Good evening and thank you for standing by for New Oriental's Fiscal Year 2023 Second Quarter Results 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 would now like to turn the meeting over to your host for today's conference, Miss Sisi Zhao.
Thank you. Hello, everyone, and welcome to New Oriental's second fiscal quarter 2023 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, 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 investor relations website at investor.neworiental.org. I'll now first turn the call over to Mr. Yang, Stephen. Please go ahead.
Thank you, Sisi. Hello, everyone. Thank you for joining us on the call. This second quarter is a successful phase of manifestation as we have turned over a new leaf in our business and embarked on an innovative journey for rich business opportunities since the beginning of fiscal year 2023. Before going into details of our financial performance for this quarter, I would like to take this opportunity to extend our gratitude to those who have been believing and supporting New Oriental along the way. I'm delighted to share with you that after a year of restructuring process, New Oriental has successfully generated fruitful yields from our new business ventures, combined with our existing business and innovative business opportunity.
Despite the seasonality of some major businesses, which has historically resulted in a slower period for every second quarter, it's immensely encouraging to see that we have achieved a meaningful profitability and better than expected margins in the second quarter. We have achieved a non-GAAP operating margin of 2.6% for this quarter, as compared to -112.0% in the same period of prior fiscal year, which was characterized by the several significant one-off expenses incurred from class cancellations, school closures, and employee layoffs. Our key remaining business have continued to demonstrate remarkable resilience. In particular, overseas test prep business and overseas study consulting business have recorded remarkable year-over-year revenue increase as global COVID restriction eases and overseas study market is recovering.
Our solid profitability, strong performing remaining business lines, and emerging new business initiatives in this quarter have again strengthened our confidence in pursuing innovative endeavors and profitable growth through the rest of the year. I would like to spend some time to talk about the quarter's performance across our remaining business lines and new initiatives to you in detail. Our key remaining business have achieved promising trends, while our new initiatives have shown a positive momentum. Breaking it down, the overseas test prep business reported a revenue increase of 17% in dollar terms, or 30% in RMB terms year-over-year for the second quarter. The overseas study consulting business recorded revenue increase of about 14% in dollar terms or 27% in RMB terms year-over-year for the second quarter.
The adults and university students business recorded a revenue decrease of 9% in dollar terms or 2% increase in RMB terms year-over-year for the second quarter. As for our new business initiatives, as mentioned in past quarter, we have launched several new initiatives which mostly revolve around facilitating students' all-round development. I'm glad to share with you that these new initiatives have further exceeded our expectations by sustaining a positive momentum and generating meaningful profits to the company. Firstly, the non-academic children business, which we have rolled out in over 60 cities, focus on cultivating students' innovative ability and comprehensive quality. We're happy to see increased market penetration in those markets we have tapped into, especially in higher-tier cities, with a total of 477,000 enrollments recorded in this quarter.
The top 10 cities in China have contributed about 60% of the revenue of this business. Secondly, the intelligence learning system and device business is a service designed to provide a tailored digital learning experience for students. It utilized our past teaching experience, data, and technology to provide a personalized targeted learning and exercise content. Our continuous investment in technology has built a competitive edge, which drives our navigation amidst the chain of challenges from the last year. Together with our teachers monitoring and accessing the learning curve for students at the back-end system, this new innovative education service not only greatly improves students' learning efficiency, but also cultivates students' proactive learning habits.
We have tested its adoption in over 60 cities with 108,000 active paid users in this quarter, and are delighted to see improved customer retention and scalability of this new business. The revenue contribution from top 10 cities in China is around 60%. Last but not least, our smart education business, which comprise smart teaching, smart hardware, science technology, innovation education, and other service, serves local governments, education authorities, schools, and kindergartens. Our educational material utilized the smart study solution, a self-learning system, which leverages advanced technology, enables students to have complete control over the pace and the flexibility of learning at an age where remote learning becomes increasing in mainstream. We also offer exam prep courses designed for students with junior college diplomas to obtain bachelor's degrees.
The above-mentioned business have been gaining wide traction and contribute the overall growth of the company, and have attained instrumental profits since the last quarter. Coming to our OMO system, we continuously invest in developing and revamping our OMO teaching platform, and have leveraged our educational infrastructure and technology strengths over the remaining business and the new initiatives to provide more advanced and diversified education service to our customers for all ages. Our OMO system has been a core support to our business, especially with some of the strict social control measures were implemented in the past months. We have invested a total of $21 million in the quarter on our OMO teaching platform, which provide us the flexibility to continue to offering high-quality service to students during the pandemic. Now, I would like to give you all an update on Koolearn's latest performance.
In the first half of this fiscal year, Koolearn has achieved instrumental breakthroughs in both business operations and financial performance. This significant progress was made as a result of Koolearn's strategic transformation from focusing on online education to live streaming e-commerce. In 2021, Koolearn expanded its live streaming e-commerce business and established Dongfang Zhenxuan, which has since become a well-known platform for promoting healthy, top-quality, and cost-effective products to the public. The platform has formed a part of the tight supply chain management and after-sales service system, which is strictly abided by a set of relevant laws and regulations. Leveraging our deep understanding of customer needs, Dongfang Zhenxuan continues to expand its product selection and SKUs through proactive cooperation with third parties, coupled with the development of our Dongfang Zhenxuan private label products.
The platform's business development has gratefully benefited from the maturity of China's social infrastructure and the contributions and support from the community. To summarize the Koolearn fruit-bearing growth and profitability with our financial performance, for the first six months of this fiscal year, Koolearn recorded the revenue approximately RMB 2,080.1 million, which represents a 590.2% increase from revenues from continuing operations of RMB 301.4 million in the same period of last prior fiscal year. Koolearn recorded RMB 585.3 million of net profit, a 638.5% increase from net loss from the continuing operation of RMB 108.7 million in the same period of prior fiscal year.
In the first six months of fiscal year, the gross profit of Koolearn reached around RMB 982.5 million, accounting for 47.2% in terms of the GP margin. As we continuously map the platform's strategic transformation, the fast-growing Dongfang Zhenxuan is also committed to give back to customers and the community. Since its launch, Dongfang Zhenxuan has stood firm to not charge commissions from customers or any pit fees. It has always taken close reference to industry standards, focusing on establishing the mutually beneficial long-term collaboration with the various party so as to maximize benefits to customers. Dongfang Zhenxuan also ensures attained cost-effective performance as one of its development principle. On one hand, Dongfang Zhenxuan focused on enhancing product capability while continuing to establish its cultural content.
On the other hand, Dongfang Zhenxuan has also organized to diversify, the diverse outdoor live streaming activities to promote special agriculture products and contribute to the cultural tourism. Through its unyielding aspiration to create value in related industries, which has also attracted and retained a large pool of talents, cooperators, as well as followers and members, Dongfang Zhenxuan has successfully received in return millions of revenues and a loyal customer base during the reporting period. With regard to the company's latest financial position, I'm confident to share with you that the company is in a healthy financial status with cash and cash equivalents, term deposits, and short-term investments totaling approximately $4.2 billion. On July 26th.
On July 26th, 2022, the company's board of directors authorized a share repurchase of up to $400 million of the company ADS or common shares during the period from July 28th, 2022 through May 31st, 2023. As of January 16th, 2023, the company repurchased an aggregate of approximately 3.1 million ADS for approximately $79 million from the open market under the share repurchase program. I will turn the call over to Sisi to share with you about the key financials. Sisi, please go ahead.
Okay. Now, I'd like to walk you through the other key financial details for this quarter. Operating costs and expenses for the quarter were $640.7 million, representing a 55.1% decrease year-over-year. Non-GAAP operating costs and expenses for the quarter, which excludes share-based compensation expenses, were $621.9 million, representing a 55.4% decrease year-over-year. The decrease was primarily due to the reduction of facilities and number of staff as a result of the downsizing in the fiscal year 2022. Cost of revenue decreased by 31.6% year-over-year to $336.2 million. Selling and marketing expenses decreased by 15% year-over-year to $95.5 million.
G&A expenses for the quarter decreased by 74.6% year-over-year to $209 million. Non-GAAP G&A expenses, which excludes share-based compensations expenses, were $190.9 million, representing a 75.7% decrease year-over-year. Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 39.5% to $18.8 million in the second fiscal quarter of 2023. Operating loss was $2.5 million comparing, compared to a loss of $768.1 million in the same period of prior fiscal year. Non-GAAP income from operations for the quarter was $16.3 million, compared to a loss of $737.1 million in the same period of prior fiscal year.
Net income attributable to New Oriental for the quarter was $0.7 million, compared to the loss of $936.5 million in the same period of last fiscal year. Basic and diluted net income per ADS attributable to New Oriental were $0 and $0 dollars, respectively. Non-GAAP net income attributable to New Oriental for the quarter was $17.8 million, compared to the loss of $901.6 million in the same period of last year. Non-GAAP basic and diluted net loss per ADS attributable to New Oriental was $0.11 and $0.10, respectively.
Net cash flow generated from operation for the second fiscal quarter of 2023 was approximately $173.7 million. Capital expenditure for the quarter were $11.4 million. Turning to the balance sheet, as of November 30, 2022, New Oriental has cash and cash equivalents of $1,029.9 million. In addition, the company has $1,033.2 million in term deposits. $2,145.7 million in short-term investments. New Oriental's deferred revenue balance, which is cash collected from registered students for courses and recognized proportionally as revenue as the instructions were delivered.
At the end of the second quarter of fiscal year 2023 was $1,139.1 million, an increase of 6.9% as compared to $1,065.8 million at the end of the second quarter of fiscal year 2022. I'll hand over to Stephen again to go through our outlook and guidance with you.
Thank you, Sisi. Looking ahead into the rest of fiscal year 2023, with the restructuring process largely completed and our new business in their early stage, we expect our school network and geographic coverage to stabilize. The company remains tireless in seeking new opportunities with greater flexibility and strong cash flows. We're confident in the sustainable profitability of all our remaining key businesses, as well as the growth and prospect of our new initiatives. For our new business, as we observed in the first half of this fiscal year, the encouraging performance that these businesses have achieved proves that we are heading towards the right direction, and we firmly believe that business will be able to maintain a upward growth trajectory and generate meaningful profit to the company in fiscal year 2023.
As for evolving pandemic development in China since late November in 2022, many cities are experiencing certain level of disruption on business operations. Although we're expecting a negative impact on financials in the coming one or two quarters, we remain confident and optimistic that overall impact will be temporary and manageable. We expect total net revenue in the third quarter of the fiscal year 2023 to be in the range of $702.8 million-$719.8 million, representing year-over-year increase in the range of 14%-17%. The projected increase of revenue in our functions, functional currency RMB is expected to be in the range of 24%-27%. As the profitability we recorded in this physical.
Fiscal quarter has reaffirmed our success and dedication in turning a new page and generating profits for the rest of the year. Bottom line wise, we're confident in achieving greater operating profits in the full year of fiscal year 2023. To conclude, we're now taking multi-pronged operational actions to promote our key remaining businesses while we cautiously invest in new initiatives, which will remain new growth engines that accelerate our recovery and pursue the profitable growth. At the same time, we'll continue to seek guidance from the and cooperate with government authorities in various province in China, in alignment with the efforts to comply with relevant policies and regulations, as well as to further adjust our business operation as required.
I must say that these expectations and forecasts reflect our considerations of the latest regulatory measure, as well as our current and preliminary view, which is subject to change. This is the end of our fiscal year 2023 Q2 summary. At this point, I would like to open the floor for questions. Operator, please open the call for these.
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, you will need to press star one and one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. Our first question comes from the line of Felix Liu from UBS. Please go ahead. Your line is open.
Hi, good evening, management. Congratulations on the strong top line as well as the guidance. My question is on the COVID impact. I know the COVID has come pretty viciously in December, but now we're past the peak. I'm just wondering how has COVID impacted our February quarter, if there is any quantifiable metrics, that would be very helpful. My second question is on growth expectation of our very big businesses from here. If you were to rank the fastest to, you know, more stable business, how would you rank your various business segments? Thank you very much.
Thank you, Felix. As for the evolving pandemic development in China, since the last December, I know the peak passed already. In many cities, I think some of our business are negatively impacted. As our current estimation, I think the negative impact is small. We remain confident and optimistic that overall impact from the pandemic will be temporary and manageable. You'll look at our guidance for Q3. It's very strong. The different business lines, the... You mean the revenue outlook for Q3, right? Can you repeat the second question?
Yeah.
Yeah.
Yes. Maybe for Q3 and for the whole year which are the business line that you think will grow the fastest, and which are the ones that are more stable?
I think, you know, I think, you know, we have two kinds of big business. You know, the number one is the traditional big business, the remaining business. You know, the overseas related business, including the overseas test prep and the consulting business, you know, which contributes 24%, 25% of the total revenue. You know, what I'm saying is for the whole year, 24% or 20%-25% of the total revenue. I think, you know, we got suffered the negative impact from the last year. This year, you know, I think, we're seeing the revenue growth is booming since two quarters ago.
The new business within the schools, you know, we started the new business last year. The year before last year, right? The November 2020-.
Fiscal year.
Yeah. The last fiscal year. You know, the growth is, you know, we just started the business 1one year ago, and the growth is extremely high. This is the number. Ranks number 1, the revenue growth, within all business lines. Also, we now have the Dongfang Zhenxuan. Yeah, Dongfang Zhenxuan. They reported, the management of the Dongfang Zhenxuan reported their first half year reports today. You saw the growth, you saw the numbers. We're exciting for the exciting performance for Dongfang Zhenxuan. Yeah, the new businesses, within the EDU side, the K-12 schools and the Dongfang Zhenxuan are the two top performers within the business lines. Felix.
Got it. Got it. Thank you, and congratulations on the results again.
Thank you again.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Kenny Wang from CICC. Please go ahead, your line is open.
Congrats on the profitable status for this quarter. My question is, since COVID-19 restrictions have been lifted in China, do we expect a higher growth rate of our new business line in the next quarter and also in the next fiscal year? Are there any new opportunities for our new initiative business? Thanks.
Yeah. For the new businesses, yeah, as we saw in this quarter and last quarter, you know, the encouraging performance proves that we are heading towards the right direction. We firmly believe the new businesses will be able to maintain upward growth, you know, in the Q3 and Q4 and the next fiscal year. What I mean is the fiscal year 2024. We started the new business in last year. You know, I think we ramp up the new business very quickly. The good news for us is, you know, the margin for the new business in this quarter is already over 10%. You know, think about that.
We started this business last year, and it's just to spend like the three, two to three quarters to get a breakeven point, and then we make profitable. It sounds very good. I think we are on the good track. I think the management of New Oriental will, you know, pay more efforts, will create more opportunity, business opportunities to develop the new business as we did in Dongfang Zhenxuan and the new business, you know, in this year. We will do more to do more creative in the future.
Yeah. Actually, the new pandemic situation with the gradual opening up after these recent developments of the new situation, I think probably we can see more opportunities in some certain kind of new initiatives such as the study tour and research camping business that we mentioned one to two quarters ago that as one of the new initiatives. As the pandemic situation happened in last one to two quarters, we did not have a very good chance to roll out that business domestically. With the new situation, we have confidence that there's more opportunity for this business to perform better.
Okay, thanks. That's very helpful.
Thank you. Once again, if you would like to ask a question, you will need to press star followed by one and one on your telephone and wait for your name to be announced. Please stand by. Once again, that's star one and one on your telephone to ask a question. Please wait for your name to be announced. Please stand by. Our next question comes from the line of Lucy Yu from Bank of America. Please go ahead. Your line is open.
Thank you. Thank you, Stephen, Sisi, for taking my question. Congratulations on a profitable quarter. Could you please give us some color on the revenue breakdown, this quarter, and as well as the margin profile for different business line? I know, Stephen, you already mentioned the new business is, 10% Operating Margin. How about the rest? Thank you.
Okay.
Yeah. For the reported quarter, the overseas related business, including the overseas test prep and consulting, contributed roughly about 21% of total revenue. The domestic test prep, the adults, university students business contributed roughly about 6%. The school business, including our remaining, like, high school business, and also the new initiatives for younger students, together, contributing roughly about over 40% of total revenue. The rest are Koolearn and some other businesses. That's the rough contribution. Yeah.
Yeah. Lucy, I just want to share with you the margins by different business lines. You know, the overseas related business, overseas test prep, combined with the consulting business, the margin for the whole year, fiscal year 2023, will be around 10%-15% margin. What I'm saying the margin is before the corporate overhead. The adults and the university study business, I think the margin profile, you know, I think the business will be the break even in this year. The school business, including the remaining business and the new initiatives, you know, as Sisi said, contribute 45% of total revenue. The margin should be somewhere around 20%-25% or even a little bit higher.
This is the big others, you know, including the Koolearn and Dongfang Zhenxuan and the others. I think the, you know, if you follow the numbers, Koolearn's first half year report, I think you will see more the color on the margin profile of Koolearn or, and the others. Yeah. Lucy.
Thank you, Stephen. Thank you, Sisi. One follow-up. Could you also talk about the YOY growth for different business line in this quarter? Thank you.
YOY. I think the revenue contribution is.
We talked about it in the prepared remarks. For this quarter, like US dollar term, overseas, test prep business increased by roughly 17%. Actually, for RMB term, you should add another 10-15% more. The university students business is stable, and US dollar term is negative 8%, but RMB term is positive. The school business actually increased because of the new initiatives, and also Koolearn and other business increased a lot.
Thank you so much.
Mm.
Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Candace Chen from Daiwa. Please go ahead. Your line is open.
Hi, Stephen and Sisi. Congratulations on the very strong set of results and also on the strong guidance for next quarter. My first question is related to the third quarter revenue guidance and also the profitability that we are aiming at, for. Firstly, can you give us a quick rough breakdown of revenue for the third quarter? In terms of the operating margin, how should we look at it for the third quarter given the strong revenue? Thank you.
Okay. In the Q3 forecast, you know, I think the number one, the overseas related business, test prep and consulting business will contribute 24%-25% of total revenue in Q3. The second, the adults and the university students business contribute 2% of total revenue because of the COVID, you know. The school business, including the traditional business, remaining business and the new initiatives will contribute 43%-44% of total revenue. The other 30% comes from Koolearn, Dongfang Zhenxuan, and the other business like the books or the other, the 2B business. The margin profile.
You know, I think the margins, you know, I think we let us start the margin analysis from this quarter. In Q2, you saw our GP margin and Operating Margin increased a lot compared to last year. I think this is mainly driven by the following reasons. The number 1 is in last year Q2, even for the last whole year, the first three quarters, we had the considerable one-off cost related to the class cancellation, the learning center closures and the staff layoffs. In this quarter, and even in this whole year, we have no one-off cost. Number 2, I think the downsizing learning center numbers, you know, led to the lower fixed costs, so it drives the margin up per learning center.
Number 3 is, you know, the new businesses, the margin is over 10% this year. You know, it's, I think it's good news for us. Also the recovery of the remaining business, for example, like the overseas- related business generate higher margin than that of last year. The last reason, the Number 4 is the Dongfang Zhenxuan, the Koolearn. You know, the live stream e-commerce business enjoys higher margin. It makes the margin, you know, it drives margin up for the whole group. Going forward, I think all the business lines, we will contribute, you know, even higher profit and drive the whole margin up year-over-year.
We are quite optimistic of the margin profile of the whole year, fiscal year 2023.
Great. Thank you, Stephen. My second question is related to the regulations recently in late December that we saw that there is new document on about the non-academic tutoring activities. Do we see any impact on our business overall, like in terms of pricing and also the expansion? Thank you.
Yeah. Actually, since the government has issued the policy last year, I think we have been actively exploring the new business direction and follow all the central and local government authorities, the rules. Yeah. You mentioned the new rules in last October, in October last year. I think there will be no material impact, practically impact our business.
Got it. Thank you very much.
Thank you.
Thank you. We'll move on to our next question. Please stand by. We have a follow-up question from the line of Felix Liu from UBS. Please go ahead. Your line is open.
Hi, Stephen and Sisi. Hi. My follow-up question is on your learning center network. I noticed you opened two centers in this quarter. I think that's a good step forward, although a small step. Could you share some color on your expansion outlook from here, maybe, this year and next year? Thank you.
Okay. I think in the rest of this fiscal year, I think we have no big plan to set up new learning centers. I think the learning center number will be stabilized. You know, we, you know, we invest a lot on OMO system, you know, in past so many years. We moved a lot of class from the offline to online, so it saved the classroom, the areas. Also, you know, we, you know, change some of the traditional business classroom areas to the new businesses. This is the internal change. The next year, we do hope we open more learning centers.
But so far, I think it's too early to say how many learning centers we set up in for the new year, because we have not finished the new year budget. I think I want to share with you the new learning center expansion plan next quarter earnings call.
Okay, great. Thank you.
Thanks.
Thank you. Once again, that's star one one to ask a question. Please stand by. Our next question comes from the line of Lian Duan from HTSC. Please go ahead. Your line is open.
Good evening, Steve and Sisi. My question is about the ratio on teachers to students. Could you share some color on the teacher-to-student ratio on each learning service segment? Thank you. Do you have more plan to recruit more teachers in the next two years? Thanks.
I can share with you the teacher's number. You know, you know, by the end of this quarter, you know, we have the 26,000 teachers in total. Because, you know, we started a new business just, you know, since the last year, so I think it's too early to like calculate the teachers to student ratio. I think maybe next quarter we're in the new year, we'll disclose the ratio. Yeah, I think we're hiring new teachers because, you know, we started those new businesses. For some non-academic courses or the other new businesses, we do need to hire more teachers.
But the key is, you know, we don't hire two more teachers. We care more about the utilization and the efficiency of the whole company. You know, I think we will believe, we will keep the higher utilization and the higher operation efficiency for the whole company in the future. Thank you.
Okay, thank you.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of D.S. Kim from J.P. Morgan. Please go ahead. Your line is open.
Hi, Stephen. Hi, Sisi. Happy New Year. Congrats on a strong result. I actually just have one quick follow-up question on all your comments regarding margins. Can I ask how much of a corporate overhead had cost shall we expect at this stage? i.e., I remember corporate overhead used to be like high single digit-ish of revenue pre Double Reduction Policy, like two years back. Given much small or reasonably smaller revenue base now, I'm wondering how much of overhead we should model and expect for this year, either as % of revenue or dollar term would be appreciated.
I think, you know, since the last year, you know, we would cut off some fixed costs and expenses in the headquarters. I think the headquarters expenses as the percentage of the total revenue will be stabilized. Roughly it's a 6%-7% of total revenue. This is the total expense from headquarters.
Thank you. That's a very impressive and great margin guidance.
Thank you.
If I may follow up again on all your comment on the expansion plan. I don't want to ask too much about the number of learning centers, but may I check for non-subject tutoring classes? Like, where do we see incremental demand opportunity, say, top-tier cities, top 10 cities versus the rest of the nation? Like, where do you see stronger demand, and where do you think we would open more store or more centers in terms of the geographical exposure? That's all from me. Thank you again for taking my question.
I think the new business development, you know, in the top-tier cities is a little bit better than the, lower-tier cities. This is a, you know, we have seen in the past quarters. You know, I do believe the, even in the, in some lower-tier cities, I think the, they will, catch up, because, you know, they started the business, you know, a little bit slower than the top-tier cities. So in almost everywhere, you know, we're seeing the business opportunities for the non-academic courses, you know, almost everywhere. Yeah, that's all.
Okay.
You want? Yeah, Koolearn. Koolearn, yeah. As I said, now we don't have the Koolearn expansion plan. We just want to keep the same learning center numbers till the next quarter or even till the end of this fiscal year. Next year, maybe we will extend some new learning centers. So far we haven't finished the next year budget. I will share with you the numbers next quarter. Okay. Thank you. Yes.
Thank you, sir.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Kenny Wang from CICC. Please go ahead. Your line is open.
Hi, Stephen. I have a follow-up question. I noticed that there is a significant increase in non-academic tutoring enrollments in Q2. Would you like to specify the driver behind? Do we have any target for the enrollments during the whole year? Thanks.
I think the market's always there. You know, you know, we do have the famous brands, and we do have the good teachers. Yeah, we started the business just a year ago that you saw the numbers. The exciting news for us is that, you know, the profitable of the new business is exciting. It's much better than we expected. For the new business, I do believe in the rest of this fiscal year, the new business, the revenue growth will be accelerated again.
Even for the next new year, fiscal year 2024, I do believe the business of the revenue growth of the new business will be high. Yeah. We're optimistic about the non-academic courses business.
Yeah. By the way, the non-academic tutoring business, according to our experience in last several quarters, we think there, it's seasonality is not that apparent as some other test prep business.
Yeah.
Every quarter, probably the enrollments will be relatively stable, if you do the Q on Q comparison. As a new business development in all the local cities, probably you can see strong momentum, as we have seen that Q2's growth or the enrollments trend are also similar or even better than Q1's. Yeah.
Yeah, I see. That's very clear. Thank you.
Okay.
Thank you. We'll now go to our next question. Please stand by. We have a follow-up question from the line of Lian Duan from HTSC. Please go ahead with your question.
Just one more follow-up question. Do we have any color on the retention rate for each segment?
I think the retention rates, you know, is related to the traditional K-12 business. You know, we closed down the K-9 business last year. For new business, like the non-academic courses, you know, we just trace the retention rate. The good news for us is we're seeing the retention rates is getting higher and higher. For example, as for the non-academic courses, the retention rate now is between 65%-70%. You know, we just started the new business and, you know, the retention rate now is better than we expected.
We believe the retention rates will get higher going forward. Overseas test prep and the adult, the university student business...
It's a one-off.
Yeah, that's one. Roughly, it's one-off.
Understood. Thanks. Okay. Thank you. Thank you. It's very clear.
Thank you. 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.
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, the representatives. Thank you.