(EDU) 2024 Q3 法說會逐字稿

Good evening, and thank you for standing by for New Oriental's FY 2024 Third Quarter Results Earnings Conference Call. (Operator Instructions) 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.

晚上好，感謝您出席新東方2024財年第三季業績電話會議。 （操作員指示）今天的會議正在錄音。如果您有任何異議，您可以此時斷開連接。現在我想把會議交給今天會議的主持人趙思思女士。

Thank you. Hello, everyone, and welcome to New Oriental's Third Fiscal Quarter 2024 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.

謝謝。大家好，歡迎參加新東方2024年第三季財報電話會議。我們這段期間的財務表現已於今天早些時候發布，可在公司網站和新聞專線服務上查看。今天，我和執行總裁兼財務長楊士強將與大家詳細分享新東方最新的財報和業務動態。之後，史蒂芬和我將回答您的問題。

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. 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 views expressed today. 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. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental's Investor Relations website at investor.neworiental.org.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。因此，我們的結果可能與今天表達的觀點有重大差異。我們向美國證券交易委員會提交的公開文件中概述了許多潛在的風險和不確定性。除適用法律要求外，新東方不承擔更新任何前瞻性聲明的義務。提醒一下，本次會議正在錄製中。此外，本次電話會議的網路直播將在新東方投資者關係網站investor.neworiental.org上播出。

I will now first turn the call over to Mr. Yang. Stephen, please go ahead.

我現在先把電話轉給楊先生。史蒂芬，請繼續。

Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. We are pleased to announce that New Oriental has achieved robust growth this quarter that has surpassed our expectations. The remarkable top line performance this quarter has spoken volumes about sustained recovery across our diverse business lines, while steady expansion of our new business made healthy contributions to the company's revenue, invigorating our portfolio of innovative endeavors.

謝謝你，茜茜。大家好，感謝您加入我們的通話。我們很高興地宣布，新東方本季實現了強勁成長，超出了我們的預期。本季出色的營收業績充分說明了我們各業務線的持續復甦，而新業務的穩步擴張為公司收入做出了健康貢獻，為我們的創新努力注入了活力。

New Oriental's bottom line performance has achieved encouraging yields with operating margin and non-GAAP operating margin reaching 9.4% and 11.7% for this quarter, respectively, thanks to the combined efforts of our restructured business model, better utilized resources, and streamlined cost structure. Bolstered by vital growth across all business lines, our commitment to maintaining a healthy market share growth stands firm as we strive to create sustainable value for our customers and shareholders in the long term.

在商業模式重組、資源優化利用和成本結構優化的共同努力下，新東方的淨利潤取得了令人鼓舞的收益，本季營業利潤率和非美國通用會計準則營業利潤率分別達到9.4%和11.7% 。在所有業務線的強勁成長的支持下，我們堅定地致力於保持健康的市場份額成長，同時努力為客戶和股東長期創造可持續的價值。

Now I would like to spend some time to talk about the quarter's performance across our remaining business lines and new initiatives to you in detail. Our key remaining business have tended a promising upward trajectory, while the new initiatives secure positive momentum. Breaking it down, the overseas test prep business reported a revenue increase of about 53% in dollar terms or 59% in the RMB terms year-over-year for the third fiscal quarter of 2024.

現在我想花一些時間向大家詳細介紹本季我們剩餘業務線的表現以及新舉措。我們主要的剩餘業務已呈現出有希望的上升軌跡，而新舉措則確保了積極的勢頭。細分來看，2024 年第三財季海外備考業務的營收以美元計算年增約 53%，以人民幣計算成長 59%。

The overseas study consulting business reported a revenue increase of about 26% in dollar terms or 31% in RMB terms year-over-year for this quarter. The adults and university students business recorded a revenue increase of 53% in dollar terms or 60% increase in RMB terms year-over-year for this quarter. Our multipronged new initiatives, which mostly revolve around facilitating students' overall development, have continued to deliver continued growth and meaningful profit to the company.

留學諮詢業務本季美元營收年增約26%，人民幣營收年增約31%。本季成人和大學生業務的美元收入年增 53%，人民幣收入年增 60%。我們多管齊下的新措施主要圍繞在促進學生的全面發展，繼續為公司帶來持續成長和可觀的利潤。

Firstly, the nonacademic tutoring courses, which we have offered in around 60 existing cities focuses on cultivating students' innovative ability and comprehensive quality. The markets we have tapped into have recorded elevated penetration, especially in higher-tier cities with a total of approximately 355,000 student enrollments reported in this quarter. The top 10 cities in China contributed over 60% of this business.

首先，我們在現有的60多個城市開設了非學術輔導課程，並專注於培養學生的創新能力和綜合品質。我們所涉足的市場滲透率有所提高，尤其是在一線城市，本季約有 355,000 名學生入學。中國前10名城市貢獻了該業務的60%以上。

Secondly, the intelligence learning system and device business, the service designed to provide a tailored digital learning experience for students to enhance learning efficiency, has been adopted in around 60 cities. We have observed enhanced customer retention rate and scalability of this new initiative business with approximately 188,000 active paid users recorded in this quarter. The revenue contribution of this initiative from the top 10 cities in China is over 55%. Our smart education business, educational material and real life smart study solutions have continued to contribute material results to the overall advancement of the company.

其次，智慧學習系統及設備業務，旨在為學生提供量身訂製的數位學習體驗，提升學習效率，已在約60個城市落地。我們觀察到這項新舉措業務的客戶保留率和可擴展性有所提高，本季活躍付費用戶約為 188,000 名。全國排名前10的城市對該措施的收入貢獻超過55%。智慧教育業務、教材和現實生活智慧學習解決方案持續為公司整體進步貢獻物質成果。

In summary, our new educational business initiatives reported a revenue increase of 73% in dollar terms or 80% increase in RMB terms year-over-year for this quarter. In addition, as mentioned in the past quarters, we inaugurated a newly integrated tourism-related business line as one of our creative venture tailored with diverse offerings of culture trips, study tours in China and overseas, as well as camp education. New Oriental's culture tourism business shared the spirit to provide premium quality travel experience that are infused with joy from culture exchange, knowledge sharing, and personal fulfillment.

總而言之，我們新的教育業務計劃本季的美元收入年增 73%，人民幣收入年增 80%。此外，正如過去幾個季度所提到的，我們推出了新的綜合旅遊相關業務線，作為我們的創意業務之一，為您量身定製文化之旅、中國和海外遊學以及營地教育等多元化產品。新東方文化旅遊業務秉承提供高品質旅遊體驗的精神，讓文化交流、知識分享、個人成就感充滿樂趣。

Within the new business line, our study tour and research camp business for students of K-12 and university age achieved inspiring growth in this quarter. We have conducted study tours and research camp in over 50 cities across the country with the top 10 cities in China offering over 55% of revenue share of this business. We also piloted a number of top notch tourism offerings to expand our reach to all age groups, including the middle-aged and elderly individuals across 25 featured provinces. As we're still at the preliminary stage of the planning, (inaudible) and evaluating the availability of this business in select regions, we will keep you posted should there be timely updates.

在新業務線中，我們為K-12和大學年齡層學生提供的遊學和研學營業務在本季度取得了令人鼓舞的成長。我們在全國50多個城市開展了遊學和研學營，其中國內排名前10位的城市佔據了該業務55%以上的收入份額。我們也在25個特色省份試行了一批精品旅遊產品，將服務範圍擴大到全年齡段，包括中老年人。由於我們仍處於規劃（聽不清楚）和評估該業務在選定地區的可用性的初步階段，如果有及時更新，我們將隨時通知您。

With regards to our OMO system, online merge offline system, we have persisted in revamping our platform and leverage our educational infrastructure and technology edge on remaining key business and new initiatives with the vision to provide advanced diversified education service to customers of all ages. During this reporting period, a total of $25.5 million has been invested in our OMO teaching platform, which equips us with the flexibility to maintain unrivaled service to students.

在OMO系統、線上融合線下系統方面，我們堅持平台改造，利用教育基礎設施和技術優勢，開展剩餘的重點業務和新舉措，為各年齡段的客戶提供先進的多元化教育服務。在本報告期間內，我們的 OMO 教學平台總共投資了 2550 萬美元，這使我們能夠靈活地為學生提供無與倫比的服務。

With regards to the East Buy, East Buy attempts sustainable growth momentum in this quarter, thanks to a rapid development of its private label products. As part of the ongoing expansion strategy from early ventures like East Buy, we have devoted substantial investments to support the growth of the company, including the optimization of East Buy's multi-platform strategies, supply chains, product offerings, as well as quality control to safeguard on product quality and regions. We're glad to see the East Buy has further enlarged its customer base following the latest establishment of time with (inaudible).

東買方面，得益於自有品牌產品的快速發展，東買在本季試圖實現可持續的成長動能。作為東買等早期企業持續擴張策略的一部分，我們投入了大量投資來支持公司的發展，包括優化東買的多平台策略、供應鏈、產品供應以及品質控制，以支持公司的發展。區域保障。我們很高興看到東買在最近建立的時間（聽不清楚）之後進一步擴大了其客戶群。

In addition, further enhancements in East Buy have been made through our comprehensive organizational structure strategy hence for professional talents and app upgrades, all of which strengthened East Buy's private label products and live streaming e-commerce. The resources we committed into East Buy have thankfully nourished improved user management and loyalty, and we look forward to leverage these inputs to propel further growth of the platform that promise premium offerings and sustainable growth for our customers.

此外，東買也透過全面的組織架構策略、專業人才和APP升級等方面進行了進一步強化，增強了東買的自有品牌產品和直播電商。值得慶幸的是，我們向東買投入的資源改善了用戶管理和忠誠度，我們期待利用這些投入推動平台的進一步發展，為我們的客戶提供優質產品和可持續增長。

With regards to the company's latest financial position, I'm confident to share with you that the company is in a healthy financial statement with cash and cash equivalents, term deposits, and short-term investments totaling approximately $4.8 billion. On July 26, 2022, the company's Board of Directors authorized a share repurchase of up to $400 million of the Company’s ADSs or common shares during the period from July 28, 2022 through May 31, 2023. The company's Board of Directors further authorized the company to extend its share repurchase program launched in July 2022 by 12 months to May 31, 2024. As of yesterday, April 23, 2024, the company repurchased an aggregate of approximately 6 million ADSs for approximately $195.3 million from open market under the share repurchase program.

關於公司最新的財務狀況，我有信心與大家分享，公司財務報表健康，現金及現金等價物、定期存款和短期投資總計約48億美元。 2022年7月26日，公司董事會授權在2022年7月28日至2023年5月31日期間回購最多4億美元的公司ADS或普通股。啟動的股票回購計畫延長12 個月至2024 年5 月31 日。存託股。

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

現在我將把電話轉給塞西，與您分享關鍵的財務數據。茜茜，請繼續。

Now I'd like to walk you through the other key financial details for this quarter. Operating costs and expenses for the quarter were $1,093.9 million, representing a 59.1% increase year-over-year. Non-GAAP operating cost and expenses for the quarter, which excludes share-based compensation expenses, were $1,066.4 million, representing a 60.1% increase year-over-year. The increase was primarily due to the cost expenses related to substantial growth in East Buy's private label products and live streaming e-commerce business.

現在我想向您介紹本季的其他關鍵財務細節。該季度營運成本和費用為 10.939 億美元，年增 59.1%。本季非 GAAP 營運成本和費用（不含股權激勵費用）為 10.664 億美元，年增 60.1%。成長主要是由於東買自有品牌產品和直播電商業務大幅成長所帶來的成本費用。

Cost of revenue increased by 74.5% year-over-year to $644.8 million. Selling and marketing expenses increased by 57.1% year-over-year to $161.3 million. G&A expenses for the quarter increased by 33.6% year-over-year to $287.8 million. Non-GAAP G&A expenses, which exclude share-based compensation expenses, were $273.6 million, representing a 40.7% increase year-over-year.

收入成本年增 74.5% 至 6.448 億美元。銷售和行銷費用年增 57.1%，達到 1.613 億美元。該季度的一般管理費用年增 33.6%，達到 2.878 億美元。非 GAAP G&A 費用（不含股權激勵費用）為 2.736 億美元，較去年同期成長 40.7%。

Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 28.3% to $27.5 million in the third fiscal quarter of 2024. Operating income was $113.4 million, representing a 70.6% increase year-over-year. Non-GAAP income from operations for the quarter was $140.9 million, representing a 60.3% increase year-over-year. Net income attributable to New Oriental for the quarter was $87.2 million, representing a 6.8% increase year-over-year. Basic and diluted net income per ADS attributable to New Oriental were $0.53 and $0.52, respectively.

2024 年第三財季，分配給相關營運成本和費用的股權激勵費用總額增加了 28.3%，達到 2,750 萬美元。本季非 GAAP 營運收入為 1.409 億美元，年增 60.3%。該季度歸屬於新東方的淨利潤為8,720萬美元，較去年同期成長6.8%。新東方每股ADS基本淨利和稀釋後淨利分別為0.53美元和0.52美元。

Non-GAAP net income attributable to New Oriental for the quarter was $104.7 million, representing a 9.8% increase year-over-year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $0.63 and $0.63, respectively. Net cash flow generated from operations for the third fiscal quarter of 2024 was approximately $109.4 million, and capital expenditure for the quarter were $80.1 million.

本季歸屬於新東方的非美國通用會計準則淨利潤為 1.047 億美元，年增 9.8%。非公認會計準則下新東方每股美國存託股基本淨利和稀釋後淨利分別為 0.63 美元和 0.63 美元。 2024年第三財季營運產生的淨現金流量約為1.094億美元，該季度的資本支出為8,010萬美元。

Turning to the balance sheet. As of February 29, 2024, New Oriental had cash and cash equivalents of $2,013.6 million. In addition, the company had $1,570.8 million in term deposits and $1,175.3 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 for goods are delivered at the end of the third quarter of fiscal year 2024 was $1,521.7 million, an increase of 30.8% as compared to $1,163.2 million at the end of the third quarter of last fiscal year.

轉向資產負債表。截至2024年2月29日，新東方擁有現金及現金等價物20.136億美元。此外，該公司還有15.708億美元的定期存款和11.753億美元的短期投資。新東方的遞延收入（即從客戶處預收的現金）以及在 2024 財年第三季末交付商品服務時確認的相關收入為 15.217 億美元，較上年同期增長 30.8%。季末為11.632 億美元。

Now I'll hand over to Stephen to go through our outlook and guidance.

現在我將交給史蒂芬來介紹我們的展望和指導。

Thank you, Sisi. As we progress into the fourth quarter, which is typically expected as a slower quarter comparing with the third quarter in terms of the revenue growth and profitability due to various seasonality of our key educational businesses, we place confidence in sustaining a healthy growth, building on the collective breaks of our rooted foundation, brand advantage, and differential teaching resources, our strategic focus and investment approach aimed at achieving satisfactory operating profit in the rest of the year, coupled with the year-over-year margin expansion for the full year. As always, we will work diligently to adhere to the latest guidance from the Chinese authorities on enhancing the nation's education level to strengthen its leading position to further strengthen our edge on all business lines and creative endeavors.

謝謝你，茜茜。隨著我們進入第四季度，由於我們主要教育業務的不同季節性因素，通常預計第四季度的收入增長和盈利能力將較第三季度放緩，我們對維持健康增長充滿信心，我們的根基、品牌優勢、差異化教學資源的集體突破，我們的策略重點和投資方式，旨在今年剩餘時間內實現令人滿意的營業利潤，加上全年利潤率的同比擴張。我們將一如既往，努力遵循中國政府關於提高國家教育水平、鞏固領先地位的最新指導意見，進一步增強我們在各業務領域和創新領域的優勢。

With regards to the learning center and classroom space, as part of the continued evolution of our offering across business lines, we plan to increase our capacity by around about 30% for this fiscal year, by which a reasonable amount of new learning centers is expected to be opened, while classroom areas of some existing learning centers will be expanded in a few major cities. Most of the new openings will be launched in the city with better top line and bottom line performance in this year. At the same time, we will continue to hire new teachers and staff to match our capacity expansion and support our revenue growth, especially for new education business initiatives and newly integrated tourism-related business.

關於學習中心和教室空間，作為我們跨業務線產品持續發展的一部分，我們計劃在本財年將容量增加約 30%，預計將有合理數量的新學習中心一些主要城市的現有學習中心的教室面積將擴大。大多數新開幕的酒店將在今年營收和利潤表現更好的城市開業。同時，我們將繼續聘請新的教師和員工，以配合我們的產能擴張並支持我們的收入成長，特別是新的教育業務舉措和新整合的旅遊相關業務。

We expect total net revenue in the fourth quarter 2024, March 1, 2024 to May 31, 2024, to be in the range of $1,101.5 million to $1,127.3 million, representing year-over-year increase in the range of 28% to 31% in dollar terms. The projected increase of revenue in our functional currency, RMB, is expected to be in the range of 34% to 37% for the fourth quarter of this fiscal year 2024.

我們預計2024年第四季（即2024年3月1日至2024年5月31日）的總淨收入將在11.015億美元至11.273億美元之間，年增28%至31%。預計 2024 年第四季以我們的功能貨幣人民幣計算的營收將成長 34% 至 37%。

To conclude, New Oriental is determined to persistently expand our existing offerings and fertilize new endeavors, dedicating strategic inputs to sharpen our capability. We will also continue to devote reasonable resources on research and application of new technologies such as AI and ChatGPT, while offering a strong belief that we could uplift our strength to favor further growth, better margin and operating efficiency. At the same time, we will also continue to seek guidance from and cooperate with the government authorities in various provinces and municipalities in China in alignment with this effort to comply with the relevant policies, regulations and measures, as well as to further adjust our business operations as required.

總而言之，新東方決心不斷拓展現有業務，培育新業務，投入策略投入提升我們的能力。我們也將繼續投入合理的資源用於人工智慧和ChatGPT等新技術的研究和應用，同時堅定地相信我們可以增強我們的實力，以促進進一步的成長、更好的利潤和營運效率。同時，我們也將繼續尋求中國各省市政府部門的指導和配合，遵守相關政策、法規和措施，進一步調整我們的業務。

I must say that these expectations and forecasts reflect our considerations of the latest regulatory measures as well as our current and preliminary view, which is subject to change. This is the end of our fiscal year 2024 Q3 summary.

我必須說，這些預期和預測反映了我們對最新監管措施的考慮以及我們當前和初步的觀點，這些觀點可能會改變。這是我們 2024 財年第三季總結的結尾。

At this point, I would like to open the floor for questions. Operator, please open the call for these. Thank you.

現在，我想請大家提問。接線員，請打開這些電話。謝謝。

(Operator Instructions) Your first question comes from the line of Felix Liu from UBS.

（操作員說明） 您的第一個問題來自瑞銀集團的Felix Liu。

Congratulations on the strong growth and guidance. My question is on growth. So first, I understand that Q4, we will have a bit of seasonality in the education business. But maybe could you just share more color on the growth in different business segments in Q4? And also, you mentioned that the capacity expansion guidance for the year is now lifted to 30%. How do you see that capacity expansion pace going forward? Do you think 30% is a sustainable expansion that we can maybe keep for 2 to 3 years?

祝賀您的強勁成長和指導。我的問題是關於成長。首先，我了解到第四季度，我們的教育業務將會有一些季節性。但也許您可以分享更多有關第四季度不同業務部門成長的資訊嗎？另外，您提到今年的產能擴張指導現在提高到30%。您如何看待未來產能擴張的腳步？您認為30%是一個可持續的擴張，我們可以維持2到3年嗎？

Thank you, Felix. Yes, as you know, we built the top line guidance this quarter a lot, just like the past couple of quarters. And as for the revenue guidance in Q4, which seems to be a little bit lower than the Q3 year-over-year revenue growth, there are 3 reasons: number one, as always, we're quite conservative to give the guidance. So this is number one. And number two, yes, as you know, Q4 is typically expected as a slower quarter compared to the Q1 and Q3. And because of the seasonality, for example, like for the K-12 related business and the overseas related business, typically, Q4 is the low season. And number 3 is, in the last year, Q4, without the impact of the pandemic, I think our business in last year Q4 was basically back to normal.

謝謝你，菲利克斯。是的，如您所知，我們在本季度製定了很多頂線指引，就像過去幾個季度一樣。至於第四季的營收指引，似乎比第三季的年收入成長低一些，原因有三：第一，一如既往，我們給的指引相當保守。所以這是第一。第二，是的，如您所知，與第一季和第三季相比，第四季通常預計會放緩。由於季節性的原因，例如K-12相關業務和海外相關業務，通常第四季是淡季。第三，去年第四季度，如果沒有疫情的影響，我認為去年第四季我們的業務基本上恢復正常了。

So that's why we think the Q4 top line guidance seems to be a little bit lower. But in my personal view, I think the guidance in dollar terms is 28% to 31%. In RMB terms, it's 34% to 37%. I think it is still very strong. And I think in the coming new fiscal year, that means that fiscal year '25, we're quite optimistic on revenue growth with the margin inflation for the whole fiscal year '25.

這就是為什麼我們認為第四季的營收指引似乎有點低。但我個人認為，以美元計算的指引是28%到31%。以人民幣計算，為34%至37%。我覺得還是很強的。我認為在即將到來的新財年，這意味著我們對 25 財年的營收成長和整個 25 財年的利潤率通膨非常樂觀。

As for the expansion plan, yes, we raised the guidance of the capacity expansion by 30% year-over-year this time, because actually, we're taking market share. And I think the demand from the customers is very strong, and that's why we raised the guidance of the expansion plan again this quarter. And going forward, next year, I think we will keep almost the same pace to open the new learning centers, because we will make the analysis of the market demand and the supply. So I think we are still on the pace to take more market share. And as for the revenue growth of the different businesses, we disclose it in next con call.

至於擴張計劃，是的，我們這次將產能擴張的指導同比提高了30%，因為實際上我們正在搶佔市場份額。我認為客戶的需求非常強勁，這就是為什麼我們本季再次提高了擴張計畫的指導。展望未來，明年，我認為我們將保持幾乎相同的速度開設新的學習中心，因為我們將對市場需求和供應進行分析。因此，我認為我們仍在努力爭取更多市場份額。至於不同業務的收入成長情況，我們將在下次電話會議中揭露。

Just roughly, our key business lines, like overseas related, including the test prep and consulting will grow roughly about 15% to 20% range. And domestic test prep university students business revenue growth will be around 20% to 25%. And high school tutoring will grow moderately. And the new business, new initiative, which is the key growth driver, will be over maybe 60% revenue growth. This is based on the exchange rate estimated by us when we do the projection.

粗略地說，我們的主要業務線，例如海外相關業務，包括考試準備和諮詢，將成長約 15% 到 20% 左右。而國內應試大學生業務收入成長率將在20%至25%左右。高中輔導將適度成長。新業務、新舉措是關鍵的成長動力，收入成長可能超過 60%。這是我們在進行預測時根據我們估計的匯率得出的。

Our next question comes from the line of Yiwen Zhang from China Renaissance.

我們的下一個問題來自華興資本的張藝文。

So my question is regarding our margin. If we look at the group level adjusted operating margin, it was 11.7%, which was flattish on a Y-o-Y basis. I understood a lot of incremental OpEx was due to expansion. So if we just look at education related margin, how does it expand on Y-o-Y basis? And how would you expect it to trend in the next few quarters?

所以我的問題是關於我們的利潤。如果我們看一下集團層級調整後的營業利潤率為 11.7%，與去年同期持平。我知道很多增量營運支出是因為擴張造成的。因此，如果我們只看與教育相關的利潤率，它的年成長情況如何？您預計未來幾季的趨勢如何？

The group's non-GAAP OP margin was flattish in this quarter. But within the education business, I think we're seeing the meaningful GP margin and non-GAAP OP margin expansion for education business in this quarter. I think thanks to the newly business restructured model and the higher utilized resources and the better utilization for the learning centers and the streamlined cost structure, so it made the education business margin expansion again this quarter. And so going forward, I think in the coming Q4, and even for the whole year, the new year, fiscal year '25, I think we do have the operating leverage in hand.

該集團本季的非公認會計原則營運利潤率持平。但在教育業務中，我認為本季度教育業務的 GP 利潤率和非 GAAP OP 利潤率出現了有意義的擴張。我認為得益於新的業務重組模式以及更高的資源利用率和學習中心的更好利用率以及精簡的成本結構，因此使得本季教育業務利潤率再次擴大。因此，展望未來，我認為在即將到來的第四季度，甚至全年、新的一年、25 財年，我認為我們確實擁有營運槓桿。

Yes, as you know, we raised the guidance of the learning center expansion by 30%, and we hired more teachers and staff to match with the new expansion. But I think the top line growth in the new fiscal year '25 will be very strong. And we do have a leverage in fiscal year '25. So we expect you will see the margin expansion with the healthy top line growth for education business in the new fiscal year '25.

是的，如您所知，我們將學習中心擴建的指導提高了 30%，並聘請了更多的教師和工作人員來配合新的擴建。但我認為 25 新財年的營收成長將非常強勁。我們在 25 財年確實有槓桿作用。因此，我們預計在新的 25 財年，您將看到教育業務的利潤率擴大，收入健康成長。

And then the East Buy, yes, I think the cost of expenses, especially for the selling and marketing expenses this quarter increased. It was partly due to the East Buy's investment. And yes, I think you saw a very strong growth in top line, especially for the private label products and the e-commerce business. And I think East Buy has devoted substantial investment to support the growth of the company, including like the optimization of the multi-platform strategies in (inaudible) and the other platform, supply chain and product offerings and quality control.

然後是東買，是的，我認為費用成本，特別是本季的銷售和行銷費用增加了。部分原因是東買的投資。是的，我認為您看到了營收的強勁成長，尤其是自有品牌產品和電子商務業務。我認為東買投入了大量投資來支持公司的發展，包括優化（聽不清楚）和其他平台的多平台策略、供應鏈和產品供應以及品質控制。

And also, East Buy recruited some more of the professional talent people from the market. And so we are optimistic on East Buy's development going forward. And we look forward to leverage this investment with input this time and going forward. So in summary, the margin profile for the whole group -- so we are quite optimistic about the margin expansion for the whole group for the education business in fiscal year '25. And also as well, we do think the East Buy will generate more revenue, top line growth and more profit to the company going forward.

同時，東買又從市場招募了一些專業人才。因此我們對東買未來的發展持樂觀態度。我們期待這次和今後利用這項投資和投入。總而言之，整個集團的利潤率狀況——因此我們對整個集團在 25 財年教育業務的利潤率擴張非常樂觀。此外，我們確實認為東買將為公司未來帶來更多收入、營收成長和更多利潤。

Our next question comes from the line of Lucy Yu from Bank of America.

我們的下一個問題來自美國銀行的 Lucy Yu。

So my question is still on the margins. So it looks like, judging from the minority interest, that East Buy might be loss-making for the quarter. So how should we think about the East Buy margin volatility impact on a group level in the upcoming quarter and upcoming fiscal year? So Stephen, how do you plan those margins for the next fiscal year?

所以我的問題仍然處於邊緣。因此，從少數股東權益來看，東買本季可能會出現虧損。那麼，我們該如何看待東買利潤率波動對下一個季度和下一個財年集團層面的影響？那麼史蒂芬，您如何規劃下一財年的利潤率？

Lucy, I'm glad to hear from you, your questions about the East Buy. But I'm afraid I'm unable to share with you about the latest financial results at this moment and our guidance for the East Buy. And in the next quarter, in July, I think East Buy will announce the full year report -- half year report and the full year report. And so at that time, I think the management of (inaudible) of East Buy will share more color with you about the margins and the top line growth. Yes, but I must mention that we are still quite optimistic about the East Buy's investment in this quarter. And over the long run, I think the East Buy will bear fruit from this investment and will generate more revenue and profit to the whole group.

露西，我很高興收到你的來信，詢問你關於東買的問題。但恐怕我目前無法與您分享最新的財務業績以及我們對東方買入的指導。在下個季度，即7月份，我認為東買將公佈全年報告—半年報告和全年報告。因此，到那時，我認為東買（聽不清楚）的管理層將與您分享更多有關利潤率和營收成長的資訊。是的，但我必須提到，我們對東買本季的投資仍然相當樂觀。從長遠來看，我認為東買將從這項投資中獲得成果，並為整個集團帶來更多的收入和利潤。

Our next question comes from the line of Tian Hou from TH Capital.

我們的下一個問題來自泰合資本的天后。

The question is related to the high school learning center expansion and also the nonacademic course learning center. What's the retention rate and utilization rate for both of them?

這個問題與高中學習中心的擴展以及非學術課程學習中心有關。兩者的留存率和利用率是多少？

I think for the utilization rate and the student retention rate for both the high school business and the nonacademic courses (inaudible) are still improving year-over-year -- actually quarter-by-quarter. And so the good news for us is we're seeing the trend is still there. And so going forward, I think we will see higher utilization rates for the existing learning centers and higher student retention rates.

我認為高中商務課程和非學術課程（聽不清楚）的使用率和學生保留率仍在逐年提高——實際上是逐季度提高。因此，對我們來說好消息是我們看到這種趨勢仍然存在。因此，展望未來，我認為我們將看到現有學習中心的利用率更高，學生保留率也更高。

And a couple of years ago, typically, it will spend us for 12 months to get the breakeven point after we opened the new learning center, but now, I think, roughly, it will take the happier 6 months to kind of breakeven point. And so I think going forward, we expect the higher utilization rate for learning centers and the higher student retention rate for overseas lines.

幾年前，我們開設新學習中心後，通常需要 12 個月的時間才能達到收支平衡點，但現在，我認為，粗略地說，我們需要 6 個月的時間才能達到收支平衡點。所以我認為，展望未來，我們預期學習中心的使用率會更高，海外線路的學生保留率也會更高。

Yes. So one follow-up question. So before the double reduction, so when you guys do the learning center expansion, so there's a tricky line. So how much you do the expansion? If you do a little bit bigger, more, then will it impact the gross profit margin? So I saw this quarter, the gross profit margin relative to last year same time was down like 5 percentage points. Is that because of the learning center expansion or is it because of East Buy?

是的。那麼一個後續問題。所以在雙倍縮減之前，所以當你們進行學習中心擴展時，所以有一條棘手的路線。那你的擴展量是多少呢？如果做大一點、多一點，會影響毛利率嗎？所以我看到這個季度，毛利率相對於去年同期下降了大約5個百分點。是因為學習中心擴建還是因為東買？

Yes. I think the learning center expansion, we raised again the learning center expansion by 30%. I think it's the result that we analyze the whole picture of this business for the last 2 to 3 quarters. And as I said, on demand side, it is very strong, especially for the nonacademic courses for the cash.

是的。我認為學習中心的擴張，我們再次將學習中心的擴張提高了30%。我認為這是我們對過去兩到三個季度該業務的整體情況進行分析的結果。正如我所說，需求方面非常強勁，尤其是對於現金的非學術課程。

And on the competition side, the competition environment is different compared to a couple of years ago. And the key is, we only choose the top performance cities, both the top line and bottom line, to allow them to open more learning centers or expand the new classroom area for the existing learning centers. So I think it will not drag the whole margin down. In opposite, it will help the margin expansion going forward.

而在比賽方面，比賽環境與幾年前也有所不同。關鍵是，我們只選擇業績最好的城市，無論是收入或利潤，讓他們開設更多的學習中心或為現有的學習中心擴大新的教室面積。所以我認為這不會拖累整個利潤率下降。相反，這將有助於未來利潤率的擴張。

Our next question comes from the line of Timothy Zhao from Goldman Sachs.

我們的下一個問題來自高盛的趙蒂莫西。

My question is regarding the cash flow statement. So basically, one is on the operating cash flow. I noticed that for this quarter, I think the operating cash flow dropped a little bit on a year-on-year basis. Just wondering if you can share some color on the rationale or the reason behind that. And second, also on the financing cash flow, I do notice that the existing share repurchase program is about to expire. Just wondering regarding your capital allocation and shareholder return? Any thoughts on the shareholder policy going forward in terms of potential dividend or further share repurchase programs?

我的問題是關於現金流量表。基本上，一是經營現金流。我注意到，本季度，我認為經營現金流量比去年同期略有下降。只是想知道您是否可以分享一些關於其基本原理或背後原因的資訊。其次，同樣在融資現金流方面，我確實注意到現有的股票回購計畫即將到期。只是想知道您的資本配置和股東回報？對未來在潛在股利或進一步股票回購計畫方面的股東政策有何想法？

As for the operating cash flow, I suggest the investors to make the analysis of the cash flow by year-on-year, not Q-on-Q, because of the business seasonality, where the student enrollment window changes quarter-by-quarter. So that's why I suggest you all guys to make the analysis year-on-year. So if you saw the deferred revenue balance year-on-year, the increase is still very strong. Yes, that's it. And that's why we give the very strong top line guidance for Q4, yes, even though Q4 is the slow quarter, yes.

至於經營現金流，我建議投資者以同比而不是環比進行分析，因為商業季節性，招生窗口逐季變化。所以我建議大家逐年進行分析。因此，如果你看到遞延收入餘額年比，成長仍然非常強勁。對，就是那樣。這就是為什麼我們為第四季度提供了非常強勁的營收指引，是的，儘管第四季度是成長緩慢的季度，是的。

And as for the share buyback plan, yes, I think we keep to create more value to the shareholders. And I think we will keep buying the shares back. And this round, we announced the share repurchase plan roughly 2 years ago. And we finished almost half, $195 million. And I think we'll keep buying in this quarter. And in this fiscal year end, I think we will discuss with the Board to decide whether or not to extend the share repurchase plan. But historically, we made a couple of times share buybacks and several times the special dividend. So our aim is to create more value to the investors as the capital return, either share buyback or dividend.

至於股票回購計劃，是的，我認為我們將繼續為股東創造更多價值。我認為我們將繼續回購股票。而這一輪，我們大約在兩年前就宣布了股票回購計畫。我們完成了幾乎一半，即 1.95 億美元。我認為我們將在本季繼續購買。在本財年結束時，我認為我們將與董事會討論決定是否延長股票回購計畫。但從歷史上看，我們進行了幾次股票回購和幾次特別股利。所以我們的目標是為投資者創造更多價值作為資本回報，無論是股票回購還是股息。

Our next question comes from the line of Xinyi Wang from CICC.

我們的下一個問題來自中金公司的王欣怡。

So actually, I had a question about the financials. We saw a larger loss from equity method investments this quarter as well as less investment interest this quarter compared to the same period last year. So I'm just wondering which factors led to these changes?

事實上，我有一個關於財務的問題。與去年同期相比，本季權益法投資損失較大，投資興趣減少。所以我只是想知道哪些因素導致了這些改變？

I think, yes, in this quarter, we made the investor company in kind of loss in this quarter. So I think we do have a onetime impact on the very bottom line this quarter. I think that all those 2 companies was negatively impacted by the deduction policy 2.5 years ago. But this is one time. It's just a onetime.

我認為，是的，在本季度，我們使投資者公司在本季出現了某種損失。因此，我認為我們確實對本季的利潤產生了一次性影響。我認為這兩家公司在2.5年前都受到了扣除政策的負面影響。但這是一次。這只是一次。

Just a follow-up question. Also, we saw less investment interest this quarter Q-on-Q. So I'm just wondering the reason.

只是一個後續問題。此外，我們發現本季的投資興趣較上季有所減少。所以我只是想知道原因。

I'm sorry, can you repeat it again, the investment one?

抱歉，您能再說一次嗎，投資方面的？

Yes, as we saw less other income, which I suppose is mainly our investment interest this quarter had decreased.

是的，因為我們看到其他收入減少，我想這主要是我們本季的投資興趣減少了。

Yes. I think the interest rate in China, it has been done in this quarter. So I think it impacts some interest income.

是的。我認為中國的利率，這個季度已經完成了。所以我認為這會影響一些利息收入。

Actually, the interest income -- the absolute dollar number are similar with previous 1 to 2 quarters. Yes, so it's pretty stable.

實際上，利息收入——絕對美元數與前一到兩個季度相似。是的，所以它非常穩定。

Congrats on the results again.

再次恭喜結果。

(Operator Instructions) We do have one more question from D. S. Kim from JPMorgan.

（操作員說明）摩根大通的 D. S. Kim 也向我們提出了一個問題。

Congrats on amazing top line growth again. Actually, I wanted to ask about margins and expansion. I think you already discussed all of that. Just wanted to follow up on one small thing, if that's okay. You mentioned earlier that new center expansions now could be margin accretive, because it's primarily expansion of the existing center. But if we only look at, say, newly opened locations, newly opened centers for nonacademic courses, how long do does it take for those new centers to hit breakeven and then to ramp up to the full level on the center level. I think back in the days, it took about a year to turn breakeven for the new learning center K-12 AST and another couple more quarters to fully ramp up, and I'm wondering how this has changed now versus now that the courses have changed primarily for nonacademic?

恭喜營收再次實現驚人成長。事實上，我想問的是利潤率和擴張的問題。我想你已經討論過所有這些了。只是想跟進一件小事，如果可以的話。您之前提到，新中心的擴建現在可能會增加利潤，因為它主要是現有中心的擴建。但如果我們只專注於新開設的地點、新開設的非學術課程中心，這些新中心需要多長時間才能達到盈虧平衡，然後達到中心水平的全面水平。我回想過去，新學習中心K-12 AST 花了大約一年的時間才實現盈虧平衡，又花了幾個季度才完全啟動，我想知道現在與課程已經完成的情況相比，現在情況發生了怎樣的變化改變主要是為了非學術？

I think now, typically, on average, it will take 6 months to get a breakeven point, but for learning centers, it is even more faster. And so in the second year, typically, the margin of the new learning centers depends on the different areas. But I think the margins that new learning centers get somewhere around 15% to 20%. So it's much better.

我認為現在，通常情況下，平均需要6個月才能達到損益平衡點，但對於學習中心來說，甚至更快。因此，在第二年，新學習中心的利潤通常取決於不同的領域。但我認為新學習中心的利潤率約為 15% 至 20%。所以好多了。

That's why we make the decision to raise the learning center expansion guidance by 30%. And so I think it's a good trade-off. In this quarter and next, in Q3, Q4, even for the whole year in fiscal year '24, we opened more learning centers, 30%, but it will drive the top line growth up in the new fiscal year '25. And I believe that for the whole education business, the whole margin of the education business will be improved in fiscal year '24, because of the better utilization and the higher student retention.

這就是為什麼我們決定將學習中心擴建指導提高 30%。所以我認為這是一個很好的權衡。在本季度和下一個季度，在第三季度、第四季度，甚至在24財年全年，我們開設了更多的學習中心，佔30%，但這將推動新財年'25的收入增長。我相信，對於整個教育業務來說，由於更好的利用率和更高的學生保留率，教育業務的整體利潤率將在'24財年得到改善。

I think it's not just good, it's amazing trade-off to have. But if I may follow up here, like do you think that faster ramp-up or faster breakeven is just a timing thing, earlier recovery or earlier ramp-up in utilization and/or do you think that even after the ramp-up, the ultimate level of center level margin can be actually higher than back in the days, the academic, i.e., like on a central level, do you think that five years down the road, some of the nonacademic centers can make more than 20% margins better than the K-9 academic of the past or just the timing is all there?

我認為這不僅是好的，而且是令人驚奇的權衡。但是，如果我可以在這裡跟進，您是否認為更快的增長或更快的盈虧平衡只是一個時間問題，更早的恢復或​​更早的利用率提升和/或您是否認為即使在增長之後，中心層級利潤率的最終水準實際上可能比以前更高，學術方面，即，就像在中央層級一樣，您認為五年後，一些非學術中心的利潤率可以提高20％ 以上嗎？的K-9 學術相比還是只是時機問題？

Both. I said that it will take the shorter time to get to breakeven point. This is number one. And number two is, theoretically, I think the ultimate for the margin of the new learning centers, I think will be a little bit higher than a couple of years ago. So it's a good trade-off for us to open more learning centers for non-academic courses, revenue from the overseas related business.

兩個都。我說達到損益平衡點需要的時間會更短。這是第一名。第二，從理論上講，我認為新學習中心的利潤率最終會比幾年前高一點。因此，開設更多的非學術課程學習中心和海外相關業務的收入對我們來說是一個很好的權衡。

It's an amazing trend and congrats again.

這是一個驚人的趨勢，再次祝賀。

We have now approached the end of the conference call. I'll now turn the call over to New Oriental's Executive President and CFO, Stephen Yang, for his closing remarks.

我們現在電話會議即將結束。現在我將把電話轉給新東方執行總裁兼財務長楊志強，他將作總結發言。

Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you.

再次感謝您今天加入我們。如果您有任何其他問題，請隨時與我或我們的任何投資者關係代表聯繫。謝謝。

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。