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12th Jun 2024

IDP investor guidance warns of market downturn through 2025

Short on time? Here are the highlights:
  • One of the industry’s largest service providers is forecasting a 20-25% decline in enrolments in leading study destinations, such as Canada, Australia, and the UK
  • The decline arises from significant new immigration policy settings in all three countries

IDP Education is one the largest service providers in international education. As a publicly traded company on the Australian Securities Exchange, it is also obliged to disclose to investors any material changes in the company or its markets that might affect financial results.

A 6 June Regulatory and Market Update does just that, and it makes it plain that the company is anticipating lower revenues and job reductions this year, and a smaller international student market for at least the next year, as a result of new policy settings in Australia, Canada, and the United Kingdom.

Those include:

  • New student visa settings in Australia, and a newly announced cap on international enrolments that will come into effect in January 2025
  • An enrolment cap in Canada for 2024 and 2025
  • A new policy preventing students from bringing accompanying dependants during their term of study in the UK

As a result of those policies, and assuming no further changes in key immigration settings, "IDP expects that the size of the international education market will contract over the next 12 months due to the supply side constraints. If current trends continue, international student volumes, as measured by the total number of new international students commencing study in IDP's six key destination markets, are expected to decline by 20-25% in [fiscal year 2025] relative to the volumes expected to be reported for FY2024."

Taking that forecast into account, IDP further projects a 15-20% decrease in its student placement volumes for fiscal year 2024. The 6 June guidance indicates that the company will now undertake a cost cutting programme that is "designed to align expenses to the near-term revenue outlook." In a subsequent investor briefing, a company spokesperson indicated that this would include a 6% reduction in IDP's global staff complement, which currently sits at more than 6,800 people in over 30 countries.

The news comes as the company's share price has already been under pressure, with a 30%+ decline in value over the last six months.

However, the company's statement indicates as well that it expects to weather these short-term challenges, and that IDP remains confident, both in the "long-term structural growth drivers for the international education market" and of its leading market position and roadmap for further product development and innovation.

Expanding on the guidance during a 6 June briefing call, Chief Executive Officer and Managing Director Tennealle O’Shannessy said that she expected the company would not feel the full impact of the recent policy changes because it was "over indexed to high quality universities."

“The purpose and the intent of the policy changes that you’re seeing across all these nations is to really bring an increasing focus on quality and sustainable growth into the industry,” she added.

“We have seen governments explicitly call out a focus on less scrupulous players, and players that are operating in the lower quality segments. We think that it creates a stronger industry structure and gives opportunity for quality players like IDP to really be operating in a structure that is more consolidated and more sustainable.”

Ms O’Shannessy noted as well, however, the extraordinary scale of significant changes in multiple destinations all at once: "“What is unique in the current environment, however, is the synchronisation of these cycles, with policy settings timing across the IDPs key destinations for Australia and the UK and Canada at the same time."

Because those new policy directions were "linked to election cycles," she added, their effects were likely to be short-term.

For additional background, please see:

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