NextEd Group (NXD) H2 2024 TU earnings summary

Financial performance and highlights

• Revenue for FY 2024 reached $111.4 million, up 9% year-on-year, driven by strong growth in international vocational, Go Study, and domestic vocational segments.

• EBITDA was $15.0 million, down 10% from last year, mainly due to a decline in technology and design revenues and increased visa rejections.

• A non-cash impairment charge of $28.9 million was recorded, resulting in a statutory net loss after tax of $31.2 million.

• Operating cash flow dropped to $1.7 million from $25.2 million, with cash at year-end at $19.3 million and no financial debt.

• Annualized cost savings of $5 million are on track for FY25, achieved through lease exits, headcount reductions, and campus optimization.

Operational and strategic developments

• International vocational student numbers grew 3% year-on-year, with strong growth in hospitality and healthcare courses and six new accredited courses approved.

• Campus expansions completed in Melbourne, Brisbane, Adelaide, and Gold Coast, with new classrooms and specialist facilities; campus expansion program now complete.

• Student mix shifted toward higher-margin vocational courses, offsetting declines in English language enrolments.

• Ceased further campus expansion and began subleasing surplus classroom capacity to optimize utilization, with campus utilization averaging 71% in H2 FY24.

• Actively recruiting and enrolling students displaced from financially distressed colleges.

Market environment and regulatory response

• Facing increased visa rejection rates and delays due to government efforts to reduce international student numbers, impacting revenue and cash flow.

• Draft ESOS Bill and National Planning Level (NPL) propose student caps from 2025, with provider-level allocations and ongoing industry lobbying for amendments.

• English language courses likely to be excluded from caps, providing a potential area of focus and growth.

• Regional campuses in Adelaide and Gold Coast positioned to benefit from policy support for regional education.

• Higher student retention observed due to changes in visa application rules, with more students packaging English and vocational courses.