A kindergarten usually takes two years to break even and improve utilization for a certain level. Therefore, the gross margin during the quarter was impacted as new schools are not profitable yet. But in most cases, our kindergartens over-delivered. And as the new ones continue to ramp up, we are confident that gross margins will normalize at 50% level in the fiscal year.Looking into detailed operating expenses, research and development expenses are up 26%. R&D accounted for 2% of net revenue compared to 3% during the same period in fiscal 2011.
Noah Education CEO Discusses F1Q2012 Results - Earnings Call Transcript
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