New Oriental Education: 3 Key Takeaways for Long-Term Investors

On its first-quarter fiscal year 2027 earnings call, held on Oct. 28, 2026, New Oriental Education (NYSE:EDU) announced total net revenue grew 23.1% year over year to $1.87 billion. Non-GAAP operating income, excluding share-based compensation, rose 21.2% to $406.8 million as operational expansion compounded returns.

Three things management said stand out.

1. Operational Efficiency Drives Margin Expansion Across Core Businesses

Learning center utilization and strict cost controls pushed margins higher across core tutoring and e-commerce segments. It doesn't rely on rapid footprint growth alone, as operational efficiency protects profitability even when revenue mix shifts.

Our core education business and East Buy recorded year over year expansion in their respective operating margins. Primarily attributable to the enhanced operational efficiency and improved utilization of our learning centers.
-- Stephen Zhihui Yang, Executive President and Chief Financial Officer

2. Specialized Artificial Intelligence Enhances Vertical Learning System Competitiveness

Management deployed a specialized vertical learning platform tuned to proprietary educational content instead of a general-purpose model. The platform generated meaningful sales within 25 days of launch while deepening student engagement.

Purpose-built as a specialized vertical learning system rather than a general purpose large language model. It flows from New Oriental's deep educational heritage. And enhance the competitiveness of our product in many aspects.
-- Stephen Zhihui Yang, Executive President and Chief Financial Officer

3. Disciplined Center Expansion Prioritizes Utilization Over Rapid Storefront Growth

Management doesn't rush into new locations without proven utilization. Physical classroom expansion of 10% to 15% depends on local student demand, financial return thresholds, and operational readiness.

Expansion decisions will be carefully calibrated throughout the year. Guided by the operational readiness, customer demand, and financial results.
-- Stephen Zhihui Yang, Executive President and Chief Financial Officer

Looking Ahead

Revenue momentum accelerates across core tutoring and new initiatives. Higher learning center utilization and proprietary software strengthen competitive advantages while management tracks enrollment timing and pricing discipline.

Looking ahead, we are particularly confident in sustaining our momentum across our core business and new endeavors.
-- Stephen Zhihui Yang, Executive President and Chief Financial Officer

Capital allocation combines business reinvestment with shareholder returns, backed by a $200 million repurchase program and cash dividends. Strong cash flow generation reinforces balance sheet flexibility.

To conclude, long-term value creation remains the fuel of the engine. And we are keen to share with our shareholders the yields of the sustainable growth we are painting for the future.
-- Stephen Zhihui Yang, Executive President and Chief Financial Officer

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.