New Oriental Education & Technology Group (EDU) Q3 2026 earnings summary

Executive summary

• Q3 FY2026 net revenue rose 19.8% year-over-year to $1,417.3 million, surpassing expectations and driven by new educational initiatives, overseas test prep, and domestic adult/university test prep.

• Margin expansion was achieved through operational efficiency, cost control, and strong performance from East Buy.

• Non-academic tutoring and intelligent learning systems expanded to 60 cities, with 458,000 and 367,000 enrollments/users, respectively, showing robust growth and market penetration.

• The company is expanding its service model to address the full family life cycle, launching the New Oriental Home platform and enhancing customer service to over 330,000 families in 12 cities.

• AI integration and OMO teaching system enhancements advanced operational efficiency and product offerings.

Financial highlights

• Non-GAAP operating income rose 42.8% to $202.9 million; non-GAAP net income increased 34.3% to $152.2 million year-over-year.

• Operating income was $180.3 million, up 44.8% year-over-year; net income attributable to the company was $126.8 million, up 45.3%.

• Basic and diluted net income per ADS were $0.80 and $0.79; non-GAAP per ADS were $0.97 and $0.95.

• Deferred revenue at quarter-end was $1,885.9 million, up 7.8% year-over-year; cash and equivalents stood at $1,783.4 million.

• Nine months FY2026: net revenues $4,131.8 million (+13.0% YoY), operating income $557.5 million (+27.6% YoY), net income $413.0 million (+13.3% YoY).

Outlook and guidance

• Q4 FY2026 net revenue expected between $1,429.6 million and $1,466.9 million, a 15%-18% year-over-year increase.

• Full-year FY2026 net revenue guidance raised to $5,561.4 million-$5,598.7 million, up 13%-14% year-over-year.

• Margin expansion is expected to continue despite one-off restructuring expenses of $10-$15 million in Q4, impacting margin by 50-100 bps.

• Marketing expenses as a percentage of revenue are expected to decline in FY2027, supporting further margin improvement.