Laureate Education's Q3 2025: Contradictions Emerge on Peru Revenue, Online Learning Demand, and Economic Environment's Impact on Enrollment and Pricing

Date of Call: None provided

Financials Results

• Revenue: $400 million for Q3, up 6% YOY; year-to-date revenue +8% (organic constant currency); FY2025 guidance $1.681B–$1.686B (+7–8% reported, ~8% organic)
• EPS: $0.23 per share (reported) for Q3; adjusted EPS $0.25, up 14% YOY

Guidance:

• Total enrollments approximately 494,000 students (~+5% vs 2024)
• FY2025 revenue $1.681B–$1.686B (+7%–8% reported; ~8% organic constant currency)
• FY2025 adjusted EBITDA $508M–$512M (+13%–14% reported; 12%–13% organic constant currency)
• Adjusted EBITDA margin expansion ~150 bps
• Adjusted EBITDA to unlevered free cash flow conversion ~50%
• Q4 2025 revenue $521M–$526M; Q4 adjusted EBITDA $194M–$198M

Business Commentary:

* Strong Operational and Financial Performance: - Laureate Education reported third quarter revenue of $400 million and adjusted EBITDA of $95 million, both ahead of guidance. - Growth was driven by improved foreign currency rates and double-digit growth in Peru's secondary intake, led by fully online working adult programs.

• Peru Market Expansion:
• Peru's new enrollments increased by 21% and total enrollments grew by 8% in the third quarter compared to the prior year.

• The growth was supported by a strengthening macroeconomic backdrop and expansion of fully online programs targeting working adults.

• Mexico Market Resilience:

• Mexico's new enrollments increased by 2% on a reported basis (or 4% excluding campus closures) and total enrollment volume increased by 4%.

• This growth demonstrates the resiliency of Laureate's business model in a sluggish macroeconomic environment.

• Capital Allocation and Stock Repurchase:

• Laureate's board authorized a $150 million increase to its stock repurchase program, underscoring its disciplined capital allocation strategy.
• This increase comes after returning more than $3 billion of capital to shareholders since 2019 through various capital returns.

Sentiment Analysis:

Overall Tone: Positive

• Management: "Third quarter revenue was $400 million and adjusted EBITDA was $95 million. Both metrics were ahead of the guidance we provided in July." They announced an increased full‑year 2025 outlook and a $150M increase to the share repurchase authorization, citing strong intake performance and favorable FX.

Q&A:

• Question from Ryan (BMO Capital Markets): On Peru, revenue for the quarter was really strong, especially given the $7M calendar timing impact — can you help us understand the roles of FX, enrollment, and pricing versus your initial forecast?
  Response: Peru's strength reflects demand catch-up post-recession, strong consumer sentiment and rapid growth in fully-online working-adult programs; face-to-face pricing was in line with inflation and online pricing was slightly reduced from a small base, so not material to overall pricing.

• Question from Ryan (BMO Capital Markets): For Mexico, can you parse the +2% reported vs +4% excluding closures — how did face-to-face and working-adult enrollments evolve in this intake?
  Response: Q3 Mexico growth was driven primarily by traditional 18–24 undergraduate (face-to-face) students; working‑adult strength is more prominent in other cycles, so most of the intake momentum came from younger, campus-based students.

• Question from Lucas Nagano (Morgan Stanley): How much of the reported growth this quarter was driven by the new campus launches — i.e., what was growth excluding the new campus?
  Response: Excluding campus closures, growth was 4% and one percentage point of that came from new campus launches; same-store growth was about 3%.

• Question from Lucas Nagano (Morgan Stanley): You expect pricing to improve in line with inflation — how much will average revenue per student be impacted by the mix shift toward fully-online programs?
  Response: Peru headline inflation is ~2%, and the mix shift toward fully-online working-adult programs could impact average revenue per student by roughly up to ~2% as the online segment scales from a smaller base.

Contradiction Point 1

Peru Revenue Performance

It involves expectations and actual performance of revenue in Peru, which is a key market for Laureate Education's growth strategy.

How did FX, enrollment, and pricing changes in Peru impact Q3 revenue compared to your initial forecast, excluding the $7 million reduction due to calendar timing? - Ryan (BMO Capital Markets)

2025Q3: we are seeing a little bit of a catch up on delayed demand or deferred demand from last year. - Eilif Serck-Hanssen(CEO)

Were there any indications on the student application pipeline for Mexico's primary intake period this fall? What were the main drivers of the revenue upside for the quarter? - Ryan (BMO Capital Markets)

2025Q2: Overall, we feel very good about the demand dynamics we are seeing in both Brazil and Peru. - Eilif Serck-Hanssen(CEO)

Contradiction Point 2

Online Learning and Demand in Peru

It involves the growth and demand expectations for online learning in Peru, which is a strategic priority for Laureate Education.

Can you explain the factors driving Peru's strong quarterly revenue despite a $7 million reduction due to calendar timing, specifically FX, enrollment, and pricing versus initial forecasts? - Ryan (BMO Capital Markets)

2025Q3: we have a very strong value proposition which works well in the premium segment, in the value segment, as well as a very rapid increase in demand for fully online working adult products. - Eilif Serck-Hanssen(CEO)

How is online learning evolving in Peru? What is the status and demand for new campuses? - Lucas Nagano (Morgan Stanley)

2025Q2: Online learning in Peru is growing double digits and showing strong interest from working adults. - Eilif Serck-Hanssen(CEO)

Contradiction Point 3

Impact of Economic Environment on Enrollment

It reflects differing views on how the economic environment affects enrollment, which is crucial for revenue projections and investor expectations.

How did FX, enrollment, and pricing in Peru impact Q3 revenue, given the $7 million reduction due to calendar timing? - Ryan (BMO Capital Markets, for Jeff Silber)

2025Q3: We have a very strong value proposition which works well in the premium segment, in the value segment, as well as a very rapid increase in demand for fully online working adult products. - Eilif Serck-Hanssen(CEO)

Are potential students in Mexico hesitating during the upcoming fall intake due to uncertainty? - Jeff Silber (BMO Capital Markets)

2025Q1: The economic environment remains similar to the slowdown seen at the end of last year in Mexico. - Eilif Serck-Hanssen(CEO)

Contradiction Point 4

Pricing Strategy and Mix Impact

It involves changes in pricing strategy and the impact of product mix on revenue, which are critical for financial planning and investor expectations.

Could you clarify the impact of FX, enrollment, and pricing on Peru's strong quarterly revenue despite a $7 million reduction due to calendar timing compared to your initial forecast? - Ryan (BMO Capital Markets, for Jeff Silber)

2025Q3: We are benefiting in Peru, having the recession behind us, which means that we are seeing a little bit of a catch up on delayed demand or deferred demand from last year. - Eilif Serck-Hanssen(CEO)

Why use historical FX rates instead of current rates in guidance? - Mauricio Cepeda (Morgan Stanley)

2025Q1: Overall inflation in Peru is trending very well. It’s a headline around 2%. That’s as a starting point of what our target would be to match that in the market. - Rick Buskirk(CFO)

Contradiction Point 5

Peru Economic Environment and Student Demand

It highlights differing perspectives on the economic situation in Peru and its impact on student demand, which are crucial factors affecting the company's enrollment and revenue.

How did FX, enrollment, and pricing factors contribute to the strong revenue in Peru, despite the $7 million impact from calendar timing, compared to your initial forecast? - Ryan (BMO Capital Markets, for Jeff Silber)

2025Q3: We are benefiting in Peru, having the recession behind us, which means that we are seeing a little bit of a catch up on delayed demand or deferred demand from last year. - Eilif Serck-Hanssen(CEO)

Has Mexico's economic uncertainty affected enrollments, and do you expect faster GDP growth? - Jeff Silber (BMO Capital Markets)

2024Q4: Economic uncertainty has slowed foreign direct investment and consumer discretionary spending. GDP growth is expected to be 1% in 2025, with volatility during trade discussions. - Eilif Serck-Hanssen(CEO)