TAL Education Group (NYSE:TAL) reported fiscal 2026 third-quarter results that management said reflected steady progress on strategic priorities centered on student development, product innovation, and service quality, while acknowledging near-term variability tied to seasonality, competitive pressures, and resource allocation decisions.
Revenue growth led by learning services
President and Chief Financial Officer Alex Peng said the company’s learning services posted year-over-year revenue growth across both offline Peiyou programs and online enrichment offerings, supported by “sustained user demand” and a portfolio delivered in offline and online formats.
In Q&A, Peng said Peiyou’s year-over-year revenue growth was primarily driven by increased enrollments, while average selling price remained “relatively stable.” He added that performance was aligned with the company’s learning center network expansion, which TAL said it continues to pursue in a “disciplined” manner, weighing operational readiness, efficiency, and localized demand at the district and neighborhood level.
Offline and online program updates
Deputy Chief Financial Officer Jackson Ding said Peiyou small class enrichment programs delivered stable operations and year-over-year growth, driven by enrollment gains. He described ongoing efforts to broaden access to enrichment programs aimed at supporting “holistic development.”
On the online side, Ding said TAL is using technology to enhance engagement, citing humanities courses with immersive online classrooms that incorporate virtual settings, interactive activities, and role-playing based on classic literature. He said the programs also use gamified mechanisms during class and out-of-class challenges to reinforce concepts. Looking ahead, Ding said the company plans to further integrate technology into engagement tools and instructional design, supported by continued investments in content, product development, and services.
Learning devices: growth, engagement metrics, and competition
Management highlighted learning devices as a key long-term focus within the company’s content solutions business, while noting a “highly competitive environment” spanning content, hardware, and AI.
Ding said the learning devices business delivered year-over-year growth in both revenue and sales volume during the quarter. He also provided user engagement metrics:
- Average weekly active rate among learning device users remained at approximately 80%.
- Average daily usage per active device was approximately one hour.
Peng and Ding both emphasized the company’s focus on moving learning devices beyond answer-providing tools and toward AI-enabled learning companions designed to guide students through processes, adapt explanations, and diagnose learning gaps. Ding said TAL’s “AI Thinkie 1-on-1” has facilitated “over hundreds of thousands of hours” of guided learning, and that as of December 2025, students had activated the company’s AI assistant “Xiao Si” over 1 billion times.
Peng said blended average selling price for learning devices came in below CNY 4,000, reflecting a shift in product mix versus the prior year period. He added that the learning device business reported an adjusted operating loss as it remains in an investment phase.
Asked about promotional performance and the competitive landscape, Peng said the market share outcome during the “2011 promotion period” was aligned with expectations, and described the broader learning device environment as dynamic as AI advances reshape education technology. He said TAL’s approach combines vertical domain models with general AI capabilities and aims to emulate teaching methodologies rather than simply giving answers.
Margins improved, but management cautioned on volatility
Ding walked through profitability and expense trends, highlighting an expansion in gross margin and reduced selling and marketing intensity. Key figures included:
- Cost of revenues rose 18.0% year-over-year to $338.4 million.
- Gross profit increased 35.0% year-over-year to $431.8 million.
- Gross margin improved to 56.1% from 52.7% a year earlier.
- Selling and marketing expenses decreased 2.8% to $220.1 million.
- Non-GAAP selling and marketing expenses as a percentage of revenue decreased to 28.3% from 36.7%.
- Income from operations was $93.1 million, compared with an operating loss of $17.4 million in the prior year period.
- Net income attributable to TAL was $130.6 million, up from $23.1 million a year earlier.
In response to questions about margin drivers, Ding attributed the year-over-year operating margin improvement primarily to selling and marketing volatility and “disciplined cost management,” including lower online marketing and branding expenses for the learning device business versus the same period last year, and seasonality in online enrichment customer acquisition.
However, he cautioned against treating the quarter’s margin performance as a benchmark for future periods, noting the company manages a portfolio of mature profitable businesses and newer initiatives that are still in the investment phase, which can create quarterly fluctuations. Ding also said the break-even timeline for the learning device business remains uncertain.
Balance sheet, cash flow, and buyback update
As of November 30, 2025, TAL reported $2,146.3 million in cash and cash equivalents, $171.1 million in short-term investments, and $339.3 million in current and non-current restricted cash. Deferred revenue was $1,162.8 million. Net cash provided by operating activities in the quarter was $526.7 million.
On capital returns, Ding said the board authorized a new share repurchase program in July 2025 for up to approximately $600 million over 12 months. Between October 30, 2025 and January 28, 2026, the company repurchased 844,856 common shares for an aggregate consideration of approximately $27.7 million.
Looking ahead, Peng said TAL continues to prioritize the intersection of learning and technology and is strengthening go-to-market capabilities, particularly through more agile channel management for newer businesses like learning devices. Management reiterated that near-term performance may be influenced by market conditions, investment cycles, and seasonal fluctuations, and said the company remains focused on long-term sustainable development.
About TAL Education Group (NYSE:TAL)
TAL Education Group is a leading provider of after-school tutoring services in China, specializing in K-12 academic instruction. The company offers a range of programs designed to help primary and secondary school students strengthen their core competencies in subjects such as mathematics, English, Chinese language and science. TAL leverages both in-person learning centers and digital platforms to deliver its curriculum, aiming to support student progress through interactive lessons and personalized study plans.
Founded in 2003 and headquartered in Beijing, TAL Education Group has grown into one of China’s largest private education firms.
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