New Oriental Education Q1 2027 Earnings Call Transcript
New Oriental Education (NYSE:EDU) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://edge.media-server.com/mmc/p/d5kv97n5/
Summary
New Oriental Education reported a strong fiscal Q1 2027, with a 23.1% year-over-year increase in net revenue to $1,874.5 million, exceeding their guidance range.
The company’s strategic initiatives, including East Buy’s rapid growth and new ventures such as New Oriental Home, contributed significantly to the revenue increase and operational efficiency.
New Oriental Education announced a 20.5% year-over-year increase in operating income to $374.7 million and provided a positive outlook, with expectations of continued growth and margin expansion.
The company reiterated its full-year revenue guidance of $6,453.9 million to $6,680.3 million, representing a 14% to 18% increase, driven by strong momentum across core and new business lines.
Management highlighted ongoing investments in AI-driven solutions and the OMO teaching platform, aiming for improved customer interaction, operational efficiency and market reach.
Full Transcript
OPERATOR (Moderator)
Good evening, and thank you for standing by for New Oriental Education’s fiscal year 2027 first quarter earnings conference call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I’d like to turn the meeting over to your host for today’s conference, Ms. Cici Zhao.
Cici Zhao (Investor Relations)
Thank you. Hello everyone, and welcome to New Oriental Education’s first fiscal quarter 2027 earnings conference call. Our financial results for the period were released earlier today and are available on the company’s website as well as on newswire services. Today, Stephen Yang and I will share New Oriental’s latest earnings results and business updates in detail with you. After that, Stephen and I will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental Education does not undertake any obligation to update any forward-looking statements except as required under applicable law.
As a reminder, this conference is being recorded. In addition, a webcast of the conference call will be available on New Oriental Education’s investor relations website at investor.neworiental.org. I will now turn the call over to Mr. Yang. Stephen, please go ahead.
Stephen Yang (Executive President and Chief Financial Officer)
Thank you, Cici. Hello everyone, and thank you for joining us on the call. We’re pleased to start the new fiscal year with an encouraging first quarter, with revenue growth exceeding our guidance upper range. In addition to the resilience of our core business, East Buy and our new ventures have also contributed outstanding results to the growth this quarter. I’m glad to report our efforts across all of our business initiatives have resulted in healthy growth amid economic headwinds and external challenges.
In this quarter, total net revenue grew 23.1% year over year to $1,874.5 million and non-GAAP operating income rose 21.2% to $406.8 million. 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. I do want to highlight here that East Buy experienced rapid growth in the past quarter, which means it now accounts for a larger share of the group revenue and therefore carries greater weight in our consolidated operating margin.
Please rest assured that our overall margin remains very stable. Yet we would encourage you to also look at each business on a standalone basis, as this gives a clearer and more accurate picture of our underlying performance. As said, all of our business lines continue to maintain healthy margins. At the group level, the consolidated margin reflects both the margin of each business and its relative share of revenue, so changes in the business mix can influence the overall figure without indicating any deterioration in the underlying businesses.
Now I’m pleased to share the strong momentum demonstrated by our core business and new initiatives this quarter in detail. Breaking down: Overseas Test Prep business recorded a revenue increase of about 8% year over year for this quarter. Overseas Study Consulting business recorded a revenue increase of about 7% year over year for this quarter. Our adults and university students business recorded a revenue increase of 22% year over year for the first quarter of 2027.
Our non-academic tutoring business has been rolled out to around 60 existing cities. Market penetration has seen steady growth, particularly across high-tier cities. The top 10 cities contribute around 60% of the business. Our Intelligent Learning System and device business has been launched in around 60 cities. We’re encouraged by continued enhancement in customer retention and scalability, with the top 10 cities contributing around 50% of this business.
In summary of the above, our new educational business initiatives delivered a 25% year-over-year revenue increase in the first quarter of 2027. Turning to our integrated tourism business, which spans study tours and research camps for K-12 and university students as well as cultural tours for middle-aged and senior travelers, we have been leveraging our Culture Travel China Study Tour, Global Study Tour and CAP Education products to deliver value through knowledge enrichment, personal growth and experiences for cultural immersion. Our student programs now operate in about 55 cities across China, with the top 10 cities generating over 50% of the revenue.
Our premium adult offerings cover around 30 provinces in China along with selected international destinations. We’re also expanding into senior health and wellness tourism through an asset-light model, partnering with more than 65 wellness facilities in key destinations such as Hainan, Yunnan, Guangxi and Shandong. As for our OMO teaching platform, investments in revamping and upgrading the system continue to be in the books. In this quarter we invested $28.2 million to improve and maintain our OMO platform, which enables us to provide and interrupt high-quality instruction to students and cater to their individual learning needs. Building on the launch of our proprietary AI-powered personalized learning platform, ongoing investment and refinements of AI-enabled products remain our organizational priorities, to which we expect progressive contributions in the coming quarters.
The platform has completed the first phase of deployment, generating meaningful sales within just 25 days of launch. Purposed as a specialized vertical learning system rather than a general-purpose large language model, it draws on New Oriental’s deep educational heritage and enhances the competitiveness of our product in many aspects. These encouraging early results affirm strong market traction and product-market fit, and we will continue to advance AI-driven solutions to extend our market reach and improve operational efficiency.
Now turning to East Buy, we are hugely encouraged by its rapid growth in the first quarter of fiscal year 2027, which underscores the success of our ongoing pursuit of evolution and optimization. We accelerated private-label development and our very own three highs: high safety, high quality and taste, and high value for money. Raw material screening, factory audits and finished product testing before every product launch reflect our commitment to stringent quality control.
Today our private-label lineup has grown beyond 1,000 SKUs across food, nutrition and health, apparel, skincare and other categories. Notably, several flagship products have managed to deliver robust sales for its live streaming platform. The addition of professional live streamers and operational specialists has strengthened East Buy’s content capabilities. The new vertical accounts launched on Douyin have now expanded our channel matrix to over 30 channels across a wide range of product categories.
We also draw on user feedback to continually improve the customer experience in our live streaming platforms. Offline sales by network is the leverage of New Oriental’s nationwide learning center network to explore new retail opportunities. We currently have four offline experience stores and are advancing campus store rollout at the group level. We have also developed instant retail capabilities with front warehouses in place and a one-hour delivery trial underway in Beijing and Shanghai.
For the rest of the year, East Buy will continue its multi-channel strategy to cast a wider net, accelerate private-label development in food and daily necessities, optimize membership operations on its proprietary app, and improve supply chain efficiency. Together we’re convinced that these initiatives will support sustainable growth and deliver a lasting impact. Now I would like to share updates on a new initiative we have been piloting since fiscal year 26 Q3, and that is New Oriental Home. This family-centric app assembles our education services, East Buy offerings and cultural tourism products into a single platform serving an entire household at every stage of life. New Oriental Home scales up a full-spectrum resource hub that caters not only to learning but to extensive individual needs. The points-based incentive program, which now reaches a large number of students, has become woven into the daily teaching and customer service, while linking positive learning habits to product and reward redemption.
We’re excited to share that our registered users grew substantially, with over half of them proactively redeeming points across our 10 learning and family-oriented offerings. Collectively, these results validate that our education offerings can extend naturally into a one-stop shop for the broader family household customer and all that we can offer in a synergistic ecosystem. New Oriental Home also lowers customer acquisition cost and improves cross-selling efficiency.
This program has been launched across 69 cities including Chongqing, Hangzhou, Guangzhou and Xi’an, with over 1,678,000 registered families. By the end of this quarter, New Oriental Home has achieved a cumulative activity participation rate of over 90%, while campaign activation rate for the quarter reached 33% and significantly outperformed many public domain e-commerce platforms. We’re ecstatic with the opportunity to further enhance customer lifetime value and are eager to build on this encouraging momentum in the quarters ahead.
Now I will turn the call over to Cici to share with you the key financials. Cici, please go ahead.
Cici Zhao (Investor Relations)
Thank you, Stephen. Let me now walk you through the key financial highlights for the quarter. Operating cost and expenses for the quarter were $1,499.8 million, representing a 23.7% increase year over year. The increase was primarily due to the cost and expenses related to the substantial growth in East Buy private label products and live-streaming e-commerce business. Cost of revenue increased by 28.1% year over year to $817 million. Selling and marketing expenses increased by 30.7% year over year to $262.2 million.
G&A expenses for the quarter increased by 12.6% year over year to $420.7 million. Total stock-based compensation expenses, which were allocated to related operating costs and expenses, increased by 31.3% to $30.6 million in the first quarter of 2027. Operating income was $374.7 million, representing a 20.5% increase year over year. Non-GAAP income from operations for the quarter, excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was $406.8 million, representing a 21.2% increase year over year. Net income attributable to New Oriental Education for the quarter was $273.2 million, representing a 13.5% increase year over year. Basic and diluted net income per ADS attributable to New Oriental Education were $1.76 and $1.74, respectively.
Non-GAAP net income attributable to New Oriental Education for the quarter was $300.9 million, representing a 16.5% increase year over year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental Education were $1.94 and $1.92, respectively. Net cash flow generated from operations for the first fiscal quarter of 2027 was approximately $195.4 million, and capital expenditure for the quarter was $65.8 million. Turning to the balance sheet, as of August 31, 2026, New Oriental Education had cash and cash equivalents of $1,754.6 million. In addition, the company had $1,441.3 million in term deposits and $2,422.7 million in short-term investments.
New Oriental Education’s deferred revenue, which represents cash collected upfront from customers and related revenue that will be recognized as the services or goods are delivered, at the end of the first fiscal quarter 2027 was $2,121.1 million, an increase of 11.2% as compared to $1,906.7 million year over year. Now I’ll hand over to Stephen to go through our outlook and guidance.
Stephen Yang (Executive President and Chief Financial Officer)
Thank you, Cici. We have entered a new phase with healthy performance this quarter, which injects confidence in our operational resilience and growth trajectory. Looking ahead, we’re particularly confident in sustaining our momentum across our core business and new endeavors, with expectations that our diverse initiatives to deepen customer engagement will drive margin expansion, greater operational efficiency, and strong shareholder yields. Strategic expansion of capacity and nurturing talents remain our focus.
We plan to deepen our presence in markets with solid top- and bottom-line performance. Expansion decisions will be carefully calibrated throughout the year, guided by operational readiness, customer demand, and financial results. Continuous pursuit of new initiatives will not hinder our commitment to delivering promising service quality, sustainable profitability, and cost discipline. In addition to confidence in the healthy growth of our core education business, we will always support East Buy and other new initiatives with a customer-centric mindset and without compromising quality standards.
Our hope is for this effort to collectively reinforce New Oriental Education’s standing as a trusted name among Chinese households. We will also reveal our cost reduction and enhancement measures from time to time to improve our operational efficiency and margin profile. Considering the positive momentum and disciplined measures across our business lines, we are pleased to reiterate the previously provided full-year guidance of total net revenue in fiscal year 2027 to be in the range of $6,453.9 million to $6,680.3 million, representing a year-over-year increase in the range of 14% to 18%. These expectations reflect our current outlook and are based on the recent regulatory developments and prevailing market conditions, both of which remain subject to change.
To update everyone on the shareholder return for fiscal year 2026, the company announced a share repurchase program in October 2025 under which the company is authorized to repurchase up to $300 million of its ADS or common shares over the subsequent 12 months. As of October 27, 2026, the company has fully utilized the $300 million repurchase amount authorized under its 2026 share repurchase program for an aggregate of approximately 56.2 million common shares, including common shares represented by ADSs, from the open market.
Before closing my remarks, I’d like to provide an update on our shareholder return plan for this fiscal year. As part of the implementation of the three-year shareholder return plan adopted in July 2025 for fiscal year 2027, the Board of Directors of the company previously approved an ordinary cash dividend and a new share repurchase program in July 2026. The company announced today that its Board of Directors has also approved an ordinary cash dividend for fiscal year 2027 of 0.$2 per common share, 0.2.$0 per ADS, which will be distributed in U.S. dollars in two installments.
For the first installment, 0.$1 per common share or $1 per ADS will be paid to holders of common shares and ADSs of record as of the close of business on November 18, 2028, Beijing/Hong Kong Time and New York time, respectively. Then for the second installment, 0.$1 per common share or $1 per ADS will be paid to holders of common shares and ADSs of a record day that will be further determined by the Board of Directors of the company in due course.
The payment date for the first installment is expected to be on or around December 1, 2026 and December 4, 2026 for holders of common shares and holders of the ADSs, respectively. For the second installment, payment date is expected to be around six months after the payment date of the first installment. Further details regarding the record date and payment date for the second installment will be announced by the company in due course. The aggregate amount of the cash dividend to be paid in two installments is expected to be approximately $300 million.
Pursuant to the 2027 Share Repurchase Program, the company may repurchase up to $200 million of its ADSs or common shares over the subsequent 12 months following the Board approval. As of October 27, 2026, the company has yet to repurchase any common shares under the 2027 share repurchase program. The company’s proposed repurchases may be made from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations.
The Board of Directors of the company will review the share repurchase program periodically and may authorize adjustments to its terms and size. The company expects to fund the repurchases out of its existing cash balance. To conclude, long-term value creation remains the fuel of the engine, and we’re keen to share with our shareholders the yields of the sustainable growth we’re painting for the future. We continue to collaborate closely with the government authorities across China, ensuring full compliance with the relevant policies and regulations while adapting our operations responsibly to meet moment requirements. This is the end of the fiscal year 2027 Q1 summary.
At this point I would like to open the floor for questions. Operator, please open the call for this.
OPERATOR (Moderator)
Thank you. The question-and-answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. To ask a question now, please press Star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press Star 11 again.
We will now proceed to take our first question, and our first question comes from the line of Jenny Yuan from UBS. Please ask your question. Jenny, your line is open.
Jenny Yuan (Analyst)
Hi Steven and hi Sisi. Thanks for taking my question. And my question is on margins. So in this quarter the overall OP margin was broadly stable year over year while both the core education and East Buy delivered year-over-year margin expansion, and you explained that the overall margin performance was more due to the changes in revenue mix. But if this trend continues, how should we think about the outlook for overall margin expansion and what are the key drivers of margin improvement going forward?
Thank you.
Stephen Yang (Executive President and Chief Financial Officer)
Thank you, Jenny. Yeah, let us start with the margin analysis of this quarter. Yeah, I think you’re right. Both our core education business and East Buy reported year-over-year margin expansion due to the enhanced operational efficiency and the improved utilization of the learning centers. And in Q1 East Buy’s rapid growth increased its share of total revenue. And typically in Q1, because of the seasonality, core education business margins are higher than East Buy because of the seasonality.
So this shift in our revenue mix kept our consolidated operating margin at a stable level for the whole group. And going forward I think we remain confident in the margin profile of each business line, both the core education business and East Buy. So we expect the margin of all the business lines will be expanded in the new year. In this fiscal year 2027, I think the margin expansion will come from the higher operational efficiency and even the better utilization of the learning centers. And also we started the cost control since March last year 2025, and now I think we have seen the good result which helps us to drive the margin up.
And we will continue the cost control going forward, so it will help the margin profile going forward. Jenny, thank you.
Jenny Yuan (Analyst)
Thank you, Stephen, for the color. Claire, thank you.
OPERATOR (Moderator)
Thank you. We will now take our next question from the line of Elsie Sheng from CLSA. Please go ahead. Elsie, your line is open.
Elsie Sheng (Analyst)
Thank you, Stephen and Sissy, for taking my question. So my question is mainly on revenue growth outlook because this quarter we see a really strong revenue growth and it’s much higher than our full-year revenue guidance. So what is the outlook for the next few quarters and maybe the possibility of raising our full-year revenue guidance? Especially if we look at by segment, I noticed that the overseas business growth actually accelerated versus the previous quarter.
Wondering what is the driver and does this mean that overseas business will see a turning point or recovery? Thank you.
Stephen Yang (Executive President and Chief Financial Officer)
Okay. Yeah, thank you, Elsie. I think your question is about the revenue, the growth outlook for the whole year. And yeah, as you know, I think this quarter, Q1, the revenue growth exceeded our expectations again. And I think the reason is because we We’re seeing all the business lines grow very fast. And, you know, starting from fiscal year 27, we are making a change to give the annual guidance rather than the quarterly guidance. Given our positive momentum, I think in the coming Q2, and even the rest of the year, the revenue growth will be very healthy. And I will give you the breakdown of the revenue outlook of the annual guidance by different business lines.
I think the overseas test prep business, this year’s revenue growth will be over 5% year over year in dollar terms. And for our new business, I think the revenue growth will be roughly high teens, or close to 20%, and the high school business roughly 15% top line growth year over year. And college business, I think the revenue growth will be around 20% or even maybe higher. And East Buy—yeah, you saw the numbers of the revenue growth in Q1 of East Buy.
We had very rapid growth of East Buy, and I believe East Buy’s revenue will accelerate in Q2. So this is the breakdown of the different business lines’ growth for fiscal year 27, and I think even in the coming Q2 we expect the revenue growth of the whole group will be higher than the revenue growth of Q1. I think you will be even more satisfied with the revenue growth in the coming Q2. And another question is about the reason for the overseas-related business. In Q1 we got 7–8% top line growth. Due to the impact of the economic environment and international situation headwinds, we met some revenue growth pressure last year. But I think our team has shown resilience even in Q1 and in the new year. We believe we will take more market share from competitors continuously in Q3 and Q4. So I think for the overseas test prep business, for this year the growth will be over 5%, even stronger than we expected last year.
Thank you, Elsie.
Elsie Sheng (Analyst)
Thank you. It’s very helpful.
OPERATOR (Moderator)
Thank you. Our next question comes from the line of Alice Tsai from Citibank. Please go ahead, Alice, your line is open.
Alice Tsai (Analyst)
Good evening, Stephen and Cici. My question is on non-academic tutoring enrollment because it was down about 10% year over year after calculation, but new initiatives revenue grew about 25%. Could you help us understand the gap? Is there anything changed in how you count enrollments? Thanks.
Stephen Yang (Executive President and Chief Financial Officer)
Okay. Yeah. So in terms of the revenue, you know, for enrollments, we are booking the enrollments on a time basis. Basically, if you look at last quarter, actually this year the enrollments timing is earlier than last year. So if you look at last quarter, our enrollments growth is more than 25%. It’s much higher than the revenue growth of last quarter because a lot of students this year registered earlier than last year for both the summer quarter and the autumn semester course.
So you saw that the enrollments increased dramatically last quarter and this quarter because of the pre-enrollment. So the actual enrollment number for comparing with last year is lower. I would suggest you combine these two quarters together to match with the revenue growth. You will see similar trends. It’s a timing difference—enrollment is on a time basis, but revenue is on an accrual basis. So if you take two quarters together to do the calculation, you will see it’s much more reasonable. That’s the key reason.
Yeah, so I think the time window changes time by time. That’s why we guided investors on revenue growth on an annual basis. I want to reiterate that the K-9 business—the new business—the growth rate for the whole year will be somewhere around 20% year over year in dollar terms. So we have no change. Thank you.
Alice Tsai (Analyst)
Okay. It’s very clear, very clear and helpful. Thank you.
OPERATOR (Moderator)
Thank you. Our next question comes from the line of Lucy Yu from Bank of America Securities. Please go ahead, Lucy. Your line is open. Thank you.
Lucy Yu (Analyst)
I just have one question on the learning center expansion pace. So how many learning centers have we added this quarter, and what would that imply year-over-year growth?
Stephen Yang (Executive President and Chief Financial Officer)
Thank you. The learning centers—yeah, I think we added 2% new capacity in Q1. This is q-on-q, so this is the net add q-on-q: 2%. For the whole year, we plan to open, let’s say, 10% to 15% new learning centers. I think most of them we will open in existing cities, and we do plan to open a couple of new cities in this new year. This is another change because we feel quite optimistic about the business of the new educational business. We’re happy to see the student retention rate improvement. That means we provide even higher quality service to the students and to the customers and drive the utilization rate up. So we’re quite optimistic on the new business and even the OMO business within the K-12 business. In the coming new year, if we open 10% to 15% new learning centers, I think the overall utilization rate will be up in the new year, Lucy.
Lucy Yu (Analyst)
Understood, very clear. Thank you, Stephen.
Stephen Yang (Executive President and Chief Financial Officer)
Thank you, Lucy.
OPERATOR (Moderator)
Thank you. And our next question comes from the line of DS Kim from JPMorgan. Please go ahead. DS, your line is open.
DS Kim (Analyst)
Hi, Stephen. Hi, Cici, thanks for taking my question. And, by the way, congrats on the all-time-high revenue and record-high profits—I think the best number in the past 33 years. So kudos to that. And despite the share reaction, I think the underlying operating trend looks pretty solid, at least to me. I was going to ask about enrollment, but you already explained very well and revenue growth for new business can sustain nearly 20% anyway. So that is more telling, I think, than the enrollment trend.
So perhaps let me ask on East Buy profit. I know you can’t talk about exact numbers because of the disclosure, but can we comment at a high level? When I look at minority interest, I think the momentum sequentially was down 8% quarter over quarter. So should we take that as a directional signal that East Buy profit dollars were down sequentially, or is that too simplistic a way to look at it? And just as a follow-up, you just mentioned about expansion. Can I double-check what that 10% to 15% learning center expansion means for K-9 or new education business classroom expansion? Does that imply a much higher number, given the profitability? Thank you so much.
Stephen Yang (Executive President and Chief Financial Officer)
Yeah, thank you, DS. For Q1, East Buy’s non-GAAP operating margin expanded year over year. And regarding the MI number—because East Buy granted ESOP last quarter, typically under GAAP it’s recorded with more share-based compensation in the first year, and so it drags on net profit. But if you look at a non-GAAP basis, I believe East Buy’s non-GAAP operating margin and non-GAAP net margin in Q1 expanded. So this is my answer to your question about East Buy’s margin.
And your second question is about the enrollment—can you repeat your second question again?
DS Kim (Analyst)
Thank you, sir. That makes a lot of sense on non-GAAP. Just wanted to double check: 10% to 15% learning center expansion that you mentioned—what does that mean for K-9 new education business classroom expansion in particular, if you could disclose to a degree?
Stephen Yang (Executive President and Chief Financial Officer)
Roughly 15% for the K-9 business, because it will be higher than the average.
DS Kim (Analyst)
Thank you, sir.
OPERATOR (Moderator)
Thank you. We will now move to our next question from the line of Timothy Chow from Goldman Sachs. Please ask your question. Timothy, your line is open.
Timothy Chow (Analyst)
Thank you. Thank you, Stephen, for taking my question. Just a quick follow-up on the margin question regarding East Buy. Stephen, in the beginning you mentioned that for this year you expect margin expansion across all business lines. I just want to clarify here whether when you refer to all business lines, whether that includes East Buy or not. And for my question, I want to understand more about New Oriental Home. A lot of the operating metrics that you shared are quite encouraging, including the membership and also the activation rate. Just wondering if you can help us better understand how those New Oriental Home operating metrics translate into the financials—whether that helps you to save on sales and marketing, and is there a way to quantify that? That will be very helpful.
Stephen Yang (Executive President and Chief Financial Officer)
Thank you. In Q1, the core education business margin expanded, and East Buy’s non-GAAP operating margin also expanded. So for both businesses, margin expanded in Q1. Going forward, for both the core education business and East Buy, we expect margin expansion. And don’t forget East Buy’s revenue growth—we recovered the business roughly three quarters ago, and in Q1, East Buy had very fast revenue growth. We believe in the coming Q2 the revenue growth of East Buy will accelerate compared to Q1, and I think the margin profile of East Buy will be positive going forward.
So that’s for East Buy and the education business margins and revenue growth outlook. I will ask Cici to answer your question about New Oriental Home.
Cici Zhao (Investor Relations)
Yes, actually New Oriental Home is a new platform that we started operating since the second half of last year. This platform is quite exciting in that it’s combining all our key business lines—not only education, but also East Buy and tourism. We’re operating on each household as a whole entity. It has actually attracted a lot of users already. Registered family numbers already increased to over 1.6 million and are still increasing, covering all kinds of educational products and still increasing—not only our own customers, but also some relatives outside New Oriental’s existing customers.
So the user number is meaningful. And also we are operating this using new kinds of ways, and the participation rate is also very high—cumulatively 90% participation, which means the vast majority of the users are actively attending all
Stephen Yang (Executive President and Chief Financial Officer)
…kinds of activities that we organized through the platform. And also the latest activation rate is over 30%. So these numbers are exciting. And also going forward, as we have this platform bigger and bigger and have all the related customers signing in and it can start to generate, because this is a sales platform, we can easily cross-sell our products not only educational but already using the credit-based operation to have some cross-selling from education business to East Buy, the live streaming business, and also have the ability to generate maybe even more revenue from this new revenue from this platform.
But actually it’s still early stage for this new initiative and we’ll keep updating everyone on the new progress of the platform. And at the same time this is also a platform that helps us to reduce the customer acquisition cost. Because we used to have individual business units covering different ages of customers, but now we’re using the platform to operate and also to manage the needs of the whole family. So we can easily use the related education activities that customers are attending and then easily reduce the customer acquisition, cross-sell different business lines to the same group of customers.
So this is also an exciting trend that we can reduce. We’re expecting that very, very effectively we can reduce the customer acquisition costs and expenses. Operation expenses will be reduced because of the platform. So going forward we’ll keep updating the progress of the platform to all of you.
OPERATOR (Moderator)
Thank you. Thank you, Stephen, for the answers. Thank you. And our next question comes from the line of Yi Kun Zheng from CITIC Securities. Please go ahead. Yi Kun, your line is open.
Yi Kun Zheng (Analyst)
Hi, Stephen. My question is about the potential for the core business margin. Since the current margin value is already very healthy and you are still rolling out the cost reduction plan, I’m just wondering how much further room there is for the margin expansion going forward. Thank you.
Stephen Yang (Executive President and Chief Financial Officer)
Yeah, I think, you know, going forward, I think the core education business margin we expect to be expanded and, you know, because of the, you know, as I said, we open the learning centers with the, you know, more discipline, and 10 to 15%. And so we do hope to get the higher utilization rate and even we have potential operating leverage going forward. And as I said, we started the cost control last year and we’ll continue to do the cost control.
So I think even like the cost expense, the selling, marketing, even the G&A profile, I think we can save some money to drive the margin up. Yeah.
Yi Kun Zheng (Analyst)
No, thank you. So if we look at the margin in the fiscal year 28 or the fiscal year 29, will the margin expansion still be our top priority?
Stephen Yang (Executive President and Chief Financial Officer)
Yeah. Yes, because, you know, we changed our strategy since last year. You know, we care more about the quality improvement and even the higher student retention rate, and we don’t want to open too many learning centers and we care more about the higher utilization rate. And so even in the next two to three years, I think our plan is to drive the margin up, you know, step by step.
Yi Kun Zheng (Analyst)
Thank you, Stephen.
OPERATOR (Moderator)
Thank you. And our next question comes from the line of Jing Yuan from CICC. Please ask your question. Jing, your line is open.
Jing Yuan (Analyst)
Good evening, Stephen. I know we have discussed a lot about the margin, but my question is, do you want to dive deeper about the operating margin? Like you said, you suggest that we look at the operating margin of the educational business and East Buy separately. So could you provide more color on the margin improvement for the, like, especially the education business, if possible, the magnitude and how should we look, like, looking forward? How is the outlook for their separately, like the operating margin?
Stephen Yang (Executive President and Chief Financial Officer)
As I said in Q1, you know, the core education business margin was expanded and the East Buy’s margin is expanded as well. But the margin expansion of East Buy is higher than the core education business because of different revenue growth level. And I don’t want to say too many words on the seasonality, but if you look at the annual basis it is what it is. And going forward I do believe, East Buy first, I do believe the margin of East Buy will be expanded in the coming new year, and for the core education business we’ll do the right things: make the learning center utilization rate up, keep doing the cost control, and provide the investors more satisfied margin profile going forward.
Jing Yuan (Analyst)
Got it. Thank you.
OPERATOR (Moderator)
Thank you. We have now approached the end of the conference call. I’ll now turn the call over to New Oriental Education’s Executive President and CFO Stephen Yang for his closing remarks.
Stephen Yang (Executive President and Chief Financial Officer)
Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you.
OPERATOR (Moderator)
This concludes today’s conference call. Thank you for participating. You may now disconnect your lines.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.