Business context and reporting period
This filing is New Oriental Education & Technology Group Inc.’s audited annual report on Form 20-F for the fiscal year ended May 31, 2024—not a standalone 2023 Q4 report. Financial statements are prepared under U.S. GAAP and reported in U.S. dollars. The company provides education services and test preparation, overseas study consulting, educational materials, and e-commerce through majority-owned East Buy.
Following the required cessation of K–9 academic after-school tutoring at the end of 2021, the company has expanded non-academic tutoring, test preparation, learning products and devices, study-related services, and East Buy’s private-label and livestreaming commerce businesses. At year-end it reported 81 schools, 944 learning centers, and approximately 35,700 teachers.
Key financial metrics
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $4,313.6 million | $2,997.8 million |
| Operating income | $350.4 million | $190.0 million |
| Net income | $325.2 million | $235.4 million |
| Net income attributable to shareholders | $309.6 million | $177.3 million |
| Basic / diluted earnings per share | $0.19 / $0.18 | $0.11 / $0.10 |
| Operating cash flow | $1,122.6 million | $971.0 million |
| Cash and cash equivalents at year-end | $1,389.4 million | $1,663.0 million |
Revenue increased 43.9%; operating income rose 84.4%, and shareholder-attributable net income rose 74.6%. Calculated operating margin was approximately 8.1%, versus 6.3%; gross margin was approximately 52.5%, versus 53.0%; and net margin was approximately 7.5%, versus 7.9%.
FY2024 operating costs and expenses were $3,963.2 million, including $2,051.0 million cost of revenues, $660.6 million selling and marketing, and $1,251.6 million general and administrative expenses. The filing reports $153.6 million interest income, $30.0 million impairment loss on long-term investments, and a $19.0 million gain from investment fair-value changes.
Cash flow: investing activities used $1,153.9 million, principally reflecting investment in short-term investments and term deposits; financing activities used $160.4 million, including $62.9 million for share repurchases and $84.5 million to purchase non-controlling interests. Cash, cash equivalents and restricted cash declined by $216.3 million during the year. Operating cash flow benefited in part from a $468.2 million increase in deferred revenue, largely reflecting advance course-fee collections.
Year-end total assets were $7,531.7 million and total liabilities $3,482.7 million. Current assets of $5,388.9 million exceeded current liabilities of $3,000.9 million. Cash, restricted cash, term deposits, and short-term investments totaled approximately $5.0 billion, but not all are unrestricted or equally accessible. Outstanding unsecured senior notes were $14.4 million; operating lease liabilities were $647.9 million, with $707.3 million of undiscounted lease payments due over time.
Material changes versus the prior year
- Service revenue rose 37.6% to $3,501.0 million; product revenue rose 79.4% to $812.6 million. Product revenue represented 18.8% of total revenue, up from 15.1%.
- Educational services and test preparation revenue increased 41.8% to $2,716.2 million, primarily with increased enrollments. East Buy private-label and livestreaming e-commerce revenue increased 61.5% to $900.6 million. Overseas study consulting revenue increased 24.0% to $439.7 million.
- Operating expenses increased 41.2%, broadly tracking growth and capacity expansion. Teaching and administrative headcount grew; learning centers increased from 663 to 944.
- The company acquired East Buy’s online education business for RMB1.5 billion; the transaction closed in March 2024, and the business is now reported primarily within education and test preparation.
Outlook, risks and unusual items
No specific financial guidance or quantified forecast is provided. Management states that existing cash and expected operating cash flow should meet anticipated cash needs for the foreseeable future. It expects seasonal fluctuations to continue, with test-preparation revenue typically strongest in the first fiscal quarter.
- Regulation and business transition: The K–9 tutoring exit and evolving PRC education rules remain significant risks. The filing reports fines of approximately RMB930,000 on two learning centers in September 2023 and, in February 2024, a RMB1.2 million fine plus RMB230,000 in confiscated gains relating to a learning center lacking a private-school operating permit.
- VIE and China exposure: The Cayman Islands parent has no equity ownership in the VIEs; contractual arrangements support control and consolidation. VIEs contributed 99.2% of FY2024 revenue. Enforceability, regulation, cash transfer restrictions, currency conversion, and future overseas-offering filing requirements are material uncertainties.
- East Buy concentration and transition: Douyin generated a majority of East Buy’s FY2024 GMV; total GMV across sales channels was RMB14.3 billion. In July 2024, East Buy agreed to sell Time with Yuhui to its celebrity host Yuhui Dong for approximately RMB76.6 million; it ceased to be consolidated in August 2024. This occurred after the reporting period.
- Litigation: A U.S. securities class action remained at a preliminary stage; the company said it could not estimate a possible loss or range of loss and recorded no related accrual.
- Capital returns: A special dividend of $0.06 per common share ($0.60 per ADS), approximately $100 million in total, was declared in August 2024. The company has no standing dividend policy. Its repurchase authorization was increased to $700 million in August 2024.
- Other: Investment valuation involves significant unobservable estimates. The company reported a $30.0 million long-term investment impairment. It reported effective internal control over financial reporting and received unqualified audit opinions on the financial statements and controls.
Important facts for investors to verify
- Confirm the applicable period: the filing covers FY2024 ended May 31, 2024, not a standalone 2023 quarter.
- Assess whether education enrollment growth and East Buy’s sales can sustain revenue and margins as associated staffing, marketing, procurement, and capacity costs rise.
- Review the composition, restrictions, and location of cash and investments, and the extent to which VIE-held funds can be transferred to the parent.
- Track PRC education licensing and tutoring rules, the VIE structure’s enforceability, and any CSRC filing or cybersecurity requirements for future offerings.
- Monitor East Buy’s dependence on Douyin and the effect of the Time with Yuhui disposal on future GMV and reported results.
- Check subsequent disclosures on the securities litigation, repurchases, the declared special dividend, and the remaining $14.4 million of notes due 2025.