IDP Education shares in $1b wipeout as global student visa crackdown savages forecast profit

A clampdown on international students through visa restrictions and enrolment caps in the US, UK, Canada and Australia has hit IDP Education (ASX: IEL) hard with the student services group forecasting a 30 per cent drop in business volumes and a halving of pre-tax earnings in FY25. 

The news sent shares in IDP Education spiralling down to an eight-year low this morning, slumping more than 48 per cent to $4.93 shortly after the market opened.

The swift response from investors wiped $1 billion off the value of the company, but the shares recovered marginally by 11.43am (AEST) to be down $3.19, or 42 per cent, at $4.28.

IDP estimates that the slump in student volumes will deliver adjusted earnings before interest and tax of between $115 million and $125 million in FY25, which is down from $239 million in FY24.

The Melbourne-based group points out that the UK has “heightened uncertainty” among international students after releasing an Immigration Policy White Paper and announcing further restrictions on student immigration while the US international student environment is “increasingly negative”.

Restrictive policies in Australia and Canada also prevail, with caps on student numbers recently introduced and “further policy changes pending”.

IDP says student demand in Canada particularly has fallen sharply due to “ongoing policy volatility” with a 65 per cent drop in visas issued during the period.

This compares with a 27 per cent drop in the US, a 10 per cent fall in Australia and a 9 per cent drop in the UK.

“The visa data shows that for the first three quarters of FY25 aggregate international student volumes to the key four IDP destinations are down 28 per cent versus the same period last year, with full-year volumes expected to continue to deteriorate,” says the company.

IDP Education notes that when it released its FY25 interim results in February it pointed to policy restrictions and uncertainty in the education sector globally impacting the size of the international student market.

“While elections have now been held in all key destination markets, policy uncertainty and negative rhetoric continues, while economic uncertainty has increased,” says the company.

The downturn in enrolment volumes is expected to continue into FY26, leading IDP to undertake a detailed review of “longer-term cost, productivity, investment and commercial levers”.

The company has already implemented new cost controls since releasing its first-half result, with adjusted overhead costs for the second half tracking at 5 per cent below the previous corresponding period.

Despite the massive hit to its business in FY25, IDP Education says it “remains confident in the long-term growth drivers for the industry and is well placed to navigate the current challenging market conditions”.

The company says it is taking a disciplined approach to costs in line with current market conditions while its long-term cost review is under way. IDP also notes that it has a “robust balance sheet with a strong cash position”.

“Governments in all key destination countries are currently seeking to temporarily reduce migration levels, and economic and geopolitical uncertainty has increased,” says the company.

“Despite this, IDP believes the long-dated structural growth drivers that underpin the economic and social importance of the international education industry, and immigration more broadly, will support the market’s sustainable long-term growth trajectory.

“With a clear strategy, an experienced global team, and a strong balance sheet, IDP remains well-placed to lead the sector through this period and emerge stronger when conditions improve.”