Idp Education (ASX:IEL) provides English language testing, tuition and university placement services for international students. It is the co-owner of IELTS (International English Language Testing System) which is the world’s most popular English language proficiency test for study, work and migration purposes. Over 11,500 organisations accept IELTS as evidence of English language proficiency. IDP Education delivers the IELTS test in over 80 countries. The IELTS exam is one of the gates hundreds of thousands of people must pass through in order to enter Australia.
Over 55% of IDP’s revenue is derived from English language testing, with a further 36% coming from student placement services. The remainder comes from English language courses and digital marketing and events.
The student placement service places students into courses across Australia and New Zealand, USA and Canada and the United Kingdom. Over 84,000 students were placed in 2023 equating to $351 million in revenue.
English language courses are primarily run in Cambodia and Vietnam. Revenue from this segment was $33 million with growth of 62% as student volumes rebounded in Cambodia. Prices also increased as students returned to classrooms and gross margins increased 3% to 48% as per student costs declined.
The Digital Marketing and Events segment generated revenue of $48 million. This comes from providing data analysis services to clients such as universities to help them source suitable student candidates.
IDP Education meets the definition of a compounding quality stock as articulated by Stockopedia contributor Roland Head in his article Building a screen to find Compounding Quality stocks. When this screen is applied across the ASX and NZX, there are currently 12 stocks that make the grade. I have previously written about a number of these including TechnologyOne (ASX:TNE), Netwealth (ASX:NWL), Car (ASX:CAR) and PWR Holdings (ASX:PWH).
IDP Education has been in existence for 50 years. They were listed in 2015, spun out of the Seek Investments business. The chairman has been with the business since prior to listing. They appointed a new CEO in February this year, Tennealle O’Shannessy who previously ran Adore Beauty (ASX:ABY) and before that was with Seek Learning. The previous CEO, Andrew Barkla has now joined the board as a non-executive director.
Revenue and earnings have demonstrated strong compound growth over the last 10 years. Revenue…
