Oct 29, 2026 earnings call — Learning Device headwinds and Peiyou growth
TAL reported second quarter net revenues of $995 million and non-GAAP operating margin rose to 24.9%.
Revenue $1.0B (est $1.1B) · EPS $-0.06 (est $0.18)
Key quotes
"Take Peiyou enrichment learning classes as an example, the retention rate was over 80%, reflecting the continued trust from students and families."
"The overall market has contracted by double digits year-over-year, and competition remains intense."
"The dividend declared this quarter complements our ongoing share repurchase program."
Analyst Q&A 4
Revenue growth by business line
Q (Eddy Wang · Morgan Stanley): He asked how revenue performed across the major business lines and what to expect for growth going forward.
A: Management said overall revenue growth moderated in the second quarter and they expect growth to become more moderate going forward. Peiyou offline programs delivered double-digit revenue growth supported by enrollment and healthy retention; Learning Device sales contracted and became a drag; online enrichment growth also moderated.
"As we just mentioned, our overall revenue growth moderated in the second quarter, and we expect growth to become more moderate going forward." — Alex Peng (CFO)
Learning Device: balance growth and profit
Q (Jenny Yuan · UBS): She asked how the company is navigating the Learning Device business given market challenges and whether they are prioritizing revenue growth or profitability.
A: Management said they still see a strategic role for learning devices and remain committed to users and content, but the market has contracted and competition and costs are pressuring the business. They will manage the business in a disciplined way, invest in content, technology and product, be thoughtful about resource allocation and costs, and they do not anticipate significant losses from this Learning Device business for the full fiscal year.
"Our focus is on managing the business in a disciplined way." — Alex Peng (CFO)
Why operating margin improved
Q (Eunice Liu · Goldman Sachs): They asked what drove the operating margin improvement this quarter and how to think about profitability going forward.
A: Management said the margin improvement reflects progress in several areas: greater scale, serving more students while managing costs more efficiently, and more disciplined resource allocation. They said improving profitability remains a priority, will continue to invest while driving operating efficiency, and expect operating margin for fiscal 2027 to improve compared with fiscal 2026, noting quarter-to-quarter variation is possible.
"The improvement this quarter, in operating margin, reflects progress across several areas." — Jackson Ding (CFO)
Other income drop and dividend plan
Q (Elsie Sheng · CLSA): She asked what drove the decline in other income and how the company thinks about shareholder returns after declaring a cash dividend.
A: Management said other income fell mainly because the fair value of certain investments declined and their investment portfolio value can change with market conditions. On shareholder returns, they said returning value is important, the dividend complements the share repurchase program, and they intend to make returns more systematic using both dividends and repurchases while considering financial position, business needs, investment opportunity, and market conditions.
"During the quarter, the fair value of certain investments declined, which was a primary driver of the sequential decrease in other income." — Jackson Ding (CFO)