Great. Thanks, April. Good morning, everyone. Welcome to Our FY22 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 FY22. 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 four in the deck, you can see the high-level financial performance summary. Revenue at AUD 793 million was up 50%. EBIT at AUD 163 million, up 127%. NPAT at AUD 106.6 million, up 137%.
Cash balance down to AUD 197 million on the back of the British Council 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, 55,400 APFs. A very strong growth across all our destination markets in the year. That given an environment really where, you know, Australia was closed for the first half of the FY22 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.
Courses 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 AUD 43 million. Revenue up 19%. Events as a subset of that up 40%, reflecting, I think, the re-engagement of the clients in our markets to build their student pipelines. Moving on to page five, 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. 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 FY21. 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. This reflects mainly the post-study work rights settings and the opportunity for students to begin their careers post study in those locations. Probably, you know, the first time we've seen such strong settings across all of our key destination markets. 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 FY21, 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 FY23. Moving to slide six, 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%. 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, you know, 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 FY22.
In terms of English Language Teaching, you know, 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 FY22, and we delivered some significant enhancements to our customer experience, including IELTS Online and IELTS by IDP app, assisting with preparation and booking. 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, you know, 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 FY23 and 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%. We added 62 new clients and contract or commercial improvements across that broader client set in FY22. I'm gonna move to our innovation agenda now, and I'll take everybody to page eight 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 an analog business. I think, you know, 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 and the platform and our omni-channel capability, enabled our counselors to remain in close contact and to guide the students through what was, you know, quite a disruptive period.
That clearly has underpinned some of our ability to rebound as quickly as we have. As we've moved through FY22, we've begun to deliver really transformative services for both the students and the clients. That's reflected in our IDP Live and our FastLane paradigm, which I'll touch a little bit more on later in the pack. We really have moved through this analog from platform and data and into new models and marketplaces. That's now supported by our Digital Campus 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 nine, looking at how we made progress through FY22, 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 websites, 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 websites 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 five 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. 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. We're seeing that about 6 times faster across that platform. In terms of priorities for FY23, you know, we plan to rapidly expand the inventory and the client adoption of FastLane.
You know, 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 FY23, and roughly around 10,000 students we expect to be receiving formal offers on that platform. It really is a year where we continue to drive adoption of that new service. Moving on to page 10, we're gonna 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 and the way people can take the test and where they can take that test, and providing improved support for those customers on their very important journey. Moving to page 11 and looking more at some of the specifics. IELTS, the IELTS platform, or the IELTS has been replatformed. 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, you know, 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 FY22 and now into FY23.
We have a whole set of new products in the pipeline for FY 2023 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 2023, going into FY 2024. 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.
Clearly, we'll be prioritizing those markets where we're not currently present today and looking to take a leading, you know, 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. You know, AI is good at some things, but it's not good at everything. Within the IELTS Online test, we're still supporting a video call speaking test to give our test takers the opportunity to speak to a real person, but doing that at scale using a new technology that we built into the test. Of course, we're empowering customers to choose their best option. Unlike competitive tests, we have the ability to give the customer that choice, whether that be paper, a computer-delivered or an online test.
I wanna 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, you know, through the cycle thematic growth that IDP is connected to. When we look at our Student Placement, and I spoke to the 45% increase in students placed in FY22, this is giving you some insight into really where we're driving that growth. 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 respects, 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. That puts us now only about 11% off our peak for Australia in that second half period. That rebound is strengthening for Australia. When we have a look at where the enrollments are coming from a source market perspective, you know, 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%.
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. 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, I've touched on this real strong through the cycle structural growth that IDP is very much aligned to with our global network. 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 FY13, and IDP IELTS volumes around a 14% CAGR growth. Clearly with a big tick up in FY22 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, as we've discussed before, these are very good leading indicators for our business.
Our Northern Hemisphere business, which clearly performed extremely well in FY22, is showing continued strong momentum and growth with qualified leads up 36% and applications up 54% as we go into, you know, 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. Nevertheless, this reflects a very strong demand from our source markets. When we look at Australia and New Zealand, I think here, we can.
You know, what's exciting about this data is we're seeing the rebound now, coming through and believe, you know, we'll be in a great position in FY23 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 too. 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 sort 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 are 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 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 FY19, which was the last pre-COVID year that we can point to. A strong and long, you know, 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. I guess with that said, we've had a complementary expansion of our Student Placement network in India, with 27 new offices launched in FY22.
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 FY22 overview. Revenue for the year was AUD 793 million, 48% above last year on a constant currency basis and 50% above last year on a headline basis. That was 32% higher than our previous highest revenue in FY19. IELTS testing revenue at AUD 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% vs 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 AUD 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 AUD 103 million, 139% above last year on a constant currency basis. Moving on to slide 20, the operating metrics. The key operating metrics show a strong rebound in IELTS volume and Northern Hemisphere Student Placement volume. Our IELTS volumes, IELTS volume of 1,915,000 candidates, and rebounded in the majority of the markets we test in. When we include the Indian acquisition, our volume accelerated to a growth rate of 67% vs the PCP. IELTS markets that impact IDP IELTS revenue in Australia, New Zealand, China, and Canada did not return to full capacity in FY22.
Student Placement volumes rebounded to 55,400, 45% growth vs 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% vs 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% vs 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. 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 AUD 3,886, a 1% increase vs 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. I'm gonna move to slide 21. Investing for future growth. Our increase in overheads in FY22 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% vs 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 FY21 to ensure we filled 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 officers and new computer-delivered test centers. On a run rate for overheads on a pre-AASB 16 basis and excluding our M&A costs to ensure a like-for-like comparison is at AUD 25 million per month, but in the second half of FY22, up from AUD 22 million per month in the first half of FY22. The full-year run rate for FY22 on the same basis was AUD 23.6 million. I'll move on to slide 22, the profit margins.
Our gross profit margins for Student Placement and IELTS in FY22 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. The 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 five years 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. 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 AUD 197 million, lower than the PCP by AUD 110 million, after AUD 159 million of the cash was that funded the acquisition of the British Council India IELTS business. Other significant movements during the year included the borrowings increase of AUD 100 million for the acquisition in India and AUD 304 million increase in intangibles that is primarily related to the acquisition in India. I'm gonna hand back to Andrew now. Thanks.
Yeah. Great. Thanks, Murray. I'll move on to the summary slide, which is slide 25. Clearly, you know, great record financial result for the company with strong revenue plus-plus 50% and profit growth with you know, EBITDA at 127% for FY22. You know, 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 operating leverage.
A 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 in our 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. We have plans to continue to invest in those key priority growth markets that represent the strongest thematic growth in the outlying periods. That's it for the presentation.
What I'd like to do now is to open it up to questions, if I may, April. If we can now open up the call for questions from people who've joined, that would be great. Thank you.
At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. First question comes from the line of Michael Paese from Goldman Sachs. Michael, your line is now open.
Oh, hi, Andrew, Murray, and Craig. First question, just on Student Placement, particularly in Australia, how do you see that panning out for 2023? Is there any risk that Australia has lost share here to U.K. and Canada? Can it overshoot like you've seen in those multi-destination markets?
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. You know, our expectation is in FY23, you know, we should be, you know, 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. You know, 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. I think we're quite confident FY23 will be a minimum pre-COVID levels in terms of volumes.
You know, our view is we could go better than that.
Just with the visa delays in Canada, what sort of, you know, push into 2023 do you think's occurred here?
Well, I think the thing about Canada, we get three intakes in Canada, so it's in my view, it's more a first half, second half question. I don't think you know, ultimately it's going to impact our full year or you know, through the year opportunity. We've got significant demand from India for Canada at the moment. There's no question on the demand side that visas are taking you know, a couple of months to work through the system. We moved our application programs much earlier for the Canadian intake in it 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, they'll flush through for the full year.
I guess I was thinking of what could have been in 2022. Did you lose 1,000 or 2,000 that might have occurred in 2022 if there had been a more normal pace of processing?
Yeah. We probably lost around 2,000. I mean, we had with different impacts, you know, post-COVID from supply chain perspective in a number of markets. I mean, to summarize, probably 2,000 to Canada got delayed from 2022 into 2023. We probably had 2,000 out of Vietnam to Australia that got delayed because of the inability to complete their high school exams. Then even from, you know, 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.
Still, you know, a few little bits of turbulence out there, Michael, but clearly nothing that is, you know, concerning through, you know, through the midterm.
Fine, Andrew. Just congratulations on your time as managing director of the company and all the best for the future.
Yeah, thanks, Michael.
Our next question comes from the line of Tim Plum from UBS. You may now go ahead, please.
Hi, guys. 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 onto the platform in FY23? I know that you mentioned 50% of the courses. Can you talk a little bit, very strong uptake in terms of downloads. How's the feedback going among the student community? Is it getting to virality status yet or are there any significant marketing pushes that you're planning to try and accelerate that?
Yeah, thanks. Thanks, Tim. The objective this year, it's not specifically client targeted. One of the things that we've decided to do, coming out of 2022. 2022 is really a pilot year for FastLane and Live, and I think clearly it's achieved all of the expectations that we've had put in place and more in terms of adoption. Yeah, FY23, we are looking at what are our most popular courses. Those courses, you know, 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.
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 you know a viral you know a viral kind of paradigm. From a student perspective, what's interesting is the NPS score of the students who are using the you know the app and engaging not just with you know FastLane and IDP Live but the sophisticated matching and content delivery and support on the app, their NPS score was up 6% vs an NPS score of 4% up for students across all engagements.
We're seeing a more 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 Hotcourses. We're currently deploying that same functionality through those channels, so it becomes a lot more ubiquitous. That's clearly the objective for this year, where we know we've 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 set. That's, you know, growing that by three times from last year to this year.
Great. Thanks. Just second question around OpEx, 25 a month in the second half. How are you guys thinking about that runway going into FY 2023, given the continued reopening and cost inflation? Maybe you could 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 FY23 as well. There's gonna be a step up in our OpEx on the same basis, so pre-AASB 16 to about AUD 29 million a month. That's a step up. Revenue will, you know, our expectation or our plan is that revenue will be growing at certainly a greater rate than our OpEx, right? We should see some expansion and continued expansion and margin.
Great. Just, I mean, this is reopening, so once we get beyond that, you know, how do you guys think about that kind of line in terms of growth?
Well, I think, yeah, coming out of reopening in many respects, you know, a large part of the business is out of what I think is a reopening phase now. You know, we've been in, you know, for the last 12-18 months, really working through a part of our strategy which reflects our rebound and accelerate initiatives. We're moving into the 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, you know, the investment in FastLane. FastLane is only the first service which is being delivered on the IDP Live marketplace platform.
There's already a set of four or five other services which have been envisioned for that platform. From a transformational perspective, we're still you know now really early days in growing that to ensure our market leadership equally in a number of markets. I mean, India, Sub-Saharan Africa and Pakistan, Vietnam, Philippines as an example, we are looking to make you know further investments in terms of penetrating those markets. There'll be continued you know growth and investment, and we expect that will be reflected in this continuing expansion of our volumes and our revenue line. 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.
Understood. Thanks for the color, guys.
Thanks, Tim.
Our next question comes from the line of Mr. Darren Leung from Macquarie.
Good morning, guys. Thanks for the opportunity. I just had two quick ones, please. One was just on the gross margins. Obviously a good outcome, and you've 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 2023, just given the strength in second half? That's sort of the first question. The second one is just on the U.S. business. Sort of at the highest, you know, number of U.S. students placed out of 50% 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?
Yeah. I'll take the U.S. one, and Murray, you can take the gross margin question. Thanks, Darren. I mean, I think many of the people on this call would recognize that we've continued to, through the past, you know, five 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. You know, that is a big investment in building that capability across our source countries, 30+ countries, building that counselor capability to effectively counsel. That's been, you know, a priority alongside some of the technology transformation.
I mean, my view and, you know, our view strategically was that as we built out our technology from platformed and deepened that capability to be able to deliver functions like FastLane and the portfolio of services that will come under IDP Live, we move much more to, you know, to a technology play. I mean, 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, you know, agents in the historic sense of companies who recruit students in source markets.
I mean, clearly we do have an expanding U.S. market, in particular from India to postgrad. My view is the U.S. will come onto our strategic agenda. I don't think this year is the year we'll see, you know, 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. Yes, I do believe the U.S. will be reprioritized as a major market for IDP in the coming two to three years. But in the meantime, we still have plenty of market share and opportunity to execute against in our current markets. We are continuing, Darren, to expand our footprint, both from a technology, omni-channel and office presence.
We're opening up 23 offices next year in those priority markets I talked about, which are still, you know, strong markets for our traditional destinations. Murray, just on the gross margin question.
Sure. Darren, I do expect the gross profit margin to expand, not at the same rate as, certainly, the growth we've seen in the second half. I think it was 58% full year, and it'll grow perhaps to, you know, 59%, thereabout. You need to look at it, the two key business lines. IELTS will. I think it was 45%. It'll certainly continue to expand. I expect that will get closer to 46%.
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 sub-agent business that we have also drops the margin back a little. The expansion in India certainly adds significantly, because that's our most profitable Student Placement market.
I understand. That's good color. Thank you, guys, and congrats on a good result.
Thanks, Darren.
The next question comes from the line of Matt Johnston from Jarden. You may go ahead please.
Great. Good morning, Andrew, Murray, and Craig. Maybe just the first one for me, just in terms of, I guess, the pricing across the network of IELTS and processing fees. Maybe just if you can give us some color around what we should expect for IELTS price growth for the network and any color or insight you can share, maybe just around Australian tuition fee growth going into calendar year 2023.
Yeah. I think, you know, we obviously with IELTS firstly, you know, we take price where, you know, wherever we see the opportunity, and that's often reflected on our closest competitors' pricing policy, which is BC, but equally a review of the backlog. We've taken a 4% price increase in India and generally across the global network, we aim to take around about a 3% price increase. Now, I think as it relates to Student Placement, you know, it's probably a little bit difficult to predict, but our best predictions would suggest we'll see price increases again.
We, you know, we tend to plan in terms of how we run the business and deliver on the financial metrics. We assume around 3%-4% course increase. Then clearly underneath that, we have a program to improve our commercial terms with the colleges and university, which runs in parallel to that.
Okay. That's good color. Maybe just on, I guess, the staff side and inflation, which is obviously going through most sectors. Maybe just any sort of comments around tech staff and more specifically around India, around Student Placement counselors. Could you make some comments around how competition's tracking? Is it easing now that we're out of lockdown?
I mean, I think clearly, you know, lots of people in the same boat here. I mean, we have a large tech hub in a city that has other global major tech players around us. We are, you know, impacted by just that ongoing challenge around salaries. One of the things we have done, and we have been very successful at, is we have built academy programs in India for both counselors and equally for our Digital Campus through relationships with a number of the local universities.
That's enabling us to, you know, to bring in and because of our scale, train people into the industry to kind of offset some of the wage inflation that is going on. I think when you get to your senior people, you've got to pay market. In that context, again, we've put in place a number of retention initiatives that relate to, you know, share plans, et cetera, to keep them tied into the, you know, the longer-term opportunity that IDP presents. In many respects, I kind of feel like that's business as usual for us in those markets.
I mean, Murray can maybe touch on more of a thematic in terms of how we've, you know, how we plan for and what increases we do have in that line across the business.
Staff costs around 7%-8%, we're expecting. Obviously, markets like Australia and, you know, U.K., et cetera, are a little lower than that, and some markets in Asia are closer to 10%, but on average about 7%-8%. Okay. Thanks, guys. That's a good color. I'll leave it there.
Thank you.
Next question comes from the line of Melinda Baxter from Morgan Stanley.
Okay. Thanks. Good and good morning, guys. Just two questions, mate, for me. Firstly, can we just get an update of where we're at in terms of the synergy achievements in terms of the British Council India acquisition, and whether or not there's more synergies to come through in 2023? Secondly, just in terms of expectations in terms of the amount of volumes we should expect to come through IELTS Online in 2023. Thank you.
Yeah. Thanks, Melinda. I mean, from a BC integration perspective, I mean, clearly, we're, you know, at end of job on that integration. We've got, you know, one model, one team, and that's working extremely well. When we did the BC acquisition, we would have flagged probably AUD 6 million-AUD 8 million in synergies 12 months out. After we did the work in the second period, we would, you know, be expecting around AUD 6 million-AUD 8 million. You know, I'm very pleased with the work the team has done, both in terms of integrating BC into IDP and the way we've gone about continuing to support the test takers in that market. We probably delivered somewhere around AUD 20 million in synergies, so well ahead of our expectations going into it.
In terms of when we look ahead, I mean, now it really is well integrated into our business, so it's quite difficult now to pull out the specific synergies we get. Yeah, no doubt there's, you know, a significant, you know, number of synergies that, you know, come into the mix now along with the way we run IELTS in a consolidated way in FY23. Nothing specific I would call out.
Just on the volume expectation for online IELTS.
Oh, yeah. I think, again, probably in the year ahead as we roll out, probably around 5% of the IELTS volume is the expectation we have given the, you know, the surveying and the understanding of the marketplace again. You know, IELTS Online, ultimately, you need the recognizing organizations to get behind it. We know, you know, to date, there's been a lot of resistance from the governments who, you know, who do look to an English test to support their visa regimes, that they're very skeptical of online tests. Really it'll be, you know, this year kind of penetrating into those markets that use it for academic reasons only.
Thanks very much.
No worries. Thanks, Melinda.
Question comes from the line of Sriharsh Singh from Bank of America.
Hi again. A few questions from my side. One, on your Canada volumes, talking to a few of your competitors, it looks like the visa rejection rate from India has inched up. Some of your competitors mentioned that it's almost as high as 40% or 50% from India to Canada volumes. Can you talk a little bit about the potential slippage in Canada volumes from 2H? As in, is it primarily because of delay in visa processing, or is there some bit of visa rejection from India as well?
Yeah. I think this is one area where IDP stands out head and shoulders from any of our competitors. I was doing a review of the India operation with our regional director last week, and we get a view that generally visa rejection rates are running at about 50% in Canada, and probably a little bit higher when you move into Northern India. I mean, IDP's visa rejection rates are running at about 15%. We're getting 85% acceptance of our students through that process, and that is very unique. By the way, that's not unusual for IDP.
That reflects the quality of the student and the work that's gone around documentation and applications and indeed, you know, the integrity in our processes. We do have kind of a step-level advantage over the majority of the market there, Sameer. You know, that gives you a view of where we sit. We're quite confident that, I mean, any improvement in visa processing pipeline in terms of capacity, we will benefit from more than our competitors because of our high visa approval rates relative to the market in general. That's a big win for the clients, right? I mean, you would want to work with IDP knowing that the applications you get from IDP are much more likely to have a high visa approval rate than the general market. That's one of our, you know, unique selling points.
That's great to know. Second question is trying to understand your physical expansion plan for the Student Placement side operationally. I'm trying to understand whether you intend to use your placement offices for lead generation or for lead conversion. The question I wanna pose is, what % of your hard leads are generated offline vs digital? What % of conversion happens offline vs digital?
Yeah, I don't have the specific details of that.
Directionally?
In front of me. I mean, that's. Pardon me? Oh, directionally. Well, I mean.
Yes.
We see the Student Placement officers, in particular the counselors, as being a critical component to our value proposition, both for the clients and for the customer. Our intent is with our technology across all channels, it is to ensure that we're getting the highest qualified lead, which is scored now through quite sophisticated data algorithms, to a counselor for conversion. The counselors themselves primarily are there to ensure that when a set of choices or matches are provided to a student, that could be through their online research, through their engagement at events, through referrals, from friends. The counselors are there to ensure that they're getting the right information, and they're able to make the right decision, and the counselor is there to finalize that conversion piece.
All of the other digital channels are there to fill the pipeline, and our pipeline is quite significant in scale. Where a lot of the investment around technology is now in ensuring that we take what is a very large pipeline, I mean, we have almost 100 million students that come across our platforms every you know every year and bring that down to a point where we can bring them into an office for that last piece of assistance in making a choice and conversion. I mean, to that end, in the last year, we've set up application processing centers in China and in India.
Mm-hmm.
To take, you know, further load off the counselors. We've implemented sophisticated lead scoring into both our contact centers and our digital channels. They're there primarily to, you know, touch the top of the market and then using technology like data, lead scoring, et cetera, to separate the wheat from the chaff, and then get that, you know, that high-quality candidate to the office or to a counselor conversation, maybe on WhatsApp or through the app for conversion.
Understood. Thank you. My last question would be circling back to your U.S. volumes. You've talked about your FastLane initiative to target the top 100 colleges in the U.S. But when I look at your hiring data in India, you're hiring a huge number of counselors focused on the U.S. market from India. But there looks to be a lot of intent amongst the community colleges in the U.S. to engage with placement agents, and your volumes have scaled up to 4,000. So if I just try and understand it quantitatively, based on the market size in the U.S. and based on what you're doing in terms of counselor hiring, do you think U.S. volumes can scale up to 8,000 or 10,000 in the next three or four years from 4,000 today, roughly?
Oh, yeah. Yes. No, definitely. Yeah.
So
Sriharsh Singh, i didn't get that last.
I mean, so 4,000 today, can it get to 10,000 in three or four years based on what you're doing?
I think we could get there sooner than that.
Great. Thank you.
There are no questions at this time. I would like to turn the call back over to our presenters.
Okay. Well, thanks, everyone, for joining the call today. Clearly, a great result and indeed, you know, the organization with expanding margins, the ability to continue to drive the top line and expand into markets, the ability to, you know, execute and deliver on our strategy with a technology vision that seems to be really resonating. We are very pleased with the results and looking forward to the opportunity to meet with many of you through the course of the next couple of days. Thanks all for joining the call.