The IDP Education Ltd (ASX: IEL) share price is going nuts. It’s up around 30% in reaction to the FY20 result.
IDP Education is a business that’s focused on helping international students with education.
FY20 report
IDP Education announced its revenue fell by 2% to $587 million.
English language testing revenue fell by 9% to $325.5 million. Australian student placement revenue fell 13% to $90.4 million due to lockdowns and multi-destination student placement revenue rose 52% to $110.2 million. English language teaching revenue rose 4% to $28.5 million and digital marketing and events revenue rose 4% to $38.2 million.
The education business boasted of an accelerated digital strategy delivery, resulting in an industry-leading virtual counselling and event platform. It rapidly rolled out an online IELTS test to help students progress applications where in-centre testing was suspended.
EBITDA (click here to learn what EBITDA means) rose by 29% to $148.6 million thanks to a reduction in costs. EBIT increased by 11% to $107.8 million.
Net profit rose 2% to $67.8 million.
Dividend and balance sheet
The company announced that it had a cash balance of $307 million at 30 June 2020. This was helped by the $254 million capital raising. It also has a $175 million working capital facility.
The IDP board decided not to declare a fully year dividend. The FY20 interim dividend which was deferred in March will be paid on 24 September 2020.
Management comments and outlook
IDP CEO and managing director Andrew Barkla said: “Throughout this period of disruption, we continued to execute on our vision of building the world’s leading platform for international students.
“Our global dataset and insights have been sought-after by policy makers and educators around the world. We will continue to share our insights to help the sector and ensure the interests and behaviours of students remain at the fore of all decision making.
“The world needs educated and globally ambitious people now more than ever. We are proud of our role in helping connect the next generation of business leaders, doctors, nurses, planners, policy makers to their global study goals.”
Summary
This was a strong result under the circumstances. The company has done well to replace some of its lost earnings through this difficult period. When will international borders open again? When will a vaccine be ready? These are unknowable questions, so it’s hard to estimate when IDP’s strong growth will return.
Much of the good news has now been priced in after today’s large movement of the IDP Education share price. I’d rather buy a business like Pushpay Holdings Ltd (ASX: PPH) first which seems better value with an easier route to growth.
