New Oriental Education & Technology Group - Earnings Call - Q4 2016

Transcript

Speaker 0

Good evening, and thank you for standing by for the New Oriental's Fourth Quarter and Fiscal Year twenty sixteen Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to your host today, Ms. Sisi Zhao. Please go ahead, ma'am.

Speaker 1

Thank you. Hello, everyone, and welcome to New Oriental's fourth quarter and fiscal year twenty sixteen earnings conference call. Our financial results for the period were released earlier today and are available on the company's website as well as on newswire services. Today, you will hear from Stephen Yang, Chief Financial Officer. After his prepared remarks, Stephen will be available to answer your questions.

Before we continue, please note that the discussion today will contain forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the view expressed today.

A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward looking statements except as required under applicable law. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental's Investor Relations website at investor.neworiental.org. I will now turn the call over to Mr.

Yang. Stephen, please go ahead.

Speaker 2

Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. I'm pleased to report another year of solid results. Net revenues in fiscal year twenty sixteen increased more than 18% to almost $1,500,000,000 with operating income up 29.5% and student enrollment up 25.8%. Throughout the fiscal year, we opened six new schools in new cities and added a net of 18 learning centers in existing cities.

In total, we added approximately 71,000 square meters of classroom area, expanding capacity by 7%. At the same time, utilization rates consistently improved by 2% to 3% to around 19% during the fiscal year. In short, the business has been on quite positive trajectory. Our strategies are working and our investments are bearing fruit, allowing us to lay down an important foundation for ongoing expansion and growth, particularly in area of our OTO efforts. More specifically, our OTO interactive education system is now being used across all key business lines.

Teachers and students in all of 55 existing cities across our school network are using our new POP Kids and UCAM Visible Progress teaching system and the feedback we're getting is very strong. Also, we launched O2O system for overseas test prep business such as IELTS, TOEFL and SAT programs in some of the large cities in China. Market feedback has been very positive in that area as well and we will continue to improve our O2O products and services. In terms of the performance for the fourth fiscal quarter, as mentioned before, this time of year is part of our peak season for K-twelve business, which last through the second half of our fiscal year. And we performed quite well during this peak period this year.

Fourth quarter net revenues exceeded the high end of our initial expectations, increasing 20.1 to $394,900,000 with operating income up 61.1% and student enrollment up 32.5%. POP Kids recorded a fourth quarter revenue increase of 42% and enrollment growth of 65%. This is an exciting increase from a year ago when the revamped program was just starting to pick up. That was strong momentum of POP Kids and U Can, our K-twelve business is poised for future growth. Turning to pricing.

Per program blended ASP slightly decreased by about 9% year over year. On an apple to apple basis, which is GAAP revenue divided by total teaching hours, hourly blended ASP is flat year over year. To provide a breakdown of the hourly blended ASP, please know that you can decline about 4%, POP Kids increased about 3% and Overseas Test Prep program increased about 4% year over year. The decrease of per program brand ASP is mainly due to the shifting of revenue mix from the Overseas Test Prep business with higher ASP to the K-twelve business. Also, in the second half of the fourth quarter, we saw a huge increase of enrollments for U Can POP Kids summer classes, whose ASP is much lower than our normal class in the spring semester as the summer classes are shorter in terms of the total teaching hours.

In addition, the slowdown of VIP business also contributed to the reduction of per program blended ASP. On final note, this growth rate will calculate in U. S. Dollar terms. So the ASP growth was negatively impacted by the RMB devaluation for about 5%.

We're very encouraged by the consistent improvement of margin and we presently expect that to continue going forward. For the fiscal year, operating margin increased by 110 bps to 13.4%, which is a little bit higher than our initial expectations. For the fourth quarter, operating margin went up by two forty bps to 9.4% from a year ago. This is a tangible proof of our commitment to enhancing operational efficiency, and we will continue to focus on this in the fiscal year 2017. Now let me give you a detailed update on our performance across individual business lines.

Our revenue driver, K-twelve all subjects after school tutoring business, achieved gross revenue growth of about 31% year over year for the fourth quarter, driven by exceptionally high enrollment growth of about 49% year over year. For the whole fiscal year, K-twelve had a revenue increase of about 32% supported by enrollment growth of over 39%. Break it down. The U Can middle school, high school, all subjects after school tutoring business reported a gross revenue increase of about 28% for the fourth quarter and 30% for the fiscal year. Student enrollments grew approximately 37% year over year for the quarter and 35% for the fiscal year.

Our POP Kids program again delivered outstanding results with gross revenue up significantly by about 42% for the fourth quarter and 35% for the fiscal year. Enrollments went up about 65 for the quarter and 46% for the fiscal year. Our overseas test prep and consulting business together reported revenue growth of about 10% year over year for the fourth quarter and 8% for the fiscal year. Finally, VIP personalized classes business recorded revenue growth of about 3% year over year for the fourth quarter and 14% for the fiscal year. Next, I will provide some updates on the progress we have continued to make with our important optimized market strategy.

As a reminder, we have been focusing aggressively on maintaining a good and positive balance between top line and bottom line growth while investing in build out our ultra integrated education system. We're confident that this strategy is working and is enabling us to perform very well. With respect to our core offline business, in the fourth quarter, we opened two new schools in the cities of Yangzhou and Jingzhou and added net of 19 learning centers and expanded certain existing ones. This led to a fourth quarter out of approximately 44,600 square meters of classroom area. For fiscal year twenty sixteen, we opened six new schools and added a net of 18 learning centers, bringing our total number of learning centers to seven forty eight.

We also expanded certain existing learning centers, thereby owing adding 71,000 square meters of classroom area for the full year. As for our online business, we invest $18,000,000 in the fourth quarter and $54,000,000 in total for the fiscal year to improve and maintain our O2O interactive integrated education ecosystem. Most of the investments were recorded under G and A expenses. We have been devoted to this online business build out since 2014 and our hard work has been rewarded with increase in customer retention and the addition of new customers. We fully believe this is transforming our business.

Before I go into the details, just a quick recap of three levels of our online platform. The first level, also the core of our online system is an O2O2A interactive education system across all of our business lines. The second level is our pure online learning platform and supplementary online education products and the New Oriental brand. The third level of our ecosystem is for New Oriental to take minority shareholdings in online education companies that complements our own online education offerings. Starting with O2O two way interactive education system, we aim to extend New Oriental's traditional offline classroom teaching offerings to online education services.

This is also an important factor that sets us apart from other key players in the market. With advanced ultra low product services, we're poised to gain more market share and improve brand recognition going forward. U Can Visible Progress Teaching System, our interactive education system has been successfully rolled out across all 55 existing cities in our nationwide school network and this expansion drove positive performance. POP Kids English program, Shuangyou, has also gradually expanded its coverage to 53 cities by the end of fiscal year from just 38 cities a year ago. The O2O system for the domestic test prep program was being used in five cities by the end of the fiscal year.

And since its launch in the second quarter, the interactive education system for overseas test prep programs including IELTS, TOEFL and SAT courses was rolled out in three cities by the end of the fiscal year. For the second level of our online education ecosystem, we have seen consistent growth in our pure online learning platform and other supplementary online education products. In the fourth quarter, koolearn.com generated net revenue of $12,800,000 up 42% year over year. The number of paid users increased about 18% year over year. The number of cumulative registered users has reached 13,500,000.

Qudao CN, our online broadcast open platform for both new rental and third party teachers achieved over 827,200 registrations in the fourth quarter. Donut, a series of game based mobile learning apps for children recorded over 41,300,000 downloads by quarter end. Lezi, an English language vocabulary training app for mobile phones and tablets app, recorded about 4,300,000 users by quarter end. For third level of our online education ecosystem, we invest in select online education companies with a minority stake and we continue to look for new opportunities that will not only complete our own offerings, but also facilitate our O2O integration. Now let me walk you through the other key financial details for the fourth quarter specifically.

Operating costs and expenses for the fourth quarter were 361,500,000 representing an 18.2% increase year over year. Non GAAP operating costs and expenses for the quarter, which excludes share based compensation expenses, were $357,900,000 an 18.9% increase year over year. Cost of revenues increased by 18.9% year over year to $163,400,000 primarily due to increase in teachers' compensation for more teaching hours. Selling and marketing expenses increased by 11.4% year over year to 59,400,000 primarily due to increases in brand promotion expenses and selling and marketing staff compensation. General and administrative expenses for the quarter increased by 20.5% year over year to $138,700,000 Non GAAP general and administrative expenses, which excludes share based compensation expenses, were $135,100,000 a 22.4% increase year over year, primarily due to increases in R and D expenses and human resources expenses related to the development of O2O integration.

Total share based compensation expenses, which were allocated to relate operating costs and expenses decreased by 22.7% to $3,600,000 in the fourth fiscal quarter. Operating income for the quarter was $37,100,000 a significant 61.1% increase compared to $23,000,000 in the same period of prior fiscal year. Non GAAP income from operations for the quarter was $40,700,000 a 46.9% increase compared to non GAAP income from operations of $27,700,000 in the same period of prior fiscal year. Operating margin for the quarter was 9.4% compared to 7% in the same period of prior fiscal year. Non GAAP operating margin, which excludes share based compensation expenses for the quarter was 10.3% compared to 8.4% in the same period in the prior fiscal year.

Net income attributable to New Oriental for the quarter was $42,000,000 representing a 17.6% increase from the same period in the prior fiscal year. Capital expenditures for the quarter were $15,400,000 and this was primarily attributable to the opening of 35 new learning centers and renovations of existing learning centers. Turning to the balance sheet. The deferred revenue balance, which is cash collected from registered students for courses and recognized proportionally as revenue as the instructions delivered at the end of the fourth quarter was 6 and $46,900,000 an increase of 29.1% as compared to the $501,200,000 at the end of the 2015. Before we move into the Q and A section, I'd like to talk about our overall outlook and priorities for fiscal year twenty seventeen and then our specific revenue expectations for the fourth quarter.

Looking ahead to fiscal year twenty seventeen, we're planning to continue to focus our optimized market strategy and build on the success we have achieved through this approach. The initiatives are working, so we're confident that by continuing to roll them out, we should drive additional progress and success. To give you more specifics, first, we will continue to expand our offline business. We plan to add 30 to 40 new learning centers for K-twelve business in existing cities. And we also plan to enter one or two new cities where we identify as markets with the most business opportunities.

Second, we will continue to invest in our O2O integration and initiatives in online education offerings. In particular, we will focus on product refinement and maintenance. We will continue to make investments, but we believe that total spending will begin to stabilize this year compared to the huge annual incremental increase over the last two fiscal years. Third, we will continue to have a top priority on improving utilization of facilities and controlling costs across the organization to drive continued margin expansion. We believe that by executing all of these things, we'll be in very positive position over both the near and long term.

In terms of the first quarter of the new fiscal year, we expect total net revenues to be in the range of $508,900,000 to $527,300,000 representing year over year growth in the range of 11% to 15%. If not including the impact from the recent RMB depreciation, the project's revenue growth rate will be in the range of 18% to 22% for the 2017. Also, we talked about the tax reform during the previous conference call, so I wanted to provide an update on this. The good news is that starting in May 2016, the value add tax VAT that applies to New Oriental's major training and tutoring business lines will be 3% rather than the 6% we anticipated. As we have been paying 3% business tax previously, this means the new tax reform won't cause extra tax burden, and we therefore expect no material impact on our top line or bottom line for fiscal year twenty seventeen from this.

Lastly, as to normally, I must mention that these expectations reflect NewRental's current and preliminary view, which is subject to change. At this point, I'll take your questions. Operator, please open the call for this. Thank you.

Speaker 0

Thank you, sir. Ladies and gentlemen, the question and answer session of this conference will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, Your first question comes from the line of Zhao Zhao from Credit Suisse. Please ask your question.

Speaker 3

Hi, management. Thank you for taking my question. I have like two questions. One is, we've seen very strong K-twelve enrollment growth for the past quarter. And then how is the growth rate of enrollment in June and July excluding promotion trending currently?

And the second question is, what is the retention like for the summer promotion so far? And do we see more aggressive than expected defense from those local players who also started to do promotion this quarter? Thank you.

Speaker 2

Okay. Thank you, Zoe. I think for the K-twelve business, yes, we had a very strong student enrollment in last year. And also, I think the good trends is continuing. Even in the June and the July, we're seeing the very strong student enrollment growth K-twelve business.

And in of the summer promotion classes, I think we had a very strong number. I think it is better than we expected. And till now, we got the 200,000 student enrollments so far. And I don't have the retention rate for the autumn semester till now. But based on my the forecast, I believe we will get the 50% to 70% retention rates for those students who enrolled in the low price summer classes.

Is it clear, Louis?

Speaker 3

Just want to clarify on the retention rate, do we measure this by headcount or enrollments, like course enrollments?

Speaker 2

Not enrollments.

Speaker 3

Right. And then could you give us more color about the very strong enrollment growth excluding promotion in June and July? Are we talking about like similar ballpark number as in like 30% to 40% for June and July? Or do we see a higher base effect for the next quarter given the relatively soft guidance?

Speaker 2

Okay, Zoe. When we announced when we reported student enrollment, we don't count the low price student enrollment.

Speaker 3

Understood. Yeah.

Speaker 2

If take out the low price classes in the first half the first quarter, we're still see the student enrollment growth somewhere at 25% to 30%.

Speaker 3

Okay. Thank you.

Speaker 2

Okay. Thanks.

Speaker 0

Thank you. Your next question comes from the line of Alvin Jiang from Deutsche Bank. Please ask your question.

Speaker 4

Hi, thank you, management for taking my question. I have a quick question is on the expansion plan in fiscal year twenty seventeen. We can see our peer company already started accelerated expansion into new cities. Do you think New Oriental will also accelerate expansion again? And is there any impact to our operating margin going forward?

Because we can see we have strong margin improvement in recent quarters. So I'm not sure what how we look at this expansion and the margin in FY 2017. Thank you.

Speaker 2

Okay. Thanks, Albert. In terms of the expansion plan, we added 24 learning centers in the whole year of fiscal year twenty sixteen, And we opened six new schools in five new cities in this year. And we expect to step into one or two, maybe three new cities in the coming New Year. And we plan to open 30 to 40 new learning centers in fiscal year twenty seventeen.

So compared to the total learning centers we have now, it's seven forty eight, it's just like the 5% to 7% expansion percentage. Our anyway, what I mean is our student enrollment growth, when is the volume growth in the coming year, we expect to be in the range of let's say the 15%. The student enrollment will be let's say the 25%, but the volume growth will be at the 15% growth. So you will see the very strong same store sales continuously in fiscal year twenty seventeen. So based on the thirty, forty new learning centers we plan to build in fiscal year twenty seventeen, it will not drag the margin.

On the contrary, I think the operating margin in the fiscal year twenty seventeen will be slightly go up, because the more leverage of the business. Yes, that's our plan, the expansion plan.

Speaker 4

Okay. Thank you.

Speaker 2

Okay. Thank you, Amon.

Speaker 0

Thank you. Your next question comes from the line of Fan Liu from Goldman Sachs. Please ask your question.

Speaker 2

Thank you for taking my questions. This is Jason Huang asking on behalf of Fan Liu. Can the management share with us what's the utilization rate target by the end of fiscal year twenty seventeen? And also, you mentioned about the Shangshu model in your conference previously. Would you mind elaborate on that?

And how does it compare to our opponent TAL's model? Thank you. Okay. Yes. Thanks, Jason.

In terms of the utilization rates, at the end of the year, the fiscal year twenty sixteen, we got the utilization rates at about 19%, which means compared to last year, we got 200 or 300 bps up. And in fiscal year twenty seventeen, we hope we get the utilization rates by 20% or 21%, because it's very easy to calculate. If our revenue grows by 20% year on year term and we just expand 7% of new classroom area, So it will drive the utilization rates up. And your second question is about the Shuangshi. We're still in the process of the piloting the program and we just piloted the program in several cities since this year.

So I think it's too early to say that were the results or were the impact for the business. But I think I will put this question to maybe three or six months when we run the business for several months. I will take I will answer your question in more detail. Okay. Thank you.

Speaker 0

Thank you. Your next question comes from the line of Natalie Wu from CICC. Please ask your question.

Speaker 5

Hi, good evening, Stephen and Sisu. Thanks for taking my question. I've got two questions here actually. The first one is you mentioned that you've got 200,000 enrollments for your summer promotion, right? So just wondering how what percentage comes from Beijing?

And can you update us which cities you only started the summer promotion plan since this year compared with last year? This is my first question. And the second one is regarding your guidance, can you give us some breakdown on each business lines forecasted growth, say POP Kids, UKN, overseas English Prep, domestic English Prep, etcetera? Thank you.

Speaker 2

Okay. Your first question is about the summer promotion classes. We got 200,000 student enrollments for the summer promotion classes. And I think 50% that means 100,000 student enrollments belongs to Beijing. And we have 30 around 30 cities to do the summer promotion.

So the other let's say the other cities except Beijing occupied another 50%. And your second question is the breakdown for the Q1 revenue guidance. Typically, we don't guide the revenue growth by business line. But in general, I can share with you some information that's below. The K-twelve business will grow by more than 30 let's say, the 30% to 40% in the Q1.

And for the overseas test prep, I think it should be, let's say, the 10% in RMB term. What I'm saying is only in RMB term, because I don't know the exchange rate. And the pure online 30% to 40% and also the adult English and domestic test prep, I think it will go down by 5%. This is a breakdown of the Q1 guidance.

Speaker 5

Great. So just for the clarification, we have mentioned this like 50% of enrollments of your summer promotion coming from 13 cities. So you mean that the net add cities this year is like 13 or the twenty twenty, Three, twenty

Speaker 2

zero. Year, only did it only in Beijing, but this year we spread it out to 30 cities.

Speaker 5

Great. What about the subjects? About the subjects? Do you also expand the subjects?

Speaker 2

This year in Beijing, the summer promotion classes are for the all three subjects, math, Chinese and English, and also in Shanghai, three subjects. But for the cities outside Beijing and Shanghai, all the other cities, we only have the summer promotion class for math only.

Speaker 5

Great. Thank you. Very helpful. Thank you.

Speaker 0

You. Your next question comes from the line of Tian Hou from T. H. Capital. Please ask your question.

Speaker 6

Yes. Stephen, good evening. So I have a question regarding the seasonality. So as you guys shifting the weight away from English overseas test preparation to K-twelve, it seems like the seasonality has been changed. Normally, Q1 is the strongest quarter.

And however, in this year or almost last year, it didn't seems like Q1 is still the strongest quarter. So would you please elaborate the new norm of your seasonality? That's the number one question. The second question is related to your subject. English is your strong foothold.

And I wonder in the U Can program, how are you going to plan to rapidly growing your other subject? That's two questions.

Speaker 2

Okay. Thanks, Tian. I think it's a good question, the seasonality question. So business has changed a lot in last three, four years. And the K-twelve business is the key growth driver.

And so the Q1 of the summer classes is not the strongest season. What it means Q1 is not the peak season for K-twelve business. So if so what I mean is the Q3 and Q4 will be the peak season for K-twelve business. So, if you recall the growth rates in individual quarters in fiscal year twenty sixteen, in the Q1 of fiscal year twenty sixteen, we got 16.4% and the second quarter 18%, third quarter '20 one percent and fourth quarter almost 20% to 21%. So that means the Q1 should be the lowest season for the revenue growth because of the different business lines.

Yes, this is my question for your first question. And your second question is about the subjects. Within The UK, the middle school, high school business, the English is only account for one third of the total revenue. And the non English subjects, the other eight subjects grows faster than the English bus going forward. So going forward, you will see the higher growth rates for non English subjects.

That's my answer. Is it clear?

Speaker 6

Yes. Thank you.

Speaker 2

Okay. Thanks Tian.

Speaker 6

Yes.

Speaker 2

Thanks.

Speaker 0

Thank you. Your next question comes from the line of Wendy Huang from Macquarie. Please ask your question.

Speaker 7

Thank you. My first question is about your pricing strategy. So what kind of price increase or ASP expansion that we should expect for the FY 'seventeen across the different segments? And also the last quarter's non GAAP OP margin was around 10%. So in past few years, you have been able to recover the margins.

Where should we see your long term non GAAP OP margin to stay with the recent expansion and also recovery?

Speaker 2

Okay. In terms of pricing, within fiscal year twenty sixteen, we used a different price strategy compared to year before last year. During the fiscal year twenty sixteen, we rolled out our new O2O products, especially for K-twelve business. So, we just want to take more market share. We just allow the local school hubs to increase the price by only 5% on an hourly basis.

And but going forward, what I mean in fiscal year twenty seventeen, I think we believe we will use a little bit more aggressive pricing one year's method. I guide the ASP for the K-twelve business, it will increase by 5% to 8% in RMB term. And for the overseas test rep, we dominate the market. So in fiscal year twenty seventeen, we still increased the price by around 8% in RMB term. And for the another one for the domestic test prep and our English, we increased price by the 5% to 8% year over year in fiscal year twenty seventeen.

And what this is my answer for first question. What is the okay, the margin, margin. Okay. Year, the fiscal year twenty fifteen, the OP margin was 12.3%. This year, we got the 110 bps up.

And our target for OP margin is to get 17% to 18% in next three, four years. And if you recall the earnings call, fourth quarter of call, our guiding matters, our OP margin will keep flat in fiscal year twenty sixteen. But as a result, we got one hundred and ten days up. So next year, I feel just want to guide the OP margin will get slightly up. Yes, that's it.

Speaker 7

Okay. I have just one housekeeping question on the headcount. So what was your total headcount and also the number of teachers as of May and also what kind of percentage increase should we expect for the FY 2017? Thank you.

Speaker 5

Okay.

Speaker 2

For the headcount, as you know, May, the total headcount is 36,000 employees and the teachers is around 19,000. And based on our budget, I think the total headcount of next year will increase by 5% to 10%. This is the budget.

Speaker 7

Okay. Thank you very much.

Speaker 0

Thank you. The next question comes from the line of Mariana Kao from CLSA. Please ask your question.

Speaker 8

Hi, good evening management. Thanks for taking the question. I just have two quick questions. I think on the overseas test prep, you mentioned the blended ASP is Could you actually help us understand a bit of the broader view of this business in terms of total revenue?

How are we trending? I guess that would imply some comments on the volume. That's my first question. And the second question, just a bit of housekeeping as well. Last quarter, I think there's a jump in tax rate.

Could you actually share a bit more color in terms of your tax outlook in the next twelve months? Thanks.

Speaker 2

Okay. For the overseas tax pricing, going forward, I think we will increase the price by eight to nine in RMB term year over year. And the student enrollment growth will keep flat, so it will guide the 8% to 10% revenue growth in RMB terms for overseas test drive courses. And for the ETR, this year, the fiscal year 2016, our ETR is 14%. And next year, I think the ETR will be somewhere at 14.5%, because based on the tax structure, some high-tech companies will lose the tax preference in the next year.

So the tax rate will steadily move up, let's say the 14.5%, we're somewhere at 14% to 15%.

Speaker 8

Okay. So we should just kind of think about it on a more full year basis, because if you just look at Q4 year on year, think there's quite significant increase in the effective tax rate, but I think we should just focus on Q4.

Speaker 2

Yes. So it should be. Yes.

Speaker 8

All right. Thank you.

Speaker 0

Thank you. The next question comes from the line of Claire Kao from Morgan Stanley. Please ask your question.

Speaker 9

Good evening, Steven and Sisu, and thanks for taking my question. Just want to follow-up on the RMB50 courses. So I'm wondering what's the percentage of those course enrollment were contributed by English subjects? And considering that the current enrollment number is pretty impressive at 200,000, I'm wondering how should we think about the margin impact in the coming fiscal first quarter? Thanks.

Speaker 2

Okay. It's a lot of questions for the summer promotion classes. I think, yeah, we gathered the 200,000 student enrollments for summer promotion classes. And I think we'll get the 50 to 70% retention rate afterwards. So I think we will get 2% to 3% extra revenue growth from the summer class, what it means on a yearly basis.

And in terms of margin, I think we will get negative impact for operating margin slightly in Q1, because the price is very low and we have to pay the teacher salary. But I think it will have a little bit positive impact for OP margin for the whole year because of the potential higher retention rates. Is it clear for your question?

Speaker 9

Yes, thanks. Then how about the enrollment contribution from English subject?

Speaker 2

In terms of the what I mean is the English enrollment for within the U Can were all the business lines.

Speaker 9

Sorry, I mean for the low price courses this summer.

Speaker 2

Sorry, don't have the numbers.

Speaker 1

We don't disclose by subject details for the promotion numbers, but actually it should be come from all subjects and cities outside Beijing and Shanghai, the promotion is mainly for math.

Speaker 9

Understood. Thanks.

Speaker 2

Yeah. So English subject, let's guess, it should be below 30 or 25%. Most of the class are the math class.

Speaker 9

Okay. Thanks. Very helpful.

Speaker 2

Okay. Thank you.

Speaker 0

Thank you. Ladies and gentlemen, we are now approaching to the end of the conference call. I will now turn the call over to New Oriental's CFO, Mr. Sifeng Yang for his closing remarks. Please go ahead, sir.

Speaker 2

Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you.

Speaker 0

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect the lines now.