LAUREATE EDUCATION, INC. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Intake Cycles: 2025 started well with solid results from Peru's primary intake and Mexico's smaller secondary intake. New enrollments grew 8% in Mexico and 6% in Peru through mid-April.
• Business Resiliency: The business model is resilient during economic cycles as families prioritize education, validated during past crises like 2008-2010, COVID-19, and 2023 Peru recession.
• Market Outlook: Monitors political and external developments in Mexico and Peru. Mexico benefits from strategic position as US reduces reliance on China; Peru's recovery continues with GDP projected at ~3% in 2025.
• Impact Report: Published 2024 impact report highlighting 4 institutions 5-star rated by QS Stars, 47% first-generation students, 9 out of 10 job-seeking graduates employed within 12 months.
• Seasonality: Campus-based higher education is seasonal; first and third quarters are low enrollment but affect revenue and EBITDA timing. 2025 classes started later in Peru, shifting ~$26M revenue and $23M adjusted EBITDA to second half.

Segment Performance

• Mexico: First quarter was a smaller secondary intake. New enrollments increased 8% year-over-year, total enrollments up 7%. Revenue increased 11% versus the prior year period, and adjusted EBITDA was up 22% due to productivity gains and revenue flow-through.
• Peru: First quarter was the primary intake. New enrollments increased 6% year-over-year. Adjusted for academic calendar timing, revenue was up 5% versus the prior year period, but adjusted EBITDA was down $2 million versus the prior year due to seasonality.

Guidance

• Full Year 2025: Tightened guidance range, raising midpoints. Total enrollments 491,000-495,000 (4-5% growth vs 2024). Revenue $1.560B-$1.575B (flat to 1% as-reported, 6-7% organic constant currency). Adjusted EBITDA $473M-$480M (5-7% as-reported, 11-13% organic constant currency). Adjusted EBITDA margins to expand 150 basis points. Adjusted EBITDA to unlevered free cash flow conversion ~50% reported.
• Second Quarter 2025: Revenue $499M-$504M, adjusted EBITDA $191M-$194M.

Risks

• Macroeconomic Volatility: Continued volatility in Mexico and Peru markets, evolving global trade dynamics may pressure GDP growth and foreign exchange rates.
• FX Translation: As a US dollar reporting company, face translation impacts from FX volatility, but revenues/expenses hedged within markets.

Question and Answer

Q: Any hesitancy from potential students given uncertain environment, specifically Mexico's fall intake?

A: Secondary intake (working adults) had robust demand. Primary intake in third quarter expected to mirror last year's 4-5% growth, assuming similar economic environment.

Q: Intake cycle normalization and FX guidance?

A: Enrollment intake normalized for academic calendar shift; Peru's academic calendar started 2 weeks later. For FX, maintained MXN 20.50 to dollar rate in guidance due to volatility.

Q: Fully digital courses breakdown and capital allocation?

A: Fully digital courses growing double-digit, ~20% of student population enrolled, growing faster than face-to-face. Committed to return excess cash to shareholders, $100M buyback program, halfway through first quarter.