PR Newswire
BEIJING, April 23, 2019
BEIJING, April 23, 2019 /PRNewswire/ -- New Oriental Education & Technology Group Inc. (the "Company" or "New Oriental") (NYSE: EDU), the largest provider of private educational services in China, today announced its unaudited financial results for the third fiscal quarter ended February 28, 2019, which is the third quarter of New Oriental's fiscal year 2019.
Financial Highlights for the Third Fiscal Quarter Ended February 28, 2019
Key Financial Results
(in thousands US$, except per ADS(1) data) | 3Q FY2019 | 3Q FY2018 | % of change |
Net revenues | 796,722 | 618,081 | 28.9% |
Operating income | 95,780 | 58,367 | 64.1% |
Non-GAAP operating income (2)(3) | 113,769 | 81,156 | 40.2% |
Net income attributable to New Oriental | 97,411 | 68,376 | 42.5% |
Non-GAAP net income attributable to New Oriental (2)(3) | 108,873 | 91,165 | 19.4% |
Net income per ADS attributable to New Oriental - basic | 0.62 | 0.43 | 42.6% |
Net income per ADS attributable to New Oriental - diluted | 0.61 | 0.43 | 42.3% |
Non-GAAP net income per ADS attributable to New Oriental - | 0.69 | 0.58 | 19.6% |
Non-GAAP net income per ADS attributable to New Oriental - | 0.69 | 0.57 | 19.3% |
(in thousands US$, except per ADS(1) data) | 9M FY2019 | 9M FY2018 | % of change |
Net revenues | 2,253,640 | 1,746,429 | 29.0% |
Operating income | 228,562 | 206,374 | 10.8% |
Non-GAAP operating income(2)(3) | 274,158 | 241,602 | 13.5% |
Net income attributable to New Oriental | 194,817 | 231,048 | -15.7% |
Non-GAAP net income attributable to New Oriental(2)(3) | 316,005 | 266,276 | 18.7% |
Net income per ADS attributable to New Oriental - basic | 1.23 | 1.46 | -15.9% |
Net income per ADS attributable to New Oriental - diluted | 1.23 | 1.46 | -16.0% |
Non-GAAP net income per ADS attributable to New Oriental - | 1.99 | 1.68 | 18.4% |
Non-GAAP net income per ADS attributable to New Oriental - | 1.99 | 1.68 | 18.2% |
(1) Each ADS represents one common share.
(2) GAAP represents Generally Accepted Accounting Principles in the United States of America.
(3) New Oriental provides net income attributable to New Oriental, operating income and net income per ADS attributable to New Oriental on a non-GAAP basis that excludes share-based compensation expenses and gain / (loss) from fair value change of long-term investments to provide supplemental information regarding its operating performance. For more information on these non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" and the tables captioned "Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures" set forth at the end of this release.
(4) The Non-GAAP net income per ADS is computed using Non-GAAP net income and the same number of shares and ADSs used in GAAP basic and diluted EPS calculation.
Operating Highlights for the Third Fiscal Quarter Ended February 28, 2019
Michael Minhong Yu, New Oriental's Executive Chairman, commented, "We are pleased to see continued acceleration of growth momentum in the third quarter of fiscal year 2019 and to achieve a top line growth of 28.9%, or 36.1% if computed in Renminbi. Our key growth driver, the K-12 after-school tutoring business, achieved a year-over-year revenue growth of approximately 38%, or 46% if computed in Renminbi. Furthermore, our U-Can middle and high school all-subjects after-school tutoring business grew by approximately 37%, or 44% if computed in Renminbi, and our POP Kids program achieved a growth of approximately 41%, or 49% if computed in Renminbi. We are confident and well-placed to continue to expand our market share in the long term through our ceaseless efforts in improving teaching quality and enhancing learning experience for our students."
Chenggang Zhou, New Oriental's Chief Executive Officer, added, "As we continued to execute our well-proven 'Optimize the Market strategy', we witnessed steady progress in our capacity expansion plan in this quarter. We added a net of 36 learning centers in existing cities, and opened a new offline training school in the city of Xining, as well as two dual-teacher model schools in the cities of Mianyang and Xinxiang. Altogether, this increased the total square meters of classroom area by approximately 27% year-over-year and 6% quarter-over-quarter by the end of this quarter. We consistently focused on maintaining our service quality while we continued to deepen our penetration into existing markets through capacity expansion. It is very encouraging to see that our student retention for the K-12 business continued to improve this quarter, which demonstrates the success of our pilot teacher training program, using standardized content and methodology, initiated in the beginning of this fiscal year. We will continue to enhance and leverage our online and offline integrated standardized teaching system for the K-12 business as well as overseas test preparation business. We also continued to make strategic investments in our dual-teacher model classes and new initiatives for K-12 tutoring in our pure online education platform, Koolearn.com, for which the demand in cities of lower tiers and in remote areas is expected to increase."
Stephen Zhihui Yang, New Oriental's Chief Financial Officer, commented, "We are deeply encouraged not only by our strong top line performance, but also the improvement in our operating margin during the third quarter. Non-GAAP operating income increased by 40.2% year over year to approximately US$113.8 million, and non-GAAP operating margin rose by 120 basis points to 14.3% from 13.1% a year ago. The robust financial performance of this quarter was driven by better utilization of facilities and enhanced cost and expenses efficiency amid our steady expansion. We will continue to revamp all business lines with a standardized, modular and systematic approach, which will enable us to capture new growth opportunities and scale our business at higher efficiency. With these strategies in place, we are poised to continue to deliver sustainable and long-term value for our shareholders."
Recent Updates
New Oriental's subsidiary, Koolearn Technology Holding Limited ("Koolearn"), a leading online extracurricular education service provider in China, has completed its global offering of ordinary shares (the "Global Offering"), comprising an international offering and a Hong Kong public offering. Koolearn commenced trading of its shares on the Main Board of The Stock Exchange of Hong Kong Limited on March 28, 2019 (Hong Kong time) under the stock code "1797".
The net proceeds from the Global Offering were approximately HK$1,777.6 million (US$226.5 million), after deducting underwriting fees and commissions and expenses related to the Global Offering, including the exercise of the over-allotment option. The net proceeds will be used for the following purposes:
Moving forward, Koolearn will disclose its periodical financial results under International Financial Reporting Standards. After the listing, its financial results will continue to be consolidated into New Oriental's financial records.
Financial Results for the Third Fiscal Quarter Ended February 28, 2019
Net Revenues
For the third fiscal quarter of 2019, New Oriental reported net revenues of US$796.7 million, representing a 28.9% increase year-over-year. Net revenues from educational programs and services for the third fiscal quarter were US$727.1 million, representing a 28.7% increase year-over-year. The growth was mainly driven by increases in student enrollments in K-12 after-school tutoring courses.
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