IDP Education (AU:IEL)
International education services
Robin research covers small and medium-sized companies with an attractive risk/reward profile mainly in Europe and North America.
Disclaimer: this is neither a buy and sell recommendation nor private advice. Investing in companies carries a risk of permanent loss of capital. Before investing in a company do your own research.
Key data
Unique brand ownership.
Double-digit growth and EBITDA margin expansion.
Pricing power and growth above the market average.
VISA management with the highest approval rate on the market.
Entry opportunity thanks to temporary issues.
Company overview
IDP Education is a global leader in international education services and is committed to transforming lives through international education. As a company listed on the Australian Securities Exchange, IDP operates in over 60 countries worldwide, helping individuals to achieve their goals of studying, working and migrating abroad. IDP's core business model combines human expertise with cutting-edge technology to support customers at every stage of their international education journey.
Core services
IDP's diverse business model encompasses three core areas:
Student Placement: This service focuses on matching students with the right country, course and support system to help them thrive in their international education. IDP's counsellors provide impartial advice and leverage the company's extensive network of partnerships with over 800 institutions across Australia, Canada, Ireland, New Zealand, the UK and the US, as well as its own data and insights. In 2024, student placement volumes grew by 17%, significantly outperforming the global market, with 98,900 students supported in entering courses. The FastLane service, accessible via the IDP Live app, streamlines the application process, enabling over 32,000 students to receive formal offers in 2024 — an 83% increase from 2023.
English Language Testing: IDP is a proud co-owner of IELTS (the International English Language Testing System), one of the world's most widely recognised English language tests for study, work and migration purposes. IELTS is accepted by more than 12,500 organisations worldwide. In 2024, IDP administered 1.58 million IELTS tests globally. Since its launch in May 2022, the IELTS by IDP app has surpassed two million downloads, providing test preparation and results in one central portal. IDP has also launched Envoy, its first AI-powered English language proficiency test designed for educational settings and aligned with CEFR standards.
English Language Teaching: Through the Australian Centre for Education (ACE) in Cambodia, IDP offers English language learners a range of services, including three study options (face-to-face, virtual and blended), with over 100,000 enrolments across six campuses a year. This business line achieved 19% revenue growth in 2024.
TAM
The TAM for this market is estimated to be worth around USD 490 billion by 2029. Depending on the service segment, the IDP market is growing at a rate of between 7% and 15% for the coming years.
Asian students are attracted by good job opportunities, new experiences, and high-quality teaching. Furthermore, the strong demographic growth and the increase in wealth in Asia is driving demand for IDP's services.
Competitive advantage
IDP's competitive advantages are built upon its long-standing reputation, extensive global presence, commitment to quality and innovation, and its role as a trusted advisor and advocate in the international education sector.
The key competitive advantages are as follows:
Established trust and quality reputation
IDP has supported international students, English language test takers and institutions for over 50 years. This long history has built a reputation as a trusted partner.
The company is seen as a leading quality player in the international education sector, which is becoming more focused on quality in an increasingly restrictive policy environment.
This commitment to quality is reflected in its Student Net Promoter Score (NPS), which increased by seven points from 2023 (its largest annual improvement ever) and 20 points since 2020, indicating high student satisfaction and trust.
Counsellors provide impartial advice to students, helping them to choose the right country, course and support system.
Unmatched global reach and footprint
IDP operates in more than 60 countries worldwide, providing critical support to students and test takers through its unmatched digital and physical scale.
The company has a broad network of partnerships with over 800 institutions in Australia, Canada, Ireland, New Zealand, the UK and the US.
IDP's physical presence continues to grow in 2024, the company opened 15 new student placement centres and, following the acquisition of Intake Education, established 11 new student placement offices in Sub-Saharan Africa (Nigeria, Ghana, and Kenya).
IDP offers IELTS in more than 2,000 test locations across over 60 countries for English language testing, including over 500 computer-delivered centres.
Leading innovation, data and technology
IDP combines human expertise with leading technology to help individuals achieve their global study, work, and migration goals.
FastLane, IDP's service that matches students with suitable courses using live admission criteria, helped over 32,000 students receive formal offers in 2024, an 83% increase year-on-year. Users of FastLane also reported an NPS that was 10 points higher.
The IELTS by IDP app has surpassed two million downloads and has become the go-to platform for test preparation and results. The IDP Live app also saw over 700,000 downloads in 2024, leading to a 2-point increase in its NPS score
IDP launched Envoy, its first AI-powered English language proficiency test, demonstrating a focus on combining AI with human expertise. The company is also integrating AI into its core processes to improve the student experience and increase back-office efficiency.
Its global digital platforms provide unrivalled data, equipping the international education sector, institutions and policymakers with informed insights.
Trusted and influential advocacy for the industry
IDP is recognised as a key voice for the industry, collaborating with governments and educational bodies to inform impactful policies with real-time student demand data and expertise.
IDP's data and insights contributed to the UK Migration Advisory Committee (MAC) recommending that the UK Graduate Route remain in place, a decision influenced by IDP's Emerging Futures data.
IDP held monthly briefings with the UK’s Department for Business and Trade, spearheading new research for a US international education strategy.
Strong English language testing offerings (IELTS)
IDP is a proud co-owner of the world's most trusted English language test for study, work and migration.
It is trusted by over 12,500 organisations worldwide for its quality, accuracy, reliability and security.
IDP sets itself apart by offering greater flexibility and efficiency to test takers with the introduction of IELTS One Skill Retake, which has been expanded to 110 countries and endorsed by the Australian, New Zealand and UK governments for various purposes.
Resilience and Through-the-Cycle Focus
IDP has a proven track record in navigating challenging market conditions, including economic crises and pandemics, by staying true to its purpose and supporting its customers throughout.
This 'through-the-cycle focus' enables IDP to weather short-term disruptions and emerge stronger. Despite recent policy changes, the company has adjusted its strategy by restructuring its global team, reducing its costs, and reallocating resources in order to continue investing.
Management and capital allocation
As you know, I always assess the alignment of management with investors' interests by examining their motivations, such as the money they earn and how they earn it.
While I believe the management has a good professional track record, I am not happy with the remuneration package, which consists almost entirely of salary with minimal share participation.
Directors will receive their salary regardless of how the share price performs, and that is not in our interest. The company pays interest, but if you look at the historical data, it is highly variable. This is also not a good sign in terms of how shareholders are treated.
It would be great if management were to activate a share buyback programme during these difficult times. However, given the company's track record, I don't think that will happen.
Investment thesis
The company's earnings have recently fallen due to a significant decrease in volumes for both student placements and IELTS testing. This is primarily due to policy uncertainty and market contraction in IDP's key destination markets.
This situation is unprecedented because these cycles are synchronised in IDP's key destinations simultaneously.
I like these situations best: large companies with market recognition, pricing power and above-industry growth that are experiencing a temporary problem.
The company's fundamentals have not changed — if anything, they have improved — but market perception, driven by short-term emotions, has changed.
When these policies are reversed and sentiment shifts, the stock price will soar. Of course, we don't know whether this will happen in 2026 or 2027, but luckily we are long-term investors with plenty of patience!
The share price is currently AUD 3,59, although I believe that by 2029 it will be trading at AUD 12. If there is a rapid recovery from 2026 onwards and an improvement towards 2027, the share price may recover at a faster rate.
Thank you for reading and sharing your opinion!
Would be interested to hear your thoughts given the current share price of $2.90, especially considering there hasn’t been any material change to the underlying business aside from the political/policy environment.
Interesting company! Thanks for the write up