Highlights:

  • FY26 Revenue declined 9% to $795.4 million as Student Placement and Language Testing volumes fell.
  • Adjusted EBIT decreased 7% to $122.9 million, within the company's previously stated guidance range.
  • Cost reductions exceeded the FY26 target, with a $32 million net reduction in the overhead cost base.
  • IDP declared a 6-cent final dividend, taking full-year declared dividends to 9 cents per share, while announcing a buyback of up to $50 million.

IDP Education Limited (ASX:IEL) reported a resilient FY26 result against a backdrop of lower international student mobility, with revenue declining 9% to $795.4 million on a constant-currency basis. Student Placement volumes fell 27%, while Language Testing volumes declined 8%. Language Teaching volumes increased 1%.

The decline in volumes was partly offset by higher yields. Student Placement Yield increased 11%, while Language Testing yield rose 7%. Adjusted EBIT decreased 7% to $122.9 million, remaining within the $120 million to $130 million range provided at the half-year result. At 10:16 am on 20 August 2026, IEL shares were trading at $1.60, down 26.04%, or $0.57, on the day.

On an unadjusted basis, EBIT fell 42% to $61.8 million, reflecting the effect of items excluded from the adjusted measure.

Cost reduction becomes central to transformation

IDP reduced direct costs by 8% and adjusted overhead costs by 11% during FY26. The company delivered a $32 million net reduction in its cost base, exceeding its previously stated $25 million target.

The transformation also involved a reduction of approximately 1,250 roles, equivalent to 20% of headcount. IDP rationalised its IELTS testing footprint from around 1,500 venues to fewer than 600 and moved towards greater use of third-party operating models.

A further $15 million net reduction in the overhead cost base has been identified for FY27, with the majority expected during the second half.

Student Placement and IELTS volumes remain under pressure

Student Placement volumes declined 27% during FY26, reflecting reduced international student flows, while the Business recorded an 11% increase in yield. IDP also reported a 7 percentage-point advantage in visa approval rates compared with the relevant market measure.

Language Testing volumes decreased 8%, although yield increased 7%. IELTS remains recognised by more than 13,500 organisations, while IDP expanded its network with 32 additional quality education institutions and further partner arrangements.

The company also expanded into 13 IELTS centres in China and launched new Student Placement destinations in Malaysia and the UAE.

Cash generation and Leverage improve

Working capital management was a key feature of the FY26 result. Cash conversion increased to 139%, up three percentage points, while combined contract Assets and trade receivables declined 56%.

The net Leverage Ratio fell from 1.4 times to 1.0 times, with $341 million of undrawn facilities available. IDP said the improvement in cash generation and leverage provided capacity for continued Investment in the business and capital management.

In June, the board announced a share buyback of up to $50 million of issued capital. The company also declared a final Dividend of 6 cents per share, unfranked, taking total declared FY26 dividends to 9 cents per share, partly franked.

Transformation continues into FY27

IDP is continuing its multi-year transformation through simplified systems, technology investment, data and artificial intelligence. The company is developing AI-enabled counselling capabilities supported by student profiles and proprietary outcome data, with the aim of improving student matching and conversion.

FastLane delivered approximately 7% higher conversion and a 13-point higher NPS during FY26. Student Essentials average revenue per user increased 24%, indicating growth in revenue generated per user despite the broader decline in student volumes.

The company is also implementing an ERP-led modernisation of its core systems, intended to improve productivity and reduce the cost of serving customers.

FY27 guidance points to further Earnings pressure

IDP expects adjusted EBIT of $95 million to $115 million in FY27. The outlook assumes international student market volumes will decline by 20% to 30% compared with FY26. The company expects revenue performance to benefit from profitable growth initiatives and further yield improvements, with Student Placement and English Language Testing yields forecast to rise at mid-single-digit percentages.

IDP expects another $15 million net reduction in its overhead cost base and forecasts its net leverage ratio to remain at or below 1.5 times throughout FY27.

Conclusion

IDP Education's FY26 result reflects the financial impact of weaker international student mobility, with revenue and adjusted EBIT both declining despite higher yields and significant cost reductions. The company improved cash conversion and reduced leverage while exceeding its cost-saving target, and it continued investing in technology and its transformation program. However, FY27 guidance indicates another year of pressure on operating earnings as market volumes are expected to fall by 20% to 30%, placing greater importance on yield growth, cost reductions and execution of the transformation program.