IDP Education shares rallied 12.6% in morning trade, ranking among the ASX 200's strongest performers, after the international student placement and English language testing company delivered a first-half earnings beat and raised its full-year outlook.
Shares are currently (12.30AEST) 13.94% higher to $5.23.
Adjusted EBIT came in at $87.5 million, down 14% year-on-year but ahead of Jarden analyst Christian Waked's expectations by 47.9%, with the beat partly driven by revenue recognition changes. Revenue of $462.2 million and gross profit also exceeded forecasts, even as total revenue fell 6% on the prior period as lower volumes weighed on the top line.
The result reflected IDP's deliberate shift toward profitable growth over volume, with Student Placement yield rising 15% and Language Testing yield up 8%, partially offsetting a 25% decline in Student Placement volumes and a 7% drop in Language Testing volumes. Cost discipline added to the positive picture, with direct costs down 6% and adjusted overhead costs falling 2%, keeping IDP on track for a $25 million net reduction in its cost base for FY26.
Full-year adjusted EBIT guidance was upgraded to a $120 million to $130 million range — a roughly 4% lift to the midpoint of $125 million, according to Waked. The company flagged that earnings remain heavily weighted to the first half, reflecting intake and destination mix dynamics alongside a one-off working capital benefit.
Balance sheet metrics showed reported net leverage of 2.5 times and banking group net leverage of 2.0 times, with cash conversion at 59%.
“We are pleased with the first half performance, with the team executing well across the business whilst also progressing our transformation program at pace. We continue to reinforce our position as a quality partner for universities and students, and this commitment is evidenced by our strong yield performance as we continue to focus on delivering valued outcomes," Tennealle O’Shannessy, Chief Executive Officer and managing director, said,
“We are delivering on our commitment to reset the cost base, simplify and strengthen our operating model and accelerate digital and AI adoption.
“Our investment in digital and AI‑enabled tools is already delivering tangible benefits. We are expanding our reach, increasing conversion, improving student engagement, experience and outcomes, and improving productivity across our counsellor network and broader organisation.
“The work to reduce cost and focus on cash and working capital discipline will provide a good platform for reinvestment in future phases of the transformation to support profitable growth and shareholder returns.”
Looking ahead, Waked expects total international student volumes to decline 20 to 30% in FY26, with fee growth continuing in the low-to-mid double-digit range for Student Placement and mid-single digits for IELTS.