Laureate Education Q3 2026 Earnings Call Transcript
Laureate Education (NASDAQ:LAUR) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Laureate Education reported strong financial performance for Q3 2026, with revenue of $485 million and adjusted EBITDA of $147 million, both exceeding previous guidance.
New enrollments grew by 8%, driven by successful campus expansions and online growth, particularly in Mexico and Peru.
The company reaffirmed its full-year guidance, expecting revenues between $1.92 billion to $1.93 billion and adjusted EBITDA between $593 million to $599 million.
Strategic initiatives include ongoing campus expansions in Mexico and Peru, with plans for additional campuses in 2027 and accelerated openings in 2028.
Management highlighted favorable economic conditions in Mexico and Peru, supporting the company’s growth outlook and strategic investments.
Laureate announced a $150 million increase to its stock repurchase program, underscoring its commitment to shareholder value.
The company experienced a favorable foreign currency impact in Q3 but noted potential FX volatility affecting Q4 outlook.
Full Transcript
OPERATOR
Hello and welcome to Laureate Education’s third quarter 2026 financial results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Adam Morse.
You may begin.
Adam Morse (Senior Vice President Finance)
Good morning and thank you for joining us on today’s call to discuss Laureate Education’s third quarter 2026 results. Joining me on the call today are Eilif Serck-Hanssen, President and Chief Executive Officer, and Rick Buskirk, Chief Financial Officer. Earnings press release is available on the Investor Relations section of our website at laureate.net. We have also posted a supplementary presentation to the website which we will be referring to during today’s call.
The call is being webcast and a complete recording will be available after the call. I would like to remind you that some of the information we are providing today, including but not limited to our financial and operational guidance, constitutes forward-looking statements within the meaning of applicable U.S. securities laws. Forward-looking statements are subject to risks and uncertainties that may change at any time and therefore our actual results may differ materially from those we expect.
Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, our 10-Q filed earlier this morning, as well as other filings made with the SEC. In addition, all forward-looking statements are based on current expectations as of the date of this conference call and we undertake no obligation to update any forward-looking statements.
Additionally, non-GAAP measures that we discuss, including, among others, adjusted EBITDA and its related margin, adjusted net income and adjusted earnings per share, total debt net of cash and equivalents, and free cash flow, are also detailed and reconciled to their GAAP counterparts in our press release or supplementary presentation. Let me now turn the call over to Eilif.
Eilif Serck-Hanssen (President and Chief Executive Officer)
Thank you, Adam, and good morning, everyone. Today we are pleased to report strong financial performance for the third quarter along with the results of our current intake cycle. Third quarter revenue was $485 million and adjusted EBITDA was $147 million. Both metrics were ahead of the guidance we provided three months ago, aided by favorable foreign exchange rates in Mexico. The primary intake is largely completed with new enrollment growth of 8% versus the comparable intake period last year, driven by a very successful launch of our new campus in Puebla as well as continued growth in existing campuses and online.
In Peru, we are seeing a 9% increase year over year in new enrollments during the secondary intake which will be fully completed in November. Our Peru intake benefited from our leading fully online capabilities which generated strong demand from working adult students. The strong results from our combined intake cycles confirm the three main growth levers in our business and that they are all working well. These three growth drivers are: number one, same-store growth enabled by rising participation rates and market share gains; secondly, new campus expansions in new zip codes and new cities in Mexico and Peru; and thirdly, our rapidly scaling fully online portfolio for working adult learners. Since the start of 2025 we have opened three new campuses and we expect two additional campuses opening in 2027.
Our Southern Lima campus remains on track to open in the first quarter, followed by our new Mexican campus in Merida which is expected to open prior to the September 2027 main intake. Beyond these projects, we have a strong multi-year pipeline of attractive campus expansion opportunities across Mexico and Peru and we have already secured multiple sites to support future growth and expect to accelerate our new campus openings in 2028. During our next earnings call we will provide some additional details on the pipeline and its deployment cadence going forward.
Upon completion of this intake cycle, we have good visibility into the remainder of the year as well as the jump-off point for 2027. That gives us the confidence to reaffirm the full-year guidance expectations and announce an additional $150 million increase to our stock repurchase program, reinforcing our disciplined capital allocation strategy and commitment to long-term shareholder value creation. Let me now provide some color on the geopolitical and macro conditions in our markets. Mexico’s economy continues to show signs of improvement during 2026. Second quarter GDP grew by 2.1% year over year, the strongest gain since 2024, supported by broad-based growth across industrial production and services and agriculture and, importantly, foreign direct investment hit a record level for the first half of this year, highlighting the renewed confidence in Mexico’s role as the preferred supply chain partner to the United States.
While conditions are improving and in line with our expectations for the second half of 2026, overall economic growth in Mexico continues to be below its full potential in the medium to long term. We remain confident that Mexico’s deep integration with the U.S. economy will provide attractive structural growth opportunities for the Mexican economy. In Peru, President Keiko Fujimori’s election win provides greater clarity on economic policy which now focuses on reducing red tape, increasing investments in core industries and lifting the growth rate for the economy. Strong domestic demand, large investment into the mining sector and elevated commodity prices further support Peru’s momentum of GDP growth above 3%. As for Peru’s El Niño preparedness, the country has drawn lessons from previous events and is today better prepared than during past extreme weather occurrences.
The government has improved their forecast capabilities and increased investments in storm and flood mitigation activities, including river dredging and drainage systems. Further, Laureate’s ability to deliver high-quality hybrid and online learning should help to partly mitigate the potential disruption to our operations during the peak of the El Niño event forecasted to take place between November 2026 and February 2027. In summary, Peru’s solid fundamentals continue to support our bullish medium- and long-term growth outlook for the country. That concludes my prepared remarks and I’m now handing the call over to Rick for the financial overview for the quarter as well as more details on our outlook. Rick, thank you.
Rick Buskirk (Chief Financial Officer)
Before I discuss our financial performance for the quarter, let me provide a few important reminders on seasonality. Campus-based higher education is a seasonal business. Although the third quarter is a large intake period, from a P&L perspective it is seasonally low, as classes are out of session for much of the quarter. In addition, the timing of the start of our classes can shift year over year depending on various factors such as when public universities begin classes or when holidays occur.
This in turn affects the timing of enrollments and revenue recognition and quarter-over-quarter comparability. In terms of seasonality for 2026, we have some intra-year calendar timing impacts, as outlined on slide 21 in our presentation. As I review our operating results, I will provide additional color on these timing-related impacts. Let’s start with pages 10 and 11 of the supplementary presentation, which highlight our third quarter and year-to-date operating and financial performance. New and total enrollment volumes increased 8% and 6%, respectively, for the current intake cycle versus the comparable intake period in the prior year. Growth from new campuses contributed approximately 2% to our overall new enrollment growth and 1% to our total enrollment growth. Third quarter revenue was $485 million and adjusted EBITDA was $147 million.
Strong new enrollment intakes in both markets drove favorable results for the quarter. We also benefited from $29 million of foreign currency impact on revenue, reflecting a stronger Mexican peso and Peruvian sol during the period. On a constant currency basis and adjusted for the academic calendar shift discussed earlier, revenue for the seasonally low third quarter was up 6% year over year and adjusted EBITDA increased by 14%. Third quarter net income was $101 million, resulting in earnings per share of $0.73 per share on a reported basis.
Third quarter adjusted net income was $72 million and adjusted earnings per share was $0.52 per share, an increase of 100% as compared to Q3 of the previous year. Growth was aided by earnings momentum and favorable intra-year academic calendar timing. Now turning to year-to-date performance. On a constant currency basis and adjusted for academic calendar timing, results for the first nine months of 2026 were strong, with revenue and adjusted EBITDA growth of 7% and 9%, respectively, versus the prior year period. Let me now provide some additional color on the performance of Mexico and Peru starting with page 13. Please note that all comparisons versus prior year are on a constant currency basis.
Let’s start with Mexico. Mexico’s new enrollments for the primary intake grew 8% versus the prior year intake period, with strong growth in face-to-face enrollments. As Eilif noted earlier, our new campus opening in Puebla is performing ahead of expectations and, as a result, contributed approximately 3% to Mexico’s year-over-year intake performance. Pricing for the intake was in line with our cost inflation for our traditional face-to-face and online programs.
Total enrollment volume increased by 5% versus the comparable intake period in the prior year. Adjusted for timing of the academic calendar, Mexico’s revenue for the third quarter grew 6% year over year and adjusted EBITDA increased 12%. As discussed on prior calls, we expect Mexico’s margin accretion in 2026 to be weighted toward the second half of this year. On a year-to-date basis and adjusted for timing of the academic calendar, Mexico’s revenue grew 6%, resulting from a 4% increase in average total enrollments and price mix, and adjusted EBITDA increased by 3%, reflecting the timing of investments and the ramp-up of our new Puebla campus.
Let’s now transition to Peru on slide 14. Peru’s secondary new enrollment intake grew 9% versus the prior year intake period, driven by fully online programs, as we continue to leverage our leading digital capabilities to meet growing market demand for working adults. Our rapid growth in fully online is creating price mix impact on average revenue per student in Peru. We expect this impact to persist into next year. Total enrollments were up 5% versus the prior year intake period, supported by new enrollment growth and the expansion of our fully online programs.
Adjusted for timing of the academic calendar, Peru’s revenue for the third quarter grew 6% year over year, driven by higher enrollment volumes, and adjusted EBITDA increased by 15%. On a year-to-date basis and adjusted for timing of the academic calendar, Peru’s revenue increased 7% versus the prior year period. Adjusted EBITDA was up 14% and was impacted by the timing of certain expenses, which are expected to normalize in the fourth quarter. Let me now transition to our balance sheet. Our balance sheet remains strong. Laureate ended September with $204 million in gross debt and $190 million in cash, for a net debt position of $14 million. Through September, we repurchased $256 million of common stock under our previously announced share repurchase program, including $75 million of repurchases in the third quarter. Today we announced that our Board has authorized an additional $150 million increase to our share repurchase program.
In total, as of September 30th and pro forma for this increased authorization, $225 million remains available under the upsized authorization. Upon completion of this full execution, we will have returned more than $3.5 billion of capital to shareholders since 2019 through a combination of share repurchases, cash distributions, and cash dividends. Moving on to our outlook starting on page 18. As Eilif noted earlier, we recognized favorable foreign currency impacts in our third quarter results versus expectations. Since that time, both the Mexican peso and Peruvian sol have weakened against the dollar, essentially giving back the FX upside from our third quarter. Despite the recent weakening of the currencies, we are pleased to reaffirm our full year guidance for 2026, which is as follows: total enrollments to be in the range of 518,000 to 523,000 students, reflecting growth of 4% to 5% versus 2025; revenues to be in the range of $1.92 billion to $1.93 billion, reflecting growth of 13% on an as-reported basis and growth of 6% to 7% on a constant currency basis versus 2025; adjusted EBITDA to be in the range of $593 million to $599 million, reflecting growth of 14% to 15% on an as-reported basis and 8% to 9% on a constant currency basis versus 2022. This would result in an increase in adjusted EBITDA margins of approximately 50 basis points at the midpoint of guidance on a reported basis for 2026.
Adjusted EBITDA to unlevered free cash flow conversion of approximately 50% on a reported basis, supporting our continued emphasis on return of capital to shareholders. Lastly, adjusted earnings per share guidance for 2026 is expected to be in the range of $2.04 to $2.10 per share, reflecting growth of 19% to 22% versus 2025 on a reported basis. This outlook assumes a weighted average share count of approximately 139 million shares. Now moving to fourth quarter guidance, which includes an expected $20 million of unfavorable intra-year academic calendar timing, as illustrated on page 21 of our presentation. For the fourth quarter of 2026, we expect revenue to be in the range of $546 million to $556 million, and finally, adjusted EBITDA to be in the range of $198 million to $204 million. Eilif, I’m now handing it back to you for your closing comments.
Eilif Serck-Hanssen (President and Chief Executive Officer)
Thank you, Rick. The strong year-to-date performance through September reflects the strength of our business model and the resilience of our operations in Mexico and Peru. Our investments in academic innovations and AI capabilities, digital offerings, and accretive campus expansions are all strengthening our competitive position. At the same time, our scaled operating model continues to drive margin expansion and strong free cash flow generation.
We have an enviable position with the leading university brands, attractive growth opportunities, and a strong balance sheet. We believe these favorable attributes position us well to create long-term value for our shareholders while also expanding access to high-quality, affordable education for students and learners in Mexico and Peru. Operator, that concludes our prepared remarks, and we are now happy to take any questions from the participants.
OPERATOR
Thank you, ladies and gentlemen. As a reminder, to ask a question, please press star-1-1 on your telephone, then wait for your name to be announced. To withdraw your question, please press star-1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.
Jeff Silber (Analyst at BMO Capital Markets)
Thank you so much. You called out the, I think it was a 3% impact on enrollment from the new campus in Puebla. Can you talk about the other two campuses you opened this year? Can you just remind us when they opened, and was there any impact from those other two campuses on the quarter as well?
Eilif Serck-Hanssen (President and Chief Executive Officer)
Hey, Jeff. Yes, Puebla performed very well. It opened on time, on budget, and it went slightly ahead of our expectations. We have also opened a new campus in the east part of Lima in a district called Ate. And we opened also a new campus in Monterrey in Mexico. Those campuses are now in the second year of operation, so there’s, you know, just normal growth in new enrollment as, you know, the base 2025 baseline already has, you know, a cohort of new enrollment in it.
So that’s part of the organic growth. However, both campuses contribute nicely to total enrollment, as those campuses take four to five years to fill up.
Jeff Silber (Analyst at BMO Capital Markets)
Okay, I appreciate you clarifying that. And in terms of the fourth quarter guidance, when we compare it to your implied guidance beforehand, it was a little light. You called out a couple things in the quarter, and I just hope you can parse that out. I think there was a timing difference in expenses in Peru and also changes in FX. Is it possible to kind of segment those two in terms of the impact on guidance?
Rick Buskirk (Chief Financial Officer)
Yeah, absolutely. Hi, Jeff. Good morning. The outperformance in Q3 was primarily driven by FX and a bit of, as you said, expense shifting in terms of adjusted EBITDA. But more specifically, the revenue outperformance of $9 million versus the high was entirely driven by FX favorability in the quarter versus guidance. And for adjusted EBITDA, it was about a near 50/50 combination of FX outperformance and operational expense timing shift. So that, you know, when you look at Q3, it was that.
When you look at Q4, we’re obviously looking at a much weakened peso relative to the dollar at where we sit as of last week and this week, so that we are not—we are reaffirming full year guidance, but we are taking down Q4 as we’re just flowing through the upside of FX in Q3 to Q4.
Jeff Silber (Analyst at BMO Capital Markets)
So again, roughly a 50/50 impact in the fourth quarter as well.
Rick Buskirk (Chief Financial Officer)
Revenue was all FX.
Jeff Silber (Analyst at BMO Capital Markets)
Yeah, revenue’s all FX. Okay. And then obviously the expenses—the adjusted EBITDA—does impact about the timing of expenses. Okay, I can follow up on this.
Rick Buskirk (Chief Financial Officer)
The expenses will shift around $5 million into Q4.
Jeff Silber (Analyst at BMO Capital Markets)
Okay, perfect. Thank you so much.
OPERATOR
Thank you. Our next question comes from the line of Alex Paris with Barrington Research. Your line is open.
Alex Paris (Analyst at Barrington Research)
Hi, guys. Thanks for taking my questions. Just to follow up on the Q4 guide—obviously FX, you just kind of went through that—a negative impact in the fourth quarter versus prior guidance. A $20 million shift in revenue, which we knew about the academic calendar. Does that shift into Q1?
Rick Buskirk (Chief Financial Officer)
First of all, no, it’s all intra-year. So it all goes, and we’ve got that laid out for you in the earnings presentation. You can see it by quarter implications. We have around $28 million shifted into Q3 in Mexico and $1 million in Peru in Q3, and $16 million and $4 million shifted out of Q4. And you see that on the earnings presentation, page 21.
Alex Paris (Analyst at Barrington Research)
And then, you know, if you take the high and low of your full-year guidance and the year to date through nine months, there’s a $10 million SP revenues from high to low, $6 million spread on adjusted EBITDA from high to low. What are the underlying assumptions for the low end and the high end?
Rick Buskirk (Chief Financial Officer)
Basically, I mean, really at this point, we’re sitting here at the end of October. We just completed our intake. We have a very strong view of the operational performance of the business and feel very comfortable about that. The bigger impact that is between the spread of the high and low is FX. And if the current FX levels hold versus the peso, continues to deteriorate versus the peso, or rebound… So if the current level holds, we’re talking midpoint. If FX improves for you, it’s the high end. If it weakens, it’s the low end, approximately.
Alex Paris (Analyst at Barrington Research)
Okay, good, now that’s helpful. And then on year-to-date new student enrollment for Laureate Education in general it was up 9%. At June 30th it was up 10%. And if you look at it by market, it was really a decline in new student enrollment sequentially in Peru. Now I realize that’s the secondary intake, but is there anything else to read into that?
Eilif Serck-Hanssen (President and Chief Executive Officer)
No. I mean we are very, very key for the new enrollment momentum this year. We’re seeing the Mexican economy improving. All this, this is usually correlated to the overall economy, and improving product is by definition more accessible, and we’re getting enough lift and execution in both countries very, very strong. So, you know, getting, you know, 8% enrollment growth for the full cycle for Mexico, which is the main intake, I’m very, very pleased and encouraged by that when you’re looking at across all of our brands and also across all modalities: face-to-face, hybrid, and online.
And also it’s important to note that the C2 intake in Mexico was, I said was the main intake. It is also heavily weighted to face-to-face young students, and that traditionally is the more economically sensitive population, because the working adult students are more resilient. In a softer economy, if they don’t have a job… And then when we get into Peru, it really was all about an online intake. The main intake is in February/March, and that was, you know, continues to be very strong in Peru.
And if you choose a second intake in Peru, I would say, you know, the vast, vast majority of that is on non-traditional students, sort of working-adult products and on a technical/vocational basis. And, you know, very strong at the moment, but signals are just building up, although much smaller part of the overall impact.
Alex Paris (Analyst at Barrington Research)
Great. Well, thank you. I appreciate the addition. Yeah, no, the additional color is helpful. Thank you. And then just a point of clarification: in prepared comments, you talked about discussing the pipeline on the Q4 call. Were you referring to the new campus pipeline?
Eilif Serck-Hanssen (President and Chief Executive Officer)
So my reference to the pipeline was the pipeline of campus inventory of new campus opportunities that we have, with a very significant amount of campus expansion opportunities across both of our markets. Of course, Mexico is a bigger country and has more opportunities, but we have some in Peru as well that we are, you know, working on. So more specificity on that around fourth-quarter results and 2027 guidance. But you can expect, given the fact that we have secured more land opportunities, to see our capex for 2H26 increase a little bit versus historical levels.
And that is because we’re securing, you know, land plots and expansion opportunities that will be coming online. It takes about 18 to 24 months to build a campus. So we’re going to have a couple of new campuses in 2027, and we would like to be able to accelerate that a little further in 2028 and beyond.
Alex Paris (Analyst at Barrington Research)
Great. I had a little trouble hearing you. But just to be clear, there were two new campuses opened last year. There’s Puebla this year, and then next year there’s two planned, one in each market. Is that still the current thinking for 2027?
Eilif Serck-Hanssen (President and Chief Executive Officer)
That’s correct. And in 2028 we should be able to go a little faster, given we have secured land plots for new locations during 2026, which then will likely come online in 2028.
Alex Paris (Analyst at Barrington Research)
Gotcha. Okay, thank you very much. I appreciate it. I’ll go back in the queue.
OPERATOR
Thank you. Our next question comes from the line of Marcelo Santos with J.P. Morgan. Your line is open.
Marcelo Santos (Analyst at J.P. Morgan)
Hi, good morning. Thanks for taking my questions. I have two on my side. The first is going back to the guidance. I think you are forecasting enrollment growth of around 4% to 5%, right, for the year. And you are growing faster than that now. What would make this number of enrollments decelerate into the fourth quarter? Like, just want to know if this is conservativeness or is there some specific fact that you are targeting there. And the second question would be more if you could discuss—you already discussed this in previous quarters—but could you reiterate your views on margins outlook for the next coming years?
Thank you.
Rick Buskirk (Chief Financial Officer)
Yeah, I can take both of those. Good morning, Marcel. First, as it relates to our guidance to raise 4% to 5%: the high end of the range is 5%. And the difference between the guidance and the 6% is simply a matter that September 30th is peak enrollment, and we have intra-cycle attrition in the fourth quarter, as we normally experience, that brings it down to an average at that high of 5%. Since we had a stronger mix of fully online, particularly in Peru, that has a higher attrition.
That’s what’s happening structurally. I’ll pause there and see if that answers your first question.
Marcelo Santos (Analyst at J.P. Morgan)
Like every year you have this effect, right, in the fourth quarter. So what you’re saying is that this year this attrition effect should be higher because of the mix in Peru. That would be the main reason why this year would be different than the previous year.
Rick Buskirk (Chief Financial Officer)
That’s correct.
Marcelo Santos (Analyst at J.P. Morgan)
Okay, perfect.
Rick Buskirk (Chief Financial Officer)
Thank you. And as it relates to your second question, as you know and our investors know, we’ve done a tremendous focus on very aggressive margin expansion, particularly in Mexico over the last couple of years that’s led to over 500 basis points. As Eilif and I have communicated, we have a commitment to continue to expand our margins in the next several years despite drag that we have from the new campus investments. And we’ve said that we expect to be able to expand margins on average around 30 to 50 basis points per year going forward.
And really what’s happening there fundamentally is we’re getting the benefit of massive scale that Laureate has of 500,000 students and a very scaled back office where we get good flow-through on incremental revenue production.
Marcelo Santos (Analyst at J.P. Morgan)
Thank you very much.
OPERATOR
Thank you. Please stand by for our next question. As a reminder, ladies and gentlemen, that’s star-one-one to ask a question. Our next question comes from the line of Samuel Alves with BTG Pactual. Your line is open.
Samuel Alves (Analyst at BTG Pactual)
Thanks, guys. Good morning, everyone. First, on Mexico’s margin, just one follow-up. Could you guys quantify how much the new greenfield campuses are currently diluting margins? Just trying to understand the potential of the margin upside as these campuses mature. And second, on Peru, we have heard that the competition has become somewhat more aggressive there, with some players cutting prices, particularly in the fully online programs or versus the fully online programs.
Have you guys noticed any change in the competitive environment or pricing dynamics there? That’s it. Thank you.
Rick Buskirk (Chief Financial Officer)
Sure. I’ll take the first question and then Eilif can take the second question. So on the first question as it relates to the impact of the new campuses, as we said in prior calls and in this one, the impact is around 50 basis points on margin in Mexico and about 25 basis points consolidated. So just as a reminder, we’re saying that we’re going to expand overall Laureate margin 50 basis points this year. Had it not been for new campuses, we would have expanded 75.
So at the end of the day we’re still expanding margins despite that. And essentially what’s happening is it’s around a $5 million drag of new campuses because the campuses are open, particularly Puebla that just launched here in the third quarter/fourth quarter, and the Mérida second campus we’re going to launch next year. So we’re paying rent on those and accelerating marketing investments on this. But obviously we are looking forward to them as they continue to get cohorts in the door; they will be very accretive to us overall as a business.
Eilif Serck-Hanssen (President and Chief Executive Officer)
Sam, can you hear me okay?
Samuel Alves (Analyst at BTG Pactual)
Yeah, sure. The second one.
Eilif Serck-Hanssen (President and Chief Executive Officer)
Yeah, the second one, the competitive environment in Peru. I just want to make sure that my microphone is working okay. In terms of the competitive environment in Peru, you know, clearly people are looking towards the leadership position we have established in fully online. And not surprisingly, other universities are launching their own online product portfolio. But the purchase behavior is really driven by the brand positioning, the product portfolio, the overall student experience, and the price point.
And our strategy has been to deliver a high-quality product at an affordable price. That gives us a very, very significant competitive advantage, and that is really why we have been growing this market very, very rapidly. And we currently have over 40,000 fully online students in Peru. So really, really robust growth for our segment. But yes, absolutely, our success is being copied by our competitors just as we have.
Samuel Alves (Analyst at BTG Pactual)
Thank you, guys.
OPERATOR
Thank you. Our next question comes from the line of Mauricio Cepita with Morgan Stanley. Your line is open.
Mauricio Cepita (Analyst at Morgan Stanley)
Hello, good morning. Thanks for the opportunity here. Just so you know, the sound there in the room is not really clear. I think you seem to be a little far away from the mic. But anyhow, I’ll make my—we have also two questions from our side. So first is about expansion so that we can project better. So this new campus in Mérida, how does it compare to the ones that we already have in Monterrey, Puebla, and Mexico City in terms of capacity and capex, and what should be your standardized campus size and necessary capex?
So will you continue to be focusing also on these lower-tier brands in both countries? So this is the first part. And the second part a little bit more about how online is progressing, so just to have a kind of a reality check on how much of the Mexican intake growth has come from the face-to-face versus online. Thank you.
Eilif Serck-Hanssen (President and Chief Executive Officer)
So in terms of the Mérida campus, it is a smaller campus because secondary cities—it is the capex of somewhere in the mid to low 20s versus, you know, mid-40s for a capital city campus. It has about 6,000 students versus a, you know, typical, you know, 92 levies ocean for a capital city campus. But it has, you know, a very similar IRR profile. It attracts, you know, the strength of our brands in these secondary cities, gives us a very, you know, commanding, you know, preference—consumer preference—and hence the market share when they’re opening up.
And the market fragmentation in the secondary cities are greater than those in the capital cities. So there is a strong preference towards large, nationally recognized brands, as education is a very important branded consumer-product business. I’ll pause there and see if that answers your question on the Mérida expansion economics. Can you hear me?
Mauricio Cepita (Analyst at Morgan Stanley)
Yeah, I think about the online also. Right, yeah.
Eilif Serck-Hanssen (President and Chief Executive Officer)
So, moving on to online. We view online to be very different but complementary. Basically, it leverages our back office, it leverages our very strong brand portfolio, and of course a lot of the teaching infrastructure as well is shared with a hybrid portfolio in those markets. That gives us a massive competitive advantage and scale benefit. But the commercial activities for online are geared towards the working adult, non-traditional students—students who are looking for degree completion or getting an undergraduate degree or postgraduate degree in order to get a promotion or shifting a career, maybe from a local company into international industry. So it’s a very, very different consumer.
And the marketing and the communication and the attraction effort is very separate and distinct from that of face-to-face, which is largely pursuing high school leavers and hence you’re marketing to what we call feeder schools within a 15 to 20 kilometer radius from all of our 55 campuses across Mexico and Florida.
OPERATOR
Thank you, ladies and gentlemen. I’m showing no further questions in the queue. That concludes today’s conference call. Thank you for your participation. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.