Q4 2026 New Oriental Education & Technology Group Inc Earnings Call

July 29, 2026

Operator: Good evening, thank you for standing by for New Oriental's FY 2026 Q4 Results Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Ms. Sisi Zhao.

Speaker #1: After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Speaker #1: And I'd like to turn the meeting over to your host for today's conference, Ms. Sisi Zhao.

Speaker #2: Thank you. Hello, everyone, and welcome to New Oriental's fourth fiscal quarter 2026 earnings conference call. Our financial results for the period were released earlier today.

Sisi Zhao: Thank you. Hello, everyone, welcome to New Oriental's Q4 fiscal quarter 2026 earnings conference call. Our financial results for the period were released earlier today and are available on the company's website as well as on Newswire Services. Today, Stephen Yang, Executive President and Chief Financial Officer, and I will share New Oriental's latest earnings results and business updates in detail with you. After that, Stephen and I will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. Our results may be materially different from the view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC.

Speaker #2: And are available on the company's website as well as on newswire services. Today, Stephen Yang, Executive President and Chief Financial Officer, and I will share New Oriental's latest earnings results and business updates in detail with you.

Speaker #2: After that, Stephen and I will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S.

Speaker #2: Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the view expressed today.

Speaker #2: A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

Sisi Zhao: New Oriental does not undertake any obligation to update any forward-looking statements except as required under applicable law. As a reminder, this conference is being recorded. A webcast of this conference call will be available on New Oriental's investor relations website at investor.neworiental.org. I'll now first turn the call over to Mr. Yang. Stephen, please go ahead.

Speaker #2: ISA reminder: this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental's investor relations website at investor.neworiental.org.

Speaker #2: I'll now first turn the call over to Mr. Yang. Stephen, please go ahead.

Speaker #3: Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. We're pleased to bring you another quarter of remarkable results. With revenue and income growth that have once again exceeded expectations, our performance this quarter reflects not only the continued strength of our core business but also the outstanding contributions of Easter Buy and our new creative ventures.

Zhihui Yang: Thank you, Sisi. Hello, everyone, thank you for joining us on the call. We're pleased to bring you another quarter of remarkable results. With revenue and income growth that have once again exceeded expectations. Our performance this quarter reflects not only the continued strength of our core business, but also the outstanding contributions of East Buy and our new creative ventures. Taken together, these assets have energized our strategic ambitions as we look ahead with confidence in the year to come. We're particularly pleased that despite the economic headwinds and external challenges, our relentless efforts to deliver the very best to our customers are yielding strong results. In this quarter, total net revenue grew 23% year-over-year to $1,529.5 million. Non-GAAP operating income rose 34.7% to $110 million, while operating margins for both the quarter and the fiscal year 2026 showed healthy increments.

Stephen Zhihui Yang: Thank you, Sisi. Hello, everyone, thank you for joining us on the call. We're pleased to bring you another quarter of remarkable results. With revenue and income growth that have once again exceeded expectations. Our performance this quarter reflects not only the continued strength of our core business, but also the outstanding contributions of East Buy and our new creative ventures. Taken together, these assets have energized our strategic ambitions as we look ahead with confidence in the year to come. We're particularly pleased that despite the economic headwinds and external challenges, our relentless efforts to deliver the very best to our customers are yielding strong results. In this quarter, total net revenue grew 23% year-over-year to $1,529.5 million. Non-GAAP operating income rose 34.7% to $110 million, while operating margins for both the quarter and the fiscal year 2026 showed healthy increments.

Speaker #3: Taken together, these assets have energized our strategic ambitions as we look ahead with confidence in the year to come. We're particularly pleased that, despite the economic headwinds and external challenges, our relentless efforts to deliver the very best to our customers are yielding strong results.

Speaker #3: In this quarter, total net revenue grew 23% year over year to $1.53 billion. Non-GAAP operating income rose 34.7% to $110 million, while operating margins for both the quarter and fiscal year 2026 showed healthy increments.

Speaker #3: Both our core business and new initiatives continue to gain meaningful traction this quarter. Breaking it down, the overseas test prep business grew 6% year over year for the fourth quarter of 2026.

Zhihui Yang: Both our core business and new initiatives continued to score meaningful traction this quarter. Breaking it down. Overseas test prep business recorded a revenue increase of 6% year over year for Q4 2026. Overseas study consulting business recorded a revenue increase of about 1% year over year for this quarter. Our adults and university students business recorded a revenue increase of 29% year over year for this quarter. Our non-academic children business has been rolled out to around 60 existing cities. Market penetration has seen steady growth, particularly across high-tier cities. The top 10 cities contributed around 60% of this business. Our intelligent learning system and device business that leverages our teaching expertise and data analytics to provide adaptive learning solutions, has been launched in around 60 cities.

Stephen Zhihui Yang: Both our core business and new initiatives continued to score meaningful traction this quarter. Breaking it down. Overseas test prep business recorded a revenue increase of 6% year over year for Q4 2026. Overseas study consulting business recorded a revenue increase of about 1% year over year for this quarter. Our adults and university students business recorded a revenue increase of 29% year over year for this quarter. Our non-academic children business has been rolled out to around 60 existing cities. Market penetration has seen steady growth, particularly across high-tier cities. The top 10 cities contributed around 60% of this business. Our intelligent learning system and device business that leverages our teaching expertise and data analytics to provide adaptive learning solutions, has been launched in around 60 cities.

Speaker #3: Overseas study consulting business recorded revenue year over year for this quarter. Our adults and university students business recorded a revenue increase of 29% year over year, for this quarter.

Speaker #3: Our non-dynamic children business has been rolled out to around 60 existing cities. Market penetration has shown steady growth, particularly across high-tier cities. The top 10 cities contributed around 60% of this business.

Speaker #3: Our intelligent learning system and device business, which leverages our teaching expertise and data analytics to provide adaptive learning solutions, has been launched in around 60 cities.

Speaker #3: We're encouraged by the enhanced customer retention and scalability, with top 10 cities contributing over 50% of this business. In summary, our new educational business initiatives delivered a 25% year over year revenue increase in this quarter.

Zhihui Yang: We're encouraged by the enhanced customer retention and scalability with the top 10 cities contributing over 50% of this business. In summary, our new educational business initiatives delivered a 25% year-over-year revenue increase in this quarter. Moving on to our integrated tourism-related business. Encompassing study tours and research camp for K12 and university students, as well as cultural tours for middle-aged and senior travelers. For cultural travel, Chinese study tour, global study tour, and camp education products continue to deliver meaningful value to customers through knowledge generation, personal growth, and deep cultural immersions. Our students programs now operate in about 55 cities nationwide, with the top 10 cities generating over 50% of the segment revenue. Our premium adult tourism offerings span around 30 provinces domestically and select international destinations.

Stephen Zhihui Yang: We're encouraged by the enhanced customer retention and scalability with the top 10 cities contributing over 50% of this business. In summary, our new educational business initiatives delivered a 25% year-over-year revenue increase in this quarter. Moving on to our integrated tourism-related business. Encompassing study tours and research camp for K12 and university students, as well as cultural tours for middle-aged and senior travelers. For cultural travel, Chinese study tour, global study tour, and camp education products continue to deliver meaningful value to customers through knowledge generation, personal growth, and deep cultural immersions. Our students programs now operate in about 55 cities nationwide, with the top 10 cities generating over 50% of the segment revenue. Our premium adult tourism offerings span around 30 provinces domestically and select international destinations.

Speaker #3: Moving on to our integrated tourism-related business, encompassing study tours and research camps for K-12 and university students, as well as cultural tours for middle-aged and senior travelers, our cultural travel Chinese study tours, global study tours, and camp education products continue to deliver meaningful value to customers through knowledge enrichment, personal growth, and deep cultural immersion.

Speaker #3: Our students' programs now operate in about 55 cities nationwide, with the top 10 cities generating over 50% of the segmented revenue. Our premium adult tourism offerings span around 30 provinces domestically and select international destinations.

Speaker #3: We're also expanding into senior health and wellness tourism with an asset-light model, forging partnerships with over 45 wellness facilities across key destinations, including Hainan, Yunnan, and Guangxi.

Zhihui Yang: We're also expanding into senior health and wellness tourism with an asset-light model, forging partnerships with over 45 wellness facilities across key destinations including Hainan, Yunnan, and Guangxi. With our OMO teaching platform, we have continued to invest in revamping and upgrading the system. During this quarter, we invested $31.2 million to improve and maintain our OMO platform, which enables us to provide uninterrupted high-quality instructions to students that cater to their individual learning needs. Beyond upgrading the OMO system, we continue to embed AI across our ecosystem, including driving product innovation and transforming our internal operations to enhance capabilities, improve efficiency, and provide greater support to our staff. In terms of the product innovation, we're proud to share that our proprietary AI-powered personalized learning platform has successfully completed its first phase of deployment, achieving meaningful sales with just 25 days of inauguration.

Stephen Zhihui Yang: We're also expanding into senior health and wellness tourism with an asset-light model, forging partnerships with over 45 wellness facilities across key destinations including Hainan, Yunnan, and Guangxi. With our OMO teaching platform, we have continued to invest in revamping and upgrading the system. During this quarter, we invested $31.2 million to improve and maintain our OMO platform, which enables us to provide uninterrupted high-quality instructions to students that cater to their individual learning needs. Beyond upgrading the OMO system, we continue to embed AI across our ecosystem, including driving product innovation and transforming our internal operations to enhance capabilities, improve efficiency, and provide greater support to our staff. In terms of the product innovation, we're proud to share that our proprietary AI-powered personalized learning platform has successfully completed its first phase of deployment, achieving meaningful sales with just 25 days of inauguration.

Speaker #3: With our OMO teaching platform, we have continued to invest in revamping and upgrading the system. During this quarter, we invested $31.2 million to improve and maintain our OMO platform, which enabled us to provide an interrupt high-quality instructions to students that cater to their individual learning needs.

Speaker #3: Beyond upgrading the OMO system, we continue to embed AI across our ecosystem, including driving product innovation and transforming our internal operations to enhance capabilities, improve efficiency, and provide greater support to our staff.

Speaker #3: In terms of the product innovation, we're proud to share that our proprietary AI-powered personalized learning platform has successfully completed the first phase of deployment, achieving meaningful sales with just 25 days of inauguration.

Speaker #3: Unlike a general proposed large language model, our AI platform is built on a highly specialized vertical learning system. Proposedly designed to reflect rooted assets of New Oriental.

Zhihui Yang: Unlike a general proposed large language model, our AI platform is built on a highly specialized vertical learning system, purposely designed to reflect the rooted assets of New Oriental. This encouraging initial performance is a validation of the platform's market traction and product-market fit. We look forward to propelling the development of the AI-driven products and solutions to further broaden our operational excellence and market impact. Turning to the East Buy's fiscal year 2026 performance. East Buy remains firmly committed to the three high product standards: high safety standards, high product quality, and high cost performance, while delivering attentive customer service for families. On the platform front, East Buy made significant strides in its multi-platform live streaming strategy on Douyin, launching 11 new vertical live streaming accounts and expanding its channel matrix to 18 channels in total.

Stephen Zhihui Yang: Unlike a general proposed large language model, our AI platform is built on a highly specialized vertical learning system, purposely designed to reflect the rooted assets of New Oriental. This encouraging initial performance is a validation of the platform's market traction and product-market fit. We look forward to propelling the development of the AI-driven products and solutions to further broaden our operational excellence and market impact. Turning to the East Buy's fiscal year 2026 performance. East Buy remains firmly committed to the three high product standards: high safety standards, high product quality, and high cost performance, while delivering attentive customer service for families. On the platform front, East Buy made significant strides in its multi-platform live streaming strategy on Douyin, launching 11 new vertical live streaming accounts and expanding its channel matrix to 18 channels in total.

Speaker #3: This encouraging initial performance is a validation of the platform's market traction and product-market fit. We look forward to propelling the development of AI-driven products and solutions to further broaden our operational excellence and market impact.

Speaker #3: Turning to the Easter Bites fiscal year 2026 performance, Easter Bite remains firmly committed to the three high product standards: high safety standards, high product quality, and high cost performance.

Speaker #3: While delivering a tentative customer service for families, on the platform front, Easter Bite made significant strides in its multi-platform live streaming strategy on Douyin, launching 11 new vertical live streaming accounts and expanding its channel matrix to 18 channels in total.

Speaker #3: Easter Bite also launched a pseudo-CE suite of innovative operational programs, including streamer recruitment campaigns and annual supplier meets. That has proven effective in strengthening internal operational teams, deepening long-term strategic partnerships with suppliers, and elevating customer engagement.

Zhihui Yang: East Buy also launched a suite of the innovative operational programs, including streamer recruitment campaigns and annual supplier summits that have proven effective to strengthen internal operational teams, deepen long-term strategic partnerships with suppliers, and it elevates the customer engagement. Charting a new course in fiscal year 2027, East Buy will accelerate its expansion of its private label portfolio across food and daily necessities, scale up product R&D and quality control to uphold the three high standards, and advance its app membership ecosystem. By leveraging New Oriental's extensive nationwide network, East Buy will further expand its offline experience footprint to engage a broader customer base, collectively optimizing operational efficiency, its supply chain network, and laying a solid foundation for sustainable long-term growth. I would like to share the latest updates of an exciting new strategic initiative that we have been piloting since the last quarter.

Stephen Zhihui Yang: East Buy also launched a suite of the innovative operational programs, including streamer recruitment campaigns and annual supplier summits that have proven effective to strengthen internal operational teams, deepen long-term strategic partnerships with suppliers, and it elevates the customer engagement. Charting a new course in fiscal year 2027, East Buy will accelerate its expansion of its private label portfolio across food and daily necessities, scale up product R&D and quality control to uphold the three high standards, and advance its app membership ecosystem. By leveraging New Oriental's extensive nationwide network, East Buy will further expand its offline experience footprint to engage a broader customer base, collectively optimizing operational efficiency, its supply chain network, and laying a solid foundation for sustainable long-term growth. I would like to share the latest updates of an exciting new strategic initiative that we have been piloting since the last quarter.

Speaker #3: Charting a new course in fiscal year 2027, Easter Bite will accelerate the expansion of its private label portfolio across food and daily necessities, scale up product R&D and quality control to uphold three high standards, and advance its app membership ecosystem.

Speaker #3: By leveraging new Oriental's extensive nationwide network, Easter Bite will further expand its offline experience for print to engage a broader customer base. Collectively optimizing operational efficiency.

Speaker #3: ...its supply chain network and laying a solid foundation for sustainable, long-term growth. Now, I would like to share the latest updates on an exciting new strategic initiative that we have been piloting since last quarter.

Speaker #3: New Oriental Home is a platform designed to serve the entire family unit—from children to parents to seniors—through a full lifecycle, full-spectrum approach. New Oriental Home assembles our education service, Easter Bite offerings, and cultural tourism products into one unified ecosystem in a single app.

Zhihui Yang: New Oriental Home, a platform designed to serve the entire family unit, from children to parents to seniors, through a full life cycle, full spectrum approach. New Oriental Home assembles our education service, East Buy offerings, and cultural tourism products into one unified ecosystem in a single app. Families can conveniently access, manage, and redeem services tailored to each member, enabling seamless cross-category engagement and deeper household levels Relationships. The platform has demonstrated strong early traction with scenario-based marketing and the integrated service anchoring solid user activation, retention, and acquisition. Notably, we have seen retention for grade 7 students increase by 10 basis points from summer to autumn this year. Customers find the earn and redeem experience rewarding and are engaged to explore broader range of the offerings within our ecosystem, thereby lowering our cost of spend on customer acquisition as well.

Stephen Zhihui Yang: New Oriental Home, a platform designed to serve the entire family unit, from children to parents to seniors, through a full life cycle, full spectrum approach. New Oriental Home assembles our education service, East Buy offerings, and cultural tourism products into one unified ecosystem in a single app. Families can conveniently access, manage, and redeem services tailored to each member, enabling seamless cross-category engagement and deeper household levels Relationships. The platform has demonstrated strong early traction with scenario-based marketing and the integrated service anchoring solid user activation, retention, and acquisition. Notably, we have seen retention for grade 7 students increase by 10 basis points from summer to autumn this year. Customers find the earn and redeem experience rewarding and are engaged to explore broader range of the offerings within our ecosystem, thereby lowering our cost of spend on customer acquisition as well.

Speaker #3: Families can conveniently access, manage, and redeem service tailored to each member, enabling seamless cross-category engagement and deeper household-level relationships. The platform has demonstrated strong early traction, with scenario-based marketing and integrated service anchoring solid user activation, retention, and acquisition.

Speaker #3: Notably, we have seen retention for grade 7 students increase by 10 basis points from summer to autumn this year. Customers found the earn and redeem experience rewarding and are engaged to explore a broader range of the offerings within our ecosystem.

Speaker #3: Thereby lowering our cost of spend on customer acquisition as well. This integrated loyalty framework has been particularly effective, as it not only strengthened retention but also transformed customer engagement into actionable data, enabling us to create incentives for customers and staff.

Zhihui Yang: This integrated loyalty framework has been particularly effective as it's not only strengthened retention, but also transformed customer engagements into actionable data, enabling us to create incentives for our customers and staffs. At the same time, the various synergies New Oriental Home generates across all business lines, including East Buy, combined with highly personalized offerings, have overall accelerated cross-selling, improved conversion efficiency, and optimized overall operating costs. We have launched this pilot program in 69 cities as test beds, including Hangzhou, Suzhou, Xi'an, and Wuhan, with over 950,000 registered families by the end of this quarter. The platform has achieved cumulative activity participation rates of around 70%, and the latest campaign activation rate is 23%, significantly outperforming many public domain e-commerce platforms.

Stephen Zhihui Yang: This integrated loyalty framework has been particularly effective as it's not only strengthened retention, but also transformed customer engagements into actionable data, enabling us to create incentives for our customers and staffs. At the same time, the various synergies New Oriental Home generates across all business lines, including East Buy, combined with highly personalized offerings, have overall accelerated cross-selling, improved conversion efficiency, and optimized overall operating costs. We have launched this pilot program in 69 cities as test beds, including Hangzhou, Suzhou, Xi'an, and Wuhan, with over 950,000 registered families by the end of this quarter. The platform has achieved cumulative activity participation rates of around 70%, and the latest campaign activation rate is 23%, significantly outperforming many public domain e-commerce platforms.

Speaker #3: At the same time, developers’ synergies at New Oriental Home generate value across all business lines, including East Buy. Combined with highly personalized offerings, these have overall accelerated cross-selling, improved conversion efficiency, and optimized overall operating costs.

Speaker #3: We have launched this pilot program in 69 cities as test beds, including Hangzhou, Suzhou, Xi'an, and Wuhan, with over 950,000 registered families this quarter.

Speaker #3: The platform has achieved cumulative activity participation rates of around 70%, and the latest campaign activation rate is 23%—significantly outperforming many public domain e-commerce platforms.

Speaker #3: This result affirmed the high reach and precision advantages of our education-focused private domain ecosystem, and we look forward to build on the promising momentum in the quarter ahead.

Zhihui Yang: These results affirm the high reach and precision advantage of our education-focused private domain ecosystem, and we look forward to build on the promising momentum in the quarter ahead. I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.

Stephen Zhihui Yang: These results affirm the high reach and precision advantage of our education-focused private domain ecosystem, and we look forward to build on the promising momentum in the quarter ahead. I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.

Speaker #3: Now, I will turn the call over to Sisi to share with you about the key financials Sisi, please go ahead.

Speaker #2: Okay. Thank you, Stephen. Let me now walk you through the key financial highlights for the quarter. Operating cost and expenses for the quarter. We're 1,443.7 million dollars, representing a 15.3% increase year over year.

Sisi Zhao: Okay. Thank you, Stephen. Let me now walk you through the key financial highlights for the quarter. Operating costs and expenses for the quarter were $1,443.7 million, representing a 15.3% increase year over year. Cost of revenues increased by 25.9% year over year to $717.3 million. Selling and marketing expense increased by 23.9% year over year to $262.5 million. G&A expenses for the quarter increased by 13.2% year over year to $463.9 million. Impairment of goodwill was nil compared to $60.3 million in the same period of the prior fiscal year. Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 20.7% to $22.7 million in this quarter. Operating income was $85.8 million compared to an operating loss of $8.7 million in the prior year period.

Speaker #2: Cost of revenues increased by 25.9% year over year to $717.3 million. Selling and marketing expenses increased by 23.9% year over year to $262.5 million. G&A expenses for the quarter increased by 13.2% year over year to $463.9 million.

Speaker #2: Impairment of goodwill was nil, compared to $60.3 million in the same period of the prior fiscal year. Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 20.7% to $22.7 million in this quarter.

Speaker #2: Operating income was $85.8 million, compared to an operating loss of $8.7 million in the prior year period. Non-GAAP income from operations for the quarter, excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisition, and impairment of goodwill, was $110 million, representing a 34.7% increase year over year.

Sisi Zhao: Non-GAAP income from operations for the quarter, excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisition, and impairment of goodwill, was $110 million, representing a 34.7% increase year over year. Net income attributable to New Oriental for the quarter was $62.2 million, representing a 775.8% increase year over year. Basic and diluted net income per ADS attributable to New Oriental were $0.40 and $0.39 respectively. Non-GAAP net income attributable to New Oriental for the quarter was $87.8 million, representing a decrease of 10.5% year over year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $0.56 and $0.55 respectively. Net cash inflow generated from operation for Q4 2026 was approximately $518.7 million, and capital expenditure for the quarter were $99 million. Turning to the balance sheet.

Speaker #2: Net income attributable to New Oriental for the quarter was 62.2 million dollars, representing a 775.8% increase year over year. Basic and diluted net income per ADS attributable to New Oriental was 40 cents and 39 cents, respectively.

Speaker #2: Non-GAAP net income attributable to New Oriental for the quarter was $87.8 million, representing a decrease of 10.5% year over year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $0.56 and $0.55, respectively.

Speaker #2: Net cash inflow generated from operation for the fourth quarter of 2026 was approximately 518.7 million dollars, and capital expenditure for the quarter were 99 million dollars, turning to the balance sheet as of May 31, 2026, New Oriental had cash and cash equivalents of 1,821.2 million dollars, in addition, the company had 1,366.8 million dollars in term deposit, and 2,372.3 million dollars in short-term investments.

Sisi Zhao: As of 31 May 2026, New Oriental had cash and cash equivalents of $1,821.2 million. In addition, the company had $1,366.8 million in term deposits and $2,372.3 million in short-term investments. New Oriental's deferred revenue, which represents cash collected upfront from customers and related revenue that will be recognized as the services or goods are delivered. At the end of Q4 FY26 was $2,242.9 million, an increase of 14.8% as compared to $1,954.5 million year over year. Now, I'll hand over to Stephen to go through our outlook and guidance.

Speaker #2: New Oriental's deferred revenue, which represents cash collected upfront from customers and related revenue that will be recognized as the services or goods are delivered, at the end of the fourth quarter of fiscal year 2026 was $2,242.9 million, an increase of 14.8% as compared to $1,954.5 million year over year.

Speaker #2: Now, I'll hand over to Stephen to go through our outlook and guidance.

Speaker #3: Thank you, Sisi. The healthy results will have delivered in fiscal year 2026 have given us both the fuel and conviction to the pursuit of resilience, sustainable growth, and ever-improving service in the year ahead.

Zhihui Yang: Thank you, Sisi. The healthy results we have delivered in FY26 have given us both the fuel and the conviction to pursue resilient, sustainable growth, and ever-improving service in the year ahead. Approaching summer vacation, we're particularly confident in sustaining momentum for the coming Q1 FY27. With expectations that improving enrollment trends will drive an accelerated revenue growth, and the higher overall operational efficiency will bolster our optimism in growing our margins. We will continue to strategically expand capacity and talent, deepening our presence in markets with proven top and bottom line performance while maintaining rigorous resource allocation. Expansion decision will be carefully calibrated throughout the year, guided by the operational readiness and financial results. Alongside our pursuits of new creative initiatives, sustainable profitability, and cost discipline remain cornerstones of our business.

Stephen Zhihui Yang: Thank you, Sisi. The healthy results we have delivered in FY2026 have given us both the fuel and the conviction to pursue resilient, sustainable growth, and ever-improving service in the year ahead. Approaching summer vacation, we're particularly confident in sustaining momentum for the coming Q1 FY2027. With expectations that improving enrollment trends will drive an accelerated revenue growth, and the higher overall operational efficiency will bolster our optimism in growing our margins. We will continue to strategically expand capacity and talent, deepening our presence in markets with proven top and bottom line performance while maintaining rigorous resource allocation. Expansion decision will be carefully calibrated throughout the year, guided by the operational readiness and financial results. Alongside our pursuits of new creative initiatives, sustainable profitability, and cost discipline remain cornerstones of our business.

Speaker #3: Approaching summer vacation, we're particularly confident in sustaining momentum for the coming first quarter of fiscal year 2027, with expectations that improving enrollment trends will drive an accelerated revenue growth and a higher overall operational efficiency will bolster our optimism in growing our margins.

Speaker #3: We will continue to strategically expand capacity and talent, deepening our presence in markets with proven top and bottom-line performance, while maintaining regular resource allocation.

Speaker #3: Expansion decisions will be carefully calibrated throughout the year, guided by operational readiness and financial results. Alongside our pursuit of new creative initiatives, sustainable profitability and cost discipline remain cornerstones of our business.

Speaker #3: In the coming quarter, we expect meaningful cost improvement to emerge from the restructuring of our overseas business, which will pave the way for the greater operational efficiency and stronger margin profile in the new year.

Zhihui Yang: In the coming quarter, we expect meaningful cost improvements to emerge from the restructuring of our overseas business, which will pave the way for the greater operational efficiency and stronger margin profile in the new year. Looking ahead, we enter fiscal year 2027 with deep confidence in our core education business and new initiatives driven by a genuine passion to create lasting value. We will continue to drive sustainable and healthy growth through product enhancements and quality improvements, while further optimizing cost structure and to enhance efficiency and profitability. Our focus remains on long-term value creation, offering investors a clearer view of our strategic trajectory and durable growth we're building for the future.

Stephen Zhihui Yang: In the coming quarter, we expect meaningful cost improvements to emerge from the restructuring of our overseas business, which will pave the way for the greater operational efficiency and stronger margin profile in the new year. Looking ahead, we enter fiscal year 2027 with deep confidence in our core education business and new initiatives driven by a genuine passion to create lasting value. We will continue to drive sustainable and healthy growth through product enhancements and quality improvements, while further optimizing cost structure and to enhance efficiency and profitability. Our focus remains on long-term value creation, offering investors a clearer view of our strategic trajectory and durable growth we're building for the future.

Speaker #3: Looking ahead, we enter fiscal year 2027 with deep confidence in our core education business and new initiatives driven by a genuine passion to create lasting value.

Speaker #3: We will continue to drive sustainable and healthy growth through product enhancements and quality improvements, while further optimizing cost structure and to enhance efficiency and profitability.

Speaker #3: Our focus remains on long-term value creation, offering investors a clearer view of our strategic trajectory and durable growth while building for the future. Considering the positive momentum and cost management measures across our business line, we expect total net revenue for the group in fiscal year 2027 to be in the range of $6,453.9 million to $6,680.3 million, representing a year-over-year increase in the range of 14% to 18%.

Zhihui Yang: Considering the positive momentum and the cost management measures across our business line, we expect total net revenue for the group in fiscal year 2027 to be in the range of $6,453.9 million to $6,680.3 million, representing a year-over-year increase in the range of 14% to 18%. These expectations reflect our current outlook based on the recent regulatory development and prevailing market conditions, both of which remain subject to change. Additionally, we announced a share repurchase program under which New Oriental is authorized to repurchase up to $300 million of its ADS or common shares over the subsequent 12 months. As of 28 July 2026, yesterday, we had repurchased a total of approximately 51.5 million common shares, including common shares represented by ADS, for aggregate consideration of the approximately $274 million from the open market and the share repurchase program.

Stephen Zhihui Yang: Considering the positive momentum and the cost management measures across our business line, we expect total net revenue for the group in fiscal year 2027 to be in the range of $6,453.9 million to $6,680.3 million, representing a year-over-year increase in the range of 14% to 18%. These expectations reflect our current outlook based on the recent regulatory development and prevailing market conditions, both of which remain subject to change. Additionally, we announced a share repurchase program under which New Oriental is authorized to repurchase up to $300 million of its ADS or common shares over the subsequent 12 months. As of 28 July 2026, yesterday, we had repurchased a total of approximately 51.5 million common shares, including common shares represented by ADS, for aggregate consideration of the approximately $274 million from the open market and the share repurchase program.

Speaker #3: This expectation reflects our current outlook based on the recent regulatory developments and prevailing market conditions, both of which remain subject to change. Additionally, we announced a share repurchase program, under which New Oriental is authorized to purchase to repurchase up to 300 million of its dollars of its ADS or common shares over the subsequent 12 months, as of July 28, 2026, yesterday, we had repurchased a total of approximately 51.5 million common shares, es, including common shares represented by ADS, for aggregate consideration of the approximately 274 million dollars from the open market and the share repurchase program.

Speaker #3: We expect to roll out the share repurchase program for the remainder of the duration in accordance with its terms. Furthermore, to implement our three-year shareholder return plan adopted in July 2025 for the fiscal year 2027, the board of directors of the company has approved an ordinary cash dividend and a new share repurchase program, with a total amount of the capital return for the fiscal year 2027 expected to be approximately 500 million dollars.

Zhihui Yang: We expect to roll out the share repurchase program for the remainder of the duration in accordance with its terms. Furthermore, to implement our three-year shareholder return plan adopted in July 2025 for fiscal year 2027, the board of the director of the company has approved an ordinary cash dividend and a new share repurchase program, with a total amount of the capital return for the fiscal year 2027 is expected to be approximately $500 million. I would like to go through details in the following. The aggregate amount of the cash dividend for the fiscal year 2027 is expected to approximately $300 million, to be paid in two installments in December 2026 and June 2027, respectively. Further details regarding the cash dividend program will be decided by the board of directors and announced by the company in due course.

Stephen Zhihui Yang: We expect to roll out the share repurchase program for the remainder of the duration in accordance with its terms. Furthermore, to implement our three-year shareholder return plan adopted in July 2025 for fiscal year 2027, the board of the director of the company has approved an ordinary cash dividend and a new share repurchase program, with a total amount of the capital return for the fiscal year 2027 is expected to be approximately $500 million. I would like to go through details in the following. The aggregate amount of the cash dividend for the fiscal year 2027 is expected to approximately $300 million, to be paid in two installments in December 2026 and June 2027, respectively. Further details regarding the cash dividend program will be decided by the board of directors and announced by the company in due course.

Speaker #3: I would like to go through details in the following. The aggregate amount of the cash dividend for the fiscal year 2027 is expected to be approximately $300 million, to be paid in two installments in December 2026 and June 2027, respectively.

Speaker #3: Further details regarding the cash dividend program will be decided by the board of directors and announced by the company in due course. Pursuant to the share repurchase program for the fiscal year 2027, the company may repurchase up to 200 million dollars of its ADS or common shares over the subsequent 12 months, following the board approval.

Zhihui Yang: Pursuant to the share repurchase program for fiscal year 2027, the company may repurchase up to $200 million of its ADS or common shares over the subsequent 12 months following the board approval. The company's proposed repurchase may be made from time to time in the open market at prevailing market price, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with the applicable rules and regulations. The board of directors of the company will review the share repurchase program periodically and may authorize adjustments of term and size. The company expects to fund the repurchase out of its existing cash balance. To conclude, New Oriental is steadfastly committed to driving sustainable growth, promising exceptional value to our customers and shareholders, and generating long-term returns to our shareholders.

Stephen Zhihui Yang: Pursuant to the share repurchase program for fiscal year 2027, the company may repurchase up to $200 million of its ADS or common shares over the subsequent 12 months following the board approval. The company's proposed repurchase may be made from time to time in the open market at prevailing market price, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with the applicable rules and regulations. The board of directors of the company will review the share repurchase program periodically and may authorize adjustments of term and size. The company expects to fund the repurchase out of its existing cash balance. To conclude, New Oriental is steadfastly committed to driving sustainable growth, promising exceptional value to our customers and shareholders, and generating long-term returns to our shareholders.

Speaker #3: The company's proposed repurchase may be made from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with the applicable rules and regulations.

Speaker #3: The board of directors of the company will review the share repurchase program periodically, and may authorize adjustments of term and size. The company expects to fund the repurchase out of its existing cash balance.

Speaker #3: To conclude, New Oriental is steadfastly committed to driving sustainable growth, promising exceptional value to our customers and shareholders. And generating long-term returns to our shareholders.

Speaker #3: We continue to collaborate closely with government authorities across provinces and municipalities in China, ensuring full compliance with the relevant policies and regulations, while adapting our operations responsibly to meet evolving requirements.

Zhihui Yang: We continue to collaborate closely with government authorities across province and municipalities in China, ensuring full compliance with the relevant policies and regulations while adapting our operations responsibly to meet evolving requirements. This is the end of our fiscal year 2026 Q4 summary. At this point, I would like to open the floor for questions. Operator, please open the call for this. Thank you.

Stephen Zhihui Yang: We continue to collaborate closely with government authorities across province and municipalities in China, ensuring full compliance with the relevant policies and regulations while adapting our operations responsibly to meet evolving requirements. This is the end of our fiscal year 2026 Q4 summary. At this point, I would like to open the floor for questions. Operator, please open the call for this. Thank you.

Speaker #3: This is the end of our fiscal year 2026 Q4 summary. At this point, I would like to open the floor for questions. Operator, please open the call for these.

Speaker #3: Thank you.

Speaker #2: Thank you. The question-and-answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller.

Operator: Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. To ask a question now, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. A moment for our first question. We will now take our first question from the line of Elsie Sheng from CLSA. Please ask your question, Elsie. Your line is open.

Speaker #2: If you have more than one question, please request to join the question queue again after your first question has been addressed. To ask a question now, please press star 11 on your telephone keypad and wait for your name to be announced.

Speaker #2: To withdraw your question, please press star 11 again. A moment for our first question. We will now take our first question from the line of Elsie Sheng from CLSA.

Speaker #2: Please ask your question, Elsie. Your line is open.

Speaker #4: Thank you, Steven and Sisi, and congratulations on the very strong results. I think the guidance on the 2027 financial year is also higher than expectations.

Elsie Sheng: Thank you, Stephen and Sisi, congratulations on the very strong results. I think the guidance on the 2027 financial year is also higher than expectation. My question is, can you help us break down the financial year 2027 guidance into quarters, especially the trend that you expect in the Q1 of the financial year 2027 in terms of revenue and margin? Thank you.

Speaker #4: So my question is, can you help us break down the financial year 2027 guidance into quarters, especially the trend that you expect in the first quarter of the financial year 2027 in terms of revenue and margin?

Speaker #4: Thank you.

Speaker #3: Okay. Thank you. Yeah. As you know, I think our strategy in fiscal year 2026 is to enhance the product and service quality. And I think we have seen the good result.

Zhihui Yang: Okay. Thank you. As you know, I think our strategy in fiscal year 2026 is to enhance the product and service quality. I think we have seen the good result. The better quality drives the student retention rate up, the Q4 marks another quarter of the solid result. Given the positive momentum, I think including the healthy growth of our K12 business and the recovery of the East Buy, I think we are now in a more optimistic position regarding our business outlook in fiscal year 2027. We give the annual guidance in fiscal year 2027 in the range of 14% to 18%. I must mention that as always, we're still conservative to give the annual guidance. We do expect to beat our annual guidance in fiscal year 2027.

Stephen Zhihui Yang: Okay. Thank you. As you know, I think our strategy in fiscal year 2026 is to enhance the product and service quality. I think we have seen the good result. The better quality drives the student retention rate up, the Q4 marks another quarter of the solid result. Given the positive momentum, I think including the healthy growth of our K12 business and the recovery of the East Buy, I think we are now in a more optimistic position regarding our business outlook in fiscal year 2027. We give the annual guidance in fiscal year 2027 in the range of 14% to 18%. I must mention that as always, we're still conservative to give the annual guidance. We do expect to beat our annual guidance in fiscal year 2027.

Speaker #3: You know, the better quality drives the student retention rate up, and the Q4 marks another quarter of the solid result. And so give the positive given the positive momentum, I think, you know, including the healthy growth of our K-12 business and the recovery of the Easter buy, I think we are now in a more optimistic position regarding our business outlook in fiscal year 2027.

Speaker #3: So we give the guidance of the annual guidance in fiscal year 2027, you know, in the range of 14% to 18%. I must mention that, as always, we're still conservative to give the annual guidance.

Speaker #3: You know, we do expect to beat our annual guidance in fiscal year 2027. And, you know, from this year, we are making the change to give the guidance, you know, on an annual basis.

Zhihui Yang: From this year, we are making the change to give the guidance on annual basis. I think that we believe this change better reflects our long-term strategic focus and encourages investors to evaluate our business performance over a longer term, rather than the quarter to quarter. I believe you're still interested in the Q1 forecast. I must say that we're quite confident in sustaining a momentum for the coming first quarter of fiscal year 2027. You saw our deferred revenue at the Q4 end was increased by roughly 15%. I think that's a good sign of the coming quarter of the revenue growth. We expect the improving summer enrollment trends that we have seen will drive accelerated revenue growth of the education business and the higher operational efficiency. I do believe the East Buy revenue will be accelerated in Q1.

Stephen Zhihui Yang: From this year, we are making the change to give the guidance on annual basis. I think that we believe this change better reflects our long-term strategic focus and encourages investors to evaluate our business performance over a longer term, rather than the quarter to quarter. I believe you're still interested in the Q1 forecast. I must say that we're quite confident in sustaining a momentum for the coming first quarter of fiscal year 2027. You saw our deferred revenue at the Q4 end was increased by roughly 15%. I think that's a good sign of the coming quarter of the revenue growth. We expect the improving summer enrollment trends that we have seen will drive accelerated revenue growth of the education business and the higher operational efficiency. I do believe the East Buy revenue will be accelerated in Q1.

Speaker #3: I think it's more you know, I think we believe this change better reflects our long-term strategic focus. And, you know, encourage the investors to evaluate our business performance over a longer term.

Speaker #3: Then rather than the quarter to quarter. And I, you know, I believe your, you know, still interested in the Q1, you know, forecast. And, you know, I must say that we're quite confident in sustaining a momentum for the coming first quarter of fiscal year 2027.

Speaker #3: You know, you saw our deferred revenue at Q4 end was increased by roughly 15%. So, I think that's a good sign for the coming quarter.

Speaker #3: Of the revenue growth. And we expect the improving summer enrollment trends, you know, that we have seen will drive accelerate revenue growth of the education business and the higher operational efficiency and also I do believe the Easter buy you know, will the revenue will be accelerate accelerated in Q1.

Speaker #3: So Easter buy will contribute more profit and revenue to the group. And so the Q yeah, repeat again, you know, we're quite optimistic about the Q1, you know, performance.

Zhihui Yang: East Buy will contribute more profit and revenue to the group. To repeat again, we're quite optimistic about the Q1 performance. Thank you.

Stephen Zhihui Yang: East Buy will contribute more profit and revenue to the group. To repeat again, we're quite optimistic about the Q1 performance. Thank you.

Speaker #3: Thank you. Oh yeah, this is the—

Elsie Sheng: Thank you. It's very helpful.

Speaker #4: Thank you, it's very helpful.

Zhihui Yang: Yeah. Your question is about the margins as well. The margin. We got the margin expansion in Q4, in this quarter, even though we need some margin drag from the overseas-related business and the one-off expenses, roughly $10 to $15 million from our internal management restructuring in this quarter. We're still getting group margin expansion by 60 basis point up in this quarter. As for the margin outlook for the next year, fiscal year 2027, I think we'll continue to focus on profitability across all business lines. We'll keep doing the cost control and I think we will improve the operational efficiency and to bring more operating leverage in the coming new year. We expect the margin will be expanded in the coming new year. The Q1 margin outlook, I think we're quite confident on the margin expansion in the coming Q1.

Stephen Zhihui Yang: Yeah. Your question is about the margins as well. The margin. We got the margin expansion in Q4, in this quarter, even though we need some margin drag from the overseas-related business and the one-off expenses, roughly $10 to 15 million from our internal management restructuring in this quarter. We're still getting group margin expansion by 60 basis point up in this quarter. As for the margin outlook for the next year, fiscal year 2027, I think we'll continue to focus on profitability across all business lines. We'll keep doing the cost control and I think we will improve the operational efficiency and to bring more operating leverage in the coming new year. We expect the margin will be expanded in the coming new year. The Q1 margin outlook, I think we're quite confident on the margin expansion in the coming Q1.

Speaker #3: Revenue, yeah. Your question is about the margins. Yeah, as well. The margin, you know, we got the margin extension in Q4, in this quarter, even though we meet some margin drag from the overseas-related business and one-off expenses, roughly $10 to $15 million from our internal management restructuring in this quarter.

Speaker #3: But we are still getting a group margin extension of 60 basis points up in this quarter. As for the margin outlook for the next year, fiscal year 2027, I think we will continue to focus on profitability across all business lines.

Speaker #3: We'll keep doing the cost control and we'll we will to I think we will improve the operational efficiency and to bring more operating leverage in the coming new year.

Speaker #3: So, we expect the margin will be expanded in the coming new year. And the Q1 margin outlook—I think we're quite confident about the margin expansion in the coming Q1.

Speaker #4: Thank you, Steven.

Elsie Sheng: Thank you, Stephen.

Speaker #3: Thank you.

Speaker #2: Thank you. We will now take our next question from the line of Jenny Yuan from UBS. Please ask your question, Jenny. Your line is open.

Zhihui Yang: That's it.

Stephen Zhihui Yang: That's it.

Operator: Thank you. We will now take our next question from the line of Jenny Yuan from UBS. Please ask your question. Jenny, your line is open. Please unmute and ask your question.

Speaker #2: Jenny, your line is open. Please unmute and ask your question.

Jenny Yuan: Oh, I'm here. We can, please.

Jenny Yuan: Oh, I'm here. Can you hear me?

Speaker #4: Oh, can you hear me? We can, please.

Speaker #2: Yes. Yes, please.

Sisi Zhao: We can, please.

Operator: Yes, please.

Jenny Yuan: Thank you. Thank you, Stephen Yang, and Sisi Zhao for taking my question, and congrats on the strong quarter results. My question regarding our revenue outlook specifically for our K-12 business. After the further acceleration in Q4, how should we project the revenue growth outlook for the upcoming Q1 and next FY27? Thank you.

Speaker #4: Thank you. Thank you, Steven, to answer this and for taking my question and congrats on the strong quarter results. So my question regarding our revenue outlook specifically for our K-12 business.

Speaker #4: So after. Further acceleration in the fourth quarter, how should we project the revenue growth outlook for the upcoming first quarter and next fiscal year 2027?

Speaker #4: Thank you.

Speaker #3: Yeah, we I think we had a strong year. Of the K-12 business growth in fiscal year 2026. And, you know, as for the guidance of the K-12 business in the new year, I think, you know, we I would like to guide the K-12 business in total, you know, the K-9 and high school in total, roughly will be expected to increase roughly close to 20% or around 20% year over year.

Zhihui Yang: Yeah. I think we had a strong year of the K-12 business growth in FY26. As for the guidance of the K-12 business in the new year, I would like to guide the K-12 business in total, the K9 and high school in total, roughly will be expected to increase roughly close to 20%, or around 20% year over year. Because I think this enrollment growth trend is good, and also, I think the Q1 revenue growth will be stronger. This is my guidance of the K-12 business. Don't forget, I think the K-12 business will bring us the higher margin in the coming new year. Jenny.

Stephen Zhihui Yang: Yeah. I think we had a strong year of the K-12 business growth in FY26. As for the guidance of the K-12 business in the new year, I would like to guide the K-12 business in total, the K9 and high school in total, roughly will be expected to increase roughly close to 20%, or around 20% year over year. Because I think this enrollment growth trend is good, and also, I think the Q1 revenue growth will be stronger. This is my guidance of the K-12 business. Don't forget, I think the K-12 business will bring us the higher margin in the coming new year. Jenny.

Speaker #3: And because, you know, I think this enrollment growth trend is good and also I think the Q1 revenue growth will be stronger. And so this is my guidance of the K-12 business.

Speaker #3: And don't forget, I think the K-12 business will bring us the higher margin in the coming new year. Jenny.

Speaker #4: Thank you. Thank you so much.

Jenny Yuan: Thank you. Thank you so much.

Speaker #2: Thank you. We will now take our next question. And the next question comes from Alice Tai from Citi. Please go ahead, Alice, your line is open.

Operator: Thank you. We will now take our next question. The next question comes from Alice Cai from Citi. Please go ahead, Alice. Your line is open.

Speaker #5: Thank you. Thank you for taking my question. Good evening. I'm Management Team. Congratulations on the solid and strong result. My question is about the capacity expansion in FY27 because you've talked about discipline capacity expansion in FY26.

Alice Cai: Thank you. Thank you for taking my question. Good evening, management team, and congratulations on the solid and strong result. My question is about the capacity expansion in FY27, because you've talked about discipline on capacity expansion in FY26, and that's been part of the margin story. Wondering what's the plan for FY27, and where is the utilization running now? I have another question about the compliance, because we've seen some reports about inspection at individual learning centers. Wondering if there is any risk we should be aware of. Thanks.

Alice Cai: Thank you. Thank you for taking my question. Good evening, management team, and congratulations on the solid and strong result. My question is about the capacity expansion in FY2027, because you've talked about discipline on capacity expansion in FY2026, and that's been part of the margin story. Wondering what's the plan for FY2027, and where is the utilization running now? I have another question about the compliance, because we've seen some reports about inspection at individual learning centers. Wondering if there is any risk we should be aware of. Thanks.

Speaker #5: And that's been part of the margin story. So what's wondering what's the plan for FY27? And what is the utilization running now? And also, I have another question about the compliance because we've seen some reports about inspection and individual learning centers wondering if there is any risk we should be aware we should be aware of.

Speaker #5: Thanks.

Speaker #3: Okay. Yeah, thank you, Alice. You know, we in fiscal year 2026, we added 13% new capacity in total. I think, you know, it's based you know, based on the, you know, the expansion control and we I think we did well in the last year.

Zhihui Yang: Thank you, Alice. In fiscal year 2026, we added 13% new capacity in total. I think based on the expansion control, I think we did well in the last year. In the coming new year, we plan to open 10% to 15% new capacity. I think most of the new openings will be in the performance with the top performance of the bottom line and top line in the last year. I think we're happy to see the student retention rate improvement, which will drive the utilization rate up in the existing learning centers. I think we're quite optimistic on the OMO or some online business development. That means we don't need to open too many learning centers in the coming new year.

Stephen Zhihui Yang: Thank you, Alice. In fiscal year 2026, we added 13% new capacity in total. I think based on the expansion control, I think we did well in the last year. In the coming new year, we plan to open 10% to 15% new capacity. I think most of the new openings will be in the performance with the top performance of the bottom line and top line in the last year. I think we're happy to see the student retention rate improvement, which will drive the utilization rate up in the existing learning centers. I think we're quite optimistic on the OMO or some online business development. That means we don't need to open too many learning centers in the coming new year.

Speaker #3: And in the coming new year, we plan to open 10 to 15% new capacity. I think most of the new openings will be in the, you know, performance with the top performance of the the bottom line and top line in the last year.

Speaker #3: I think, you know, we're happy to see the student retention rate improvement, which will drive the utilization rate up in the existing learning centers.

Speaker #3: And I think we are you know, we're quite optimistic on the OMO or some online business development. And so that means we don't need to open too many learning centers in the coming new year.

Speaker #3: So in one word, I think the top line growth in the coming new year will be higher than the learning center expansion. So it will drive the average utilization rate up again in the coming new year.

Zhihui Yang: In one word, I think the top line growth in the coming new year will be higher than the learning center expansion. It will drive the average utilization rate up again in the coming new year. Your second question is about the regulation. Anyway, I think we'll obey the rules, the policy requirements. I think that's fine because in last four or five years, we passed all the requirements of the government. I think going forward, my personal view is on the regulation side, I think for me, it's neutral to positive on the regulatory environment. Thank you.

Stephen Zhihui Yang: In one word, I think the top line growth in the coming new year will be higher than the learning center expansion. It will drive the average utilization rate up again in the coming new year. Your second question is about the regulation. Anyway, I think we'll obey the rules, the policy requirements. I think that's fine because in last four or five years, we passed all the requirements of the government. I think going forward, my personal view is on the regulation side, I think for me, it's neutral to positive on the regulatory environment. Thank you.

Speaker #3: Oh, your second question is about the regulation. I think the yeah, anyway, we I think the, you know, obey the rules, you know, the the the the policy requirements I think, you know, I think that's fine because, you know, in last four or five years, you know, we passed all the requirement of the governments.

Speaker #3: I think going forward, you know, my personal view is on the the regulation side, you know, I think for me, it's a, you know, the it's neutral to positive on the regular rate environment.

Speaker #3: Thank you.

Speaker #5: Thanks. Very helpful.

Alice Cai: Thanks. Very helpful.

Speaker #2: Thank you. We will now take our next question. And our next question comes from Timothy Chow from Goldman Sachs. Please go ahead, Timothy, your line is open.

Operator: Thank you. We will now take our next question. Our next question comes from Timothy Zhao from Goldman Sachs. Please go ahead, Timothy. Your line is open.

Speaker #6: Sure. Thank you, Steven. Thank you, Sissi. Thank you for taking my question and congrats on the very solid results. I think my question is regarding the overseas test pride and consulting business.

Timothy Zhao: Sure. Thank you, Stephen. Thank you, Sisi. Thank you for taking my question. Congrats on the very solid results. I think my question is regarding the overseas test prep and the consulting business. Just wondering if you can give us an update on what you are seeing on the ground and what you have seen from the summer vacation period in terms of the overseas test prep growth, and how do you think about the growth trajectory for this year for this specific segment? I believe last year you did a segment merger or integration between the two separate business. Just wondering if you can give us some margin outlook for this business line. What was the operating margin or contribution margin for the overseas business related last year, and what is your expectation for this year? Thank you.

Speaker #6: Just wondering if you can give us an update on what you are seeing on the ground and what you have seen from the summer vacation period in terms of the overseas test prep growth and how do you think about the growth trajectory for this year for this specific segment.

Speaker #6: And I believe last year you did a segment merger or integration between the two separate business. Just wondering wondering if you can give us our some margin outlook for this business line.

Speaker #6: What was the operating margin or contribution margin for the overseas business related last year and what is your expectation for this year? Thank you.

Speaker #3: Thank you, Jen. You know, your question is about the overseas related business. I think, yeah, everybody knows you know, due to the impact of the economic environment and the international situation, our overseas related business meets some, you know, growth pressure in last year.

Zhihui Yang: Thank you, Tim. Your question is about the overseas-related business. I think, yeah, everybody knows, due to the impact of the economic environment and the international situation, our overseas-related business meets some gross pressure in last year. I think we have shown the resilience in last year. We believe that we were taking the market share as a SaaS, as always. In the coming new year, we expect our overseas-related business will be flattish or low single-digit growth in the coming new year. I think the Q1, roughly the Q1, I think we will still believe that we can get some low single-digit growth of the overseas-related business. Yeah. We merged the overseas test prep business and the consulting business in Q3 last year.

Stephen Zhihui Yang: Thank you, Tim. Your question is about the overseas-related business. I think, yeah, everybody knows, due to the impact of the economic environment and the international situation, our overseas-related business meets some gross pressure in last year. I think we have shown the resilience in last year. We believe that we were taking the market share as a SaaS, as always. In the coming new year, we expect our overseas-related business will be flattish or low single-digit growth in the coming new year. I think the Q1, roughly the Q1, I think we will still believe that we can get some low single-digit growth of the overseas-related business. Yeah. We merged the overseas test prep business and the consulting business in Q3 last year.

Speaker #3: But I think we have shown resilience in the last year. And we believe that we were taking—I think we were taking—market share. SSS, you know, as always.

Speaker #3: And so in the coming new year, we expect we expect our overseas related business will be flattish or low single digit growth. In the coming new year.

Speaker #3: And I think the Q1, roughly the Q1, we I think we we still believe that we can get some, you know, low single digit the growth of the overseas related business.

Speaker #3: Yeah. We merged the overseas test prep business and the consulting business in, you know, two in Q3 last year. I think the reason that we put it together is to, you know, restructure the two different the management team and to provide the customers one-stop service.

Zhihui Yang: I think the reason that we put it together is to restructure the two different management team and to provide the customers one-stop service and to enhance the cost control, reduce some cost and expenses. Roughly, the margin of the overseas-related business last year is roughly 15%, roughly last year.

Stephen Zhihui Yang: I think the reason that we put it together is to restructure the two different management team and to provide the customers one-stop service and to enhance the cost control, reduce some cost and expenses. Roughly, the margin of the overseas-related business last year is roughly 15%, roughly last year.

Speaker #3: And to enhance the cost control reduce some cost and expenses. And roughly the margin of the overseas related business last year is roughly 15%, roughly last year.

Speaker #4: But including both test prep and consulting.

Timothy Zhao: Including both test prep and consulting?

Sisi Zhao: Including both test prep and consulting?

Zhihui Yang: Yeah. We put it together. In the coming new year, we believe the margin will be expanded for the overseas-related business because of the cost control, because of the merge of the restructuring the new team. Yeah, I think we have done a lot of jobs, we will keep doing the cost control in the coming new year. It will drive the margin up of the overseas-related business in the coming new year.

Stephen Zhihui Yang: Yeah. We put it together. In the coming new year, we believe the margin will be expanded for the overseas-related business because of the cost control, because of the merge of the restructuring the new team. Yeah, I think we have done a lot of jobs, we will keep doing the cost control in the coming new year. It will drive the margin up of the overseas-related business in the coming new year.

Speaker #3: Yeah. The the the we put it together. And in the coming new year, we believe the margin will be expanded for the overseas related business because of the cost control, because of the merge of the restructuring the new team.

Speaker #3: So yeah, we I think we have done a lot of jobs and we will keep doing the cost control in the coming new year.

Speaker #3: It's will drive the margin up of the overseas related business in the coming new year.

Timothy Zhao: Great. Thank you, Stephen.

Speaker #6: Thank you. Thank you, Steven.

Speaker #2: Thank you. We will now take our next question from the line of Lucy Yu from Bank of America Securities. Please go ahead, Lucy, your line is open.

Operator: Thank you. We will now take our next question from the line of Lucy Yu from Bank of America Securities. Please go ahead, Lucy, your line is open.

Speaker #5: Hi, Steven. Sisi. I have a question on the sales and marketing distribution expense in the last quarter. It was up a bit, both on the Q1-Q and year-over-year basis.

Lucy Yu: Hi, Stephen, Sisi. I have a question on the sales and the marketing distribution expense in the last quarter. It was up a bit, both on a Q-on-Q and a Y-on-Y basis. Could you elaborate why is that, and how should we think about the selling distribution expense in FY27, especially we have the Oriental Home in place? Thank you.

Speaker #5: Could you elaborate why is that? And how should we think about the selling distribution expense in FY27, especially we have the Oriental Home in place?

Speaker #5: Thank you.

Speaker #3: I think in Q4, you know, the East by spend a little bit more money on the marketing, but, you know, it's drive the revenue you know, growth up a lot.

Zhihui Yang: I think in Q4, the East Buy spent a little bit more money on the marketing, but it drive the revenue goes up a lot. In the coming new year, I do believe the selling marketing expenses as the percentage of the revenue for the whole group will be down. It will drive the margin up in the coming new year, Lucy.

Stephen Zhihui Yang: I think in Q4, the East Buy spent a little bit more money on the marketing, but it drive the revenue goes up a lot. In the coming new year, I do believe the selling marketing expenses as the percentage of the revenue for the whole group will be down. It will drive the margin up in the coming new year, Lucy.

Speaker #3: And so in the coming new year, I do believe the selling marketing expense expenses as the percentage of the revenue for the whole group will be down.

Speaker #3: So it will drive the margin up in the coming new year. Lucy.

Lucy Yu: Oh, thank you. Maybe one more. For the Q4 Non-GAAP operating margin expansion, if we excluding East Buy, how about the rest of the education? Is it flattish or expand as well? Thank you.

Speaker #5: Thank you. Maybe one more. So for the fourth quarter non-GAAP operating margin expansion, if we exclude East Buy, how about the rest of the education?

Speaker #5: Is it like flattish or expand as well? Thank you.

Speaker #3: If we take out the East Bay contribution of the Q4—the margin contribution from the East Bay—you know, I think our education business margin is, you know, roughly flattish.

Zhihui Yang: If we take out the East Buy's contribution of the Q4, the margin contribution from the East Buy, I think our education business margin roughly flattish. Don't forget, we take the one-off expenses of the restructuring merge of the overseas-related business in Q4. Roughly we required $10 to $15 million as a one-off expenses in Q4. If you add it back, the margin is up of the core business, Lucy.

Stephen Zhihui Yang: If we take out the East Buy's contribution of the Q4, the margin contribution from the East Buy, I think our education business margin roughly flattish. Don't forget, we take the one-off expenses of the restructuring merge of the overseas-related business in Q4. Roughly we required $10 to 15 million as a one-off expenses in Q4. If you add it back, the margin is up of the core business, Lucy.

Speaker #3: But don't forget we take the one-off expenses of the the restructuring merge of the overseas related business in Q4. So roughly we recorded 10 to 15 million dollars as the one-off expense expenses in Q4.

Speaker #3: So if you add it back, the margin is up. Of the core business. Lucy.

Lucy Yu: Understood. Very clear. Thank you.

Speaker #5: Understood. Very clear. Thank you.

Speaker #3: Yeah. Thank you.

Zhihui Yang: Yeah. Thank you.

Stephen Zhihui Yang: Yeah. Thank you.

Speaker #2: Thank you. We will now take our next question from the line of DS Kim from JP Morgan. Please go ahead, DS, your line is open.

Operator: Thank you. We will now take our next question from the line of D.S. Kim from JPMorgan. Please go ahead, D.S., your line is open.

Speaker #7: Thank you. Hello, sir. Thanks for another strong bid and rate. I think this is now third time in a row. I have a very quick two questions if okay.

DS Kim: Thank you. Hello, sir. Thanks for another strong beat and rate. I think this is now third time in a row. I have a very quick two questions, if okay. First, we just mentioned about that cost optimization initiative. Can I ask if this is already done behind us, or shall we expect, I don't know, like $5 million, $10 million or some more of this one-off in Q1? More importantly, can we try to quantify roughly how much fixed cost savings can we enjoy in FY27 from this? I have one small follow-up.

Speaker #7: First, we just mentioned about that cost optimization initiative and can I ask if this is already done behind us or shall we expect I don't know, like, you know, 5, 10 million dollars or or some more of this one-off in first quarter?

Speaker #7: And more importantly, can we try to quantify roughly how much a fixed cost savings can we enjoy in 2027 from this? And I have one small follow-up.

Zhihui Yang: Thank you, D.S. Your questions about the cost control. We started to do the cost control since March last year. I think we did a great job in the whole year, fiscal year 2026. Roughly, we saved $100 million, roughly, in fiscal year 2026. Now we closely to the end of the phase one, cost control phase one. We're stepping into the phase two. As I said, in the cost control phase two, we will do more like the restructuring of the management teams to do more cost control. We will use more AI to save the staff cost or extra. I think in the coming new year, we expect the cost control can save more amount than that of last year. This is our target. Thank you, Diaz.

Stephen Zhihui Yang: Thank you, D.S. Your questions about the cost control. We started to do the cost control since March last year. I think we did a great job in the whole year, fiscal year 2026. Roughly, we saved $100 million, roughly, in fiscal year 2026. Now we closely to the end of the phase one, cost control phase one. We're stepping into the phase two. As I said, in the cost control phase two, we will do more like the restructuring of the management teams to do more cost control. We will use more AI to save the staff cost or extra. I think in the coming new year, we expect the cost control can save more amount than that of last year. This is our target. Thank you, Di.

Speaker #3: Thank you, DS. You know, your question is about the cost control. You know, we started to do the cost control things March last year.

Speaker #3: And I think we did a great job in in the whole year, fiscal year 26. You know, roughly we saved 100 million dollars roughly in fiscal year 26.

Speaker #3: So now we, you know, closely to the end of the phase one cost control phase one. So we're stepping into the phase two You know, as I said, in the phase in the cost control phase two, we will do more like the restructuring of the management teams to do more cost control.

Speaker #3: And we will use more AI, you know, to save the legacy staff cost or extra. So I think in the coming new year, we expect the cost control can save more amount than that of last year.

Speaker #3: So this is our target. Thank you, DS.

Speaker #7: Thank you. Thank you, sir. That's very helpful. Second, a small question. Can I ask I saw we spent 250 million KPAX capital expenditure last year.

DS Kim: Thank you. Thank you, sir. That's very helpful. Second, a small question. Can I ask, I saw we spent $250 million CapEx capital expenditure last year. Can I check if we have a budget for FY27?

Speaker #7: And can I check if we have a budget for 2027?

Speaker #3: Yeah. The KPAX, you know, yeah, last year roughly 250 million dollars. In the coming new year, roughly 250 to 300 million dollars. You know, as the new new capacity or some, you know, the KPAX on the on the learning path model or on the some others.

Zhihui Yang: Yeah. The CapEx, last year, roughly $250 million. In the coming new year, roughly $250 to $300 million. As the new capacity or some, the CapEx on the learning path model were on the, some others, roughly $250 to $300. Yeah.

Stephen Zhihui Yang: Yeah. The CapEx, last year, roughly $250 million. In the coming new year, roughly $250 to $300 million. As the new capacity or some, the CapEx on the learning path model were on the, some others, roughly $250 to $300. Yeah.

Speaker #3: So roughly 250 to 300. Yeah.

Speaker #7: Got it. Thank you. Just just on that, I mean, not to nitpick on this, but last year I think our new opening, like absolute number of stores were down 40% from a year ago.

DS Kim: Got it. Thank you. Just on that, not to nitpick on this, last year, I think our new opening, absolute number of stores were down 40% from a year ago. I think we opened 170 stores. The year before was like 260, 270, yet CapEx was flat. This coming year, CapEx to go up, is that the delta, the gap because of East Buy? Can I understand that way? If you could comment on that, is it related to a new initiative of the East Buy offline store or anything else I'm missing?

Speaker #7: I think we opened about 170 stores. The year before, it was around 2,670. Yet, KPAX was flat, and this coming year, we expect KPAX to go up.

Speaker #7: Is that the delta the the the gap because of East by? Can I understand that way? Or if you could comment on that, you know, is it related to new initiative of the East by offline store or anything else I'm missing?

Speaker #3: No, East by offline store—you know, the KPAX is very tiny. It's, you know, I mean, very, very, very, very small in number.

Zhihui Yang: No. East Buy is an offline store. The CapEx is very tiny. To me, it's a very small number. I think as I said, last year we opened 13% new capacity in terms of the square meters. The coming new year, we plan to open 10% to 15% new capacity. We believe the new capacity growth, or the new capacity numbers will be lower than the top line growth. That means it will drive the utilization rate up. Your questions about the CapEx. Yeah, we're building up the new headquarters in Chongqing, and it costs a little bit more money. The CapEx in the new year will be a little bit more higher than that of last year.

Stephen Zhihui Yang: No. East Buy is an offline store. The CapEx is very tiny. To me, it's a very small number. I think as I said, last year we opened 13% new capacity in terms of the square meters. The coming new year, we plan to open 10% to 15% new capacity. We believe the new capacity growth, or the new capacity numbers will be lower than the top line growth. That means it will drive the utilization rate up. Your questions about the CapEx. Yeah, we're building up the new headquarters in Chongqing, and it costs a little bit more money. The CapEx in the new year will be a little bit more higher than that of last year.

Speaker #3: And I think the the yeah, as I said, last year we opened you know, 13% new capacity in terms of the square meters. And the coming new year, we plan to open 10 to 15% new capacity.

Speaker #3: And we believe the new capacity growth or the new capacity numbers will be, you know, lower than the top line growth. So that means it will drive the utilization rate up.

Speaker #3: And your question is about the KPAX. Yeah, we're we're we're building up the new high quarters in in Changping. And it's cost a little bit more money.

Speaker #3: So the KPAX in the new year is will be a little bit more higher than the that of last year. But.

DS Kim: That makes a lot of sense, sir.

Speaker #7: That that makes a lot of sense, sir. Yeah, that makes a lot of sense. Thank you.

Zhihui Yang: Yeah.

Stephen Zhihui Yang: Yeah.

DS Kim: Yeah, that makes a lot of sense. Thank you.

Speaker #3: Yeah.

Zhihui Yang: Yeah.

Stephen Zhihui Yang: Yeah.

Speaker #2: Thank you. We will now go to our next question. Our next question comes from Yi Kun Zheng from Citrix. Please go ahead, Yi Kun—your line is open.

Operator: Thank you. We will now go to our next question. Our next question comes from Yiqun Zheng from CITIC Securities. Please go ahead, Yiqun, your line is open.

Speaker #8: Good evening, Steven. This is thank you for taking my question. And congrats on the strong results. My question is about the competition. Well, last year the competition in summer season is quite strong.

Yiqun Zheng: Good evening, Stephen, Sisi. Thank you for taking my question, and congrat on the strong results. My question is about the competition. Last year, the competition in summer season is quite strong. How do you think of the competition for this summer? Considering the impacts of the decline population and the competition, can we have a three-year outlook for the K-12 business?

Yikun Zheng: Good evening, Stephen, Sisi. Thank you for taking my question, and congrat on the strong results. My question is about the competition. Last year, the competition in summer season is quite strong. How do you think of the competition for this summer? Considering the impacts of the decline population and the competition, can we have a three-year outlook for the K-12 business?

Speaker #8: So how do you think of the competition for this summer? And considering the impacts of the decline population and the competition, can we have a three-year outlook for the K212 business?

Zhihui Yang: The competition. In this summer, I think the competition is less than that of last year. I remember in last year's summer, the competition situation. This year, I think it's better. That's why we can give the Q1 guidance, even higher revenue acceleration in the coming Q1. The K12 business in the coming Q1 and even the whole new year, will be accelerated a little bit than that of last year. As for the population, I think it's an issue, but I think the parents will choose the education company for their kids, will be more carefully. I think the parents love to give their kids the best education in the coming three or five years. That means the big players will take more market share from the market. This is, in my opinion, based on the current estimation.

Speaker #3: Yeah. The competition, I think, you know, in this summer, I think the competition is less than that of last year. You know, I remember, you know, in last year summer, you know, the the competition situation.

Stephen Zhihui Yang: The competition. In this summer, I think the competition is less than that of last year. I remember in last year's summer, the competition situation. This year, I think it's better. That's why we can give the Q1 guidance, even higher revenue acceleration in the coming Q1. The K12 business in the coming Q1 and even the whole new year, will be accelerated a little bit than that of last year. As for the population, I think it's an issue, but I think the parents will choose the education company for their kids, will be more carefully. I think the parents love to give their kids the best education in the coming three or five years. That means the big players will take more market share from the market. This is, in my opinion, based on the current estimation.

Speaker #3: And this year, I think, you know, it's better. And so that's why we can give the Q1 guidance, you know, you know, even higher revenue acceleration in the coming Q1.

Speaker #3: And so the K12 business in the coming Q1, and even the whole new year, will accelerate a little bit compared to that of last year.

Speaker #3: And and as for the population, I think, yeah, yeah, it it's an issue. But I think, you know, the parents will choose the education company for their kids will be more carefully.

Speaker #3: And I think the parents love to give their kids the best education. In in the coming new like the three or five years. And so that means the big players will take more market share from the market.

Speaker #3: So this is a, you know, in my opinion. Based on the current estimation.

Speaker #8: Thank you, Steven. That's helpful.

Yiqun Zheng: Thank you, Stephen. That's helpful.

Yikun Zheng: Thank you, Stephen. That's helpful.

Speaker #2: Thank you.

Operator: Thank you. As a reminder, before we take our next question, to ask a question now, please press star one one on your telephone keypad. We will now take our next question. The next question comes from Jing Yuan from CICC. Please ask your question, Jing. Your line is open.

Speaker #3: Thank you.

Speaker #2: As a reminder, before we take our next question, to ask a question now, please press star 11 on your telephone keypad. We will now take our next question.

Speaker #2: And the next question comes from Jing Yuan from CICC. Please ask your question. Jing, your line is open.

Speaker #5: Good evening, management. Thank you for taking my question. My question is about the AI adoption. Like, with the rapid development of AI technology and could management share how the company is leveraging AI in its teaching and learning process?

Jing Yuan: Good evening, management. Thank you for taking my question. My question is about the AI adoption. With the rapid development of AI technology, could management share how the company is leveraging AI in its teaching and learning process? Do you see AI primarily as a tool to transform the teaching model or a way to improve operational efficiency? Thanks.

Speaker #5: And do you see AI primarily as a tool to transform the teaching model or like a way to improve operational efficiency? Thanks.

Speaker #1: Yeah. Actually, as for the AI, you know, we have been devoting a lot of effort and resources into implementing AI technology into the education sector.

Zhihui Yang: Yeah. Actually, as for the AI, we have been devoting a lot of efforts and resources into implementing the AI technology into education sector. In total, for three aspects. One is that for all the existing educational products, we are implementing AI technology to enhance the product

Sisi Zhao: Yeah. Actually, as for the AI, we have been devoting a lot of efforts and resources into implementing the AI technology into education sector. In total, for three aspects. One is that for all the existing educational products, we are implementing AI technology to enhance the product

Speaker #1: And and, you know, in total, for three aspects. One is that for all the existing educational products, we are implementing AI technology to enhance the the the product quality and also enhance the students' learning experience.

Sisi Zhao: quality and also enhance the students' learning experience. For example, we embedded AI new functions into our learning device business. Also, even in class, we use the AI tools to help students to improve the teaching and learning efficiency and the learning experience. Also, after school, they can use the AI new tools to enhance the learning efficiency. All these are differentiating us much more than before, more differentiating from all the other competitors because we have enough capital. Also, we have the technology and also the teaching knowledge to use the AI technology and make our products better. This is one aspect. The other thing that we're using AI is, even more exciting, is that we are piloting a lot of new AI new products.

Speaker #1: For example, like we we embedded AI new functions into our learning device business and also even in-class all we use the AI tools to help students to improve the teaching and learning efficiency and the learning experience and also after school they can use the AI new tools to to enhance the learning efficiency.

Speaker #1: So all these are differentiating us much more than before more differentiating from all the other competitors because we have enough capital and also we have the technology and all the in the and also the the teaching knowledge to to to use the AI technology and make our products better.

Speaker #1: So this is one aspect. And the other thing is that we are using AI is more even more exciting is that we are piloting a lot of new AI new products it's not only products but as we announced this quarter that we have a new platform launched recently.

Sisi Zhao: It's not only products, but as we announced this quarter that we have a new platform launched recently. To use the AI technology and also using our teaching and learning experience and all the teaching and learning settings that we have, all these combined together to come up with some new solution. It's based on to help students how to learn and how to use our teaching knowledge and using all the new AI tools to have some new products. This is something that we are piloting and still in early stage, but we believe that the platform will be more and more better in the future. Also we have a series of new products coming. That's some exciting ones.

Speaker #1: And you know, to to use the AI technology and also using our teaching and learning experience and all the teaching and learning settings that we have all these combined together to come up with some new solutions.

Speaker #1: So it's based on the to help students how to learn and how to use our teaching knowledge and using all the new AI tools to to have some new products so this is something that we are piloting and still in early stage but we believe that the platform will be more and more better in the future and also we have a series series of new products coming so that's some exciting ones.

Speaker #1: And also third thing that we're doing is using our using the AI technology to improve the working efficiency so that we can save more labor cost.

Sisi Zhao: Also third thing that we're doing is using the AI technology to improve the working efficiency so that we can save more labor costs for all functions, like all the teachers and also our teacher assistants. For all aspects of their working process, we can use AI tools to help them to improve the efficiency so that we don't need to hire as many new staff as before, so that they can handle more work than before. The HR cost can be saved more and efficiency can be improved. Also functional supporting staff as well. That's all the things that we're using AI to do. I think in total, we are more differentiating and have more advantage than other competitors in terms of using AI.

Speaker #1: For all functions like all the teachers and also our teacher assistants and from the for for all aspects of their working process we can use AI tools to help them to improve the efficiency.

Speaker #1: So that we don't need to hire as much as staff as before so that they can handle more work than before. So the HR cost can be saved more and efficiency can be improved.

Speaker #1: And also functional supporting staff as well. So that's all the all the things that we're using AI to do. And I think in in total, we are more differentiating and have more advantage than other competitors in terms of using AI.

Speaker #1: Yeah. So so we have the good solution and also can have the AI technology used more and more better and better in the education sector.

Sisi Zhao: Yeah, we have the good solution and also can have the AI technology used more and more, better and better in the education sector. Yeah.

Speaker #1: Yeah.

Speaker #5: Thank you. That's very comprehensive.

Jing Yuan: Thank you. That's very comprehensive.

Speaker #2: Thank you for your questions. We are now approaching the end of the conference call. I'll now turn the call over to New Oriental's executive president and CFO, Steven Yang.

Operator: Thank you for your questions. We are now approaching the end of the conference call. I will now turn the call over to New Oriental's Executive President and CFO, Stephen Yang, for his closing remarks.

Speaker #2: So his closing remarks.

Speaker #3: Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives.

Zhihui Yang: Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relation representatives. Thank you very much.

Stephen Zhihui Yang: Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relation representatives. Thank you very much.

Speaker #3: Thank you very much.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect your lines.

Q4 2026 New Oriental Education & Technology Group Inc Earnings Call

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