Jingu Finance News | Soochow Securities released a research report stating that New Oriental (09901) announced FY2025Q1 (i.e. June to August 2024) quarterly results. FY2025Q1 total revenue increased by 30.5% year-on-year to $1.44 billion; total revenue excluding East Buy and live e-commerce increased by 33.5% year-on-year to $1.28 billion, in line with performance guidance. Operating profit increased by 42.9% year-on-year to $0.29 billion; operating profit excluding East Buy and live e-commerce increased by 58.4% year-on-year to $0.3 billion, with an operating profit margin improvement of 3.7 percentage points to 23.7%.

The bank stated that the company's gross margin in FY2025Q1 decreased by 1 percentage point year-on-year to 59%, Non-GAAP operating profit margin decreased by 1 percentage point year-on-year to 21%. The decline in profit margin is primarily due to investments in cultural and tourism businesses, the impact of East Buy, and the time needed for new branches to ramp up their profit margins. As of August 31, 2024, the total number of schools and learning centers was 1089, an increase of 64 compared to May 31, 2024, and an increase of 296 compared to August 31, 2023. The company expects the total number of schools and learning centers to grow by 20% to 25% in FY2025. The bank believes that the profit margin of the education business is expected to improve with the increase in branch utilization rates, maintaining an optimistic outlook on long-term profit margin improvement.

The bank further mentioned that the company's education business revenue met expectations but the profit was under pressure in this stage, mainly due to the drag of cultural and tourism business and e-commerce business, as well as the costs generated by the rapid opening of branches in the early period. The bank believes that as the company's branch profit margins gradually improve and the application scope of OMO expands, it is expected to drive overall profit margin improvement, maintaining a 'buy' rating.