Judging from the performance of the financial report, the vitality of the education market continues to improve.
Recently, listed companies such as New Oriental and Good Future have successively announced their performance from September to November 2023. Among them, Good Future achieved revenue of 3700 million US dollars, a year-on-year increase of 605%；The net loss attributable to the parent company was 239460,000 US dollars, the loss narrowed by 53 year-on-year6%。
In the same period, New Oriental's performance results were more significant, with strong growth in multiple business segments, driving revenue to a year-on-year increase of **363% to 8$700 million, non-GAAP operating profit was **212 year-over-year2% to US$50.9 million, and operating net profit of US$21.34 million, a year-on-year turnaround.
Such a "report card" can be said to exceed market expectations. Generally speaking, September to November is the traditional off-season for the education industry, and the ability to achieve growth in this situation often means that enterprises have strong endogenous growth power.
Under the new path, the potential of diversified businesses is fully revealed
In terms of performance, New Oriental's growth path has become wider and wider. According to the financial report, in the first quarter of fiscal year 2024, New Oriental achieved net revenue of $1.1 billion, a year-on-year increase of 477%；Net profit attributable to the parent company 165.4 billion US dollars, a significant increase of 150 percent year-on-year6%。It can be said that the performance in the second quarter continued the growth trend.
New Oriental can continue to release its growth potential, and "step on the market demand and choose the right direction of transformation" may be the only way. Specifically, with the advent of the "double reduction", New Oriental has put the brakes on academic training in a timely manner, and turned to focus on more promising new education business and e-commerce business, providing more and more powerful support for sustainable development in the future.
The first is the new education business, which has a year-on-year increase of 68% in revenue according to the financial report3%。It is reported that this sector includes non-academic tutoring, intelligent learning systems, etc., which correspond to a very promising market.
According to the survey, more than 80% of parents have signed up for more interest, quality-related non-subject courses for their children after the "double reduction".
Moreover, the track is still in the early stage of development, and the market structure is relatively scattered, which also means that after New Oriental and other leading companies enter the game, they can quickly form advantages. In this regard, the research report "China Education 2030 Market Outlook" released by Morgan Stanley has revealed that "leading companies can use their original brands and R&D capabilities to gradually gain more market share and further integrate market segments".
Therefore, it can be seen that in this fiscal quarter, New Oriental's non-academic tutoring business was carried out in nearly 60 cities, and the number of applicants was 7860,000, a certain scale has been formed.
The smart learning device market is also an incremental market. Under the trend of future education and AI iteration, the smart learning equipment market represented by learning machines has ushered in a development boom. According to data from the China Research Industry Research Institute, from 2021 to 2025, China's learning machine market will grow steadily at an annual growth rate of 15%, and is expected to reach 8.75 million units by 2025, doubling the growth rate compared with 2020.
Moreover, compared with the education and training market, the smart learning device market does not have a very obvious seasonality. This also represents a more stable cash flow for the educational institutions that have entered the market.
It is reported that in the intelligent learning equipment market, New Oriental's layout is dominated by learning machines. Specifically, New Oriental will deploy learning machines to the learning center, and students can study on their own after purchase. According to the financial report, the company's intelligent learning system and equipment have been adopted in about 60 cities, with 18 active paying users10 thousand.
On the whole, the new education business has become the core driving force for New Oriental's sustainable development. In addition to the new education business, the e-commerce business is also an important engine to promote New Oriental's revenue generation.
In recent years, live-streaming e-commerce has played an active role in increasing employment, expanding domestic demand, and promoting the development of the digital economy. According to analysts at the China Business Industry Research Institute**, the scale of China's live broadcast e-commerce transactions will reach 5,563.9 billion yuan in 2024.
In the current live broadcast e-commerce industry, Dongfang Selection can be called a "dark horse". According to Dong Yuhui, at first, no one cared about the live broadcast room of Dongfang Selection, but suddenly its popularity increased to more than 10,000 people overnight. Since then, Dongfang Selection has taken the high-speed train, with millions of fans in three days and a tenfold increase in single-day sales.
From June 1 to November 30, 2023, Dongfang Selection has achieved a total revenue of 2.8 billion yuan, a year-on-year increase of 344%；The total GMV of the goods was 5.7 billion yuan. This is mainly due to the fact that in recent years, the company has continued to increase the construction of live broadcast rooms, and promoted the improvement of self-operated products** and related services.
It can be said that New Oriental's "second growth curve" has taken shape.
It is worth mentioning that while developing new businesses, New Oriental is also continuing to maintain its traditional business, for example, according to the financial report, in terms of revenue, New Oriental's overseas exam preparation and overseas consulting business increased by about year-on-year respectively. 7%, and the domestic test preparation business for ** and college students increased by about 427%。
In general, New Oriental has formed a relatively strong development synergy by relying on diversified business layout, and in the long run, New Oriental's business segment can release greater potential, which is mainly reflected in the development of e-commerce business.
According to the interim report for fiscal year 2024, the total revenue cost of Dongfang Selection was 1.7 billion yuan, an increase of 55% year-on-year; Net profit 24.9 billion yuan, down 57 percent year-on-year4%。Such data performance reflects the current intensifying competition in the live broadcast e-commerce industry, in this case, Dongfang Selection undoubtedly needs to go through a period of dormancy, and it is also necessary to increase cost investment during the period.
However, in order to explore greater development space and make investment "not wasted", so as to improve the profit level, New Oriental obviously needs to further stabilize the "second growth curve" of e-commerce business.
After concentrating resources, how does Dongfang Selection seize the opportunity?
It is understood that all of the education business of Oriental Selection to the parent company New Oriental has been approved. **Upon completion, Oriental Selection will become a purely self-operated and live-streaming e-commerce company.
This means that the development of New Oriental's e-commerce business will be more focused on the main line. After the integration of concentrated resources, the direction of development and market opportunities are becoming increasingly clear, or reflected in the following aspects.
The first is to increase self-management. In the live streaming e-commerce industry, consumers are most concerned about quality and service. Previously, a "Survey Report on Consumer Satisfaction with Live E-commerce Shopping" showed that "worrying about the quality of goods is not guaranteed" and "worrying about after-sales problems" are the two main concerns of consumers, accounting for 60 respectively5% and 448%。
In order to ensure high product quality and service standards, it is necessary for relevant enterprises to carry out strong control on the first chain, and the importance of self-management is also highlighted. In addition, it is worth mentioning that self-operation may enable enterprises to open up more room for growth. Li Chengdong, a senior e-commerce expert, once said to **: "Selling 100 yuan of self-operated brand goods is 100 yuan of income, but selling third-party goods adopts a commission model, with a maximum of 20%-30%. ”
At present, the results of Dongfang Selection to promote self-management construction have also appeared. According to the financial report, as of November 30, 2023, the number of self-operated products selected by Dongfang exceeded 264, bringing revenue of about 1.9 billion yuan, accounting for about 67 percent of total revenue98%。
For the future, Dongfang Selection disclosed in the financial report that considering the more conservative consumption model, the company will focus on creating explosive products, and strive to launch new products with high cost performance and high repurchase rate, trying to break through the existing product cycle and continue to expand the scope of SKUs.
The second is to create a richer account and platform matrix. Specifically, this is similar to the risk diversification strategy of "not putting all the eggs in the same basket", whether it is a single platform or a single account, the imagination of traffic and product sales growth is limited.
Therefore, it can be seen that following the official announcement of the double "11" in 2022, during the 618 period in 2023, make a friend and "hold hands" with JD.com, becoming the first head MCN live broadcast agency across the three major platforms of **, JD.com, and Douyin. In addition, before the multi-platform layout, Make a Friend also opened a live broadcast room for categories such as wine and food, beauty and daily chemicals, clothing and jewelry, sports and outdoor, late-night canteens, smart life, and parent-child life, which further covered consumer groups.
Outside the Douyin platform, Dongfang Selection has opened its own APP and entered the **live broadcast. Although the competition between the live broadcast rooms should not be underestimated, with the style of scarce knowledge content with goods, Dongfang Selection has also achieved certain results. The data shows that the first show of Oriental Selection brought more than 17.5 billion yuan, ** more than 30 million people.
In addition, in terms of building an account matrix, it is reported that the accounts operated by Dongfang Selection on Douyin include Dongfang Selection, Dongfang Selection See the World, Dongfang Selection Self-operated Products, Dongfang Selection Books, Dongfang Selection Beautiful Life, Dongfang Selection Will Enter Wine, etc., with categories radiating from a single agricultural product to books, beauty, clothing, wine, etc.
This year, New Oriental also opened a new account "Walking with Hui" on Douyin, and with the blessing of Dong Yuhui, it received a very good response. It is reported that only 3 hours after the start of the broadcast, the sales of the live broadcast room have exceeded 1500 million yuan, even surpassing Dongfang Selection.
The third is to aim overseas. iiMedia Consulting analysts pointed out that with the rapid development of TikTok e-commerce platform, the trend of cross-border live broadcast e-commerce in China is unstoppable, and it is expected that the scale of cross-border live broadcast e-commerce will reach 828.7 billion yuan in 2025. Under this trend, the Three Sheep Network, to which Douyin's head talent "Crazy Brother Yang" belongs, has opened the first overseas live broadcast to bring goods.
Dongfang Selection also began to prepare for its efforts. It is reported that Dongfang Selection is recruiting for relevant positions, including TikTok's overseas store operations, content operation managers, business managers, etc. In addition, Tianyancha shows that Beijing New Oriental Xuncheng Network Technology Co., Ltd. has applied for the registration of a number of "East Buy" trademarks in preparation for Oriental Selection to go to sea.
In fact, in the development of overseas markets, Dongfang Selection also has a certain first-mover advantage. On the one hand, in order to successfully develop business in overseas markets, the most important thing is to break through the language barrier, and Dongfang Selection already has many anchors who are fluent in English, which is very beneficial to reaching consumers. On the other hand, based on the needs of study abroad business, the New Oriental team visited 20 study abroad countries such as the United States, the United Kingdom, Australia, New Zealand, and Canada, and covered more than 200 world-famous universities. The accumulation of these experiences and resources is undoubtedly a boost for Dongfang Selection's going overseas.
Overall, in consolidating the "second growth curve", New Oriental has a relatively clear direction of force. As the e-commerce business with Oriental Selection as the core becomes more stable, and other businesses tap more increments, the future of New Oriental's "blossoming and fruitful" is worth looking forward to.
Author: Xiwen.