Executive Summary / Key Takeaways

• Laureate Education, Inc. (LAUR) is a leading private higher education provider in Mexico and Peru, strategically positioned to capitalize on robust demand for affordable, quality education, driven by a growing middle class and limited public university capacity.
• The company delivered strong third-quarter 2025 results, with revenue reaching $400.2 million and Adjusted EBITDA of $95 million, both exceeding prior guidance, propelled by favorable foreign currency rates and double-digit growth in Peru's online programs.
• LAUR has significantly increased its full-year 2025 guidance, now projecting revenues between $1.681 billion and $1.686 billion and Adjusted EBITDA between $508 million and $512 million, reflecting strong organic constant currency growth and margin expansion.
• Strategic initiatives, including the expansion of high-growth fully online programs for working adults and the launch of new physical campuses, are key drivers of future enrollment and revenue growth, reinforcing LAUR's competitive moat.
• With a strong balance sheet and a commitment to shareholder returns, evidenced by a recent $150 million increase in its stock repurchase program, LAUR is poised for continued value creation despite macroeconomic uncertainties and foreign currency translation impacts.

A Resilient Foundation in Emerging Education Markets

Laureate Education, Inc. stands as a prominent force in the private higher education landscape of Mexico and Peru, offering a diverse portfolio of undergraduate and graduate degree programs. The company, which evolved from Sylvan Learning Systems, Inc. to Laureate Education, Inc. in 2004 and went public in 2017, operates as a public benefit corporation, underscoring its commitment to societal impact alongside financial performance. This mission-driven approach is particularly relevant in its core markets, where a significant imbalance exists between the supply and demand for accessible, high-quality higher education. The burgeoning middle class in both nations, coupled with global growth in technology and services, fuels a consistent demand for graduates, creating a fertile ground for private institutions like Laureate.

The company's business model has demonstrated remarkable resilience across various economic cycles, including the 2008-2010 global financial crisis, the COVID-19 pandemic, and the mid-2023 recession in Peru. This resilience stems from the fundamental prioritization of education by families, recognizing the substantial wage premium and strong return on investment that a higher education degree provides. Laureate's strategic transformation between 2019 and 2021 honed its focus on Mexico and Peru, streamlining operations and positioning it for sustained growth.

Technological Edge: Powering Digital Expansion and Hybrid Learning

A cornerstone of Laureate's strategic differentiation and a significant driver of its growth is its advanced digital capabilities and hybrid learning model. The company's proprietary online-hybrid platforms are not merely supplementary; they are integral to its educational delivery, offering enhanced accessibility and flexibility that are particularly appealing to the working adult demographic. This technological advantage allows Laureate to penetrate new student segments and optimize its existing campus infrastructure.

The benefits of this technology are tangible and quantifiable. Fully online courses are experiencing robust double-digit growth in both Mexico and Peru, significantly outpacing the growth of traditional on-campus, face-to-face or hybrid delivery. Approximately 100,000 students, representing about 20% of Laureate's total student population, are currently enrolled in these fully online digital learning programs. This rapid adoption highlights the effectiveness of Laureate's digital offerings in meeting evolving student needs. The company positions itself as a market leader in innovating and launching new digital programs, leveraging its platforms to deliver quality education efficiently. This technological leadership creates a competitive moat by enabling Laureate to offer flexible, career-oriented programs that resonate with a broad student base, contributing to higher enrollment volumes and diversified revenue streams.

Competitive Landscape: Leading with Scale and Quality

Laureate Education holds a privileged position as the leading private higher education provider in both Mexico and Peru. The competitive landscape in these markets is characterized by numerous private and public institutions, with competition expected to intensify as markets mature. However, Laureate believes it compares favorably due to its unwavering focus on quality, professional-oriented curriculum, and the inherent advantages of its extensive in-country networks.

In Mexico, private education providers account for approximately 39% of the total higher education market, while in Peru, this figure rises to about 76%. Laureate's scale, with two nationally licensed institutions and over 30 campuses in Mexico, and three institutions with 20 campuses in Peru, provides a significant operational and brand advantage. For instance, UPC in Peru has been consistently ranked as the number one education brand in the country by Merco for four consecutive years and was recognized as the top-ranked university in Peru by the 2025 Times Higher Education Impact rankings. Similarly, UVM in Mexico was ranked the second-best private university by Reader's Digest in 2024. These accolades underscore the strong brand equity and academic reputation that Laureate's institutions command, which are crucial differentiators in attracting and retaining students.

Compared to U.S.-focused online education providers like Grand Canyon Education (LOPE) or Strayer Education (STRA), Laureate's strength lies in its global network and its versatile blend of campus-based, online, and hybrid programs, offering a broader geographic reach and diverse learning experiences. While competitors like Adtalem Global Education (ATGE) also have a global presence and focus on professional education, Laureate's wider program diversity, including engineering alongside health sciences, provides more comprehensive options. Laureate's extensive international network enables cross-border opportunities, fostering a culturally varied learning environment that differentiates it from more domestically focused or niche vocational training providers like Lincoln Educational Services (LINC).

Financial Performance: Strong Momentum and Strategic Capital Allocation

Laureate Education has demonstrated robust financial performance, particularly in the most recent periods. For the three months ended September 30, 2025, the company reported revenues of $400.2 million, a 9% increase compared to the same period in 2024. Adjusted EBITDA for the quarter stood at $95 million, exceeding management's guidance. This strong performance was primarily driven by favorable foreign currency rates and double-digit growth in Peru's secondary intake, largely fueled by fully online working adult programs.

Year-to-date through September 30, 2025, revenues reached $1.16 billion, a 2% increase over the prior year, while Adjusted EBITDA was $314.7 million, also up 2%. On an organic constant currency basis, year-to-date revenue growth was 8% and Adjusted EBITDA increased by 13%. Mexico's segment performance was particularly strong, with Q3 2025 Adjusted EBITDA increasing by 29% on an organic constant currency basis, driven by revenue growth and productivity gains. The segment's year-to-date Adjusted EBITDA increased by 21% on an organic constant currency basis, leading to a 240 basis point margin increase. Peru's segment also saw significant new enrollment growth of 21% in Q3 2025, primarily from online programs, contributing to an 8% increase in total enrollments.

The company's liquidity position remains exceptionally strong. As of September 30, 2025, Laureate held $241 million in cash and cash equivalents against $102 million in gross debt, resulting in a net cash position of $139 million. Cash flow from operating activities increased significantly by $80.8 million to $272.8 million for the nine months ended September 30, 2025, attributed to higher operating income, lower cash paid for taxes, and reduced interest expenses. Capital expenditures for the same period totaled $36.1 million, an increase of $1.5 million, reflecting investments in equipment and campus improvements in Mexico.

Laureate is committed to returning excess capital to shareholders. On October 30, 2025, the Board of Directors approved a $150 million increase to the existing stock repurchase program, bringing the total remaining authorization to approximately $177 million. Since 2019, the company has returned over $3 billion of capital to shareholders through various means, demonstrating a disciplined approach to capital allocation.

Outlook and Strategic Growth Initiatives

Laureate has raised its full-year 2025 guidance, reflecting confidence in its operational momentum and favorable market conditions. The company now anticipates total enrollments of approximately 494,000 students, representing about 5% growth over 2024. Full-year revenues are projected to be between $1.681 billion and $1.686 billion, reflecting 7% to 8% growth on an as-reported basis and approximately 8% on an organic constant currency basis. Adjusted EBITDA is expected to range from $508 million to $512 million, indicating 13% to 14% growth on an as-reported basis and 12% to 13% on an organic constant currency basis. This outlook implies an Adjusted EBITDA margin expansion of approximately 150 basis points, driven primarily by Mexico's margin optimization and operating leverage. The company also expects an Adjusted EBITDA to unlevered free cash flow conversion of approximately 50%.

Strategic initiatives underpin this positive outlook. Laureate opened two new campuses in September 2025 for its value brands: one in Monterrey, Mexico (UNITEC), and another in Lima's Ate District, Peru (UPN). These are the first new campus launches since 2019, with two more planned for late 2026 or early 2027. These expansions are expected to contribute to long-term enrollment growth and offer attractive internal rates of return. The company anticipates capital expenditures to be around 5% of revenues to support this growth momentum.

The macroeconomic backdrop in Peru remains favorable, with projected GDP growth of approximately 3% for both 2025 and 2026. In Mexico, while the current macroeconomic environment is "a bit sluggish" due to U.S. trade policy uncertainties, economists anticipate increased economic activity in the second half of 2026 and into 2027 following trade negotiations. Laureate's guidance for Mexico in 2025 assumes a more benign 1% GDP growth.

Risks and Challenges

Despite the positive outlook, Laureate faces several risks. Operating in Mexico and Peru exposes the company to complex business, economic, legal, regulatory, political, tax, and foreign currency risks. As a U.S. dollar reporting company, Laureate is subject to foreign currency translation impacts, particularly from the Mexican peso, which has experienced volatility. While local revenues and expenses are naturally matched, significant weakening of the peso can unfavorably affect reported U.S. dollar revenues.

Campus consolidation initiatives in Mexico are expected to result in a one-time revenue loss of approximately $13 million in 2025. However, this is a strategic move aimed at creating a more streamlined and efficient campus footprint, ultimately contributing to margin growth. The company is also subject to legal proceedings and governmental audits, though management believes these will not materially impact its financial position.

Conclusion

Laureate Education, Inc. is executing a compelling growth story, leveraging its market leadership in Mexico and Peru, robust digital capabilities, and strategic physical expansion. The company's strong financial performance in the third quarter of 2025 and its increased full-year guidance underscore the effectiveness of its strategy to meet the burgeoning demand for quality, affordable higher education. With a resilient business model that thrives across economic cycles, a commitment to technological innovation in online learning, and a disciplined approach to capital allocation, Laureate is well-positioned to deliver sustained value to its students and shareholders. The strategic investments in new campuses and the continued scaling of its digital offerings, combined with a strong balance sheet and a focus on operational efficiency, reinforce Laureate's competitive standing and its long-term growth trajectory in attractive emerging markets.