Laureate Education, Inc. Q3 FY2025 earnings call

• Strong Q3 performance: Third quarter revenue was $400 million and adjusted EBITDA was $95 million, both ahead of July guidance, driven by improved foreign currency rates and double-digit growth in Peru's secondary intake.
• Campus openings: Opened 2 new campuses in Mexico and Peru, with 2 additional new campus projects underway, expecting to open late next year or early 2027.
• Balance sheet: Board authorized a $150 million increase to stock repurchase program, underscoring disciplined capital allocation.
• Macroeconomic: Peru's economy performing well with robust domestic demand; Mexico's government focused on fiscal discipline and infrastructure investments.

Mexico: Third quarter new enrollments increased 2% reported, 4% excluding campus closures; total enrollment volume up 4% reported, 5% adjusted for campus closures. Revenue up 5% Y/Y, adjusted EBITDA up 25%. YTD revenue up 8%, adjusted EBITDA up 21%. Peru: Third quarter new enrollments up 21%, total enrollments up 8%. Revenue up 8% Y/Y (adjusted for calendar), adjusted EBITDA down 2% Y/Y (due to timing, expected to normalize). YTD revenue up 7%, adjusted EBITDA up 5%.

• Full year 2025 outlook increased: Revenue expected in range of $1.681 billion to $1.686 billion (7-8% growth), adjusted EBITDA in range of $508 million to $512 million (13-14% growth).
• Fourth quarter 2025: Revenue expected in range of $521 million to $526 million, adjusted EBITDA in range of $194 million to $198 million, reflecting catch-up benefit from academic calendar changes in Peru.

• Macro uncertainties: U.S. trade policy uncertainties affecting Mexico's macroeconomic environment.
• Timing impacts: Academic calendar shifts affecting revenue recognition and quarter-over-quarter comparability.

Q: On Peru, revenue for the quarter was really strong, especially in the context of the $7 million of revenue falling out from the calendar timing. I was just trying to understand some of the moving pieces with FX enrollment and pricing versus your initial forecast.

A: We are benefiting in Peru from recession behind us, strong consumer sentiment, strong value proposition. Pricing for face-to-face in line with inflation, slight reduction in headline pricing for fully online working adult product.

Q: For the follow-up on the Mexican new enrollment growth for the quarter. I was hoping you could parse apart the plus 2% or the plus 4%, I guess, on an organic basis. I think last quarter, you had highlighted some working adult strength. So I was just wondering how that evolved. And then if you could give us anything on how the face-to-face new enrollment evolved in Mexico as well for the intake cycle.

A: The third quarter is really the main enrollment for traditional 18- to 24-year-old undergraduate students in Mexico. The vast majority of the volume momentum is driven by them.

Q: We have a question about the intake in Mexico. If you could quantify the contribution, the percentage points from the new campus launched this quarter? In other words, how much did it grow without the new campus?

A: We had 4% growth when excluding campus closures and 1 point of that came from new campus launches. So 3% same store.

Q: You mentioned that going forward, you expect pricing in Peru in line with inflation. How much should the average revenue per student be impacted due to the mix of [indiscernible] fully online?

A: Overall inflation in Peru is trending around 2%. Mix impact could be upwards of 2% as we continue to aggressively go after the fully online working adult segment.