New Oriental(NYSE: EDU) yesterday announced its results for the fourth fiscal quarter and the fiscal year ended May 31, 2020. According to the report, New Oriental's net revenue of the whole financial year was US$3.579 billion, a year-on-year increase of 15.6%, while that of Q4 was US$798 million, a year-on-year decrease of 5.3%.
The fourth quarter's gross profit margin was 51.0%, a year-on-year decrease of 500 basis points. Yang Zhihui, Chief Financial Officer of New Oriental, pointed out that this is mainly due to the negative impact of the epidemic and the increased investment in the promotion of New Oriental Online K-12 large-sized classes.
In Q4 2020FY, the overseas test preparation business declined by approximately 52%, while overseas study consulting grew by about 6%. And all-subjects after-school tutoring business of Grade 7 to 12 increased by around 1%, plus, kids program achieved a growth of approximately 10%.
From the perspective of Michael Yu, New Oriental's Executive Chairman, the outbreak of COVID-19 pandemics worldwide starting from March posed continuing pressure on the Group's key business lines. "We saw challenges in acquiring new customers during the pandemics, and the enrollment for summer courses has also been delayed. Our overseas related businesses, including test preparation and consulting business, faced the most difficult challenges, due to cancellation of overseas exams, suspension of overseas schools, and restrictions on travels." Said him.
With the pronounced demand for online education, New Oriental will focus on promoting the OMO strategy and engage more students from more cities by launching low-cost trial online courses. “We believe this business direction can take advantage of the digital trend and will substantially boost our enrollment rate and profitability in the coming quarters.” Said Michael Yu. At the meanwhile, New Oriental will invest more resources in Koolearn, specializing in online courses.
As New Oriental gradually resumed business in more than 90% of cities, most students have successfully returned to offline learning centers. For the new fiscal year, Michael Yu said that although it will still face various challenges in the short term, New Oriental is optimistic about the new fiscal year and long-term business prospects.
Besides, New Oriental expects total net revenues in the first quarter of the fiscal year 2021 (June 1, 2020, to August 31, 2020) to be in the range of US$911.2 million to US$953.5 million, representing a year-over-year decline in the range of 15% to 11%.