New East: Slow Growth, TAL Education: High Elasticity — What’s the Next Battle for the Tutoring Giants?
Two Paths to Profit Recovery: New East Hits the Brakes, TAL Swaps Its Engine.
Both New Oriental and TAL Education have emerged from the profit trough following the “Double Reduction” policy, yet they have adopted two nearly opposite solutions.
New Oriental’s recovery path shows a clear pattern of a slow start followed by strong momentum.
Interim financial results for fiscal 2026 (covering June–November 2025) indicate that its revenue grew only modestly in the first quarter, with net profit declining year-on-year.
However, it rebounded sharply in the second quarter:
Revenue reached $1.191 billion, up 14.7% year-on-year.
Net profit was $45.45 million, up 42.3% year-on-year.
Adjusted net profit rose 68.6% year-on-year.
The profit elasticity in Q2 did not come from a sudden surge in revenue, but from a restructuring of internal operations: shifting business focus to segments with more stable cash flow and lighter delivery models, while imposing stricter cost controls.
The most representative change is the deliberate slowdown in learning center expansion: from a high growth rate of 20%–30% in the previous fiscal year to a moderate expansion of around 10%. Meanwhile, domestic adult exam preparation and new education businesses have become the main growth drivers.
This is more than just “opening fewer stores.” For an education company with a strong offline heritage, slower expansion means overall tightening in organization, staffing, leasing, and management reach. New Oriental has clearly recognized that, with policy boundaries still in place, speed itself is a risk variable.
In contrast, TAL Education’s results read like full-throttle acceleration.
For the third quarter of fiscal 2026 (September–November 2025), TAL’s net revenue increased 27% year-on-year; Non-GAAP net profit surged 266.6% year-on-year; and gross margin rose to 56.1%, becoming the most closely watched metric.
This was not a natural recovery after subsidy cuts, but a substantial improvement in operating efficiency: revenue became more concentrated in learning services and education hardware, while the accelerated expansion of offline learning centers delivered higher output.
More importantly, TAL has clearly abandoned the old logic of “trading subsidies for scale.”
Selling and marketing expenses in Q3 fell 2.8% year-on-year, a sharp contrast to the 25.9% cumulative increase in the first three quarters. Growth continues, but no longer through heavy spending — instead, it relies on higher personnel efficiency and stronger delivery capabilities to turn scale back into positive assets.
Two distinct profit-recovery paths have thus taken shape:
New Oriental chose to stabilize profits first, then decide how fast to grow.
TAL bet on steepening its growth curve once profitability was confirmed.
This shows that when the industry no longer allows high-speed trial and error, mastering the pace of growth has itself become a source of competitiveness.
Growth Engine Migration: Who Remains in Tutoring, Who Has Transcended It
If profit recovery reflects short-term operational judgment, the choice of new growth engines reveals the two companies’ differing visions for the next phase.
New Oriental’s growth sources are increasingly concentrated toward more traditional education services. While overseas test preparation and study-abroad consulting have recovered somewhat, the rebound has been significantly constrained by unstable global education mobility and geopolitical conditions. Financial reports show that revenue from overseas test preparation rose approximately 4.1% year-on-year, while study-abroad consulting revenue fell about 3% year-on-year.
What truly underpins its cash flow base is the domestic adult education segment. Postgraduate entrance exams, civil service exams, and professional certification programs enjoy stable demand, longer cycles, and relatively controllable policy risks. Specifically, its domestic test preparation business for adults and college students grew approximately 12.8% year-on-year.
Meanwhile, New Oriental’s investment in “new education” has begun to show scale effects. Financial results indicate that overall revenue from new education businesses rose 21.6% year-on-year (compared with 15.3% in the previous quarter). Non-academic tutoring attracted 1.058 million students this quarter, and the number of active paying users of smart learning systems and devices reached 352,000.
The overall growth rate of non-academic tutoring, intelligent learning systems, and education hardware has outpaced the company average, yet these businesses are more about structuring the portfolio than driving steep growth. AI, silver-haired education, and other initiatives remain in the investment stage and are unlikely to lead growth in the short term.
TAL’s choices are significantly more aggressive. Learning services remain its cash flow foundation, with offline learning centers expanding by roughly 50% within a year to drive scale. Meanwhile, learning content solutions — especially AI hardware — are being pushed to the forefront and now contribute nearly 30% of revenue, despite still being in a loss-making phase.
Although its AI assistant “Xiao Si” has surpassed 1 billion cumulative activations, the sector is no longer untapped. Entrants such as Zuoyebang and iFLYTEK have quickly turned education hardware from a blue ocean into a red ocean. TAL’s bet is whether AI capabilities can continuously increase per-user value, rather than merely driving a round of hardware replacement.
The underlying divergence is clear:
New Oriental emphasizes policy risk resistance and business replicability, pursuing low-volatility certainty.
TAL, by contrast, is attempting to use AI and technology to extract “learning” from the traditional tutoring context and redefine it into a larger solution market.
One is building more stable education; the other is betting on bigger learning scenarios.
The Real Dividing Line: Not AI, Not Hardware, But Sustainable Growth
Silver-haired eldercare represents another form of logical extension. There is indeed synergy between education, service attributes, and brand trust. However, the eldercare industry itself is characterized by long profit cycles, heavy asset investment, and high operational complexity.
For a company that started as an asset-light tutoring business, this is more of a cautious pilot than a cross-border innovation that can be scaled up in the short term. Without a clear business model, the risk of resource misallocation is considerable.
