IDP will Initiate Cost Reduction Steps in reaction to “restrictive policies”

IDP Education has informed investors of its plan to implement significant cuts due to “restrictive policies” in key study destinations, including Australia, Canada, and the UK. In a regulatory and market update, IDP predicted that the international education market will shrink by 20-25% over the next 12 months. Despite this, the company remains optimistic about increasing its market share during this period as other companies face similar challenges.

In the short term, financial concerns revolve around declining demand for IELTS testing. The company forecasts a 15-20% decrease in the number of IELTS test-takers and anticipates solid average fee growth in 2025. IDP Education manages the IELTS testing franchise in India, one of the largest sources of international students globally.

Visa data indicates that the total volume of study permits for Australia, the UK, and Canada fell by 20-30% in the first quarter of 2024 compared to the same period last year. The popularity of these three English-speaking study destinations has been affected by recent policy changes.

The Australian government has introduced changes aimed at reducing net overseas migration by approximately 50% by 2024/25. Canada has implemented a two-year cap on the number of study permits issued, reducing student numbers by a third. The UK has increased the skilled worker salary threshold and banned dependents.

IDP will now begin implementing a cost reduction program for 2025 to “align expenses to the near-term revenue outlook,” according to a company statement. However, the company assured that it would retain its experienced global staff and that the cost-reduction program would not affect its operating footprint.

Despite the challenging outlook, IDP still anticipates robust growth in student placements in the coming year. The company predicts a 15-20% increase in student placements as alternative destination markets such as New Zealand, Germany, and Ireland gain popularity. The US is also expected to increase its market share as it addresses a 15% domestic demographic decline of university-aged students by 2025.

Recent data from the US Department of State shows a 7% increase in international student flows in the first quarter of this calendar year compared to the same period in 2023.

Following IDP’s announcement, reports from Australia indicated that the company’s share price fell by approximately 38% over six months, with shares dropping more than 12% on June 6 when the news broke before recovering to close down 6.5% at $14.68.