IDP Education Limited (ASX:IEL) fell around 20% on Thursday following the release of its FY26 results. The stock opened at $1.875, traded to a low of $1.53 by late morning, and closed at $1.72 on turnover of $59.1 million.

Revenue was $795 million with gross profit margin stable at 60%. Adjusted EBIT came in at $123 million, down 7% on FY25 and within the guidance range. Student Placement volumes fell 27%, partly offset by yield up 11% in Student Placement and up 7% in Language Testing.

The 27% volume decline is the operative figure for the share price. Yield improvements of 11% do not offset a fall of that size, and the visa policy settings across the major destination markets that drive placement volumes are outside the company's control.

Cost reduction ahead of target

Net cost reduction reached $32 million against a $25 million target. Headcount fell by approximately 1,250 roles, or 20% of the workforce, and the IELTS venue footprint was cut from around 1,500 locations to fewer than 600 with a transition to third-party models.

Centralised procurement delivered $9 million of IT licensing savings through commercial renegotiations. Five contact centres were consolidated and the ERP program progressed. Gross margin held at 60% through the volume decline, which is the measure the company points to as evidence the cost work is holding.

Balance sheet and capital management

Cash conversion was 139%, with combined contract assets and receivables down 56%. Net leverage fell to 1.0x from 1.4x, with $341 million of undrawn facilities available.

A final unfranked dividend of 6.0 cents per share was declared. The company also announced a share buyback of up to $50 million, which is a ceiling rather than a commitment and carries no minimum purchase obligation.

Operating metrics

IDP reported more than 1,000 university partners, including 32 new partners and 66 upsells or contract inclusions during the year. NPS was above 70, with 90% of surveyed customers indicating they trust or highly trust IDP, and visa approval rates ran 7 percentage points above market.

IELTS is recognised by more than 13,500 organisations, which the company describes as its greatest competitive advantage. Language Testing expansion covers 13 China IELTS centres. Student Placement expansion covers Student Essentials with ARPU up 24%, plus Malaysia and UAE as new destinations. FastLane delivered approximately 7% higher conversion with a 13-point higher NPS.

A comparability caveat

All figures in the presentation were restated for the voluntary change in Student Placement revenue recognition announced on 18 December 2025. Anyone modelling from prior disclosures needs to work from the restated base rather than previously reported numbers.

Management describes the work completed as phase one of the transformation, with technology and AI investment positioned as the foundation for the next stage. The three stated ongoing benefits are a reduced cost base, improved working capital and cash generation, and AI-driven improvements to conversion and counsellor productivity.