Business Context and Reporting Period
Company: New Oriental Education & Technology Group Inc. (NYSE: EDU; HKEX: 9901)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended May 31, 2026
Corporate Structure: Cayman Islands holding company operating primarily through Variable Interest Entities (VIEs) in China. The company conducts operations via PRC subsidiaries and contractual arrangements with VIEs, which contributed 99.7% of total net revenues in 2026.
Business Segments: Educational services (test preparation, non-academic tutoring, intelligent learning systems, overseas study consulting, educational materials) and livestreaming e-commerce (East Buy).
Key Financial Metrics (Fiscal Year 2026)
| Metric | Value (US$) |
|---|---|
| Total Net Revenues | 5,661,294,000 |
| Net Service Revenues | 4,893,000,000 |
| Net Product Revenues | 768,294,000 |
| Operating Income | 643,251,000 |
| Net Income (Consolidated) | 516,661,000 |
| Net Income Attributable to Shareholders | 475,172,000 |
| Diluted EPS | $0.30 |
| Cash and Cash Equivalents (May 31, 2026) | 1,821,202,000 |
| Total Assets | 8,792,020,000 |
| Total Liabilities | 4,467,604,000 |
| Shareholder Equity | 3,986,323,000 |
Material Changes vs. Prior Period (FY 2025)
- Revenue Growth: Total net revenues increased 15.5% from $4.90 billion in FY 2025 to $5.66 billion in FY 2026. Net service revenues grew 12.8%, while net product revenues increased 35.7%.
- Profitability: Operating income rose 50.2% to $643.3 million. Net income attributable to shareholders increased 27.8% to $475.2 million.
- Cost Structure: Total operating costs and expenses increased 12.4% to $5.02 billion. Cost of revenues rose 17.6%, while selling and marketing expenses increased 9.2%.
- Balance Sheet: Cash and cash equivalents increased by $208.8 million to $1.82 billion. Total assets grew 12.6% to $8.79 billion.
- Shareholder Returns: The company executed a significant capital return program, paying approximately $189 million in dividends and repurchasing approximately $288.7 million of common shares under the 2026 Share Repurchase Program.
Guidance, Outlook, and Risks
Management Commentary and Outlook
- Shareholder Return Plan: The Board approved a three-year plan (effective FY 2026) dedicating at least 50% of net income to shareholder returns via dividends and buybacks. A new $200 million repurchase program was approved for FY 2027, alongside an expected $300 million cash dividend.
- Strategic Focus: Continued expansion of non-academic tutoring, intelligent learning systems, and the East Buy livestreaming e-commerce platform. The company aims to leverage its brand and OMO (Online-Merge-Offline) system to drive efficiency.
- Operational Metrics: As of May 31, 2026, the company operated 75 schools and 1,459 learning centers across 69 cities with approximately 44,200 teachers. East Buy reported a Gross Merchandise Value (GMV) of RMB 10.2 billion for FY 2026.
Key Risks and Contingencies
- Regulatory Environment (China): Significant risks remain regarding the interpretation and enforcement of PRC laws, particularly the "Alleviating Burden Opinion" restricting K-9 academic tutoring. The company faces uncertainty regarding the classification of intelligent learning systems and potential restrictions on foreign investment in education.
- VIE Structure: The company relies on contractual arrangements rather than direct equity ownership for its Chinese operations. Changes in PRC law could render these arrangements unenforceable, potentially forcing the company to relinquish control of its primary revenue-generating assets.
- PCAOB Inspections: While the PCAOB currently has access to inspect auditors in China, future determinations could lead to delisting risks under the Holding Foreign Companies Accountable Act (HFCAA).
- Competition and Market Dynamics: Intense competition in both the education sector and the livestreaming e-commerce space. The company faces risks related to retaining popular livestreamers and maintaining brand reputation.
- Legal Proceedings: The company is a defendant in a putative shareholder class action lawsuit; the outcome is uncertain and could result in material costs.
Investor Verification Checklist
- VIE Enforceability: Verify the current status of PRC regulations regarding Variable Interest Entities and any new guidance on foreign ownership in education or e-commerce.
- Regulatory Compliance: Confirm the company's compliance status with the "Alleviating Burden Opinion" and any new regulations regarding intelligent learning devices or online tutoring.
- East Buy Performance: Assess the sustainability of the East Buy livestreaming e-commerce growth and the dependency on specific key livestreamers.
- Capital Allocation: Review the execution of the new FY 2027 share repurchase program and dividend policy to ensure alignment with cash flow generation.
- Legal Exposure: Monitor developments in the shareholder class action lawsuit and any potential regulatory investigations in China.