New Oriental Education & Technology Group Inc. (NYSE:EDU) Q2 2020 Earnings Conference Call - Final Transcript

Jan 20, 2020 • 08:00 am ET

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New Oriental Education & Technology Group Inc. (NYSE:EDU) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good evening and thank you for standing by for the New Oriental's FY 2020 Second Quarter and Interim Results Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would like to turn the meeting over to your host for today's conference, Mr. Sisi Zhao.

Executive
Sisi Zhao

Thank you. Hello, everyone, and welcome to New Orientals second fiscal quarter 2020 earnings conference call. Our financial results for the periods were released earlier today and are available on our company's website as well as on newswire services. Today you will hear from Stephen Yang, Chief Financial Officer. After his prepared remarks, Stephen will be available to answer your questions.

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 involved 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 Orientals Investor Relations website at investor.neworiental.org.

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

Executive
Zhihui Yang

Thank you, Sisi. Hello, everyone and thank you for joining us on the call. We are very pleased to report a set of solid financial results in the second fiscal quarter of this year, delivering both accelerate top line growth and continued operating margin expansion.

Total net revenue was $785.2 million, representing a growth of 31.5% or 34.8%, if measured in RMB, exceedingly the high ends of our expected range. Net revenues from educational programs and services for the second quarter were $723.3 million, representing a 33.0% increase year-over-year. The growth was mainly driven by increase in student enrollments in K-12 after-school tutoring courses, which continued its strong momentum and achieved a year-over-year revenue growth of approximately 46% in dollar terms or 49% if computed in RMB.

We continue to be guided by our optimized market strategy in this quarter and carried our capacity expansion in cities where we see potential for rapid growth and strong profitability. During this quarter, we added another 41 learning centers in existing cities, opened a new training school in the city of Huizhou and the dual-teacher model school in the city of Chengde. By the end of this quarter, the total square meters of classroom area increased by approximately 25% year-over-year, and 6% quarter-over-quarter.

Total student enrollments in academic subjects tutoring and test prep courses in the second fiscal quarter of 2020 increased by 63.3% a year-over-year to approximately 3,789,200. Please know