Laureate's Q3 2025 Earnings Call: Contradictions Emerge on Mexico Enrollment Drivers, Peru Revenue Strategy, and Capital Allocation Policy

Date of Call: October 30, 2025

Financials Results

• Revenue: $400.0M for Q3, ahead of guidance; up 6% YOY on an organic constant-currency basis (adjusted for academic calendar timing); YTD revenue +8% organic CC
• EPS: $0.23 reported EPS; adjusted EPS $0.25, up 14% YOY

Guidance:

• Total enrollments ~494,000 for FY2025 (~+5% vs 2024)
• FY2025 revenue $1.681B–$1.686B (+7%–8% as-reported; ~8% organic CC)
• FY2025 adjusted EBITDA $508M–$512M (+13%–14% as-reported; 12%–13% organic CC)
• Adjusted EBITDA margin expansion ~150 bps; adj. EBITDA→unlevered FCF conversion ~50%
• Q4 2025 revenue $521M–$526M; Q4 adjusted EBITDA $194M–$198M
• Board authorized $150M increase to share repurchase program

Business Commentary:

* Strong Financial Performance and Revenue Growth: - Laureate Education reported revenue of $400 million for Q3, ahead of the guidance provided, with adjusted EBITDA of $95 million. - Growth was driven by improved foreign currency rates, double-digit growth in Peru's secondary intake, and favorable price/mix and currency movements.

• Peruvian Market Expansion and Enrollment Growth:
• Peru experienced a 21% increase in new enrollments for Q3, with total enrollments up 8%.

• The growth was attributed to the scaling of fully online working adult programs, stronger macroeconomic conditions, and expansion of these programs.

• Mexican Market Performance and Margin Optimization:

• In Mexico, total enrollment volume increased 4% compared to the prior year, with adjusted EBITDA margin expansion of 240 basis points.

• Growth was supported by the value proposition of Laureate's institutions, fiscal discipline, and productivity gains, despite a sluggish macroeconomic environment.

• Capital Allocation and Shareholder Returns:

• The company's balance sheet remained strong, with a net cash position of $139 million.

• Reflecting this strength, the Board authorized a $150 million increase in the stock repurchase program, underscoring the focus on long-term shareholder value creation.

• Macroeconomic Conditions and Strategic Outlook:

• Peru's economy showed robust growth, projected at approximately 3% GDP for 2025, while Mexico experienced fiscal discipline and infrastructure investments.
• Laureate's strategic approach and diversified market presence positioned the company to capitalize on these favorable conditions and maintain strong performance.

Sentiment Analysis:

Overall Tone: Positive

• Management: "strong operating and financial performance" and Q3 results ($400M revenue, $95M adjusted EBITDA) were "ahead of the guidance we provided in July." They raised full‑year outlook (midpoint revenue +$61M, adjusted EBITDA +$17M) and expanded the buyback by $150M, citing a "strong balance sheet."

Q&A:

• Question from Jeff Silber (BMO Capital Markets): On Peru, revenue was strong (despite ~$7M falling out from calendar timing); can you explain FX, enrollment and pricing versus your initial forecast?
  Response: Peru demand is recovering post‑recession with catch‑up and strong consumer sentiment; face‑to‑face pricing in line with inflation while fully‑online working‑adult pricing has been slightly reduced (from a small base).

• Question from Jeff Silber (BMO Capital Markets) - follow-up: On Mexican new enrollment growth (the +2% reported or +4% excluding closures), how much of the intake strength was working adult vs face‑to‑face?
  Response: Q3 Mexican growth was driven mainly by traditional 18–24 undergraduate students (third‑quarter intake); working‑adult strength is concentrated in other cycles.

• Question from Lucas Nagano (Morgan Stanley): How much did the new campus launched this quarter contribute to Mexico's growth — i.e., growth without the new campus?
  Response: New campus launches contributed ~1 percentage point of the reported growth; same‑store growth was ~3% (4% excluding closures, 1 point from new campuses).

• Question from Lucas Nagano (Morgan Stanley): With more fully‑online students in Peru, how much should average revenue per student be impacted by mix?
  Response: Inflation in Peru is ~2% (guiding pricing), and mix from scaling fully‑online could reduce average revenue per student by roughly ~2% as online enrollment grows.

Contradiction Point 1

Mexico's Enrollment Growth Driver

It involves the primary driver of growth in Mexico's new enrollments, which is crucial for understanding the company's student acquisition strategy.

Can you break down the organic growth rate for Mexican new enrollment (2-4%) and clarify how the working adult segment performed this quarter compared to last? Also, could you provide details on how face-to-face new enrollment in Mexico evolved during the intake cycle? - Ryan (BMO Capital Markets)

2025Q3: In Mexico, the third quarter is driven by traditional 18- to 24-year-old undergraduate students. The majority of growth is from these traditional students, with smaller contributions from working adult segments. - Eilif Serck-Hanssen(CEO)

Are you seeing hesitancy from potential students in Mexico for the upcoming fall intake due to the current uncertain environment? - Jeff Silber (BMO Capital Markets)

2025Q1: Year-to-date, intake growth is primarily driven by working adult new enrollments. - Eilif Serck-Hanssen(CEO)

Contradiction Point 2

Peru's Revenue and Pricing Strategy

It involves the revenue performance and pricing strategy in Peru, which are critical for understanding the company's financial stability and international expansion.

Could you clarify how FX, enrollment, and pricing impacted Peru's revenue this quarter compared to your initial forecast, especially with the $7 million calendar timing impact? - Ryan (BMO Capital Markets)

2025Q3: In Peru, we are benefiting from the recession being behind us and seeing a catch-up on delayed demand. Our strong value proposition works well in various segments, including fully online working adult products. Pricing for face-to-face is in line with inflation, with face-to-face pricing having a minor impact. - Eilif Serck-Hanssen(CEO)

How is the online learning trend in Peru developing, and how does product acceptance compare to Mexico? - Lucas Nagano (Morgan Stanley)

2025Q2: In Peru, we are seeing good demand and interest across segments. The main intake is underway, and we are encouraged by early results. - Eilif Serck-Hanssen(CEO)

Contradiction Point 3

Working Adult Student Demand and Growth

It addresses the demand and growth in working adult students, which is a key segment for the company's future growth strategy.

Could you clarify the organic growth rate of Mexican new enrollment for the quarter (2% or 4%)? Additionally, how did the working adult segment's performance evolve compared to last quarter? Also, could you provide updates on face-to-face new enrollment trends in Mexico during the intake cycle? - Ryan (BMO Capital Markets)

2025Q3: In Mexico, the majority of growth is from these traditional students, with smaller contributions from working adult segments. - Eilif Serck-Hanssen(CEO)

Are you seeing hesitancy from potential students in Mexico due to current uncertainty during the fall enrollment period? - Jeff Silber (BMO Capital Markets)

2025Q1: Year-to-date, intake growth is primarily driven by working adult new enrollments. - Eilif Serck-Hanssen(CEO)

Contradiction Point 4

Peru Revenue and FX Impact

It involves the revenue performance and FX impact in Peru, which are critical for understanding the company's financial stability and international expansion.

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

2025Q3: In Peru, we are benefiting from the recession being behind us and seeing a catch-up on delayed demand. Our strong value proposition works well in various segments, including fully online working adult products. - Eilif Serck-Hanssen(CEO)

Were there any time shifts between 2024 and 2025, and were the numbers normalized to compare the intake cycles? - Mauricio Cepeda (Morgan Stanley)

2025Q1: In Peru, the academic calendar started 2 weeks later, shifting Peru from a reported negative 9% to an adjusted 6%. - Rick Buskirk(CFO)

Contradiction Point 5

Capital Allocation Policy

It affects the company's financial strategy and distribution of resources, which is crucial for investors and stakeholders.

Can you provide more details on returning excess capital to shareholders and your current capital allocation policy? - Ryan (BMO Capital Markets)

2025Q3: Our objective is to deliver 50% free cash flow conversion on our EBITDA on an unleveraged basis. 50% of unlevered free cash flow will be returned to shareholders. This supports growth in the business with approximately 5% of revenues in CapEx to sustain growth momentum. - Eilif Serck-Hanssen(CEO)

Can you provide details on returning excess capital to shareholders and your current capital allocation policy? - Jeff Silber (BMO Capital Markets)

2024Q4: Our objective is to deliver 50% free cash flow conversion on our EBITDA on an unleveraged basis. 50% of unlevered free cash flow will be returned to shareholders. - Eilif Serck-Hanssen(CEO)