New Oriental Education & Technology Group Inc. provides a wide variety of educational programs, services and products. In addition, the company conduct the sale of private label products and livestreaming e-commerce business through East Buy.
Segments
For the year ended May 31, 2024, the company identified four operating segments, including Educational Services and Test Preparation Courses, Private Label Products and Livestreaming E-Commerce; Overseas Study Consulting Services; and Educational...
New Oriental Education & Technology Group Inc. provides a wide variety of educational programs, services and products. In addition, the company conduct the sale of private label products and livestreaming e-commerce business through East Buy.
Segments
For the year ended May 31, 2024, the company identified four operating segments, including Educational Services and Test Preparation Courses, Private Label Products and Livestreaming E-Commerce; Overseas Study Consulting Services; and Educational Materials and Distribution. The company identified Educational Services and Test Preparation Courses, Private Label Products and Livestreaming E-Commerce; and Overseas Study Consulting Services as its three reportable segments for the year ended May 31, 2024. The company’s operating segment, Educational Materials and Distribution, individually did not exceed the 10% quantitative threshold during the year ended May 31, 2024, and as a result, was aggregated in others.
Educational Services
Network
The company delivers its comprehensive educational programs, services and products to students across China through the company’s nationwide physical network of schools, learning centers and bookstores, as well as the company’s pure-play online learning platforms. As of May 31, 2024, the company had a physical network of 81 schools and 944 learning centers in 74 cities and approximately 35,700 teachers. The company delivers online courses through its online learning platforms, including Koolearn.com, the company’s comprehensive online education platform. Powered by the company’s OMO system, the company has combined its offline network with online technologies and adopted different business models tailored to students in different locations to facilitate the company’s operational efficiency. For example, for students in most cities, the company primarily delivers courses in offline classroom settings, supported with interactive online learning components. For students in lower-tier cities, the company broadcasts courses delivered by well-known teachers from top-tier cities through the company’s OMO system, and the local assistant lecturers monitor and provide in-person guidance and interactions with students onsite.
The company distributes and sells books and other educational materials developed or licensed by the company through its distribution channels, which consist of bookstores operated by the company and third-party distributors. As of May 31, 2024, the company had eight bookstores operated by the company, and 245 third-party distributors, who provided the company with access to a nationwide network of online and offline bookstores. In addition, the company has an extensive network of students and alumni, who have been essential in helping the company promotes its brand and the company’s programs, services and products by word-of-mouth referrals.
Almost all of the schools, learning centers and bookstores that the company operates are under its ‘New Oriental’ brand. The company’s schools in major cities consist of classrooms and administrative facilities with full student and administrative services, while the company’s schools in satellite cities and its learning centers consist primarily of classroom facilities and limited course registration and management capabilities. The company selects new locations for its schools and learning centers based on various factors, including demographics, the number of schools or colleges in, and the economic condition of, the particular region. The company has opened bookstores in some of its established schools to sell educational materials relating to the company’s courses and also sell self-help, know-how, inspirational and other books.
The company ceased its K-9 Academic AST Services at the end of 2021 and closed certain schools and learning centers in connection with the cessation of the company’s K-9 Academic AST Services. The following table sets forth information about the locations of the company’s schools, learning centers and bookstores as of May 31, 2024.
Educational Programs, Services and Products
The company provides various educational programs, services and products. The company delivers education to its students in traditional classroom setting, in a combination of online and offline classroom setting, and through the company’s pure-play online platforms. Other than kindergartens, the company’s classroom-based courses are generally designed to be completed in 1 to 12 weeks. Course fees are determined based on factors such as the length of the course, the size and the subject of the class, and the geographic location of the school. The company offers flexible class sizes for its courses, including larger classes that range from 6 to 200 students per class and small classes that range from one to five students per class. The company’s educational program, service and product offerings include five major areas: test preparation courses, non-academic tutoring, intelligent learning system and devices, overseas study consulting services and educational materials and distribution. In compliance with the Alleviating Burden Opinion and applicable rules, regulations and measures, the company ceased offering K-9 Academic AST Services in China at the end of 2021. The company deconsolidated Beijing Changping New Oriental Bilingual School and Beijing New Oriental Yangzhou Foreign Language School, two private schools that provide compulsory education, from the company in September 2021 in compliance with Amended Implementation Rules for the Private Education Law. Historically, East Buy operated the company’s pure-play online learning platforms. In March 2024, the company’s wholly-owned subsidiary and New Oriental China completed the acquisition of East Buy’s online education business. Upon completion, the online education business is recorded by the company primarily under test preparation courses.
Test Preparation Courses
The company began offering TOEFL preparation courses in 1993. The company has evolved to provide a wide range of test preparation courses to students taking language and entrance exams used by educational institutions in the United States, the Commonwealth countries, and the PRC. The company’s overseas test preparation courses primarily include IELTS, TOEFL, SAT, AP, A LEVEL, GCSE, TOEFL Junior, SSAT, ACT, GRE, GMAT and LSAT preparation courses and the company’s PRC test preparation courses primarily include CET 4, CET 6, Postgraduate Entrance Exam and exams for students with junior college diplomas to obtain bachelor’s degrees.
The company’s test preparation courses focus on quality instruction and test-taking techniques designed to help students achieve high scores on the admissions and assessment tests. The company recognizes that students begin test preparation at different levels, have different strengths and weaknesses, and learn at different rates. The company offers a range of basic and advanced test preparation courses tailored to students at different levels.
Following the acquisition of the East Buy’s online education business, which primarily consists of online test preparation courses, the following operating metrics are presented to include the test preparation courses offered through Koolearn.com. In the company’s year ended May 31, 2024, the company had approximately 1,050,000 student enrollments in its test preparation courses. Approximately 491,000 of the company’s student enrollments in its year ended May 31, 2024 were in overseas test preparation courses and the other 559,000 were in PRC test preparation courses. The company’s test preparation courses generally range from 6 to 200 students per class. The company also has students from its test preparation courses that take the company’s small class, in particular 1-on-1, tutoring courses. The company’s students typically enroll in a 12 to 400 hour program with classes meeting one to ten times per week for approximately 1 to 3 hours per class. The company also offers intensive and condensed versions of its courses, which are compacted into shorter time periods.
Non-Academic Tutoring
The company started to expand its non-academic tutoring courses in 2021, which focus on cultivating students’ innovative and comprehensive abilities. The company’s courses have been well-received by students since launch and the company has rolled out non-academic tutoring courses in around 60 cities in China. In the company’s year ended May 31, 2024, the company had approximately 2,454,000 student enrollments in the company’s non-academic tutoring courses.
Intelligent Learning Systems and Devices
The company launched its intelligent learning systems and devices in 2021, which are designed to provide a tailored digital learning experience for students. Leveraging the company’s advanced data and technology capabilities with the company’s abundant teaching experience, together with the company’s teachers that monitor and assess the learning curve of each student from the company’s backend system, the company provides customized and personalized learning materials and exercises for students. This innovative educational service not only improves students’ learning efficiency, but also cultivates students’ proactive learning habits. The company’s intelligent learning systems and devices have been tested and adopted in around 60 cities in China, and the company had 342,000 active paid users in the year ended May 31, 2024. Active paid users are users who visit and logged in the company’s intelligent learning system and devices at least once and also make payments for the company’s products and services at least once in a given period, after eliminating duplicates. The contribution of intelligent learning systems and devices has been immaterial to the company’s business for the year ended May 31, 2024.
Overseas Study Consulting Services
The company’s consultants help students through the application and admission process for overseas educational institutions and provide useful college, graduate and career counseling advice to help students make informed decisions. The company also counsels and assists students with the immigration process for overseas studies, such as obtaining visas and arranging housing.
Educational Materials and Distribution
The company develops and edits educational materials for language training and test preparation and distribute these materials through various distribution channels, consisting of the company’s bookstores, as well as third-party distributors. In the company’s year ended May 31, 2024, the company developed and edited approximately 361 titles and distributed approximately 15.9 million books authored or licensed by the company in China. Most of the materials distributed by the company is education-related and include the materials that the company uses in its courses and titles that the company markets for use in different education areas.
The company’s extensive distribution channels have attracted international education content providers to cooperate with the company in distributing localized versions of their materials in China. For example, the company has worked with Cambridge University Press, Oxford University Press, Educational Testing Service, Cengage Learning and other education content providers in distributing their education materials in China. With access to such high-quality education content, the company further develops localized products that best serve the needs for millions of students and families in the China market.
Private Label Products and Livestreaming E-commerce Business through East Buy
Leveraging the technology developed for the company’s original live-broadcast classrooms and with the company’s existing team of talents, East Buy established an e-commerce platform under the brand name East Buy for the sale of agricultural and other products in 2022. In December 2021, East Buy began to pilot livestreaming events on certain short-video platforms, such as Douyin. The company has a team of livestreaming hosts and has developed an array of livestreaming channels, such as East Buy, East Buy Book, East Buy Private Label Products, and East Buy Beautiful Life, focusing on different product categories. Through East Buy, the company provides a wide selection of high quality agricultural and other products through the company’s supply chain management system and diversified cooperation with different third parties.
Upholding a multi-channel strategy to reach a wider consumer base, the company has launched its livestreaming channels on Taobao, Wechat Mini program and the company’s own App. While continuing enriching the products and services through livestreaming channels, the company also opened online shops on different platforms, such as Tmall, JD.com, Pinduoduo, Xiaohongshu. The company launched its brand new East Buy mobile App in early July 2023, where the consumers can purchase products both from livestreaming sessions, as well as from the marketplace on the App. The company has established and will continue to promote its membership system on the company’s own App. Members can enjoy membership discounts or coupons during the membership period and earn loyalty points that can be used to offset cash payments.
In addition to the products sourced from third parties, the company also provides a number of private label products under the East Buy brand, including fresh foods, juice, coffee, tea, bedding, among others. Since the launch of the company’s first private label product in April 2022, East Buy has developed and launched 488 SKUs in private label products as of May 31, 2024. The company has continued to increase its investment in factories to improve the company’s supply chain management.
The company has continued to host provincial livestreaming events nationwide with strong support from local cultural and tourism authorities. The company has also started to introduce and offer cultural and tourism products through East Buy, and incorporated history, culture, geography and folklore into the company’s livestreaming sessions to introduce and promote certain historical sites and monuments, tourist attractions and also local specialty products to the company’s audience.
Marketing and Student and Consumer Acquisition
The company has a variety of marketing and student acquisition channels to attract new and retain existing students. The company primarily attracts prospective students through the company’s brand name, the quality of the company’s education services and products and the company’s long operating history. In addition, the company’s OMO system amplifies student acquisition effectiveness while reducing acquisition costs, enabling the company to multiply student acquisition efforts. The company integrates its offline presence with online traffic acquisition channels, media and efforts, such as providing online demonstration courses and social media promotions, to attract prospective students.
The company employs the following marketing and student acquisition channels to attract new and retain existing students:
Referrals. With nearly 30 years of operating history, the company has successfully established ‘New Oriental’ as one of the most trusted brands with well-established brand recognition in the private education industry. The company has focused on delivering high quality and differentiated educational services and products to across two generations of students in China. The company’s strong brand has allowed the company to generate significant organic growth in student enrollments through word-of-mouth referrals. The company expects its student enrollments to continue to grow from referrals through the company’s extensive network of students and alumni.
Cross-Selling. As the company has presence in different markets, the company uses its programs in one market as an opportunity to advertise the company’s programs in other markets. With a variety of programs aimed at different age groups, the company’s intention is to encompass students’ lifelong learning journeys and cross-sell the company’s course offerings to maximize students’ lifetime value. Outside of the company’s network, the company has established cross-promotional relationships with a number of companies to promote the company’s programs, services and products and awareness of the company’s brand.
Speeches and Seminars. The company’s management, most of whom are experienced teachers and were among the company’s earliest teachers, and the company’s teachers give speeches at colleges, universities, high schools and middle schools and to student groups, parent groups and educational organizations. They also participate in educational seminars and workshops. Their speeches include direct program promotion speeches during which they directly explain the merits and advantages of the company’s programs or general English learning methods, as well as inspirational speeches designed to motivate students to reach their full potential and strive for success.
Demo Courses and Advertisements. The company provides online demo courses and social media promotions to attract target students, which has enabled the company to maintain growth in student acquisition while reducing acquisition costs. The company also advertises through its own websites.
For the company’s private label products and livestreaming e-commerce business through East Buy, the company has primary built up its brand awareness and the company’s consumer base by leveraging word-of-mouth referrals, as well as online and offline marketing and brand promotion activities. From time to time, the company also offers coupons and credits to consumers on the company’s platforms. The company has also established its membership system in the company’s App to provide consumers with more favorable products and comprehensive membership services.
Seasonality
The company has experienced seasonal fluctuations in its operations, primarily due to seasonal changes in student enrollments in educational business and some other services. The company’s test preparation courses tend to have the highest revenue in the company’s first fiscal quarter, which runs from June 1 to August 31 of each year, primarily because a significant number of students enroll in the company’s courses during the summer vacation to prepare for admissions and assessment tests.
Regulation
The company operates its business in China under a legal regime consisting of the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the Ministry of Education, the National Press and Publication Administration, the Ministry of Industry and Information Technology, the State Administration for Market Regulation, the Ministry of Civil Affairs, the Ministry of Culture and Tourism and their respective authorized local counterparts.
History
New Oriental Education & Technology Group Inc. was founded in 1993.
