Q4 2026 TAL Education Group Earnings Call

April 23, 2026

Speaker #1: Children fiscal year 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch tone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please be informed today's conference is being recorded. I would like to hand the conference over to Ms. Fang Liu, Investor Relations Director.

Speaker #1: Thank you. Please go ahead.

Speaker #2: Thank you all for joining us today for TAL Education Group fourth quarter and 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 or through the newswires.

Speaker #2: 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 Ms. Ding will be available to answer your questions.

Speaker #2: 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.

Speaker #2: 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: 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.

Speaker #2: 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.

Speaker #2: Alex, please go ahead.

Speaker #3: Thank you, Fang. And thanks to all of you for joining today's conference call. As we reflect on fiscal year 2026, it is worth stepping back to consider the progress we've made over the past several years.

Speaker #3: That progress has been built on more than two decades of experience in education, along with continuing investment in our capabilities, and innovation. Together, these efforts have enabled us to continuously refine our offerings and better serve the evolving needs of students and society.

Speaker #3: So with that context in mind, let me now turn to our learning services business. Learning services business remains our largest revenue contributor. We are committed to delivering quality learning experiences to our user base.

Speaker #3: We're also building our content solutions business, including learning devices. These products significantly extend the accessibility and customer reach of our proprietary and third-party content.

Speaker #3: They work alongside our learning services to create a more integrated learning experience. Driving longer, deeper, and stronger user engagement. Beyond our domestic operations, we're also expanded into select international markets.

Speaker #3: Leveraging our R&D capabilities and operational know-how to serve educational needs globally. While our businesses are at different stages of maturity, we are beginning to see meaningful improvement in company-level profitability.

Speaker #3: This underscores our ability to optimize core operations and build a more efficient operating model. Further strengthening our foundation for sustainable growth and long-term value creation.

Speaker #3: So with that overview, let me walk you through our business progress for the fourth fiscal quarter and full year 2026. Our offline pay-you enrichment programs demonstrated continued year-over-year growth in both the fourth quarter and the full fiscal year.

Speaker #3: Throughout the past year, we maintained a disciplined and consistent approach to expanding our offline learning center network. With a strong focus on service quality, operational health, and sustainable growth.

Speaker #3: Our expansion decisions are guided by a holistic assessment of factors including local market demand, receptivity to our offerings, our operational capabilities, and our commitment to maintaining high service quality.

Speaker #3: This approach supported solid growth and healthy operating performance throughout fiscal year 2026. In our online enrichment learning business, we continue to enhance user experience and service quality through technology.

Speaker #3: During the fourth quarter and throughout fiscal year 2026, we upgraded key products with richer content and technology-enabled features creating a more engaging learning experience.

Speaker #3: Together, these efforts strengthened the value proposition of our online enrichment offerings and supported sustained user growth and user engagement over time. Our learning device business achieved year-over-year revenue growth this quarter.

Speaker #3: In the last couple of quarters, this business has transitioned from its rapid expansion phase to a more moderate growth. We believe product quality and go-to-market capabilities will be critical to this business' long-term success.

Operator: Quarter and Fiscal Year 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. To withdraw your question, please press star then two. Please be informed today's conference is being recorded. I would like to hand the conference over to Ms. Fang Liu, Investor Relations Director. Thank you. Please go ahead.

Alex Peng: Quality, operational health, and sustainable growth. Our expansion decisions are guided by a holistic assessment of factors including local market demand, receptivity to our offerings, our operational capabilities, and our commitment to maintaining high service quality. This approach supported solid growth and healthy operating performance throughout FY 2026. In our online enrichment learning business, we continue to enhance user experience and service quality through technology. During Q4 and throughout FY 2026, we upgraded key products with richer content and technology-enabled features, creating a more engaging learning experience. Together, these efforts strengthen the value proposition of our online enrichment offerings and supported sustained user growth and user engagement over time. Our learning device business achieved year-over-year revenue growth this quarter. In the last couple of quarters, this business has transitioned from its rapid expansion phase toward more moderate growth.

Our expansion decisions are guided by a holistic assessment of factors, including local market demand receptivity to our offerings, our operational capabilities and our commitment to maintaining high service quality.

Speaker #3: In March 2026, we introduced the X5 Ultra Classic, a device incorporating enriched content and upgraded AI capabilities. With the X5 Ultra now integrated into our learning devices portfolio, we are positioned to address a broader spectrum of at-home, self-directed learning needs.

<unk> supported solid growth and healthy operating performance throughout fiscal year 2026.

In our online enrichment learning business, we continue to enhance user experience and service quality through technology.

Speaker #3: As we expand our install base, our key user engagement metrics remain strong with around 80% weekly active users and an average daily active usage time of about one hour per device.

Fang Liu: Thank you all for joining us today for TAL Education Group's Q4 and FY 2026 earnings conference call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website or through the newswires. 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.

During the fourth quarter and throughout fiscal year 2026, we upgraded key products, what richer content and technology enabled features creating a more engaging learning experience.

Speaker #3: This allows us to serve customers beyond our physical presence and enhance at-home engagement. Next, let me turn to our financial performance for the quarter.

Alex Peng: Together, these efforts strengthen the value proposition of our online enrichment offerings and supported sustained user growth and user engagement over time. Our learning device business achieved year-over-year revenue growth this quarter. In the last couple of quarters, this business has transitioned from its rapid expansion phase toward more moderate growth. We believe product quality and go-to-market capabilities will be critical to this business' long-term success.

Together these efforts strengthened the value proposition of our online and virtual offerings and supported sustained user growth and user engagement over time.

Speaker #3: In the fourth quarter, our net revenues were $802.4 million or $5 billion 590 million RMB. Representing a year-over-year increase of 31.5% and 25.8% in US dollars and RMB terms respectively.

Our learning device business achieved year over year revenue growth this quarter.

In the last couple of quarters. This business has transitioned from its rapid expansion phase toward more moderate growth, we believe product quality and go to market capabilities will be critical to this business long term success.

Alex Peng: We believe product quality and go-to-market capabilities will be critical to this business' long-term success. In March 2026, we introduced the X5 Ultra Classic, a device incorporating enriched content and upgraded AI capabilities. With the X5 Ultra now integrated into our learning devices portfolio, we are positioned to address a broader spectrum of at-home self-directed learning needs. As we expand our install base, our key user engagement metrics remain strong, with around 80% weekly active users and an average daily active usage time of about one hour per device. This allows us to serve customers beyond our physical presence and enhance at-home engagement. Next, let me turn to our financial performance for the quarter. In Q4, our net revenues were $802.4 million U.S., or 5,590,000,000 RMB, representing a year-over-year increase of 31.5% and 25.8% in U.S. dollar and RMB terms, respectively.

Speaker #3: Our non-GAAP income from operations was $82.2 million and non-GAAP net income attributable to talent reached $254.5 million for the quarter. I will now hand the call over to Jackson, who will provide an update on the operational developments across our four business lines and a review of our financial results for the fiscal fourth quarter.

Alex Peng: In March 2026, we introduced the X5 Ultra Classic, a device incorporating enriched content and upgraded AI capabilities. With the X5 Ultra now integrated into our learning devices portfolio, we are positioned to address a broader spectrum of at-home self-directed learning needs. As we expand our install base, our key user engagement metrics remain strong, with around 80% weekly active users and an average daily active usage time of about one hour per device. This allows us to serve customers beyond our physical presence and enhance at-home engagement. Next, let me turn to our financial performance for the quarter. In Q4, our net revenues were $802.4 million, or RMB 5,590,000,000, representing a year-over-year increase of 31.5% and 25.8% in U.S. dollar and RMB terms, respectively.

In March 2026, we introduced the X five ultra classic a device incorporating enriched content.

Upgraded AI capabilities with the X five ultra now integrated into our learning devices portfolio. We are positioned to address a broader spectrum of at home self directed learning needs.

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.

As we expand our installed base our key user engagement metrics remained strong.

Speaker #3: Jackson, over to you.

Around 80% weekly active users and then the average daily active usage time of about one hour per day box.

Speaker #4: Thank you, Alex. I am pleased to update you on our progress during the fourth fiscal quarter and full year across all core business lines.

This allows us to serve customers beyond our physical presence and enhance it.

Home engagement.

Speaker #4: Our pay-you small-cost enrichment programs continued its operational momentum during this quarter. As we grow, we continue to uphold our service quality and operational efficiency.

Next let me turn to our financial performance for the quarter.

Alex Peng: Thank you, Fang, and thanks to all of you for joining today's conference call. As we reflect on fiscal year 2026, it is worth stepping back to consider the progress we've made over the past several years. That progress has been built on more than two decades of experience in education, along with continued investment in our capabilities and innovation. Together, these efforts have enabled us to continuously refine our offerings and better serve the evolving needs of students and society. With that context in mind, let me now turn to our learning services business. Learning services business remains our largest revenue contributor. We are committed to delivering quality learning experiences to our user base. We're also building our content solutions business, including learning devices. These products significantly expand the accessibility and customer reach of our proprietary and third-party content.

In the fourth quarter, our net revenues were $802 4 million U S dollars or $5 billion 590 million RMB, representing a year over year increase of 31, 5% and 25 eight.

Speaker #4: In terms of physical footprint, we expanded our learning center network at a measured pace. Our operational discipline is reflected in our key performance indicators.

Percent in U S dollar and RMB terms, respectively.

Alex Peng: Our non-GAAP income from operations was $82.2 million U.S., and non-GAAP net income attributable to TAL reached $254.5 million U.S. for the quarter. 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 Q4. Jackson, over to you.

Our non-GAAP income from operations was $82 $2 million and non-GAAP net income attributable to Tal reached $254 $5 million for the quarter.

Speaker #4: With pay-you ou small-cost maintaining a generally stable retention rate, of around 80% across fiscal year 2026. With certain quarters exceeding that level. Turning to our online enrichment learning business.

I will now hand, the call over to Jackson, who will provide an update on the operational developments across our four business lines and a review of our financial results for the fiscal fourth quarter.

Speaker #4: We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats such as immersive online classrooms and role-playing activities.

Jackson over to you.

Yeah.

Jackson Ding: Thank you, Alex. I am pleased to update you on our progress during Q4 and full year across all core business lines. Our Peiyou Small Class enrichment programs continued its operational momentum during this quarter. As we grow, we continue to uphold our service quality and operational efficiency. In terms of physical footprint, we expanded our learning center network at a measured pace. Our operational discipline is reflected in our key performance indicators, with Peiyou Small Class maintaining a generally stable retention rate of around 80% across FY 2026, with certain quarters exceeding that level. Turning to our online enrichment learning business. We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats such as immersive online classrooms and role-playing activities.

Thank you Alex.

I am pleased to update you on our progress during the fourth fiscal quarter and full year across all core business blocks.

Alex Peng: They work alongside our learning services to create a more integrated learning experience, driving longer, deeper, and stronger user engagement. Beyond our domestic operations, we also expanded into select international markets, leveraging our R&D capabilities and operational know-how to serve educational needs globally. While our businesses are at different stages of maturity, we are beginning to see meaningful improvement in company-level profitability. This underscores our ability to optimize core operations and build a more efficient operating model, further strengthening our foundation for sustainable growth and long-term value creation. With that overview, let me walk you through our business progress for Q4 and FY 2026. Our offline Peiyou enrichment programs demonstrated continued year-over-year growth in both Q4 and FY 2026.

Pale small comps enrichment programs continue.

Continued operational momentum during this quarter.

As we grow we continue to uphold our service quality.

Speaker #4: By offering both offline and online enrichment programs, we aim to address the evolving needs of students and support their holistic development. Next, our learning devices business delivered year-over-year growth in the fourth quarter as well as the full fiscal year.

And operational efficiency.

In terms of physical footprint.

We expanded our learning Center network.

Measured pace.

Our operational discipline.

Correct.

Key performance indicators.

Speaker #4: This reflects our progress in product development and go-to-market execution. Over the past year, we have also broadened our content library and incorporated AI-driven features to support a more engaging and effective self-directed learning experience.

Was pale small costs, maintaining a generally stable retention rate.

Around 80% across the fiscal year 2026.

With certain quarters exceeding not level.

Okay.

Jackson Ding: Turning to our online enrichment learning business. We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats such as immersive online classrooms and role-playing activities. By offering both offline and online enrichment programs, we aim to address the evolving needs of students and support their holistic development. Next, our learning devices business delivered year-over-year growth in Q4 as well as the full fiscal year.

Turning to online enrichment and learning business.

Speaker #4: As Alex mentioned, last month we launched the X5 Ultra. This device expands our pricing points while offering more content: a unified learning interface and improved AI tools.

We continue to leverage technology to enhance the student learning experience.

A core focus remains deepening student engagement to drive meaningful learning outcomes.

Alex Peng: Throughout the past year, we've maintained a disciplined and consistent approach to expanding our offline learning center network with a strong focus on service quality, operational health, and sustainable growth. Our expansion decisions are guided by a holistic assessment of factors including local market demand, receptivity to our offerings, our operational capabilities, and our commitment to maintaining high service quality. This approach supported solid growth and healthy operating performance throughout fiscal year 2026. In our online enrichment learning business, we continue to enhance user experience and service quality through technology. During Q4 and throughout fiscal year 2026, we upgraded key products with richer content and technology-enabled features, creating a more engaging learning experience. Together, these efforts strengthen the value proposition of our online enrichment offerings and support a sustained user growth and user engagement over time. Our learning device business achieved year-over-year revenue growth this quarter.

To that end.

Speaker #4: Among them, the upgraded AI ThinQ 101 tutoring feature. To complement these upgrades, we've also improved the hardware. The X5 Ultra includes a faster processor and a 13.2-inch eye-comfort display.

We have driven engagement.

Interactive.

Such as immersive online costumes.

And ROE cleaning activities.

Jackson Ding: By offering both offline and online enrichment programs, we aim to address the evolving needs of students and support their holistic development. Next, our learning devices business delivered year-over-year growth in Q4 as well as the full fiscal year. This reflects our progress in product development and go-to-market execution. Over the past year, we have also broadened our content library and incorporated AI-driven features to support a more engaging and effective self-directed learning experience. As Alex mentioned, last month we launched the X5 Ultra. This device expands our pricing points while offering more content, a unified learning interface, and improved AI tools. Among them, the upgraded AI Think 101 tutoring feature. To complement these upgrades, we've also improved the hardware. The X5 Ultra includes a faster processor and a 13.2-inch eye comfort display, ensuring solid performance across different learning activities.

By offering both offline and online enrichment programs.

Aimed to address the evolving needs of students.

Importantly, our holistic.

Speaker #4: Ensuring solid performance across different learning activities. While technology itself is important, we believe the true value lies in how we integrate curriculum-aligned content scenario-based AI and seamless hardware into a cohesive learning system.

Thanks.

Next our learning devices businesses delivered year over year growth in the fourth.

As well as the full fiscal year.

Jackson Ding: This reflects our progress in product development and go-to-market execution. Over the past year, we have also broadened our content library and incorporated AI-driven features to support a more engaging and effective self-directed learning experience. As Alex mentioned, last month we launched the X5 Ultra. This device expands our pricing points while offering more content, a unified learning interface, and improved AI tools. Among them, the upgraded AI Think 101 tutoring feature. To complement these upgrades, we've also improved the hardware. The X5 Ultra includes a faster processor and a 13.2-inch eye comfort display, ensuring solid performance across different learning activities.

This reflects our progress in product development and go to market execution.

Over the past year, we have also broaden our content library and incorporated AI driven features to support a more engaging and effective self directed learning experience.

Speaker #4: One that is intended to be more intuitive and practical for students. By organizing fragmented learning materials and tools, into a clear, structured progression, it helps students monitor their progress and identify next steps.

As Alex mentioned last month, we launched the X y or tricks.

Sure.

This device expands our pricing points.

Speaker #4: With these efforts, we aim to gradually evolve our learning device into a personalized learning companion designed to foster independent learning over time. I would now like to walk you through our financial results.

While offering more content.

A unified learning interface.

Improved AI tools.

Alex Peng: In the last couple of quarters, this business has transitioned from its rapid expansion phase toward more moderate growth. We believe product quality and go-to-market capabilities will be critical to this business' long-term success. In March 2026, we introduced the X5 Ultra Classic, a device incorporating enriched content and upgraded AI capabilities. With the X5 Ultra now integrated into our learning devices portfolio, we are positioned to address a broader spectrum of at-home self-directed learning needs. As we expand our install base, our key user engagement metrics remain strong, with around 80% weekly active users and an average daily active usage time of about one hour per device. This allows us to serve customers beyond our physical presence and enhance at-home engagement. Next, let me turn to our financial performance for the quarter.

Among them the upgraded AI thing key 101 to the future.

Okay.

Speaker #4: For the fourth fiscal quarter. Our net revenues were $802.4 million or $5,590 million RMB. An increase of 31.5% and 25.8% year-over-year in US dollars and RMB terms respectively.

To complement these upgrades.

We've also improved the hardware.

The X five ultra includes a faster processor.

And the $13 two inch.

Comfort display ensuring a solid performance across different learning activities.

Jackson Ding: While technology itself is important, we believe the true value lies in how it integrates curriculum-aligned content, scenario-based AI, and seamless hardware into a cohesive learning system, one that is intended to be more intuitive and practical for students. By organizing fragmented learning materials and tools into a clear structured progression, it helps students monitor their progress and identify next steps. With these efforts, we aim to gradually evolve our learning device into a personalized learning companion designed to foster independent learning over time. I would now like to walk you through our financial results for Q4. Our net revenues were $802.4 million, or RMB 5,590 million, an increase of 31.5% and 25.8% year over year in US dollar and RMB terms respectively.

While technology itself is important we believe the true value lies in how it integrates curriculum online content.

Speaker #4: Cost of revenues increased by 28.2% to $375.2 million from $292.6 million for the same period last year. Non-GAAP cost of revenues which excludes share-based compensation expenses increased by 28.5% to $374.8 million from $291.7 million for the same period last year.

Scenario based AI is seamless hardware into a cohesive 90 system.

One that is intended to more intuitive.

Practical for students.

By organizing fragmented learning materials and tools into a clear structured progression.

It helps students monitor their progress and identify next steps.

Yeah.

With these efforts, we aim to gradually evolve or learning device into a personalized learning companion designed to foster independent learning over time.

Alex Peng: In Q4, our net revenues were $802.4 million, or RMB 5,590,000,000, representing a year-over-year increase of 31.5% and 25.8% in US dollar and RMB terms, respectively. Our non-GAAP income from operations was $82.2 million, and non-GAAP net income attributable to TAL reached $254.5 million for the quarter. I will now hand the call over to Jackson, who will provide an update on the operational developments across our four business lines and a review of our financial results for the fiscal Q4. Jackson, over to you.

Speaker #4: Gross profit increased by 34.5% to $427.2 million from $317.6 million in the fourth quarter of fiscal year 2025. The gross margin for the fourth quarter of fiscal year 2026 was 53.2% compared to 52.0% in the same period of the prior year.

Okay.

I would now like to walk you through all financial results for the fourth fiscal quarter.

Yeah.

While net revenues were.

802, 4 million U S doctors.

All $5.590 billion.

<unk>, an increase of 31, 5% and 25, 8% year over year in U S dollar and RMB terms, respectively.

Speaker #4: Turning to operating expenses. Selling and marketing expenses for the quarter were $220.9 million representing an increase of 1.4% from $218.0 million for the same period last year.

Yeah.

Jackson Ding: Cost of revenues increased by 28.2% to $375.2 million from $292.6 million for the same period last year. non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 28.5% to $374.8 million from $291.7 million for the same period last year. Gross profit increased by 34.5% to $427.2 million from $317.6 million in Q4 of FY 2025. The gross margin for Q4 of FY 2026 was 53.2% compared to 52.0% in the same period the prior year. Turning to operating expenses.

Cost of revenues increased by <unk>.

28, 2% to 300 submitted $5 $2 million.

From $292 6 million U S dollars for the same period last year.

Jackson Ding: Thank you, Alex. I am pleased to update you on our progress during Q4 and full year across our core business lines. Our Peiyou Small Class enrichment programs continued its operational momentum during this quarter. As we grow, we continue to uphold our service quality and operational efficiency. In terms of physical footprint, we expanded our learning center network at a measured pace. Our operational discipline is reflected in our key performance indicators, with Peiyou Small Class maintaining a generally stable retention rate of around 80% across fiscal year 2026, with certain quarters exceeding that level. Turning to our online enrichment learning business. We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats, such as immersive online classrooms and role-playing activities.

Jackson Ding: Thank you Alex. I am pleased to update you on our progress during Q4 and full year across our core business lines. Our Peiyou Small Class enrichment programs continued its operational momentum during this quarter. As we grow, we continue to uphold our service quality and operational efficiency. In terms of physical footprint, we expanded our learning center network at a measured pace. Our operational discipline is reflected in our key performance indicators, with Peiyou Small Class maintaining a generally stable retention rate of around 80% across fiscal year 2026, with certain quarters exceeding that level. Turning to our online enrichment learning business. We continue to leverage technology to enhance the student learning experience. A core focus remains deepening student engagement to drive meaningful learning outcomes. To that end, we have driven engagement through interactive formats, such as immersive online classrooms and role-playing activities.

non-GAAP cost of revenues, which excludes share based compensation expenses.

Speaker #4: Non-GAAP selling and marketing expenses which exclude share-based compensation expenses increased by 2.0% to $218.5 million from $214.3 million for the same period last year.

Increased by 28, 5% to three.

$374 8 million years Congress.

291 $7 million for the same period last year.

Okay.

Gross profit increased by 34, 5%.

Speaker #4: Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35.1% to 27.2% year-over-year. General and administrative expenses increased by 15.7% to $133.8 million from $115.6 million in the fourth quarter of fiscal year 2025.

Two $427 2 million from $317 $6 million in the fourth quarter fiscal year 2025.

Gross margin for the fourth quarter of fiscal year 2026 was.

53, 2% compared to $52 zero percent in the same period the prior year.

Jackson Ding: Turning to operating expenses. Selling and marketing expenses for the quarter were $220.9 million, representing an increase of 1.4% from $218.0 million for the same period last year. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 2.0% to $218.5 million from $214.3 million for the same period last year. Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35.1% to 27.2% year over year. General and administrative expenses increased by 15.7% to $133.8 million from $115.6 million in Q4 of FY 2025.

Turning to operating expenses.

Speaker #4: Non-GAAP general and administrative expenses which excluded share-based compensation expenses increased by 19.7% to $126.8 million from $106.0 million in the fourth quarter of fiscal year 2025.

Jackson Ding: Selling and marketing expenses for the quarter were $220.9 million, representing an increase of 1.4% from $218.0 million for the same period last year. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 2.0% to $218.5 million from $214.3 million for the same period last year. Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35.1% to 27.2% year over year. General and administrative expenses increased by 15.7% to $133.8 million from $115.6 million in Q4 of FY 2025.

Selling and marketing expenses for the quarter were $229 million, representing an increase of one 4% from 218.0 million U S dollars for the same period last year.

non-GAAP, selling and marketing expenses, which exclude share based compensation expenses increased by 2.0%.

Speaker #4: Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from $17.4% to $15.8% year-over-year. Total share-based compensation expenses allocated to related operating costs and expenses decreased by 31.9% to $9.8 million in the fourth quarter of fiscal year 2026.

Two $218 5 million U S dollars from $214 $3 million for the same period last year.

Jackson Ding: By offering both offline and online enrichment programs, we aim to address the evolving needs of students and support their holistic development. Next, our learning devices business delivered year-over-year growth in Q4 as well as the full fiscal year. This reflects our progress in product development and go-to-market execution. Over the past year, we have also broadened our content library and incorporated AI-driven features to support a more engaging and effective self-directed learning experience. As Alex mentioned, last month, we launched the X5 Ultra. This device expands our pricing points while offering more content, a unified learning interface, and improved AI tools, among them the upgraded AI ThinkKey 101 tutoring feature. To complement these upgrades, we've also improved the hardware.

non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35, 1% to 27, 2% year over year.

General and administrative expenses increased by 15, 7% to $133 8 million doctors from $156 million in the fourth quarter.

Speaker #4: From 14.3 million in the same period of fiscal 2025. Income from operations was $72.5 million in the fourth quarter of fiscal year 2025 compared to loss from operations of $16.0 million in the fourth quarter of fiscal year 2025.

Fiscal year 2025.

Jackson Ding: Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 19.7% to $126.8 million from $106.0 million in Q4 of fiscal year 2025. Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 17.4% to 15.8% year over year. Total share-based compensation expenses allocated to related operating costs and expenses decreased by 31.9% to $9.8 million in Q4 of fiscal year 2026 from $14.3 million in the same period of fiscal 2025. Income from operations was $72.5 million in Q4 of fiscal year 2026, compared to loss from operations of $16.0 million in Q4 of fiscal year 2025.

non-GAAP general and administrative expenses, which excluded share based compensation expenses increased by 19, 7% to 126 aimed in India stock.

Speaker #4: Non-GAAP income from operations which excluded share-based compensation expenses was $82.2 million compared to non-GAAP loss from operations of $1.7 million in the same period of the prior year.

From 106.0, many of your stores.

Fourth quarter of fiscal year 2025.

non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 17, 4% to 15, 8% year over year.

Speaker #4: Other income was $275.0 million for the fourth quarter of fiscal year 2026. Compared to other income of $13.0 million in the fourth quarter of fiscal year 2025.

Yeah.

Okay.

Sure.

Jackson Ding: The X5 Ultra includes a faster processor and a 13.2-inch eye comfort display, ensuring solid performance across different learning activities. While technology itself is important, we believe the true value lies in how it integrates curriculum-aligned content, scenario-based AI, and seamless hardware into a cohesive learning system, one that is intended to be more intuitive and practical for students. By organizing fragmented learning materials and tools into a clear, structured progression, it helps students monitor their progress and identify next steps. With these efforts, we aim to gradually evolve our learning device into a personalized learning companion designed to foster independent learning over time. I would now like to walk you through our financial results for Q4. Our net revenues were $802.4 million, or RMB 5,590 million, an increase of 31.5% and 25.8% year-over-year in US dollar and RMB terms respectively.

Okay.

Total share based compensation expenses allocated to related operating costs and expenses decreased by 31, 9% to $9 8 million as partners.

Speaker #4: The change in other income for the fourth quarter was mainly driven by fluctuations in the fair value of certain investments. Net income attributable to TAL was $244.8 million in the fourth quarter of fiscal year 2026.

The fourth quarter of fiscal year 2026.

$14 three many of your stars in the same period of fiscal 2025.

Income from operations was.

$72 $5 million in the fourth quarter of fiscal year 2025, compared to loss from operations of $16 zero million U S dollars in the fourth quarter of fiscal year 2025.

Speaker #4: Compared to net loss attributable to TAL of $7.3 million in the fourth quarter of fiscal year 2025. Non-GAAP net income attributable to TAL which excluded share-based compensation expenses was $254.5 million compared to non-GAAP net income attributable to TAL of $7.0 million in the fourth quarter of fiscal year 2025.

Jackson Ding: Non-GAAP income from operations, which excluded share-based compensation expenses, was $82.2 million, compared to non-GAAP loss from operations of $1.7 million in the same period of the prior year. Other income was $275.0 million for Q4 FY 2026, compared to other income of $13.0 million in Q4 FY 2025. The change in other income for Q4 was mainly driven by fluctuations in the fair value of certain investments. Net income attributable to TAL was $244.8 million in Q4 FY 2026, compared to net loss attributable to TAL of $7.3 million in Q4 FY 2025. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was $254.5 million, compared to non-GAAP net income attributable to TAL of $7.0 million in Q4 FY 2025. Moving on to our balance sheet.

non-GAAP income from operations, which excluded share based compensation expenses.

Yes.

$82 $2 million compared to non-GAAP loss from operations.

One $7 million in the same period of the prior year.

Other income was.

275 zero many of your stores for the fourth quarter of fiscal year 2026.

Speaker #4: Moving on to a balance sheet. As of February 28th, 2026, the company had one billion 523.9 million of cash and cash equivalents; one billion 715.4 million of short-term investments; and $262.2 million in current and non-current restricted cash.

Compared to other income.

13.0, many of U S dollars in the fourth quarter of fiscal year 2025.

The change in other income for the fourth quarter was mainly driven by fluctuations in the fair value of certain investments.

Jackson Ding: Cost of revenues increased by 28.2% to $375.2 million from $292.6 million for the same period last year. Non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 28.5% to $374.8 million from $291.7 million for the same period last year. Gross profit increased by 34.5% to $427.2 million from $317.6 million in Q4 FY 2025. The gross margin for Q4 FY 2026 was 53.2%, compared to 52.0% in the same period the prior year. Turning to operating expenses. Selling and marketing expenses this quarter were $220.9 million, representing an increase of 1.4% from $218.0 million for the same period last year. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased by 2.0% to $218.5 million from $214.3 million for the same period last year.

Net income attributable to Tao was $244 eight many of the doctors in the fourth quarter of fiscal year 2026, compared to net loss attributable to Tao.

Speaker #4: I would defer revenue balance was $882.2 million as of the end of the fourth fiscal quarter. Now, turning to our cash flow statement. Net cash used in operating activities for the fourth quarter in fiscal year 2026 was $215.0 million finally, I would like to briefly address our share repurchase program.

Seven 3 million U S dollars.

Fourth quarter of fiscal year 2025.

non-GAAP net income attributable to Tau, which excluded share based compensation expenses.

$254 $5 million compared to non-GAAP net income attributable to Tal.

Seven zero million dollars.

Third quarter fiscal year 2025.

Speaker #4: On July 28th, 2025, the company's board of directors authorized a share repurchase program under which the company may purchase up to $600 million of the company's common shares over the next 12 months.

Jackson Ding: Moving on to our balance sheet. As of 28 February 2026, the company had $1,523,900,000 of cash and cash equivalents, $1,715,400,000 of short-term investments, and $262.2 million in current and non-current restricted cash. Our deferred revenue balance was $882.2 million as of the end of Q4. Now turning to our cash flow. Net cash used in operating activities for Q4 FY 2026 was $215.0 million. Finally, I would like to briefly address our share repurchase program. On 28 July 2025, the company's board of directors authorized a share repurchase program under which the company may purchase up to $600 million of the company's common shares over the next 12 months.

Moving onto our balance sheet.

Jackson Ding: As of 28 February 2026, the company had $1,523,900,000 of cash and cash equivalents, $1,715,400,000 of short-term investments, and $262.2 million in current and non-current restricted cash. Our deferred revenue balance was $882.2 million as of the end of Q4. Now turning to our cash flow. Net cash used in operating activities for Q4 FY 2026 was $215.0 million. Finally, I would like to briefly address our share repurchase program. On 28 July 2025, the company's board of directors authorized a share repurchase program under which the company may purchase up to $600 million of the company's common shares over the next 12 months. Between 29 January 2025 and 22 April 2026, the company has repurchased 101,371 common shares at an aggregate consideration of approximately $3.3 million. That concludes the financial section.

And as of February 28, 2026.

The company had $1 billion 523, 9 million U S dollars of cash and cash equivalents.

Speaker #4: Between January 29th, 2025, and April 22nd, 2026, the company has repurchased $101,371 common shares and an aggregate consideration of approximately $3.3 million that concludes the financial section.

One billions $715 4 million in U S dollars of short term investments.

And $262 $2 million and current and non current restricted cash.

Our deferred revenue balance was.

$882 2 million in U S dollars.

As of the end of the fourth fiscal quarter.

Speaker #4: I will now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

Okay.

Now turning to our cash flows.

Net cash used in operating activities for the fourth quarter and fiscal year 2026 was.

Speaker #2: Thanks, Jackson. Before turning to fiscal 2027, I want to take a moment to speak to the responsibility and mission we carry in serving students and families.

215.0, many of your songs.

Jackson Ding: Non-GAAP selling and marketing expenses as a percentage of total net revenues decreased from 35.1% to 27.2% year over year. General and administrative expenses increased by 15.7% to $133.8 million from $115.6 million in Q4 of FY 2025. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 19.7% to $126.8 million from $106.0 million in Q4 of FY 2025. Non-GAAP general and administrative expenses as a percentage of total net revenues decreased from 17.4% to 15.8% year over year. Total share-based compensation expenses allocated to related operating costs and expenses decreased by 31.9% to $9.8 million in Q4 of FY 2026 from $14.3 million in the same period of FY 2025.

Finally.

I would like to briefly address our share repurchase program.

Speaker #2: Particularly in the K12 sector, ITL, this is not a peripheral consideration. It is at the heart of how we think about our products, our services, and the standards to which we hold ourselves.

On July 28 2025.

The company's board of directors authorized a share repurchase program.

Under which the company may purchase.

Speaker #2: It shapes not only what we build but also how we grow. As we move into fiscal 2027, our strategy is centered on three priorities: first, we aim to drive quality growth across our businesses; we expect learning services to remain our largest revenue contributor; and we will continue emphasizing quality across both digital and in-person offerings so that we can serve more users effectively while preserving a strong user experience.

Up to $600 million of the company's common shares over the next 12 months.

Jackson Ding: Between 29 January 2025 and 22 April 2026, the company has repurchased 101,371 common shares at an aggregate consideration of approximately $3.3 million. That concludes the financial section. I will now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

Between January 29, 2025, and April 22nd 2026, the company has repurchased.

100 on them.

1000 <unk> three.

371 common shares.

In an aggregate consideration of approximately $3 3 million.

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Speaker #2: In content solutions, we will focus on expanding through stronger product capabilities; richer content offerings; and more effective go-to-market execution. Second, AI remains key to our long-term strategy, and we're approaching it with a clear sense of focus and discipline.

That concludes the financial section.

Jackson Ding: I will now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

I will now hand, the call back to Alex to briefly update you on our business outlook. Alex. Please go ahead.

Alex Peng: Thanks, Jackson. Before turning to fiscal 2027, I want to take a moment to speak to the responsibility and mission we carry in serving students and families, particularly in the K-12 sector. At TAL, this is not a peripheral consideration. It is at the heart of how we think about our products, our services, and the standards to which we hold ourselves. It shapes not only what we build but also how we grow. As we move into fiscal 2027, our strategy is centered on three priorities. First, we aim to drive quality growth across our businesses. We expect learning services to remain our largest revenue contributor, and we will continue emphasizing quality across both digital and in-person offerings so that we can serve more users effectively while preserving a strong user experience.

Thanks Jackson.

Before turning to fiscal 2027, I want to take a moment to speak to the.

Responsibility.

In Michigan, we carry and surveying students and families, particularly in the K 12 sector.

Speaker #2: Our approach is application-first. Rather than pursuing foundation models ourselves, we are focused on deploying AI in ways that meaningfully enhance the user experience. Improve operational efficiency and strengthen our products and services.

Well this is not a peripheral consideration it is at the heart of how we think about our products.

Our servicer and the standards to which we hold ourselves ashish not only what we build but also how we can grow.

Speaker #2: In learning, that means helping students find the right content more effectively. Staying engaged more deeply and learning more efficiently. Across the company, it also means applying AI to improve how we operate, from customer service and content production to software development, enabling us to grow with greater leverage over time.

As we move into fiscal 2027, our strategy is centered on three priorities.

Jackson Ding: Income from operations was $72.5 million in Q4 of fiscal year 2025, compared to loss from operations of $16.0 million in Q4 of fiscal year 2025. non-GAAP income from operations, which excluded share-based compensation expenses, was $82.2 million, compared to non-GAAP loss from operations of $1.7 million in the same period of the prior year. Other income was $275.0 million for Q4 of fiscal year 2026, compared to other income of $13.0 million in Q4 of fiscal year 2025. The change in other income for the fourth quarter was mainly driven by fluctuations in the fair value of certain investments. Net income attributable to TAL was $244.8 million in Q4 of fiscal year 2026, compared to net loss attributable to TAL of $7.3 million in Q4 of fiscal year 2025.

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We aim to drive quality growth across our businesses, we expect learning services to remain our largest revenue contributor and will continue emphasizing quality across both digital and in person offerings. So that we can serve more users effectively.

Speaker #2: Finally, we remain focused on discipline execution as we scale. By continuing to strengthen execution across content, product, operations, and go-to-market, we can further improve efficiency, and enhance profitability over time.

While preserving a strong user experience.

Alex Peng: In content solutions, we will focus on expanding through stronger product capabilities, richer content offerings, and more effective go-to-market execution. Second, AI remains key to our long-term strategy, and we're approaching it with a clear sense of focus and discipline. Our approach is application first. Rather than pursuing foundation models ourselves, we are focused on deploying AI in ways that meaningfully enhance the user experience, improve operational efficiency, and strengthen our products and services. In learning, that means helping students find the right content more effectively, staying engaged more deeply, and learning more efficiently. Across the company, it also means applying AI to improve how we operate, from customer service and content production to software development, enabling us to grow with greater leverage over time. Finally, we remain focused on disciplined execution as we scale.

And content solutions.

Focus on expanding through stronger product capabilities richer content offerings and more effective go to market execution.

Speaker #2: So that concludes my prepared remarks on operator. I think we are ready to open the call for questions.

Second.

It remains key to our long term strategy.

Speaker #3: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Approaching it.

Clear sense of focus and discipline.

Our approach is applications first.

Rather than pursuing foundation models ourselves, we are focused on deploying AI in ways that meaningfully enhance the user experience.

Speaker #3: If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Improved operational efficiency and strengthen our products and services.

And Laura.

That means helping students find the right content more effectively.

Speaker #4: Hello, operator. Before we take the first question, we'd like to make one correction. We just talked about the we have repurchased at aggregate consideration of approximately $3.3 million this is happened between January 29, 2026 and April 22, 2026.

Staying engaged more deeply and learning more efficiently.

Alex Peng: Across the company, it also means applying AI to improve how we operate, from customer service and content production to software development, enabling us to grow with greater leverage over time. Finally, we remain focused on disciplined execution as we scale. By continuing to strengthen execution across content, product, operations, and go-to-market, we can further improve efficiency and enhance profitability over time. That concludes my prepared remarks. Operator, I think we are ready to open the call for questions.

Across the company. It also means apply AI to improve how we operate from customer service and content production for software development, enabling us to grow with greater leverage over time.

Jackson Ding: Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was $254.5 million, compared to non-GAAP net income attributable to TAL of $7.0 million in Q4 of FY 2025. Moving on to our balance sheet. As of 28 February 2026, the company had $1.5239 billion of cash and cash equivalents, $1.7154 billion of short-term investments, and $262.2 million in current and non-current restricted cash. Our deferred revenue balance was $882.2 million as of the end of Q4. Now turning to our cash flow. Net cash used in operating activities for Q4 in FY 2026 was $215.0 million. Finally, I would like to briefly address our share repurchase program.

Finally, we remain focused on disciplined execution as we scale by.

Alex Peng: By continuing to strengthen execution across content, product, operations, and go-to-market, we can further improve efficiency and enhance profitability over time. That concludes my prepared remarks. Operator, I think we are ready to open the call for questions.

By continuing to strengthen execution across content product operations Anchorage market.

Speaker #4: Okay, that's the correction we'd like to make. Now, please open to an analyst question. Thank you.

Can further improve efficiency and enhance profitability overtime.

So that concludes my prepared remarks, operator, I think we are ready to open the call for questions.

Speaker #3: The first question comes from the line of Jenny Wang with UBS. Please go ahead.

Okay.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're 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. At this time, we will pause momentarily to assemble our roster.

Speaker #5: Thank you for taking my question and first of all, congrats on another topic order. So my question is related to other income. So we noticed a significant increase in other income in the fourth quarter.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.

Speaker #5: So could you please provide more color on what drove this? Thank you.

<unk> talked anytime Youre question has been addressed and you would like to withdraw your question. Please.

Please press Star then two.

Speaker #6: Jenny, thank you for the question. This is Jackson. Let me take this one. Look, from time to time, we make financial strategic investments, right, to either generate capital return for shareholders or to accelerate business growth.

At this time.

Pause momentarily to assemble our roster.

Yeah.

Frank: Hello, operator. Before we take the first question, we'd like to make one correction. We just talked about we have repurchased at an aggregate consideration of approximately $3.3 million. This happened between 29 January 2026 and 22 April 2026. Okay. That's the correction we'd like to make. Now please open to analyst questions. Thank you.

[Company Representative] (TAL Education Group): Hello, operator. Before we take the first question, we'd like to make one correction. We just talked about we have repurchased at an aggregate consideration of approximately $3.3 million. This happened between 29 January 2026 and 22 April 2026. Okay. That's the correction we'd like to make. Now please open to analyst questions. Thank you.

Hello, operator.

If I would take the first question.

We'd like to make one correction.

We just talked about they are we have a great purchase.

Speaker #6: And these investments target vary from the classic wealth management to minority equity investments to sometimes outright full-on mergers and acquisitions. As we've seen in the last all of which, as you've seen in the last few years, right?

Greg.

Aggregate concentration.

Approximately.

$3 3 million U S. Dollar. This is happened it training January 29.

'twenty 'twenty six and April 22, two.

2026.

Okay, that's that correction, we like to make now six or 10-Q.

Speaker #6: Specifically, what happened in this quarter is that a couple of investments in our portfolio experienced an increase in valuation. And this resulted in an investment gain on our financial statements, which is booked under other income.

Thank you.

Operator: The first question comes from the line of Jenny Wang with UBS. Please go ahead.

The first question comes from the line of Janney One with UBS. Please go ahead.

Jackson Ding: On 28 July 2025, the company's board of directors authorized a share repurchase program under which the company may purchase up to $600 million of the company's common shares over the next 12 months. Between 29 January 2025 and 22 April 2026, the company has repurchased 101,371 common shares at an aggregate consideration of approximately $3.3 million. That concludes the financial section. I will now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

Jenny Wang: Thank you for taking my question. First of all, congrats on the strong quarter. My question is related to other income. We know there's a significant increase in other income in Q4. Could you please provide more color on what drove this? Thank you.

Thank you for taking my question and Furthermore, congrats on that.

Sure.

So my question is related to our income so like nowadays a significant increase in claims handling at both brands. So could you. Please provide more color.

Speaker #6: I would also like to mention that this is a one-time event. Therefore, we don't recommend using this quarter's other income as a baseline for future performance projections.

Thank you.

Alex Peng: Jenny, thank you for the question. This is Jackson. Let me take this one. Look, from time to time, we make financial strategic investments, right? To either generate capital return for shareholders and/or to accelerate business growth. These investment targets vary from the classic wealth management products to minority equity investments to sometimes outright full-on mergers and acquisitions, all of which, as you've seen in the last few years, right? Specifically, what happened in this quarter is that a couple of investments in our portfolio experienced an increase in valuation. This resulted in an investment gain on our financial statements, which is booked under other income. I would also like to mention that this is a one-time event, therefore we don't recommend using this quarter's other income as a baseline for future performance projections. Jenny, I hope that answers your question.

Jackson Ding: Jenny, thank you for the question. This is Jackson. Let me take this one. Look, from time to time, we make financial strategic investments, right? To either generate capital return for shareholders and/or to accelerate business growth. These investment targets vary from the classic wealth management products to minority equity investments to sometimes outright full-on mergers and acquisitions, all of which, as you've seen in the last few years, right? Specifically, what happened in this quarter is that a couple of investments in our portfolio experienced an increase in valuation. This resulted in an investment gain on our financial statements, which is booked under other income. I would also like to mention that this is a one-time event, therefore we don't recommend using this quarter's other income as a baseline for future performance projections. Jenny, I hope that answers your question.

Jenny and thank you for the question. This is Jack So let me let me take this one.

Speaker #6: Jenny, I hope that answers your question.

Look for from time to time, we make financial and strategic investments right to to either generate capital return for shareholders or and or to accelerate business growth.

Speaker #5: Thank you, Jackson. That was good. Thank you.

Speaker #3: The next question comes from the line of Timothy Zhao with Goldman Sachs. Please go ahead.

And these investment targets vary from.

Speaker #7: Great. Good evening. Thank you for taking my question and congratulations on the solid quarter. My question is related to the offline payers more class business.

The cost.

Wealth management products too.

Minority equity investments to two sometimes ally colon mergers and acquisitions as we've seen in the loss all of which as you've seen in the last few years right.

Speaker #7: Just wondering if the metric can share some color. On the most recent developments of this business in the fourth quarter of last year, and what was the growth rate look like on the revenue side?

Specifically what happened in this quarter is that a couple of a couple of our investments.

Speaker #7: And looking forward into the fiscal year, 2027, what is your strategic approach in expanding the learning center network? And what kind of capacity growth that we can expect?

And our portfolio.

Experienced an increase and automation.

And this is this resolved.

Speaker #7: Thank you.

And in Boston Gang are I don't know.

Speaker #2: Thanks, Timothy. This is Alex. Let me take that one on. So I'll first talk about our fourth quarter performance. And then share our approach to expanding the learning center network in the new fiscal year, okay?

For National State.

Which is booked under other income.

I would also like to mention that this is a onetime event.

Therefore, we don't recommend using this quarter's other income as a baseline for future performance projections.

Speaker #2: So in the first in the fourth quarter, pay you a small class enrichment business, as we mentioned earlier, on the call. Really had steady growth.

Jamie I hope that answers your question.

Okay.

Speaker #2: Revenue increased year over year, which is primarily driven by hiring enrollment, which reflects both our learning center network expansion and continued efforts to enhance the learning experience for our students, right?

Jenny Wang: Thank you, Jackson. That was clear. Thank you.

Thank you Jackson.

Okay.

Yeah.

Operator: The next question comes from the line of Timothy Zhao with Goldman Sachs. Please go ahead.

The next question comes from the line of Timothy Zhao with Goldman Sachs. Please go ahead.

Alex Peng: In content solutions, we will focus on expanding through stronger product capabilities, richer content offerings, and more effective go-to-market execution. Second, AI remains key to our long-term strategy, and we're approaching it with a clear sense of focus and discipline. Our approach is application first. Rather than pursuing foundation models ourselves, we are focused on deploying AI in ways that meaningfully enhance the user experience, improve operational efficiency, and strengthen our products and services. In learning, that means helping students find the right content more effectively, staying engaged more deeply, and learning more efficiently. Across the company, it also means applying AI to improve how we operate from customer service and content production to software development, enabling us to grow with greater leverage over time. Finally, we remain focused on disciplined execution as we scale.

Timothy Zhao: Great. Good evening. Thank you for taking my question, and congratulations on the solid quarter. My question is related to the offline Peiyou Small Class business. Just wondering if the management can share some color on the most recent developments of this business in Q4 of last year, and what was the growth rate look like on the revenue side? Looking forward into FY 2027, what is your strategic approach in expanding the learning center network, and what kind of capacity growth that we can expect? Thank you.

Great. Good evening and thank you for taking my question and congratulations on the solid quarter my.

Speaker #2: We talked earlier about the key operational metrics. They remain healthy. In the fourth quarter, for example, retention we talked about retention rate of over 80%.

My question is related to the offline payers small class business just wondering if the macro can share some color on the most recent developments of this business.

Quarter of last year, and what the growth rate looks like on the revenue side.

Speaker #2: So this really underscores the trust our students and families place in our programs. And the consistent quality I should say the consistent high quality we maintain in our services delivery.

Looking forward into the fiscal year of 2007, what is your strategic approach and expanding the learning Center network and what kind of capacity growth that we can expect thank you.

Alex Peng: Thanks, Timothy. This is Alex. Let me take that one on. I'll first talk about our Q4 performance, and then share our approach to expanding the learning center network in the new fiscal year. Okay? In Q4, Peiyou Small Class enrichment business, as we mentioned earlier on the call, really had steady growth. Revenue increased year over year, which is primarily driven by higher enrollment, which reflects both our learning center network expansion and continued efforts to enhance the learning experience for our students. We talked earlier about the key operational metrics. They remained healthy in Q4. For example, retention. We talked about retention rate of over 80%. This really underscores the trust our students and families place in our programs and the consistent quality, I should say, the consistent high quality we maintain in our services delivery.

Thanks, Timothy this is Alex let me take that one on so.

Speaker #2: From our day-to-day offline operations, we really continue to see steady demand for enrichment learning. Which is driven by, I think, the evolving parental and educational priorities of this new generation of parents.

So I'll first talk about our fourth quarter performance.

And then share our approach to expanding the learning Center network and our new fiscal year Okay.

So in the first in the fourth quarter.

Hey, you're a small class enrichment business as we mentioned earlier on the call really steady.

Speaker #2: So to align with these changing needs, we're really increasing capacity and refining our offerings both of which we believe will support the business' long-term growth trajectory.

Steady growth.

<unk> revenue increased year over year.

Yes.

Primarily driven by higher enrollment.

Which reflects both our learning center network expansion.

Speaker #2: You asked about our network expansion. So network expansion in the fourth quarter we really stick to the discipline approach that we've followed throughout the year and then throughout this past several years, right?

And continuing efforts to enhance.

The learning experience for our students.

We talked earlier about the key operational metrics.

Named healthy in the fourth quarter.

Speaker #2: For the full year, we entered five new cities which brings our total coverage to over 40 cities across China. Looking ahead to the new fiscal year, we'll continue to prioritize the business' long-term health and sustainability our expansion strategy will remain disciplined focusing primarily on consolidating our presence in existing cities rather than pursuing aggressive geographical coverage expansion.

For example, retention or talked about retention rate of over 80%.

So this really underscores the trust.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone 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 star then two. At this time, we will pause momentarily to assemble our roster.

Our students and families, placing our programs and the consistent quality.

As you say the full system of high quality, we maintain in our services delivery.

Alex Peng: From our day-to-day offline operations, we really continue to see steady demand for enrichment learning, which is driven by, I think, the evolving parental and educational priorities of this new generation of parents. To align with these changing needs, we're really increasing capacity and refining our offerings, both of which we believe will support the business's long-term growth trajectory. You asked about our network expansion. Network expansion in Q4, we really stick to the disciplined approach that we've followed throughout the year and throughout the past several years, right? For the full year, we entered 5 new cities, which brings our total coverage to over 40 cities across China. Looking ahead to the new fiscal year, we'll continue to prioritize the business's long-term health and sustainability.

From our day to day offline operations.

We really continue to see steady demand for enrichment Laura.

Fang Liu: Hello, operator. Before we take the first question, we'd like to make one correction. We just talked about we have repurchased at an aggregate consideration of approximately $3.3 million. This has happened between 29 January 2026 and 22 April 2026. Okay. That's the correction we'd like to make. Now please open to analyst queue. Thank you.

It's driven by I think the evolving.

Parental and educational priorities.

Speaker #2: Operating from a higher baseline, right? We talked about that. We did that earlier. We're really operating from a much higher baseline. And we need to prioritize sustainable development over expansion for its own sake.

This new generation of carrots.

To align with these changing needs, we're really increasing capacity and refining our offerings.

Both of which we believe will support the business long term growth projection.

Speaker #2: We expect the revenue growth for this business to gradually taper in FY 2027 relative to its rate of growth in FY 2026. So Timothy, I hope that answered your question.

He asks about our network expansion.

So network expansion in the fourth quarter.

Really stick to the disciplined approach that we've followed throughout the year at length throughout US has several years right for the full year we entered.

Operator: The first question comes from the line of Jenny Yuan with UBS. Please go ahead.

Operator: The first question comes from the line of Jenny Wang with UBS. Please go ahead.

Speaker #7: Sure. Thank you.

Five new studies.

Which brings our total coverage.

Speaker #3: The next question comes from the line of Eddy Wang with Morgan Stanley. Please go ahead.

Jenny Yuan: Thank you for taking my question, and first of all, congrats on another solid quarter. My question is related to other income. We know there's a significant increase in other income in Q4. Could you please provide more color on what drove this? Thank you.

Jenny Wang: Thank you for taking my question, and first of all, congrats on another solid quarter. My question is related to other income. We know there's a significant increase in other income in Q4. Could you please provide more color on what drove this? Thank you.

Two over 40 cities across China.

Looking ahead to the new fiscal year.

Speaker #8: Hi, Alex and Jackson. Thank you for taking my questions and congratulations on a very strong quarter. So my question is regarding the learning devices.

We will continue to.

Prioritize the business long term health and sustainability.

Alex Peng: Our expansion strategy will remain disciplined, focusing primarily on consolidating our presence in existing cities rather than pursuing aggressive geographical coverage expansion. Operating from a higher baseline, we talked about that a little bit earlier. We're really operating from a much higher baseline. We need to prioritize sustainable development over expansion for its own sake. We expect the revenue growth for this business to gradually taper in FY 2027 relative to its rate of growth in FY 2026. Timothy, I hope that answered your question. Sure. Thank you.

Our expansion strategy will remain disciplined focusing primarily on consolidating our presence in existing cities.

Speaker #8: Could you give me some color on the performance of the learning devices business in this quarter? And how did you mitigate the memory cost hike?

Jackson Ding: Jenny, thank you for the question. This is Jackson. Let me take this one. Look, from time to time, we make financial strategic investments, right? To either generate capital return for shareholders and/or to accelerate business growth. These investment targets vary from the classic wealth management products to minority equity investments to sometimes outright full-on mergers and acquisitions, all of which, as you've seen in the last few years, right? Specifically what happened in this quarter is that a couple of investments in our portfolio experienced an increase in valuation. This resulted in an investment gain on our financial statements, which is booked under other income. I would also like to mention that this is a one-time event, therefore, we don't recommend using this quarter's other income as a baseline for future performance projections. Jenny, I hope that answers your question.

Rather than pursuing aggressive geographical hub.

Speaker #8: Also, how do you view the current competitive landscape in the learning devices sector? And what's your strategy to navigate and strengthen your position? Thank you.

Average expansion.

Operating from a higher baseline right, we've talked about that earlier, we're really operating from a much higher baseline.

Speaker #2: Thanks, Eddy. This is Alex. So let me first share some color on our learning device performance in the fourth quarter. And then our views on the competitive landscape.

And we need to prioritize sustainable development or expansion of horizontal sick.

We expect the.

Revenue growth for this business chair so gradually.

Speaker #2: So our learning device business achieved year-over-year revenue growth in the fourth quarter. This really reflects the consistent execution of our strategy. Which has always been prioritizing improving product capabilities and refining our go-to-market approach.

Paper and.

FY 2027 rollout.

Relative to its rate of growth in FY 'twenty strike effects.

So Timothy I hope that answered your question.

Timothy Zhao: Sure. Thank you.

Sure. Thank you.

Operator: The next question comes from the line of Eddy Wang with Morgan Stanley. Please go ahead.

The next question comes from the line of Andy One with Morgan Stanley. Please go ahead.

Speaker #2: So sales volume also increased. Compared to the same period last year, which is supported by and expanded and more diversified product portfolio. Which meets a broader range of customer segments.

Eddy Wang: Hi, Alex and Jackson. Thank you for taking my questions, and congratulations on a very strong quarter. My question is regarding the learning devices. Could you give me some color on the performance of the learning devices business in this quarter, and how did you mitigate the memory cost hike? Also, how do you view the current competitive landscape in the learning devices sector, and what's your strategy to navigate and strengthen your position? Thank you.

Hi, Allison Jackson, Thank you for taking my questions and.

Congratulations on very strong quarter. So my question is regarding the memory devices.

Could you give me some color on the performance of the linear devices fitness.

Speaker #2: And their needs. We also see that the blended average selling price was over $3,000 RMB. Which is consistent with our current product mix. I mean, there's some a lot of talk about memory cost pressures.

This quarter and how did you mitigate.

The memory cost of Mike.

Jenny Yuan: Thank you, Jackson. That was clear. Thank you.

Jenny Wang: Thank you, Jackson. That was clear. Thank you.

So how do you view the current competitive landscape in the learning devices.

And but what's your strategy to navigate and to strengthen your position.

Operator: The next question comes from the line of Timothy Zhao with Goldman Sachs. Please go ahead.

Sure.

Alex Peng: Thanks, Eddy. This is Alex. Let me first share some color on our learning device performance in Q4, and then our views on the competitive landscape. Our learning device business achieved year-over-year revenue growth in Q4. This really reflects the consistent execution of our strategy, which has always been prioritizing improving product capabilities and refining our go-to-market approach. Sales volume also increased compared to the same period last year, which is supported by an expanded and more diversified product portfolio, which meets a broader range of customer segments and their needs. We also see that the blended average selling price was over RMB 3,000, which is consistent with our current product mix. There's a lot of talk about memory cost pressures. Really, this is an industry-wide challenge that many consumer electronics companies are facing.

Thanks, Eddie this is Alex.

Timothy Zhao: Great. Good evening. Thank you for taking my question and congratulations on the solid quarter. My question is related to the offline Peiyou Small Class business. Just wondering if the management can share some color on the most recent developments of this business, in Q4 of last year, and what the growth rate looked like on the revenue side. Looking forward into FY 2027, what is your strategic approach in expanding the learning center network, and what kind of capacity growth we can expect? Thank you.

Let me first share some color on our learning device performance in the fourth quarter and then.

Speaker #2: Really, this is an industry-wide challenge. That many consumer electronics companies are facing. I mean, the sector has pretty extensive experience managing these kinds of cycles.

Our views on the competitive landscape.

So our learning device.

<unk> year over year revenue growth in the fourth quarter.

This really reflects.

Speaker #2: Through operational adjustment. And we're applying those lessons alongside strategies tailored to our business model, right? So our key initiatives include optimizing inventory turnover stock management for greater efficiency.

The consistent execution of our strategy.

Which has always been prioritizing.

Improving product capabilities.

And refining our go to market approach.

Alex Peng: Thanks, Timothy. This is Alex. Let me take that one on. I'll first talk about our Q4 performance, and then share our approach to expanding the learning center network in the new fiscal year. Okay? In the Q4, Peiyou Small Class enrichment business, as we mentioned earlier on the call, really had steady growth. Revenue increased year over year, which is primarily driven by higher enrollment, which reflects both our learning center network expansion and continued effort to enhance the learning experience for our students, right? We talked earlier about the key operational metrics. They remained healthy in the Q4. For example, retention. We talked about retention rate of over 80%.

So sales volume.

Speaker #2: As well as refining our product portfolio by streamlining SKUs. And really adjusting our product mix where it's appropriate. These steps are helping us mitigate the impact of rising cost cycle while maintaining our focus on long-term competitiveness.

Also increased.

Compared to the same period last year.

Which are supported by an expanded and more diversified product portfolio.

Meet a broader range of customer segments.

And their needs.

We're also.

Let's see that the.

Speaker #2: So the question on competition. I think the learning devices sector remains pretty highly dynamic. With competitors advancing in hardware, content offerings, and AI-driven features.

When the.

Average selling price.

It was over 3000 RMB.

Which is consistent with our current product mix.

I mean, there is some.

A lot of talk about <unk>.

Cost pressures.

Speaker #2: In this kind of environment, our strategy is to really focus on continued innovation across our own product and user experience. While staying responsive to shifting market conditions.

Really this is an industry wide challenge.

There are many consumer electronics companies are facing.

Alex Peng: The sector has pretty extensive experience managing these kinds of cycles through operational adjustments, and we're applying those lessons alongside strategies tailored to our business model. Our key initiatives include optimizing inventory turnover, stock management for greater efficiency, as well as refining our product portfolio by streamlining SKUs. And really adjusting our product mix where it's appropriate. These steps are helping us mitigate the impact of rising cost cycle, while maintaining our focus on long-term competitiveness. The question of competition. I think the learning devices sector remains pretty highly dynamic, with competitors advancing in hardware, content offerings, and AI-driven features. In this kind of environment, our strategy is to really focus on continued innovation across our own product and user experience, while staying responsive to shifting market conditions. If you look at the past year, we've really expanded our lineup to serve different user segments.

Yes, I mean the sector.

Pretty extensive experience.

Imaging these kind of cycles.

Alex Peng: This really underscores the trust our students and families place in our programs and the consistent quality, I should say, the consistent high quality we maintain in our services delivery. From our day-to-day offline operations, we really continue to see steady demand for enrichment learning, which was driven by, I think, the evolving parental and educational priorities of this new generation of parents. To align with these changing needs, we're really increasing capacity and refining our offerings, both of which we believe will support the business' long-term growth projection. You asked about our network expansion. Network expansion in Q4, we really stick to the disciplined approach that we follow throughout the year and then throughout the past several years, right? For the full year, we entered 5 new cities, which brings our total coverage to over 40 cities across China.

Speaker #2: So if you look at the past year, we really expanded our lineup to serve different user segments. We talked about the recent launch of the X5 Ultra.

Through.

Operational adjustments and we're applying those lessons alongside strategies tailored to our business model right. So our key initiatives.

Optimizing inventory turnover.

Speaker #2: We continue to enrich our content offering to enhance the learning experience. We've also maintained a pretty good cadence of software updates I think we delivered something like 19 major operating system upgrades and introduced nearly 300 new features over the last fiscal year.

Stock management for greater efficiency.

As well as refining our product portfolio.

By streamlining our skus and really adjusting our product mix, where where it's appropriate.

These steps are helping us mitigate the.

Impact of of ryzen half cycle.

Maintaining our focus on long term competitiveness.

Alex Peng: The question of competition. I think the learning devices sector remains pretty highly dynamic, with competitors advancing in hardware, content offerings, and AI-driven features. In this kind of environment, our strategy is to really focus on continued innovation across our own product and user experience, while staying responsive to shifting market conditions. If you look at the past year, we've really expanded our lineup to serve different user segments.

So the question not competition.

Speaker #2: So together, these efforts really help us reinforce our integrated approach which is combining hardware, software, and distribution to create a cohesive learning solution. And at home, learning solution.

I think the learning devices sector remains.

Pretty highly dynamic.

With competitors.

And sing.

In hardware.

Content offerings and AI driven features.

In this kind of environment, our strategy is to really focus.

Speaker #2: We believe building innovation and product capability is really the key to navigating the competitive landscape and I think we are progress to date in market share really aligns with that with our expectation and our approach we've adopted.

Because our continued innovation across our own product and user experience.

While staying responsive.

Two shifting market conditions.

So if you look at the half year, we've really expanded our lineup.

Alex Peng: Looking ahead to the new fiscal year, we'll continue to prioritize the business' long-term health and sustainability. Our expansion strategy will remain disciplined, focusing primarily on consolidating our presence in existing cities, rather than pursuing aggressive geographical coverage expansion. Operating from a higher baseline, right? We talked about that a little bit earlier. We're really operating from a much higher baseline. We need to prioritize sustainable development over expansion for its own sake. We expect the revenue growth for this business to gradually taper in FY 2027 relative to its rate of growth in FY 2026. Timothy, I hope that answered your question.

To serve different user segments.

Speaker #2: So really beyond devices, we also see content solutions as a strategic initiative that extends learning beyond the classroom and deepens and provides longer engagement for us between us and our users at home.

Alex Peng: We talked about the recent launch of the X5 Ultra. We continue to enrich our content offering to enhance the learning experience. We've also maintained a pretty good cadence of software updates. I think we delivered something like 19 major operating system upgrades, and introduced nearly 300 new features over the last fiscal year. Together, these efforts really help us reinforce our integrated approach with combining hardware, software, and distribution to create a cohesive learning solution, an at-home learning solution. We believe building innovation and product capability is really the key to navigating the competitive landscape. I think our progress to date in market share really aligns with our expectation and that approach we've adopted.

We talked about the recent launch of the X five ultra.

We continue to enrich.

Our content offering.

To enhance the learning experience.

We've also maintained a.

Pretty good cadence of software updates.

Speaker #2: And we think this can really build together as an integrated learning experience for our students. Across learning services and content solutions. Really, our long-term goal is to make quality learning resources more accessible.

I think we deliver something like 19 major operating system upgrades.

And introduced nearly 300, new features over the last fiscal year. So.

Together these efforts really help us reinforce our integrated approach.

Speaker #2: While supporting students' holistic development along their journey of learning and development. So I hope that answered your question.

Sure.

Combining hardware software and distribution to create a cohesive learning solution.

At home learning solution.

Speaker #1: Thank you, Alex. Much appreciated.

We believe building.

Innovation and product capability is really the key to navigating the competitive landscape and.

Speaker #3: The next question comes from the line of Jing Yuan with CICC. Please go ahead.

Timothy Zhao: Sure. Thank you.

I think where our progress to date.

Operator: The next question comes from the line of Eddy Wang with Morgan Stanley. Please go ahead.

Speaker #4: I'm good evening, Alex and Jackson. Thanks for taking my question and congratulations on this strong quarter. So my question is about the bottom line probability.

And market share.

It really aligns with.

With our expectation and our approach.

Approach we've adopted.

Speaker #4: Could you walk us through the primary driver behind this quarter's bottom line growth? And what were the key factors contributing to the improved profitability?

Alex Peng: Really beyond devices, we also see content solutions as a strategic initiative that extends learning beyond the classroom and deepens and provides longer engagement for us, between us and our users at home. We think this can really build together as an integrated learning experience for our students across learning services and content solutions. Really, our long-term goal is to make quality learning resources more accessible, while supporting students' holistic development along their journey of learning and development. I hope that answer your question.

So yeah.

Beyond devices, we also see content solutions.

Strategic initiative expands.

Speaker #4: Thanks.

Turning.

Beyond the classroom and deepens.

Speaker #2: Thank you for the question. This is Jackson, the MEO. Let me take this one. First of all, I would just like to say profitability is a priority for us.

It provides longer engagement for us.

Ignacio <unk> users at home.

And we think this can really build together.

Speaker #2: And we continue to take measures to drive profitability improvement, right? When we think about profitability, we see profitability as a manifestation of the value we create for customers and society as a whole.

An integrated learning experience for our students across learning services and control solutions.

Alex Peng: Thanks, Eddie. This is Alex. Let me first share some color on our learning device performance in the Q4 and then our views on the competitive landscape. Our learning device business achieved year-over-year revenue growth in the Q4. This really reflects the consistent execution of our strategy, which has always been prioritizing improving product capabilities, and refining our go-to-market approach. Sales volume also increased compared to the same period last year, which is supported by an expanded and more diversified product portfolio, which meets a broader range of customer segments, and their needs. We also see that the blended average selling price was over RMB 3,000, which is consistent with our current product mix. There's a lot of talk about memory cost pressures. Really this is an industry-wide challenge that many consumer electronics companies are facing.

Really our long term goal is to make quality learning resources.

More accessible.

While supporting <unk>.

June's holistic evolve them along their journey of learning and development.

Speaker #2: Combined with our operating efficiency, right? So when I when we think about measures we take to improve profitability, it's really measures along the lines of, one, value creation, but two, also operating efficiency.

So I hope that answered your question.

Eddy Wang: Thank you, Alex, much appreciate.

Hey, guys. Thanks much appreciate it.

Yeah.

Operator: The next question comes from the line of Jing Wan with CICC. Please go ahead.

The next question comes from the line of Jean one with Cie CEC. Please go ahead.

Speaker #2: Now, let's break down the drivers of the I think there are several contributing factors to profitability momentum this past quarter. One, as payoffs more class continue to grow, it's operating margin it's margin profiles remain steady.

Jing Wan: Good evening, Alex and Jackson. Thanks for taking my question, and congratulations on this strong quarter. My question is about the bottom line profitability. Could you walk us through the primary driver behind this quarter's bottom line growth, and what were the key factors contributing to the improved profitability? Thanks.

And.

And Jackson, Thanks for taking my question and congratulations on strong quarter. So my question was about the bottom line profit.

Could you walk us through the primary driver behind this Congress potline topline growth and what worries that some factors contributing to the improved propaganda concerns.

Yeah.

Alex Peng: Thank you for the question. This is Jackson. Let me take this one. First of all, I would just like to say profitability is a priority for us, and we continue to take measures to drive profitability improvement. Right? When we think about profitability, we see profitability as a manifestation of the value we create for our customers and society as a whole, combined with our operating efficiency. Right? When we think about measures we take to improve profitability, it's really measures along the lines of one, value creation, but two, also operating efficiency. Now let's break down the drivers. I think there are several contributing factors to profitability momentum this past quarter. One, as Peiyou Small Class continue to grow, its margin profiles remain steady and has generated more absolute profit dollar.

Jackson Ding: Thank you for the question. This is Jackson. Let me take this one. First of all, I would just like to say profitability is a priority for us, and we continue to take measures to drive profitability improvement. Right? When we think about profitability, we see profitability as a manifestation of the value we create for our customers and society as a whole, combined with our operating efficiency. Right? When we think about measures we take to improve profitability, it's really measures along the lines of one, value creation, but two, also operating efficiency. Now let's break down the drivers. I think there are several contributing factors to profitability momentum this past quarter. One, as Peiyou Small Class continue to grow, its margin profiles remain steady and has generated more absolute profit dollar.

Thank you for the question. This is Jackson EMEA, let me take this one.

Speaker #2: And has it generated more absolute profit dollar? Other business lines including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well.

First of all I would just like to say profitability is.

As a priority for us and we continue to take.

Take measures to drive profitability improvement right.

When we think about profitability, we see profitability as a.

Speaker #2: In addition to business unit level profitability improvement, the overall company is also experiencing unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well.

Manifestation of the value, we create for customers and society as a whole.

Alex Peng: The sector has pretty extensive experience managing these kind of cycles through operational adjustment, and we're applying those lessons alongside strategies tailored to our business model, right? Our key initiatives include optimizing inventory turnover, stock management for greater efficiency, as well as refining our product portfolio by streamlining SKUs and really adjusting our product mix where it's appropriate. These steps are helping us mitigate the impact of rising cost cycle, while maintaining our focus on long-term competitiveness. The question on competition. I think the learning devices sector remains pretty highly dynamic with competitors advancing in hardware, content offerings, and AI-driven features. In this kind of environment, our strategy is to. That really focus on continued innovation across our own product and user experience, while staying responsive to shifting market conditions. If you look at the past year, we've really expanded our lineup to serve different user segments.

Combined with our operating efficiency right. So when I when we think about measures we take to improve profitability. It's really measures along the lines of one value creation, but two also.

Speaker #2: I'd like to also comment a bit on the overall trend of our profitability. If we look at non-gap operating income margin, for the last few quarters, I think for every single quarter this past fiscal year, our non-gap operating margin improved.

Operating efficiency.

Now, let's break down the drivers of that.

I think there are several contributing factors too.

Profitability momentum this this past quarter.

Speaker #2: Compared to the same period of last year. And we really see this as a result of all the profitability improvement measures were taken discussed above.

One.

As payoffs more costs continue to grow.

It's it's operating margin, it's Martin profiles.

<unk> remains steady.

And as we generated more absolute profit dollar.

Speaker #2: I hope that answers your question.

Speaker #4: Great. Thanks. Thanks for the color.

Alex Peng: Other business lines, including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well. In addition to business unit level profitability improvement, the overall company is also unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well. I'd like to also comment a bit on the overall trend of our profitability. If we look at non-GAAP operating income margin for the last few quarters, I think for every single quarter this past fiscal year, our non-GAAP operating margin improved compared to the same period of last year. We really see this as a result of all the profitability improvement measures we're taking, discussed above. I hope that answers your question.

Jackson Ding: Other business lines, including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well. In addition to business unit level profitability improvement, the overall company is also unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well. I'd like to also comment a bit on the overall trend of our profitability. If we look at non-GAAP operating income margin for the last few quarters, I think for every single quarter this past fiscal year, our non-GAAP operating margin improved compared to the same period of last year. We really see this as a result of all the profitability improvement measures we're taking, discussed above. I hope that answers your question.

Other business lines.

Including online.

Speaker #3: The next question comes from the line of Candice Chan with Daiwa. Please go ahead.

Richmond learning programs, including 90 devices.

Uh huh.

Showed varying degree of profitability improvement in that as well.

Speaker #5: Hi, Jess and Alice and Fran. Thanks for taking my question and also congrats on this very strong set of results. Can you provide us a breakdown of the top line growth performance across the major business lines this quarter?

In addition to business unit level profitability improvement.

The overall company is also experiencing unlocking more of the operating leverage which has been a contributing factor to overall profitability improvement as well.

Speaker #5: And additionally, what is the outlook of the growth for these business lines in the coming fiscal year? And one more question, if I may, is that we do observe a very solid margin expansion for three consecutive quarters at about 10%.

I'd like to also comment a bit on the overall trend although profitability.

If we look at non-GAAP operating income margin.

Alex Peng: We talked about the recent launch of the X5 Ultra. We continue to enrich our content offering to enhance the learning experience. We've also maintained a pretty good cadence of software updates. I think we delivered something like 19 major operating system upgrades and introduced nearly 300 new features over the last fiscal year. Together, these efforts really help us reinforce our integrated approach with combining hardware, software, and distribution to create a cohesive learning solution, an at-home learning solution. We believe building innovation and product capability is really the key to navigating the competitive landscape. I think our progress to date in market share really aligns with our expectation and that approach we've adopted.

Speaker #5: What is the potential for the further margin improvement going forward? Thank you.

Yes.

For the last few quarters I think for every single quarter. This past fiscal year, our non-GAAP operating margin.

Speaker #2: Thanks, Candice. This is Alex. Let me take that down. Let me unpack that. So first of all, let's look at the first part of the question, which really is a breakdown of the top line growth performance across our major business lines this quarter, right?

Improved.

Compared to the same period of last year.

And we really see this as a result of all the profit profitability improvement measures were taken were taking discussed above.

Speaker #2: So let's start with pay you offline enrichment business, which as we mentioned on this call, remains our largest revenue driver. It really continued its solid growth this quarter.

Okay.

I hope that answers your question.

Jing Wan: Great. Thanks. Thanks for the color.

Yeah.

Hey, thanks, Thanks for the color.

Operator: The next question comes from the line of Candis Chan with Daiwa. Please go ahead.

The next question comes from the line of candies.

Speaker #2: This was supported by, as we said, the ongoing expansion of our learning center network and the consistent improvement to service quality. Moving into fiscal year 2027, the expansion strategy remains disciplined.

<unk> with Daiwa. Please go ahead.

Candis Chan: Hi, Jackson, Alex, and Frank. Thanks for taking my question, and also congrats on this very strong set of results. Can you provide us a breakdown of the top-line growth performance across the major business lines this quarter? Additionally, what is the outlook of the growth for these business lines in the coming fiscal year? One more question, if I may, is that we do observe a very solid margin expansion for three consecutive quarters, staying at above 10%. What is the potential for the further margin improvement going forward? Thank you.

Hi, Jeff just Alex on for Ryan. Thanks for taking my question and also congrats on the same set of results can you provide us a breakdown of the top line growth to pharma is that constantly.

Major business lines this quarter and Additionally, what is the outlook. After gross spent these business lines are.

Speaker #2: We're going to focus on increasing center density within existing cities. To ensure we maintain high operational standards. We anticipate this business continue to grow at a healthy rate.

Coming fiscal year and one more question.

If I may is that we do understand and I'm very sorry that margin expansion for three consecutive quarters.

Alex Peng: Really, beyond devices, we also see content solutions as a strategic initiative that extends learning beyond the classroom, deepens, and provides longer engagement for us, between us and our users at home. We think this can really build together as an integrated learning experience for our students across learning services and content solutions. Really, our long-term goal is to make quality learning resources more accessible while supporting students' holistic development along their journey of learning and development. I hope that answered your question.

What is at.

And about 10% what is the potential for the center and margin improvement going forward. Thank you.

Speaker #2: As the operations grow larger, and the baseline, becomes larger. We've seen the year-over-year revenue growth rate moderate naturally which is a trend that we expect to continue into the next fiscal year.

Alex Peng: Thanks, Candice. This is Alex. Let me take that on. Let me unpack that. First of all, let's look at the first part of the question, which really is a breakdown of the top-line growth performance across our major business lines this quarter. Right? Let's start with the Peiyou offline enrichment business, which, as we mentioned on this call, remains our largest revenue driver. It really continued its solid growth this quarter. This was supported by, as we said, the ongoing expansion of our learning center network and the consistent improvement to service quality. Moving into fiscal year 2027, the expansion strategy remains disciplined. We're going to focus on increasing center density within existing cities to ensure we maintain high operational standards. We anticipate this business continue to grow at a healthy rate.

Thanks, Candice this is Alex let me take that I'll, let me unpack that.

So.

First of all you know what what odds are the first part of the question, which really is a breakdown of the topline growth performance across our major business lines. This quarter right. So let's far was pay you offline and Richmond vessels, which as we mentioned on this call remains our <unk>.

Speaker #2: Second, the online enrichment learning business. We remain committed to delivering high-quality interactive learning experiences we continue to enhance the user experience by introducing more interactive features and leveraging AI in both content production and our internal workflows.

Larger revenue driver.

<unk> continued its solid growth this quarter.

This was supported by the ongoing expansion of our learning Center network.

And that's consistent.

Eddy Wang: Thank you, Alex, much appreciated.

Eddy Wang: Thank you Alex, much appreciated.

Speaker #2: This product and user-centric approach really supports user engagement over time. In terms of the online enrichment learning business's channel strategies, we balance between growth objectives and return on investment to build long-term operational capabilities.

Improvements to service quality.

Moving into fiscal year 2027.

Operator: The next question comes from the line of Jean Wang with CICC. Please go ahead.

The expansion strategy remains disciplined.

We're going to focus on increasing centered density within existing cities.

Jean Wang: Good evening, Alex and Jackson. Thanks for taking my question and congratulations on this strong quarter. My question is about the bottom line profitability. Could you walk us through the primary driver behind this quarter's bottom line growth, and what were the key factors contributing to the improved profitability? Thanks.

Jin Wang: Good evening, Alex and Jackson. Thanks for taking my question and congratulations on this strong quarter. My question is about the bottom line profitability. Could you walk us through the primary driver behind this quarter's bottom line growth, and what were the key factors contributing to the improved profitability? Thanks.

To ensure we maintain high operational standards.

We anticipate those vessels continue to grow.

Speaker #2: Next, learning device business. It delivered year-over-year revenue growth this quarter driven by increased sales volume and a higher contribution from different revenue recognition. The market, as we discussed, is evolving toward a more sustainable growth path.

Either healthy rate.

Alex Peng: As the operations grow larger and the baseline becomes larger, we've seen the year-over-year revenue growth rate moderate naturally, which is a trend that we expect to continue into the next fiscal year. Second, the online enrichment learning business. We remain committed to delivering high-quality interactive learning experiences. We continue to enhance the user experience by introducing more interactive features and leveraging AI in both content production and our internal workflows. This product and user-centric approach really support user engagement over time. In terms of the online enrichment learning business' channel strategies, we balance between growth objectives and return on investment to build long-term operational capabilities. Next, learning device business. It delivered year-over-year revenue growth this quarter, driven by increased sales volume and a higher contribution from deferred revenue recognition.

As the operations.

Grow larger.

And the baseline.

Jackson Ding: Thank you for the question. This is Jackson. Let me take this one. First of all, I would just like to say profitability is a priority for us, and we continue to take measures to drive profitability improvement. Right? When we think about profitability, we see profitability as a manifestation of the value we create for our customers and society as a whole, combined with our operating efficiency. Right? When we think about measures we take to improve profitability, it's really measures along the lines of, one, value creation, but two, also operating efficiency. Now let's break down the drivers. I think there are several contributing factors to profitability momentum this past quarter. One, as Peiyou Small Class continues to grow, its margin profiles remain steady and has generated more absolute profit dollar.

Becomes larger.

The year over year revenue growth rate.

Moderate naturally.

So the trend that we expect to continue into the next fiscal year.

Second.

Online enrichment.

Learning business.

Speaker #2: And we are focused on strengthening our long-term competitiveness through the kind of investment in product innovation and channel development. Our product strategy focuses on creating integrated learning solutions that really combine hardware proprietary software content and AI-enhanced experiences.

We remain committed to delivering.

Our high quality interactive.

Learnings be ourselves.

We continue to enhance the user experience.

By introducing more interactive features and leveraging AI in both constant production and our internal workflows.

This product and user centric approach.

Really support user engagement over time.

In terms of.

Speaker #2: We often talk about channel development. Here, the plan is really to further diversify distribution by balancing investment across both online and offline channels to effectively reach and serve our users.

The online.

<unk> learning vessels channel strategies.

We.

Power's speaking growth objectives.

<unk> retirement last month.

To build long term operational capabilities.

Next learning device business.

Speaker #2: So if I put all of that together, when we look at a company holistically, as our operations scale with an increasingly larger baseline, we anticipate that our year-on-year growth rate will gradually moderate.

It delivered year over year revenue growth this quarter.

Driven by increased sales volume and.

A higher contribution from deferred revenue recognition.

Alex Peng: Other business lines including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well. In addition to business unit level profitability improvement, the overall company is also unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well. I'd like to also comment a bit on the overall trend of our profitability. If we look at non-GAAP operating income margin for the last few quarters, I think for every single quarter this past fiscal year, our non-GAAP operating margin improved compared to the same period of last year. We really see this as a result of all the profitability improvement measures we're taking, discussed above. I hope that answers your question.

Jackson Ding: Other business lines including online enrichment learning programs, including learning devices, showed varying degree of profitability improvement as well. In addition to business unit level profitability improvement, the overall company is also unlocking more of the operating leverage, which has been a contributing factor to overall profitability improvement as well. I'd like to also comment a bit on the overall trend of our profitability. If we look at non-GAAP operating income margin for the last few quarters, I think for every single quarter this past fiscal year, our non-GAAP operating margin improved compared to the same period of last year. We really see this as a result of all the profitability improvement measures we're taking, discussed above. I hope that answers your question.

Alex Peng: The market, as we discussed, is evolving toward a more sustainable growth path, and we are focused on strengthening our long-term competitiveness through the kind of investment in product innovation and channel development. Our product strategy focuses on creating integrated learning solutions that really combine hardware, proprietary software, content, and AI-enhanced experiences. We often talk about channel development. Here, the plan is really to further diversify distribution by balancing investment across both online and offline channels to effectively reach and serve our users. If I put all of that together, when we look at a company holistically, as our operations scale with an increasingly larger baseline, we anticipate that our year-on-year growth rate will gradually moderate. With growing maturity, we also expect operational efficiency to improve and will remain focused on driving profitability.

The markets.

With the stars is evolving toward a more sustainable growth.

Speaker #2: With growing maturity, we also expect operational efficiency to improve and will remain focused on driving profitability. We may see some quarterly fluctuations but improving overall profitability remains a top priority for fiscal year 2027.

And we are focused on strengthening our long term competitiveness.

Through the kind of investment in product innovation and channel development.

Our product strategy.

Our focus is on creating integrated learning solutions.

Really.

Speaker #2: Looking ahead, we'll continue advancing our strategic initiatives and also strengthen core capabilities to support sustainable margin improvement over time. So Candice, I hope that answered your question.

Buying hardware proprietary software constant.

AI enhanced experiences.

We often talk about channel development.

Here the plan is really to further.

Diversify distribution.

Speaker #5: Yes, very helpful. Thank you.

By balancing investment across both online and offline channels.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

To effectively reach and serve our users.

So if I put all of that together.

Speaker #2: So thanks again for joining us today and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

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When we look at our company Holistically.

As our operations scale with an increasingly larger base line.

We anticipate that our year on year growth rate.

Jean Wang: Great. Thanks. Thanks for the color.

Jin Wang: Great. Thanks. Thanks for the color.

Gradually moderate.

What's growing maturity, we also Xbox operational efficiency.

Operator: The next question comes from the line of Candis Chan with Daiwa. Please go ahead.

Prove it.

And.

Candis Chan: Hi, Jackson Ding, Alex Peng, and Fang Liu. Thanks for taking my question, and also congrats on this very strong set of results. Can you provide us a breakdown of the top-line growth performance across the major business lines this quarter? Additionally, what is the outlook of the growth for these business lines in the coming fiscal year? One more question, if I may, is that we do observe a very solid margin expansion for three consecutive quarters, staying at above 10%. What is the potential for the further margin improvement going forward? Thank you.

We'll remain focused on driving profitability.

Alex Peng: We may see some quarterly fluctuations, but improving overall profitability remains a top priority for fiscal year 2027. Looking ahead, we'll continue advancing our strategic initiatives and also strengthen core capabilities to support sustainable margin improvement over time. Candis, I hope that answered your question.

You know we.

We may see some quarterly fluctuations.

But improving overall profitability remains.

A top priority for fiscal year 2020 sulfur.

Looking ahead, we'll continue advancing our strategic initiatives and also strengthen core capabilities.

To support sustainable margin improvement overtime.

So Candice I hope that answered your question.

Candis Chan: Yes, very helpful. Thank you.

That's very helpful. Thank you.

Alex Peng: Thanks, Candis. This is Alex. Let me take that on. Let me unpack that. First of all, let's look at the first part of the question, which really is a breakdown of the top-line growth performance across our major business lines this quarter. Right? Let's start with the Peiyou offline enrichment business, which, as we mentioned on this call, remains our largest revenue driver. It really continued its solid growth this quarter. This was supported by, as we said, the ongoing expansion of our learning center network and the consistent improvement to service quality. Moving into fiscal year 2027, the expansion strategy remains disciplined. We're going to focus on increasing center density within existing cities to ensure we maintain high operational standards. We anticipate this business continue to grow at a healthy rate.

Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.

Alex Peng: Thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

So thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you bye bye.

Alex Peng: Thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

Okay.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[music].

Operator: Yes, very helpful. Thank you. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Fang Liu: Thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

Alex Peng: Thanks again for joining us today, and we look forward to seeing all of you next quarter. Thank you. Bye-bye.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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