New Oriental Starts FY2027 With 23.1% Revenue Growth, Plans to Add Up to 15% More Learning Centres
New Oriental Education & Technology Group (NYSE: EDU; 9901.SEHK) on 28 October reported unaudited results for the first quarter of fiscal 2027, the three months ended 31 August 2026. Net revenue rose 23.1% year on year to US$1,874.5 million, which the company attributed mainly to its new education initiatives and to growth in East Buy's private-label products and live-commerce business.
Operating income increased 20.5% to US$374.7 million. Non-GAAP operating income, which excludes share-based compensation, amortisation of intangibles from business acquisitions and goodwill impairment, rose 21.2% to US$406.8 million. Net income attributable to New Oriental grew 13.5% to US$273.2 million, with non-GAAP net income up 16.5% to US$300.9 million. Operating margin narrowed to 20.0% from 20.4%, and the non-GAAP operating margin eased to 21.7% from 22.0%.
Total operating costs and expenses rose 23.7% to US$1,499.8 million, driven largely by East Buy. Revenue costs climbed 28.1% to US$817.0 million, selling and marketing expenses grew 30.7% to US$262.2 million, and general and administrative expenses rose 12.6% to US$420.7 million. At quarter end the company held US$1,755 million in cash and cash equivalents, plus US$1,441 million in time deposits and US$2,423 million in short-term investments. Deferred revenue stood at US$2,121 million, up 11.2% from US$1,907 million a year earlier.
By business line, overseas test preparation and consulting grew about 7.7%, domestic test preparation for adults and university students about 22.3%, and the new education initiatives about 24.7%. Non-academic tutoring courses ran in around 60 cities with roughly 476,000 student enrolments, the top ten cities contributing about 60% of that revenue. The intelligent learning system and devices business had been adopted in about 60 cities with approximately 515,000 active paid users, with the top ten cities again accounting for about half of its revenue.
Executive President and CFO Zhihui Yang said on the earnings call that study-tour and camp programmes now cover about 55 cities nationwide, with the top ten contributing more than half of segment revenue, while premium adult travel products reach about 30 provinces and selected international destinations. The company is building a wellness-travel offer for older travellers on an asset-light basis, working with more than 65 institutions in Hainan, Yunnan and Guangxi. Spending on improving and maintaining the OMO platform was US$28.2 million in the quarter, and New Oriental's in-house AI personalised learning platform completed its first deployment phase, generating what Yang called meaningful sales within 25 days of launch.
East Buy expanded its private-label assortment to more than 1,000 SKUs and its Douyin channel matrix to over 30 vertical accounts, opened four offline experience stores and piloted one-hour delivery in Beijing and Shanghai using front warehouses. The cross-business customer platform New Oriental Home had served 1.678 million families in 69 cities by quarter end, which management said is showing potential on loyalty, retention and cross-selling.
Learning centre capacity grew 2% sequentially, and New Oriental plans to add 10% to 15% more capacity in fiscal 2027 while raising utilisation in the 60 cities where it already operates. CEO Chenggang Zhou said the company is keeping a disciplined capacity expansion strategy to balance revenue growth and operating efficiency, and that AI remains an organisation-level priority this fiscal year — aimed at strengthening existing products, developing commercially viable new AI education products and using AI more widely to cut labour and operating costs. Executive Chairman Michael Yu noted the 23.1% top-line growth came in above the current full-year guidance range, which the company reiterated at US$6.4539 billion to US$6.6803 billion, up 14% to 18%.
Operating income increased 20.5% to US$374.7 million. Non-GAAP operating income, which excludes share-based compensation, amortisation of intangibles from business acquisitions and goodwill impairment, rose 21.2% to US$406.8 million. Net income attributable to New Oriental grew 13.5% to US$273.2 million, with non-GAAP net income up 16.5% to US$300.9 million. Operating margin narrowed to 20.0% from 20.4%, and the non-GAAP operating margin eased to 21.7% from 22.0%.
Total operating costs and expenses rose 23.7% to US$1,499.8 million, driven largely by East Buy. Revenue costs climbed 28.1% to US$817.0 million, selling and marketing expenses grew 30.7% to US$262.2 million, and general and administrative expenses rose 12.6% to US$420.7 million. At quarter end the company held US$1,755 million in cash and cash equivalents, plus US$1,441 million in time deposits and US$2,423 million in short-term investments. Deferred revenue stood at US$2,121 million, up 11.2% from US$1,907 million a year earlier.
By business line, overseas test preparation and consulting grew about 7.7%, domestic test preparation for adults and university students about 22.3%, and the new education initiatives about 24.7%. Non-academic tutoring courses ran in around 60 cities with roughly 476,000 student enrolments, the top ten cities contributing about 60% of that revenue. The intelligent learning system and devices business had been adopted in about 60 cities with approximately 515,000 active paid users, with the top ten cities again accounting for about half of its revenue.
Executive President and CFO Zhihui Yang said on the earnings call that study-tour and camp programmes now cover about 55 cities nationwide, with the top ten contributing more than half of segment revenue, while premium adult travel products reach about 30 provinces and selected international destinations. The company is building a wellness-travel offer for older travellers on an asset-light basis, working with more than 65 institutions in Hainan, Yunnan and Guangxi. Spending on improving and maintaining the OMO platform was US$28.2 million in the quarter, and New Oriental's in-house AI personalised learning platform completed its first deployment phase, generating what Yang called meaningful sales within 25 days of launch.
East Buy expanded its private-label assortment to more than 1,000 SKUs and its Douyin channel matrix to over 30 vertical accounts, opened four offline experience stores and piloted one-hour delivery in Beijing and Shanghai using front warehouses. The cross-business customer platform New Oriental Home had served 1.678 million families in 69 cities by quarter end, which management said is showing potential on loyalty, retention and cross-selling.
Learning centre capacity grew 2% sequentially, and New Oriental plans to add 10% to 15% more capacity in fiscal 2027 while raising utilisation in the 60 cities where it already operates. CEO Chenggang Zhou said the company is keeping a disciplined capacity expansion strategy to balance revenue growth and operating efficiency, and that AI remains an organisation-level priority this fiscal year — aimed at strengthening existing products, developing commercially viable new AI education products and using AI more widely to cut labour and operating costs. Executive Chairman Michael Yu noted the 23.1% top-line growth came in above the current full-year guidance range, which the company reiterated at US$6.4539 billion to US$6.6803 billion, up 14% to 18%.
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