New Oriental Education (NYSE: EDU) reported Q1 EPS of $1.15, $0.14 better than the analyst estimate of $1.01. Revenue for the quarter came in at $986.4 million versus the consensus estimate of $956.52 million.

Financial Highlights for the First Fiscal Quarter Ended August 31, 2020

• Total net revenues decreased by 8.0% year-over-year to US$986.4 million for the first fiscal quarter of 2021.
• Operating income decreased by 38.9% year-over-year to US$150.3 million for the first fiscal quarter of 2021.
• Net income attributable to New Oriental decreased by 16.4% year-over-year to US$ 174.7million for the first fiscal quarter of 2021.

Operating Highlights for the First Fiscal Quarter Ended August 31, 2020

• Total student enrollments in academic subjects tutoring and test preparation courses increased by 13.5% year-over-year to approximately 2,961,100 for the first fiscal quarter of 2021.
• The total number of schools and learning centers was 1,472 as of August 31, 2020, an increase of 211 compared to 1,261 as of August 31, 2019, and an increase of 7 compared to 1,465 as of May 31, 2020. The total number of schools was 112 as of August 31, 2020.

Michael Yu, New Oriental's Executive Chairman, commented, "COVID-19 outbreak continues to raise hurdles for businesses across the globe, and inevitably affect our business operations and financial condition for the first quarter of fiscal year 2021. However, we are pleased to report a set of encouraging results. Net revenue for the first quarter was down 8.0% year over year, which is better than what we guided in the previous quarter. The slight decrease was mainly due to the delayed enrollment for summer and autumn classes and the shortening of summer holiday in many major cities by one to two weeks this year, as well as the delayed resumption of offline operation in certain cities, such as Beijing. As the pandemic gradually fades in China, positive signs of recovery have started to emerge across our business lines with significant jump in student enrollments. Our key growth driver, K-12 all-subjects after-school tutoring business, achieved year-over-year revenue growth of approximately 8%. U-Can middle and high school all-subjects after-school tutoring business grew by approximately 9%, while our POP Kids program recorded a growth of approximately 4%. Overseas related businesses, continued face the most difficult challenges due to the cancellation of overseas exams and restrictions on travels. The overseas test preparation business and the overseas consulting and study tour business declined by approximately 51% and 31% respectively."

Mr. Yu continued, "Most of the schools in China have resumed face-to face classes since end of September, hence we have also gradually resumed our offline operation in all cities that we operate in, including Beijing. We are glad to have seen significant pick-up in the year-over-year trend of student enrollments and cash proceeds from students for the autumn semester, which is a positive sign of recovery. Looking ahead, we believe that our financial performance will bottom out starting from the second fiscal quarter. As one of the market leaders in China, we are confident that our continued improved services and best-in-class learning experience would enable us to capture more market share and deliver long-term value for our shareholders."

Chenggang Zhou, New Oriental's Chief Executive Officer, added, "We expect the industry will undergo a wave of market consolidation once the pandemic fades away. We remain committed to ramp up our expansion effort to get prepared for further taking market share from other players post-COVID. During this quarter, we opened seven new offline training schools in new cities. The total square meters of classroom area by the end of this quarter increased approximately 23% year-over-year, and 1% quarter-over-quarter. I'd also like to take this opportunity to highlight we have completed a highly successful summer promotion campaign, targeting grade seven secondary school and grade three primary school student customers before they start their new school year. Despite the challenges of a shortened summer holiday, we are delighted to see the total promotion enrollments reached 1,079,000, a 31% increase year-over-year, accompanied by improved student retention year-over-year. Student enrollments for K-12 after-school tutoring business during the quarter increase by 21% year-over-year. At the same time, we have also placed more focus on executing our OMO (online merging offline) strategy, which enables our service to virtually reach a broader pool of students in existing cities and the surrounding satellite cities. In the summer quarter, we piloted the OMO online courses in around 20 existing cities and attracted a promising number of new customers. We believe these OMO initiatives will effectively boost enrollments and speed up the recovery of businesses in the rest of the year. Last but not least, our pure online education platform, Koolearn.com have also invested more resources in upgrading their APP and online platforms, enhancing the overall in-class learning experience and developing the teacher training system."

Stephen Zhihui Yang, New Oriental's Chief Financial Officer, commented, "Despite our topline faced a bigger pressure this quarter due to the impact caused by COVID-19, our margin has improved comparing with the previous quarter. Our Non-GAAP operating margin for the quarter was 16.8%, down 720 basis points year-over-year, and Non-GAAP net margin for the quarter was 18.7%, down 280 basis points year-over-year. In order to minimize the negative impact to our bottom line, we actively adjusted our operational strategy and made more efforts on cost control and reducing expenditures, especially for business lines facing bigger negative impact in the near term. We believe that our continuous efforts will prepare us to achieve a better margin recovery in the rest of the year."

For earnings history and earnings-related data on New Oriental Education (EDU) click here.