You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A. Operating Results General Factors Affecting Our Results of Operations We have benefited significantly from favorable demographic trends, the overall economic growth and the demand for high-quality educational services in China. We expect that the demand for private educational services in China will be driven by (i) increasing disposable income per capita along with increasing level of urbanization, (ii) increasing education and employment opportunities requiring educational services beyond school curriculum, and (iii) advancement and wide application of innovative technology. However, any adverse changes in the economic conditions or regulatory environment in China may have a material adverse effect on the private education industry in China, which in turn may harm our business and results of operations and any heightened tension in international relations or global pandemic can have an adverse impact on our overseas related businesses, such as test preparation and consulting services. For example, on July 24, 2021, the General Office of State Council and the General Office of Central Committee of the Communist Party of China jointly promulgated the Alleviating Burden Opinion, which provides, among others, that (i) Academic AST Institutions are prohibited from raising funds by listing on stock markets or conducting any capitalization activities; (ii) foreign capital is prohibited from controlling or participating in any Academic AST Institutions through mergers and acquisitions, entrusted operation, joining franchise or variable interest entities; (iii) online tutoring for preschool-age children is prohibited, and offline academic subjects (including foreign language) tutoring services for preschool-age children is also strictly prohibited. The Alleviating Burden Opinion provides that any violation of the foregoing shall be rectified. The Alleviating Burden Opinion further states that the administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Private Education—Regulations on After-School Tutoring” for more details. In line with the development of our livestreaming e-commerce business, our results of operations are also affected by the general factors affecting the livestreaming e-commerce industry, including the level of overall economic growth, increase in per capita disposable income and growth in consumer spending, the growing popularity of online shopping, improvements in logistics infrastructure, among others. 113 Table of Contents Specific Factors Affecting Our Results of Operations While our business is influenced by factors affecting the private education industry in China generally and by conditions in each of the geographic markets we serve, we believe our business is more directly affected by company- specific factors such as the number of student enrollments, the amount of course fees and our operating cost and expenses. The number of student enrollments is in turn largely driven by the demand for our courses, our ability to maintain the consistency and quality of our teaching, our established brand and reputation and effectiveness of our marketing and brand promotion efforts, our ability to optimize our comprehensive online and offline integrated education ecosystem and our OMO (online-merge-offline) standardized digital classroom teaching system on a constant basis, the locations of our schools and learning centers, and our ability to respond to competitive pressure, as well as seasonal factors. The demand for our courses also depends on the continued use of admissions and assessment tests by educational institutions and governmental authorities both in China and abroad. We determine course fees primarily based on demand for our courses, the targeted market for our courses, the subject of the course, the geographic location of the school, cost of services, and the course fees charged by our competitors for the same or similar courses. We typically adjust course fees or school fees based on the market conditions of the city where the particular school is located, subject to the relevant local governmental authority’s advance approval, if required. The level of our operating cost and expenses will depend on our ability to carry out our systemized and centralized approach to improve operational efficiency through refinement of our centralized operation platform that supports all service offerings and continued investment in technologies. Our future results of operations will depend significantly upon our ability to maintain and increase student enrollments both online and offline and offer a greater variety of courses, including those related to non-academic subjects. Our business changes may result in substantial demands on our management, operational, technological, financial and other resources. To manage and support our further development, we must improve our existing operational, administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified teachers and school management personnel as well as other administrative and sales and marketing personnel, particularly as we grow outside of our existing areas. We will continue to implement additional systems and measures and recruit qualified personnel in order to effectively manage and support our business. If we cannot achieve these improvements, our financial condition and results of operations may be materially adversely affected. The results of operations of our livestreaming e-commerce business are more directly affected by certain company specific factors, including: our ability to attract and engage consumers and increase GMV on East Buy; our ability to develop high-quality and cost-effective private label products; our ability to enhance supply chain management capabilities, among others. Selected Statements of Operations Items Net Revenues. In the fiscal years ended May 31, 2023, 2024 and 2025, we generated total net revenues of US$2,997.8 million, US$4,313.6 million and US$4,900.3 million, respectively. We currently derive revenues from the following sources: • net service revenues, which accounted for 84.9%, 81.2% and 88.4% of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025, respectively; and • net product revenues, which accounted for 15.1%, 18.8% and 11.6% of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025, respectively. Net Service Revenues. Our net service revenues consist of revenues from educational services and test preparation courses, private label products and livestreaming e-commerce, overseas study consulting services and other services. Revenues from educational services and test preparation courses accounted for 63.9%, 63.0% and 70.5%, respectively, of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025. We recognize revenues from course fees collected for enrollment in our educational services and test preparation courses and online education proportionally as we deliver the instruction over the period of the course. Course fees are generally paid in advance by students and are initially recorded as deferred revenue. Students are entitled to a short-term trial period which commences on the date the course begins. Tuition refunds are provided to students if they decide within the trial period that they no longer want to take the course. After the trial period, if a student withdraws from a class, usually only those collected but unearned portion of the fee is available to be refunded. We recognize revenues from the commission revenue of livestreaming e-commerce business through East Buy at a point when the customer purchases the merchants’ products through the e-commence platforms. 114 Table of Contents For the year ended May 31, 2025, US$3,456.2 million, US$119.1 million, US$516.4 million and US$242.4 million of service revenues were derived from educational services and test preparation courses, private label products and livestreaming e-commerce, overseas study consulting services and other services, respectively. For the year ended May 31, 2024, US$2,716.2 million, US$190.9 million, US$439.7 million and US$154.2 million of service revenues were derived from educational services and test preparation courses, private label products and livestreaming e-commerce, overseas study consulting services and other services, respectively. For the year ended May 31, 2023, US$1,914.9 million, US$178.2 million, US$354.8 million and US$96.9 million of service revenues were derived from educational services and test preparation courses, private label products and livestreaming e-commerce, overseas study consulting services and other services, respectively. Net Product Revenues. Our net product revenues consist of revenues from the sales of private label products and sales of books or other educational materials developed or licensed by us either through our own distribution channels or through third party distributors. Revenues are recognized when control of the promised goods is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods. For the year ended May 31, 2025, US$481.2 million and US$85.0 million of product revenues were derived from private label products, and sales of books or other educational materials, respectively. For the year ended May 31, 2024, US$709.8 million and US$102.8 million of product revenues were derived from private label products, and sales of books or other educational materials, respectively. For the year ended May 31, 2023, US$379.3 million and US$73.7 million of product revenues were derived from private label products, and sales of books or other educational materials, respectively. Operating Cost and Expenses Our operating cost and expenses consist of cost of revenues, selling and marketing expenses and general and administrative expenses. The following table sets forth the components of our operating cost and expenses as a percentage of total net revenues for the periods indicated. For the Years Ended May 31, 2023 2024 2025 (in thousands, except percentages) US$ % US$ % US$ % Net revenues 2,997,760 100.0 4,313,586 100.0 4,900,262 100.0 Operating cost and expenses: Cost of revenues (1,409,438 ) (47.0 ) (2,050,960 ) (47.5 ) (2,183,291 ) (44.6 ) Selling and marketing (444,693 ) (14.8 ) (660,586 ) (15.3 ) (783,959 ) (16.0 ) General and administrative (953,583 ) (31.8 ) (1,251,615 ) (29.0 ) (1,444,463 ) (29.5 ) Impairment of goodwill — — — — (60,299 ) (1.2 ) Total operating cost and expenses (2,807,714 ) (93.6 ) (3,963,161 ) (91.8 ) (4,472,012 ) (91.3 ) Cost of Revenues. Cost of revenues for educational services and test preparation courses primarily consists of teaching fees and performance-linked bonuses paid to our teachers and rental payments for our schools and learning centers and, to a lesser degree, depreciation and amortization of property and equipment used in the provision of educational services, as well as costs of course materials. Our teachers consist of both full-time teachers and contract teachers. Full-time teachers deliver instruction and may also be involved in management, administration and other functions at our schools. Full-time teachers’ compensation and benefits primarily consist of teaching fees based on hourly rates, performance-linked bonuses based on student evaluations, as well as base salary, annual bonus and standard employee benefits in connection with their services other than teaching. Compensation of our contract teachers, who we mainly hire based on fluctuation in demand, is comprised primarily of teaching fees based on hourly rates and performance-linked bonuses based on student evaluations and other factors. We account for teaching fees and performance-linked bonuses paid to our teachers as cost of revenues as they are directly associated with the provision of educational services. 115 Table of Contents Cost of revenues for private label products and livestreaming e-commerce and other services primarily consists of labor cost and procurement cost of goods. Cost of books and other educational materials primarily consist of printing costs of books and other materials, and licenses fees, royalties and other fees paid to content licensors, publishing companies and third-party distributors. Selling and Marketing. Expenses Our selling and marketing expenses primarily consist of human resources expenses and other expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purpose. General and Administrative. Expenses Our general and administrative expenses primarily consist of compensation and benefits of administrative staff, R&D expenses, costs of third-party professional services, rental and utilities payments relating to office and administrative functions, and depreciation and impairment of property and equipment and other long-lived assets used in our general and administrative activities. Share-based Compensation Expenses We account for share-based compensation expenses in accordance with an authoritative accounting pronouncement, which requires share-based compensation expense to be determined based on the fair value of our common shares as of their grant date. The following table sets forth the allocation of our share-based compensation expenses (including East Buy’s share-based compensation expenses), both in absolute amount and as a percentage of total share-based compensation expenses, among our employees based on the nature of work which they were assigned to perform. See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers” for a description of our share-based compensation programs. For the Years Ended May 31, 2023 2024 2025 (in thousands, except percentages) US$ % US$ % US$ % Allocation of Share-based Compensation Expense: Cost of revenues 2,749 3.1 19,966 16.3 (1,261 ) (2.1 ) Selling and marketing 5,750 6.4 26,053 21.3 4,658 7.8 General and administrative 81,289 90.5 76,440 62.4 56,536 94.3 Total 89,788 100.0 122,459 100.0 59,933 100.0 For options granted to our employees and directors, we record share-based compensation expenses based on the fair value of our common shares underlying options as of the date of option grant and amortize the expenses over the vesting periods of the options. For non-vested equity shares granted to employees and directors, we record share-based compensation expenses based on the quoted market price of our ADSs on the grant date and amortize the expenses over the vesting periods of the non-vested equity shares. Taxation Cayman Islands We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. Our majority-owned subsidiary, East Buy, is incorporated in the Cayman Islands. The dividend payments of East Buy are not subject to withholding tax in the Cayman Islands. 116 Table of Contents Hong Kong Under the current Hong Kong Inland Revenue Ordinance, from the year of assessment 2018/2019 onwards, the subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2,000,000; and 16.5% on any part of assessable profits over HK$2,000,000. Under the Hong Kong tax law, our Hong Kong subsidiaries are exempted from the Hong Kong income tax on its foreign-derived income. Hong Kong does not impose a withholding tax on dividends. PRC Our operating entities in China are subject to value-added tax at varying rates ranging from 3% to 13% on their respective net revenues. Our operating entities that provide educational services are subject to a simple value-added tax collection method and a 3% value-added tax rate since June 2016. With regard to income tax, enterprises in China are generally subject to enterprise income tax at a rate of 25%. Some of our subsidiaries and consolidated affiliated entities are entitled to a favorable statutory tax rate of 15% because of their qualifications as “High and New Technology Enterprises” or because of favorable local tax treatment. In addition, some of our subsidiaries and consolidated affiliated entities are entitled to an exemption from the enterprise income tax for two years beginning the enterprise’s first profitable year followed by a tax rate of 12.5% for the succeeding three years because of their qualifications as “Newly Established Software Enterprises.” In addition, under the current regulatory regime, whether our schools are entitled to any preferential income tax treatment remains unclear, and practice varies across different cities in China. Pursuant to the Implementation Rules for the Law for Promoting Private Education (2004), private schools that do not require reasonable returns enjoy the same preferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall be separately formulated by the relevant authorities under the State Council. The Amended Private Education Law, which became effective on September 1, 2017, no longer uses the term “reasonable return.” Instead, under the Amended Private Education Law, sponsors of private schools may choose to establish non-profit or for-profit private schools at their own discretion, except that private schools in compulsory education area can only be registered as non-profit private schools, and after-school tutoring institutions providing tutoring services on academic subjects can only be registered as non-profit private schools under the Alleviating Burden Opinion. Pursuant to the Amended Private Education Law, non-profit private schools will be entitled to the same tax benefits as public schools while taxation policies for for-profit private schools are still unclear. Due to a lack of implementation rules, whether our schools can be entitled to any preferential income tax treatment remains unclear. In practice, tax treatments for private schools vary across different cities in China. For example, private schools in certain cities are subject to a 25% standard enterprise income tax, while in other cities, private schools are subject to a fixed amount of enterprise income tax each year as determined by the local tax authority in lieu of the 25% standard enterprise income tax or are not required to pay enterprise income tax at all. Among our schools in four major cities from which we derived a significant portion of our revenues in the fiscal year ended May 31, 2025, three schools are subject to the standard 25% enterprise income tax rate and one school was not required by the governing tax bureau to pay any enterprise income tax from its establishment through May 31, 2025. For additional information on PRC regulations on taxation, see “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Taxation.” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The discontinuation of any preferential tax treatments currently available to us could materially and adversely affect our results of operations.” If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, which may subject us to PRC income tax for our global income and withholding for any dividends we pay to our non-PRC shareholders and ADS holders.” 117 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. For the Years Ended May 31, (in thousands of US$ except share and per share data) 2023 2024 2025 Net revenues: Net service revenues 2,544,729 3,500,998 4,334,071 Net product revenues 453,031 812,588 566,191 Total net revenues 2,997,760 4,313,586 4,900,262 Operating cost and expenses:(1) Cost of revenues (1,409,438 ) (2,050,960 ) (2,183,291 ) Selling and marketing (444,693 ) (660,586 ) (783,959 ) General and administrative (953,583 ) (1,251,615 ) (1,444,463 ) Impairment of goodwill — — (60,299 ) Total operating cost and expenses (2,807,714 ) (3,963,161 ) (4,472,012 ) Operating income 190,046 350,425 428,250 Interest income 114,453 153,589 119,605 Interest expense (707 ) (298 ) (311 ) Realized gain from long-term investments 767 185 422 Impairment loss from long-term investments (8,056 ) (30,007 ) (5,215 ) Loss from fair value change of long-term investments (860 ) 19,025 (10,078 ) Miscellaneous income, net 12,888 922 3,711 Provision for income taxes: Current (97,594 ) (130,927 ) (175,612 ) Deferred 31,528 21,237 29,317 Provision for income taxes (66,066 ) (109,690 ) (146,294 ) Loss from equity method investments (7,102 ) (58,933 ) (14,257 ) Net income 235,363 325,218 375,833 Less: Net income attributable to non-controlling interests 58,022 15,627 4,117 Net income attributable to New Oriental Education & Technology Group Inc.’s shareholders 177,341 309,591 371,716 Net income per common share attributable to shareholders of New Oriental Education & Technology Group Inc.(2) -Basic 0.11 0.19 0.23 -Diluted 0.10 0.18 0.23 Weighted average shares used in calculating basic net income per common share 1,678,264,547 1,653,597,432 1,619,727,518 Weighted average shares used in calculating diluted net income per common share 1,685,631,987 1,669,499,952 1,631,137,164 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, (in thousands of US$) 2023 2024 2025 Cost of revenues 2,749 19,967 (1,261 ) Selling and marketing 5,750 26,052 4,658 General and administrative 81,289 76,439 56,536 Total 89,788 122,458 59,933 (2) Each ADS represents ten common shares. 118 Table of Contents Fiscal Year Ended May 31, 2025 Compared to Fiscal Year Ended May 31, 2024 Net Revenues. Our total net revenues increased by 13.6% from US$4,313.6 million for the fiscal year ended May 31, 2024 to US$4,900.3 million for the fiscal year ended May 31, 2025. This increase was due to the increase in net revenues from our new educational business initiatives. • Net Service Revenues. Our net service revenues increased by 23.8% from US$3,501.0 million for the fiscal year ended May 31, 2024 to US$4,334.1 million for the fiscal year ended May 31, 2025. This increase was primarily due to the increase in net revenues from our new educational business initiatives, such as our non-academic tutoring courses. • Net Product Revenues. Net product revenues decreased by 30.3% from US$812.6 million in the fiscal year ended May 31, 2024 to US$566.2 million in the fiscal year ended May 31, 2025, primarily due to the decrease in the sales of East Buy private label products through our livestreaming e-commerce platform in the fiscal year ended May 31, 2025. Operating Cost and Expenses. Our total operating cost and expenses increased by 12.8% from US$3,963.2 million in the fiscal year ended May 31, 2024 to US$4,472.0 million in the fiscal year ended May 31, 2025. This increase resulted from increases in each of our cost of revenues, selling and marketing expenses, general and administrative expenses and impairment of goodwill. We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget on educational businesses accordingly. Our total numbers of schools and learning centers were 77 and 1,241, respectively, as of May 31, 2025, compared to 81 and 944, respectively, as of May 31, 2024. We employed approximately 35,700 and 41,000 teachers as of May 31, 2024 and 2025, respectively. • Cost of Revenues. Our cost of revenues increased by 6.5% from US$2,051.0 million in the fiscal year ended May 31, 2024 to US$2,183.3 million in the fiscal year ended May 31, 2025. This increase was in line with the increase in revenues and primarily due to the increase in the cost of revenues for the accelerated capacity expansion for educational businesses in the fiscal year ended May 31, 2025. • Selling and Marketing Expenses. Our selling and marketing expenses increased by 18.7% from US$660.6 million in the fiscal year ended May 31, 2024 to US$784.0 million in the fiscal year ended May 31, 2025. This increase was primarily due to the increased human resources expenses and market promotion expenses incurred in the fiscal year ended May 31, 2025. • General and Administrative Expenses. Our general and administrative expenses increased by 15.4% from US$1,251.6 million in the fiscal year ended May 31, 2024 to US$1,444.5 million in the fiscal year ended May 31, 2025. This increase was primarily due to an increase of US$115.1 million in human resources expenses as a result of the increased headcount as we grew our network of learning centers and culture and tourism business in the fiscal year ended May 31, 2025. • Impairment of goodwill. We recorded impairment of goodwill of US$60.3 million in the fiscal year ended May 31, 2025, compared to nil in the fiscal year ended May 31, 2024. This change was primarily due to the recognition of goodwill impairment losses in the reporting unit of kindergarten business. Other Income, net. Our net other income decreased by 24.6% from US$143.4 million in the fiscal year ended May 31, 2024 to US$108.1 million in the fiscal year ended May 31, 2025, primarily due to the decrease of the US$34.0 million of interest income. Provision for Income Tax. Our income tax expense increased by 33.4% from US$109.7 million in the fiscal year ended May 31, 2024 to US$146.3 million in the fiscal year ended May 31, 2025. The increase was primarily due to the increase in current income tax expenses. 119 Table of Contents Net Income. As a result of the foregoing, our net income increased by 15.6% from US$325.2 million in the fiscal year ended May 31, 2024 to US$375.8 million in the fiscal year ended May 31, 2025. Fiscal Year Ended May 31, 2024 Compared to Fiscal Year Ended May 31, 2023 Net Revenues. Our total net revenues increased by 43.9% from US$2,997.8 million for the fiscal year ended May 31, 2023 to US$4,313.6 million for the fiscal year ended May 31, 2024. This increase was due to the increase in net revenues from our new educational business initiatives and East Buy private label products and livestreaming e-commerce business. • Net Service Revenues. Our net service revenues increased by 37.6% from US$2,544.7 million for the fiscal year ended May 31, 2023 to US$3,501.0 million for the fiscal year ended May 31, 2024. This increase was primarily due to the increase in net revenues from our new educational business initiatives, such as our non-academic tutoring courses. • Net Product Revenues. Net product revenues increased by 79.4% from US$453.0 million in the fiscal year ended May 31, 2023 to US$812.6 million in the fiscal year ended May 31, 2024, primarily due to the significant increase in the sales of East Buy private label products through our livestreaming e-commerce platform in the fiscal year ended May 31, 2024. Operating Cost and Expenses. Our total operating cost and expenses increased by 41.2% from US$2,807.7 million in the fiscal year ended May 31, 2023 to US$3,963.2 million in the fiscal year ended May 31, 2024. This increase resulted from increases in each of our cost of revenues, selling and marketing expenses, general and administrative expenses. We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget on educational businesses accordingly. Our total numbers of schools and learning centers were 81 and 944, respectively, as of May 31, 2024, compared to 85 and 663, respectively, as of May 31, 2023. We employed approximately 26,600 and 35,700 teachers as of May 31, 2023 and 2024, respectively. • Cost of Revenues. Our cost of revenues increased by 45.5% from US$1,409.4 million in the fiscal year ended May 31, 2023 to US$2,051.0 million in the fiscal year ended May 31, 2024. This increase was in line with the increase in revenues and primarily due to the increase in the cost of revenues for the private label products and livestreaming e-commerce business and accelerated capacity expansion for educational businesses in the fiscal year ended May 31, 2024. • Selling and Marketing Expenses. Our selling and marketing expenses increased by 48.5% from US$444.7 million in the fiscal year ended May 31, 2023 to US$660.6 million in the fiscal year ended May 31, 2024. This increase was primarily due to the increased human resources expenses and administrative expenses incurred in the fiscal year ended May 31, 2024. • General and Administrative Expenses. Our general and administrative expenses increased by 31.3% from US$953.6 million in the fiscal year ended May 31, 2023 to US$1,251.6 million in the fiscal year ended May 31, 2024. This increase was primarily due to an increase of US$169.3 million in human resources expenses, and an increase of US$99.7 million in administrative expenses as a result of the increased headcount as we grew our network of learning centers in the fiscal year ended May 31, 2024. Other Income, net. Our net other income increased by 21.0% from US$118.5 million in the fiscal year ended May 31, 2023 to US$143.4 million in the fiscal year ended May 31, 2024, primarily as a result of the US$153.6 million of interest income. Provision for Income Tax. Our income tax expense increased by 66.0% from US$66.1 million in the fiscal year ended May 31, 2023 to US$109.7 million in the fiscal year ended May 31, 2024. The increase was primarily due to the increase in current income tax expenses. 120 Table of Contents Net Income. As a result of the foregoing, our net income increased by 38.2% from US$235.4 million in the fiscal year ended May 31, 2023 to US$325.2 million in the fiscal year ended May 31, 2024. Discussion of Segment Operations For the fiscal year ended May 31, 2025, we identified four operating segments, including (i) educational services and test preparation courses, (ii) private label products and livestreaming e-commerce, (iii) overseas study consulting services, and (iv) educational materials and distribution. We identified educational services and test preparation courses, private label products and livestreaming e-commerce and overseas study consulting services as our three reportable segments for the fiscal year ended May 31, 2025. Our operating segment, educational materials and distribution, individually did not exceed the 10% quantitative threshold during the fiscal year ended May 31, 2025, and as a result, was aggregated in others. Net revenues from our educational services and test preparation courses accounted for 63.9%, 63.0% and 70.5%, respectively, of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025. Net revenues from private label products and livestreaming e-commerce accounted for 18.6%, 20.9% and 12.2%, respectively, of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025. Net revenues from overseas study consulting services accounted for 11.8%, 10.2% and 10.5%, respectively, of our total net revenues in the fiscal years ended May 31, 2023, 2024 and 2025. We recognize revenues from course fees collected for enrollment in our educational services and test preparation courses and online education proportionally as we deliver the instruction over the period of the course. We recognize revenues from the sales of private label products when control of the promised goods is transferred to the customer. Cost of revenues for our educational services and test preparation courses primarily consists of teaching fees and performance-linked bonuses paid to our teachers, rental payments for our schools and learning centers and, to a lesser degree, depreciation and amortization of property and equipment used in the provision of educational services. Cost of revenues for our private label products and livestreaming e-commerce business primarily consists of labor cost and procurement cost of goods. Cost of overseas study consulting services primarily consists of application cost and staff costs. Selling and marketing expenses for each of our reportable segments primarily consist of marketing and promotion expenses and other costs related to our selling and marketing activities for the corresponding reportable segment. General and administrative expenses for each of our reportable segments primarily consist of compensation and benefits of administrative staff of our reportable segments, compensation and benefits, rental and utilities payments relating to office and administrative functions of our reportable segments, depreciation and amortization of property and equipment used in the general and administrative activities of our reportable segments and, to a lesser extent, costs to develop our curriculum. 121 Table of Contents The following table lists our net revenues, operating cost and expenses and operating income by reportable segment for the periods indicated. For the years ended May 31, (in thousands of US$) 2023 2024 2025 Net revenues of the reportable segments: Educational services and test preparation courses 1,914,865 2,716,174 3,456,189 Private label products and livestreaming e-commerce 557,508 900,614 600,281 Overseas study consulting services 354,764 439,744 516,367 Others 170,623 257,054 327,425 Total net revenues of our company 2,997,760 4,313,586 4,900,262 Cost of revenues: Educational services and test preparation courses (793,423 ) (1,027,889 ) (1,319,315 ) Private label products and livestreaming e-commerce (345,211 ) (677,270 ) (410,377 ) Overseas study consulting services (179,284 ) (214,602 ) (251,782 ) Others (91,520 ) (131,199 ) (201,817 ) Total cost of revenue of our company (1,409,438 ) (2,050,960 ) (2,183,291 ) Selling and marketing: Educational services and test preparation courses (261,606 ) (348,121 ) (414,669 ) Private label products and livestreaming e-commerce (45,611 ) (124,975 ) (121,421 ) Overseas study consulting services (80,528 ) (92,865 ) (103,015 ) Others (45,657 ) (77,785 ) (121,174 ) Total selling and marketing expenses of our company (433,402 ) (643,746 ) (760,279 ) General and administrative: Educational services and test preparation courses (519,765 ) (755,074 ) (913,775 ) Private label products and livestreaming e-commerce (34,238 ) (77,626 ) (78,778 ) Overseas study consulting services (61,861 ) (57,204 ) (79,071 ) Others (65,725 ) (75,657 ) (93,100 ) Total general and administrative expenses of our company (681,589 ) (965,561 ) (1,164,724 ) Unallocated corporate expenses (283,285 ) (302,894 ) (363,718 ) Segment operating income/(loss): Educational services and test preparation courses 340,071 585,090 808,430 Private label products and livestreaming e-commerce 132,448 20,743 (10,295 ) Overseas study consulting services 33,091 75,073 82,499 Others (32,279 ) (27,587 ) (88,666 ) Total operating income of our company 190,046 350,425 428,250 Fiscal Year Ended May 31, 2025 Compared to Fiscal Year Ended May 31, 2024 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses increased by 27.2% from US$2,716.2 million for the fiscal year ended May 31, 2024 to US$3,456.2 million for the fiscal year ended May 31, 2025, primarily due to the increase in student enrollment in the programs and courses we offered. Net Revenues of Private Label Products and Livestreaming E-commerce Net revenues from private label products and livestreaming e-commerce and other services decreased by 33.3% from US$900.6 million for the fiscal year ended May 31, 2024 to US$600.3 million for the fiscal year ended May 31, 2025, primarily as a result of decrease in the GMV. Net Revenues of Overseas Study Consulting Services Net revenues from overseas study consulting services increased by 17.4% from US$439.7 million for the fiscal year ended May 31, 2024 to US$516.4 million for the fiscal year ended May 31, 2025, primarily due to the increased number of students who planned to study overseas. 122 Table of Contents Operating Costs and Expenses of Reportable Segments Operating Cost and Expenses of Educational Services and Test Preparation Courses • Cost of Revenues. Cost of revenues for our educational services and test preparation courses increased by 28.3% from US$1,027.9 million for the fiscal year ended May 31, 2024 to US$1,319.3 million for the fiscal year ended May 31, 2025, primarily due to an increase in teaching staff costs and course research staff costs. • Selling and Marketing Expenses. Selling and marketing expenses for our educational services and test preparation courses increased by 19.1% from US$348.1 million for the fiscal year ended May 31, 2024 to US$414.7 million for the fiscal year ended May 31, 2025, primarily due to the increase in our marketing efforts and the addition of marketing staff. • General and Administrative Expenses. General and administrative expenses for our educational services and test preparation courses increased by 21.0% from US$755.1 million for the fiscal year ended May 31, 2024 to US$913.8 million for the fiscal year ended May 31, 2025, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2025 Compared to Fiscal Year Ended May 31, 2024—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce • Cost of Revenues. Cost of revenues for private label products and livestreaming e-commerce decreased by 39.4% from US$677.3 million for the fiscal year ended May 31, 2024 to US$410.4 million for the fiscal year ended May 31, 2025, primarily due to a decrease in cost of inventories and logistics cost for private label products as a result of decrease in the GMV. • Selling and Marketing Expenses. Selling and marketing expenses for private label products and livestreaming e-commerce decreased by 2.8% from US$125.0 million for the fiscal year ended May 31, 2024 to US$121.4 million for the fiscal year ended May 31, 2025, primarily due to an increase in advertising expenses and a decrease in share-based compensation expenses. • General and Administrative Expenses. General and administrative expenses for private label products and livestreaming e-commerce increased by 1.5% from US$77.6 million for the fiscal year ended May 31, 2024 to US$78.8 million for the fiscal year ended May 31, 2025. Operating Cost and Expenses of Overseas Study Consulting Services • Cost of Revenues. Cost of revenues for overseas study consulting services increased by 17.3% from US$214.6 million for the fiscal year ended May 31, 2024 to US$251.8 million for the fiscal year ended May 31, 2025, primarily due to an increase in consulting application costs. • Selling and Marketing Expenses. Selling and marketing expenses for overseas study consulting services increased by 10.9% from US$92.9 million for the fiscal year ended May 31, 2024 to US$103.0 million for the fiscal year ended May 31, 2025, primarily due to an increase in staff costs and marketing and promotional expenses. • General and Administrative Expenses. General and administrative expenses for overseas study consulting services increased by 38.2% from US$57.2 million for the fiscal year ended May 31, 2024 to US$79.1 million for the fiscal year ended May 31, 2025, primarily due to an increase in staff costs. 123 Table of Contents Fiscal Year Ended May 31, 2024 Compared to Fiscal Year Ended May 31, 2023 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses increased by 41.8% from US$1,914.9 million for the fiscal year ended May 31, 2023 to US$2,716.2 million for the fiscal year ended May 31, 2024, primarily due to the increase in student enrollment in the programs and courses we offered. Net Revenues of Private Label Products and Livestreaming E-commerce Net revenues from private label products and livestreaming e-commerce and other services increased by 61.5% from US$557.5 million for the fiscal year ended May 31, 2023 to US$900.6 million for the fiscal year ended May 31, 2024, primarily due to the multi-platform strategy adopted by East Buy, diversified product categories and SKUs as well as the membership day promotional activities launched by East Buy. Net Revenues of Overseas Study Consulting Services Net revenues from overseas study consulting services increased by 24.0% from US$354.8 million for the fiscal year ended May 31, 2023 to US$439.7 million for the fiscal year ended May 31, 2024, primarily due to the increased number of students who planned to study overseas. Operating Costs and Expenses of Reportable Segments Operating Cost and Expenses of Educational Services and Test Preparation Courses • Cost of Revenues. Cost of revenues for our educational services and test preparation courses increased by 29.6% from US$793.4 million for the fiscal year ended May 31, 2023 to US$1,027.9 million for the fiscal year ended May 31, 2024, primarily due to an increase in teaching staff costs and course research staff costs. • Selling and Marketing Expenses. Selling and marketing expenses for our educational services and test preparation courses increased by 33.1% from US$261.6 million for the fiscal year ended May 31, 2023 to US$348.1 million for the fiscal year ended May 31, 2024, primarily due to the increase in our marketing efforts and the addition of marketing staff. • General and Administrative Expenses. General and administrative expenses for our educational services and test preparation courses increased by 45.3% from US$519.8 million for the fiscal year ended May 31, 2023 to US$755.1 million for the fiscal year ended May 31, 2024, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2024 Compared to Fiscal Year Ended May 31, 2023—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce • Cost of Revenues. Cost of revenues for private label products and livestreaming e-commerce increased by 96.2% from US$345.2 million for the fiscal year ended May 31, 2023 to US$677.3 million for the fiscal year ended May 31, 2024, primarily due to an increase in procurement cost of goods and shipping cost for private label products. • Selling and Marketing Expenses. Selling and marketing expenses for private label products and livestreaming e-commerce increased by 174.0% from US$45.6 million for the fiscal year ended May 31, 2023 to US$125.0 million for the fiscal year ended May 31, 2024, primarily due to an increase in staff costs. • General and Administrative Expenses. General and administrative expenses for private label products and livestreaming e-commerce increased by 126.7% from US$34.2 million for the fiscal year ended May 31, 2023 to US$77.6 million for the fiscal year ended May 31, 2024, primarily due to an increase in staff costs and share-based compensation expenses. 124 Table of Contents Operating Cost and Expenses of Overseas Study Consulting Services • Cost of Revenues. Cost of revenues for overseas study consulting services increased by 19.7% from US$179.3 million for the fiscal year ended May 31, 2023 to US$214.6 million for the fiscal year ended May 31, 2024, primarily due to an increase in consulting application costs. • Selling and Marketing Expenses. Selling and marketing expenses for overseas study consulting services increased by 15.3% from US$80.5 million for the fiscal year ended May 31, 2023 to US$92.9 million for the fiscal year ended May 31, 2024, primarily due to an increase in staff costs and marketing and promotional expenses. • General and Administrative Expenses. General and administrative expenses for overseas study consulting services decreased by 7.5% from US$61.9 million for the fiscal year ended May 31, 2023 to US$57.2 million for the fiscal year ended May 31, 2024, primarily due to a decrease in staff costs. B. Liquidity and Capital Resources Our principal source of liquidity has been cash generated from operating activities. As of May 31, 2025, we had US$1,612.4 million and US$204.8 million in cash and cash equivalents and restricted cash, respectively. Our cash and cash equivalents consist of cash on hand and liquid investments that are unrestricted as to withdrawal or use, have maturities of three months or less and are placed with banks and other financial institutions. Although we consolidate the results of New Oriental China and its schools and subsidiaries, we do not have direct access to the cash and cash equivalents or future earnings of New Oriental China. However, a portion of the cash balances of New Oriental China and its schools and subsidiaries are paid to our wholly-owned subsidiaries in China pursuant to contractual arrangements for the services our subsidiaries provide to New Oriental China and its schools and subsidiaries. The following table sets forth a summary of our cash and cash equivalents, restricted cash and short-term investments inside and outside China as of May 31, 2025. Cash, cash equivalents and restricted cash in RMB Cash, cash equivalents and restricted cash in other currencies Total Cash, cash equivalents and restricted cash Short-term investments in RMB Short-term investments in other currencies Total short-term investments Entities outside China 215 345,647 345,862 — 128,667 128,667 VIEs in China 1,025,518 653 1,026,171 1,375,867 — 1,375,867 Non-VIEs in China 443,046 2,055 445,101 368,968 — 368,968 Entities inside China 1,468,564 2,708 1,471,272 1,744,835 — 1,744,835 Total 1,468,779 348,355 1,817,134 1,744,835 128,667 1,873,502 Although we consolidate the results of the VIEs, our access to the consolidated affiliated entities is only through the contractual arrangements with the VIEs. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” We expect to require cash to fund our ongoing business needs, particularly the rent and other cost and expenses relating to developing new businesses. Other cash needs include acquisitions of businesses and properties that complement our operations when suitable opportunities arise. We have not encountered any difficulties in meeting our cash obligations to date. We believe that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the foreseeable future. 125 Table of Contents The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended May 31, (in thousands of US$) 2023 2024 2025 Net cash provided by operating activities 971,008 1,122,643 896,592 Net cash used in investing activities (37,411 ) (1,153,922 ) (93,428 ) Net cash used in financing activities (246,867 ) (160,438 ) (584,971 ) Effect of foreign exchange rate changes (75,830 ) (24,606 ) 9,836 Net change in cash and cash equivalents 610,900 (216,323 ) 228,029 Cash and cash equivalents and restricted cash at beginning of the period 1,194,527 1,805,427 1,589,104 Cash and cash equivalents and restricted cash at end of the period 1,805,427 1,589,104 1,817,133 Operating Activities Net cash provided by operating activities amounted to US$896.6 million in the fiscal year ended May 31, 2025. Our net cash used in operating activities in the fiscal year ended May 31, 2025 reflected net income of US$375.8 million, as adjusted by the reconciliation of certain non-cash items, including US$139.8 million in depreciation, US$60.3 million in goodwill impairment and US$59.9 million in share-based compensation expense. Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$163.8 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$57.5 million, primarily due to an increase in accrued employee salary expenses and welfare benefits. Net cash provided by operating activities amounted to US$1,122.6 million in the fiscal year ended May 31, 2024. Our net cash used in operating activities in the fiscal year ended May 31, 2024 reflected net income of US$325.2 million, as adjusted by the reconciliation of certain non-cash items, including US$100.6 million in depreciation and US$122.5 million in share-based compensation expense. Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$468.2 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$160.0 million, primarily due to an increase in accrued employee salary expenses and welfare benefits. Net cash provided by operating activities amounted to US$971.0 million in the fiscal year ended May 31, 2023. Our net cash used in operating activities in the fiscal year ended May 31, 2023 reflected net income of US$235.4 million, as adjusted by the reconciliation of certain non-cash items, including US$117.0 million in depreciation and US$89.8 million in share-based compensation expense. Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$469.3 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$83.4 million, primarily due to an increase in accrued employee salary expenses and welfare benefits. Investing Activities We lease all of our facilities except for part of the premises for the Beijing, Xi’an, Tianjin, Kunming, Wuhan, Guangzhou, Changsha, Xiamen, Zhengzhou, Hangzhou and Hefei schools, which premises we own. Our cash used in investing activities is primarily related to the premises for the facilities we own and equipment used in our operations, our investment in term deposits and short-term investments. Net cash used in investing activities amounted to US$93.4 million in the fiscal year ended May 31, 2025, compared to net cash used in investing activities amounted to US$1,153.9 million in the fiscal year ended May 31, 2024 and net cash used in investing activities amounted to US$37.4 million in the fiscal year ended May 31, 2023. Net cash used in investing activities in the fiscal year ended May 31, 2025 was primarily attributable to net cash of US$244.9 million used for investing in short-term investments and term deposits. Net cash used in investing activities in the fiscal year ended May 31, 2024 was primarily attributable to net cash of US$792.9 million used for investing in short-term investments and term deposits. Net cash used in investing activities in the fiscal year ended May 31, 2023 was primarily attributable to purchase of property and equipment of US$143.0 million and partially offset by net proceeds of US$117.3 million from investing in short-term investments and term deposits. 126 Table of Contents Financing Activities Net cash used in financing activities amounted to US$585.0 million in the fiscal year ended May 31, 2025, compared to net cash used in financing activities amounted to US$160.4 million in the fiscal year ended May 31, 2024 and net cash used in financing activities amounted to US$246.9 million in the fiscal year ended May 31, 2023. Net cash used in financing activities in the fiscal year ended May 31, 2025 was primarily attributable to the funds used for share repurchase in the amount of US$445.5 million and cash paid for dividend of US$98.2 million. Net cash used in financing activities in the fiscal year ended May 31, 2024 was primarily attributable to the funds used for share repurchase in the amount of US$62.9 million and purchase of non-controlling interest in the amount of US$84.5 million. Net cash used in financing activities in the fiscal year ended May 31, 2023 was primarily attributable to the funds used for share repurchase in the amount of US$191.6 million and the unsecured senior notes repurchase in the amount of US$48.8 million. Material cash requirements Our material cash requirements as of May 31, 2025 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, long-term debt obligations and funds used for share repurchase and dividend payment. The expansion of our existing program, service and product offerings to new areas and launch of new business initiatives have required investment. Our capital expenditures were US$143.0 million, US$283.4 million and US$259.2 million in the fiscal years ended May 31, 2023, 2024 and 2025, respectively. Our capital expenditures are incurred primarily in connection with facility acquisitions, leasehold improvements and investments in equipment, technology and operating systems. We believe that we will be able to fund our capital needs in the foreseeable future through cash generated from our operating activities. Our operating lease commitments consist of the commitments under the lease agreements for our schools, learning centers, office premises and other facilities. As of May 31, 2025, the payment due within one year and thereafter for our operating lease commitments amounted to US$852.6 million. Our long-term debt obligations consist of the principal amount and cash interests in connection with unsecured senior notes issued in July 2020. In July 2020, we issued unsecured senior notes for a principal amount of US$300 million which were listed in the Hong Kong Stock Exchange. The notes bear fixed interest rate at 2.125% with interest payable semiannually in arrears on January 2 and July 2 of each calendar year, commencing on January 2, 2021. As of May 31, 2025, we repurchased an aggregate principal amount of US$285.6 million of the notes with a total cash consideration of US$271.0 million, and the outstanding principal amount of the unsecured senior notes was US$14.4 million. On July 26, 2022, our board of directors authorized a share repurchase program, under which we may repurchase up to US$400 million of the Company’s ADSs or common shares during the period from July 28, 2022 through May 31, 2023. In June 2023 and May 2024, our board of directors further authorized to extend the share repurchase program by twelve months through May 31, 2024 and May 31, 2025, respectively. In August 2024, our board of directors approved an adjustment to the share repurchase program, increasing the aggregate value of shares that we are authorized to repurchase under the share repurchase program from US$400 million to US$700 million. As of May 31, 2025, the share repurchase program had expired and we had repurchased an aggregate of approximately 14.5 million ADSs for approximately US$700 million from the open market under this share repurchase program. On August 19, 2024, our board of directors declared a special cash dividend in the amount of US$0.60 per ADS or US$0.06 per common share to holders of ADSs and common shares of record as of the close of business on September 9, 2024. The total cash dividend distributed was approximately US$100.0 million. 127 Table of Contents On July 29, 2025, our board of directors authorized a three-year shareholder return plan, effective from the fiscal year 2026, under which no less than 50% of our net income attributable to New Oriental for the preceding fiscal year will be dedicated to returning value to shareholders, including through dividend distribution and/or share repurchases. Our board of directors will reevaluate this plan upon its expiration. For the fiscal year 2026, our board of directors will determine the implementation of this plan based on the net income attributable to New Oriental for the fiscal year ended May 31, 2025 in due course. See “Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.” We intend to fund our existing and future material cash requirements with our existing cash balance. We will continue to make cash commitments, including capital expenditures, to support the growth of our business. We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred. We have not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets. We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position. Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of May 31, 2025. Holding Company Structure Overview New Oriental is a holding company with no material operations of its own. We conduct substantially all of our business in China through contractual arrangements with the variable interest entities, and their schools and subsidiaries and shareholders. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of these contractual arrangements. In the fiscal years ended May 31, 2023, 2024 and 2025, the consolidated affiliated entities contributed in aggregate 99.5%, 99.2% and 99.8%, respectively, of our total net revenues. Our operations not conducted through contractual arrangements with the variable interest entities primarily consist of the leasing of our commercial property. As of May 31, 2024 and 2025, the consolidated affiliated entities accounted for an aggregate of 62.2% and 68.7%, respectively, of our total assets, and 96.7% and 97.2%, respectively, of our total liabilities. The assets not associated with the consolidated affiliated entities primarily consist of cash and cash equivalents, term deposits and short-term investments. As of May 31, 2024 and 2025, US$1,031.0 million and US$998.0 million, respectively, of these assets were denominated in U.S. dollars, and US$1,364.2 million and US$1,027.5 million, respectively, of these assets were denominated in RMB and the remaining are denominated in other foreign currencies, including British pounds and Hong Kong dollars. As a holding company, New Oriental’s ability to pay dividends and other cash distributions to its shareholders depends in part upon dividends and other distributions paid to it by our PRC subsidiaries. The amount of dividends paid by our PRC subsidiaries to us primarily depends on the service fees paid to our PRC subsidiaries from the variable interest entities, and, to a lesser degree, our PRC subsidiaries’ retained earnings. As of May 31, 2023, 2024 and 2025, the total amount of service fees payable to our PRC subsidiaries from the variable interest entities under the service agreements was US$61.8 million, US$309.1 million and US$393.5 million, respectively. Conducting our operations through contractual arrangements with the variable interest entities entails a risk that we may lose the power to direct the activities that most significantly affect the economic performance of the variable interest entities, which may result in our being unable to consolidate their financial results with our results and may impair our access to their cash flow from operations and thereby reduce our liquidity. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” for more information, including the risk factors titled “If the PRC government finds that the agreements that establish the structure for operating some of our China business do not comply with applicable PRC laws and regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “We rely on contractual arrangements for our operations in China, which is not as effective in providing operational control as direct ownership.” 128 Table of Contents Dividend Distributions Under PRC law, each of our PRC subsidiaries, variable interest entities and their respective subsidiaries which is not a for-profit private school is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital and to further set aside a portion of its after-tax profit to fund the reserve fund at the discretion of our board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. In addition, each of our schools that requires or does not requires reasonable returns in China is required to allocate a certain amount out of its annual net income or annual increase in the net assets, if any, to its development fund for the construction or maintenance of the school or procurement or upgrade of educational equipment. For our schools which have elected to require reasonable returns, this amount shall be no less than 25% of the annual net income of the school, and for our schools which have elected not to require reasonable returns, this amount shall be equivalent to no less than 25% of the annual increase in the net assets of the school, if any. Each of our schools that is for-profit or non-profit in China is required to allocate a certain amount to its development fund for the development of the school. In the case of a for-profit private school, this amount shall be no less than 10% of the audited annual net income of the school, while in the case of a non-profit private school, this amount shall be equal to no less than 10% of the audited annual increase in the unrestricted net assets of the school, if any. Upon the effectiveness of the Amended Law for Promoting Private Education in September 2017, sponsors of for-profit private schools are entitled to retain the profits and proceeds from the schools and the operation surplus may be allocated to the sponsors pursuant to the PRC Company Law and other relevant laws and regulations. Our PRC subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Pursuant to contractual arrangements that our wholly-owned subsidiaries in China have with the variable interest entities, the earnings and cash of variable interest entities and their schools and subsidiaries are used to pay service fees in RMB to our PRC subsidiaries in the manner and amount set forth in these agreements. After paying the applicable withholding taxes and making appropriations for its statutory reserve requirement, the remaining net profits of our PRC subsidiaries would be available for distribution to three Hong Kong-incorporated intermediate holding companies wholly owned by our company, and from these three Hong Kong-incorporated intermediate holding companies to our company. See “Item 4. Information on the Company—C. Organizational Structure” for a diagram of our corporate structure. As of May 31, 2025, the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were restricted due to statutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, were in aggregate US$973.3 million, and the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were unrestricted and thus available for distribution were in aggregate US$1,869.0 million. We do not believe that these restrictions on the distribution of our net assets will have a significant impact on our ability to timely meet our financial obligations in the future. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries or New Oriental China and its schools and subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” for more information. Furthermore, cash transfers from our PRC subsidiaries to our Hong Kong-incorporated intermediate holding companies are subject to PRC government control of currency conversion. Restrictions on the availability of foreign currency may affect the ability of our PRC subsidiaries and New Oriental China and its schools and subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Governmental control of currency conversion may affect the value of your investment.” C. Research and Development, Patents and Licenses, etc. Technology Capabilities and Infrastructure Our continuous development in technology capabilities has contributed to our sustained success in the private education industry. We believe our strong technology capabilities enable us to deliver a superior learning experience and improve our operational efficiency. We employ experienced research and development personnel to build, maintain and upgrade our technologies and systems. We had approximately 2,900, 3,200 and 3,600 research and development personnel as of May 31, 2023, 2024 and 2025, respectively. 129 Table of Contents Our online and offline integration We have integrated our offline network and operations with online technology for our educational services and operations. Our OMO system serves as the core of this integration. We developed and launched our OMO system in 2014 as a standardized digital classroom teaching system to digitalize our offline teaching materials and education resources. Capitalizing on our technology advancements, we continued to upgrade the functions and features of our OMO system over the years and it has evolved into an online education system, with a comprehensive set of technologies and initiatives that complements and supports students’ offline learning activities and improves students’ learning experience. Our OMO system has been extensively integrated into our educational services and operations. Leveraging our big data analytics capabilities, our OMO system provides multiple interactive online learning features that benefit students, teachers, and parents, including offering self-adaptive and interactive courseware to students, pushing customized content to students, recommending additional courses based on their online study records and performance, offering real-time feedback to parents to help improve students’ academic performance and closely connecting teachers, students and parents. Our OMO system also helps teachers prepare lessons, both those delivered online and offline, through a standardized and structured process. Based on our rich database, teaching materials can be generated automatically and tailored to the needs of the specific classes. Big data analytics technology Throughout our long operating history, we have accumulated a large student data base, including complex students’ learning behavior and performance data, and extensive data on teaching techniques, materials, and resources, while maintaining a high standard of data protection and privacy. We have built strong data analytics capabilities using algorithms, models and data analytics tools. Our OMO system leverages big data analysis to enhance our operational efficiency, including understanding students’ learning needs and generating customized teaching content and services for each student, as well as allowing teachers to prepare lessons through a standardized and structured process. Our OMO system not only benefits from our extensive data accumulated over our long operating history and as a result of our large scale, but also constantly accumulates more data from all participants in the education ecosystem, such as students, teachers, parents, and administrators, through a wide range of interfaces and terminals. As the database expands with the accumulation of new data, we continue to advance and evolve our data analytics capabilities. The continued accumulation of data also enables us to develop new teaching services, which in turn feeds new data back into the system, creating a virtuous cycle. AI-powered technologies We continue to make significant strides in integrating artificial intelligence (AI) into our educational ecosystem. Our approach combines open-source large language models with our proprietary AI technologies to create intelligent educational tools that enhance the teaching and learning processes. Our AI-powered solutions not only improve learning effectiveness and experiences but also alleviate the workload for teachers and parents. Internally, we have also deployed a variety of AI applications to improve our operational efficiency. Educational systems. To further optimize classroom efficiency, we have introduced intelligent educational systems that enable one-click generation of teaching plans and exercises. Real-time classroom performance evaluation tools and data-driven dashboards help teachers identify common learning challenges and refine their instructional strategies. Our AI-driven systems also support interdisciplinary course development by associating multi-disciplinary concept maps and integrating multi-modal resources, thereby enriching course content and teaching effectiveness. Teaching support. We have implemented AI-powered quality inspection tools that utilize speech recognition to generate verbatim transcripts and subtitles, streamlining the review of teaching sessions. Our enterprise Weixin communication tools aggregate and analyze home-school communication, automatically generating reports that save valuable time for teachers and administrators. 130 Table of Contents Assessment and testing. For student assessment, our AI technologies enable automatic grading, batch evaluation, and personalized feedback, ensuring timely and accurate responses to student work. Our intelligent testing systems generate ability maps and track learning behaviors, allowing for targeted training and optimized recommendations based on individual strengths and weaknesses. Operational tools. We have developed an AI-powered consultation and training application that leverages speech recognition and natural language processing to support comprehensive, personalized training for our sales teams. This application covers the entire consultation process, providing real-time feedback and significantly improving training efficiency, which in turn enhances service response and conversion rates. In addition, AI is actively used to improve efficiency in recruitment, employee management, and other administrative functions. Technology Platform and Infrastructure Our technology platform is designed to provide systems that help distinguish ourselves in the marketplace, operate cost-effectively and accommodate future growth. Our technology platform is a combination of our proprietary self-adaptive learning systems, content management systems, interactive courseware, exam platforms, computerized assessment testing systems, and big data analytics. We have been investing in infrastructure to achieve simplification of the storage and processing of large amounts of data, facilitation of the deployment and operation of large-scale programs and services, automation of much of the administration of our business, and the ability to scale both capacity and functionality and build large clusters seamlessly. One of our ongoing focuses is to maintain reliable systems. We have implemented performance monitoring for all key web and business systems to enable us to respond quickly to potential problems. Based on cluster technology, our system can identify errors and isolate failed servers automatically so that our customers can access our services at any time. Our websites are hosted at third-party facilities in Beijing. These facilities provide redundant utility systems, a backup electric generator and 24-hour a day server support. All servers have redundant power supplies and file systems to maximize system and data availability. We regularly back up our database on a server hosted at an Internet data center to minimize the impact of data loss due to system failures. We do not capitalize any related costs. Application of 5G We have partnered with hardware service providers and telecom operators to provide remote education services leveraging 5G technologies to further differentiate us from smaller-scale peers and at the same time reduce reliance on local teachers. We have also been helping students from remote and less developed areas to gain access to high quality teaching content with the help of 5G technology and we are committed to continuing to do so as the technology improves. Intellectual Property Our trademarks, copyrights, trade secrets and other intellectual property rights distinguish our services and products from those of our competitors and contribute to our competitive advantage in our target markets. To protect our brand and other intellectual property, we rely on a combination of trademark, copyright and trade secrets laws as well as confidentiality agreements with our employees, contractors and others. As of May 31, 2025, we had 30 main works of art copyrights and 46 main software copyrights in China relating to various aspects of our operations, and 17 main trademarks registered in China, of which “ ,” “ ,” and “ ” have been recognized as “well-known trademarks” in civil action adjudicated and/or administrative determination in China. Our main websites are located at www.xdf.cn, www.neworiental.org, www.eastbuy.com and www.koolearn.com. In addition, we have registered other domain names, including www.dogwood.com.cn, www.blingabc.com and www.ileci.com. We have adopted guidelines, procedures and safeguards designed to educate our employees and contractors regarding the importance of respecting the intellectual property rights of third parties, and detect and prevent any conduct or activities by our employees or contractors that infringe or have the potential to infringe upon such third-party rights. The guidelines specify certain key principles and policies that we require all of our employees and contractors to uphold as a fundamental condition of their employment. The procedures and safeguards we have implemented to ensure compliance with these principles and policies include the assignment of dedicated staff to monitor and enforce compliance with these intellectual property guidelines, including in particular our content control group, which reviews the content of our course materials to ensure that no infringing materials are used in our classrooms. We have also made efforts to ensure that our marketing materials are reviewed and approved by appropriate management before being distributed to the public. We believe these guidelines, procedures and safeguards increase our ability to avoid infringing or potentially infringing activities, reduce our exposure to third-party claims and protect our reputation as a company that respects the intellectual property rights of third parties. 131 Table of Contents Insurance We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased limited liability insurance for some of our schools and learning centers. We also provide social security insurance for our employees as required by local governmental authorities. We consider our insurance coverage to be in line with that of other private education providers in China. D. Trend Information Please refer to “—A. Operating Results” for a discussion of known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since June 1, 2025 that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. E. Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenue, costs, and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and other factors that we believe to be relevant under the circumstances. Our management has discussed the development, selection and disclosure of these estimates with our board of directors. Since our financial reporting process inherently relies on the use of estimates and assumptions, actual results may differ from these estimates under different assumptions or conditions. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could reasonably have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We consider the policies discussed below to be critical to an understanding of our audited consolidated financial statements because they involve the greatest reliance on our management’s judgment. You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included with this annual report. Fair value measurement of level 3 available-for-sale investments Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income as a component of shareholders’ equity. Declines in the fair value of individual available-for-sale investments below their amortized cost due to credit-related factors are recognized as an allowance for credit losses, whereas if declines in the fair value is not due to credit-related factors, the loss is recorded in other comprehensive income / (loss). The available-for-sale investments classified within Level 3 assets are valued using income approach in discounted cash flow method or market approach in back solve method. The discounted cash flow analysis and back solve method require the use of significant unobservable inputs (Level 3 inputs) which involve significant management judgment and estimation, such as revenue growth rate and weighted average cost of capital. 132 Table of Contents