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Presentation

New Oriental Education & Technology Group Inc. reports earnings inline with expectations. Reported EPS is $1.48 EPS, expectations were $1.48.

Operator: Good evening, and thank you for standing by for New Oriental’s FY 2025 First Quarter Results Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I’d now like to turn the meeting over to your host for today’s conference, Ms. Sisi Zhao.

Sisi Zhao: Thank you. Hello, everyone, and welcome to New Oriental’s first fiscal quarter 2025 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 view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward-looking statements, except as required under applicable law. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental’s Investor Relations website at investor.neworiental.org. I will now first turn the call over to Mr. Yang. Stephen, please go ahead.

Stephen Yang: Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. We’re pleased to announce that the company has forged a healthy growth across our key business lines in alignment with the expectations, with the top-line growth of 30.5% this quarter. Total net revenues, excluding revenues generated from East Buy private label products and livestreaming business, increased by 33.5% year-over-year. In particular, we’re impressed by the highly encouraging growth that the new endeavors have anchored, which has significantly contributed to the core building blocks of the company. At the same time, New Oriental’s bottom-line performance for our core educational business has also achieved healthy yields. Operating margin wise, we have excluded operating margins generated from East Buy for this quarter for a better reflection of the performance of New Oriental’s core educational business.

The operating margin and non-GAAP operating margin for this quarter have reached 23.7% and 24.4%, representing 370-basis-point and 220-basis-point improvement year-over-year, respectively. We’re pleased to see the tremendous efforts that we devoted into our offerings and platforms, sparking positive growth across our business lines. Our commitment to maintaining a healthy profitability and market share stands firm as we strive to create sustainable value for our customers and shareholders in the long term. Now, I would like to spend some time to talk about the quarter’s performance across our existing business lines and new initiatives to you in detail. Our key remaining business continued to secure encouraging trends this quarter. Breaking it down, the overseas test prep business recorded a revenue increase of 19% year-over-year for the fiscal — first fiscal quarter of 2025.

The overseas study consulting business recorded revenue increase of about 21% year-over-year for this quarter. The adults and university students business recorded a revenue increase of 30% year-over-year for this quarter. The ongoing investments, our new educational business initiatives, which mostly revolve around facilitating students’ all-round development, have propelled the company’s engine to innovation, having secured strong momentum in their respective ventures. Firstly, the non-academic tutoring courses, which we have offers in around 60 existing cities, focuses on cultivating students’ innovative ability and comprehensive quality. We’re pleased to receive solid interest with a total of approximately 484,000 student enrollments recorded in this 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 elevated customer retention and scalability with approximately 323,000 active paid users reported in this quarter. The revenue contribution of these initiatives from the top 10 cities in China is around 55%. Our smart education business, educational 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 have recorded a revenue increase of 50% year-over-year for this quarter. In addition, our newly integrated tourism-related business line is now comprised of diverse offerings of culture trips, study tours in China and overseas, as well as the camp education.

Within business line, our study tour and research camp business for students of K-12 and university age achieved tremendous growth this quarter with an increase of 221% in revenue year-over-year for this quarter. We have operated study tours and research camp business in over 55 cities across the country, with the top 10 cities in China offering over 55% of revenue share of this new business. The number of top-notch tourism offerings were also piloted to expand our reach to all age groupings, including the middle-aged and elderly individuals around the 30 featured provinces in China and globally. This inspiring growth this quarter has affirmed our devotion to deliver premium offerings to our valued customers and we believe this new business line will contribute continuously meaningful revenue from this fiscal year.

With regards to our OMO system, we have proceeded in revamping our platform and leveraged our educational infrastructure and technology edge on remaining key business and new initiatives with a vision to provide advanced diversified education service to customers of all ages. In this quarter, a total of $24.6 million has been invested in our OMO teaching platform, which equips us with the flexibility to maintain unrivaled service to students. In terms of the East Buy’s performance, since April 2022, East Buy has launched a total of 488 SKUs in private label products in just two years. Our products categories have expanded into well-diversified product mix to date. During the reporting period, East Buy also [uplifted] (ph) the significance of the offering-only product with a high cost of performance, which has proven effective in reiterating East Buy’s value in the minds of our current and new users.

In addition, thanks to our multi-channel strategy that has been — that has driven sustainable growth, East Buy’s footprints have expanded from our livestreaming channels to the like of Tmall, JD, Pinduoduo and Xiaohongshu as they amplify our reach to a wider customer base. In the New Year, East Buy will explore offline channels by examining the partnership with offline schools owned by New Oriental brands and other parties, as part of our vision to initiate offline sales network and enhance our brand awareness to the great extent. With regards to the company’s latest financial position, I’m pleased to share that the company is seeing a healthy financial status with the cash and cash equivalents, term deposits and short-term investments totaling approximately $4.9 billion.

Now, I would also like to take the opportunity to highlight that 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 ADS or common shares through the next 12 months. The company’s Board of Directors further approved to extend the effective time of the share repurchase program to May 31, 2025 and increasing the aggregate value of the shares that the company authorized to repurchase from $400 million to $700 million. As of October 22, 2024, the company repurchased an aggregate of approximately 9.8 million ADS for approximately $457.9 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: Thank you, Stephen. I’d like to share our key financial details for this quarter. Operating cost and expenses for the quarter were $1,142.3 million, representing a 27.6% increase year-over-year. Non-GAAP operating cost and expenses for the quarter, which excludes share-based compensation expenses, were $1,135.4 million, representing a 32.8% increase year-over-year. The increase was primarily due to the cost expenses related to accelerated capacity expansion for educational business and newly integrated tourism-related business. Cost of revenues increased by 32.3% year-over-year to $583.5 million. Selling and marketing expenses increased by 42.3% year-over-year to $193.7 million. G&A expenses for the quarter increased by 15% year-over-year to $365.1 million.

Non-GAAP G&A expenses, which exclude share-based compensation expenses, were $354.5 million, representing a 22.1% increase year-over-year. Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 82.7% to $6.9 million in the first fiscal quarter of 2025. Operating income was $293.2 million, representing a 42.9% increase year-over-year. Non-GAAP income from operations for the quarter was $300 million, representing a 22.6% increase year-over-year. Net income attributable to New Oriental for the quarter was $245.4 million, representing a 48.4% increase year-over-year. Basic and diluted net income per ADS attributable to New Oriental were $1.49 and $1.48, respectively. Non-GAAP net income attributable to New Oriental for the quarter was $264.7 million, representing a 39.8% increase year-over-year.

Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $1.61 and $1.60, respectively. Net cash flow generated from operation for the first fiscal quarter of 2025 was approximately $183.2 million, and capital expenditure for the quarter were $80.2 million. Turning to the balance sheet. As of August 31, 2024, New Oriental had cash and cash equivalents of $1,147 million. In addition, the company had $1,513.8 million in term deposit and $2,248.6 million 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 first quarter of fiscal year 2025 was $733.1 million, an increase of 23.7% as compared to $1,401.4 million at the end of the first quarter of last fiscal year.

Now, I’ll hand over to Stephen to go through our outlook and guidance.

Stephen Yang: Thank you, Sisi. With the encouraging performance achieved from our diverse business lines, backed by our solid educational resources that have stood the test of time, we’re bullish on maintaining a healthy growth for our core educational business. Simultaneously, we will devote ongoing investments in expanding our new tourism-related business. We believe that this [impulse will nourish more extensive] (ph) nationwide rollout of our tours in this fiscal year. While we strive to safeguard a healthy balance between revenue and profitability growth, we will also cautiously manage our capacity expansion and hiring to underpin the development of our educational business in this New Year. We plan to increase our capacity by around 20% to 25% for this fiscal year.

The most new openings will be launched in cities with better top-line and bottom-line performance. Rest assured that we will closely monitor the pace and scale of new openings in accordance to the local operations and financial performance during the year. Every second quarter of our financial year tends to be a slower period due to the seasonality of our business. That being said, we remain confident in attending a steady growth and satisfactory operating profit for the full fiscal year. We expect total net revenues, excluding revenues generated from East Buy, in the second quarter of the fiscal year 2025, September 1, 2024 to November 30, 2024, to be in the range of $851.4 million to $871.8 million, representing a year-over-year increase in the range of 25% to 28%.

In addition, based on our current estimation, we expect the operating margin for the whole company, except for East Buy, for fiscal year 2025 will expand year-over-year. 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. To conclude, New Oriental will always pursue premium offerings to our customers, simultaneously achieve sustainable growth. To achieve that, we will continue to devote necessary resources on research and application of new technologies such as AI and ChatGPT into our education and product offerings with a vision to uplift our strengths to pursue to the growth and operating efficiency. We will also continue to seek guidance from the — from and cooperate with government authorities, comply with the relevant policies, guidelines and any related regulations, as well as to further adjust our business operation as required.

As always, we will work diligently to enhancing the nation’s education level to strengthen the leading position, so as to unveil further potential across all our business lines and realizing our vision. This is the end of our fiscal year 2025 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. [Operator Instructions] We will now take our first question. This is from the line of Felix Liu from UBS. Please go ahead.

Felix Liu: Good evening, management. Thank you for taking my question. My question is on your second quarter guidance. We noticed that in the first quarter, your capacity expansion was over 30% year-on-year by the number of learning center. However, if we look at your second quarter guidance, it’s slower than your capacity expansion in the first quarter. So, how should we think about the gap between capacity growth and revenue guidance? And could management share your outlook for second half growth? Do we expect to see the revenue growth to converge with capacity? Thank you.

Stephen Yang: Yeah, I think — thank you, Felix. As for the Q2 guidance, we gave the guidance of the — top-line growth will be in the range of the 25% to 28% in dollar terms year-over-year, but as you know, every second quarter tends to be a slower quarter due to the seasonality of our education business. And — but we will remain confident in attending a steady growth of around 30% year-over-year for the whole year. So that means we expect the revenue growth, excluding East Buy, in Q3 and Q4 will be accelerated compared to the growth of Q2. So, as you know, even though we have seen some impacts of the existing economic environment, like the overseas-related business, that we will expect that the full fiscal year revenue growth, which, except for East Buy, will be around 30% year-over-year.

And, yeah, we opened more learning centers in last year Q3 and Q4, and — but we have seen — we ramped up the learning centers much faster than before. And so — and I think we will feel the new learning centers — more students into the learning centers, especially in the Q3 and Q4. So, we’re quite optimistic about the top-end growth for the whole year. Thank you, Felix.

Felix Liu: Thank you.

Operator: Thank you. We will now take our next question. This is from the line of Alice Cai from Citi. Please go ahead.

Alice Cai: Good evening, Stephen from Sisi. Thanks for taking my question. I have a question about the capacity expansion. Since Q2 is typically a low season, are you considering slowing down capacity expansion during this period to improve margins? And is that capacity to be concentrated in Q1 and Q4 for FY ’25? And for the upcoming quarters, will you focus on encouraging penetration in existing cities rather than entering new ones? Thanks.

Stephen Yang: Yeah. By the end of this quarter, Q1, we have added around 6% new capacity. And so, as I said, we plan to increase our capacity expansion by 20% to 25% for the whole year. And last year, we opened more learning centers, but this year, I think we will open the learning center at more healthy pace, 20% to 25%. And, yeah, as I said, we ramp up the learning centers much faster than before. And so, I think as the whole year wise, I think the margin — you will see the margin expand for the whole year. And in the Q2, yeah, we might be need some like margin — like the tiny margin pressure in the Q2 because of the seasonality, Q2 is the low season, but we do believe for the whole year, the margin will be expanded for the education business, except for East Buy. Thank you, Alice.

Alice Cai: Thanks.

Operator: Thank you. We’ll now take our next question. And this is from Yiwen Zhang from China Renaissance. Please go ahead.

Yiwen Zhang: Yeah, great. Thanks for taking my question. So, my question is about follow-up on the margin. So, [very glad] (ph) to see our adjusted operating margin increase 220 bps on Y-o-Y basis, [indiscernible] in the previous quarter. So, can you just tell us more about what are driving this improvement? And how should we think about the drivers to play out in the rest of the year? Thank you.

Stephen Yang: Thank you, Yiwen. You asked the question about the margin. Let us start with the margin analysis of this quarter. The non-GAAP operating margin for education business, which excluding East Buy, was expanded by 220 basis points year-over-year. As you know, I think last year Q1, OP margin was high base. So that means we have a harder comparison this quarter, but we still doubled the margin expansion by 220 basis points year-over-year. I think this is mainly due to the following reasons. Number one, we’re pleased to see that business lines achieved the positive top-line growth for all business lines. And number two is, we started to bear fruit of the learning center expansion of last year, [indiscernible] the overall utilization rate up and get more operating leverage.

Number three, we started to make cost control in the whole company and we leveraged more overhead in this quarter. Even though we spend more money at the new tourism business, but the educational business, except for East Buy, we still got the margin expansion higher than we expected. And as for the margin outlook, due to the seasonality of the business, every second quarter is the low season. So, we’re likely to experience some minor margin pressure in the second quarter. But as I said, we were quite confident about the Q3 and Q4. So, we’re optimistic on the margin profile for the educational business, including East Buy in the whole year. And I think we expect that the whole year, the non-GAAP OP margin will be expanded for the whole year.

Thank you, Yiwen.

Operator: Thank you. We will now take our next question. This is from Lucy Yu from Bank of America. Please go ahead.

Lucy Yu: Hi, Stephen and Sisi. Just to clarify, Stephen, you said second quarter non-GAAP OP margin will be under pressure. Do you mean that excluding East Buy, we’re going to see margin contraction on a year-over-year basis? So, just to clarify on that. And actually my question is on the cultural tourism. You did mention that camp revenue was up by over 200% year-over-year. So, may I know like how much revenue that cultural tourism contributed this quarter? And is that business segment loss making or profit making for this quarter? Thank you.

Stephen Yang: Yeah, the margin — the tiny margin pressure in Q2, what I said is only related to the educational business. And because we guided the 25% to 28% top-line growth and the Q2 is the low season of the educational business, so I think that you will see more leverage in Q3 and Q4. And so, this is the — so as I said, we’re quite optimistic about the margin profile in Q3 and Q4. And the tourism business, yeah, the Q1 was the peak season for the tourism business, such as the camp business and the overseas study tour, even domestic study tour business. So, the revenue of the Q1 was somewhere around $90 million of the tourism business. This is the revenue in Q1. And yeah, we are profitable in Q1 because of the peak season, but for the whole year, I think we will feel loss making of the tourism business.

And it’s just the first year, we need more time to testify the product and business models for the tourism business, but we’re quite confident about the development of the tourism business. Thank you, Lucy.

Lucy Yu: Thank you, Stephen.

Operator: Thank you. We’ll now take our next question. This is from Timothy Zhao from Goldman Sachs. Please go ahead.

Timothy Zhao: Hi, Sisi. Hi, Stephen. Thank you for taking my question. My question is regarding your K-12 new initiatives. Just wondering if you can break down in terms of the revenue growth between the non-academic tutoring and the intelligent learning devices and services. And the related question on the specific segment is I do notice that I think for the non-academic tutoring, the quarterly enrollment for the past quarter grew by around 11% year-on-year compared to close to 40% a quarter ago. Just wondering if you can elaborate more on the growth and what kind of growth that we should expect on the enrollment, I think, for the following quarters versus only 11% for this quarter. Thank you.

Stephen Yang: Sisi, you share with Tim about the revenue breakdown, whether in the new business…

Sisi Zhao: Yeah. The new K-9 educational related, including the non-academic tutoring and intelligent learning device business grew by over 50% in Q1, 56%. And both are growing at similar rates. And…

Stephen Yang: Yeah. And to your second question about the enrollment, yeah, the enrollment growth of the K-12 seems to be low in this quarter because we opened the summer enrollment window earlier than that of last year. So, that means we reported more student enrollments in last year Q4. This is kind of the timing difference. And so, if you combine the Q4 and Q1, the enrollment growth will be normal, and it’s very strong absolutely. And as I said, even though the Q4 — the Q2 will be the low season, but we’re quite confident about the whole year, the top-line growth. And I think we will see even the accelerating top-line growth in Q3 and Q4. And for the new businesses, I think we still keep the same guidance of the 40% to 50% top-line growth for the new businesses for the full year.

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

Stephen Yang: Thank you.

Operator: Thank you. We’ll now take the next question. This is from Charlotte Wei from HSBC. Please go ahead.

Charlotte Wei: Congratulations on your strong results. Thank you, Stephen and Sisi, for taking my question. Could you please share more color on the growth in different business segments in the second quarter? Thank you.

Sisi Zhao: Yeah. Actually…

Stephen Yang: Second quarter?

Sisi Zhao: Yeah. You’re asking the guidance — for the guidance for Q2?

Charlotte Wei: Guidance breakdown, yeah.

Sisi Zhao: Okay. Yeah. Overseas-related business will grow about over 20%. And domestic test prep, university students business grow will be over 30% — 30%, 35%. And high school business grow, like, 20%. And the new business will grow, like, over 50%, around 50%.

Charlotte Wei: Thank you. Very clear. Thank you.

Operator: Thank you. We’ll now take our next question. This is from DS Kim from JPMorgan. Please go ahead.

DS Kim: Hi, Stephen. Hi, Sisi. Thanks for taking my question. I just have a follow-up on your points that you made on new businesses, if I may. Did you say, this past quarter, new businesses grew over 56%? Did I hear it correctly? Because from the press release, I think maybe it’s a minor thing, but the press release seems to say 49.8% this quarter. So just wanted to double check if I’m looking — yeah.

Sisi Zhao: Yeah, DS, that’s the growth for non-academic tutoring and intelligent learning device, the over 55%.

DS Kim: Oh, okay. So, that means, this new educational business initiative have something else as well. And may I ask what else is here? And also, can you, if you could, give us the breakdown in terms of like current revenue, last year revenue between non-academic tutoring versus intelligent and some others, how’s the mix within this sub-segment?

Sisi Zhao: Yeah, actually, every quarter the contribution is similar. So, the non-academic tutoring is roughly about more than half of the new educational business, and roughly about one-third is the intelligent learning device business. And these two are growing faster than the rest, smaller categories.

DS Kim: And smaller category, if I may, is, like, book sales, or may I check out what else we have here? Just to double check, sorry.

Sisi Zhao: Yeah, intelligent books and also some to-be business.

DS Kim: Got it. Thank you very much. And if I may follow-up on — earlier, you mentioned and kindly gave us a breakdown of the growth momentum for 2Q guidance. Can I double check whether that was based on U.S. dollar versus renminbi? And if you could provide this first quarter similar breakdown between segment growth, if possible, it would be great. Thank you so much. And I’ll go back to the queue.

Stephen Yang: Q1 guidance, just share about the exchange rates we’re using…

Sisi Zhao: Yeah. We — I can share with you the exchange rate that we’re using for Q1 quarter and the guidance quarter. Is that okay?

DS Kim: Yes, but earlier growth, was it based on USD? Yes.

Sisi Zhao: Yeah. Q1 exchange rate is CNY7.22 and Q2 is CNY7.08 roughly.

DS Kim: Thank you very much.

Operator: Thank you. [Operator Instructions] We have another question coming through. Please stand by. This is from the line of Lucy Yu from Bank of America. Please go ahead.

Lucy Yu: Stephen, sorry, just want to follow-up on the second quarter margin. I know that you said it’s a low season, but if you’re looking at the top-line, it’s still growing at over 25% to like 28%, which is not low. So, why would — should we think that the OP margin will decline or contract on a year-over-year basis? Is there any other like investment that you’re going to step up or some other reasons? Thank you.

Stephen Yang: Teah, the Q2 is the low season for all business lines, the overseas-related, even for the K-12 business and the tourism business. We have tiny revenue from the tourism business. So, we will suffer the loss of the tourism business in Q2. And so, if you saw the numbers, historically, every Q2 every year will be the low margin profile for the whole company. And, yeah, as I said, we opened more learning centers in the second half of the last year, but we will still need more time to fill the students into the new learning centers. So yeah, and I must mention that we’re using the conservative approach to give the margin guidance as always, Lucy.

Lucy Yu: Understood. Just may I follow-up that, how much like loss or margin drag have you sucked in from tourism in second quarter? Thank you.

Stephen Yang: I think it’s too early to say that, but it is still the margin drag. And also we spent some more expenses in the marketing and in the coming Q2. But I think we will — yeah, as you said, we spent more money on the marketing in Q1, but we started to control the selling and marketing expenses in Q2. We’re still in the process. And so that’s why we guided the margin tiny pressure in Q2, but we expect we will do better than we expected on margin wise in Q2.

Lucy Yu: Understood, Stephen. So, let’s put it this way, so if we exclude East Buy, if we exclude culture tourism, will the rest of the revenue — rest of the business still see margin contraction in second quarter?

Stephen Yang: Yes, I think so. I think the — if we take out the impact of the tourism business, I think the margin will be better than the overall company margin profile, except for East Buy. We don’t give the guidance of the East Buy by top-line growth and the margin.

Lucy Yu: Understood. Thank you so much.

Stephen Yang: Thank you, Lucy.

Operator: Thank you. We’ll now take our next question. This is from Timothy Zhao from Goldman Sachs. Please go ahead.

Timothy Zhao: Great. Thank you, Stephen and Sisi. So, I think a follow-up question on East Buy. I think one is on, I think, your revenue guidance. I guess, I think there was a transaction between EDU parent company and East Buy regarding the East Buy’s education business previously. Just wondering in your guidance for the EDU core, basically the EDU educational services, does that include East Buy’s previous education business? And secondly, I think for East Buy, I think the implied revenue for East Buy actually dropped quite significantly on a Q-on-Q basis. Just wondering if you can elaborate what is the background or the rationale behind that and how should we think about the revenue going forward. Thank you.

Stephen Yang: The guidance of Q2 top-line growth in the range of 25% to 28% is the core education business except for East Buy, okay. And I’m very glad to hear from you about the question of the East Buy. But I’m afraid I’m unable to share the latest financial results of the East Buy, because they will announce their half year report in this next quarter. So, next quarter, I think we — the both party, the parent company and East Buy will announce the East Buy’s financial status in much more detail next quarter.

Timothy Zhao: Sure. So, just to clarify on the guidance, I think if you look at East Buy’s previous half year financials for their education business, which is now part of EDU core business, it’s around like US$30 million, US$40 million per quarter. Just wondering when you talk about the guidance for EDU core education business, so when you look at on a year-on-year basis, the last year number for EDU core education business, that also includes the East Buy’s education business, right?

Sisi Zhao: Yeah, correct, Timothy. So, your understanding is totally correct. So, when we give guidance, we do apple-to-apple comparison. So, both the comparison quarter and the guidance quarter both includes the educational portion of East Buy’s business. Is that clear?

Timothy Zhao: Yes. Thank you, Sisi. Thank you, Stephen.

Operator: Thank you. We’ll now take our next question. This is from DS Kim from JPMorgan. Please go ahead.

DS Kim: Hello. Hi. Sorry, I didn’t mean to beat a dead horse here, but some investors were asking me just now on this, so I thought it would be better to clarify things on new businesses again, sorry. So just to be clear, when you earlier commented that next quarter growth guidance of new businesses of over 50%, did you mean to include other smaller businesses or only non-academic and intelligent learning devices, i.e., if you compare that 50% or over 50% growth next quarter, how does that number look for this quarter, August quarter? And then, similarly, for high school businesses, we expected a 20% growth as you said next quarter. How was the growth this quarter? Would you be able to comment on that? Sorry for redundant question here.

Sisi Zhao: Yeah. To make it clear for Q2 guidance for overall new initiatives — new educational initiative, including all the things, so together is around 45%, 46% growth. And if you only look at non-academic tutoring and intelligent learning device, the two key ones, the growth is over 50%. Okay? And the high school business Q1 growth is about 20% to 21%.

DS Kim: Thank you. That’s very clear. So, about 4%, 5% deceleration for the new businesses in terms of apples-to-apples, which I think is pretty great given that the base got — the comps got much tougher. So, thank you for the clarification.

Sisi Zhao: Okay.

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

Operator: Thank you. This concludes today’s conference call. Thank you for participating, and you may now disconnect.