Two of China’s most watched education-linked businesses have, at least for now, stopped the financial bleeding. New Oriental and its offshoot Dongfang Zhenxuan both reported mid‑fiscal 2026 results showing operating stability after two turbulent years, winning a muted vote of confidence from investors even as underlying questions persist.
Dongfang Zhenxuan, the live‑streaming commerce business that once rode the celebrity of a star host, returned to profit in the reporting period. Revenue for the six months ending November 30 rose 5.7% year‑on‑year to RMB 2.312 billion, with net profit of RMB 239 million and adjusted net profit rising to RMB 258 million. The rebound was driven by higher gross margins—helped by a growing share of self‑operated, high‑margin products and stronger supplier bargaining power—plus steep cuts in administrative and marketing spending.
Yet the recovery carries caveats. Gross merchandise value (GMV) fell 14.6% to RMB 4.1 billion and app membership slipped from 264,000 to 240,100, signaling that transaction scale and user engagement have not yet returned to earlier highs. Some cost savings were one‑off or structural adjustments tied to asset disposals, and reduced R&D and marketing investment may constrain product innovation and future user acquisition.
New Oriental’s half‑year numbers show a steadier, if less spectacular, repair. The Beijing‑based education group posted revenue of $2.714 billion and net income of $286 million, modestly ahead of a year earlier. The second quarter delivered the stronger performance, with revenue up 14.7% and quarterly profit rising sharply as the firm shifted its business mix toward domestic adult test‑prep and “new education” offerings while reining in real‑estate‑style expansion of learning centres.
The group’s recovery reflects deliberate structural choices: consolidating international education units, slowing the rollout of new learning centres, and redirecting investment into an OMO (online‑merged‑with‑offline) teaching platform and AI tools. Management has also begun exploring the silver‑economy and health‑service partnerships as diversification plays, though these remain early‑stage and capital‑intensive.
Markets reacted positively. Dongfang Zhenxuan’s Hong Kong shares jumped 14.2% on the report, while New Oriental’s U.S. listings rose around 5.3%, underscoring investor relief that both businesses appear to have arrested downside momentum. But the rebound is a stabilization rather than a proof of a durable, high‑growth blueprint.
Both firms illustrate a broader strategic pivot by post‑crackdown Chinese education companies: grafting recognizable educational brands and content capabilities onto commerce, hardware and services. Dongfang Zhenxuan’s “de‑personalisation” and focus on self‑operated SKUs is a direct response to the vulnerability of influencer‑driven models; New Oriental’s push into AI and non‑traditional education products reflects a desire to build repeatable, scalable revenue beyond in‑person tutoring.
The risks are twofold. First, commercialising an education brand outside classroom tuition requires sustained investment in product development, supply chains and fulfilment; early margin gains can prove temporary if GMV and active users do not rebound. Second, competition is intense: e‑commerce incumbents, specialised ed‑tech firms and AI players are already entrenched, and offline retail and ageing‑care operators occupy the spaces New Oriental seeks to enter.
For investors and strategists, the critical signals to watch are GMV and membership trends at Dongfang Zhenxuan, the pace and quality of new product launches, the cadence of learning centre openings at New Oriental, and the monetisation path for AI tools and silver‑economy partnerships. Both companies have reduced near‑term downside; whether they can restore sustainable, multi‑year growth depends on execution in very different operating arenas than the ones that made them household names.