The IDP Education Ltd (ASX: IEL) share price is charging higher on Thursday morning.
At the time of writing, the language testing and student placement company's shares are up 5% to $16.30.
This follows the release of the company's FY 2024 results before the market open.
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IDP Education share price higher on results release
- Revenue up 6% to a record of $1,037 million
- Adjusted earnings before interest and tax (EBIT) up 4% to $239 million
- Adjusted net profit after tax down 1% to $154 million
- Full year dividend down 17% to 34 cents per share
What happened in FY 2024?
For the 12 months ended 30 June, IDP Education delivered a 7% increase in revenue to a record of $1,037 million. This was driven predominantly by the company's Student Placement segment, which reported a 27% increase in revenue to $508.3 million. This offset an 11% decline in English Language Testing revenue in FY 2024.
Management advised that its record student placement revenue was driven by strong increases in both volume and price. It also highlights that it significantly outperformed the market, achieving 17% volume growth, while the broader industry saw a 13% volume decline due to tighter visa settings in key destination markets.
English Language Testing volumes were down 18%. This was primarily due to declines in India, a market impacted by negative test-taker sentiment towards regulatory and visa uncertainty in key destinations. Outside of India, volumes were up 12%.
With IDP Education's costs increasing in FY 2024, its adjusted net profit after tax was down 1% to $154 million. This ultimately led to the company cutting its full year dividend by 17% to 34 cents per share.
Broker reaction
Goldman Sachs was pleased with the results and described them as "solid". The broker said:
IEL reported a solid FY24 result with a small beat at adjusted EBIT (+3% vs GSe) and key outlook commentary consistent with the trading update in June (industry volumes to decline 20-25% in FY25).
Focus areas for the call include early indicators for FY25E across the main SP destination markets; run-rate for IELTS, particularly in India; and outlook for further cost-out to protect earnings.
Outlook
No firm guidance has been given for FY 2025. However, as Goldman mentions above, the company is guiding to industry volumes declining 20% to 25%. It said:
[W]e expect that international student volumes (as measured by the total number of new international students commencing study in IDP's six key destination markets), will decline by 20-25% in FY25 relative to the volumes experienced in FY24.
However, as was the case in FY 2024, the company expects to outperform the industry. It adds:
We expect to record a decline in volumes in our key business lines in FY25 but would expect to continue to outperform the broader market decline outlined above.
It also highlights that it remains confident in the long-term structural growth drivers for the international education market.
The IDP Education share price is down by a third over the past 12 months.
