LAUR

• Overall Operational Performance

  • Strong 10% year-over-year new enrollment growth and 6% total enrollment growth through the first half of 2026, driving 7% timing-adjusted constant currency revenue growth.
  • The company's balance sheet remains strong, with $223 million in gross debt and $162 million in cash, resulting in a net debt position of $61 million as of the end of June 2026.
  • $181 million in common share repurchases completed in the first half of 2026, with an additional $150 million authorized for the repurchase program. Geopolitical and macroeconomic conditions in both core markets remain stable.

• Campus Expansion Strategy

  • Two new campuses opened in 2025 (Monterrey, Mexico and Lima, Peru) are performing in line with expectations.
  • The 2026 new campus opening in Puebla, Mexico is off to a strong start, with enrollments underway for the September 2026 primary intake.
  • A clear multi-year pipeline of new campus expansion opportunities is secured across Mexico and Peru: two new campuses are scheduled to open in 2027 (southern Lima in Q1 2027, Mérida, Mexico for September 2027 primary intake), with additional openings planned for 2028 and beyond.

• AI and Digital Transformation

  • AI integration is a core long-term strategic capability, embedded across the entire student journey to deliver personalized learning, strengthen student support, and improve academic outcomes.
  • AI tools are provided to faculty and staff to shift focus to high-value student-facing activities, with investments in data/IT infrastructure and strategic partnerships with leading technology firms to build an integrated AI-powered learning ecosystem for over 500,000 students, faculty, and staff across the two markets.
  • AI deployment in digital marketing has improved lead generation, conversion rates, reduced customer acquisition costs, and delivered strong competitive market share gains, with capabilities developed in Mexico now being rolled out to Peru.

• Student Retention Improvements

  • Years of process optimization across the full enrollment-to-graduation journey, including the addition of AI tutor tools to reduce friction in digital learning for online segments, has driven improved retention rates in Mexico, particularly for the fully online segment, with full-year attrition improvement expected for consolidated Mexico operations.

• The company raised its full year 2026 guidance at the midpoint, increasing revenue by $28 million, adjusted EBITDA by $8 million, and adjusted EPS by $0.03 per share, reflecting improved operational momentum and more favorable foreign exchange rates.
• Updated full year 2026 guidance includes: total enrollment of 518,000 to 523,000 (4% to 5% year-over-year growth), total revenue of $1.920 billion to $1.930 billion (13% as-reported growth, 6% to 7% constant currency growth), adjusted EBITDA of $593 million to $599 million (14% to 15% as-reported growth, 8% to 9% constant currency growth), and adjusted EPS of $2.04 to $2.10 (19% to 22% as-reported year-over-year growth).
• Adjusted EBITDA margin is expected to expand approximately 50 basis points at the midpoint on a reported basis, with margin expansion in the second half driven by investment timing and new campus scaling. Unlevered free cash flow conversion from adjusted EBITDA is still expected to be approximately 50% for the full year 2026.
• Third quarter 2026 guidance calls for revenue of $471 million to $476 million and adjusted EBITDA of $134 million to $137 million, including a $29 million favorable intra-year academic calendar timing impact.

Laureates Education operates two core geographic segments: Mexico and Peru. For the second quarter of 2026:

1. Mexico Segment: Revenue increased 10% year-over-year on a constant currency basis, with adjusted EBITDA up 9% (including launch costs for the new Puebla campus). Year-to-date, after adjusting for academic calendar timing, revenue grew 6% (driven by a 5% increase in average total enrollments and 1% positive price mix), while adjusted EBITDA decreased 2% due to timing of new campus investments. New enrollments grew 7% year-to-date, total enrollments grew 5%, with strong growth in fully online programs for working adults.
2. Peru Segment: Revenue increased 6% year-over-year in the second quarter, with adjusted EBITDA up 7% on a constant currency basis. Year-to-date, after adjusting for academic calendar timing, revenue grew 7% and adjusted EBITDA grew 13% year-over-year. Total year-to-date enrollment grew 8%, supported by strong demand for fully online working adult programs.

On a consolidated basis, the company reported second quarter 2026 total revenue of $616 million, adjusted EBITDA of $251 million, GAAP net income of $137 million (EPS of $0.98), and adjusted net income of $140 million (adjusted EPS of $1.00). Year-to-date first half 2026 constant currency, timing-adjusted revenue and adjusted EBITDA grew 7% each year-over-year.

There was no explicit discussion of material current risks or operational failures during the call. Management noted that annual review of the USMCA trade agreement will begin in 2027, with future discussions focused on improving market access, strengthening regional production, and addressing select tariffs, but emphasized that current trade and supply chain integration between Mexico and the U.S. remains strong. Management also referenced unique overcapacity and consumer pricing dynamics in Brazil's online education market that are not present in the company's core Mexico and Peru markets, which the company is intentionally avoiding through its disciplined product segmentation strategy.

Q: How is the upcoming September 2026 main intake in Mexico progressing, and have you seen shifts in student discovery toward AI that changed your marketing strategy? / A: The secondary March 2026 intake grew 4% in line with trends, and the June working adult intake grew 12% as expected. The September main intake, which makes up 60% of annual enrollment, is 50% complete and tracking in line with management expectations. Laureates has been an early adopter of AI for digital marketing, partnered with Google, and ranked in the top decile for AI marketing capabilities. AI has driven explosive lead growth, better conversion, lower acquisition costs, and consistent market share gains in Mexico, and these capabilities are now rolling out to Peru.

Q: What are the core long-term growth drivers for the company, and what actions drove improved retention in Mexico? / A: The three core long-term growth drivers are rising higher education participation rates (with significant headroom vs. mature markets), scaling fully online programs for working adults (fast growth from a small base in Peru, high single-digit growth in Mexico), and selective new campus expansion in under-served cities and locations. Improved retention in Mexico comes from multi-year work optimizing the end-to-end student journey, including adding AI tools to reduce friction for online learners, resulting in lower attrition, particularly in the fully online segment, with full-year improvement expected.

Q: How is the fully online program priced vs. campus programs, what is its profitability, and how does marketing differ by student segment? / A: Fully online programs are priced 40% lower than comparable campus-based offerings, but deliver similar mid-50s contribution margins to campus programs, with far superior ROIC due to no required capex investment. Traditional high school-aged on-campus students are recruited via long-term relationships with high schools, resulting in very low acquisition costs. Working adult online students are reached via broad digital lead generation, increasingly using AI for personalized targeting alongside traditional search tools.

Q: What will drive future margin expansion in Mexico, and when will online penetration's price dilution offset margin and enrollment benefits? / A: After historical margin expansion from campus consolidation, future growth will come from healthy operating leverage from incremental revenue and ongoing targeted operating efficiencies. Management expects to close most of the 6% margin gap between Mexico (leased properties) and Peru (owned properties) over the next 3-5 years, driving ~30 basis points of annual consolidated margin expansion. Management closely monitors for cannibalization, but intentionally segments the market: fully online is only marketed to working adults 25-50, and 95% of students under 25 with access to a campus enroll in on-campus programs, so meaningful ticket dilution and cannibalization is not expected.