The umbrella firm; which provides language tuition, overseas exam preparation courses, and after school tutoring, made a net revenue gain of 21.7% year on year. This percentage gain translates to nearly $1.8bn in revenue, and a non-GAAP net income increase of $295m, in the last 12 months.
“The K-12 after school tutoring business achieved approximately 44.2% increase in revenue”
The most profitable revenue streams came through the company’s K-12 after school tutoring operations and online learning platforms.
New Oriental operates 77 schools and more than 850 learning centres in China, and claims to have around 17 million registered users on its online learning platform.
In the nearly 25 years since its founding, the company has enrolled over 30 million students, with 4.9 million coming in the financial year to May 2017. This is a yearly increase of 33.3%.
Along with increases in student enrolments, New Oriental is investing its increased revenue to significantly grow learning facilities. The firm incorporated 107 new learning centres and schools in the past financial year, 52 since the end of February 2017.
These additions to the company’s assets also added costs of $26.5m in Q4, the majority of which came from four new schools, as well as further learning centres and renovations to existing learning centres.
The growth of New Oriental in 2017 is also allowing for further expansion of the group’s most profitable arm – online learning platforms originally developed for K-12 students, executive chairman Michael Yu explained in a statement.
“K-12 after school tutoring business, our key revenue driver, achieved approximately 44.2% increase in revenue… contributing 55% of total revenues,” he said. “In particular, our customer retention rate and acquisition efficiency have consistently improved through our online and offline (O2O) integrated education system.”
CEO Chenggang Zhou said the company is in the process of launching the O2O standardised teaching system for the group’s overseas test preparation business, including IELTS, TOEFL and SAT programs, in some of the large cities in China.
Alongside the mixed platform provided by O2O, New Oriental’s purely online venture Koolearn.com is also growing.
“[It] recorded revenue growth of approximately 31%, with registered users up by over 29% and paid users up by approximately 56%,” said Zhou.
This growth signals that New Oriental remains unscathed by an expose by Reuters into alleged rogue practice, such as falsifying student transcripts in order to gain entry into US universities, resulting in an investigation by the American International Recruitment Council in December 2016 and in as much as $1.8bn being wiped off its stock value.
The investigation was into the overseas consulting arm of New Oriental, New Oriental Vision Overseas Consulting, which is certified by AIRC until 2018.
In June, AIRC completed the investigation of the 3,300-employee business concluding that: “BNOVO’s operational procedures, rules, regulations and employee training are appropriate, and that they are properly and consistently applied.”
One partner of New Oriental, Bell English, who provide teacher training for New Oriental’s English language teachers, said the firm’s growth was far from unexpected.
“They’ve been expanding since they started – they have been pretty much one of the fastest growing organisations in EFL and that growth continues, so… [it] is understandable,” Bell CEO Greg Hoile told The PIE News.