BEIJING – October 29, 2026 -- TAL Education Group (NYSE: TAL) lifted second-quarter fiscal 2027 net revenues 15.5% to US$994.6 million and more than doubled operating income to US$235.9 million. Even so, it posted a net loss attributable to TAL of US$47.4 million for the quarter ended August 31, 2026, against net income of US$124.1 million a year earlier.
Gross margin widens to 59.8% as marketing spend falls 15.3%
Gross profit rose 21.1% to US$594.6 million, and gross margin reached 59.8% against 57.0% a year earlier. Cost of revenues increased 8.0% to US$400.0 million, below the pace of revenue growth.
Selling and marketing expenses fell 15.3% to US$226.4 million from US$267.3 million. General and administrative expenses rose 3.7% to US$132.4 million. Total operating costs and expenses declined 0.8% to US$758.8 million.
Income from operations was US$235.9 million versus US$96.1 million a year earlier. Non-GAAP income from operations, which excludes share-based compensation, reached US$247.7 million versus US$107.8 million.
Investment fair-value swing and withholding tax drive the quarterly net loss
Other expense was US$189.7 million, against other income of US$67.1 million a year earlier. TAL attributed the change mainly to fluctuations in the fair value of certain investments.
Income tax expense rose to US$135.9 million from US$51.1 million, mainly because of changes in deferred tax liabilities relating to withholding tax.
Non-GAAP net loss attributable to TAL was US$35.6 million, compared with non-GAAP net income of US$135.8 million. Basic and diluted net loss per American Depositary Share was US$0.09, or US$0.06 on a non-GAAP basis.
Cash and short-term investments drop to US$2,748.5 million after US$179.1 million operating outflow
Net cash used in operating activities was US$179.1 million in the quarter. Cash, cash equivalents and short-term investments totaled US$2,748.5 million at August 31, 2026, down from US$3,239.3 million at February 28, 2026.
The mix shifted toward cash. Cash and cash equivalents rose to US$1,952.6 million from US$1,523.9 million, while short-term investments fell to US$795.9 million from US$1,715.4 million. Deferred revenue grew to US$930.4 million from US$882.2 million.
Six-month net income more than doubles to US$360.6 million
For the first six months, net revenues rose 22.0% to US$1,753.0 million. Income from operations reached US$373.1 million versus US$110.4 million. Net income attributable to TAL climbed to US$360.6 million from US$155.4 million, equal to US$0.65 per ADS. Non-GAAP net income was US$383.9 million, or US$0.69 per ADS.
Six-month cost of revenues increased 14.3% to US$720.2 million, while selling and marketing expenses decreased 11.1% to US$398.4 million. Total operating costs and expenses rose 4.1% to US$1,380.0 million.
President and Chief Financial Officer Alex Peng said the company delivered steady revenue growth and improved operational efficiency, and will keep focusing on its core businesses and on combining educational expertise with technology. TAL also declared a cash dividend and issued notice of its Annual General Meeting.