TAL Education Group Q2 FY2026 earnings call

• Focused on holistic student development and invested in product/service enhancements with tech integration.
• Peiyou small class enrichment programs continued development with higher enrollments and balanced learning center expansion.
• Adopted technology-driven approach for online enrichment, introducing initiatives like immersive online classrooms and AI-powered features.
• Learning device business expanded product portfolio, launched new models, and saw revenue growth with AI Think 101 gaining market traction and industry recognition.

The net revenues for the quarter were USD 861.4 million or RMB 6,180.4 million, representing year-over-year increases of 39.1% and 38.1% in U.S. dollar and RMB terms, respectively. Peiyou small class enrichment programs saw growth due to higher enrollments supported by the expansion of the offline learning center network. The learning device business grew revenue both year-over-year and sequentially, with new models launched and AI integration. Peiyou small class contributed through steady performance from balanced learning center expansion, while learning devices contributed via product portfolio expansion and AI-powered features.

• Fiscal third quarter may have fluctuations due to seasonal factors.
• Continue to invest in content and technology for sustainable long-term growth.
• Prioritize resource allocation to critical areas aligned with long-term strategic goals.
• Maintain flexibility in resource allocation considering business dynamics, product cycles, etc.

• Escalating competition in the learning devices market.
• AI-driven learning products reshaping education at a rapid pace.
• Seasonal demand shifts causing short-term financial performance variability.
• Competitive pressures and deliberate resource reallocation impacting visibility.

Q: Regarding the Peiyou offline enrichment business, updates on market dynamics, second quarter performance, offline center expansion, and growth outlook.

A: Alex Peng noted steady growth in Peiyou, competition in fragmented market, moderate increase in offline centers, stable summer course ASP, and outlook of gradual tapering of year-over-year revenue growth for Peiyou.

Q: On learning device business, performance, sales volume, pricing, user feedback, P&L margins, and competition.

A: Alex Peng said learning device sales volumes increased, blended ASP declined due to product mix, adjusted operating loss still incurred, focus on long-term competitiveness over short-term profitability, and competitive landscape with major players and AI-driven changes.

Q: Breakdown of top line growth and bottom line performance across business lines and trend for Q3/second half.

A: Jackson Ding stated Peiyou small class revenue growth to taper off, learning devices in early stage with fluctuating performance, and margin profile reflects mix of mature and emerging businesses with Q2 being peak for profitability.

Q: Outlook on share repurchase pace for the rest of the year.

A: Jackson Ding said they'll continue the share repurchase program in line with market conditions, may not utilize full authorization, and will balance strategic investments with shareholder returns.