Charlotte Wei

Charlotte Wei of HSBC asked about the reasons for the significant slowdown in non-academic enrollment growth this quarter. She also inquired about the specific summer enrollment growth for K-9 non-academic tutoring and how it compares to the broader industry trend.

Answer

Executive President & CFO Stephen Zhihui Yang explained that the enrollment slowdown was primarily a seasonality issue caused by an earlier Chinese New Year, which shifted enrollments into prior quarters. He expressed confidence that growth would accelerate from Q2 based on current bookings but stated that the summer enrollment window is not yet closed and declined to comment on industry-wide trends.

Charlotte Wei from HSBC asked about the reasons for the significant slowdown in non-academic enrollment growth and requested details on summer enrollment trends for the K-9 non-academic tutoring business.

Answer

Stephen Zhihui Yang, Executive President & CFO, attributed the slowdown to seasonality from an early Chinese New Year, which shifted enrollments into prior quarters. He noted that Q2 bookings already appear stronger, supporting the forecast for accelerating growth. He deferred providing specific summer enrollment data until the next earnings call as the registration period was ongoing.

Charlotte Wei from HSBC asked about management's view on how AI and large language models will reshape the education industry, and specifically requested details on New Oriental's strategy and investment plans in this area.

Answer

CFO Zhihui Yang explained that New Oriental uses AI tools like essay grading and speaking assistance to improve student outcomes and gather data. He clarified there is no plan to build a proprietary large model and that investments will be 'reasonable.' He also noted AI's potential to reduce costs and improve margins.

Charlotte Wei of HSBC requested a more detailed breakdown of the expected growth rates for New Oriental's different business segments within the second-quarter guidance.

Answer

Sisi Zhao, an executive at the company, provided the Q2 growth guidance breakdown: overseas-related business is expected to grow over 20%; the domestic test prep and university students business is projected to grow between 30-35%; the high school business is guided to grow around 20%; and the new business initiatives are expected to grow around 50%.