New Oriental (NYSE: EDU) announced recently the third quarter results for FY2020. Data shows that during this fiscal quarter, New Oriental’s total revenue growth was 923 million USD, representing a growth of 15.9%; operating income was approximately 117 million USD, showing a 22.4% increase year-over-year; net income attributable to New Oriental was approximately 138 million USD, showing a year-over-year increase of 41.4%; the gross margin was 56.8%, representing a 0.8% decrease year-over-year.

In this third quarter, K-12 all-subject business witnessed year-over-year revenue growth of 24%. The middle school business achieved a 23% growth year-over-year, while the primary school business achieved a year-over-year growth of 26%. Zhou Chenggang, CEO of New Oriental, suggested that New Oriental will continue to carry out capacity expansion plans in cities with huge potentials and strong profitability. 

Board Chairman Yu Minhong said that due to the outbreak of COVID-19, New Oriental had closed all learning centers nationwide since the end of January, which had an estimated 8-10% negative impact on the net revenue growth in Q3.

This negative impact comes from the higher-than-normal class drop-off rate and class deferments in February.  Meanwhile, New Oriental had transferred all the offline courses to online courses through its OMO standardized classroom teaching system. Additionally, New Oriental estimates that for the fourth fiscal quarter, the total revenue will be between $ 774 and $ 806 million, representing a year-over-year decline in the range of 8% to 4%.