IDP Education Limited (IEL) Earnings Call Transcript & Summary

Great. Thanks, April, and good morning, everyone. Welcome to our FY '22 results call. I'm joined here by Murray Walton, our Chief Financial Officer; and Craig Mackey, Head of Corporate Development and Investor Relations. IDP delivered a record revenue and EBIT in FY '22. This achievement is underpinned by our commitment to holding our teams in place through the COVID disruption and the continued investment and delivery of our transformative strategy. If we move to Page 4 in the deck, you can see the high-level financial performance summary. Revenue at $793 million was up 50%; EBIT at $163 million, up 127%; NPAT at $106.6 million, up 137%. Our cash balance are down to $197 million on the back of the BC acquisition and the cash that was used for that acquisition earlier in the year. Looking at some of the highlights across our operational metrics. Student placements, 54,000 -- sorry, 55,400 APFs, a very strong growth across all our destination markets in the year, and that given an environment really where Australia was closed for the first half of the FY '22 year. English language testing at 1,915,600. IELTS tests up 67% on the previous year, with the majority of IDP markets back at pre-pandemic levels. English language teaching, 69,700. Our course is down 6%, and that reflected really some of the ongoing COVID restrictions that we have in our major English teaching market, Cambodia. Digital marketing and events at $43 million, revenue up 19%. Events is a subset of that, up 40%, reflecting, I think, the reengagement of the clients in our markets to build their student pipelines. Moving on to Page 5, just looking at things from an industry perspective. We are seeing very strong demand across all our source markets. Clearly, we have record student placement and test taker volumes. But I think as we look at the pipeline and what we're seeing across the market, as I mentioned, strong demand from all of those source markets. That's reflected in the student placement pipeline, which shows a 36% increase in hot and warm leads over FY '21. Around the top markets that we place students into, of course, Australia, Canada and the U.K., we're seeing very supportive industry settings from a policy perspective. And this reflects mainly the post-study work, right, settings and the opportunity for students to begin their careers post study in those locations. And probably the first time we've seen such strong settings across all of our key destination markets. And we continue to expand our global footprint. That's a key strategy along with our technology transformation. We have 157 student offices. That's an increase of 29 on FY '21 and including an aggressive expansion into India and the opening up of our Nigerian business. In the year ahead, we have a plan for another 23 student placement offices in FY '23. Moving to Slide 6, the operational overview. This strong growth, again, really demonstrates our leadership position and the commitment to continue to deliver on our transformative strategy and build on those trusted relationships we have with our clients around the world. Student placement, as I mentioned, up 54%. And you'll see later in the pack, when we dig into demand a little bit deeper, strong demand from all of our source markets through this period of time. And I guess this reflects holding our teams together and some of the innovations we're driving with omnichannel and our technology. We've been able to increase our customer satisfaction with our Net Promoter Score up 4 points in FY '22. In terms of English language teaching, very significant volume growth. Clearly, a lot of that came about through the acquisition of BC, now IDP, solely the IELTS distributor in what is the largest IELTS market globally. We opened up 101 new computer-delivered test centers in FY '22. And we delivered some significant enhancements to our customer experience, including IELTS Online and IELTS IDP app, assisting with preparation and booking. And underscoring this will be the beginning of the rollout of a new booking engine across all of our IELTS platforms. In terms of English language teaching, ACE Cambodia, our teaching operation, there continues to be a market leader in its own right with a new campus really coming online as we go into FY '23 and a recognition in the industry as a top professional English school. IDP Connect, where we're managing our client relationships and our channel for digital marketing and some of the transformative new models we're bringing into the client product set, had a great year. Their IQ data services revenue up 25%. And we added 62 new clients and contract or commercial improvements across that broader client set in FY '22. I'm going to move to our innovation agenda now, and I'll take everybody to Page 8 in the pack. This page reflects really our continuum of transformation in the business as it relates to student placement. I mean, going all the way back to 2016, where fundamentally, we had a market-leading network of offices and a significant first-class client base around the world, but primarily in analog business. And I think the investments that we made have really put IDP in this industry-leading position as it relates to reinventing the sector. We've made great progress. I mean, clearly, through COVID, our ability to continue to service customers even though our offices were closed, using our foundation in the platform and our omnichannel capability, enabled our counselors to remain in close contact and to guide the students through what was quite a disruptive period. That clearly has underpinned some of our ability to rebound as quickly as we have. But as we move through FY '22, we've begun to deliver really transformative services for both the students and the clients, and that's reflected in our IDP Live and our FastLane paradigm, which I'll touch a little bit more on later in the pack. So we really have moved through this analog from platform and data and into new models and marketplaces. And that's now supported by our digital canvas in Chennai where we have some 600 DevOps people assisting us in developing the software to support that strategy. If we move on to Page 9, looking at how we made progress through FY '22, which is fundamentally a pilot year for this new first set of transformative services which will be delivered on the IDP Live app and on our website, fundamentally establishing a marketplace model. The first of those was FastLane, which was the ability to provide offers in principle through sophisticated matching of students to inventory published on our website by universities who are seeking to engage with the right students of quality and the ones they need for their courses. We took 61 clients live across Australia and the U.K. as of the end of the year. And we launched in Canada with 5 clients in the process of being onboarded. We've now got 1,200 courses live on FastLane. In terms of how we've been able to engage with students, in particular with that technology in the primary channel we launched on, which was the app, we've had over 900,000 downloads of the IDP Live app. We've had 3,000 students receive formal offers through FastLane. And uniquely, we have clients who have provided IDP with specific service level agreements of responding to those students in a much faster turnaround time than they would normally. And we're seeing that about 6x faster across that platform. In terms of priorities for FY '23, we plan to rapidly expand the inventory and the client adoption of FastLane. Our expectation and our aim is to have almost half of our most popular courses accessible from FastLane in our key countries by the end of FY '23 and roughly around 10,000 students we expect to be receiving formal offers on that platform. So it really is a year where we continue to drive adoption of that new service. Moving on to Page 10, and we're going to go through just some of the areas we're focusing on in IELTS. Clearly, like student placement, IELTS is going through a significant transformation that is a continuation of the investments we've made through the last number of years. Those investments are really focused on creating a great consumer or customer experience relative to our competitors, leading the market in terms of the choices in the way people can take the test and where they can take that test and providing an improved support for those customers on their very important journey. Moving to Page 11 and looking more at some of the specifics. The IELTS platform -- or the IELTS has been re-platformed. IELTS Online itself is now being delivered on that new platform as well as a program of work this year to roll out our CD centers and move them across onto this new platform. Now this is giving us a whole new set of flexibility in terms of the way we can service and deliver the test. Some of the proof points there, of course, were IELTS Indicator, which we rolled out specifically in China; an online test to deal with some of the COVID disruptions we had through the past couple of years. We're very focused on improving the IELTS test taker experience. From that perspective, we've rolled out an IELTS app which enables sophisticated booking but equally now gives us a portal and a service channel to those customers to provide preparation along that customer journey to help them be successful with their IELTS test. This new platform has also enabled some very significant innovation with IELTS Online rolled out just as we crossed over from FY '22 and now into FY '23. And we have a whole set of new products in the pipeline for FY '23 to ensure that IELTS remains the world's most popular high-stakes English language test. Moving to Page 12 and maybe dropping down a little bit lower into the functionality and the strategic product release on IELTS Online. We are currently in the process of rolling that out around the world. We've made that already available in 31 countries, and we're on target to have that available for our customers in 50 countries by the end of FY '23, going into FY '24. I mean one of the unique opportunities with IELTS online, of course, it gives us the opportunity to provide that test, that IDP test, in markets where we don't have a current IELTS operation. So clearly, we'll be prioritizing those markets where we're not currently present today and looking to take a leading market share position for IELTS Online in those new markets. We're maintaining a human dimension to the test. We think this is really important. AI is good at some things, but it's not good at everything. So within the IELTS Online test, we're still supporting a video call speaking test to give test takers the opportunity to speak to a real person by doing that at scale, using a new technology that we've built into the test. And of course, we're empowering customers to choose their best option. And unlike a competitive test, we have the ability to give the customer that choice, whether that be paper, computer-delivered or an online test. I want to move now to customer demand, and I'll take everybody to Slide 14 in the deck, just to provide you a view of really some of that through-the-cycle thematic growth that IDP is connected to. When we look at student placement, I spoke to the 45% increase in students placed in FY '22. This is giving you some insight into really where we're driving that growth. And I think what's most pleasing is the strong growth we're seeing now across all markets: Canada, up 50%; the U.K., up 36%; Australia, up 39%, even with really only half a year and, in some respect, an uncertain half a year, given the communication to students in the first half. We've seen a very strong recovery in Australia in the second half with around 13,400 students placed in the second half in Australia. And that puts us now only about 11% off our peak for Australia in that second half period. So that rebound is strengthening for Australia. When we have a look at where the enrollments are coming from a source market perspective, our investment in India continues to pay great dividends, with India up 78%, representing 53% of that 55,400. China, probably no surprise to everyone on the call, was down 21%. And again, that reflects really the continued disruptions, whether that be in the access to do an IELTS test or the COVID approach, zero COVID approach. And indeed, generally, the students' more conservative approach to safety and the concerns around COVID. But nevertheless, we are seeing some green shoots in China at the moment, in particular, with a rebound in IELTS testing in July; and for Australia, a rebound in pipeline growth in terms of hot and warm leads in the July period for Australia. If I move to Slide 15. And again, I've touched on this real strong through-the-cycle structural growth that IDP is very much aligned to with our global network. And this is a great chart. I think it really gives you the ability to see not only the industry thematic but IDP's ability to really harness the opportunity that we're engaged in student placement volumes, around a 12% CAGR growth from FY '13, and IDP IELTS volumes, around a 14% CAGR growth, clearly, with a big tick up in FY '22 as we bring the BC acquisition into the fold for IDP. Moving to Slide 16, giving you some insight into our student placement pipeline. I think here, I think as we've discussed before, these are very, very good leading indicators for our business. Our Northern Hemisphere business, which clearly performed extremely well in FY '22, we're showing continued strong momentum and growth with qualified leads up 36% and applications up 54% as we go into what will be a big intake. I guess in terms of things we watch with the Northern Hemisphere, in particular, there's still a little bit of disruption around visa approvals, primarily for Canada, very strong demand. And we're just watching how, through time, the Canadian government improves their ability to get to the backlog of visas they have. But nevertheless, this reflects a very strong demand from our source markets. When we look at Australia and New Zealand, I think here, we can -- what's exciting about this data is we're seeing the rebound now coming through and believe we'll be in a great position in FY '23 to engage with that rebound. For Australia, qualified leads are now up 36%. And this is a record number of qualified leads for Australia in that half 2. So that's a very good indicator for us, and applications up 33% for Australia. Moving on to Slide 17. I'd just like to present really kind of a summary for everybody on the BC acquisition in India. It was a significant acquisition for IDP and one that we all know was very important to our success. I'm very pleased to say that it has been an exceptional acquisition and we now do have a unified operating model in India with a very clear focus on improving the test taker experience and the consistency of that across what is the largest IELTS market in the world. You can see on the right-hand side of that slide the total number of IELTS tests in India, clearly a rebound and, if you like, almost reconnection to the momentum that was in that market pre-COVID with a 16% CAGR through the period that's reflected on that slide. We opened up 12 additional computer-delivered centers in India. And we now have a network of CD centers, CD centers totaling 74. We overachieved on the synergies quite significantly as we brought together those operations and consolidated some of the suppliers who we work with and the model that we use to deliver IELTS in India. Clearly, it remains a very attractive growth market for us from both an IELTS perspective with IELTS volumes up 73% and 23% up from FY '19, which was the last pre-COVID year that we can point to. A strong and long term through-the-cycle growth thematic exists in that market. With it, really positioned as the largest international student placement source market in the world. And I guess with that said, we've had a complementary expansion of our student placement network in India with 27 new offices launched in FY '22. So we currently have 67 student placement offices in 60 cities across India and clearly are the largest provider of those services in the Indian market. Let me pause there and pass over to Murray to take everyone through the financial results.

Thanks, Andrew. I'm going to start on Slide 19, the FY '22 overview. So revenue for the year was $793 million, 48% above last year on a constant currency basis and 50% above last year on a headline basis. And that was 32% higher than our previous highest revenue in FY '19. IELTS testing revenue at $511 million was 56% higher than the pcp on a constant currency basis as the majority of our testing markets rebounded to pre-pandemic levels and the acquisition of the British Council India IELTS business accelerated our growth. Student placement revenue was 46% higher than the pcp on a constant currency basis, with multi-destination revenue on a constant currency basis up 53% versus the pcp as the U.K., Canada and the U.S.A. all delivered strong volume growth. Australian student placement revenue was 37% higher than the pcp with a strong rebound in the second half once the borders opened and students could travel to commence their courses. Digital marketing and event revenue was up 17% on a constant currency basis, with clients investing in the student pipeline with strong growth from Australian and U.S.A. digital marketing clients. EBIT was $159 million, 135% higher than the pcp on a constant currency basis as revenue rebounded and accelerated while expenses returned to more normal levels as we invested for future growth. Net profit after-tax was $103 million, 139% above last year on a constant currency basis. Moving on to Slide 20, the operating metrics. So the key operating metrics showed a strong rebound in IELTS volume and Northern Hemisphere student placement volume. So our IELTS volumes are 1,915,000 candidates and rebounded in the majority of the markets we're testing. And when we include the Indian acquisition, our volume accelerated to a growth rate of 67% versus the pcp. IELTS markets that impact IDP IELTS revenue in Australia, New Zealand, China and Canada did not return to full capacity in FY '22. Student placement volumes rebounded to 55,400. 45% growth versus the pcp with multi-destination volumes up 50% to 35,300, making up 64% of our total volume. The U.K. was up by 36% versus the pcp, and seasonality returned to the pre-pandemic trend with 74% of the U.K. volume in the first half. Canada volumes were up by 50%. But the second half growth was slowed as delays in visa processing caused many students to delay their commencements. Our volume to the U.S.A. was up by 154% versus the pcp, with the majority of placements by IDP being Indian postgraduate students. Australian student placement volume of 20,100 was 39% above the pcp with strong second half growth, but the market remains below pre-pandemic levels. India and Thailand had strong growth, while China continued to be well below our pre-pandemic levels. Moving on to our average fee performance. The average test fee for IELTS decreased by 6% on a constant currency basis as the much higher mix of candidates from India at a lower price rebased our average price. Price increases were applied in many markets, including India, and the impact of price increases taken during the year added 2.7% to the average price. The lower test volume in China reduced the license fee paid by the British Council and reduced IDP's average price by 1.6%. The average student placement application processing fee has increased to $3,886, a 1% increase versus the pcp on a constant currency basis. There were relatively small movements in average price as the Australian average fee decreased by 1% and the multi-destination average fee increased by 2%, excluding FX, with increases coming from commission increases from clients, offset by lower student charging revenue in the main. So I'm going to move to Slide 21, investing for future growth. So our increase in overheads in FY '22 reflect the investments being made after a lengthy period of disciplined cost control to invest in capacity and in growing our student pipeline. Increases in marketing spend of 66% versus the pcp were made with a focus on building the student placement pipeline for future intakes. Broad-based hiring for frontline staff continued from the second half in FY '21 to ensure we fill vacancies and added new positions early enough in the year to build the student pipeline. Our occupancy costs increased as we added new student placement offices and new computer-delivered test centers. On a run rate for overheads on a pre-AASB16 basis, and excluding our M&A costs to ensure a like-for-like comparison, is at $25 million per month in the second half of FY '22, up from $22 million per month in the first half of FY '22. The full year run rate for FY '22 on the same basis was $23.6 million. So I move on to Slide 22, the profit margins. So our gross profit margins for student placement and IELTS in FY '22 were at record highs as volumes for both product lines were at record levels, allowing the proportion of fixed costs to be spread across greater volume. Efficiencies in our IELTS test day activities and in IELTS operations in India and synergies from the BC, the British Council, India acquisition contributed a significant proportion of the margin improvement. EBIT and net profit after-tax margin, improvement continued the trajectory we've seen over the last 5 years -- sorry, pre-pandemic as we grow our volume and revenue and drive efficiencies in our operations and keep our cost base growing below our revenue growth. So I'll move on to Slide 23, just briefly on the balance sheet. Our balance sheet remains strong with a cash balance at the close of $197 million, lower than the pcp by $110 million after $159 million of the cash that funded the acquisition of the British Council India IELTS business. Other significant movements during the year included the borrowings increase of $100 million for the acquisition in India and $304 million increase in intangibles that is primarily related to the acquisition in India. I'm going to hand back to Andrew now. Thanks.

Yes. Great. Thanks, Murray. And I'll move on to the summary slide, which is Slide 25. Clearly, great record financial result for the company with strong revenue, plus 50%, and profit growth with EBITA at 127% for FY '22. Most pleasing -- well, many pleasing things, but one of the pleasing things was to see the margin expansion coming through. That's something that we always keep a close eye on, but it's good to see that reconnecting with the trajectory we had pre-pandemic in terms of continued now expansion of those -- that operating leverage. Our strong volume growth really evidences that through the cycle, structural demand for global education and migration that I think we'll continue to see for some years into the future. Pleasing to see, around the world, a major destination market, the positive industry dynamics, really, in some respects, with some competition for skilled migration and talent going on due to labor shortages in the major English-speaking markets, that bodes well from a policy perspective and is reflected in the current settings for post-study work rights across the countries that we support. From an industry leadership perspective, IDP really does hold a unique place in terms of its trusted brand and unique combination of digital and physical solutions for our clients and for our customers to engage in their ambition and their international education and/or migration strategies for the clients and the governments. Clearly, we have an ongoing program of innovation. That pace does not stop and will continue into the years ahead as we set out to remain the leader in the segments that we compete in. And we have plans to continue to invest in those key priority growth markets that represent the strongest thematic growth in the outline periods. So that's it for the presentation. What I'd like to do now is to open it up to questions, if I may, April. So if we can now open up the call for questions from people who joined that would be great. Thank you.

[Operator Instructions] First question comes from the line of Michael Peet from Goldman Sachs.

First question, just on student placement, particularly in Australia. How do you see that panning out for '23? Is there any risk that Australia has lost share here to U.K. and Canada? And can it overshoot like you've seen in those multi-destination markets?

Yes. I think, I mean, clearly, the pipeline for Australia, both in terms of hot and warm leads and applied is rebounding quite quickly at the moment. Our expectation is in FY '23, we should be back to pre-pandemic levels in terms of volumes for Australia and probably just ahead of where we were pre-pandemic, in our best year. The rebound to Australia has been a little slow, primarily, of course, by some of the impacts, in particular, in China. However, it's been remarkably strong and stronger than previous periods from markets like India and Southeast Asia, in particular. So I think we're quite confident FY '23 will be a minimum pre-COVID levels in terms of volumes, but our view is we could go better than that.

And just with the visa delays in Canada, what sort of push into '23 do you think has occurred here?

Well, I think the thing about Canada, we get 3 intakes in Canada. So in my view, it's more a first half-second half question. I don't think, ultimately, it's going to impact our for-the-year -- through-the-year opportunity. We've got significant demand from India for Canada at the moment. So there's no question on the demand side, but visas are taking a couple of months to work through the system. We moved our application programs much earlier for the Canadian intake with an expectation that we would still have some challenges there. But again, I think through the year, no concern that if there's some visa issues in the first half, that'll flush through for the full year.

I guess I was thinking of what could have been in '22. Did you lose 1,000 or 2,000 that might have occurred in '22 if there had been a more normal pace of processing?

Yes. We probably lost around a couple of thousand. I mean we had different impacts post-COVID from the supply chain perspective in a number of markets, I mean, to summarize, and probably a couple of thousand to Canada got delayed from '22 into '23. We probably had a couple of thousand out of Vietnam to Australia that got delayed because of the inability to complete their high school exams. And then, even from India to external markets, we had delays in them equally completing their high school exams and then having time to do their IELTS prep and IELTS test. So still a few little bits of turbulence out there, Michael, but clearly, nothing that is concerning through the midterm.

Finally, Andrew, just congratulations on your time as Managing Director of the company and all the best for the future.

Yes. Thanks, Michael.

So our next question comes from the line of Tim Plumbe from UBS.

Good result. Just wondering if we can talk a little bit more about FastLane. Andrew, how are you guys thinking about number of universities you'd like to get on to the platform in FY '23? I know that you mentioned 50% of the courses. And then, can you talk a little bit very strong uptake in terms of downloads? How is the feedback going amongst the student community? Is it getting to a virality status yet? Or are there any significant marketing pushes that you're planning to try and accelerate that?

Yes. Thanks, Tim. Yes, the objective this year, it's not specifically client targeted. One of the things that we've decided to do coming out of '22, '22 was really a pilot year for FastLane and Live. And I think clearly, it's achieved all of the expectations that we had put in place and more in terms of adoption. FY '23, we are looking at what are our most popular courses. So those courses across our network. which are deemed the most popular. And we're looking at our priority markets, which are markets like India, clearly, Pakistan, Vietnam, the Philippines, Nigeria as we go into Nigeria. And we've identified what we believe are the most popular courses. And the focus will be to get probably 50% of those courses or that inventory onto the platform this year. We feel that gives us the ability to kind of break the back, to your point, in terms of creating a viral kind of paradigm. From a student perspective, what's interesting is the NPS score of the students who are using the app and engaging, not just with FastLane and IDP Live, but the sophisticated matching and content delivery and support on the app, their NPS score was up 6% versus an NPS score of 4% up for students across all engagements. So we're seeing a more positive -- have a positive reaction from students who are getting access to this functionality. The functionality of FastLane will be published and delivered on our web channels. So through idp.com and hot courses, we're currently deploying that same functionality through those channels. So it becomes a lot more ubiquitous. But that's clearly the objective for this year. We set a target of around 10,000 students to receive confirmed offers. I mean, clearly, we like to overshoot, but that's what we've said. So that's growing that by 3x from last year to this year.

Great. And just second question around OpEx, $25 million a month in the second half. How are you guys thinking about that run rate going into FY '23 given the continued reopening and cost inflation? And then maybe can you talk about how we should think about growth within that OpEx line once you kind of get to a business-as-usual or post reopening stage, please?

Sure. Thanks, Tim. I might pass that one to Murray.

Tim, we're investing for growth in FY '23 as well. And so there's going to be a step-up in our OpEx on the same basis, so pre-AASB16, to about $29 million a month. So that's a step-up. But revenue will -- our expectation or our plan is that revenue will be growing at certainly a greater rate than our OpEx growth. So we should see some expansion and continued expansion in margin.

Great. And then just -- I mean, this is reopening. So once we get beyond that, how do you guys think about that kind of line in terms of growth?

Well, I think coming out of reopening, in many respects, a large part of the business is out of what I think is a reopening phase now. And we've been in -- for the last 12 to 18 months really working through a part of our strategy, which reflects our rebound and accelerate initiatives. We're moving into delivering the unique business model that includes things like IELTS Online and the new functionality that will come in and around IELTS, including new tests through the next year or so. Equally, the investment in FastLane. FastLane is only the first service, which is being delivered on the IDP Live Marketplace platform. So there's already a set of 4 or 5 other services, which have been envisioned for that platform. So from a transformational perspective, we're still now really early days in growing that to ensure our market leadership equally in a number of markets. I mean, India, Africa and Pakistan, Vietnam, Philippines, as an example, we are looking to make further investments in terms of penetrating those markets. So there'll be continued growth and investment, and we expect that will be reflected in this continuing expansion of our volumes and our revenue line. But as Murray said, we do it in a very disciplined way, looking to ensure that we're getting leverage out of our operations and expanding the margins as we do that.

Our next question comes from the line of Mr. Darren Leung from Macquarie.

I just had 2 quick ones, please. So one was just on the gross margins. Obviously, a good outcome and you flagged the extent of operating leverage in the business. Just to clarify, on the gross margin piece, is that one that you expect we should sort of think about as the run rate going forward for FY '23, just given the strength in second half? That's the first question. The second one is just on the U.S. business. So it's sort of had been a hard number of U.S. students probably start at 5 percentage or number of students. Is this something that you think the market should be focusing more of its efforts on in terms of the opportunity here, please?

Yes. I'll take the U.S. one and Murray, you can take the gross margin question. Thanks, Darren. I think many of the people on this call would recognize that we've continued through the past 5 years not really prioritize the U.S. primarily because of the opportunity for market share gains that we could see in Canada and the U.K. and the continued expansion of our quality client base and our counselor capabilities specifically for those markets. And that is a big investment in building that capability across our source countries, 30-plus countries, building that counselor capability to effectively counsel. And that's been a priority alongside some of the technology transformation. But I mean, my view and our view strategically was that as we built out our technology from platform and deepen that capability to be able to deliver functions like FastLane and the portfolio of services that will come under IDP Live, we moved much more to a technology play. And in my view and our assessment is that resonates quite well in the U.S., and it resonates well, in particular, in that client set, which we would want to target, which are the top 100. Now they traditionally have not used agents in the historic sense of companies who recruit students in source markets. And now we -- I mean, clearly, we do have an expanding U.S. market, in particular from India to post grad. My view is the U.S. will come onto our strategic agenda. I don't think this year is the year we'll see the returns from that. But we are looking at upskilling and building a stronger U.S. team in parallel with the technology innovation that we're delivering. And yes, I do believe the U.S. will be reprioritized as a major market for IDP in the coming 2 to 3 years. But in the meantime, we still have plenty of market share and opportunity to execute against in our current markets, and we are continuing, Darren, to expand our footprint, both from a technology, omnichannel and office presence. We're opening up 23 offices next year in those priority markets I talked about, which are still strong markets, our traditional destinations. And Murray, just on the gross margin question.

Sure. Darren, I don't expect the gross profit margin to expand, not at the same rate as the significant growth we've seen in the second half. So I think it was 58% full year, and it will grow perhaps to 59% thereabouts. But we need to look at the 2 key business lines. So IELTS, I think it was 45%, it will certainly continue to expand. I expect that, that will get closer to 46%. But the student placement business, as we see China volume come back, which is at a lower gross profit margin, I would expect that the student placement margin will just drop back a little from the 84%, 84.5% that it was as our China volume, with the subagent business that we have, also drops the margin back a little. But the expansion in India certainly adds significantly because that's our most profitable student placement market.