Recently, TAL Education Group announced its first quarter performance for the fiscal year 2025. According to the financial report, as of May 31, 2024, TAL Education's first quarter revenue reached $414 million, a year-on-year increase of 50.4%, exceeding market expectations; The net profit attributable to TAL Education was 11.402 million US dollars, and the net loss attributable to TAL Education in the same period last year was 45.037 million US dollars, achieving a turnaround from losses to profits; The diluted net profit per ADS attributable to TAL Education is $0.02, and the diluted net loss per ADS attributable to TAL Education in the same period last year was $0.07.
Pan Helin, a member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, told Securities Daily reporters that TAL Education's performance has improved, mainly due to the sustained recovery of the current education and training industry. At the same time, the company is accelerating its efforts in the AI learning machine business. With the increase in sales of learning machines, the company's operating situation is expected to further improve.
The latest research report from Huatai Securities also pointed out that TAL Education's first quarter of fiscal year 2025 continues the recovery trend since 2023, with offline production capacity maintaining rapid growth, online school SKU richness increasing, and online learning machine products continuously iterating and upgrading, which is expected to continue driving revenue growth.
Good Future Stable Transformation
Dual wheel drive of quality education and learning hardware
In the first quarter of fiscal year 2025, the non GAAP net profit attributable to TAL Education was $29.6 million, while the non GAAP net loss attributable to TAL Education in the same period last year was $19.5 million; The gross profit was 214 million US dollars, a year-on-year increase of 57.6%; The gross profit margin was 51.7%, compared to 49.3% in the same period last year.
In terms of cash flow, the net cash provided by operating activities in the first quarter of fiscal year 2025 was $246.8 million; As of May 31, 2024, the total balance of cash, cash equivalents, and short-term investments held by TAL Education is $3.419 billion, while the balance as of February 29, 2024 is $3.303 billion.
During the analyst earnings conference call, Peng Zhuangzhuang, President and Chief Financial Officer of TAL Education, stated, "In this quarter, TAL Education will continue to focus on providing high-quality products and managing online and offline operational efficiency to efficiently serve users. In the future, TAL Education will continue to invest in providing users with high-quality learning experiences, based on product capabilities and operational efficiency, to provide long-term value to users
An industry analyst who declined to be named told Securities Daily that according to the latest financial report data of TAL Education, the company's transformation path is very stable. Currently, quality education and learning hardware have become the backbone of its business, and its business layout is solid.
The reporter also learned from TAL Education that learning services and other businesses maintained growth momentum in the first quarter of the 2025 fiscal year. In terms of content solution business, thanks to its product development and marketing capabilities, Xueersi Learning Machine also achieved year-on-year growth in this quarter. Especially the Xueersi learning machine continues to enrich its content and integrate AI functions. At the same time, new SKUs have been launched, providing users with a wider range of intelligent learning products. In addition, Xueersi has comprehensively upgraded the entire product line of its learning machines, becoming the first learning hardware to support updates to the new curriculum standards. TAL Education's performance in the first quarter of fiscal year 2025 was strong, with significant growth in revenue and net profit. New businesses such as AI learning machines have shown great potential and are expected to become new growth points Ai Media Consulting CEO Zhang Yi told Securities Daily reporters that TAL Education will continue to optimize its products and services, adapt to market changes, and significantly improve technological innovation and operational efficiency. However, in the face of future uncertainty, it is still necessary to maintain cautious optimism and continuously optimize strategies to consolidate market position and promote long-term development.
Empower AI education hardware
Creating a second growth curve
While TAL's first quarter turned losses into profits, the company's accelerated layout in the AI field is also worth paying attention to.
At present, artificial intelligence represented by large models is empowering various industries. As a leading company in the education industry, TAL Education has chosen to deeply integrate AI with educational hardware products. It is reported that the nine chapter model independently developed by TAL Education, with problem-solving and teaching algorithms as its core, has completed relevant filing and passed the review, and is one of the first education models in China to pass the filing. At the same time, in the MathEval Big Model Mathematics Ability Assessment Ranking, the Nine Chapters Big Model overall ranking is first, showing a leading advantage in all sub rankings.
It is reported that learning applications developed based on the Nine Chapters model have been implemented in smart products such as Xueersi learning machines, and product functions developed based on the Nine Chapters model have also been implemented in apps and other applications under Xueersi.
In May of this year, the Xueersi learning machine upgraded its built-in intelligent assistant "Xiaosi", adding AI functions such as homework mode, circle learning, AI oral grading practice, and Xiaosi dialogue. On the basis of big model technology, combined with Xueersi's in-depth understanding of learning scenarios, big models can be applied more specifically and practically in educational products. As the nine chapter model evolves, the AI driven features integrated into learning devices will also provide learners with more easily accessible and reliable learning aids.
The combination of AI and devices is natural, and when it comes to hardware, parents feel that it can be seen and touched, which is a good landing scenario. "Tian Mi, CTO of TAL Education, said that the combination of AI and education is the trend.
And this also provides a new growth curve for the company's future development. According to a research report by Huatai Securities, the content solution business of TAL Education in the first quarter of the 2025 fiscal year continued to grow at a high rate, with an estimated revenue share increasing to about 27%. In combination with the data tracking of Tiktok, Huatai Securities expects the sales of TAL learning machine to increase 51% year on year from March to May. Meanwhile, with the gradual manifestation of economies of scale and controllable investment, the learning machine business is expected to continue to strengthen.
Zhang Yi stated that the market prospects for AI learning machines are promising, as children have become accustomed to using smart devices for learning. If we want to achieve the second growth curve through this, we need to combine AI technology to extract and analyze knowledge points, and form an integrated online and offline teaching model. Among them, offline interest courses may still be the main direction.
The industry analyst, who declined to be named, told Securities Daily reporters that with 21 years of teaching and research experience combined with AI technology, the company has found a promising and suitable path for its transformation and development. However, to successfully achieve this goal, it is necessary to continuously optimize product performance, enrich content resources, and accurately position the market to win user favor through differentiated competitive strategies. At the same time, the company also needs to pay attention to user experience and feedback, continuously optimize and iterate, in order to consolidate its market position and promote sustained performance growth.