IDP Education share price jumps 15% after crushing first-half expectations

It's fair to say that investors were pleasantly surprised with this result.

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The IDP Education Ltd (ASX: IEL) share price is avoiding the market selloff on Wednesday.

In morning trade, the language testing and student placement company's shares are up 15% to $23.33.

This follows the release of a stronger than expected half-year result.

IDP Education share price jumps on strong result

  • Revenue up 15% to a record of $579.1 million
  • Adjusted earnings before interest and tax (EBIT) up 25% to $159 million
  • Adjusted net profit after tax up 23% to $107 million
  • Interim dividend of 25 cents share

What happened during the half?

For the six months ended 31 December, IDP Education reported a 15% increase in revenue to $579.1 million. This was driven almost entirely by its Student Placement business, which offset softer revenue from English Language Testing.

IDP Education's Student Placement business reported a 44% increase in revenue to $287.5 million thanks to strong growth across both its Australia and Other Destinations segments. This reflects a 33% increase in student placement volumes to a record of 57,300 and price increases.

The English Language Testing business reported a 5% decline in revenue after testing (IELTS) volumes fell 12% to 902,000. This was due largely to weakness in the key India market.

How does this compare to expectations?

The company's half-year results has come in ahead of expectations. This may explain why the IDP Education share price is charging higher today. Goldman Sachs commented:

IEL has reported a strong 1H24 result, with revenue/EBIT/NPAT in line with our above-consensus estimates, and +3%/+11%/+13% vs Visible Alpha Consensus Data expectations.

Management commentary

IDP Education's CEO and managing director, Tennealle O'Shannessy, was pleased with the half. She said:

IDP's performance was highlighted by our student placement business which grew total revenue by 44 per cent. This exceptional growth was partially offset by a weaker period for English Language Testing where revenues fell five per cent.

Outlook

While no guidance was given, O'Shannessy spoke about recent policy changes that have been weighing on the IDP Education share price. The good news is that she believes the company is well-placed to navigate these changes. Ms O'Shannessy said:

IDP is the leading player, operating in a large market, with global scale diversified across business lines and geographies. We have a relentless focus on quality and have been building our strategic position as the trusted provider for more than 50 years. While policy settings in our main destination markets for international students and migrants are entering a more restrictive period, IDP remains very well placed to strengthen its industry leadership and help students and institutions navigate these changing market conditions.

The IDP Education share price remains down 25% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education. The Motley Fool Australia has recommended Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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