New Oriental Education & Technology Group Inc (EDU) 2022 Q3 法說會逐字稿

Good evening and thank you for standing by for New Oriental's FY 2022 Third Quarter Results Earnings Conference Call. (Operator Instructions) Today's conference is being recorded. (Operator Instructions)

晚上好，感謝您參加新東方 2022 財年第三季度業績電話會議。 （操作員說明）今天的會議正在錄製中。 （操作員說明）

I'd now like to turn the meeting over to your host for today's conference, Ms. Sisi Zhao.

我現在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 2022 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, you will hear from Stephen Yang, Executive President and Chief Financial Officer. After his prepared remarks, Stephen and I will be available to answer your questions.

謝謝你。大家好，歡迎來到新東方2022財年第三季度財報電話會議。我們在此期間的財務業績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閱。今天，您將聽到執行總裁兼首席財務官 Stephen Yang 的講話。在他準備好的發言之後，斯蒂芬和我將可以回答你的問題。

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the US 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.

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作出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，我們的結果可能與今天表達的觀點存在重大差異。我們向美國證券交易委員會提交的公開文件中概述了一些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陳述的義務。

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.

提醒一下，本次會議正在錄製中。此外，本次電話會議的網絡直播將在新東方的投資者關係網站investor.neworiental.org 上提供。

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

我現在把電話轉給楊先生。斯蒂芬，請繼續。

Thank you, Sisi. Hello, everyone and thank you for joining us on the call. Before we begin, I would like to convey our sympathy to all the people who have been impacted by the pandemic and thank all the health care heroes and local authorities for their hard work and commitment during this difficult time. It's been a while since our last earnings conference call and we would like to take the opportunity to extend our gratitude to those who have been supporting and believing in New Oriental. While our business in the previous quarters was perhaps characterized by the significant cost incurred from cancellation of class, close of the schools and learning centers and employee layoffs as a result of government's policy introduced last year. This quarter was about turning over a new leaf with new and decisive endeavors in innovative business opportunities as the company embarks on a fresh journey that's strived to encourage along development of students.

謝謝你，茜茜。大家好，感謝您加入我們的電話會議。在開始之前，我想向所有受到大流行影響的人們表示同情，並感謝所有衛生保健英雄和地方當局在這個困難時期的辛勤工作和承諾。距離我們上次召開財報電話會議已經有一段時間了，我們想藉此機會向一直支持和相信新東方的人們表示感謝。雖然我們在前幾個季度的業務的特點可能是由於去年政府出台的政策而取消課程、關閉學校和學習中心以及裁員導致的巨額成本。本季度將翻開新的一頁，在創新商業機會方面做出新的決定性努力，因為公司踏上了努力鼓勵學生髮展的新旅程。

Despite the challenges the company is facing during this restructuring phase, we are pleased to see a promising trend in our key remaining businesses and positive momentum emerging across many of our new initiatives, as we announced the latest set of financial results.

儘管公司在此重組階段面臨挑戰，但我們很高興看到我們的主要剩餘業務呈現有希望的趨勢，並且隨著我們公佈了最新的財務業績，我們的許多新舉措都出現了積極的勢頭。

Our key remaining business have shown remarkable resilience, as oversea test prep business and overseas study consulting business recorded a year-over-year revenue growth of about 8% and 26% respectively for the first nine months of the current fiscal year. In same period, our adult and university students business has performed exceptionally and recorded a rate growth of approximately 59% year-over-year.

我們的主要剩餘業務顯示出顯著的彈性，因為海外考試準備業務和海外留學諮詢業務在本財年前九個月分別錄得約 8% 和 26% 的同比收入增長。同期，我們的成人和大學生業務表現出色，同比增長約 59%。

Simultaneously, our management team's entrepreneurial spirit has come to the forefront as such time of change. And we have been exploring new business opportunities, including non-academic tutoring, intelligent learning system device, study tour and research camp, educational material and digitalized smart study solutions, as well as exam prep courses designed for the students with junior college diplomas to obtain bachelor's degree.

同時，我們管理團隊的創業精神也隨著時代的變化而走在了前列。我們一直在探索新的商機，包括非學歷輔導、智能學習系統設備、遊學研究營、教材和數字化智能學習解決方案，以及專為具有大專文憑的學生設計的備考課程。學士學位。

Now I would like to spend some time to talk about this quarter performance across our remaining business lines and introducing our new initiatives in detail.

現在我想花點時間談談我們剩餘業務線的本季度業績，並詳細介紹我們的新舉措。

Our key remaining business got a promising trend, breaking it down.

我們剩下的關鍵業務有一個有希望的趨勢，將其分解。

The overseas test drive business recorded a revenue increase of about 8% in dollar terms for the first nine months of the fiscal year. The overseas study consulting business recorded revenue increase about 26% in dollar terms year-over-year for the first nine months of this year. Domestic test prep business targeting adults and the university students recorded rapid growth of approximately 59% year-over-year for the first nine months of this year.

本財年前九個月，海外試駕業務以美元計算的收入增長約 8%。今年前九個月，海外留學諮詢業務的收入按美元計算同比增長約 26%。今年前九個月，針對成人和大學生的國內備考業務錄得約 59% 的同比快速增長。

As for our new business initiatives, we have launched five new initiatives in the past months which mostly revolve around facilitating students all around development. I'm glad to share with you that these new initiatives have shown positive momentum.

至於我們的新業務舉措，我們在過去幾個月推出了五項新舉措，主要圍繞促進學生全面發展。我很高興與大家分享這些新舉措已顯示出積極的勢頭。

Firstly, the non-academic tutoring business which we have rolled out in over 60 existing cities focused on cultivating students' innovative ability and comprehensive quality. We're happy to see increased market penetration in those market we have tapped into. The top 10 cities in China have contributed more than 60% of the revenue of this business.

一是在現有60多個城市開展的非學歷輔導業務，重點培養學生的創新能力和綜合素質。我們很高興看到我們所涉足的這些市場的市場滲透率有所提高。中國前 10 大城市貢獻了該業務收入的 60% 以上。

Secondly, the intelligence learning system and device business is a service designed to provide a tailored digital learning experience for students, utilized our past teaching experience, data and technology to provide personalized and targeted learning and exercise content, together with our teachers monitoring and assessing the learning curve for our students at the back-end system. The new educational service not only greatly improves students' learning efficiency, but also cultivate students' proactive learning habits. We have tested this adoption in over 50 existing cities and are delighted to see improved customer retention and scalability of this new initiative. The revenue contribution of these initiatives from the top 10 cities in China is over 65%.

其次，智能學習系統和設備業務是一項旨在為學生提供量身定制的數字學習體驗的服務，利用我們過去的教學經驗、數據和技術，提供個性化和有針對性的學習和鍛煉內容，並與我們的教師一起監控和評估我們的學生在後端系統的學習曲線。新的教育服務不僅大大提高了學生的學習效率，還培養了學生主動學習的習慣。我們已經在 50 多個現有城市測試了這種採用情況，很高興看到這項新計劃的客戶保留率和可擴展性得到了提高。這些舉措對中國前 10 大城市的收入貢獻超過 65%。

Meanwhile, the study tour and research camp business is an initiative that aims at offering students the opportunity to fully leverage their free time holidays to broaden the scope of knowledge and cultivate subject interest. We have conducted study tours and research camp in over 50 cities across the country. The revenue contribution of these initiatives from the top 10 cities in China is over 55%.

同時，遊學和研究營業務旨在為學生提供充分利用假期的機會，拓寬知識範圍，培養學科興趣。我們在全國50多個城市進行了遊學和研究營。這些舉措對中國前 10 大城市的收入貢獻超過 55%。

We're also very excited about the prospects of the educational material and digitalized smart study solutions, a self-learning system leveraging advanced technology that enables students to have complete control over the pace and flexibility of learning in an age where remote learning becomes increasingly mainstream.

我們也對教育材料和數字化智能學習解決方案的前景感到非常興奮，這是一種利用先進技術的自學系統，使學生能夠在遠程學習日益成為主流的時代完全控制學習的速度和靈活性.

In addition, New Oriental smart education business comprised smart teaching, smart hardware, science and technology innovation, education and other service, providing high-quality educational resources and comprehensive service for local governments, educational authorities primary and secondary schools and kindergartens. The products and services relate to scientific alignment, aerospace feature and artificial intelligence, smart education business have presence in over 2,000 kindergartens and over 500 primary secondary schools across the country.

此外，新東方智慧教育業務包括智慧教學、智能硬件、科技創新、教育等服務，為地方政府、教育主管部門中小學和幼兒園提供優質教育資源和綜合服務。產品和服務涉及科學對齊、航天特色和人工智能，智慧教育業務遍及全國2000多所幼兒園和500多所中小學。

Last but not least, one other new initiative I would like to share is exam prep course designed for students with junior college diplomas to obtain bachelor's degree. It has become a very common goal among many associated degree holders in the country to progress further in their education ladder by applying to university and we saw this gap in the market is providing them prime service to these diplomas and college students, who would require support in taking that leap forward to the university level. We're piloting such courses in some higher-tier cities now and plan to roll it out to more cities in the next fiscal year.

最後但並非最不重要的一點是，我想分享的另一項新舉措是為擁有大專文憑的學生設計的考試準備課程，以獲得學士學位。通過申請大學進一步提升他們的教育階梯已經成為該國許多相關學位持有者的一個非常共同的目標，我們看到市場上的這種差距正在為這些文憑和大學生提供優質服務，他們需要支持在向大學水平邁進的過程中。我們現在正在一些較高線城市試點此類課程，併計劃在下一財年將其推廣到更多城市。

During the last two fiscal quarters, we have been fully committed to comply in the government policy. And as a result, the total number of schools and learning centers was reduced to 847 by the end of this fiscal quarter. The significant change in our structure has underscored the importance of our industry-leading OMO system, which have been one of the consistent during the company's restructuring phase as we remained committed to investing in the R&D of the technology.

在過去兩個財政季度中，我們一直致力於遵守政府政策。結果，到本財政季度末，學校和學習中心的總數減少到 847 所。我們結構的重大變化突顯了我們行業領先的 OMO 系統的重要性，這是公司重組階段的一貫做法，因為我們仍然致力於投資於該技術的研發。

The OMO has been instrumental during the restructuring process, as well as the COVID-19 outbreaks in certain part of China, where strong flexibility is required in migrating students between online and offline classes to minimize learning disruption. We continued our efforts in developing and revamping our OMO teaching platform and kept leveraging our education infrastructure and technology strength across our remaining key business and new initiatives to prove more advanced and diversified education service to our customers for all ages.

OMO 在重組過程中發揮了重要作用，以及在中國某些地區爆發的 COVID-19 疫情，在這些地區需要強大的靈活性來在線和離線課堂之間遷移學生，以盡量減少學習中斷。我們繼續努力開發和改造我們的 OMO 教學平台，並在我們剩餘的關鍵業務和新舉措中繼續利用我們的教育基礎設施和技術實力，為我們的客戶提供更先進和多樣化的教育服務。

We invested US$27 million in the quarter and US$129 million in the first three quarters of this fiscal year to improve and maintain our OMO teaching platform, which ensure that our high-quality service to students during the pandemic is uncompromised.

我們在本季度投入了 2700 萬美元，在本財年前三季度投入了 1.29 億美元，用於改進和維護我們的 OMO 教學平台，確保我們在疫情期間為學生提供的高質量服務不受影響。

Regarding the performance of our pure online platform, Koolearn, in light of the changing landscape of the education industry in China, Koolearn has been actively seeking new market opportunities by leveraging existing infrastructure and technology shifting strategic focus and adjusting existing business lines and service offerings. On one hand, Koolearn continue to expand the developments of existing college and institution business segment, as well as online education products and service offering. On the other hand, it's implementing structural changes to meet the needs of the changing regulatory and educational environment, by actively exploring new initiatives to broaden customer base and offerings. Some of the new initiatives that Koolearn have been exploring, including livestream marketing of the traditional Chinese culture and high-quality agriculture and other products from different players of our origin in China, seeking institutional cooperation and developing new intelligent learning innovations.

關於我們純在線平台酷學的表現，鑑於中國教育行業不斷變化的格局，酷學一直在積極尋找新的市場機會，利用現有的基礎設施和技術轉移戰略重點，調整現有的業務線和服務產品。一方面，Koolearn 繼續拓展現有高校和機構業務領域的發展，以及在線教育產品和服務的提供。另一方面，它通過積極探索擴大客戶群和產品的新舉措，實施結構變革，以滿足不斷變化的監管和教育環境的需求。 Koolearn一直在探索的一些新舉措，包括中國傳統文化和優質農業等來自中國不同參與者的產品的直播營銷，尋求機構合作和開發新的智能學習創新。

After the introduction of the tightened government policy on after last year, which has no doubt post a direct impact to our business. We have received many inquiries and concerns from investors over the company's financial position. As a company with long-standing heritage, we have always made sure that we are prepared for and capable in weathering changes in the market and that is reflected in our ability to maintain a strong cash position throughout the whole process. By the end of the quarter, our cash and cash equivalent term deposit and short-term investments totaled approximately US$4.4 billion.

繼去年政府出台收緊政策後，這無疑對我們的業務產生了直接影響。我們收到了許多投資者對公司財務狀況的詢問和擔憂。作為一家擁有悠久傳統的公司，我們始終確保我們為市場變化做好準備並有能力應對，這反映在我們在整個過程中保持強勁現金狀況的能力上。截至本季度末，我們的現金及現金等價物定期存款和短期投資總額約為 44 億美元。

In the second and third quarter of this fiscal year, the company incurred considerable cost from the termination of its leasing agreements in relation to the closure of the learning centers and the employee layoffs. We believe that this cost generated during restructuring phase are temporary as they are non-recurring losses.

在本財年的第二和第三季度，該公司因終止與學習中心關閉和員工裁員有關的租賃協議而產生了可觀的成本。我們認為，重組階段產生的成本是暫時的，因為它們是非經常性損失。

With the process of school closure now largely completed, it signals that the company has now entered stage of starting fresh, exploring new opportunities with greater flexibility and strong cash flows. We're confident that in the sustainable profitability of the all the remaining key business, as well as the growth and profit potential of our new initiatives. The company's management team will continue to work together to seek profitable growth. We believe our continued commitment to high-quality service and operational efficiency will generate more values to our customers, society and shareholders over the long-term.

隨著學校停課過程的基本完成，這標誌著公司現在進入了重新開始的階段，以更大的靈活性和強勁的現金流探索新的機會。我們對所有剩餘關鍵業務的可持續盈利能力以及我們新舉措的增長和盈利潛力充滿信心。公司管理團隊將繼續共同努力，謀求盈利增長。我們相信，我們對高質量服務和運營效率的持續承諾將為我們的客戶、社會和股東創造更多的長期價值。

Now I will turn the call over to Sisi to go through our key financials. Sisi?

現在我將把電話轉給 Sisi 來檢查我們的關鍵財務狀況。思思？

Okay. Now I'd like to walk you through the other key financial details for the quarter. Operating cost and expenses for the quarter were US$755.3 million, representing a 30.6% decrease year-over-year. Non-GAAP operating cost and expenses for the quarter, which exclude share-based compensation were US$725.3 million, representing a 32.5% decrease year-over-year. The decrease was primarily due to the reduction of facilities and number of staff as a result of the restructuring in the last two quarters.

好的。現在，我想向您介紹本季度的其他關鍵財務細節。本季度的運營成本和費用為 7.553 億美元，同比下降 30.6%。本季度非美國通用會計準則運營成本和費用（不包括股權激勵）為 7.253 億美元，同比下降 32.5%。減少主要是由於過去兩個季度的重組導致設施和員工人數減少。

Cost of revenue decreased by 30.9% year-over-year to US$372.7 million. Selling and marketing expenses decreased by 40% year-over-year to US$93.7 million. G&A expenses for the quarter decreased by 26.6% year-over-year to US$288.8 million. Non-GAAP G&A expenses which exclude share-based compensation were US$259.6 million, representing 32.3% decrease year-over-year. Total share-based compensation expenses which were allocated to related operating cost and expenses increased by 107.8% to US$30 million in the quarter. The increase is due to the grants of restricted share units to public company to employees and directors in May 2021 with graded vesting over three years.

收入成本同比下降 30.9% 至 3.727 億美元。銷售和營銷費用同比下降 40% 至 9,370 萬美元。本季度的 G&A 費用同比下降 26.6% 至 2.888 億美元。不包括基於股票的薪酬的非公認會計原則 G&A 費用為 2.596 億美元，同比下降 32.3%。本季度分配至相關運營成本和費用的股權激勵費用總額增長 107.8% 至 3,000 萬美元。增加是由於在 2021 年 5 月向上市公司的員工和董事授予限制性股票單位，並在三年內分級歸屬。

Operating loss was US$141.2 million compared to an income of US$101.5 million in the same period of the prior fiscal year.

經營虧損為 1.412 億美元，而上一財年同期的收入為 1.015 億美元。

Non-GAAP loss from operations for the quarter was US$111.2 million compared to an income of US$115.9 million in the same period of last fiscal year. Net loss attributable to New Oriental for the quarter was US$122.4 million compared to an income of US$151.3 million in the same period last year. Basic and diluted net loss per ADS attributable to New Oriental were US$0.72 and US$0.72 respectively.

本季度非公認會計原則的運營虧損為 1.112 億美元，而上一財年同期的收入為 1.159 億美元。本季度歸屬於新東方的淨虧損為 1.224 億美元，而去年同期的收入為 1.513 億美元。歸屬於新東方的每 ADS 的基本和攤薄淨虧損分別為 0.72 美元和 0.72 美元。

Non-GAAP net loss attributable to New Oriental for the quarter was US$95.5 million compared to an income of US$163.2 million in the same period last year. Non-GAAP basic and diluted net loss per ADS attributable to New Oriental were US$0.56 and US$0.56 respectively.

本季度歸屬於新東方的非美國通用會計準則淨虧損為 9,550 萬美元，而去年同期的收入為 1.632 億美元。歸屬於新東方的非美國通用會計準則基本和攤薄後每股美國存託憑證淨虧損分別為 0.56 美元和 0.56 美元。

Net operating cash outflow for the quarter was approximately US$235 million and the CapEx for the quarter were US$37.4 million.

本季度淨經營現金流出約為 2.35 億美元，本季度資本支出為 3740 萬美元。

Turning to the balance sheet, as of February 28, 2022, New Oriental had cash and cash equivalents of US$1,466.8 million. In addition, the company had US$915.1 million in term deposits and US$2,028.1 million in short-term investment.

轉向資產負債表，截至2022年2月28日，新東方擁有現金及現金等價物14.668億美元。此外，公司還有9.151億美元的定期存款和20.281億美元的短期投資。

New Oriental's deferred revenue balance which is the cash collected from registered students for the courses and recognized proportionally as revenue as the instructions are delivered at the end of the quarter was US$971.3 million, a decrease of 47.9% as compared to the end of the third quarter of fiscal year 2021. The decrease is primarily due to the cessation of K-9 academic after-school tutoring services in order to comply with the government's policy in China.

新東方的遞延收入餘額為9.713億美元，即向註冊學生收取的課程現金，並在本季度末按比例確認為收入，比第三季度末下降47.9% 2021 財年季度。減少的主要原因是為了遵守中國政府的政策，停止了 K-9 學術課外輔導服務。

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

現在我將交給斯蒂芬來介紹我們的展望和指導。

Looking ahead into the next quarter of fiscal year 2022, having adopted measures in response to the latest policies and regulations, we now have a clearer picture about the recovery trend of the company's near-term financial performance and are prepared for a new beginning as we identify new and profitable market opportunities for the long run. As a stage of the closure of the schools and learning centers nearing its end, we're left with a relatively small portion of the lease terminations to be executed in the coming months. The non-recurring one-off costs related to the closure were already accrued in the first half of the current fiscal year. In the meantime, our strong performing key remaining business are all profitable and will continue to serve as a solid foundation for business performance that will provide us with the feel to explore new possibilities in the market. Our strategic focus and investment approach going forward aim at expanding our new initiatives, which will be nurtured into key growth engines for our business.

展望 2022 財年下一季度，我們根據最新政策法規採取措施，對公司近期財務業績的恢復趨勢有了更清晰的認識，並為新的開始做好準備。從長遠來看，識別新的和有利可圖的市場機會。作為學校和學習中心關閉接近尾聲的一個階段，我們剩下的租約終止的相對較小部分將在未來幾個月內執行。與關閉相關的非經常性一次性費用已在本財年上半年累計。與此同時，我們表現強勁的剩餘關鍵業務全部實現盈利，並將繼續為業務表現奠定堅實的基礎，讓我們有在市場上探索新可能性的感覺。我們未來的戰略重點和投資方法旨在擴大我們的新舉措，這些舉措將成為我們業務的關鍵增長引擎。

We're confident about the future success of these initiatives as they echo with the current trends in the market, with the likes of non-academic tutoring and study tour and research camp targeting the facilitation of the overrun development of students, which is to generate -- which is a general goal that the industry is striving to achieve.

我們對這些舉措的未來成功充滿信心，因為它們與當前的市場趨勢相呼應，非學術輔導和遊學和研究營等旨在促進學生的超額發展，即產生——這是行業正在努力實現的總體目標。

Meanwhile, intelligent learning system and device and digitalized smart study solutions are offering students' digital, personalized and remote learning experience, which is a trending theme in the current teach-enabled and post-pandemic education industry. It will take time for this new business to come to full fruition. But as we saw in this quarter, the encouraging growth trajectory that they have already been showing proof that we are heading towards the right direction. And we're confident that the business will be starting to contribute meaningful revenue from the next fiscal year onwards.

同時，智能學習系統和設備以及數字化智能學習解決方案正在為學生提供數字化、個性化和遠程學習體驗，這是當前教化和後疫情教育行業的趨勢主題。這項新業務需要時間才能全面開花。但正如我們在本季度看到的那樣，他們已經顯示出令人鼓舞的增長軌跡，證明我們正朝著正確的方向前進。我們相信，該業務將從下一個財年開始貢獻可觀的收入。

We will like to note that our guidance is taking into consideration of the recent pandemic development in Shanghai and some small other small cities, as the lockdown of these cities since March has inevitably impacts our business operation locally. Student recruitments is where we experienced some disruption as students and customers were unable to access our service centers to sign up for courses. Though the overall impact on the business has been limited, thanks to our OMO system, which enable us to swiftly migrate students from offline to online classes, although within much of the learning disruption.

我們要指出，我們的指導考慮到了上海和其他一些小城市最近的大流行發展，因為這些城市自 3 月以來的封鎖不可避免地影響了我們在當地的業務運營。由於學生和客戶無法訪問我們的服務中心註冊課程，因此我們在學生招聘方面遇到了一些干擾。儘管對業務的整體影響有限，但得益於我們的 OMO 系統，這使我們能夠迅速將學生從線下課程遷移到在線課程，儘管在大部分學習中斷的情況下。

We also don't expect the disruption in Shanghai and some other small cities would have significant effect on our overall revenue growth as we have a wide presence across many cities in China. Although, the pandemic situation in China remains fluid, our operation infrastructure led by the OMO system has shown its strength and flexibility in the past couple of years to weather disruptions, while our staff across the country have got the experience to prepare for and respond to COVID outbreaks. Therefore, we're confident that any future outbreaks in other cities will only have limited impact on our business.

我們也不認為上海和其他一些小城市的中斷會對我們的整體收入增長產生重大影響，因為我們在中國許多城市都有廣泛的業務。儘管中國的大流行形勢仍然不穩定，但我們以 OMO 系統為主導的運營基礎設施在過去幾年中顯示出其抵禦干擾的實力和靈活性，而我們全國各地的員工都有準備和應對的經驗COVID爆發。因此，我們相信，未來在其他城市爆發的任何疫情都只會對我們的業務產生有限的影響。

Experience stands the test of time. One of the strengths about New Oriental is experience and legacy we have built over the years and this has proven to be the differentiation between us and other players during the challenging period. Leveraging our experience and brand recognition, as well as the very healthy cash balance that has been unharmed during a very difficult time. We have great confidence that the overall business will turn profitable again in the near future.

經驗經得起時間的考驗。新東方的優勢之一是我們多年來積累的經驗和傳統，這已被證明是我們在充滿挑戰的時期與其他參與者之間的差異化。利用我們的經驗和品牌知名度，以及在非常困難的時期沒有受到損害的非常健康的現金餘額。我們對整體業務將在不久的將來再次扭虧為盈充滿信心。

To conclude, we are now taking all kinds of operational actions to promote our key remaining business and investing in the new initiatives, which will be the new growth engine that accelerate our recovery. At the same time, we will continue to seek guidance from and cooperate with the government authorities in various province in China in connection with its efforts to comply with the relevant policies, guidelines and any related implementation rules, regulations measures and to further adjust our business operations as required.

總而言之，我們現在正在採取各種運營行動來促進我們的關鍵剩餘業務並投資於新舉措，這將成為加速我們復甦的新增長引擎。同時，我們將繼續尋求中國各省政府部門的指導和合作，以努力遵守相關政策、指引和任何相關的實施規則、法規措施，並進一步調整我們的業務根據需要進行操作。

With our investments in different strategies, we're optimistic on brighter prospects of our business and believe new company structure falling in the restructuring phase will bring us fruitful returns in the long run. I must mention that these expectations reflect our considerations of the latest regulatory measures in the pandemic situation, as well as our current and preliminary view, which is subject to change.

隨著我們對不同戰略的投資，我們對業務的更光明前景持樂觀態度，並相信在重組階段落下的新公司結構將從長遠來看為我們帶來豐碩的回報。不得不提的是，這些預期反映了我們對大流行形勢下最新監管措施的考慮，以及我們目前和初步的看法，這些看法可能會發生變化。

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

在這一點上，我想請大家提問。接線員，請打開這些電話。

Thank you. (Operator Instructions) Our first question comes from Felix Liu from UBS. Please ask your question.

謝謝你。 （操作員說明）我們的第一個問題來自瑞銀的 Felix Liu。請提出你的問題。

Thank you management for taking my question and I'm very pleased to see the resilience you have shown and the tough restructuring due to the external environment. My first question is on the restructuring progress. So you mentioned that most of the restructuring are almost finished. So may I know the learning center that you have by the end of the Q3 will be more or less sustainable into the future or do you expect more closure in the upcoming months? And secondly -- my second part of the question is on the accounting of the restructuring cost. Unfortunately -- unfortunately I noticed that you have termed loss-making in this quarter. So may I know how much of the cost this quarter is related to the one-off restructuring and how much will be ongoing? And maybe any color on the unit economics of your new initiatives will be much appreciated? Thank you.

感謝管理層提出我的問題，我很高興看到您表現出的韌性以及由於外部環境而進行的艱難重組。我的第一個問題是關於重組的進展。所以你提到大部分重組都快完成了。那麼我可以知道您在第三季度末擁有的學習中心將或多或少地持續到未來，還是您預計未來幾個月會有更多的關閉？其次，我的問題的第二部分是關於重組成本的會計處理。不幸的是——不幸的是，我注意到您在本季度將虧損稱為虧損。那麼我可以知道本季度有多少成本與一次性重組有關，還有多少成本將持續進行？也許您的新計劃的單位經濟學的任何顏色都會受到讚賞？謝謝你。

Thank you, Felix. Your first question is about learning center. In the last fiscal year end, we had the 1,669 learning centers in total. And in this quarter end, we have 847 learning centers. And we plan to close down some of the learning centers. So we expect the learning center number will be decreased to 650 to 700 in this fiscal year-end. So this is my answer for the learning center number of your question.

謝謝你，菲利克斯。你的第一個問題是關於學習中心的。在上一財年末，我們共有 1,669 個學習中心。在本季度末，我們有 847 個學習中心。我們計劃關閉一些學習中心。因此，我們預計本財年末學習中心的數量將減少至 650 至 700 個。所以這是我對你問題的學習中心號碼的回答。

And yeah and yes, we're in the restructuring phase and I think the one-off cost relate to the learning center close down and the employee layoff were already accrued in the first half of this year. So that means we have already recorded most of the one-time cost into the first half this year, yeah, you saw the loss in this quarter. But I think it's mainly due to the new investments for the new initiatives for the future.

是的，是的，我們正處於重組階段，我認為一次性成本與學習中心的關閉和員工裁員有關，這些成本已經在今年上半年產生。所以這意味著我們已經記錄了今年上半年的大部分一次性成本，是的，你看到了本季度的虧損。但我認為這主要是由於對未來新舉措的新投資。

So you know, but I think it's worthy because we started to fight the new kinds of the business like the non-academic tutoring, like the intelligence learning system devices and study tour camps were some like the exams for the college students to get bachelor's degree. So those new initiatives need our new investments to build up the good future. And so now we are in a new the investment phase, but we do believe those new initiatives will make profitable in the near -- will make profit in the near future.

所以你知道，但我認為這是值得的，因為我們開始打新的業務，比如非學術輔導，比如智能學習系統設備和遊學營，有點像大學生獲得學士學位的考試.因此，這些新舉措需要我們的新投資來建立美好的未來。所以現在我們處於一個新的投資階段，但我們確實相信這些新舉措將在不久的將來盈利 - 將在不久的將來盈利。

So I think we do believe in the near future we can be profitable because first of all, our remaining business, the domestic test prep, the adult English and the [overseas] (corrected by company after the call) test prep and the overseas consultant business, all the business are profitable. And we do believe the new business will be profitable. So I think the margin profile will be optimistic in the coming new fiscal year, Felix.

所以我認為我們確實相信在不久的將來我們可以盈利，因為首先，我們剩餘的業務，國內備考，成人英語和[海外]（由公司在電話後更正）備考和海外顧問生意，所有生意都是盈利的。我們確實相信新業務將是有利可圖的。所以我認為菲利克斯在下一個新財年的利潤率狀況將是樂觀的。

Thank you. (Operator Instructions) Our next question comes from DS Kim from J.P. Morgan. Please ask your question.

謝謝你。 （操作員說明）我們的下一個問題來自摩根大通的 DS Kim。請提出你的問題。

Hi, Stephen. Hi, Sisi. Thanks for resuming the result call and hope you are safe and well in Beijing. I actually have a couple of questions but because of the reminder, I would ask one question here and I will try to ask again later. In terms of the revenues in third quarter, if you look into the details, number one, how much of that third quarter revenue happened in December versus Jan, Feb of this year? And in relation to that, how much of the -- roughly how much was the new initiative those that you mentioned like non-academic intelligent learning systems and whatnot? How big was it the revenue contribution in third quarter?

嗨，斯蒂芬。嗨，思思。感謝您恢復結果電話，希望您在北京平安無事。我實際上有幾個問題，但由於提醒，我會在這裡問一個問題，稍後我會嘗試再問一次。就第三季度的收入而言，如果你仔細研究一下，第一，第三季度的收入有多少發生在 12 月和今年 1 月、2 月？與此相關的是，您提到的新計劃有多少，比如非學術智能學習系統之類的？第三季度的收入貢獻有多大？

Okay. For the revenue contribution in this quarter, I think the December revenue is a little bit higher than the revenue of the January and February because we closed down the K-9 business by the end of the calendar year. So in December, we did have some the K-9 the tutoring courses and we reported revenue. So yeah, and the new business of course, it's quite new. We just launched the business, the non-academic courses a couple of months ago. And now it's a little bit small, but it's grown very fast.

好的。對於本季度的收入貢獻，我認為 12 月的收入比 1 月和 2 月的收入略高，因為我們在日曆年年底關閉了 K-9 業務。所以在 12 月，我們確實有一些 K-9 輔導課程，並且我們報告了收入。所以，是的，當然，新業務是相當新的。幾個月前，我們剛剛推出了業務，非學術課程。現在它有點小，但它增長得非常快。

So the new business, what I mean, including the like the non-academic courses and some like the new service relate to the intelligent learning system I think will contribute more revenue in next year. So I believe the new business will contribute over 20% of the revenue contribution next year. So you saw the growth is extremely high.

所以新業務，我的意思是，包括像非學術課程和一些像新服務這樣的與智能學習系統相關的，我認為明年將貢獻更多的收入。所以我相信新業務將在明年貢獻超過 20% 的收入貢獻。所以你看到增長非常高。

Thank you. Our next question comes from [LC Zhang] from Morgan Stanley. Please ask your question.

謝謝你。我們的下一個問題來自摩根士丹利的 [LC Zhang]。請提出你的問題。

Thank you, management. My question is also related to the new business. So is there any operation data that you could share, for example, like the retention rate for the new non-academic courses? And also, how do you see the competition in this area? Thank you.

謝謝你，管理層。我的問題也與新業務有關。那麼有沒有什麼運營數據可以分享，比如新開的非學術課程的留存率？另外，您如何看待該領域的競爭？謝謝你。

Actually, we started the new business a couple of months ago, but it developed very quickly. And we have seen the student retention rate is getting higher and higher. So in some new main cities, we are seeing the student retention rate of the non-academic courses is close to the retention rate that we had of the academic courses last year. So it's a good result, good news for us. And yeah, I know the revenue contribution is small, but it grows very fast.

實際上，我們在幾個月前開始了新業務，但它發展得很快。我們已經看到學生的保留率越來越高。所以在一些新的主要城市，我們看到非學術課程的學生保留率接近我們去年學術課程的保留率。所以這是一個好結果，對我們來說是個好消息。是的，我知道收入貢獻很小，但增長非常快。

And the second on the competition, I think the competition is still there, but upon the whole market environment changes, so I do believe the competition will become less because we have seen a lot of our competitors disappear from the market. So the competition is not a problem for us.

第二個關於競爭，我認為競爭仍然存在，但是隨著整個市場環境的變化，我相信競爭會減少，因為我們已經看到很多競爭對手從市場上消失了。所以競爭對我們來說不是問題。

Thank you.

謝謝你。

Thank you. The next question comes from Candis Chan from Daiwa. Please ask your question.

謝謝你。下一個問題來自大和的 Candis Chan。請提出你的問題。

Hello, Sisi and Stephen, thank you for taking my question and I would like to ask about the recovery of the overseas and domestic test prep businesses so far because of the easing of cross border control in other countries. And at the same time, I also noticed that the domestic test prep business has revenue growth looks very strong. So overall for next fiscal year, how does this est prep business revenue growth will look like? And what kind of development for the domestic test prep has been done over the past year to achieve that strong growth? Thank you.

Sisi和Stephen您好，感謝您接受我的提問，我想問一下由於其他國家的跨境管制放鬆，目前海外和國內備考業務的恢復情況。而與此同時，我也注意到國內備考業務的收入增長看起來非常強勁。因此，總體而言，對於下一財年，這種 est prep 業務收入增長情況如何？而在過去的一年裡，國內備考做了哪些發展，以實現如此強勁的增長？謝謝你。

Yeah, great question. Yeah, despite we are in the restructuring phase, but we're happy to see the domestic test prep business and oversea related business with very fast in the last couple of months. And oversea test prep and consulting business, the revenue increase is about 15% year-over-year, overseas test prep 8% and consulting business 26% in the first nine months of this year. And yeah, we know the pandemic still in some other countries even in China. But actually, what we're seeing some students still enroll our the overseas test prep classes because for most of our overseas test prep the students are the high school students and college student.

是的，很好的問題。是的，儘管我們正處於重組階段，但我們很高興看到國內備考業務和海外相關業務在過去幾個月裡發展得非常快。而海外備考和諮詢業務，今年前九個月收入同比增長約15%，海外備考增長8%，諮詢業務增長26%。是的，我們知道這種流行病仍在其他一些國家，甚至在中國。但實際上，我們看到一些學生仍然報名參加我們的海外考試預備班，因為對於我們的大多數海外考試預備班，學生是高中生和大學生。

And they made the decision to study abroad someday, so they don't have to change their decision. So and I do believe the human beings can beat the coronavirus. So I do believe our overseas test prep business and consulting business will be broad in a meaningful rate in the coming new year in fiscal year 2023. And the domestic test prep, there's a news recently in China, more and more the university and college students choose to take the Chinese GRE, the like Chinese exam. So I think the market is booming.

他們決定有一天出國留學，所以他們不必改變他們的決定。因此，我確實相信人類可以戰勝冠狀病毒。所以我相信我們的海外備考業務和諮詢業務將在即將到來的2023財年以有意義的速度擴大。而國內備考，最近在中國有一個消息，越來越多的大學生和大學生選擇參加中文GRE，喜歡中文考試。所以我認為市場正在蓬勃發展。

And I think we are one of the dominator of this part of the business. And since two years ago, internally, we arranged internal solution of the Chinese GRE department, the English and the master test prep. And we moved some talent people from the K-12 business to the domestic test prep. So I think we prepared for this new market for like just for the last two to three years. So I do believe the mass test prep will grow very fast and will generate more and more the profit for New Oriental. Thank you.

我認為我們是這部分業務的主導者之一。並且從兩年前開始，在內部，我們安排了中文GRE部門、英語和碩士考試準備的內部解決方案。我們將一些人才從 K-12 業務轉移到國內備考。所以我認為我們在過去兩到三年裡就為這個新市場做好了準備。所以我相信大規模的考試準備會增長得非常快，並且會為新東方帶來越來越多的利潤。謝謝你。

Thank you. Our next question comes from Lucy Yu from Bank of America. Please ask your question.

謝謝你。我們的下一個問題來自美國銀行的 Lucy Yu。請提出你的問題。

Thank you, Stephen for taking my question. My question is more on the margin side. You mentioned the remaining business is profitable. So can you share us the profitability of those remaining business? And for the new business, you also mentioned it will turn profitable next fiscal year. So what's our expectation of the margin for those new business in the upcoming year? Thank you.

謝謝你，斯蒂芬接受我的問題。我的問題更多的是邊緣方面。你提到剩餘的業務是盈利的。那麼，您能否與我們分享剩餘業務的盈利能力？對於新業務，您還提到它將在下個財政年度扭虧為盈。那麼我們對這些新業務在未來一年的利潤率有何預期？謝謝你。

Okay. The remaining business, the overseas test prep and consulting business, typically the margin is the 15% to 20%. And domestic test prep the margin is about to -- is around 10%. And the new business we suffered a little bit loss, but I do believe [in the near future] (corrected by company after the call) will be profitable for the new business. And I do believe theoretically the margin of new business will together be around 20% somewhere. And so it's a good business.

好的。剩下的業務，海外備考和諮詢業務，通常利潤率在 15% 到 20% 之間。國內考試準備的利潤率大約是 10%。新業務我們遭受了一些損失，但我相信[在不久的將來]（在電話會議後由公司更正）將為新業務帶來利潤。而且我確實相信理論上新業務的利潤率將在某個地方達到 20% 左右。所以這是一門好生意。

Thank you. Our next question comes from Li Ping from CICC. Please ask your question.

謝謝你。我們的下一個問題來自中金公司的李萍。請提出你的問題。

Thanks, Stephen, Sisi for taking my question. So glad to see that you have made progress in some new initiative. So may I know which one will most likely be the future key revenue contributor? And what's EDU's competitive advantage in that direction? Thank you.

謝謝斯蒂芬和茜茜接受我的提問。很高興看到您在一些新舉措中取得了進展。那麼我可以知道哪一個最有可能成為未來的主要收入貢獻者嗎？ EDU 在這個方向上的競爭優勢是什麼？謝謝你。

Yeah, we're exploring new business opportunities including like the five the new business. So firstly, non-academic tutoring focus on helping the students to improve their innovative ability and comprehensive quality and such as programming, present skill, our exposure to grow very fast because since the double deduction new policy last year, we're seeing that the students have more time during the weekend, during the holidays. So -- and the parents love to see their kids to improve their OP comprehensive ability and so this is number one.

是的，我們正在探索新的商機，包括五項新業務。所以首先，非學業輔導側重於幫助學生提高創新能力和綜合素質，比如編程、現技能，我們的曝光率增長非常快，因為自從去年雙扣新政策以來，我們看到學生在周末和假期有更多的時間。所以——父母喜歡看到他們的孩子提高他們的OP綜合能力，所以這是第一位的。

Number two, we launched the intelligent learning system and device, utilize our past teaching experience and data technologies to help the students to do this like self study by them self. I think the system help them a lot and the students and parents love the new product. And so those two are the products the non-academic courses and the intelligent learning system devices will contribute more revenue going forward.

第二，我們推出了智能學習系統和設備，利用我們過去的教學經驗和數據技術，幫助學生像自學一樣自學。我認為這個系統對他們幫助很大，學生和家長都喜歡這個新產品。所以這兩個是非學術課程和智能學習系統設備的產品，將在未來貢獻更多的收入。

Right. Thank you. We're now approaching the end of the conference call. I will now turn the call back to New Oriental's Executive President and CFO, Stephen Yang for his closing remarks.

正確的。謝謝你。我們現在接近電話會議的尾聲。我現在將電話轉回新東方執行總裁兼首席財務官斯蒂芬·楊的閉幕詞。

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。謝謝你。

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.

謝謝你。這確實結束了我們今天的會議。感謝您的參與。你們都可以斷開連接。