New Oriental Education & Technology Group Inc
NYSE:EDU
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New Oriental Education & Technology Group Inc
Earnings Call Analysis
Q1-2025 Analysis
New Oriental Education & Technology Group Inc
In the first fiscal quarter of 2025, New Oriental reported a remarkable top-line growth of 30.5%, with total net revenues (excluding East Buy revenues) rising 33.5% year-over-year. This indicates a robust demand across their educational service offerings. Notably, the operating margin achieved a significant boost, with the non-GAAP operating margin up to 24.4%, improving by 220 basis points compared to the previous year. Healthy revenue growth and margin enhancement underline the company's strategy of bolstering its core business while expanding its service lineup.
New Oriental's education branches have exhibited promising growth trends, particularly in overseas test prep with a 19% revenue increase and overseas study consulting up by 21%. Furthermore, their non-academic tutoring initiative, which aims to enhance students' overall capabilities, saw robust enrollments of about 484,000 in 60 cities. The company's intelligent learning system, present in the same cities, reported approximately 323,000 active users, showing the success of these new education models.
The newly integrated tourism-related segment has demonstrated explosive growth, achieving a staggering 221% increase in revenue compared to the previous year. This segment has expanded its offerings to include study tours and camps, contributing approximately $90 million in Q1, signaling effective market penetration. However, management anticipates additional time is required to stabilize its profitability in this new venture, although early results are promising.
Looking forward, New Oriental has provided guidance for the second quarter with net revenues projected between $851.4 million to $871.8 million, translating to growth of 25% to 28% year-over-year. While the second quarter is typically a slower period due to seasonality, they remain optimistic about achieving steady growth, with full fiscal year revenue growth forecasted at approximately 30% year-over-year, excluding East Buy. This aligns with their commitment to sustainable growth fueled by ongoing investments and capacity expansion of 20% to 25% across key service areas.
While New Oriental is experiencing strong growth, operational expenditures have also seen a significant increase, reflective of their capacity expansion efforts and investments in the tourism segment. Total operating costs for the quarter were $1,142.3 million, up 27.6% year-over-year. However, strategic cost control measures are in place to ensure profitability remains intact. Management has expressed confidence that margins will expand further as they optimize operational efficiencies throughout the remaining fiscal year.
New Oriental is also investing in the development of its OMO (Online-Merge-Offline) teaching platform, allocating $24.6 million to enhance their service delivery. This commitment aims to leverage technology to provide diverse educational services, enhancing customer experience and maintaining competitive advantage. Additionally, the company is exploring AI integrations into its offerings, demonstrating a forward-thinking approach to education.
In a gesture to reinforce confidence among stakeholders, the Board of Directors approved an extension of their share repurchase program, increasing the authorized repurchase value from $400 million to $700 million. As of October 22, 2024, approximately $457.9 million worth of shares had already been repurchased. This move is expected to enhance shareholder value amid the backdrop of a strong operational performance.
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Good evening, and thank you for standing by for New Oriental's FY 2025 First Quarter Results Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Ms. Sisi Zhao.
Thank you. Hello, everyone, and welcome to New Oriental's First Fiscal Quarter 2025 Earnings Conference Call. Our financial results for the periods were released earlier today and are available on the company's website as well as on Newswire services. Today, Stephen Yang, Executive President and Chief Financial Officer, 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 view expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental 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 this conference call will be available on New Oriental's Investors Relations website at investor.neworiental.org. I will now first turn the call over to Mr. Yang. Stephen, please go ahead.
Thank you, Sisi. Hello, everyone, and thank you for joining us on the call. We are pleased to announce that the company has forced a healthy growth across our key business lines in alignment with the expectations with a top line growth of 30.5% this quarter. Total net revenues excluding revenues generated from East Buy private label products and live streaming business increased by 33.5% year-over-year. In particular, we are impressed by the highly encouraging growth that the new endeavors have entered, which has significantly contributed to the core building blocks of the company.
At the same time, New Oriental's bottom line performance for our core educational business has also achieved healthy yields. Operating margin wise, we have excluded operating margins generated from East Buy for this quarter for better reflection of the performance of New Oriental's core educational business. The operating margin and non-GAAP operating margin for this quarter has reached 23.7% and 24.4%, representing 370 and 220 basis point improvement year-over-year, respectively.
We are pleased to see the tremendous efforts that we devoted into our offerings and platforms sparking positive growth across our business lines. Our commitment to maintaining a healthy profitability and market share stands firm as we strive to create sustainable value for our customers and shareholders in the long term. Now I would like to spend some time to talk about the quarter's performance across our existing business lines and new initiatives to you in detail.
Our key remaining business continued to secure encouraging trends this quarter. Breaking it down, the overseas test prep business recorded a revenue increase of 19% year-over-year for the fiscal -- first fiscal quarter of 2025. The overseas study consulting business recorded revenue increase of about 21% year-over-year for this quarter. The adults and university students business recorded a revenue increase of 30% year-over-year for this quarter.
The ongoing investments on our new education business initiatives, which mostly revolve around facilitating students' all round development have propelled the company's engine to innovation, having secured strong momentum in their respective ventures. Firstly, the non-academic tutoring courses, which we have offered in around 60 existing cities, focused on cultivating students' innovative capability and comprehensive quality. We are pleased to receive solid interest with a total of approximately 484,000 student enrollments recorded in this quarter. The top 10 cities in China contribute over 60% of this business.
Secondly, the intelligence learning system and device business has been adopted in around 60 cities. We're happy to see elevated customer retention and scalability with approximately 323,000 active payment users reported in this quarter. The revenue contribution of these initiatives from the top 10 cities in China is around 55%. Our smart education business, educational material and digitalized smart study solutions have continued to contribute material yields to the overall advancement of the company.
In summary, our new educational business initiatives have recorded a revenue increase of 50% year-over-year for this quarter. In addition, our newly integrated tourism-related business line is now comprised of diverse offerings of culture trips, study tours in China and overseas as well as the camp education. Within the business line, our study tour and research camp business for students of K-12 and university-age achieved tremendous growth this quarter with an increase of 221% in revenue year-over-year for this quarter.
We have operated study tours and research camp business in over 55 cities across the country with the top 10 cities in China offering over 55% of revenue share of this new business. The number of top notch tourism offerings were also piloted to expand our reach to all age groups, including the middle age and the elderly individuals around 30 featured provinces in China and globally. This inspiring growth this quarter has affirmed now our devotion to deliver premium offerings to our valued customers. And we believe, this new business line will contribute continuously meaningful revenue from this fiscal year.
With regards to our OMO system, we have perceived in revamping our platform and leveraged our educational infrastructure and technology edge on remaining key business and new initiatives with a vision to provide advanced diversified education service to customers of all ages. In this quarter, a total of $24.6 million has been invested in our OMO teaching platform, which equips us with the flexibility to maintain unrivaled service to students.
In terms of the East Buy performance, since April 2022, East Buy has launched a total of 488 SKUs in private label products in just 2 years. Our product categories have expanded into well-diversified product nearest to date. Through the reporting period, East Buy also uplifts the significance of the offering-only product with high cost performance, which has proven effective in reiterating East Buy's value in the minds of our current and new users.
In addition, thanks to our multichannel strategy that has driven sustainable growth. East Buy's footprint have expanded from our live streaming channels to the life of Tmall, JD, Pinduoduo and Xiahongshu, as they amplify our reach to a wider customer base.
In the new year, East Buy will explore off-line channels by planning the partnership with off-line schools owned by new rental brands and other parties. As part of our vision to initiate off-line sales network and enhance our brand awareness to a great extent.
With regards to the company's latest financial position, I'm pleased to share that the company is in a healthy financial status, with cash and cash equivalent term deposits and short-term investments totaling approximately $4.9 billion.
Now, I would also like this take opportunity to highlight that the company's Board of Directors approved a share repurchase program in July 2022, and which the company is authorized to repurchase up to $400 million of the company ADS or common shares through the next 12 months. The company's Board of Directors further approved to extend the effective time of the share repurchase program to May 31, 2025, and increase in the aggregate value of the shares that the company is authorized to repurchase from $400 million to $700 million.
As of October 22, 2024, the company repurchased an aggregate of approximately 9.8 million ADS for approximately $457.9 million from the open market. Now I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.
Thank you, Stephen. I'd like to share our key financial details for this quarter. Operating costs and expenses for the quarter were $1,142.3 million, representing a 27.6% increase year-over-year. Non-GAAP operating costs and expenses for the quarter, which exclude share-based compensation expenses, were $1,135.4 million, representing a 32.8% increase year-over-year. The increase was primarily due to the cost expenses related to accelerated capacity expansion for educational business and newly integrated tourism-related business.
Cost of revenues increased by 32.3% year-over-year to $583.5 million. Selling and marketing expenses increased by 42.3% year-over-year to $193.7 million. G&A expenses for the quarter increased by 15% year-over-year to $365.1 million. Non-GAAP G&A expenses, which exclude share-based compensation expenses, were $354.5 million, representing a 22.1% increase year-over-year. Total share-based compensation expenses, which were allocated to related operating costs and expenses increased by 82.7% to $6.9 million in the first fiscal quarter of 2025.
Operating income was $293.2 million, representing a 42.9% increase year-over-year. Non-GAAP income from operations for the quarter was $300 million, representing a 22.6% increase year-over-year. Net income attributable to New Oriental for the quarter was $245.4 million, representing a 48.4% increase year-over-year. Basic and diluted net income per ADS attributable to New Oriental were $1.49 and $1.48, respectively. Non-GAAP net income attributable to New Oriental for the quarter was $264.7 million, representing a 39.8% increase year-over-year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental were $1.61 and $1.60, respectively.
Net cash flow generated from operations for the first fiscal quarter of 2025 was approximately $183.2 million and capital expenditure for the quarter were $80.2 million.
Turning to the balance sheet. As of August 31, 2024, New Oriental had cash and cash equivalents of $1,147 million. In addition, the company has $1,513.8 million in term deposits and $2,248.6 million in short-term investments. New Oriental's deferred revenue, which representing cash collected upfront from customers and related revenue that will be recognized as a service or goods are delivered at the end of the first quarter of fiscal year 2025 were $733.1 million, an increase of 23.7% as compared to $1,401.4 million at the end of the first quarter of last fiscal year.
Now I'll hand over to Stephen to go through our outlook and guidance.
Thank you, Sisi. With the encouraging performance achieved from our diverse business lines, backed by our solid education resources that have to stood the test of time, we're bullish on maintaining a healthy growth for our core educational business. Simultaneously, we will devote ongoing investments in expanding our new tourism-related business. We believe that these inputs will nourish more extensive expansion-wise rollout of our tours in this fiscal year.
While we strive to safeguard a healthy balance between revenue and profitability growth, we will also cautiously manage our capacity expansion inherence to underpin the development of our educational business in this new year. We plan to increase our capacity by around 20% to 25% for this fiscal year. The most new openings will be launched in cities with better top line and bottom line performance. Rest assured, that we will closely monitor the pace and scale of new openings in accordance to the local operations and financial performance during the year.
Every second quarter of our financial year tends to be a slower period due to the seasonality of our business. That being said, we remain confident in attaining a steady growth and satisfactory operating profit for the full fiscal year. We expect total net revenues excluding revenues generated from East Buy in the second quarter of the fiscal year 2025, September 1, 2024 to November 30, 2024, to be in the range of $851.4 million to $871.8 million, representing a year-over-year increase in the range of 25% to 28%.
In addition, based on our current estimation, we expect the operating margin for whole company except for East Buy for fiscal year 2025 will expand year-over-year. I must say that these expectations and forecasts reflect our considerations of the latest regulatory measures as well as our current and preliminary view, which is subject to change.
To conclude, New Oriental will always pursue premium offerings to our customers, simultaneously achieve sustainable growth. To achieve that, we will continue to devote necessary resources on research and application of new technologies such as AI and ChatGPT into our education and product offerings with a vision to uplift our strength to pursue the growth and operating efficiency. We will also continue to seek guidance from and cooperate with the government authorities, comply with the relevant policies, guidelines and any related regulations, as well as to further adjust our business operation as required.
As always, we will work diligently to enhancing the nation's education level to strengthen the leading position so as to unveil further potential across all our business lines and realizing our vision. This is the end of our fiscal year 2025 Q1 summary. At this point, I would like to open the floor for questions.
Operator, please open the call for these. Thank you.
[Operator Instructions]
We will now take our first question. This is from the line of Felix Liu from UBS.
My question is on your second quarter guidance. We noticed that in the first quarter, your capacity expansion was over 30% year-on-year by the number of learning centers. However, if we look at your second quarter guidance, it's slower than your capacity expansion in the first quarter. So how should we think about the gap between capacity growth and revenue guidance? And could management share your outlook for second half growth? Do we expect to see the revenue growth to converge with capacity?
Yes. I think -- thank you, Felix. As for the Q2 guidance, we give the guidance of -- the top line growth will be in the range of the 25% to 28% in dollar terms year-over-year. But as you know, every second quarter tends to be a slower quarter due to the seasonality of our education business. But you know we will remain confident in attaining a steady growth of around 30% year-over-year for the whole year.
So that means we expect the revenue growth, excluding East Buy in Q3 and Q4 will be accelerated compared to the growth of Q2. So as you know, even though we have seen some impact of the existing economic environment like the overseas business. But we will expect the full fiscal year revenue growth, which except for East Buy, will be around 30% year-over-year. And yes, we opened more learning centers in last year, Q3 and Q4, but we have seen -- we ramped up the learning centers much faster than before.
And so -- and I think we will fill the learning centers with more students into the learning centers, especially in the Q3 and Q4. So we're quite optimistic about the top line growth for the whole year. Thank you, Felix.
We will now take our next question. This is from the line of Alice Cai from Citi.
I have a question about capacity expansion. Since Q2 is typically a low season, are you considering slowing down capacity expansion during this period to increase margins? And do you expect CapEx to be concentrated in Q1 and Q4 for FY '25? And for the upcoming quarters, will you focus on encouraging penetration in existing cities rather than entering new ones?
Yes. You know, by the end of this quarter, Q1, we have added around 6% new capacity. And so yes, as I said, we plan to increase our capacity expansion by 20% to 25% for the whole year. And last year, we opened more learning centers. But this year, I think we will open the learning centers back at more healthy pace, coming to 25%.
And yes, as I said, we ramped up the learning centers much faster than before. And so I think as the whole year wise, I think the margin -- you will see the margin expanded for the whole year. And in the Q2, yes, we might be in some like margin -- like tiny margin pressure in Q2 because of the seasonality, Q2 is the low season. But we do believe for the whole year, the margin will be expanded for the education business, except for East Buy.
Thank you. We'll now take our next question, and this is from Yiwen Zhang from China Renaissance.
Yes, great. So my question is a follow-up on the margin. So it's very glad to see our adjusted operating margin increase 220 bps our Y-o-Y basis, reversing the dip in the previous quarter. So can you discuss more about what are driving this improvement? And how should we think about the drivers to play out in the rest of the year?
Thank you, Yiwen. You asked the question about the margins. Let us start with the margin analysis of this quarter. The non-GAAP OP margin for education business, which excluding East Buy, was expanded East Buy 220 basis points year-over-year. As you know, I think -- last year, Q1, OP margin was high based. So that means we have a hard comparison this quarter, but we still doubled the margin expansion by 220 basis points year-over-year.
I think this is mainly due to the following reasons. Number one, we are pleased to see that the business alliance achieved the positive top line growth for all business lines. And number two is, we started to bear fruit of the learning center expansion of last year. It's perhaps the overall utilization rate up and get more operating leverage. Number three, we started to make cost control in the whole company, and we leveraged more overhead in this quarter, even though we even spend more money on the new tourism business. But as you know, the educational business, except for East Buy, we still got margin expansion higher than we expected.
And for the margin outlook, due to the seasonality of the business, every second quarter is the low season. So we're likely to experience some minor margin pressure in the second quarter. But as I said, we were quite confident about Q3 and Q4. So we are optimistic on the margin profile for the educational business excluding East Buy in the whole year. And I think we expect that the whole year, the non-GAAP OP margin will be expanded for the whole year.
We will now take our next question. This is from Lucy Yu from Bank of America.
Just to clarify, Stephen, you said the second quarter non-GAAP OP margin will be under pressure. Do you mean that excluding East Buy, we're going to see margin contraction on a year-over-year basis? So just to clarify on that. And actually my question is on the culture tourism. You did mention that TAM revenue was up by over 200% year-over-year. So may I know like how much revenue that cultural tourism contributed this quarter? And is that business segment loss-making or profit making for this quarter?
Yes, the margin -- the timing margin pressure in Q2, what I said is only related to the educational business. And because we guided to 25% to 28% top line growth and the Q2 is the low season of the educational business. So I think that you will see more leverage in Q3 and Q4. And so this is the -- so as I said, we're quite optimistic about the margin profile in Q3 and Q4.
And the tourism business. Yes, in Q1, we'll see peak season for the tourism business such as the camp business and the overseas study tour, even domestic study tour business. So the revenue of the Q1 was somewhere around $90 million of the tourism. This is the revenue in Q1. And yes, we are profitable in Q1 because of the peak season. But for the whole year, I think we will see loss making of the tourism business. It's just the first year. We need more time to testify the product and the business model for the tourism business. But we are quite confident about the development of the tourism business.
We'll now take our next question. This is from Timothy Zhao from Goldman Sachs.
My question is regarding your K-12 new initiatives. Just wondering if you can break down in terms of the revenue growth between the non-academic tutoring and intelligent learning devices and services. And a related question on the specific segment is, I do notice that I think for the non-academic tutoring, the quarterly enrollment for the past quarter grew by around 11% year-on-year compared to close to 40% a quarter ago. Just wondering if you can elaborate more on the growth and what kind of growth that we should expect on the enrollment, I think for the following quarters versus only 11% for this quarter?
Sisi, you share with the team about the revenue breakdown within the new business.
Yes, the new K-9 educational related, including the non-academic tutoring and intelligent learning device business grew by over 50% in Q1 -- 56%, and both are growing at similar rates.
Yes. And to your second question about the enrollment. Yes, the enrollment growth of the K-12 seems to be low in this quarter, because we opened the summer enrollment window earlier than that of last year. So that means, we reported more student enrollment in the last year Q4. This is kind of the timing difference.
And so if you combine the Q4 and Q1, the enrollment growth will be normal and is very strong, absolutely. And as I said, even though the Q2 will be in the low season, but we're quite confident about the whole year top line roles. And I think we will see even the accelerating top line growth in Q3 and Q4. And for the new businesses, I think we still keep the same guidance of the 40% to 50% top line growth for the new businesses for the full year.
We'll now take the next question. This is from Charlotte Wei from HSBC.
Congratulations on your strong results. Could you please share more color on the growth in different business segments in the second quarter?
Yes. Actually...
Second quarter?
Yes. You're asking the guidance -- for the guidance quarter -- Q2?
Guidance breakdown. Yes.
Okay. Yes. Overseas-related business will grow about over 20%. And domestic test prep university students business grow will be over 30% -- 30%, 35%. And high school business grow like 20% and the new business will grow like over 50% -- around 50%.
We'll now take our next question. This is from D.S. Kim from JPMorgan.
I just have a follow-up on all your points that I made on new businesses, if I may. Did you say, this past quarter, new businesses grew over 56%, did I hear it correctly? Because from the press release, I think -- I know it's a minor thing, but the press release seems to say 49.8% this quarter. So just wanted to double check if I'm looking...
Yes. Yes, that's the growth for non-academic tutoring and intelligent learning devices, the over 55%.
Okay. So that means this new educational business initiative have something else as well. And may I ask what else is here. And also, can you -- if you could give us the breakdown in terms of the current revenue or last year revenue between non-academic tutoring versus intelligent and some other? How is the mix within this subsegment?
Actually, every quarter, the contribution is similar. So the non-academic tutoring is roughly about more than half of the new educational business. And roughly about 1/3 is the intelligent learning device business, and these 2 are growing faster than the rest, smaller categories.
And smaller category if I may is like book sales or may I check what else we have here, just to double check.
Yes, intelligent books and also some [ 2B ] business.
Got it. If I may follow up on earlier, you mentioned and kindly gave us a breakdown of the growth momentum for 2Q guidance. Can I double check whether that was based on U.S. dollar versus renminbi. And if you could provide the first quarter similar breakdown between a segment growth, if possible. It would be great.
Q1 guidance and -- just share about the exchange rates we are using.
Yes. We -- I can share with you the exchange rate that we're using for Q1 quarter and the guidance power. Is that okay?
Yes. Earlier growth, was it based on [ USA ]. Yes.
Yes, Q1 exchange rate is 7.22 and Q2 is 7.08 roughly.
[Operator Instructions]
This is from the line of Lucy Yu from Bank of America.
Stephen, sorry, just one follow-up on the second quarter margin. I know that you said it's a low season. But if you're looking at the top line, it's still growing at over 25% to like 28%, which is not low. So why should we think that the OP margin will decline or contract on a year-over-year basis? Is there any other investments? Are you going to step up or some other reasons?
Yes, the Q2 is the low season for all business lines, the overseas related even for the K-12 business and the tourism business. We have tiny revenue from the tourism business. So we said we will suffer loss of the tourism business in Q2.
And so if you saw the numbers, historically, every -- Q2 every year will be the low margin profile for the whole company. And yes, as I said, we will open more learning centers in the second half of the last year, but we will still need more time to bring the students into the new learning centers. And I must mention that we are using the conservative approach to give the margin guidance, as always, Lucy.
Understood. Just may I follow-up that how much like loss or margin drag have you factored in from tourism in the second quarter?
I think it's too early to say that, but it is still the margin drag. And also, we spent some more expenses in the marketing and in the coming Q2. But I think we will -- yes, as you said, we will spend more money on the margin in Q1, but we started to control these other margin expenses in Q2. We are still in the process. And so that's why we guided the margin timing pressure in Q2. But we expect we will do better than we expected on margin wise Q2.
Understood, Stephen. So let's put this way. So if we -- excluding East Buy, if we're excluding cultural tourism, will the rest of the business still see margin contraction in second quarter?
Yes, I think so. I think the -- if you take out the impact of the tourism business, I think the margin will be better than the overall company margin profile, except for East Buy. We don't give the guidance of the East Buy by top line growth and the margin.
I'll now take our next question. This is from Timothy Zhao from Goldman Sachs.
Great, Stephen and Sisi. I think a follow-up question on East Buy. I think one is on, I think your revenue guidance. I guess I think there was a transaction between EDU, your parent company, and East Buy regarding the East Buy's education business previously. Just wondering in your guidance, for the EDU core, basically the EDU educational services, does that include East Buy's previous education business? And secondly, I think for East Buy, I think the implied revenue for East Buy actually dropped quite significantly on a Q-on-Q basis. Just wondering if you can elaborate what is the background or the rationale behind that, and how should we think about the revenue going forward?
The guidance of Q2 top line growth in the range of 25% to 28% is the core education business, except for East Buy, okay? And I'm very glad to hear from you allow the question of East Buy. But I'm afraid I'm unable to share the latest financial results of the East Buy details. They will announce their half year report next quarter. So next quarter, I think we -- the both parties, the parent company and East Buy will announce the East Buy financial status in more detail, next quarter.
Sure, sure. So just to clarify on the guidance, I think if you look at East Buy's previous half year financials for their education business, which is now part of EDU Core business, is around like USD 30 million, USD 40 million per quarter. Just wondering when you talk about the guidance for EDU Core education business. So when you look at it on a year-on-year basis, the last year number for EDU Core education business, that also includes the East Buy's education business, right?
Yes, correct, Timothy. So your understanding is totally correct. So when we gave guidance, we do apple-to-apple comparison. So both the comparison quarter and the guidance quarter, both includes the educational portion of East Buy's business. Is that clear?
We will now take our next question. This is from D.S. Kim from JPMorgan.
Sorry, I didn't mean to beat a dead horse here. But some investors who are asking me just now on this, I thought it would be better to clarify things on new businesses, again, sorry. Just to be clear, when you earlier commented that next quarter growth guidance of new businesses of over 50% and you mean to include other smaller business or only nonacademic and intelligent learning devices, i.e., if you compare that 50% or over 50% growth next quarter, how does that number look for this quarter -- August quarter? And then similarly, for high school businesses, we expected 20% growth as you said next quarter. How was the growth this quarter? Would you be able to comment on that? Sorry for redundant question.
Yes. To make it clear, for Q2's guidance, for overall new initiatives, new educational initiatives, including all the things together is around 45%, 46%. And if you only look at noneconomic tutoring and intelligent learning device, the 2 key ones, the growth is over 50%, okay? And the high school business Q1's growth is about 20% -- 20% to 21%.
That's very clear. So about 4%, 5% deceleration for the new businesses in terms of apples-to-apples, which I think is pretty great given that the base got -- the comps got much tougher. So thank you for the clarification.
We are now approaching the end of the conference call. I will now turn the call over to New Oriental's Executive President and CFO, Stephen Yang, for his closing remarks.
Thank you again 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.
This concludes today's conference call. Thank you for participating, and you may now disconnect.