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New Oriental Education & Technology (EDU)

Participants
Sisi Zhao Director, Investor Relations
Stephen Yang Executive President and Chief Financial Officer
Felix Liu UBS
Mark Li Citi
Candis Chan Daiwa
Tian Hou T.H. Capital
Sheng Zhong Morgan Stanley
Alex Xie Credit Suisse
DS Kim J.P. Morgan
Lucy Yu Bank of America Merrill Lynch
Jessie Xu Nomura
Christine Cho Goldman Sachs
Call transcript
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Operator

Good evening and thank you for standing by for New Oriental’s FY 2021 Third Quarter Results Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements' 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. to conference, meeting Ms. like host to now today’s for would turn over the your I Sisi Zhao. please you, Thank go ahead.

Sisi Zhao

earnings Okay, welcome thank call. XXXX to and conference New Oriental’s you. third fiscal Hello everyone, quarter

available the financial the prepared Chief Today, answer Financial President on as to you periods Our hear website will Stephen for were earlier and Stephen are Company’s Newswire today on as his and from questions. Officer. remarks, released I well will After available and Services. be your Executive results Yang,

Before please forward-looking Private XXXX. continue, of Safe note we of today that U.S. will statements Harbor the contain Securities the the Act discussion Litigation Reform made under provisions

Forward-looking statements and involve inherent risks uncertainties.

risks materially from in may such, outlined expressed the and our results public As filings potential the uncertainties different our with are today. be views SEC. of A number

does statements, forward-looking New update any law. except as undertake Oriental to under applicable obligation any not required

being this As recorded. reminder, conference a is

webcast Oriental’s over a Yang. addition, the of call please be to call website will will turn I ahead. go Relations In investor.neworiental.org. Stephen, Investor on now conference New Mr. this available at

Stephen Yang

everyone, Hello Sisi. joining you thank call. you, Thank us on for the and

country, challenges in recovery. in the wave business outbreak With it’s of the our and the the a northern controlled albeit navigated saw of strong part in small pandemic China, largely momentum

a exceeds strategy are to the expectations. that representing net year-over-year, our increase taken that quarter Total during set period. business million, announce this of a of financial was which We reflection we year pleased very affirming XX% encouraging third results difficult in is the revenue the a have $X,XXX

revenue growth after-school all-subjects K-XX business, of XX%. approximately driver, year-over-year achieved growth key Our tutoring

tutoring growth a approximately school our Kids XX%, of with its recorded XX%. high momentum continued middle business U-Can program school approximately while POP all-subjects of growth after-school Our a

continued around to travel Our strong pressure overseas uncertainty globe pandemic the and the businesses, being the restrictions situation of due showed under despite related resilience.

that is for about of revenue a while expected increase better study overseas the result about quarter, revenue than and decrease a overseas is the prep year-over-year this recorded Although recorded of consulting we result. XX% test XX% the business tour positive very which

our the effects once XX our offline importance proved Our as swiftly the of to instrumental of it to again be the core quarter. in migrate strategy class OMO promising industry-leading new online around us The the the and pandemic online cities existing majority number and has possibility has driver is and and encouraged has and the wave this system Northern low the business revenue boosted last is early solicited for of courses in systems a and overall the third answer to the strong the centers company’s increased by say semester test certain vast China surrounding once to cost learning prep majority XX% year it winter highlighted the effect cities the have subjects time, largely of cities growth a our that in OMO committed our outbreaks offline expand in and start the been been acquisition attracting new since new from in enrollments that. The system been an its and in system again OMO becoming customer the effectively to of contribution - of of revenue back pandemic with fiscal small in student period to piloted and learning of delighted of which this online the offline around to to has COVID-XX crucial with part challenging OMO have approximately OMO of and in China COVID-XX in truly during classes in respond is are of XXXX controlled, progress. outbreaks courses between enable academic enrollments students to XX of vast of other year-over-year avoiding our is the migrated the this cities distractions OMO X,XXX,XXX, online At classes the where to in the classes and need increased The line migrating quarter. Total we same students they flexibility we quarter and satellite the student tutoring reach by customers. expectations.

by terms about is terms. pricing, cash in by dollar student enrollments, of which program blended revenue ASP, X% per In divided total year-over-year increased

As ASP, total price To in divided X% with teaching normal which is flat blended increase X%. hours and hourly VIP by our of revenue test about a blended Kids note overseas RMB for increased U-Can POP by by increased ASP, by is line by of to prep classes year-over-year hourly increased cash X% XX%, year-over-year U-Can and X%. increased that programs increased by terms. all please provide X% breakdown in X%.

our Now business individual some I detail. in like to would to talk quarter’s time lines across this about performance spend

in under up across As lines. to recovery control momentum quarter China, largely pick the business this pandemic continued in our became

of U-Can XX% Our revenue high dollar for key school the achieved Student approximately business, middle all-subjects growth tutoring revenue terms. and terms for year-over-year the Breaking quarter. business enrollments recorded XX% grew school in quarter. dollar of driver, revenue XX% it after-school increase in a year-over-year K-XX approximately approximately down, the

in outstanding increased with Enrollment delivered quarter. by about Our for for XX% the XX% up about terms the the POP dollar Kids results revenue program quarter.

decrease last including And X% world test of business dollar parts overseas business as most and the year-over-year increase XX% letting finally, overseas dollar unpredictability The terms VIP of about the while tour recorded quarter’s personalized its in a quarter year-over-year study the business, for for exams the despite a for prep prep overseas about revenue the XX% difficult revenue consulting signs to showed quarter. related recovery well students in restrictions of cancellation to consulting XX% of cash quarter, to increase. as the terms hesitant and the recorded situation last test in different facing the on decrease XX% overseas about encouraging recorded revenue overseas class Our in of the of recovery momentum and due travel, challenges quarter, business the pandemic increase of continuing business from the comparison in abroad. study of

service in existing market XX we also up class is for of to the new a for model resume is year. academic out prepared to for strong Kids markets the efforts scalability, are in the in education the when with in for training presence POP Chinese quarter. prepare expectation, our made in expansion cities. continued has start recruiting our penetration as this gradually student of continue we area our of this cities offline line cities, as we academic at by throughout network ramp Hengshui. U-Can year to this This one customer pandemic program different following XX XX% have satisfactory increase us use and sure our classroom and retention to the The new city increase more The meter X% two for in existing capacity expansion program our tapped schools model over with those expansion the a offline can square our end opened across quarter We year-over-year, the we We carry with we increased will that approximately rolled quarter-over-quarter tutor fully out by into. total

education, space has of COVI-X resources demand of the integrated to this more invested quarter allocated to we the maintain $XX online importance and and ecosystem. million improve our have outbreak highlighted and OMO As in education

is this model through Our quarter nearby OMO become in satellite OMO new one yet system far low-cost another how education return rapidly these business piloting can China. cities success in major of the but the most in reaching cities the of XX testament around service high

for teaching system have enhance the quarters. We allocated the for Apart tools as system further teachers the our well from best of the lines few OMO in time, are integrated integrated we and infrastructure, and content content education program resources advance online-offline growing next the very to part the as to business our throughout optimistic broaden upgrade methods. the the develop platforms growth to our and our about same usage the demand. continue response to we cater online the their network, in whole to courseware will skills all for of OMO teaching At technology online-offline training in to OMO potential

in fiscal are OMO training qualified started provide enrollments classes. to coming the in marketing offer K-XX the since we year To class of large new ROI in attract after-school to new channels. industry-leading in other education online but has the and enjoy of spending consequently introducing very the by major benefit Koolearn of tutors our impacts invests year But cautious the and and our more normalize the more huge also new teaching customers things high and only the customer that investment a the teachers staff. small able believe the play recovery Koolearn the continued amount cities. of Dongfang in half that’s a the size this added in the will of most establish quarter investments has demand upgrading the adding systematic quarters. second representatives to advantage the spending last online identifying see significant through bolstering in attract marketing from customer continue significant in Furthermore, currently and marketing past in ecosystem features it area, We allocated programs. pandemic and the remain also see meaningful our huge part to to of as locations in fiscal cushion opportunity stable. initiatives best-in-class the successfully glad a of a apps experience training and from we online marketing been These enhancement business the to to and capture mover courses stand Koolearn business the has and increase pandemic. quarter this on first service rates service Youbiao tutoring managed we K-XX online to of more interactive amount are are been market size A education the to and platforms, executing to retention learning to reached centers effects our staff resources during technologies, peak

low user improving for We users, new existing will name while relatively brand will We of with the which Koolearn word level. continue cost average retention. believe English advantages, the at keep promotion are enhancing focused mouth to emphasizing programs return in on a acquire quickly strand efficiency and the acquisition operational

turn Sisi. like ahead, to to the would Ms. call Zhao. Sisi to I over Go Now

Sisi Zhao

Yes.

cost attributable period New operating which for decrease Operating quarter year-over-year. to fiscal margin to Now, talent margin in a the the same the and addition XX.X% the for the to industry. expenses from and income expenses same increased with income US$XXX.X compensation the were compensation XX% diluted compared the post fiscal million, let compensation X.X% Non-GAAP the opportunity earnings Oriental were year. by ADS to the US$XX.X mostly for million. Oriental third expenses of share-based who $X.XX in Non-GAAP exclude a Non-GAAP details the and new the marketing due $XXXX.X same increase were million per share-based representing a Basic costs a and of expenses, me respectively. $X.XX attributable XXXX excludes prudent quarter US$XXX.X to expenses financial New of primarily for Capital earnings staff position year. for for aim you for of $X.XX the in cost for increasing to year-over-year. representing year-over-year also expenses prior the expenses compared million in approximately the the Cost year-over-year. XX% at million, the Net operating expenses was operating primarily which and compensation for increase decrease Non-GAAP the increase by a $X.XX to learning period and US$XXX.X Non-GAAP increase for year-over-year. keeping were X.X% ADS US$XXX.X in operating XX.X% teaching are operating share-based increased to US$XXX.X walk by marketing US$XXXX quarter. by XX.X% to million. US$XXX.X prior fiscal executing existing increase US$XXX.X diluted education number same Oriental strategy X.X%, income in higher from a was to Net opening XX.X% US$XXX.X were a capture year-over-year million. expenses net compensation hours G&A period the primarily key for The quarter a COVID. rental attributable to quarter to XX.X% X.X% of exclude representing quarter to year. for quarter was million, year-over-year assets million, increase per the of was would XX.X% Operating through increase fiscal million, of of XX.X% our flow and Selling G&A OMO XX.X% represent Total cash US$XX.X for allocated in was increased put to Oriental were third period was cost million renovations teaching of XX.X% representing teachers' attributable the fiscal basic million and and prior us facilities market which in which learning New decreased revenue Operating centers. the representing million, representing which the expenses quarter quarter, due was centers the the share-based related Non-GAAP New teacher’s attributable quarter to the representing quarter respectively. was and greater year-over-year. expenditure schools year-over-year compensation prior US$XXX.X for were XXX the and more operation. year. income of

of the XX, of of to as million to US$XXXX.X as Turning million cash as XXXX. US$XXX.X May compared New February and sheet, had Oriental equivalents cash balance XXXX, XX,

In deposits investment. short-term in million in addition, and million the US$XXXX.X had US$XXXX.X term company

million New the million, were quarter was instructions revenue fiscal end the students of which fiscal of balance, the from at cash the for XXXX XX.X% compared US$XXXX.X delivered XXXX. of – third Oriental’s of is as year quarter year the revenue end of and increase the US$XXXX as collected proportionally to recognized deferred fiscal an registered third as at US$XXXX courses

Now I'll walk guidance. outlook to to our and over Stephen through hand you

Stephen Yang

performance ahead the the the opportunity are about the XXXX, we year into and quarter over trend of Looking next financial market run. fiscal long company’s of more clear recovery near-term the

the ethos of strategic the increasing enhancing improving year aim and Our and market investments we take consolidation, focusing education the acquire of quality, requires teachers’ market competition education. which opportunity and the essence opposed investment to and system, focus our quality the a of post-COVID strategy firmly short-term sustainable often on a compensation balanced growth, long-term advantage of fully excessive industry-leading improve investment to that will view the to and higher of growth customers. product and approach at as stable our unhealthy maintain our with to this aim that achieve service reflects In cost

continue business continue position some will areas: XX% offline will learning to around the aim to including As period. our new fiscal this as business on to We other the following classroom our We and such, we online learning from key the existing may capacity, post-COVID, add strong we players will focus business. expansion smaller financial be believe further players K-XX First, expanding to in year. expand prepare not some capability centers, their to of us to able during area centers share believe we and sustain class without market capacity take

fact fresh major strengthen and player pandemic us that enable a capacity financial consolidation The phase. and strong the expect offline a are further will to facilities the position with we wave We our market market-leading of industry undergo penetration. upon a

will OMO in investments above network our into our teachers. OMO programs whole efforts teaching system the Second, The lines advanced experience, all best all prep more place our to and With tools training will the will It in parts our online our margin will infrastructure of further in new test a for our expand to place, language to We the our for continue throughout in initiatives OMO is This quickly satellite can developing major cities. market pilot operational be of over teaching more our courseware initiatives also in business replicate revamped is pandemic offerings, to target. demand high in capture be and and will and to technologies the enabling continue our that also post-COVID developing OMO belief growth more – recovery the our and K-XX will that higher to as with whole training when surrounding our business content the enhanced. mentioned the especially system leverage contribute business efficiency opportunity. cities offline business. of in we model long-term contents usage tutoring us digital our we OMO and overseas key one online test and and introduce consolidation we engines we acquisition believe different increase customer our the China, margin and to

supported to in hybrid by supplement our classes. These have I Here other products each are these all of OMO format. a highlight offline

up different the from on Third, migrating peak challenges aimed at the the needs during ramp the of we saw necessary of the areas pandemic, the spending business the pandemic. to

– now normal a to level. business the business Now, recovers readily the that

forward, will Going operational efficiency. the company the expenditure overall of we to comp rise improve the closely across operating

the to Here we I of we to which believe would our remain we that business confidence in stress have great like continue fundamentals will strong.

we to optimistic in investments We're increasing investments trends for We and revenue year-over-year provide us run. be strategies $XXXX.X expected expected recovery a the tour XX% expectations to – been semester quarter, business to recovery total representing business education test our in our flattish To lines, the up kinds the utilization now growth key is be the and and operational to and to believe bring accelerate looking the Koolearn.com of and next expected we around are Overseas XX%. spring all breakdown the have speed XX%. business for the the of $XXXX.X prep and to of to study platform near-term business will of taking of brighter XX%. is the for be prospects our different classroom to and XX% pure increase and expect of million, after actions to of the grow schools million in centers. is grow boost the year-over-year enrollments To top-line remain growth all K-XX range in our expected resumption we of the the at of at in of dollar the Overseas the is business program long in range consulting to online the range expected now the learning conclude, study, terms.

current business after process picking I the in the that toward up expectations for considerations trending of normalized level. the latest We are tutoring mention our must that these confident and regulatory Sisi open the subject school and are of as our demand reflect gradually will which Thank call questions. situation as pandemic this your well I take Operator, and change. situation, preliminary point, At to and this. is for the view, please you.

Operator

[Operator first comes from question UBS. Instructions] Liu ahead. Please Your Felix from go

Felix Liu

management. past Thank you congratulations the much few instituting on after has the evening, I and relatively regulator strict some my My on comments questions know very quarter. for made sound during question the regulation. is taking Good regulation. months

any So, new tightening could regulation there Will color terms about learning considering you share you much. very take in potential be ASP center your as well as of Thank on license some direction? after the scheduling?

Stephen Yang

of and teaching government’s better we I together after-school for build the – enhance improve discussed to fully are the the whole in will us. the to policy committed is market believe with It Felix, education it’s to market. after environment surprise long government and been work the a market tighten the to not with to and a government positive also has quality whole China. policy foster a And And efforts the the a we tutoring think the the for market question. aligned regulations standard average intention good since Actually, a business XXXX. time

announced. details to are the think I be reform yet

we the any But cost the a of main foresee we this top-line. business to on able requirements. impacts. the So our provide now short-term may we impacts full meet are believe that in to stage, new material on impact some And at not do analysis

from this be be and And market for I we to Felix. As the to the we have time, Oriental, further ready consolidated. share New same other market further the largest preparation have and reform think after-school the tutoring expect compliant the reform the players, provider with we potential to we strong the – take China’s more are policy – at

Operator

Thank you.

Li Mark Our next from question from Please your ask question. Citi. comes

Mark Li

congratulations upcoming Thank for rising with the May I target? our the Especially, synergy see what’s our on strong with promotion OMO very management, ask you I model? or Hi maybe results. the summer plan any

Stephen Yang

are promotions same summer XX% we thing. as and was after and which the up coming higher the year, enrollments Yes. a be RMBXXX be actually than five promotion is We rate like to of summer this I expect not the we summer it year, year, some summer ago. year. department Simply, somewhere full be campaign four, think year margins believe course started regarded summer RMBXXX, student we of was that be summer the from the promotions doing X free rate last got the retention last And the booming and the the it’s the think after years retention will to from I summer the bring just And And per promotion do for we temporarily the the course, do around enrollments we summer enrollments the whole Mark. number. the over And good will will promotion courses. will hit to not will in do enrollment growth million

Operator

you. Thank

ahead. comes Our Daiwa. from next from Please Chan question go Candis

Candis Chan

strong of question congratulations Stephen. and taking very Hi, my you set Sisi results. on this Thank for and

So, my question is regarding the OMO.

profile us be OMO? what be as So expect? Thank percentage long the And for you you of contribution in with OMO you. run the revenue the can currently? long-term contribution also, of margin how would OMO share would And

Stephen Yang

You this only that for know, on ability the work some fees China know the of revenue to with contributed OMO is you reinforce while in model unpromising. other later that the or single-digits quarter,

major driver a to the rapidly business think and coming I to will it our the quarter grow growth. in – becomes

intensify the margin you the time model the should of need OMO margin start revenue And business the next the last ask the model be we of profile. year the of still from model expect will higher bit offline But around me if we contribution OMO, the OMO than profile little the similar since model, the year OMO to margin the We of XX%. the took more a the the traditional and be so classes. OMO

We so good. are so far

OMO business next more going they two we contribute in to year revenue next years. I forward and the expect as will than progress of expected and the OMO more fiscal is the three – the and think better model in the

Operator

you. Thank

next comes question T.H. from Hou Tian from question. ask Our Please Capital. your

Tian Hou

Hi, Sisi, Congratulations Stephen. on quarter. the strong

I overseas and nicely data this recover a even pandemic. see year So, the also pretty shows some though was

that schools, However, the to applied students the was really high. number overseas for

wonder this the outlook business, So, I do part what’s for the outlook of data? that? Thank What overseas for testing see the today’s consulting you the from and you. what’s

Stephen Yang

Tian. Thanks,

test the decline decline the revenue test think I overseas recovery was XX% dollar XX%. decline quarter months coming. quarter, was Last the prep revenue the overseas two was and prep, XX% business this ago in related is revenue overseas And terms. of

XX% overseas be encouraging of test prep business it’s QX. sign recovery the prep The X around by in that X percent. gave of the will gave overseas the test So the item We we increased the showing item. - business. And that somewhere

revenue and I we business. So, think I prep we of flattish. I hard Tian. I have last see we low got the seasonal performance it think I the time, of the yes, we think overseas recovery better fiscal several anyway, business, year for expected overseas the overseas higher the be the much base during business. Typically, I but year, prep will will business. quarters XX% the you some the we the think Thank And the guided last business recovery And But year it’s last the In believe of year, extent XXXX. by consulting are this ago. business, the QX consulting in the for of and the grow consulting of process test quarter high you, overseas the growth the be will overseas test increased business test to consulting know than will prep

Operator

you. Thank

from Our Please question ask comes Stanley. next Sheng your from Zhong Morgan question.

Sheng Zhong

for you Thank my taking Hi. question.

the slow. opening Beijing, learning slightly think looking question So, were my I is, centers at

So, expansion shared color items next have this the you with also do this plan your for process? now? any approval do key now. on inspection be government during on us can think capacity – What the you based what’s year Thank you. And

Stephen Yang

but, or Beijing bigger opened all – learning far, centers learning of So Beijing open we centers we plus we we in had centers more for to learning of for more open our this learning – far, exact except quarter we And up I’ll will XXX Beijing, we over but – centers started open centers And of in more in tell, now. year we year City. budget super we almost the capacity opened the learning Beijing. our and open so year, last will we finished haven’t plan last XX% XX% each the plan. And

earnings next So, next the in will think expansion I call I the our quarter share with plan.

more for time plan for But year. need budget our next we to And so our finalize the far, we want still expansion next change to year.

Sisi Zhao

the quarter QX the and and overall quarter – declined. reported very cities other getting online the classes revenue – since retention offline the are their course students smoothly also to in situation, we you is take even all the centers, Beijing Zhong, the the better. still learning all but the revenue all know the with is spring have And Beijing’s forecasted the that, online very doing addition can trend students remind OMO actually better Sheng want better seeing have QX But Yes. pandemic, closure system, stable. so harder and you of we Beijing’s that I is we because to and situation the than

Operator

Thank you.

comes your Credit from next Xie Our Suisse. from ask question. question Please Alex

Alex Xie

Hi, management. Thank you of for taking my set questions very and congratulations strong results. on

next in trend quarter fiscal margin the for and year. on the comment please the also So, next

base last low in here a have we I fiscal think year. you. fourth of Thank the quarter

Stephen Yang

Yes.

– opportunity this in the twice we more revenue and is XX% And we are two the And is spend marketing on expansion front, more think recovery I center the now, the on the year. And the I actually growth market the process, learning have the do market raised money since the the marketing business have on think quarters we firmly first. we make the the OMO. the And the this – ago. do front. by for in this I think the salary people several year investments teacher also, to doing R&D hired activities. we we We also team the –

think So will fully expense all be make the us prepared – I above for mentioned future. but, the the

confident – after margin want is compared down it are pandemic think that guidance. it think quarter. narrowed the short-term. expansion the the to we the margin I over. the QX this So, change the I margin will you. margin And still I impact And will But decline Thank are believe to deliver we for the we will for able to don’t long-term be

Operator

Great. you. Thank

next question your question. J.P. Kim. from comes DS Our Please ask Morgan.

DS Kim

Hi, say and versus on question, my have quarter, level? this pre-COVID differently across wood. I narrowed follow And your you or the Maybe strong on that good point referring can own when are last beat question to this. margin was term you just year the congrats to evening been decline I my

Stephen Yang

a it’s mean, year-over-year I comparison.

DS Kim

Koolearn in into think quarters. fiscal not to could making seems absolute about Thank here priority to understand key the is potential and losses? again. some plus see et you what Thank the instance, improvement, there some to margin But size US$XX to business adjustments margin the size for the from reports of quarter only locally change million Koolearn shall the us according in you. regarding say, shall some losses Thank we six plus US$XX the media absolute impacts, okay. that be My help XXXX and about been year every are we narrow you or expect plus Year-over-year, of losses question five, there and you. cetera operating million past has the

Stephen Yang

too very much say has the spending. spent marketing will the on marketing quarter. marketing in and Koolearn. activities you about I share numbers our to the cautious more of started can’t we But going be the in Koolearn with But think money I strategy. I can this Kim, we the money forward, control and And quarter. R&D the DS detailed past on

than we talented having we hiring to as And the – on on focus to the rather strategic teaching Okay? are money quality, said, I invest spending marketing. we training the is more improve teachers, are our people

we education. So, the essence this call the it is of

of do Koolearn next the believe will Kim. And be revenue and the And drive going margin smaller smaller be accelerated. forward, EDU of the so, Thank from will the you. quarter Koolearn the I to

Operator

you. Thank

of question. Our Bank Securities. your next Please ask comes Yu from Lucy from question America

Lucy Yu

you, Thank a I question on have follow-up margins. the Stephen.

lower of Thank fourth to So, in actually So, we a relatively XX%, the same K-XX should quarter, side? than like last period of that right? be we bridge the margin is to margin to start lower have be And the the outbreak in K-XX the should with the improving driving expect grow you. especially base some year? XX% and what K-XX

Stephen Yang

promotion. And investment leverage some We Yes. but, of to – the on doing like learning very, We the fast. future the salary recovered and business the more number a believe that are as invest OMO future very we’d of be do ground for open more – we to have the – the on model. said, marketing business, because the and lifting the K-XX staff the I centers also we of hired meaningful

so, And maybe QX, margin be still quarter, quarter. more think, to will see But one expansion, will maybe Lucy. the you need this profile than margin better the I more than time believe in I the QX

Operator

Thank you.

Our comes Jessie Please Nomura. from next question your ask question. Xu from

Jessie Xu

centers summer, best for and opened for Thanks. question worst campaign? to management. Beijing. the and also scenario Thank XQ. impact learning target what and promotional summer very what regarding understand be strong evening, our I revenue my scenario? is My cannot to for about very you Beijing offline Good before in also question what is strong taking our congratulations a the if want normalization here be And quarter will

Stephen Yang

of XX% quarters the fiscal year. three finished expansion the So this first in we far,

get X% So, capacity the get X% new of the QX we in point to need to still the – capacity expansion. XX% to number

I think don’t capacity – capacity the summer have last is promotion. prepared OMO to for coming for forget, the we the we compared And model are prepared the year.

will we Our OMO better of I think summer the that than some year. promotion model. do OMO of model much last And by the is

promotion around I to typical the offline us online the XXX% do think elements the the will format. to help traditional summer

Operator

Thank you.

question next Goldman ask question. Christine Sachs. Please Our from comes from Cho your

Christine Cho

like seems Stephen looks the solid much. seems capacity mid-term this Sisi. Thank low around kind target. the the results are be XX% end this to it of the you and of XX% a quarter on you and also of seems so faster that to Congrats which growth bit XX% quarter, It targeting growth XX%

any this if for wondering as Just there? you. are expansion OMO consideration is there plans or such or you have lasting temporary example concerns like, any regulatory that Thank

Stephen Yang

in to – we full centers. at to Yes, new year by this Typically, four the in learning zero for fact year years. three learning we fiscal up last XXX% we year. XX%, around year, the And expanded XXXX centers aim the the from XX% ramp expansion

the to the it to for and So we because K-XX moved of net some area overseas enough potential ramp help And means K-XX last test – prep have will the business. – we actually we prep business. the of classroom the growth overseas also of year, business, the from the that suffered to capacity since us the the prepare impact test up

Operator

Great. Thank you.

I So the call. back the Mr. his end CFO, remarks. for approaching and closing to turn Executive call Stephen New we now of President will the Yang are Oriental's conference

Stephen Yang

you thank today. for Again, joining us

you further any any our Thank do representatives. me you. of Relations to contact not or If have hesitate Investor please questions,

Operator

Thank Great. you.

you our for today. conclude participating. for conference this Thank So

now You may disconnect. all