Laureate (LAUR) Q2 Revenue Jumps 5%

Laureate Education (LAUR 1.37%), a leading provider of higher education with a focus on fast-growing markets in Mexico and Peru, released its results for the second quarter of fiscal 2025 on July 31, 2025. The main headline from the release was that revenue grew 5% year over year to $524.2 million (GAAP), beating the consensus estimate by $18.85 million. However, GAAP earnings per share (EPS) came in at $0.65, below the analyst consensus of $0.72, with the miss tied to foreign currency translation losses on a GAAP basis. Adjusted EPS, which removes currency effects and other one-time items, was $0.79. Management described the period as one of strong underlying demand, citing robust enrollment growth and advances in digital learning, and raised full-year FY2025 guidance for both revenue and adjusted EBITDA.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Strategic Focus

Laureate Education operates universities and higher-education institutions designed to meet the needs of students in rapidly developing regions. Its main markets are Mexico and Peru, where private universities account for a large portion of higher-education enrollment. Laureate focuses on professional and applied programs in high-demand fields such as health sciences, STEM (science, technology, engineering, and mathematics), and business.

Recently, Laureate has concentrated on four main areas: growing its market share as demand for higher education expands; tailoring its curriculum to ensure graduates are attractive to employers; strengthening its local brands like Universidad del Valle de México and Universidad Peruana de Ciencias Aplicadas; and investing in digital and hybrid education formats. Navigating regulatory requirements and maintaining accreditation in both countries remain key factors for its continued success.

Quarter Highlights: Financial and Operating Performance

The second quarter showed strong financial performance, especially on the revenue side. Revenue was $524.2 million, rising 5% year over year and beating analyst forecasts by approximately 3.7% on a GAAP basis. Management noted that revenue growth would have been higher—about 10% in constant currency terms—if not for negative impacts from exchange-rate fluctuations and some academic calendar timing effects. In particular, about $8 million in revenue was favorably affected by calendar shifts within the academic year.

Operating income improved by $26.7 million, reaching $193.3 million, while adjusted EBITDA (a profit measure before interest, taxes, depreciation, and amortization, and excluding certain non-cash and unusual items) climbed to $214.5 million, up nearly 15% year over year. Both operating income and adjusted EBITDA benefited from enrollment momentum and academic calendar timing effects. The Mexico segment, for example, saw adjusted EBITDA grow 19%.

Enrollments, a key measure of future revenue potential, increased significantly for the six months ended June 30, 2025. For the six months ended June 30, 2025, new student enrollments grew 7% overall (6% enrollment growth in Mexico, 8% in Peru), and total student enrollments stood at 472,100, up 6%. More than 70% of Laureate’s students are now pursuing degrees in applied and professional fields as of December 31, 2024. Digital courses are growing three to four times faster than traditional formats, addressing demand from working adults and improving operational efficiency.

Despite these strengths, GAAP net income fell to $97.4 million from $128.4 million compared to the prior year period, and GAAP EPS dropped 21.7% compared to the prior year period. The decline was not tied to operating weakness, but rather to a $25.6 million foreign currency exchange loss, compared with a $27.5 million gain a year earlier. This volatility is mainly related to intercompany loan arrangements between U.S. and local operations. On an adjusted (non-GAAP) basis, which strips out such translation effects, profit and EPS both rose sharply.

On the capital allocation front, Laureate repurchased approximately $71 million in shares under its ongoing buyback program during the first six months of 2025. The company ended the quarter with $135.3 million in cash and net cash (non-GAAP; cash minus total debt) of $19.2 million as of June 30, 2025. Operating cash flow for the first half of the year increased by about 80% compared to the previous year.

Business Lines, Enrollment, and Market Context

Laureate’s core business includes its campus-based universities and a significant and growing online education segment in Mexico and Peru. These institutions provide degrees in high-demand, professional disciplines. For example, the Universidad del Valle de México is a well-known brand in Mexico, while the Universidad Peruana de Ciencias Aplicadas holds a similar reputation in Peru. Both are ranked highly in employability and quality by national standards, helping attract students in a competitive market.

Program mix and curriculum design continue to drive results. Over two-thirds of students are now enrolled in health science, STEM, and business programs as of December 31, 2024, chosen for their strong employment prospects and high demand from both students and employers.

The digital learning segment expanded further, capturing students seeking flexible or remote options. Roughly 100,000 students, or about 20% of Laureate’s total, are now enrolled in fully online courses as of Q1 2025. Management reports that digital enrollments are growing at rates three to four times faster than traditional face-to-face or hybrid offerings. In both Mexico and Peru, digital learning is focused on professional programs and working adults, with digital share higher in Mexico but increasing in both countries.

No material regulatory challenges or accreditation issues were disclosed during the period. Regulatory compliance remains a critical focus for Laureate, given the complex frameworks in Mexico and Peru.

Outlook and Items to Watch

Management raised its full-year FY2025 guidance, now projecting revenue between $1.615 billion and $1.630 billion, up from the previous $1.560 billion to $1.575 billion range. Adjusted EBITDA guidance was also increased to $489 million to $496 million for FY2025. Laureate targets total enrollments of 491,000 to 495,000, representing 4% to 5% growth for FY2025. The improved outlook reflects stronger-than-expected enrollment trends and more favorable foreign currency rates.

Translation risk from currency swings remains a significant consideration for investors, particularly as earnings and cash flows in Mexico and Peru must be translated into U.S. dollars for reporting. Management expects that the negative impact from academic calendar timing in early 2025 will reverse in the second half of the year. Guidance also notes that foreign currency effects, while less severe than earlier feared, will still act as a headwind for as-reported numbers compared to 2024.

LAUR does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.