAAP net income attributable to TAL, which excludes share-based compensation expenses, was $141.4 million compared to non-GAAP net income attributable to TAL of $38.6 million in the same period of last year.
Speaker #2: Moving on to the balance sheet. As of November 30th, 2025, we had $2,146.3 million in cash and cash equivalents, and $1,471.1 million in short-term investments.
Jackson Ding: Excuse me, $1,471.1 million in short-term investments, and $339.3 million in current and non-current restricted cash. Our deferred revenue balance was $1,162.8 million as of the end of Q3. Now, turning to our cash flow statement. Net cash provided by operating activities for Q3 of fiscal year 2026 was $526.7 million. Finally, I would like to briefly address our share repurchase program. In July 2025, the company's board of directors authorized a new share repurchase program. Under the program, the company may spend up to approximately $600 million to purchase its common shares over the next twelve months.
Speaker #2: And $339.3 million in current and non-current restricted cash. Our deferred revenue balance was $1,162.8 million as of the end of the third fiscal quarter.
Now, turning to our cash flow statement. Net cash provided by operating activities for Q3 of fiscal year 2026 was $526.7 million. Finally, I would like to briefly address our share repurchase program. In July 2025, the company's board of directors authorized a new share repurchase program. Under the program, the company may spend up to approximately $600 million to purchase its common shares over the next twelve months.
Speaker #2: Now, turning to our cash flow statement. Net cash provided by operating activities for the third quarter of fiscal year 2026 was $526.7 million. Finally, I would like to briefly address our share repurchase program.
Speaker #2: In July 2025, the company's board of directors authorized a new share repurchase program. Under the program, the company may spend up to approximately $600 million to purchase its common shares.
Speaker #2: Over the next 12 months, between October 30, 2025, and January 28, 2026, the company has repurchased 844,856 common shares for an aggregate consideration of approximately $27.7 million. That concludes the financial section.
Jackson Ding: Between 30 October 2025 and 28 January 2026, the company has repurchased 844,856 common shares at an aggregate consideration of approximately $27.7 million. That concludes the financial section. Alex, I will now hand the call back to you for business outlook. Alex, please go ahead.
Between 30 October 2025 and 28 January 2026, the company has repurchased 844,856 common shares at an aggregate consideration of approximately $27.7 million. That concludes the financial section. Alex, I will now hand the call back to you for business outlook. Alex, please go ahead.
Speaker #2: Hand the call back to you for business, Alex. I will now outlook. Alex, please go ahead. Thanks, Jackson. I'd like to share some thoughts on our outlook for the company's future development.
Alex Peng: Thanks, Jackson. I'd like to share some thoughts on our outlook for the company's future development. We view the intersection of learning and technology as one of our long-term strategic priorities. By integrating technology with our industry expertise, we aim to continue enhancing our product design and service delivery across our businesses. In addition, we are strengthening our go-to-market capabilities. For newer businesses, such as learning devices, we are implementing more agile channel management strategies, dynamically optimizing resource deployment based on market conditions and performance indicators. At the same time, we are reinforcing our multi-channel ecosystem by combining digital and physical touchpoints to broaden market reach and user engagement. From a financial perspective, as I mentioned previously, improving overall profitability remains a key priority for us.
Alex Peng: Thanks, Jackson. I'd like to share some thoughts on our outlook for the company's future development. We view the intersection of learning and technology as one of our long-term strategic priorities. By integrating technology with our industry expertise, we aim to continue enhancing our product design and service delivery across our businesses. In addition, we are strengthening our go-to-market capabilities. For newer businesses, such as learning devices, we are implementing more agile channel management strategies, dynamically optimizing resource deployment based on market conditions and performance indicators. At the same time, we are reinforcing our multi-channel ecosystem by combining digital and physical touchpoints to broaden market reach and user engagement. From a financial perspective, as I mentioned previously, improving overall profitability remains a key priority for us.
Speaker #2: We view the intersection of learning and technology as one of our long-term strategic priorities. By integrating technology with our industry expertise, we aim to continue enhancing our product design and service delivery across our businesses.
Speaker #2: In addition, we are strengthening our go-to-market capabilities for newer businesses such as learning devices. We are implementing more agile channel management strategies and dynamically optimizing resource deployment based on market conditions and performance indicators.
Speaker #2: At the same time, we are reinforcing our multi-channel ecosystem by combining digital and physical touchpoints to broaden market reach and user engagement. From a financial perspective, as I mentioned previously, improving overall profitability remains a key priority for us.
Speaker #2: At the same time, we remain mindful of near-term variability, which may be influenced by factors such as market conditions, investment cycles, and seasonal fluctuations.
Alex Peng: At the same time, we remain mindful of near-term variability, which may be influenced by factors such as market conditions, investment cycles, and seasonal fluctuations. These factors may also require timely adjustments to our operational execution, potentially resulting in limited short-term visibility. Nevertheless, we'll continue to advance our strategic initiatives and strengthen capabilities across our core business lines, maintaining a focus on long-term sustainable development rather than short-term financial outcomes. So that concludes my prepared remarks. Operator, we are now ready to open the call for questions.
At the same time, we remain mindful of near-term variability, which may be influenced by factors such as market conditions, investment cycles, and seasonal fluctuations. These factors may also require timely adjustments to our operational execution, potentially resulting in limited short-term visibility. Nevertheless, we'll continue to advance our strategic initiatives and strengthen capabilities across our core business lines, maintaining a focus on long-term sustainable development rather than short-term financial outcomes. So that concludes my prepared remarks. Operator, we are now ready to open the call for questions.
Speaker #2: These factors may also require timely adjustments to our operational execution, potentially resulting in limited short-term visibility. Nevertheless, we'll continue to advance our strategic initiatives and strengthen capabilities across our core business lines.
Speaker #2: Maintaining a focus on long-term sustainable development rather than short-term financial outcomes. So that concludes my prepared remarks. Operator, we are now ready to open the call for questions.
Speaker #3: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press stars and two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Felix Liu with UBS. Please go ahead.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press stars and two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Felix Liu with UBS. Please go ahead.
Speaker #3: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Speaker #3: At this time, we'll pause momentarily to assemble our roster. The first question today comes from Felix Leo with UBS. Please go ahead.
Felix Liu: Thank you, Alex and Jackson, for taking my question, and congratulations on the very strong quarter. If my memory is correct, this is probably the highest level of the November quarter margin since 2018, so congratulations on that. My question is related to offline Peiyou small class. Can management provide some updates on the learning center network expansion in Q3 and your latest perspective on the pace of expansion going forward? With respect to Peiyou revenue, what has been the key drivers of your year-over-year growth, and could you provide more color on the upcoming winter season as well as the growth outlook from here? Thank you.
Speaker #4: And thank you, Alex and Jackson, for taking my question, and congratulations on the very strong quarter. If my memory is correct, this is probably the highest level of the November quarter margin since 2018.
Felix Liu: Thank you, Alex and Jackson, for taking my question, and congratulations on the very strong quarter. If my memory is correct, this is probably the highest level of the November quarter margin since 2018, so congratulations on that. My question is related to offline Peiyou small class. Can management provide some updates on the learning center network expansion in Q3 and your latest perspective on the pace of expansion going forward? With respect to Peiyou revenue, what has been the key drivers of your year-over-year growth, and could you provide more color on the upcoming winter season as well as the growth outlook from here? Thank you.
Speaker #4: Congratulations on that. My question is related to the offline payload small class. Could management provide some updates on the learning center network expansion in Q3, and your latest perspective on the pace of expansion going forward?
Speaker #4: With respect to payload revenue, what have been the key drivers of your year-over-year growth, and could you provide more color on the upcoming winter season as well as the growth outlook from here?
Speaker #4: Thank you.
Speaker #2: Thanks, Felix. This is Alex. Let me, first of all, thank you for your kind remark and your continued long-term attention to the company. Let me take this question.
Alex Peng: Thanks, Felix. This is Alex. Let me first of all thank you for your kind remark and your continued long-term attention to the company. Let me take this question. So I'll provide an update on Peiyou's Q3 performance and outlook. You know, during the third fiscal quarter, Peiyou offline enrichment programs delivered year-over-year revenue growth, which is largely aligned with the expansion of our learning center network. You know, we really maintain our disciplined operational approach to network expansion. You know, we evaluate factors such as our organizational readiness and capability, our operational efficiency, the regional market demand, really, this comes down to a very micro level of districts and neighborhood, and user acceptance of our offerings. So based on this measured and multidimensional approach, the business remains on a stable growth trajectory.
Alex Peng: Thanks, Felix. This is Alex. Let me first of all thank you for your kind remark and your continued long-term attention to the company. Let me take this question. So I'll provide an update on Peiyou's Q3 performance and outlook. You know, during the third fiscal quarter, Peiyou offline enrichment programs delivered year-over-year revenue growth, which is largely aligned with the expansion of our learning center network. You know, we really maintain our disciplined operational approach to network expansion. You know, we evaluate factors such as our organizational readiness and capability, our operational efficiency, the regional market demand, really, this comes down to a very micro level of districts and neighborhood, and user acceptance of our offerings. So based on this measured and multidimensional approach, the business remains on a stable growth trajectory.
Speaker #2: So, I'll provide an update on payloads' Q3 performance and outlook. During the third fiscal quarter, payload offline enrichment programs delivered year-over-year revenue growth, which is largely aligned with the expansion of our learning center network.
Speaker #2: We really maintain our disciplined operational approach to network expansion. We evaluate factors such as our organizational readiness and capability, our operational efficiency, and the regional market demand. Really, this comes down to a very micro level, of districts and neighborhoods.
Speaker #2: And user acceptance of our offerings. So, based on this measured and multidimensional approach, the business remains on a stable growth trajectory. Our operating metrics—really, they show that we've built a solid and sustainable business framework.
Alex Peng: Our operating metrics really show that we've built a solid and sustainable business framework, and we aim to maintain this level of operational efficiency for the upcoming winter season. So when I look ahead, I think we'll continue to manage the pace of learning center expansion, you know, prudently, balancing growth with operational efficiency and long-term sustainability. So when I, you know, look at the drivers of Peiyou's year-over-year growth, you know, revenue growth during the quarter was primarily driven by increased enrollments, while our ASP remained relatively stable. So this performance really reflects both market demand for, you know, high quality enrichment programs and the internal capabilities we've been developing. You know, if you look at these capabilities, product design, service quality, and content development, just to name a few, right?
Our operating metrics really show that we've built a solid and sustainable business framework, and we aim to maintain this level of operational efficiency for the upcoming winter season. So when I look ahead, I think we'll continue to manage the pace of learning center expansion, you know, prudently, balancing growth with operational efficiency and long-term sustainability. So when I, you know, look at the drivers of Peiyou's year-over-year growth, you know, revenue growth during the quarter was primarily driven by increased enrollments, while our ASP remained relatively stable. So this performance really reflects both market demand for, you know, high quality enrichment programs and the internal capabilities we've been developing. You know, if you look at these capabilities, product design, service quality, and content development, just to name a few, right?
Speaker #2: And we aim to maintain this level of operational efficiency for the upcoming winter season. So, when I look ahead, I think we'll continue to manage the pace of learning center expansion prudently.
Speaker #2: Balancing growth with operational efficiency and long-term sustainability. So, when I look at the drivers of year-over-year growth in payloads, revenue growth during the quarter was primarily driven by increasing enrollment, while our ASP remained relatively stable.
Speaker #2: So this performance really reflects both market demand for high-quality enrichment programs and the internal capabilities we've been developing. If you look at these capabilities—product design, service quality, and content development, just to name a few.
Speaker #2: So, on the product and service front, we really emphasize a standardized teaching framework while fostering an interactive, student-centric classroom experience. On the talent front, we train our lecturers in-house to ensure consistent teaching quality.
Alex Peng: So on the product and service front, we really emphasize a standardized teaching framework while fostering an interactive, student-centric classroom experience, right? On the talent front, we train our lecturers in-house to ensure consistent teaching quality. So provided that these growth drivers remain in place, we expect this business line to continue growing. At the same time, given that we are coming off a higher comparison base, and, you know, we talked about this in the past as well, it's coming off a higher comparison base than in prior years. We anticipate a gradual moderation in the pace of revenue growth in, you know, FY 2026. So Felix, I hope that answered your question.
So on the product and service front, we really emphasize a standardized teaching framework while fostering an interactive, student-centric classroom experience, right? On the talent front, we train our lecturers in-house to ensure consistent teaching quality. So provided that these growth drivers remain in place, we expect this business line to continue growing. At the same time, given that we are coming off a higher comparison base, and, you know, we talked about this in the past as well, it's coming off a higher comparison base than in prior years. We anticipate a gradual moderation in the pace of revenue growth in, you know, FY 2026. So Felix, I hope that answered your question.
Speaker #2: So, provided that these growth drivers remain in place, we expect this business line to continue growing. At the same time, given that we are coming off a higher comparison base—and we talked about this in the past as well—it's coming off a higher comparison base than in prior years.
Speaker #2: We anticipate a gradual moderation in the pace of revenue growth in FY2026. So, Felix, I hope that answered your
Speaker #2: question. That's
Felix Liu: That's clear, and congratulations on the results. Thank you.
Felix Liu: That's clear, and congratulations on the results. Thank you.
Speaker #4: Clear, and congratulations on the results. Thank you.
Speaker #2: Thank you.
Speaker #3: The next question comes from Charlotte Wei with HSBC. Please go ahead.
Alex Peng: Thank-
Alex Peng: Thank-
Operator: The next question comes from Charlotte Wei with HSBC. Please go ahead.
Operator: The next question comes from Charlotte Wei with HSBC. Please go ahead.
Speaker #5: Good evening. Thank you for taking my question, and congratulations on a strong set of results. My question is related to the top-line growth momentum. We noticed that the growth kind of slowed down compared to last quarter.
Charlotte Wei: Good evening. Thank you for taking my question, and congratulations on a strong set of results. My question is related to the top line growth momentum. We noticed that the growth kind of slowed down compared to last quarter. Could you please elaborate the key reasons behind this trend? In addition, how should we think about the revenue growth outlook for different business lines, especially for learning devices for the upcoming quarter? Thank you.
Charlotte Wei: Good evening. Thank you for taking my question, and congratulations on a strong set of results. My question is related to the top line growth momentum. We noticed that the growth kind of slowed down compared to last quarter. Could you please elaborate the key reasons behind this trend? In addition, how should we think about the revenue growth outlook for different business lines, especially for learning devices for the upcoming quarter? Thank you.
Speaker #5: Could you please elaborate on the key reasons behind this trend? In addition, how should we think about the revenue growth outlook for different business lines, especially for learning devices for the upcoming quarter?
Speaker #5: Thank
Speaker #5: Thank you. Charlotte, thanks for the—
Jackson Ding: Charlotte, thanks for the question. This is Jackson. I'll take this one. Yeah, for your question regarding revenue trend, I think we've talked about this a few times in the previous quarters. As we continue to grow, our growth rate will taper off, naturally, you know, normalizing to a more moderate growth result. More specifically, if we look at this quarter, the moderation in our top line growth was primarily driven by a deceleration in the growth rate of our learning device business, which stems from multiple factors. First, it reflects the evolving patterns in our learning device business, which is transitioning from its initial rapid expansion phase to a more sustained growth trajectory.
Jackson Ding: Charlotte, thanks for the question. This is Jackson. I'll take this one. Yeah, for your question regarding revenue trend, I think we've talked about this a few times in the previous quarters. As we continue to grow, our growth rate will taper off, naturally, you know, normalizing to a more moderate growth result. More specifically, if we look at this quarter, the moderation in our top line growth was primarily driven by a deceleration in the growth rate of our learning device business, which stems from multiple factors. First, it reflects the evolving patterns in our learning device business, which is transitioning from its initial rapid expansion phase to a more sustained growth trajectory.
Speaker #2: Question. This is Jackson. I'll take this one. For your question regarding the revenue trend, I think we talked about this a few times in the previous quarters.
Speaker #2: As we continue to grow, our growth rate will taper off, naturally normalizing to a more moderate growth result. More specifically, if we look at this quarter, the moderation in our top-line growth was primarily driven by a deceleration in the growth rate.
Speaker #2: Of our learning device business, which stems from multiple factors. First, it reflects the evolving patterns in our learning device business, which is transitioning from its initial rapid expansion phase to a more sustained growth trajectory.
Jackson Ding: Another consideration is the timing of a product launch across fiscal years, creating a different kind of comparable base. If you look at last year's fiscal Q3, for example, it benefited from late August introduction of some of our new product lines back then. While this year, our major product launches happened earlier in the year, in May, boosting fiscal Q2 sales instead. The shift in product launch cycle resulted in different sales patterns between the two fiscal years, leading to a higher comparison base in Q3 of last year. Additionally, as we have consistently emphasized in the previous quarters, we continue to prioritize long-term competitiveness.
Speaker #2: Another consideration is the timing of our product launch. Across fiscal years, it creates a different kind of comparable base. If you look at last year's fiscal quarter three, for example, it benefited from the late August introduction of some of our new product lines back then.
Another consideration is the timing of a product launch across fiscal years, creating a different kind of comparable base. If you look at last year's fiscal Q3, for example, it benefited from late August introduction of some of our new product lines back then. While this year, our major product launches happened earlier in the year, in May, boosting fiscal Q2 sales instead. The shift in product launch cycle resulted in different sales patterns between the two fiscal years, leading to a higher comparison base in Q3 of last year. Additionally, as we have consistently emphasized in the previous quarters, we continue to prioritize long-term competitiveness.
Speaker #2: While this year, our major product launches happened earlier in the year, in May, boosting fiscal quarter two sales instead. So the shift in product launch cycles result would the shift in product launch cycle resulted in different sales patterns between the two fiscal years, leading to a higher comparison base in quarter three of last year.
Speaker #2: Additionally, as we have consistently emphasized in the previous quarters, we continue to prioritize long-term competitiveness by applying this philosophy across all business lines. We aim to balance sustainable, high-quality growth with prudent execution.
Jackson Ding: By applying this philosophy across all business lines, we aim to balance sustainable, high-quality growth with prudent execution. Given factors such as market condition, investment cycles, and seasonal fluctuations, dynamic and timely adjustments to our operational actions may be required, potentially resulting in quarterly variability in financial performance. Looking ahead, we expect continued fluctuation in learning device revenue. Now, coming back to the group level, we believe year-over-year growth rate to moderate in the second half of this fiscal year, primarily due to a higher comparison base. Consequently, the year-over-year growth rate in the second half of this fiscal year is expected to be lower than in the first half. Our growth strategy remains grounded in the value we deliver to our users and the society. This guiding principle informs our business decisions-
By applying this philosophy across all business lines, we aim to balance sustainable, high-quality growth with prudent execution. Given factors such as market condition, investment cycles, and seasonal fluctuations, dynamic and timely adjustments to our operational actions may be required, potentially resulting in quarterly variability in financial performance. Looking ahead, we expect continued fluctuation in learning device revenue. Now, coming back to the group level, we believe year-over-year growth rate to moderate in the second half of this fiscal year, primarily due to a higher comparison base. Consequently, the year-over-year growth rate in the second half of this fiscal year is expected to be lower than in the first half.
Speaker #2: Given factors such as market conditions, investment cycles, and seasonal fluctuations, dynamic and timely adjustments to our operational actions may be required, potentially resulting in quarterly variability in financial performance.
Speaker #2: Looking ahead, we expect continued fluctuation in learning device revenue. Now, coming back to the group level, we believe the year-over-year growth rate will moderate in the second half of this fiscal year, primarily due to a higher comparison base.
Speaker #2: Consequently, the year-over-year growth rate in the second half of this fiscal year is expected to be lower than in the first half. Our growth strategy remains grounded in the value we deliver to our users and society.
Our growth strategy remains grounded in the value we deliver to our users and the society. This guiding principle informs our business decisions and operations, as we continue to develop our business. Over the long term, we believe that sustainable growth is driven by three core factors: continuous innovation, strengthened organizational capabilities, and disciplined operational execution. By maintaining our focus on these fundamentals, we aim to support sustainable development over time as we continue developing solutions that address learning needs and contribute to education development. Charlotte, I hope that answers your question.
Speaker #2: This guiding principle informs our business decisions and operations, as we continue to develop our business. Over the long term, we believe that sustainable growth is driven by three core factors.
Alex Peng: ... and operations, as we continue to develop our business. Over the long term, we believe that sustainable growth is driven by three core factors: continuous innovation, strengthened organizational capabilities, and disciplined operational execution. By maintaining our focus on these fundamentals, we aim to support sustainable development over time as we continue developing solutions that address learning needs and contribute to education development. Charlotte, I hope that answers your question.
Speaker #2: Continuous innovation, strengthened organizational capabilities, and disciplined operational execution. By maintaining our focus on these fundamentals, we aim to support sustainable development over time as we continue developing solutions that address learning needs and contribute to education development.
Speaker #2: Charlotte, I hope that answers your question.
Speaker #2: question. This is very clear.
Charlotte Wei: This is very clear. Thank you, Jackson.
Charlotte Wei: This is very clear. Thank you, Jackson.
Speaker #5: Thank you, Jackson.
Speaker #3: The next question comes from Li Pingzhao with CICC. Please go ahead.
Operator: The next question comes from Liping Zhao with CICC. Please go ahead.
Operator: The next question comes from Liping Zhao with CICC. Please go ahead.
Liping Zhao: Good evening, Alex and Jackson. Thanks for taking my questions, and congrats on a strong quarter. I have a follow-up question on the learning devices. Could you please share the Q3 sales performance of your learning device and how they performed during the Double Eleven promotion period, relative to management's expectations before? How do you view the competitive landscape in the learning device market at present? Thank you.
Speaker #6: Good evening, Alex and Jackson. Thanks for taking my questions, and congrats on a strong quarter. I have a follow-up question on learning devices. Could you please share the Q3 sales performance of your learning device and how they performed during the W-11 promotion period relative to management's expectations before?
Liping Zhao: Good evening, Alex and Jackson. Thanks for taking my questions, and congrats on a strong quarter. I have a follow-up question on the learning devices. Could you please share the Q3 sales performance of your learning device and how they performed during the Double Eleven promotion period, relative to management's expectations before? How do you view the competitive landscape in the learning device market at present? Thank you.
Speaker #6: And how do you view the competitive landscape in the learning device market at present? Thank you.
Speaker #6: you. Hi, Li Ping.
Alex Peng: Hi, Liping, this is Alex. Thanks for the question. So let me begin with our Q3 sales performance. We saw year-over-year volume growth driven by enhancements to our product portfolio and channel strategies. I also know the blended ASP came in below CNY 4,000, which, you know, really reflects a shift in our product mix compared to the same period last year. You know, financially speaking, the learning device business reported an adjusted operating loss, as it remains in an investment phase. We'll continue to, you know, allocate resources to strengthen our capabilities and, you know, support long-term competitiveness in, you know, in this area.
Alex Peng: Hi, Liping, this is Alex. Thanks for the question. So let me begin with our Q3 sales performance. We saw year-over-year volume growth driven by enhancements to our product portfolio and channel strategies. I also know the blended ASP came in below CNY 4,000, which, you know, really reflects a shift in our product mix compared to the same period last year. You know, financially speaking, the learning device business reported an adjusted operating loss, as it remains in an investment phase. We'll continue to, you know, allocate resources to strengthen our capabilities and, you know, support long-term competitiveness in, you know, in this area.
Speaker #2: This is Alex. Thanks for the question. So let me begin with our Q3 sales performance. We saw year-over-year volume growth driven by enhancements to our product portfolio and channel strategies.
Speaker #2: I also know the blended ASP came in below RMB 4,000, which really reflects a shift in our product mix compared to the same period last year.
Speaker #2: Financially speaking, the learning device business reported an adjusted operating loss, as it remains in an investment phase. We'll continue to allocate resources to strengthen our capabilities and support long-term competitiveness in this area.
Alex Peng: So speaking of competitiveness, if I turn to the competitive landscape question, you know, we are really operating in a dynamic environment where, you know, artificial intelligence advancements are fundamentally transforming the, you know, educational technology landscape. You know, our approach really combines vertical domain large models with general AI capabilities to create more intelligent, personalized learning experiences. You know, one of the, you know, one of the common challenges in at-home learning involves students encountering difficult questions, unclear, unfamiliar concepts, but, you know, they don't have immediate access to teacher support. You know, rather than simply providing answers, in that moment, our AI solutions really aim to, you know, emulate the human teaching methodologies, right? So you break down complex problems, you offer tailored explanations, you take in the student's feedback, right? And then you guide students through learning progression pathways.
Speaker #2: So, speaking of competitiveness, if I turn to the competitive landscape question, we are really operating in a dynamic environment where artificial intelligence advancements are fundamentally transforming the educational technology landscape.
So speaking of competitiveness, if I turn to the competitive landscape question, you know, we are really operating in a dynamic environment where, you know, artificial intelligence advancements are fundamentally transforming the, you know, educational technology landscape. You know, our approach really combines vertical domain large models with general AI capabilities to create more intelligent, personalized learning experiences. You know, one of the, you know, one of the common challenges in at-home learning involves students encountering difficult questions, unclear, unfamiliar concepts, but, you know, they don't have immediate access to teacher support. You know, rather than simply providing answers, in that moment, our AI solutions really aim to, you know, emulate the human teaching methodologies, right? So you break down complex problems, you offer tailored explanations, you take in the student's feedback, right? And then you guide students through learning progression pathways.
Speaker #2: Our approach really combines vertical domain large models with general AI capabilities to create more intelligent, personalized learning experiences. One of the common challenges in at-home learning involves students encountering difficult questions or unclear, unfamiliar concepts, but they don't have immediate access to teacher support.
Speaker #2: Rather than simply providing answers, in that moment, our AI solutions really aim to emulate human teaching methodologies. So, we break down complex problems; we offer tailored explanations; we take in the student's feedback; and then we guide students through learning progression pathways.
Speaker #2: So, to this end, we are developing our AI agents' full-stack capabilities across these diverse learning scenarios. So, investment in product innovation and channel expansion continue to yield positive feedback.
Alex Peng: So to this end, we are developing our AI agents' full stack capabilities across these diverse learning scenarios. So investment in product innovation and channel expansion continue to yield positive feedback, which really underscore the user value we're creating, you know, with our products. Our key user engagement metrics, they remain very solid, with an average weekly active rate exceeding 80% and an average daily user time per active device at approximately one hour. During the recent Double Eleven promotion period, you know, if you look at our market share performance, that's really aligned with our expectations. So these outcomes, I think they demonstrate that our learning devices are gaining market traction through growing product market fit and diversified user acquisition channels. So these collectively enhance our long-term competitiveness. So I'll...
So to this end, we are developing our AI agents' full stack capabilities across these diverse learning scenarios. So investment in product innovation and channel expansion continue to yield positive feedback, which really underscore the user value we're creating, you know, with our products. Our key user engagement metrics, they remain very solid, with an average weekly active rate exceeding 80% and an average daily user time per active device at approximately one hour. During the recent Double Eleven promotion period, you know, if you look at our market share performance, that's really aligned with our expectations. So these outcomes, I think they demonstrate that our learning devices are gaining market traction through growing product market fit and diversified user acquisition channels. So these collectively enhance our long-term competitiveness.
Speaker #2: What's really underscored the user value we're creating with our products. Our key user engagement metrics remain very solid, with an average weekly active rate exceeding 80% and an average daily usage time per active device at approximately one hour.
Speaker #2: During the recent W-11 promotion period, if you look at our market share performance, that's really aligned with our expectations. So these outcomes, I think, demonstrate that our learning devices are gaining market traction through growing product–market fit and diversified user acquisition channels.
Speaker #2: So these collectively enhance our long-term competitiveness. So, I mean, I also know that we look at AI's integration into education as a long-term process shaped by technological breakthroughs and evolving market demands.
So I'll...You know, I mean, I also know that we look at AI's integration into education as a long-term process shaped by technological breakthroughs and evolving market demands. So short-term fluctuations are inevitable, right? But our commitment to the strategic business remains unwavering. Our, you know, our vision really extends beyond just the current offerings. As artificial intelligence continues to advance, we aspire to bring the principle of teaching in accordance with individual aptitude to a wider scale. So this, you know, this really helps ensure that, you know, more students, regardless of, you know, where they're coming from, what kind of learning environment they have at home, they really have the access to high-quality learning resources. So, you know, Lipi, I hope that answered your question.
Alex Peng: You know, I mean, I also know that we look at AI's integration into education as a long-term process shaped by technological breakthroughs and evolving market demands. So short-term fluctuations are inevitable, right? But our commitment to the strategic business remains unwavering. Our, you know, our vision really extends beyond just the current offerings. As artificial intelligence continues to advance, we aspire to bring the principle of teaching in accordance with individual aptitude to a wider scale. So this, you know, this really helps ensure that, you know, more students, regardless of, you know, where they're coming from, what kind of learning environment they have at home, they really have the access to high-quality learning resources. So, you know, Lipi, I hope that answered your question.
Speaker #2: So, short-term fluctuations are inevitable, I think. But our commitment to the strategic business remains unwavering. Our vision really extends beyond just the current offerings.
Speaker #2: As artificial intelligence continues to advance, we aspire to bring the principle of teaching in accordance with individual aptitude to a wider scale. So, this really helps ensure that more students, regardless of where they're coming from or what kind of learning environment they have at home, really have access to high-quality learning resources.
Speaker #2: So, Li Ping, I hope that answered your question.
Speaker #2: question.
Operator: Yes, that's very helpful. Thanks, Alex. The next question comes from Timothy Zhao with Goldman Sachs. Please go ahead.
Liping Zhao: Yes, that's very helpful. Thanks, Alex.
Speaker #6: Thanks, Yes, that's very
Speaker #6: Alex. The next
Operator: The next question comes from Timothy Zhao with Goldman Sachs. Please go ahead.
Speaker #3: The question comes from Timothy Zhao with Goldman Sachs. Please go ahead.
Speaker #3: ahead. Great.
Timothy Zhao: Great. Thank you, Magnus, for taking my question, and congrats on the very strong results again. My question is regarding your profitability and bottom-line performance. As I think our colleague just mentioned just now, the operating margin in Q3 reached the highest level probably over the past 5 years or so. I'm just wondering, what is the main drivers ahead, and also if you can share how is the operating margin performance across different major business lines in Q3? And what is your outlook in terms of profit margin for the group and for different segments? That'll be very helpful. Thank you.
Timothy Zhao: Great. Thank you, Magnus, for taking my question, and congrats on the very strong results again. My question is regarding your profitability and bottom-line performance. As I think our colleague just mentioned just now, the operating margin in Q3 reached the highest level probably over the past 5 years or so. I'm just wondering, what is the main drivers ahead, and also if you can share how is the operating margin performance across different major business lines in Q3? And what is your outlook in terms of profit margin for the group and for different segments? That'll be very helpful. Thank you.
Speaker #7: Thank you, Magnus, for taking my question, and congrats on the very strong results. Again, my question is regarding your profitability and bottom-line performance. As I think our colleague just mentioned just now, the operating margin in the third quarter reached the highest level—probably over the past five years or so.
Speaker #7: Just wondering, what are the main drivers ahead? Also, if you can share how the operating margin performed across different major business lines in Q3, and what is your outlook in terms of profit margin for the group and for different segments.
Speaker #7: That would be very helpful. Thank you.
Jackson Ding: Timothy, thank you for the question. This is Jackson. Let me take this one. Let me maybe first address the key drivers of our operating margin performance this quarter. On a year-over-year basis, the improvement primarily reflects the volatility in our selling and marketing expenses coupled with disciplined cost management across all business lines that continue to drive operating leverage. In this quarter, online marketing and branding expenses for our learning device business were lower compared to the same period last year. Our marketing expenditures naturally fluctuate as we dynamically adjust spending levels and marketing strategies based on market conditions, campaign performance, and strategic priorities. As we continue building our long-term core competitiveness, we actively diversify our marketing approaches across different platforms. Brand-related expenses also declined during this period.
Speaker #2: Timothy, thank you for the question. This is Jackson. Let me take this one. Let me maybe first address the key drivers of our operating margin performance this quarter.
Jackson Ding: Timothy, thank you for the question. This is Jackson. Let me take this one. Let me maybe first address the key drivers of our operating margin performance this quarter. On a year-over-year basis, the improvement primarily reflects the volatility in our selling and marketing expenses coupled with disciplined cost management across all business lines that continue to drive operating leverage. In this quarter, online marketing and branding expenses for our learning device business were lower compared to the same period last year. Our marketing expenditures naturally fluctuate as we dynamically adjust spending levels and marketing strategies based on market conditions, campaign performance, and strategic priorities. As we continue building our long-term core competitiveness, we actively diversify our marketing approaches across different platforms. Brand-related expenses also declined during this period.
Speaker #2: On a year-over-year basis, the improvement primarily reflects the volatility in our selling and marketing expenses. Coupled with disciplined cost management across all business lines, that continues to drive operating leverage.
Speaker #2: In this quarter, online marketing and branding expenses for our learning device business were lower compared to the same period last year. Our marketing expenditures naturally fluctuate as we dynamically adjust spending levels and marketing strategies based on market conditions, campaign performance, and strategic priorities.
Speaker #2: As we continue building our long-term core competitiveness, we actively diversify our marketing approaches across different platforms. Brand-related expenses also declined during this period. On a sequential basis, online marketing and branding expenses for the learning device business also declined.
Jackson Ding: On a sequential basis, online marketing and branding expenses for learning device business also declined. In addition, for online enrichment learning programs, this quarter is not peak season for online customer acquisition, results in lower online marketing expenditure compared to Q2. We consider these adjustments a normal part of resource allocation as we balance short-term needs with long-term objectives. And the resulting margin volatility aligns with our expectations. For these reasons, we would caution against using this quarter's margin performance as a benchmark for future periods. For our learning device business, we reported an adjusted operating loss this quarter. As we've emphasized, we prioritize establishing long-term competitiveness over short-term profitability for this emerging business. The break-even timeline remains uncertain. We are continuing to refine our offerings through new product development, content expansion, AI-driven user experience enhancement, and ongoing optimization in operations and sales channels.
On a sequential basis, online marketing and branding expenses for learning device business also declined. In addition, for online enrichment learning programs, this quarter is not peak season for online customer acquisition, results in lower online marketing expenditure compared to Q2. We consider these adjustments a normal part of resource allocation as we balance short-term needs with long-term objectives. And the resulting margin volatility aligns with our expectations. For these reasons, we would caution against using this quarter's margin performance as a benchmark for future periods. For our learning device business, we reported an adjusted operating loss this quarter. As we've emphasized, we prioritize establishing long-term competitiveness over short-term profitability for this emerging business. The break-even timeline remains uncertain. We are continuing to refine our offerings through new product development, content expansion, AI-driven user experience enhancement, and ongoing optimization in operations and sales channels.
Speaker #2: In addition, for online enrichment learning programs, this quarter is not a peak season for online customer acquisition, resulting in lower online marketing expenditure compared to Q2.
Speaker #2: We consider these adjustments a normal part of resource allocation as we balance short-term needs with long-term objectives and the resulting margin expectation. For volatility, and for these reasons, we would caution against using this quarter's margin performance as a benchmark for future periods.
Speaker #2: For the learning device business, we reported an adjusted operating loss this quarter. As we've emphasized, we prioritize establishing long-term competitiveness over short-term profitability for this emerging business.
Speaker #2: The break-even timeline remains uncertain. We are continuing to refine our offerings through new product development, content expansion, AI-driven user experience enhancement, and ongoing optimization in operations and sales channels.
Speaker #2: Looking at our overall margin profile, it is important to note that we are managing a portfolio comprising both mature, profitable businesses and new initiatives still in the investment phase.
Jackson Ding: Looking at our overall margin profile, it is important to note that we are managing a portfolio comprising both mature, profitable business and new initiatives still in the investment phase. This dynamic will result in quarterly margin fluctuations, making it inappropriate to extrapolate current results as indicative of future trends. Timothy, I hope that answers your question.
Looking at our overall margin profile, it is important to note that we are managing a portfolio comprising both mature, profitable business and new initiatives still in the investment phase. This dynamic will result in quarterly margin fluctuations, making it inappropriate to extrapolate current results as indicative of future trends. Timothy, I hope that answers your question.
Speaker #2: This dynamic will result in quarterly margin fluctuations, making it inappropriate to extrapolate current results as indicative of future trends. Timothy, I hope that answers your question.
Speaker #7: Sure. Thank you for the comment.
Timothy Zhao: Sure. Thank you for the clarity.
Timothy Zhao: Sure. Thank you for the clarity.
Speaker #3: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Speaker #1: So, thanks to everyone again for joining us today. As it is that time of the year, I also bid you an early happy Chinese New Year.
Alex Peng: Thanks to everyone again for joining us today. As it is that time of the year, I also bid you an early happy Chinese New Year, and we'll talk to you next quarter. Thank you. Bye-bye.
Alex Peng: Thanks to everyone again for joining us today. As it is that time of the year, I also bid you an early happy Chinese New Year, and we'll talk to you next quarter. Thank you. Bye-bye.
Speaker #1: And we'll talk to you next quarter. Thank you. Bye-bye.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
