The IDP Education Ltd (ASX: IEL) share price has been an exceptionally strong performer on Wednesday.
In morning trade the student placement and language testing company's shares are up over 17% to a record high of $29.22.
Today's impressive gain means the IDP Education share price is now up a remarkable 42% since the start of 2021.
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Why is the IDP Education share price rocketing higher today?
Investors have been fighting to get hold of IDP Education shares today despite it posting a sizeable decline in first half revenue and earnings.
For the six months ended 31 December, the company reported total revenue of $269 million and earnings before interest and tax (EBIT) of $47.3 million. This represents a 29% and 46% decline on the prior corresponding period.
This was driven by declines across all segments due to COVID impacts. The key English Language Testing segment reported a 36% decline in revenue to $158.3 million, whereas the Student Placement segment posted a 36% decline to $78.3 million.
Elsewhere, the English Language Teach segment experienced a 39% decline in revenue and the Digital Marketing segment recorded a 7% decline.
This ultimately led to IDP Education posting a 49% reduction in half year net profit after tax to $29.7 million. Earnings per share fell 53% to 10.9 cents.
In light of this profit decline, the IDP Education Board has cut its unfranked interim dividend by over 50% to 8 cents per share.
At the end of the period, the company reported a cash balance of $293 million. Management notes that this reflects its strong cash flow, aided by disciplined cost management.
Outlook
IDP Education hasn't provided any guidance for the second half and full year.
However, it has noted that IELTS volumes rebounded to pre-pandemic levels during the half.
And CEO, Andrew Barkla, advised that its global teams are at full strength and it has successfully accelerated its digital transformation program.
So why is the IDP Education share price rising?
Given its poor financial result compared to the prior period, investors may be wondering why the IDP Education share price has hit a record high today.
Well, as poor as it might look on paper, it was actually well ahead of expectations.
According to a note out of Goldman Sachs, IDP Education's revenue was 15% ahead of its expectations and its earnings per share of 10.9 cents was a whopping 156% ahead of its estimates.
