TAL (NYSE: TAL) is gradually emerging from a loss making quagmire, but there is still a long way to go before its big brother, New Oriental (NYSE: EDU).
On April 26th, TAL released its Q4 2024 financial performance. From December 1, 2023 to February 29, 2024, the company recorded a revenue of $430 million, a year-on-year increase of 59.7%. The net profit was 27.508 million US dollars, and the net loss for the same period last year was 39.417 million US dollars, a year-on-year increase of 170%.
Just the day before, New Oriental also submitted its latest report card, with a quarterly revenue of 1.2073 billion US dollars during the same period, a year-on-year increase of 60.1%; The net profit was 87.167 million US dollars, a year-on-year increase of 6.8%.
By comparison, although TAL's revenue scale is only 35% of New Oriental's scale, its growth rate is almost on par with it, and its profit growth rate is more pronounced. Compared to New Oriental's cross-border transformation, TAL Education is relatively more focused on its old field of education.
After divesting from disciplinary training, TAL Education's current business is divided into three major areas: first, learning services, which remains its main source of income, covering quality education, international education, overseas business, etc. TAL Education has established learning centers in the United States, Singapore, and Hong Kong, China, and serves overseas markets through Think Academy.
The second is content solutions, including subject and non subject teaching aids, mobile applications, learning devices, such as learning machines, etc. This is also an exploration by TAL since its transformation into an intelligent learning solution provider.
The third is to provide technical solutions to third-party institutions, which refers to providing technical products and services to educational institutions. The products involve classroom, company development, teaching support, and learning center management. The latest financial report did not disclose any business data.
Xueersi quality education and Xueersi online schools are still the main sources of income for learning services.
Interface education compares Xueersi quality education with Xueersi online schools, both of which offer quality courses, but there are differences in content and form. The former adopts offline teaching, while the latter is online live or recorded.
In terms of content, both offer programming robotics, science, and humanities courses, while offline courses add research and Go, while online courses add chess and museum. Some users have expressed on social media that even for similar courses, there may be differences in the teaching methods and perspectives between the two.
The expansion of Xueersi's offline learning center network and the increase in enrollment rate have driven the growth of learning service business.
Peng Zhuangzhuang, President and Chief Financial Officer of TAL Education, mentioned at the financial report that in the past quarter, the capacity expansion of the learning center has met expectations and the retention rate has remained stable. For the new fiscal year, a balanced approach will be adopted, taking into account operational indicators such as demand, geographic density, user feedback, and classroom utilization.
In the content solution business, Xueersi learning machines are a key contributor to revenue growth.
During the reporting period, Xueersi launched a new second-generation learning machine, which is different from the first generation learning machine. The biggest highlight of the second generation is the installation of a large model. Xueersi's large model MathGPT, which was registered in November last year, was first implemented in educational hardware.
In 2023, with the explosion of big models, incorporating AI big models into educational intelligent hardware has become an option for some brands to avoid homogenization.
Brands such as Xiaodu, iFLYTEK, Xueersi, Homework Help, and Reading Lang are currently launching learning machines that combine with large models. The newly added AI functions are mainly implemented in oral practice, essay correction, personalized learning, and other scenarios.
NetEase Youdao (NYSE: DAO) CEO Zhou Feng previously stated in an interview with media outlets such as Interface Education, "This year and the next two years should be a crucial year for the implementation of the big model."
Peng Zhuangzhuang stated that Xueersi's learning opportunities focus on two main directions: first, continuing to improve the product. For example, improving hardware design, adding high-quality content and artificial intelligence learning tools to enhance learning engagement and human-computer interaction experience.
Secondly, continue to build the brand. Although in the era of education and training, the Xueersi brand has a high reputation in the parent circle, it is still a newcomer to hardware. Therefore, we will continue to promote brand building, expand sales channels, closely monitor the efficiency of online sales channels, including mainstream e-commerce platforms and live streaming platforms, and explore more opportunities for offline channels.
Regarding the investment direction for the new fiscal year, Peng Zhuangzhuang stated that he will improve mature businesses, explore new businesses, continue to invest in artificial intelligence, optimize large models, improve their response speed and accuracy, and integrate artificial intelligence with existing products and services.
In addition, efficiency indicators in all business areas will be closely monitored and adjusted in a timely manner to optimize every aspect of operations, including content generation, product development, sales, and marketing.
In the fourth quarter of fiscal year 2024, TAL's operating costs and expenses amounted to $445.4 million, a year-on-year increase of 41.7%. Among them, the revenue and cost increased by 58.4% to 202.2 million US dollars. Sales and marketing expenses increased by 69.0% to 125.9 million US dollars. General and administrative expenses increased by 4.5% to $117.2 million.
As of February 29, 2024, the total balance of TAL cash, cash equivalents, and short-term investments was $3.303 billion, while the balance as of February 28, 2023 was $3.172 billion.
As of the close on April 25th Eastern Time, TAL News reported a price of $13.35 per share, up 8.89%, with a market value of $8.525 billion.