IEL
Idp Education Limited
ASX
H1 FY25 Investor Presentation
Sentiment:
Financial Results
26 February 2025 4:07 PM
IDP Education reports a decline in revenue and adjusted EBIT for H1 FY25 due to challenging market conditions, but maintains a strong financial position and continues to outperform the market.
Worse than expected
Revenue and adjusted EBIT are down due to lower student placement and English language testing volumes.
Summary
- IDP Education's revenue for H1 FY25 decreased by 16% to A$475.4 million due to lower Student Placement and English Language Testing volumes.
- Adjusted EBIT decreased by 40% to A$92.7 million.
- Student Placement volumes decreased by 27% with 42,016 APFs (Application Processing Fees).
- English Language Testing volumes decreased by 24% with 683,708 IELTS tests.
- English Language Teaching courses increased by 1% to 52,946 courses.
- Other Student Placement services revenue increased by 5% to A$33.6 million.
- Gross Operating Cash Flow (GOCF) conversion improved to 64%, up 18 percentage points from H1 FY24.
- Overhead costs decreased by 14% to A$167.8 million.
- Student Placement volume decline of 15% outperformed the market decline of 28%.
- Average Student Placement fees increased by 14%.
- IELTS average fees increased by 6%.
Sentiment
Score: 6
Explanation: While the company faced revenue and profit declines, it is actively managing costs, outperforming the market in student placements, and maintaining a strong balance sheet. The sentiment is neutral to slightly positive due to proactive measures and market outperformance.
Positives
- Gross Operating Cash Flow (GOCF) conversion improved to 64%, up 18 percentage points from H1 FY24.
- Overhead costs decreased by 14% to A$167.8 million, reflecting cost management efforts.
- Student Placement volume decline of 15% outperformed the market decline of 28%, indicating market share growth.
- Average Student Placement fees increased by 14%.
- IELTS average fees increased by 6%.
- English Language Teaching courses increased by 1% to 52,946 courses.
- Other Student Placement services revenue increased by 5% to A$33.6 million.
- Net Leverage Ratio of 1.1x indicates a robust balance sheet.
- Student NPS maintained over 70, increased by 3 points.
Negatives
- Revenue decreased by 16% to A$475.4 million.
- Adjusted EBIT decreased by 40% to A$92.7 million.
- Student Placement volumes decreased by 27% to 42,016 APFs.
- English Language Testing volumes decreased by 24% to 683,708 IELTS tests.
- English Language Testing volumes down 24% reflecting lower volumes in India partially offset by growth in other markets.
- Indian IELTS volumes down 55% reflecting weaker student volume flows driven by policy changes and increased competition.
Risks
- Uncertainty in destination markets due to policy changes and visa rejections.
- Cyclical decline in IELTS volumes due to weaker market conditions in India.
- Potential impact of government policy changes in key destination countries like Canada, Australia, the UK, and the USA.
- Foreign exchange risks due to operations in approximately 50 currencies.
Future Outlook
Due to the impact of policy announcements on H1 FY25, a lower skew to H1 than in the past is expected.
Management Comments
- IDP is well-placed to help students and institutions navigate changing market conditions and increased short-term uncertainty.
- Optimising the controllables and maintaining a disciplined approach to costs aligned to short-term market conditions continue to grow Student Placement market share.
Industry Context
The international education sector is facing challenges due to policy changes and visa restrictions in key destination markets. IDP is focusing on quality and leveraging its global scale to navigate these conditions and maintain market share.
Comparison to Industry Standards
- IDP's Student Placement volume decline of 15% outperformed the market decline of 28%, indicating market share gains.
- IDP's visa approval rates are superior to industry averages in Australia and Canada.
Stakeholder Impact
- Shareholders: Impacted by the decline in revenue and profitability, but may be reassured by cost management and market share gains.
- Employees: Affected by cost reduction programs and headcount reductions.
- Customers (Students): Benefit from IDP's focus on quality and support in navigating complex visa processes.
- Client Institutions: Rely on IDP to place students and navigate changing market conditions.
Next Steps
- Continue to optimise controllables and maintain a disciplined approach to costs.
- Focus on quality and customer service to navigate changing market conditions.
- Continue strategic investment in network expansion, multi-modal delivery and product innovation.
- Monitor policy changes in key destination markets and adapt strategies accordingly.
Key Dates
- January 2017: Acquisition of Hotcourses.
- May 2023: Acquisition of The Ambassador Platform.
- June 2024: Restructuring announced.
- July 23 2024: UK Secretary of State for Education Bridget Phillipson quote.
- 31 December 2024: End of H1 FY25 reporting period; Net Leverage Ratio calculated.
- 27 February 2025: H1 FY25 Financial Results release date.
- May 2025: Australian election to be held.
- October 2025: Canadian election to be held.
Keywords
IEL
Idp Education Limited
ASX
Sector: Consumer Services
Filings with Classifications
Worse than expected
2 June 2025 6:26 PM
Market and Trading Update
- The company's revised Adjusted FY25 EBIT guidance of $115 million to $125 million is a downward adjustment, indicating worse than previously expected financial performance.
- The 20% decline in the student enrolment pipeline compared to FY24 signifies a significant negative impact on future revenue prospects.
- Aggregate international student volumes to key IDP destinations being down 28% for the first three quarters of FY25 reflects a substantial deterioration in market conditions.
Worse than expected
26 February 2025 4:07 PM
Financial Results
- Revenue and adjusted EBIT are down due to lower student placement and English language testing volumes.
Worse than expected
26 February 2025 4:07 PM
Half Year Results
- The company's revenue and adjusted EBIT decreased compared to the prior corresponding period due to declines in student placement and English language testing volumes.
Worse than expected
26 February 2025 4:07 PM
Interim Financial Report
- The company's revenue and NPAT were worse than the prior corresponding period due to market-wide declines in student volumes and regulatory changes.
Worse than expected
14 October 2024 5:19 PM
Annual Report
- While IDP exceeded revenue expectations, the 18% decline in IELTS volumes and the projected 20-25% drop in student numbers for the coming year indicate worse than expected results in key areas.
Worse than expected
12 September 2024 6:46 PM
Sustainability Report
- The 18% decrease in IELTS test volumes represents worse than expected results, indicating a decline in a key revenue stream.
- The 6% reduction in the global workforce due to market shifts and regulatory changes suggests worse than expected performance in managing operational costs and adapting to market conditions.
Delay expected
12 September 2024 6:45 PM
Annual Report
- Vandhana Boolchandani, an IDP employee, experienced a visa delay due to diplomatic complexities between countries.
Worse than expected
12 September 2024 6:45 PM
Annual Report
- While IDP outperformed the market in student placements, the overall impact of tightened visa regulations in key markets resulted in lower than expected IELTS volumes and a decline in EBIT compared to the previous year.
Delay expected
12 September 2024 6:45 PM
Corporate Governance Statement
- Expansion of Leadership and Accelerate programs were deferred due to challenging operating conditions, resulting in a delay in achieving one of the diversity and inclusion objectives.
Worse than expected
12 September 2024 6:44 PM
Notice of Annual General Meeting
- The company anticipates a significant drop in international student enrollment (20-25%) in the upcoming fiscal year, indicating worse-than-expected results.
Worse than expected
5 June 2024 6:27 PM
Market Update
- The company expects a decline in IELTS volumes and anticipates a contraction in the international education market, indicating worse than expected conditions.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.