New Oriental Stock Takes Off After Q2 Surge, Smashing Revenue Expectations

New Oriental Education & Technology Group, Inc. EDU shares are trading higher on Wednesday.

The company reported second-quarter revenue of $869.60 million, rising 36.3% year over year. Revenues beat the analyst consensus of $814.07 million.

The growth was mainly driven by increase in net revenues from the company’s educational new business initiatives and East Buy private label products and livestreaming e-commerce business.

The company reported adjusted net income per ADS of $0.29, in line with the analyst consensus. 

Operating income was $21.3 million, compared to a loss of $(2.5) million in the same period of the prior fiscal year.

Non-GAAP operating margin for the quarter was 5.9%, compared to 2.6% in the same period of the prior fiscal year.

The total number of schools and learning centers was 843 as of November 30, 2023, an increase of 50 and 135 compared to 793 as of August 31, 2023, and 708 as of November 30, 2022, respectively. The total number of schools was 83 as of November 30, 2023.

“Our overseas test preparation and overseas study consulting businesses maintained strong momentum with approximately 46.5% and 31.7% growth year over year, respectively,” said Michael Yu, New Oriental’s Executive Chairman.

The company recorded a positive operating cash flow of $300.6 million for this quarter, and by the end of this fiscal quarter, its cash and cash equivalents, term deposits and short-term investments totaled approximately $4.8 billion.

Outlook: The company expects total net revenues in the third quarter of the fiscal year 2024 (December 1, 2023 to February 29, 2024) to be in the range of $1.071 billion to $1.093 billion, representing year over year increase in the range of 42% to 45%. The analyst consensus stands at $935.92 million.

Price Action: EDU shares are trading higher by 7.7% to $77.57 on the last check Wednesday.

Image: Shutterstock/ MD Duran