On October 23rd, New Oriental released its financial report for the first quarter of fiscal year 2025 (June 1st to August 31st, 2024). It is worth mentioning that this is the first quarterly report of Dongfang Selection after Dong Yuhui left New Oriental. Among them, New Oriental specifically disclosed financial data other than Dongfang Zhenxuan's self operated products and live streaming e-commerce business separately.
According to the financial report, New Oriental's net revenue increased by 30.5% year-on-year during the reporting period, reaching $1.435 billion. Excluding the revenue from Dongfang Zhenxuan's self operated products and live streaming e-commerce business, the year-on-year growth rate reached 33.5%, with a revenue of $1.278 billion.
In terms of operating profit, New Oriental reported a quarterly operating profit of $293 million, a year-on-year increase of 42.9%; Excluding the operating losses of live streaming e-commerce business, the operating profit reached 303 million US dollars, a significant increase of 58.4% year-on-year.
Looking ahead to the second quarter of fiscal year 2025, New Oriental expects net revenue to be between $851 million and $872 million, a year-on-year increase of 25% to 28%.
Compared to previous financial reports, the reporter found that New Oriental's income level during the reporting period has significantly exceeded that before the double reduction. New Oriental executives believe that the company's education business maintained strong growth in the quarter and expect its newly established cultural and tourism business to bring meaningful revenue contributions to the company in the future.
Without the 'soul figure', Dongfang Zhenxuan has incurred operating losses
From the revenue share of New Oriental in this financial report, the proportion of Oriental Selection in New Oriental's revenue has significantly decreased. Compared with past financial data, the contribution of Oriental Selection does not reflect a significant advantage. According to the above calculation excluding the revenue from Dongfang Zhenxuan's self operated products and live streaming e-commerce business, the current e-commerce business revenue from Dongfang Zhenxuan is about 157 million US dollars. According to the annual and semi annual reports for the 2024 fiscal year previously disclosed by Dongfang Zhenxuan, the total revenue of Dongfang Zhenxuan in the last two quarters of the previous fiscal year was approximately 3.731 billion yuan, with an average of approximately 1.866 billion yuan per quarter.
It is not difficult to find that since Dong Yuhui's resignation, perhaps as analyzed by the outside world, New Oriental's e-commerce business has unexpectedly encountered growth difficulties. Moreover, Dongfang Zhenxuan has also suffered operating losses in its e-commerce business.
According to information disclosed by New Oriental in its financial report, Dongfang Zhenxuan incurred operating losses in the quarter. Specifically, New Oriental achieved an operating profit of $293 million in the quarter, while after excluding the operating losses caused by Dongfang Zhenxuan's related businesses, the operating profit for the quarter was $303 million. Based on this calculation, Dongfang Zhenxuan's operating loss for the quarter was approximately $10 million, equivalent to approximately RMB 71 million. Due to the fact that the listed companies of Dongfang Zhenxuan in the Hong Kong stock market have not disclosed their quarterly reports separately in the past, it can be seen from this perspective that Dongfang Zhenxuan not only did not make positive performance contributions in this quarter, but also dragged down the performance of its parent company New Oriental.
However, with the departure of Dong Yuhui, the Oriental Selection business has undergone adjustments, reflected in the financial data of cost reduction. In the first quarter of the fiscal year 2025, the total amount of equity based compensation expenses within New Oriental's operating costs and expenses also decreased significantly by 82.7% to $6.9 million, while in the first quarter of the fiscal year 2024, New Oriental's expenses for this item reached $39.6 million, approximately RMB 281 million.
Revenue data from Q1 2019 to present
Net profit situation from the first quarter of fiscal year 2019 to present
Returning to Main Business: Education
If we set aside Eastern Selection and only look at New Oriental's performance, this quarter can be described as "impressive". In addition to significantly higher revenue and profit than before the double reduction, its main business, the education sector, has performed very strongly.
In terms of revenue, in the first quarter of fiscal year 2025, New Oriental achieved a revenue of $1.435 billion, an increase of 30.5% compared to the same period in the previous fiscal year (first quarter of fiscal year 2024), which was $1.1 billion, and an increase of 45.53% compared to the first quarter of fiscal year 2021 before the double reduction, which was $986 million. In terms of profit, the first quarter of fiscal year 2025 achieved a net profit of 245 million US dollars, an increase of 39.2% compared to the 176 million US dollars in the first quarter of fiscal year 2024, and an increase of 63.3% compared to the first quarter report of fiscal year 2021 before the double reduction.
Regarding such impressive performance, Yu Minhong, Executive Chairman of the Board of Directors of New Oriental, said, "We are pleased to start the 2025 fiscal year with a steady revenue growth of 30.5%. All of our new education businesses maintained strong growth momentum in this quarter, recording a year-on-year revenue growth of 49.8%
The reporter found that the growth of New Oriental's business is mainly due to the strong performance of its education new business and overseas study consulting business. New Oriental's overseas exam preparation and overseas consulting business increased by about 18.8% and 20.7% respectively year-on-year. The domestic exam preparation business for adults and college students increased by about 30.4% year-on-year, and the revenue of its education new business increased by 49.8% year-on-year. New Oriental's non disciplinary tutoring services and intelligent learning systems have performed well in multiple cities, with promising application prospects. During this fiscal quarter, the number of applicants for non subject tutoring services reached 484000, and the number of paid users for intelligent learning systems reached 323000.
In addition, New Oriental's traditional education business has continued to maintain good growth, with overseas exam preparation and overseas consulting services increasing by about 18.8% and 20.7% respectively year-on-year. At the same time, the domestic exam preparation business for adults and college students increased by about 30.4% year-on-year. As of August 31, 2024, the total number of New Oriental schools and learning centers is 1089, an increase of 64 compared to 1025 as of May 31, and an increase of 296 compared to 793 as of August 31, 2023. The education capacity is still steadily expanding.
Overall, although the popular "Oriental Selection" has incurred losses and even dragged down New Oriental's performance, the overall revenue and profit of New Oriental demonstrate the stability of its core education business, especially after excluding Oriental Selection, the company's revenue and profit growth have been strengthened.
Yu Minhong stated that with our abundant educational resources, we will continue to strive to achieve our long-term vision, striving to balance growth with stability and sustainability, and improve profitability by enhancing service quality and operational efficiency.