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FY21 result: IDP Education (ASX:IEL) share price rises

The Idp Education Ltd (ASX: IEL) share price is up after the business reported its FY21 result.

IDP Education is a global provider of English language testing and student placements.

IDP Education FY21 result

The business reported that for the 12 months of FY21, its total revenue was down by 10%, to $528.7 million. This was a 5% decline in constant currency terms.

English language testing saw revenue rose slightly (by $0.1 million) to $325.6 million. In constant currency this was growth of 8%.

But other areas of the business saw sizeable revenue declines. Student placement revenue was down 25% in total to $143.3 million, with Australian revenue down 34% to $59.7 million.

English language teaching revenue was down 29% to $20.2 million.

IDP Education revealed a 5% decline of direct costs to $230.9 million. Gross profit dropped 14% to $297.8 million. Overhead costs reduced 2% to $195.4 million.

The sizeable decline in revenue saw EBITDA (EBITDA explained) drop by 30% to $101.7 million. EBIT fell 41% to $64.1 million.

IDP Education net profit dropped 42% to $39.5 million. Underlying net profit fell 36% to $45 million – this excludes acquisition costs and intangible asset amortisation.

Management said that the English language testing demonstrated its through-the-cycle appeal as volumes rebounded despite ongoing restrictions across the global network.

Operational highlights

The company said that international English language testing volumes increased by 5% despite ongoing operational disruptions caused by COVID-19 restrictions.

Student placement volumes to countries other than Australia only fell by 12% compared to FY20.

Digital marketing revenue grew by 8% to $30 million with institutional clients looking to IDP’s global digital platform for marketing and data insights.

The company finished with a cash balance of $307 million.

There was also an announcement of a change to the ownership of the business.

Thoughts on the IDP Education share price and outlook

IDP Education pointed to its recent acquisition of the British Council’s IELTS operations in India, along with investments in digital marketing and the IELTS technology platform have positioned it to grow market share into the future.

This ASX share is a quality business, but it’s up 49% over the last year. I’m not sure how much more it can recover until there’s signs of opening international borders.

It’s hard to value the business based on the current profit. IDP Education could be one of the leading ASX growth shares around once there’s a travel recovery. However, it’s hard to say when that will be.

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