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01/11 07:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with revenue and adjusted EBITDA growth, despite some challenges like campus closures in Mexico and currency fluctuations. The increased stock repurchase program, alongside a history of returning capital to shareholders, adds to the positive outlook. The Q&A session provided clarity on growth strategies, particularly in Peru and Mexico, with no unclear management responses. With a market cap of approximately $2.2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
Third Quarter Revenue $400 million, up 6% year-over-year on an organic constant currency basis. The increase was driven by favorable secondary intake in Peru, favorable price/mix, and improved currency rates.
Third Quarter Adjusted EBITDA $95 million, up 3% year-over-year on an organic constant currency basis. The increase was supported by favorable secondary intake in Peru and improved currency rates.
Third Quarter Net Income $34 million, resulting in earnings per share of $0.23. Adjusted net income was $37 million, with adjusted earnings per share of $0.25, an increase of 14% compared to the prior year.
Year-to-Date Revenue Increased by 8% year-over-year on an organic constant currency basis. Growth was driven by strong enrollment volumes and favorable pricing.
Year-to-Date Adjusted EBITDA Increased by 13% year-over-year on an organic constant currency basis. Growth was supported by productivity gains and revenue flow-through.
Mexico Third Quarter Revenue Increased by 5% year-over-year. Growth was driven by a 4% increase in total enrollment volume and pricing in line with inflation for traditional face-to-face students.
Mexico Third Quarter Adjusted EBITDA Increased by 25% year-over-year. Growth was led by productivity gains and revenue flow-through.
Peru Third Quarter Revenue Increased by 8% year-over-year on an organic constant currency basis, driven by higher enrollment volumes and strong growth in fully online programs for working adults.
Peru Third Quarter Adjusted EBITDA Declined by 2% year-over-year on an organic constant currency basis, due to timing of expenses expected to normalize in the fourth quarter.
Net Cash Position $139 million as of September 2025, with $241 million in cash and $102 million in gross debt.
New fully online working adult programs: Double-digit growth in Peru's secondary intake, driven by these programs, which are scaling from a smaller base.
New campus openings: Two new campuses opened in Monterrey, Mexico, and Lima's Ate District, Peru. These are the first new campus launches since 2019, with two additional projects underway.
Market expansion potential: Numerous cities and site locations in Mexico and Peru identified for future development.
Revenue and adjusted EBITDA growth: Third quarter revenue was $400 million, and adjusted EBITDA was $95 million, both exceeding guidance. Year-to-date revenue and adjusted EBITDA grew 8% and 13%, respectively, versus the prior year.
Enrollment growth: New and total enrollment volumes increased 7% and 6%, respectively, in Q3 2025 compared to the prior year.
Stock repurchase program: Board authorized a $150 million increase to the stock repurchase program, with $177 million remaining available.
Focus on digital capabilities and affordability: Emphasis on high-quality, affordable education with strong digital capabilities to drive growth in Mexico and Peru.
Macroeconomic Environment in Mexico: The macroeconomic environment in Mexico is currently sluggish, which could impact enrollment growth and revenue generation. U.S. trade policy uncertainties and the upcoming U.S.-Mexico-Canada Agreement (USMCA) review add to the economic challenges.
Timing of Academic Calendar in Peru: The shift in the academic calendar in Peru has caused revenue and adjusted EBITDA to shift from the first quarter to the second half of the year, primarily the fourth quarter. This creates timing-related risks for financial performance.
Price Mix Impact in Peru: The higher growth rate of fully online programs in Peru, which have a different price mix compared to traditional face-to-face programs, could impact average revenue per student and overall financial performance.
Campus Closures in Mexico: Campus closures in Mexico have affected enrollment numbers, which could impact revenue and operational efficiency.
Currency Rate Fluctuations: While favorable currency rates have benefited financial performance, any adverse fluctuations in the future could negatively impact revenue and adjusted EBITDA.
Full Year 2025 Guidance: Total enrollments expected to be approximately 494,000 students, reflecting growth of approximately 5% versus 2024. Revenues projected to be in the range of $1.681 billion to $1.686 billion, reflecting growth of 7% to 8% on an as-reported basis and approximately 8% on an organic constant currency basis versus 2024. Adjusted EBITDA expected to be in the range of $508 million to $512 million, reflecting growth of 13% to 14% on an as-reported basis and 12% to 13% on an organic constant currency basis versus 2024. Adjusted EBITDA margin expansion of approximately 150 basis points, primarily driven by Mexico's continued margin optimization and operating leverage. Adjusted EBITDA to Unlevered Free Cash Flow Conversion projected at approximately 50%.
Fourth Quarter 2025 Guidance: Revenue expected to be in the range of $521 million to $526 million. Adjusted EBITDA projected to be in the range of $194 million to $198 million. Fourth quarter outlook reflects the catch-up benefit from the intra-year academic calendar changes in Peru.
Market Trends and Economic Outlook: Peru's economy projected to grow at approximately 3% in 2025, with a similar pace expected through 2026, supported by robust domestic demand, new mining projects, strong commodity prices, rising wages, and low inflation. Mexico's economic activity anticipated to increase in the second half of 2026 and into 2027 following the completion of U.S.-Mexico trade negotiations.
Strategic Growth Plans: Two new campuses expected to open in Mexico and Peru by late 2026 or early 2027. Numerous other cities and site locations in both markets identified for development over the next several years.
Cash dividends: Since 2019, Laureate has returned more than $3 billion of capital to shareholders through a combination of share repurchases, cash distributions, and cash dividends.
Stock repurchase program: The Board has authorized a $150 million increase to the stock repurchase program, bringing the total remaining authorization to $177 million. Through September 2025, $71 million of common stock was repurchased under the previously announced $100 million program.
The earnings call reveals strong financial performance with revenue and adjusted EBITDA growth, despite some challenges like campus closures in Mexico and currency fluctuations. The increased stock repurchase program, alongside a history of returning capital to shareholders, adds to the positive outlook. The Q&A session provided clarity on growth strategies, particularly in Peru and Mexico, with no unclear management responses. With a market cap of approximately $2.2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
The earnings call presents a positive outlook with strong financial performance, including a 9% revenue growth and improved EBITDA margins. The Q&A section reveals positive enrollment trends and successful campus expansions. Although there are risks, such as currency volatility and regulatory changes, these are common industry challenges. The share repurchase program and positive guidance further bolster sentiment. Given the company's market cap of $2.2 billion, the stock is likely to see a positive movement of 2% to 8% over the next two weeks.
The earnings call reveals mixed signals. Positive aspects include a 10% revenue increase, strong enrollment growth, and robust digital course expansion. However, the flat revenue guidance and a net loss raise concerns. While stock repurchases and a strong cash position are positive, macroeconomic uncertainties and unclear guidance on FX rates and future enrollments temper enthusiasm. Given the company's mid-sized market cap, the stock price is likely to remain stable, with a neutral movement expected over the next two weeks.
Strong financial metrics with EPS and revenue beats, optimistic guidance, and a robust shareholder return plan support a positive outlook. Despite some concerns in Mexico and Peru, the company's strategic initiatives and increased guidance for 2024 outweigh these. The market cap suggests moderate sensitivity, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
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