Regulatory and Market Update

• IDP Education faces a more restrictive policy environment in key destination countries, impacting the international student market.
• H2 FY24 has seen a negative impact on IELTS testing and student placement volumes.
• For FY24, IDP expects a 15-20% increase in student placement volumes but a 15-20% decline in IELTS volumes compared to FY23.
• Adjusted EBIT for FY24 is expected to be broadly in-line with FY23.
• The international education market is expected to decline by 20-25% over the next twelve months.
• IDP is implementing a cost reduction program to align expenses with the near-term revenue outlook.
• Visa data shows a 20-30% decline in aggregate industry volumes to Australia, UK, and Canada in the first quarter of CY24 compared to the same period last year.
• IDP expects a decline in volumes in its key business lines in FY25 but anticipates outperforming the broader market decline.

Score: 5

Explanation: The sentiment is neutral to slightly negative. While IDP highlights its strengths and cost-cutting measures, the overall outlook points to a challenging period with declining market size and volume declines in key business lines.

• IDP expects a 15-20% increase in student placement volumes for FY24.
• Adjusted EBIT for FY24 is expected to be broadly in-line with FY23.
• IDP anticipates outperforming the broader market decline in FY25.
• IDP is implementing cost controls to offset the softer volume environment.
• IDP expects to grow its market share in student placement.

• IDP anticipates a 15-20% decline in IELTS volumes for FY24.
• The international education market is expected to decline by 20-25% over the next twelve months.
• Visa data shows a 20-30% decline in aggregate industry volumes to Australia, UK, and Canada in the first quarter of CY24 compared to the same period last year.
• IDP expects a decline in volumes in its key business lines in FY25.

• Restrictive policies in key destination markets are negatively impacting the international student market.
• The expected decline in the international education market by 20-25% poses a significant challenge.
• Changes in immigration and visa policies could further impact IDP's performance.
• The cost reduction program may impact strategic growth areas if not managed carefully.

IDP expects the international education market to decline by 20-25% in FY25 and anticipates a decline in its key business lines, but expects to outperform the broader market decline.

• IDP remains very well placed to help students and institutions navigate these challenging market conditions and expects to grow its market share in student placement.
• IDP remains confident in the long-term structural growth drivers for the industry.
• IDP is positioning the company so that it can manage short-term volume and market trends whilst continuing to execute on a strategy that will drive long-term shareholder value creation.

The announcement reflects a broader trend of increased regulatory scrutiny and policy changes impacting the international education sector, particularly in key destination markets like Australia, the UK, and Canada. Competitors are likely facing similar challenges, and IDP's focus on quality and market share gains suggests a strategy to consolidate its position during this downturn.

• The reported visa declines of 20-30% in Australia, UK and Canada are consistent with industry reports of reduced international student numbers.
• Navitas, another player in the international education sector, has also acknowledged the impact of policy changes on student enrollments.
• IDP's strategy to focus on quality and increase market share mirrors approaches taken by other leading education providers during periods of market contraction.

• Shareholders may experience short-term volatility due to the expected decline in volumes and market contraction.
• Employees may be affected by the cost reduction program, although the company states it is not expected to impact the operating footprint.
• Students may face increased challenges in obtaining visas and navigating the changing regulatory landscape.
• Educational institutions may need to adjust their recruitment strategies in response to the decline in international student numbers.

• IDP will implement a cost reduction program for FY25.
• IDP will continue to invest in product innovation and strategic growth areas.
• IDP's CEO will host an investor call on June 6, 2024.
• IDP will announce detailed financial and operational performance on August 29, 2024.

• 22 January 2024: Canadian Government announced a temporary two-year cap on international student visa applications.
• 1 January 2024: International students in the UK have been unable to access a visa for a dependent unless enrolled in a postgraduate research program.
• 31 March 2024: New administrative processes required to apply for a Canadian student visa were implemented.
• 11 May 2024: The Australian Government announced a range of proposals designed to create sustainable, managed growth in international student enrolments.
• 23 May 2024: The UK Government indicated that it would lift financial capacity requirements for international students and seek to implement tougher compliance standards for institutions that recruit overseas students.
• 6 June 2024: IDP's CEO will host an investor call at 10:00am (AEST) to discuss the market update.
• 29 August 2024: IDP will announce detailed financial and operational performance.
• 2024/25: Australian Government's stated objective of reducing net overseas migration by approximately 50% by 2024/25 relative to 2022/23 levels.
• 2025: It is expected that any changes to the Australian Government's proposal to set maximum enrolment numbers by education provider will be implemented in calendar year 2025.