New Oriental (EDU) Q1 2026 Earnings Transcript

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DATE

Tuesday, Oct. 28, 2025, at 8 a.m. ET

CALL PARTICIPANTS

• Executive President and Chief Financial Officer — Stephen Zhihui Yang
• Chief Financial Officer — Sisi Zhao

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RISKS

• Stephen Zhihui Yang said, "As for the overseas-related business, as you know, we are adversely affected by the external environment," and projected that due to international relationship and macro factors.
• Sisi Zhao confirmed share-based compensation expenses increased 239.8% year over year to $23.3 million in the fiscal first quarter of 2026, with management indicating this elevated level will persist "for the coming several quarters," potentially pressuring margins.
• Stephen Zhihui Yang stated, "The Q1, I think the situation is special because, you know, even since the second half of last year and Q1, we paid dividends from the office to LISCO, and we need to pay the withholding tax to the tax bureau. It's driving the ETR up in Q1. It was 27%. Typically, we pay 25% of the ETR. Going forward, I think we probably will do more, pay more dividends from office to LISCO. I think in this year, the ETR will be higher than that of last year or normal," highlighting a structurally higher tax rate related to capital allocation and dividend strategies.

TAKEAWAYS

• Non-GAAP Operating Margin -- 22% non-GAAP operating margin in the fiscal first quarter of 2026, up 100 basis points year over year, indicating improved operational efficiency.
• Non-GAAP Operating Income -- while GAAP operating income reached $310.8 million, up 6% in the fiscal first quarter of 2026.
• Net Income Attributable to New Oriental (NYSE:EDU) -- Non-GAAP net income was $258.3 million, down 1.6% in the fiscal first quarter of 2026.
• Deferred Revenue -- $1,906.7 million in deferred revenue at the end of the fiscal first quarter of 2026, representing 10% growth and supporting forward revenue visibility.
• K-9 (Primary & Middle School) New Business -- Management guides for over 20% year-over-year revenue growth in the fiscal second quarter of 2026 and fiscal 2026 for the K-9 new business, with junior high school revenue growth expected to outpace that of primary school in the fiscal second quarter of 2026.
• High School Business -- Management expects double-digit revenue growth to return in the fiscal second quarter of 2026.
• Overseas Test Prep Revenue -- Increased 1% year over year in the fiscal first quarter of 2026, with management noting offset by declines in the adult and college student segments in the fiscal first quarter of 2026.
• Overseas Study Consulting Revenue -- Increased 2% year over year in the fiscal first quarter of 2026; growth led by Asia-focused and background-enhancement subsegments.
• New Educational Business Initiatives -- Achieved 15% revenue growth in the fiscal first quarter of 2026.
• OMO (Online-Merge-Offline) Platform Investment -- $28.5 million invested in the fiscal first quarter of 2026 to upgrade and maintain the OMO teaching platform.
• Selling and Marketing Expenses -- General and Administrative Expenses were $373.8 million, up 2.4% in the fiscal first quarter of 2026.
• Shareholder Return Plan -- Board approved a $190 million total ordinary cash dividend ($0.12 per share or $1.20 per ADS paid in two installments) and a new share repurchase program of up to $300 million over the next 12 months.
• Guidance for Q2 -- Total net revenue is expected to be between $1,132.1 million and $1,263.3 million for the fiscal second quarter of 2026, implying 9%-12% year-over-year growth.
• Full Year Guidance -- Projected total net revenue of $5,145.3 million to $5,390.3 million for fiscal 2026, reflecting 5%-10% year-over-year growth, with management expressing high confidence in achieving these targets.
• Cash and Equivalents -- Term deposits of $1,570.2 million as of the fiscal first quarter of 2026 and short-term investments totaling $2,178.1 million as of the fiscal first quarter of 2026.
• Elevated Effective Tax Rate -- The effective tax rate in the fiscal first quarter of 2026 was 27% due to withholding taxes on internal dividends, with expectation of structurally higher ETR for the current fiscal year.

SUMMARY

New Oriental Education (NYSE:EDU) highlighted strategic investments in AI-driven platforms and a substantial shareholder return initiative. Management signaled ongoing headwinds in overseas business and a persistently higher effective tax rate for fiscal 2026 due to capital allocation activities.

• Stephen Zhihui Yang emphasized the intent to "closely monitor the pace and scale of new openings, aligning them with local operational needs and financial results throughout the year," underscoring a disciplined approach to expansion.
• Sisi Zhao indicated that "SBC expenses will be similar with this quarter and at this kind of level for the coming several quarters," which may affect near-term profitability trends.
• The dividend plus buyback program, totaling approximately $490 million, represents a payout exceeding 130% of last fiscal year's net profit, according to management, based on the net profit for fiscal 2025, reinforcing a focus on shareholder returns.
• AI investments span both internal operations and customer-facing platforms, with management highlighting improvements in customer retention and expectations for further margin gains in upcoming quarters.

INDUSTRY GLOSSARY

• OMO (Online-Merge-Offline): Hybrid educational delivery model integrating digital platforms and physical classroom experiences.
• ADS (American Depositary Share): A negotiable security representing shares in a non-U.S. company, traded on U.S. exchanges.
• SBC (Share-Based Compensation): Expense related to equity-based remuneration granted to employees or management, such as stock options or restricted shares.

Full Conference Call Transcript

Stephen Yang: Thank you, Sisi. Hello everyone and thank you for joining us on the call. Before diving into the details of our first quarter results, I would like to share that after a period of testing and trialing various business models and offerings, formulating the right strategy and direction for New Oriental, we're pleased to see that the company has now entered a stable growth trajectory. This quarter, we recorded an encouraging set of results that exceeded our expectations, mainly driven by our strong capabilities, enhancing operational resilience, and sustainable profitability. This quarter's total net revenue has increased by 6.1% year over year.

Bottom line-wise, we're delighted to see that our efforts to manage costs and streamline efficiency have yielded tangible success, with non-GAAP operating margin reaching 22% this quarter, representing a year-over-year improvement of 100 basis points. Our key remaining business remains solid, while our new initiatives have continuously demonstrated positive momentum. Breaking down for the first fiscal quarter of 2026, overseas test prep business recorded a revenue increase of about 1% year over year. Overseas study consulting business recorded a revenue increase of about 2% year over year. Our adults and university students business recorded a revenue increase of 14% year over year.

At the same time, our continued investments in new education business initiatives, primarily centered on facilitating students' all-around development, have delivered consistent progress, further driving the company's overall momentum. Firstly, the non-academic tutoring business, which focuses on cultivating students' innovative ability and comprehensive qualities, has now been rolled out to around 60 cities. Market penetration has grown steadily, particularly across high-tier cities. The top 10 cities contribute over 60% of this business. Secondly, the intelligent learning system and device business, which utilizes our past teaching experience data technology to provide personalized and targeted learning and exercise content to improve students' learning efficiency, has been tested in around 60 existing cities.

We're encouraged by the improved customer retention and scalability of these new initiatives. The top 10 cities contribute over 50% of this business. In summary, our new educational business initiatives recorded a revenue increase of about 15% year over year for the first quarter of 2026. Moving to the integrated tourism-related business line, and breaking down, both domestic and international study tours and research camps for K-12 and university students were connected across 55 cities nationwide, where the top 10 cities contributed over 50% of our revenue. In parallel, we provide a series of premium tourism offerings primarily designed for middle-aged and senior audiences across 30 provinces in China and internationally.

Our product range has also been expanded to now include cultural travel, China study tour, global study tour, and camp education. With regards to our OMO (online merging offline) system, our efforts in developing and revamping our OMO teaching platform continued. These efforts aim to deliver more advanced and diversified education services to our customers of all ages. A total of $28.5 million have been invested during the quarter to upgrade and maintain our OMO teaching platform. Beyond OMO, we continue to focus on our venture in AI. Our newly launched AI-powered intelligent learning device and smart study solution marks significant steps of our ongoing pursuit to transform education through technology.

Encouraged by the positive market feedback, we have been and will continue to refine and embed AI across our offerings to strengthen New Oriental's core capabilities. Simultaneously, we're also leveraging AI to streamline internal operations, thereby boosting efficiency and providing enhanced support for our teaching staff. As an industry leader, we're dedicated to driving long-term revenue growth through a dual focus on product innovation and operational efficiency. In upcoming quarters, we look forward to sharing tangible results and positive highlights on performance that are backed by our investments in AI.

Now, with regards to East Buy's performance, in fiscal year 2026, East Buy strategically invested in its private label portfolio centered around the promise to deliver products that are healthy, high quality, and good value for money. As we enrich East Buy's product categories, our blockbuster offerings, namely the nutritious food product line, have particularly stood out. We have strengthened our capability through rigorous end-to-end quality management, from sourcing to after-sale service, which resulted in greater market recognition for our private label products. During the reporting period, East Buy further advanced its East Buy app and membership platform, connecting our loyal customer base to premium products and services.

As the business continues to evolve steadily, East Buy has intensified its focus on improving operational efficiency and profitability metrics to align closely with the group's corporate strategies. Now, I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.

Sisi Zhao: Thank you, Stephen. Now, I'd like to share our key financial details for this quarter. Operating costs and expenses for the quarter were $1,212.2 million, representing a 6.1% increase year over year. Cost of revenues increased by 9.3% year over year to $637.8 million. Selling and marketing expenses increased by 3.6% year over year to $200.6 million. G&A expenses increased by 2.4% year over year to $373.8 million. Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 239.8% to $23.3 million in the first fiscal quarter of 2026. Operating income was $310.8 million, representing a 6% increase year over year.

Non-GAAP operating income, excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was $335.5 million, representing an 11.3% increase year over year. Net income attributable to New Oriental for the quarter was $240.7 million, representing a 1.9% decrease year over year. Basic and diluted net income per ADS attributable to New Oriental were $1.52 and $1.50 respectively. Non-GAAP net income attributable to New Oriental for the quarter was $258.3 million, representing a 1.6% decrease year over year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $1.63 and $1.61 respectively.

Net cash flow generated from operation for the first fiscal quarter of 2026 was approximately $192.3 million, and capital expenditure for the quarter was $55.4 million. Turning to the balance sheet, as of August 31, 2025, New Oriental had cash and cash equivalents of $1,282.3 million, $1,570.2 million in term deposits, and $2,178.1 million in short-term investment. New Oriental's deferred revenue, which represents cash collected upfront from customers and related revenue that will be recognized as the service or goods are delivered at the end of the first fiscal quarter of 2026, was $1,906.7 million, an increase of 10% as compared to $1,733.1 million at the end of the first fiscal quarter of 2025.

Now, I'll hand over to Stephen to go through our outlook guidance and our new shareholder return plan. Stephen.

Stephen Yang: Thank you, Sisi. Following a strong start to the fiscal year, we're optimistic about further improving our margins and operational efficiency while staying committed to effective cost control and sustainable profitability across all our business. As part of these efforts, we're taking a thoughtful and strategic approach to capacity expansion and hiring, ensuring that we continue to grow without compromising the quality of our offerings. We plan to increase our presence in cities with stronger top-line and bottom-line performance last year, while carefully managing resources. Rest assured, we will closely monitor the pace and scale of new openings, aligning them with local operational needs and financial results throughout the year.

Guidance-wise, we expect total net revenue for the group, including East Buy, in the second quarter of the fiscal year 2026, September 1, 2025 to November 30, 2025, to be in the range of $1,132.1 million to $1,263.3 million, representing a year-over-year increase in the range of 9% to 12%. In the second quarter, we projected a notable acceleration of revenue growth in K-12 business, driven by our enhanced service quality, which has led to steady year-over-year and quarter-over-quarter improvements in student retention rates.

As for the full fiscal year 2026, we're very confident that our previously provided guidance of total net revenue for the group, also including East Buy, to be in the range of $5,145.3 million to $5,390.3 million will be realized, representing a year-over-year increase in the range of 5% to 10%. As part of our appreciation for our shareholders' unwavering support, we today announced that the shareholder return plan for the fiscal year 2026 has begun. The board of directors has approved an ordinary cash dividend and new share repurchase program.

Regarding the ordinary share dividend, the ordinary cash dividend of $0.12 per common share or $1.20 per ADS will be paid in two installments with an aggregate amount of approximately $190 million. The first installment with $0.06 per common share or $0.60 per ADS will be paid to holders of common shares or ADS of record as of the close of business on November 18, 2025, Beijing and Hong Kong time and New York time, respectively.

The second installment, $0.06 per common share or $0.60 per ADS, is expected to be paid around six months after the payment date of the first installment to holders of common shares and ADS of the record date to be further determined by the Board of Directors. Details of the second installment will be announced in due course. Regarding the share repurchase program, pursuant to the new share repurchase program, the company may repurchase up to $300 million of its ADS or common shares from the open market over the next 12 months.

To conclude, New Oriental remains committed to our trajectory of sustainable growth, delivering premium offerings to our customers and sharing the fruits of our success with our shareholders. We're also in close collaboration with the government authorities in various provinces and municipalities in China, ensuring compliance with the relevant policies, guidelines, and any related implementations, regulations, and measures, and adjusting our business operation as required. This is the end of our fiscal year 2026 Q1 summary. At this point, I would like to open the floor for questions. Operator, please open the call for these. Thank you.

Operator: 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 now, please press star one-one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one-one again. We will now take our first question from the line of Felix Liu from UBS. Please ask your question, Felix.

Felix Liu: Hi. Good evening, management. Thank you for taking my question. I'm glad to hear that you mentioned or expected a notable acceleration in your K-12 business in the upcoming quarter. I know previously there are market concerns over increased competition, especially over the summer. Could management elaborate on how is the latest competition landscape in K-12 that you are feeling at the moment? Have you made any adjustments to your strategy? What is a reasonable level of sustainable growth for your K-12 business in the mid to long term? Thank you.

Stephen Yang: Thank you, Felix. First of all, I'm very happy to see the revenue growth acceleration in our K-12 business since Q2. As you know, I started in Q1, and even for the whole year, I think our target is to enhance our quality of product and service in K-12 business. I think since Q2, we will see the good result. I think the better quality drives the student retention rate up after the summer. That means more and more students choose our Q2 course. Also, the better word of mouth attracts new student enrollment of our autumn classes.

As you know, we meet some competition pressure in the summer because some competitors were using the low price or even the free course strategy. Now we're happy to see students came back to New Oriental to enroll our classes in autumn. That's why we raised the guidance of the K-12 business. Let's divide the K-12 business one by one. We expect the K-9 new business revenue growth will be around 20% year-over-year growth in Q2. For the high school business, I think in Q2, the growth rate will return to double-digit growth. I think you see the revenue acceleration since Q2.

I think the high student retention rate and the better word of mouth will drive the revenue growth acceleration. I believe the revenue growth acceleration will continuously in since Q2 and throughout the year. For the whole year, 2026, I think the K-9 business will be, the year-over-year growth will be over 20%. For the high school, like the double-digit growth. I think our strategy is correct because the student retention rates, both for the primary school students and the middle school students and the high school students, all business lines, the student retention rate is getting higher year over year.

Felix Liu: Thanks.

Stephen Yang: Okay, thank you.

Operator: Thank you. Our next question comes from the line of Alice Tai from Citibank. Please go ahead, Alice.

Alice Cai: Good evening, Stephen. I have two questions. Quick question. First, on SBC, it jumped a lot to $23 million this quarter. I'm wondering what drove this increase and what's the outlook? The other increase, $21 million. Would you break down what the driver is for the SBC?

Stephen Yang: Yeah. I think Alice, your question is about the SBC, the share-based compensation. I think, you know, in the second half of the last fiscal year, we issue, we grant the AES shares to the management and the staff and teachers, you know, in the next three years. It's driving the SBC up. Yeah, the number of the SBC in this quarter is bigger than that of last year. Yeah, you know.

Sisi Zhao: You can roughly estimate going forward every quarter, the SBC expenses will be similar with this quarter and at this kind of level for the coming several quarters.

Stephen Yang: Yes, I think typically, the first of the year, we recorded more SBC expenses, more in the first of the year and then less in the second and the third of the year.

Alice Cai: Thanks so much.

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

Lucy Yu: Stephen, I have a question on overseas. It looks like overseas has been stronger than your earlier expectation. Could you please break down the test prep growth by age and also the consulting group growth breakdown by subsegment? How should we think about the overseas sustainability growth? Will that impact your guidance for the full year? Thank you.

Stephen Yang: Yeah. As for the overseas-related business, as you know, we are adversely affected by the external environment. Last quarter, we guided in Q1 the revenue of the overseas-related business would be down by 5%. In Q1, I think overseas test prep still grows by 1%. Overseas consulting business grows by 2%. I think we will strive to minimize the negative impact going forward. In Q2, we still guide the overseas-related business will be down by a low single digit in Q2, which we are still using the conservative method to make the forecast. I think the negative impact from the international relationship, even the outside environment, changed a lot. I think we will strive to minimize the impact.

We do expect we can beat our guidance because we do the guidance in Q2 even for the whole year more conservatively. Lucy.

Lucy Yu: Stephen, just to follow up. For example, your test prep is positive. By age group, like younger age, high school, and like college students, which one of them is better than expected? Also, for the consulting business, I believe that 60% is around pure consulting and the other 40% is like background raising. Which part of that is better than expected?

Stephen Yang: Within the overseas test prep, the younger age students group, the business of that part grows very fast, even more than 25% year over year. That's why in the makeup of the adults or even the college students, this is down. Within the overseas consulting business, I think the non-U.S. and U.K. business, especially for the Asia country consulting business and the background improving business, still grow very fast. As a whole, I think the overseas test prep and consulting business, we will still give the guidance of like the 4 or 5% down year over year. I believe we will do better than our guidance. Lucy.

DS Kim: Okay. Thank you so much, Stephen.

Stephen Yang: Thank you.

Operator: Thank you. Our next question comes from the line of D.S. Kim from J.P. Morgan. Please go ahead, D.S.

DS Kim: Hi, Stephen. Hi, Sisi. Good evening. Thanks for taking my question. I actually wanted to ask why the share price is down 6%, 7% pre-market, but I guess that's a question for the market and you. I actually have a question regarding shareholder return policies, if that's okay. How do we think about the policy going forward? Say, you know, is this based on your projected or budgeted net profit and payout ratio, or is it more based on our expectation on cash flows and whatnot?

The reason why I'm asking is if I use my own estimated the GAAP EPS, what you announced is roughly about 100% payout, say like 40% payout for the dividend and 60% for buybacks based on my GAAP net profit or EPS. Is that what we should think about going forward? I.e., you know, like we could pay regularly over 50% as you guided, but more like 100% payout going forward based on this earnings and payout, or shall we treat the buyback as one-off only for the current year because the stock price is low and you know we only need we can only expect 50% going forward?

Like can we walk us through how we can think about the payout ratio or shareholder return going forward?

Stephen Yang: I think, yes, it's a good question. I think you know last quarter our board approved three years shareholder return plan. You know this early we announced earlier today, you know we paid $190 million dividend, you know which amounted to the 50% of net profit we generated last year. Combined with the $300 million, the new share buyback program. Let's do the math. You know I think you know the payout ratio this year is over 130%. You know if you compare the capital allocation with the net profit we made last year. The dividends plus the share buyback yield is over 5%.

I think going forward next year, I think the dividend we will pay because I think this is a regular dividend. The $300 million share buyback you know we announced this year is not one-time. It's not one-time. I think you know next year, I think I will discuss with the board and push the board to approve the new capital allocation program. I think we will keep the high level of the payout ratio and yield. You know think about that. We meet some pressure of slowing down the top line. You know we can still like that go like the 10% or plus top-line growth and generate higher margin. Also, we are piling up the cash.

That's why the board supports the management to pay more capital allocation to investors. I think the investors deserve to get more money, the capital allocation from the company. We announced three years the shareholder return plan. I think in the next year, we will pay more.

DS Kim: Thank you, sir. If I may follow up just on that part, just to clarify, when I said 100%, that was based on fiscal year 2026, my EPS? Because the wording of the announcement says this is a dividend for fiscal year 2026. Based on what you say, shall we going forward expect that like what you announced is actually coming out of fiscal year 2025 earnings and what you are going to announce next year will be coming out of fiscal 2026? Will there be a one-year delay? Is that how we should think about it? I guess it's all flexible, but just wanted to get your thoughts.

Stephen Yang: I think this is our internal policy because you know we make the calculation based on the last year net profit. Last quarter, we announced that we pay no less than 50%. Finally, we paid 30%. Next year, I think we will calculate based on the net profit we made in fiscal year 2026, and we will do the same thing.

DS Kim: Thank you, sir. I think that's actually much, much better than what I had expected. I am again wondering why stocks down 6, not up 6. Anyway, let's see how it goes. Thank you so much, sir.

Stephen Yang: Okay. Thank you. Yes.

Operator: Thank you. Next question comes from the line of E. Quinn Chung from Citi. Please go ahead, E. Quinn.

Yiqun Chen: Good evening, management. Thank you for taking my question and congratulations on the strong results. My question is regarding the operating margin. Since the operating margin in Q1 is quite good, I'm not sure if it was mainly due to the cost reduction plan or some other reasons. How can we expect the contribution of the cost reduction plan for the next season or for the full year? How do we expect the operating margin for the full year? Thank you.

Stephen Yang: Thank you, Quinn. It's a good question about margin. Let us start the margin analysis of this Q1, this quarter. Even though we meet some margin pressure from the slowdown of the overseas-related business, we still got the group margin expansion by 100 basis points in Q1. I think the margin expansion was mainly driven by the better utilization, operating leverage, the cost control, and the profit contribution from East Buy. As you know, we started to do the cost control since March, in the last fiscal year, this year, March. We have seen the good result. I think it will help the margin expansion, even in the rest of the year, this fiscal year.

We look ahead into the Q2 margin guidance. I think we are quite optimistic about the margin expansion for the whole group in Q2. That means the core business and the East Buy business, both of the business, the margin will be up in Q2. I believe the margin expansion in Q2 will be greater than that of Q1. As for the margin outlook for the whole year, I think the whole group are focusing on the profitability across all business lines. We are doing the cost control in all business lines. We do hope we can get the margin expansion for the whole year for the group. Thank you, E. Quinn.

Yiqun Chen: Thank you, Stephen.

Stephen Yang: Yeah.

Operator: Thank you. We'll take our next question from the line of Elsie Sheng from CLSA. Please go ahead, Elsie.

Elsie Sheng: Hi, Stephen, Sisi. Thank you, and congratulations on the very good result. I have a quick question on the tax rates because I noticed that the tax rate in the first quarter is higher. Could you let us know what we should look at for the tax rate in the next quarter and also for the full year?

Stephen Yang: Yeah. The Q1, I think the situation is special because, you know, even since the second half of last year and Q1, we paid dividends from the office to LISCO, and we need to pay the withholding tax to the tax bureau. It's driving the ETR up in Q1. It was 27%. Typically, we pay 25% of the ETR. Going forward, I think we probably will do more, pay more dividends from office to LISCO. I think in this year, the ETR will be higher than that of last year or normal. The reason is that, you know, you saw, we announced earlier today, we raised the capital allocation to investors, roughly $490 million as the capital allocation total.

We need more dollars, and that's why it drives the ETR up.

Lucy Yu: Okay. On this end, it's very clear. Thank you.

Stephen Yang: Thank you.

Operator: Thank you. As a reminder, to ask a question now, please press star one-one on your telephone keypad. We now take our next question from the line of Timothy Zhihui Yang from Goldman Sachs. Please ask your question, Timothy.

Timothy Zhao: Hi, Stephen. Hi, Sisi. Thank you for taking my question. My question is regarding the K-12 non-union initiatives. When I look at the enrollment growth for this quarter, I still notice a pretty big gap between the non-academic tutoring and the intelligent learning system and devices. Just wondering, can we use that gap to model the revenue growth gap between these two segments for the first quarter or the second quarter? Do we think that this gap may sustain, I think, going forward, given I think for the intelligent learning system, I think it's very good business. It's probably also marginally attractive to you. Thank you.

Stephen Yang: I think the growth rate, the revenue growth of the junior high school business is a little bit faster than the primary school business because, first of all, it's a little bit low base than the kids' business. Secondly, we spent a lot of the efforts and resources in the last three, four years to open a new business of the middle school business. I think the whole team contributed a lot to provide a better product to the customers, and the students love the new product. That's why the revenue growth is better. Going forward, I think we believe the revenue growth of the middle school business will be a little bit higher than the kids' business.

As a whole, the K-9 new business grows, you saw our guidance of Q2. Even for the whole year, I think, yeah, definitely, the revenue acceleration is coming. As I said, in Q2, the K-9 business, roughly 20% top-line growth. We do hope we can do better in the second half of the year. Tim.

Timothy Zhao: Understood. Thank you. Thank you, Stephen.

Stephen Yang: Thank you.

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

Stephen Yang: 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: This concludes today's conference call. Thank you for participating. You may now disconnect your line.

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