New Oriental Education & Technology Group - Q4 2024

Transcript

Operator (participant)

Good evening, and thank you for standing by for New Oriental's Full Year 2024 Fourth Quarter Results Earnings Conference Call. At this time, all participants are in listen-only mode. After the 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 for today's conference, Ms. Sisi Zhao. Please go ahead.

Sisi Zhao (Director of Investor Relations)

Okay, thank you. Hello, everyone, and welcome to New Oriental's fourth fiscal quarter 2024 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, Stephen Yang, Executive President and Chief Financial Officer, and I will share New Oriental's latest earnings results and business updates in detail with you. After that, Stephen and I 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 views 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'll now first turn the call over to Mr. Stephen Yang. Please go ahead.

Stephen Yang (Executive President and CFO)

Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. Before we begin, we would like to firstly extend our gratitude to those who have been supporting and believing in New Oriental. We understand there might be some questions with regards to the latest separation of East Buy and Time with Yuhui. Before we go into New Oriental's performance, we would like to stress that this decision was carefully made upon a considerable amount of transparent communication with Dong Yuhui, who has been a beloved colleague of ours and drove instrumental growth of East Buy.

As we send Yuhui our best regards for his new venture, the company remains fully dedicated in forging a stable path of healthy growth for the platform, devoting our very best to live up to our customer-centric promise to offer a diverse range of premium, healthy, delicious, yet cost, cost-effective products to our customers. Anchored by the exceptional teams, far-reaching partnerships, over 400 SKUs and distribution channels, which we've thankfully built over the years, strategic pivot to expand our multi-brand presence are in the works. We will continue to leverage East Buy to propel knowledge sharing, product dissemination, and culture promotion to our valued customers in the long term. For more details, please refer to East Buy's latest announcement. Now, let's deep dive into New Oriental's fiscal year 2024 performance.

For New Oriental's financial results of this fiscal quarter, we are pleased to announce that the company has achieved a healthy growth in our key businesses, with a solid top-line growth of 32.1%. Strong demands have fueled stable recovery across our business lines, while our portfolio of innovative ventures have invigorated the company's revenue with healthy contributions. New Oriental's bottom line performance has achieved the yields with operating margin and non-GAAP operating margin, reaching 0.9% and 3.2% for this quarter, respectively. Except for East Buy's investment in private label products and certain costs and expenses related to the platform of Time with Yuhui, our spending in accelerated capacity expansion and newly integrated tourism-related business, as well as additional incentives to the management and staff, have led to a short-term impact on our operating margin this quarter.

However, coupled with the increase in market demand, we strongly believe we made the right move to input the right investment. We anticipate that the pressure on margins for the educational business will reduce in the next fiscal year as we continue to improve the utilization of facility and operating efficiency. We expect our operating margin of the company, excluding East Buy, will expand year-over-year in the first quarter of 2025 and deliver satisfactory operating profit for the full fiscal year 2025. Now, I would like to spend some time to talk about this quarter's performance across our existing business lines and new initiatives to you in detail. Our key remaining business secured an encouraging trend, and new initiatives have shown positive momentum.

Breaking it down, the overseas test prep business recorded a revenue increase of 18% in dollar terms, or 23% in RMB terms year-over-year for this quarter. The overseas study consulting business recorded revenue increase of about 17% in dollar terms, or 23% in RMB terms year-over-year for the first fiscal quarter of 2024. The adults and university students business recorded a revenue increase of 16% in dollar terms, or 21% increase in RMB terms year-over-year for this quarter. Our new initiative, which mostly revolve around facilitating students' all-around development, have continued to sustain a strong momentum in their respective ventures. Firstly, the non-academic tutoring courses, which we have offered in around 60 existing cities, focuses on cultivating students' innovative ability and comprehensive quality.

We're excited to see further penetration in those markets we have tapped into, especially in high-tier cities, which total approximately 875,000 students enrollments recorded in this fiscal quarter. The top 10 cities in China contribute over 60% of this business. Secondly, the intelligent learning system and device business has been adopted in around 60 cities. We're happy to see stable customer retention and scalability, with approximately 188,000 active paid users recorded in this quarter. The revenue contribution of this initiative from the top 10 cities in China is over 55%. Our smart education business, education material, and digitalized smart study solutions, have continued to contribute material yields to the overall advancement of the company.

In summary, our new educational business initiatives recorded a revenue increase of 50% in dollar terms, or 57% increase in RMB terms year-over-year for this quarter. In addition, the newly integrated tourism-related business line, one of our creative endeavors, is tailored with diverse offerings of cultural trips, study tours in China and overseas, as well as the camp education. Within the business line, our study tour and research camp business for students of K-12 and university age continued to achieve sustainable growth this quarter. We have conducted the study tours and research camp in over 65 cities across the country, with the top 10 cities in China offering over 55% of the revenue share of this new business. We also piloted a number of top-notch tourism offerings to expand our reach to all age groups, including middle-aged and elderly individuals across 27 featured provinces.

As we are still at a preliminary stage of planning, testifying, and evaluating the visibility of the business in select regions, we will keep you posted should there be timely updates. With regards to our OMO system, we have persisted in revamping our platform and leveraged our education infrastructure and technology edge, our remaining key business and new initiatives, with a vision to provide advanced, diversified education service to customers of all ages. During the reporting period, a total of $30.5 million has been invested in our OMO teaching platform, which equips us of the flexibility to maintain unrivaled service to students. With regards to the company's latest financial position, I'm confident to share with you that the company is in a healthy financial status, with cash and cash equivalents, term deposits, and short-term investments totaling approximately $4.9 billion.

In addition, we would like to highlight the company's board of directors approved a share repurchase program in July 2022, under which the company is authorized to repurchase up to $400 million of the company's ADSs or common shares through the next twelve months. The company's board of directors further approved to extend the effective time of the share repurchase program to May 31, 2025. As of July 30, 2024, the company repurchased an aggregate of approximately 7.3 million ADSs for approximately $296.1 million from the open market. Now, I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.

Sisi Zhao (Director of Investor Relations)

Okay. Before we go into our key financials, we'd like to inform you that as part of the company's business line reorganization, the company's wholly owned subsidiary and variable interest entity entered into an agreement with East Buy and its subsidiaries and variable interest entity to acquire East Buy's online education business at an aggregate consideration of RMB 1.5 billion. The consideration was agreed by both parties after arm's length negotiations, with reference to an independent valuation. The acquisition was completed in this fiscal quarter. Upon completion, the online education business was consolidated from East Buy's consolidated financial statements and was deconsolidated from East Buy's consolidated financial statements, and is now recorded by the company under educational services. Now, for our key financial details for this quarter.

Operating costs and expenses for the quarter were $1,126.2 million, representing a 38.6% increase year-over-year. Non-GAAP operating costs and expenses for the quarter, which excludes share-based compensation expenses, were $1,100.4 million, representing a 40.7% increase year-over-year. The increase was primarily due to the costs and expenses related to the substantial growth in East Buy's private label products, live streaming, e-commerce business, and an accelerated capacity expansion for education business. Cost of revenue increased by 38.5% year-over-year to $542.4 million. Selling and marketing expenses increased by 40.9% year-over-year to $208.2 million.

G&A expenses for the quarter increased by 37.5% year-over-year to $375.5 million. Non-GAAP G&A expenses, which excludes share-based compensation expenses, were $355.2 million, representing a 42.3% increase year-over-year. Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 15.5% to $25.8 million in the fourth fiscal quarter of 2024. Operating income was $10.5 million, representing a 78.1% decrease year-over-year. Non-GAAP income from operations for the quarter was $36.3 million, representing a 53.8% decrease year-over-year.

Net income attributable to New Oriental for the quarter was $27 million, representing a 6.9% decrease year-over-year. Basic and diluted net income per ADS attributable to New Oriental were $0.16 and $0.16, respectively. Non-GAAP net income attributable to New Oriental for the quarter was $36.9 million, representing a 40.5% decrease year-over-year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $0.22 and $0.22, respectively. Net cash flow generated from operations for the fourth fiscal quarter of 2024 was approximately $376.8 million, and capital expenditure for the quarter was $27.4 million. Turning to the balance sheet.

As of May 31, 2024, New Oriental has cash and cash equivalents of $1,389.4 million. In addition, the company has 1,489.44 million dollars in term deposits and 2,065.6 million dollars and in short-term investments. New Oriental's deferred revenue, which representing cash collected upfront from customers and related revenue that will be recognized as the service or goods are delivered at the end of the fourth quarter of fiscal year 2024, were $780.1 million, an increase of 33.1% as compared to $1,337.6 million at the end of the fourth quarter of last fiscal year. Now, I'll hand over to Stephen to go through our outlook and guidance.

Stephen Yang (Executive President and CFO)

Thank you, Sisi. As we look ahead for 2025, we're confident that our educational business will embark on a healthy trajectory of growth, fueled by the continuously strong demand. Supported by New Oriental's rooted resources that have stood the test of time, we have firm belief in delivering margin expansion for the whole company, except for East Buy, in the first quarter of 2025, and attaining satisfactory operating profit for the full fiscal year. Simultaneously, we expect to achieve tremendous growth for our new tourism-related business. In the belief that the significant resources we invested for a nationwide rollout, these tours will contribute meaningful revenue in the new fiscal year. As we ensure a healthy balance between revenue and profitability growth, we will cautiously manage our capacity expansion and hiring to underpin the development of educational business in the new year.

We plan to increase our capacity by around 20%-25% for the fiscal year 2025. The most new openings will be launched in the cities with better top line and bottom line performance. Rest assured, we will closely monitor the pace and scale of the new openings in accordance to the local operations and the financial performance during the year. We expect total net revenue, excluding revenue generated from East Buy, in the first quarter of fiscal year 2025, June 1, 2024 to August 31, 2024, to be in the range of $1,254.7 million-$1,283.5 million, representing year-over-year increase in the range of 31%-34%.

In addition, based on our current estimation, we expect the operating margin for the whole company, except for East Buy, in the first quarter will be expanded year-over-year. To conclude, New Oriental has been known as a resilient adventurer that sails on its voyage amid years changes for the transformation. Thanks to the support of our valued customer, promising premium offering and giving back to society in the long term stand firm as our priorities from day one. As always, we will devote reasonable resources on research and application of new technologies such as AI and ChatGPT into our educational and product offerings.

With a vision to uplift our strength in pursuit of the growth and operating efficiency, we will continue to seek guidance from, and cooperate with the government authorities in various provinces in China, comply with relevant policies, as well as to further adjust our business operations as required. We will also work diligently to enhancing the nation's education level, to strengthen its leading position, so as to unveil further potential across all our business lines and realize our vision. I must say that these expectations and forecasts reflect our considerations of the latest regulatory measure, as well as our current and preliminary view, which is subject to change. This is the end of our fiscal year 2024 Q4 summary. At this point, I would like to open the floor for questions. Operator, please open the call for this. Thank you.

Operator (participant)

Thank you. The question and answer session of this conference call 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, please request to join the question queue again after your first question has been addressed. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by, we will compile the Q&A roster. Our first question is from Alice Cai from Citi. Please proceed with your question.

Alice Cai (Analyst)

Good evening, Stephen and Sisi. Thank you for your presentation. I have a question about growth strategy. Since you are not planning to expand into new cities, how much room for growth is left in your existing locations before reaching saturation? Could you please share your color about this? Thank you so much.

Stephen Yang (Executive President and CFO)

Okay. Yeah, thank you, Alice. You know, as for the, the learning center expansion plan, you know, I think, you know, we, as I said, you know, we plan to, increase the capacity expansion, by 20%-25% in the new fiscal year. And I think we will open the, the most of the new learning centers, where the new classroom areas in the, mostly in the existing cities. And, I think most of the openings, will be in the cities with a better performance, you know, both the top-line growth and the, the, the, the market expansion in fiscal year 2024. And I think we will keep monitoring the pace and the scale of the new openings. You know, we care more about the balance of the top-line growth and the market expansion.

This is our strategy. I think in the coming new year, you know, upon the expansion of the new learning center by 20%-25%, we will keep the utilization rates up. I think the strong revenue growth in the current year will cover the incremental classroom rental. Thank you, Alice.

Alice Cai (Analyst)

Thank you so much for your sharing.

Operator (participant)

Thank you. We will now take the next question from the line of Yiwen Zhang from China Renaissance. Please go ahead.

Yiwen Zhang (Research Analyst)

Hey, thanks. Good evening. Thanks for taking my question. So I would like to follow up on the, you know, margin decline in this fiscal quarter. So you mentioned several reasons in your prepared remarks. Can you discuss more about, you know, which ones are like, well, or which one are recurring? And also, if we look at the education business alone, how do we see the margin actually trending in our fiscal quarter? Thank you.

Stephen Yang (Executive President and CFO)

Yeah, thank you, Yiwen. Let's start with the this quarter's margin analysis. Yeah, the OP margin decreased in this quarter. I think this is mainly due to a couple of the reasons. Number 1, so, you know, we accelerated the learning center expansion, you know, in this quarter and even in the last two quarters. And also, you know, we newly invested the new tourism business. The number two reason, you know, we made the additional incentives to the management and staff in Q4. And number three is, you know, East Buy investments in some private label products and some certain, you know, one-time costs and expenses related to the sales, the Time with Yuhui.

So I think, you know, partially, some of the expenses is one time of the incremental cost expenses in Q4. And as for the margin outlook, we expect the OP margin in the coming Q1 of the whole company, excluding East Buy, will be expanded by 200 basis points year-over-year. So that means you will see more operating leverage and the higher operating efficiency in the coming Q1. And we are quite optimistic about the margin expansion of the company, except for East Buy. In fiscal year 2025, the margin will be expanded. I think, we will, as I said, you know, we will keep getting more operating leverage and keep the learning center utilization rates up.

This quarter's, you know, margin decrease is just one time, and next quarter you will see the margin expansion for the educational business. Thank you, Yiwen.

Yiwen Zhang (Research Analyst)

Okay, thanks. That's very clear.

Stephen Yang (Executive President and CFO)

Mm-hmm.

Operator (participant)

Thank you. We will now take the next question from the line of Felix Liu from UBS. Please go ahead.

Felix Liu (Equity Research Analyst)

Thank you, management, for taking my question. First, I just want to say that I have a lot of respect to how you, New Oriental handled the situation with Dong Yuhui, and believe the decisions you made will be beneficial to the long-term branding of New Oriental. My question is a follow-up on the margin expansion. You mentioned that Q1, you expect the margin to expand by 200 basis points. May I check the pace of margin expansion or your expectation on the pace of expansion for the rest of the year? Do you think Q1 will be the peak of margin expansion, or do you expect this momentum to continue or even improve in the following quarters after Q1?

And also on the margin improvement driver, do you see the driver as mainly from operating leverage, or do you see the underlying segment margin also has potential for improvement? Thank you.

Stephen Yang (Executive President and CFO)

Yeah, Felix, you know, as for the margin outlook, you know, yeah, we, we guided the margin expansion in Q1 for the educational business will be expanded by 200 basis points. And I think, yeah, as you know, Q1 is the peak season for the educational business. And so in the rest of the year, Q2 to Q4, I think we'll keep posted, your guys set to the margin expansion, you know, in detail. And, so but, but as I said, we're quite confident about the whole year margin expansion, for the education business. And, the operating leverage. Yeah, you know, we opened more learning centers and hired more people in Q3 and Q4.

But I think this, market demand for educational business, also for the overseas related business, especially for the, the K-12 business, I think the demand is very, very strong. And we have seen the less competition in the market, even though we know the, the competitors are investing more money and human resources to take more market share. But we're quite optimistic that New Oriental will take more market share from the market. And I think we do have the operating leverage in hand. So you know, we will leverage the business by, you know, the top line growth. The, what I mean is the top line growth will, I think we will beat the top line guidance again in the Q1 for the whole new year.

And so I would believe the margin expansion in Q1 and the whole year of 2025.

Operator (participant)

Thank you. We will now take the next question from the line of Lucy Yu from Bank of America. Please go ahead.

Lucy Yu (Equity Research Analyst)

Hi, this is Lucy from Bank of America. So I have a question on the enrollment growth versus the capacity expansion pace. So if we're looking at this quarter, actually, our number of learning centers have been expanded by, like, 42% on a year-over-year basis, but the non-academic tutoring enrollments only grow, like, 39%. I know it's not a big difference, but if we looking at the past quarters, enrollment growth is always higher than the capacity expansion pace. So how should we think about the, you know, the difference between these two? Is it because of timing or some other reasons? Thank you.

Stephen Yang (Executive President and CFO)

Partially it's because of the timing, like the student enrollment window, the open, like the timing difference. And so, yeah, I think as I said, you know, I think in this quarter, you know, at the end of this fiscal year, we have added around 37% of new capacity. Yes, that's a little bit, you know, bigger than we expected. But I think we will bear fruit of since the Q1. So, you know, for example, as for the new business for the K-12, for the new business, you know, the top line growth in this quarter, in RMB terms, is 57% year-over-year.

Even in the coming summer, in the Q1, we believe the revenue of the new business will be somewhere around 50%, 45%-50%, 50% year-over-year growth. So I think the revenue will cover the incremental cost of the new learning centers. And on the other hand, I think the rentals per learning center per square meters get decreased because, you know, the markets change a lot. So I do believe we will get the operating leverage on rentals, even on the other cost and expenses going forward. We'll see.

Lucy Yu (Equity Research Analyst)

Thank you, Stephen. Sorry, just if I may, one small question is that you mentioned in the May quarter, there's a small amount of, like, one-off compensation paid to Dong Yuhui. I think it's one-off, but will that be any compensation paid to Dong Yuhui in the first quarter? That'll be all. Thank you.

Stephen Yang (Executive President and CFO)

Yeah, I think, you know, you know, the cost and expenses, you know, related to the sale of the Yuhui Tongxing will be happens in the Q4 and the coming Q1. So we will keep you posted, you know, in the next earnings call to tell you the exact numbers of how much we spent in the coming Q1. But it's one time.

Lucy Yu (Equity Research Analyst)

Okay, thank you. Okay, thank you so much.

Operator (participant)

Thank you. We will now take the next question from the line of Timothy Zhao from Goldman Sachs. Please go ahead.

Timothy Zhao (Equity Research Analyst)

Great. Hi, Stephen. Hi, Sisi. Thank you for taking my question. My question is regarding your revenue outlook for the new fiscal year. Just wondering if you can give us certain guidance on the revenue growth for different segments of the business, including the traditional K-12, the overseas test prep consulting, and the K-12 new initiative? I think that would be very helpful. Thank you.

Stephen Yang (Executive President and CFO)

Oh, yeah. As for the revenue outlook for fiscal year, for the new year, in different segments, you know, the overseas test prep business, I think the revenue growth in the coming new year will be somewhere around 20%-25% year-over-year. And the consulting business, you know, you know, the revenue growth will be somewhere around 15% year-over-year. And the new business, I think the top line growth of the new business will be increased by 45%-50%. And, as for the high school business, I think the revenue growth will be somewhere around 25%-30%. And, you know, as always, we will give the guidance by the most conservative way. Thank you.

Timothy Zhao (Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. We will now take the next question from the line of Charlotte Wei from HSBC. Please go ahead.

Charlotte Wei (Equity Research Analyst)

Well, good evening, Sisi and Stephen. Thank you for taking my question. My question is regarding competitive landscape. We noticed low-cost, more players have been more aggressive in terms of the expansion. Do you see competition intensifying this summer, especially in the top-tier cities? Can you share more color on the summer enrollment growth and the student retention rate? Thank you.

Stephen Yang (Executive President and CFO)

As for the competition environment, yeah, we have seen, you know, some competitors invest some money or open more learning centers in the top cities. But, but I, you know, I think as, you know, as the whole analysis of the competition, I think the competition situation now is less a lot than a couple of years ago, you know, before the policy. So and, so I believe the competition is less, and, and I think New Oriental will take more market share and seize the opportunity to provide the good services to the students. And the student enrollment for the summer, and we have already given the guidance.

You know, the top line growth will be in the range of 31% to 34% in dollar terms year-over-year, and this is for education business. You know, excluding the East Buy. Yeah, considering the style of our guidance. I think there will be the guidance, you know, in Q1. And the student enrollments in Q1, I think it's very good. So, I think we're quite optimistic about the top line growth and the margin expansion in Q1. Thank you.

Charlotte Wei (Equity Research Analyst)

Thank you. Very clear. May I have another question regarding the shareholder return? Because we have a lot of cash on hand.

Stephen Yang (Executive President and CFO)

Yeah.

Charlotte Wei (Equity Research Analyst)

Do you consider, like, upsize your share buyback plan if the current plan retires? Thank you.

Stephen Yang (Executive President and CFO)

Yeah. We do have the $400 million share buyback program in hand. And till yesterday, we finished, we finished, you know, the $294 million. So that means we have, we have, we have, one hundred million, you know, somewhere, one hundred million dollars left. So I think in the first step, we'll finish the $100 million share buyback. And, you know, once we finish the $400 million share buyback program, I think I will, the, discuss with Michael and the board to, to think about the even more capital allocation, you know, the share buyback or, the, the dividend to the investors.

You know, our company. You know, yeah, I think you're right. We're piling up the cash, and we have a lot of cash. We have $4.49 billion cash in hand. So I think we will create more value to the shareholders. And I think we should pay more capital allocation to the investors.

Operator (participant)

Thank you.

Charlotte Wei (Equity Research Analyst)

Thank you.

Operator (participant)

As a reminder, if you wish to ask a question, press star one and one. We will now take the next question from the line of Liping Zhao from CICC. Please go ahead.

Liping Zhao (VP)

Thanks, Stephen, for taking my questions. Just one quick question on your tourism business. So how much revenue contribution of your tourism business in your Q1 outlook? And looking ahead for the whole fiscal year 2025, how much revenue contribution will that business contribute? And also the bottom line track. Thank you.

Stephen Yang (Executive President and CFO)

Yeah, as for the tourism business, you know, in fiscal year 2024, in the last year, and the revenue was three hundred and eighty million RMB. And in fiscal year 2025, you know, we expect the revenue of the new, the whole year will be somewhere around 1.2 billion RMB. So this is our expectations. And in the Q1, I think the revenue growth of the tourism business will be somewhere around 180% year-over-year. Just a big number.

Liping Zhao (VP)

Thank you, Stephen. Also on the bottom line, how much will that impact?

Stephen Yang (Executive President and CFO)

Because we, we just started the business, the tourism business this year, and, you know, last year, you know, in fiscal year 2025, I think we will suffer the, you know, a loss because we start a business, still in the pace of the investment. So, but I think in the fiscal year 2026, the business, the tourism business will be profitable. And, you know, I think, I we believe, we believe the loss of the tourism business in fiscal year 2025 will be somewhere around RMB 100 million. Yeah. This is our expectations.

Liping Zhao (VP)

All right. Thank you. That's very helpful.

Stephen Yang (Executive President and CFO)

Thank you.

Operator (participant)

Thank you. As a reminder, if you wish to ask a question, please press star one one on your telephone. Once again, if you wish to ask a question, please press star one and one. We will now take the next question. From the line of DS Kim from JPMorgan. Please go ahead.

Sue Zhu (Executive Director)

Hello, sir. Hi, this is Sue. Good evening. Thanks for taking my question. I just have a quick follow-up, if I can. Would you have any comment on the recent regulatory environment, given the market concerns and whatnot? And as you all know, there was a public consultation paper on the tutoring policy, I think, back in February or end of January, early February. Have you heard any updates on that or any anecdotal color that you hear and see and listen from the regulators in on the ground? If you could share, it would be appreciated. Thank you.

Stephen Yang (Executive President and CFO)

I think we haven't seen any new regulations. You know, as I said, I think the regulation has not changed. You know, as the education industry leader, you know, we comply, you know, with the regulations as always, last for three years. I think going forward, we expect the regulation environment will be stabilized in the coming new year or even the year after.

Sue Zhu (Executive Director)

Thank you, sir. If I may follow up, I think that you already discussed that there were one-offs and all. Can you, if you could, quantify just for the modeling purpose, for the past fourth quarter, how much was roughly, what you believe was a, one-off impact from, Dong Yuhui Tongxing, and what not, if you could share? If not, totally fine, but just let me try. Thank you.

Stephen Yang (Executive President and CFO)

Yeah, but yes, you know, I'm afraid I'm unable to share with the detailed numbers, because, you know, I think the East Buy will announce their earnings in late August. So, and then by then, I think you know, in the earnings call of the East Buy, I think the management of East Buy will share more color about the numbers of these parties, the questions you asked, in August. Yeah.

Sue Zhu (Executive Director)

Thank you, sir. Thank you very much.

Operator (participant)

Thank you. We are now approaching the end of the conference call. I will now turn the call over to New Oriental's Executive President and CFO, Stephen Yang, for his closing remarks.

Stephen Yang (Executive President and CFO)

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.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.