TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2025

, /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the first quarter of fiscal year 2026 ended May 31, 2025. Highlights for the First Quarter of Fiscal Year 2026 Net revenues were US$575.0 million, compared to net revenues of US$414.2 million in the same period of the prior year. Income from operations was US$14.3 million, compared to loss from operations of US$17.3 million in the same period of the prior year. Non-GAAP income from operations, which excluded share-based compensation expenses, was US$25.1 million, compared to non-GAAP income from operations of US$0.9 million in the same period of the prior year. Net income attributable to TAL was US$31.3 million, compared to net income attributable to TAL of US$11.4 million in the same period of the prior year. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$42.0 million, compared to non-GAAP net income attributable to TAL of US$29.6 million in the same period of the prior year. Basic and diluted net income per American Depositary Share ("ADS") were both US$0.05. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.07. Three ADSs represent one Class A common share. Cash, cash equivalents and short-term investments totaled US$3,472.8 million as of May 31, 2025, compared to US$3,618.4 million as of February 28, 2025. Financial Data——First Quarter of Fiscal Year 2026(In US$ thousands, except per ADS data and percentages) Three Months Ended May 31, 2024 2025 Pct. Change Net revenues 414,187 574,999 38.8 % (Loss)/Income from operations (17,330) 14,346 (182.8 %) Non-GAAP income from operations 876 25,109 2766.3 % Net income attributable to TAL 11,402 31,282 174.4 % Non-GAAP net income attributable to TAL 29,608 42,045 42.0 % Net income per ADS attributable to TAL – basic 0.02 0.05 173.8 % Net income per ADS attributable to TAL – diluted 0.02 0.05 175.0 % Non-GAAP net income per ADS attributable to TAL – basic 0.05 0.07 41.7 % Non-GAAP net income per ADS attributable to TAL – diluted 0.05 0.07 42.4 % "We achieved year-over-year revenue growth this quarter, driven by solid progress in both our learning services and AI-powered devices. This reflects our continued commitment to delivering high-quality learning experiences and fostering the long-term growth of our core businesses. The launch of new learning device models, including the P4, S4, and T4, helped our products reach a wider audience." said Alex Peng, TAL's President and Chief Financial Officer. Mr. Peng added, "Looking ahead, we remain dedicated to driving innovation in the K-12 learning sector, adapting to evolving user needs and advancements in AI and technology." Financial Results for the First Quarter of Fiscal Year 2026 Net RevenuesIn the first quarter of fiscal year 2026, TAL reported net revenues of US$575.0 million, representing a 38.8% increase from US$414.2 million in the first quarter of fiscal year 2025. Operating Costs and ExpensesIn the first quarter of fiscal year 2026, operating costs and expenses were US$561.5 million, representing a 29.9% increase from US$432.1 million in the first quarter of fiscal year 2025. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$550.7 million, representing a 33.0% increase from US$413.9 million in the first quarter of fiscal year 2025. Cost of revenues increased by 29.8% to US$259.6 million from US$200.0 million in the first quarter of fiscal year 2025. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 31.0% to US$258.9 million, from US$197.6 million in the first quarter of fiscal year 2025. Selling and marketing expenses increased by 47.7% to US$180.8 million from US$122.4 million in the first quarter of fiscal year 2025. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 50.5% to US$177.7 million, from US$118.1 million in the first quarter of fiscal year 2025. General and administrative expenses increased by 10.4% to US$121.1 million from US$109.7 million in the first quarter of fiscal year 2025. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 16.1% to US$114.0 million, from US$98.2 million in the first quarter of fiscal year 2025. Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 40.9% to US$10.8 million in the first quarter of fiscal year 2026 from US$18.2 million in the same period of fiscal year 2025. Gross Profit Gross profit increased by 47.3% to US$315.4 million from US$214.2 million in the first quarter of fiscal year 2025. The gross margin for the first quarter of fiscal year 2026 was 54.9%, compared to 51.7% in the same period of the prior year. (Loss)/Income from OperationsIncome from operations was US$14.3 million in the first quarter of fiscal year 2026, compared to loss from operations of US$17.3 million in the first quarter of fiscal year 2025. Non-GAAP income from operations, which excluded share-based compensation expenses, was US$25.1 million, compared to Non-GAAP income from operations of US$0.9 million in the same period of the prior year. Other Income Other income was US$9.5 million for the first quarter of fiscal year 2026, compared to other income of US$13.2 million in the first quarter of fiscal year 2025. Income Tax Expense Income tax expense was US$11.1 million in the first quarter of fiscal year 2026, compared to US$2.3 million of income tax expense in the first quarter of fiscal year 2025. Net Income Attributable to TAL Education GroupNet income attributable to TAL was US$31.3 million in the first quarter of fiscal year 2026, compared to net income attributable to TAL of US$11.4 million in the first quarter of fiscal year 2025. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$42.0 million, compared to Non-GAAP net income attributable to TAL of US$29.6 million in the first quarter of fiscal year 2025. Basic and Diluted Net Income per ADSBasic and diluted net income per ADS were both US$0.05 in the first quarter of fiscal year 2026. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.07 in the first quarter of fiscal year 2026. Cash Flow Net cash provided by operating activities for the first quarter of fiscal year 2026 was US$347.8 million. Cash, Cash Equivalents, and Short-Term InvestmentsAs of May 31, 2025, the Company had US$1,267.2 million of cash and cash equivalents and US$2,205.6 million of short-term investments, compared to US$1,771.3 million of cash and cash equivalents and US$1,847.1 million of short-term investments as of February 28, 2025. Deferred RevenueAs of May 31, 2025, the Company's deferred revenue balance was US$967.9 million, compared to US$671.2 million as of February 28, 2025. Share RepurchaseIn April 2025, the Company's board of directors authorized to extend its share repurchase program launched in April 2021 by another 12 months. Pursuant to the extended share repurchase program, the Company may repurchase up to approximately US$490.7 million of its common shares through April 30, 2026. As of July 30, 2025, following the extension of the share repurchase program, the Company had repurchased 15,184,109 common shares at an aggregate consideration of approximately US$477.4 million under the share repurchase program. Authorization of Share Repurchase Plan On July 28, 2025, TAL's board of directors authorized a new share repurchase plan under which the Company may repurchase up to US$600 million of the Company's common shares over the next 12 months. The Company's proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. The Company's board of directors will review the share repurchase plan periodically, and may authorize adjustment of its terms and size. The Company plans to fund repurchases from its existing cash balance. Conference CallThe Company will host a conference call and live webcast to discuss its financial results for the first fiscal quarter of fiscal year 2026 ended May 31, 2025 at 8:00 a.m. Eastern Time on July 31, 2025 (8:00 p.m. Beijing time on July 31, 2025). Please note that you will need to pre-register for conference call participation at https://register-conf.media-server.com/register/BI6ba336d6d0db4942b5ded26678ec673e. Upon registration, you will receive an email containing participant dial-in numbers and unique Direct Event Passcode. This information will allow you to gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time. A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at https://ir.100tal.com/. Safe Harbor StatementThis announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, TAL Education Group's strategic and operational plans contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's ability to continue to provide competitive learning services and products; the Company's ability to continue to recruit, train and retain talents; the Company's ability to improve the content of current course offerings and develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law. About TAL Education GroupTAL Education Group is a smart learning solutions provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life", which reflects our vision to promote top learning opportunities for students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive learning solutions to students from all ages through diversified class formats. Our learning solutions mainly cover enrichment learnings programs and some academic subjects in and out of China. Our ADSs trade on the New York Stock Exchange under the symbol "TAL". About Non-GAAP Financial MeasuresIn evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating costs and expenses, non-GAAP income from operations, non-GAAP net income attributable to TAL, non-GAAP basic and non-GAAP diluted net income per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release. TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. For further information, please contact: Jackson DingInvestor RelationsTAL Education GroupTel: +86 10 5292 6669-8809Email: [email protected] TAL EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars) As of February 28,2025 As of May 31, 2025 ASSETS Current assets Cash and cash equivalents $ 1,771,260 $ 1,267,182 Restricted cash, current 187,846 258,530 Short-term investments 1,847,120 2,205,649 Inventory, net 104,876 136,984 Amounts due from related parties, current 37 26 Prepaid expenses and other current assets 215,781 231,742 Total current assets 4,126,920 4,100,113 Restricted cash, non-current 32,625 32,674 Property and equipment, net 472,366 505,028 Deferred tax assets 3,487 2,561 Rental deposits 22,131 24,090 Intangible assets, net 394 49,477 Goodwill 155 44,819 Land use rights, net 182,880 183,942 Amounts due from related parties, non-current 96 97 Long-term investments 305,105 374,991 Long-term prepayments and other non-current assets 27,844 28,135 Operating lease right-of-use assets 329,064 369,275 Total assets $ 5,503,067 $ 5,715,202 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 146,300 $ 160,358 Deferred revenue, current 624,272 929,866 Amounts due to related parties, current 93 94 Accrued expenses and other current liabilities 582,227 637,368 Operating lease liabilities, current 88,453 98,468 Total current liabilities 1,441,345 1,826,154 Deferred revenue, non-current 46,955 38,004 Deferred tax liabilities 3,474 5,419 Operating lease liabilities, non-current 244,895 275,374 Total liabilities 1,736,669 2,144,951 Equity Class A common shares 154 154 Class B common shares 49 49 Treasury stock - (8) Additional paid-in capital 4,294,819 4,051,486 Statutory reserve 179,537 177,945 Accumulated deficit (624,078) (591,204) Accumulated other comprehensive loss (83,914) (67,935) Total TAL Education Group's equity 3,766,567 3,570,487 Non-controlling interests (169) (236) Total equity 3,766,398 3,570,251 Total liabilities and equity $ 5,503,067 $ 5,715,202 TAL EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except share, ADS, per share and per ADS data) For the Three Months Ended May 31, 2024 2025 Net revenues $ 414,187 $ 574,999 Cost of revenues (note 1) 200,008 259,571 Gross profit 214,179 315,428 Operating expenses (note 1) Selling and marketing 122,428 180,773 General and administrative 109,682 121,119 Total operating expenses 232,110 301,892 Government subsidies 601 810 (Loss)/Income from operations (17,330) 14,346 Interest income, net 22,522 18,722 Other income 13,151 9,472 Impairment loss on long-term investments (3,767) - Income before income tax expense and loss from equity method investments 14,576 42,540 Income tax expense (2,295) (11,078) Loss from equity method investments (985) (255) Net income $ 11,296 $ 31,207 Add: Net loss attributable to non-controlling interests 106 75 Total net income attributable to TAL Education Group $ 11,402 $ 31,282 Net income per common share Basic $ 0.06 $ 0.15 Diluted 0.06 0.15 Net income per ADS (note 2) Basic $ 0.02 $ 0.05 Diluted 0.02 0.05 Weighted average shares used in calculating net income per common share Basic 201,567,132 201,980,675 Diluted 205,382,443 204,880,688 Note1: Share-based compensation expenses are included in the operating costs and expenses as follows: For the Three Months Ended May 31, 2024 2025 Cost of revenues $ 2,362 $ 622 Selling and marketing expenses 4,375 3,071 General and administrative expenses 11,469 7,070 Total $ 18,206 $ 10,763 Note 2: Three ADSs represent one Class A common Share. TAL EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (In thousands of U.S. dollars) For the Three Months Ended May 31, 2024 2025 Net income $ 11,296 $ 31,207 Other comprehensive (loss)/income, net of tax (7,580) 15,987 Comprehensive income 3,716 47,194 Add: Comprehensive (income)/loss attributable to non-controlling interests (45) 67 Comprehensive income attributable to TAL Education Group $ 3,671 $ 47,261 TAL EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) For the Three MonthsEnded May 31, 2024 2025 Net cash provided by operating activities $ 246,793 $ 347,785 Net cash used in investing activities (124,635) (527,309) Net cash provided by/(used in) financing activities 5 (254,104) Effect of exchange rate changes (1,217) 283 Net increase/(decrease) in cash, cash equivalents and restricted cash 120,946 (433,345) Cash, cash equivalents and restricted cash at the beginning of period 2,457,476 1,991,731 Cash, cash equivalents and restricted cash at the end of period $ 2,578,422 $ 1,558,386 TAL EDUCATION GROUP Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures (In thousands of U.S. dollars, except share, ADS, per share and per ADS data) For the Three Months Ended May 31, 2024 2025 Cost of revenues $ 200,008 $ 259,571 Share-based compensation expenses in cost of revenues 2,362 622 Non-GAAP cost of revenues 197,646 258,949 Selling and marketing expenses 122,428 180,773 Share-based compensation expenses in selling and marketing expenses 4,375 3,071 Non-GAAP selling and marketing expenses 118,053 177,702 General and administrative expenses 109,682 121,119 Share-based compensation expenses in general and administrative expenses 11,469 7,070 Non-GAAP general and administrative expenses 98,213 114,049 Operating costs and expenses 432,118 561,463 Share-based compensation expenses in operating costs and expenses 18,206 10,763 Non-GAAP operating costs and expenses 413,912 550,700 (Loss)/Income from operations (17,330) 14,346 Share based compensation expenses 18,206 10,763 Non-GAAP income from operations (note 3) 876 25,109 Net income attributable to TAL Education Group 11,402 31,282 Share based compensation expenses 18,206 10,763 Non-GAAP net income attributable to TAL Education Group (note 3) $ 29,608 $ 42,045 Net income per ADS Basic $ 0.02 $ 0.05 Diluted 0.02 0.05 Non-GAAP Net income per ADS Basic $ 0.05 $ 0.07 Diluted 0.05 0.07 ADSs used in calculating net income per ADS Basic 604,701,396 605,942,025 Diluted 616,147,329 614,642,064 ADSs used in calculating Non-GAAP netincome per ADS Basic 604,701,396 605,942,025 Diluted 616,147,329 614,642,064 Note 3: The tax effect of share-based compensation expenses was immaterial in the first quarter of fiscal year 2026. 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TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2025

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