Earnings Call: H1 2019

Feb 7, 2019

Quarterly report

Thank you, operator, and good morning, everybody. This morning, I'm joined by Murray Walton, our CFO and Craig Mackie, our Head of Investor Relations. And we're pleased to take you through our half year financial results. We have a deck we'll be working through covering our highlights, a business update from myself, and then I'll be handing to Murray for the financial results. I'll close off with a short summary, and then we will open up to questions. So if we move to Page five of the presentation, I think everyone can see that we've had very strong results across all business lines. Our performance continues to be underpinned by IDP's growth strategy, our diverse platform and structural trends supporting overseas study work and migration. If we look at our performance on revenue, it's up 26% to $3.00 $4,000,000 EBITDA, up 33% to $66,800,000 NPAT A at $41,800,000 up 32%. We declared interim dividend of $0.01 2 per share, up 41% over the same period last year. As we look at some of the business lines, English Language Testing, our IELTS business up very strongly, 18% at 660,000 tests. Some really strong contribution from a number of key large markets in that result. India, up 31% Canada, up 20% Vietnam, up almost nearly 30%. And we're seeing some early benefits from new markets again like Nigeria, where we opened up less than twelve months ago. If we move to student placement, very strong result, 27,300 placements. That's up 23% over the previous comparable period. In this business line, really strong results right across the board. If we look at U. K, our placements into The U. K, were up 33%, with China contributing strongly to that with 27% growth to The U. K. And India contributing very strongly at 85% growth to The U. Canada overall placements, up 52% with India, the major contributor to that at 70 up 70% over the same period. In Australia, we're up 9% on placements and running ahead of now the visa numbers for Higher Ed. India, a major contributor, up 60%. And in that number, we have seen a small decline from China to Australia of around minus 4%, which is kind of in line with some of the dynamics we're seeing in the marketplace. As we look at English Language Teaching, that was up to 45,900 courses, up 13. Again, contribution from Cambodia, up 15%. But we have seen some strengthening also in Vietnam, course numbers with Vietnam up 10%. Digital marketing, which primarily relates, if you like, to the integration of the Hot Courses acquisition, a very strong traffic expansion for the international sites, which are the sites where we're really harvesting leads for our student placement business, up 26%. So all in all, top line, a great result for the half. If I move to the business update, and here I'm moving to Page seven. I think it's worth noting that we continue to gain strong results from our core underpinning strategies, which is the continued expansion of our network for both IELTS and for student placement. In fact, in that regard, as I mentioned, we're now getting the benefit of testing in Nigeria. And just recently, we had our first student fair in Nepal, the third largest market for Australian student placement. So we're now engaged in that new market. But whilst we're getting the benefits from that underpinning strategy, we are now seeing green shoots, we are remaining very committed to our transformational strategy, which is building the global platform and connected community. If I just touch on a couple of elements there as we look under that top heading of delivering world leading capabilities and services, we've now connected in the Hot Courses international sites into our platform, connected directly into our marketing our new marketing automation systems and our new CRM, so we're able to provide the hot courses, our students engaging on their sites a seamless journey in through and into the counseling process. We continue to expand our leading office network, as I mentioned, having our first event in Nepal in recent months. And looking ahead, we have plans to open up three offices in Pakistan before the end of this financial year, a new market for us for both student placement and for computer delivered IELTS. And in India, whilst we've gone through a very significant office expansion, we continue to plan additional offices, and we have plans for four more between now and the end of the year. Global contact centers, we have 11 centers now in place with seven more to come. Our virtual agency business, nascent really a year to two years ago, is starting to show some good return. Our KCOS virtual agency in China showing a 35% growth over the previous comparable period. And our virtual agency in India, while still small, showed growth at 75%. So good green shoots in some of those very strategic initiatives for the future. We now have a new CRM in place across the business integrated into the platform, an integrated digital student events system enabling us to really reach out in an omnichannel channel way to support students coming to events, but both when they are participating in our many events around the world. Student Essentials equally showing now some green shoots in terms of return with things like health insurance now with a forty two percent attach rate, and we continue to focus on building out that opportunity. And in the future, we still have our eyes on how we bring internships and work readiness into the platform to assist our students in achieving their end goals. Of course, underneath this, and I've said this many times before, the real goal is in the data that we're building across the platform as we integrate IDP websites and our digital platform, IELTS, Hot Courses and other partners, enabling us to build the world's most definitive data set on international students, which provides great value to not just our customers, but ultimately to transforming our products for our clients. If we move to the following page, Page eight. Really, the point I wanted to make here is our investment in our rollout in the global platform is now mainly complete. We've only got a very small number of licensees now to bring on the platform, which we'll do between now and March. But as you can see from the map, we now have the bulk of IDP's countries running on this integrated platform and beginning to reap the benefits from the platform that is in place. Moving to the following page, Page nine. We are indeed seeing early performance indicating that the hypothesis we have around the benefits the platform will bring will be realized. We now have 29 global and country specific websites up and running integrated into that platform. We've seen a 40% increase in traffic, a 46% increase in student online leads and a 35% increase in student placement leads as we look at leads combined both from events or off line and our online initiatives. So we're very pleased with the early signs we're seeing in our key performance indicators. If I move to the following page, Page 10, you'll see that on the left, really flagging that the technology platform is now in place, and we're shifting really our focus. As I said as I think I've said in the past, we now we're now driving a Ferrari as opposed to a Ford Falcon. And to really gain the benefits of that, we've enhanced our global marketing structure. And in that regard, we've brought in an additional 33 global and specialist roles in marketing, enabling us to better understand how we can take advantage of things like SEO, marketing automation, social engagement and richer content across our digital platforms. And that is nearing completion in terms of the investment in people and training that we've undertaken through the last six months. We're right in the middle of what we're calling our Global Ways of Working program or Wow, and that's very much focused on what we've defined as the 20 key roles in marketing and student placement that are most impacted and where we have the most opportunity through changing position descriptions, processes and realigning KPIs to really harvest the benefits of new ways of working in the digital or hybrid digital analog space, which is changing the DNA of the way IDP works in the new world for this new opportunity. I'm excited to announce that we're establishing a digital campus in Chennai where we're bringing together our technology support teams. And what was initially the hot courses web development team now reclassified as our innovation hub into a digital campus, which will be established by June, early July this year, where we will see somewhere between three hundred and four hundred digital experts and technology experts ensuring that we continue to drive the digital change and pursue the digital opportunity we have to engage with our customers to leverage data and transform our products and services. Moving to Page 11 to give you a view on IELTS. We have a very collaborative set of initiatives with our partners, British Council and Cambridge, where we have a clear roadmap of innovation for IELTS into the future, which will deliver new products and new functionality for our test takers and our accepting organization. We've seen record volumes, as I mentioned earlier, with IELTS global volumes up 18%. We're well on our way to ensure that we have computer delivered IELTS in many markets around the world. We now have 55 new IELTS computer delivered test centers in place in the first half across 23 countries, and we're working very hard to have computer delivered IELTS up and running in over 40 countries before the end of this financial year. We've seen really good uptake and feedback of computer delivered IELTS. And the aim would be, out of our total IELTS volumes, to have somewhere between 380,000 tests done on that platform through the course of this year. We continue to invest in our customer journey and ensuring that our test takers understand that IELTS is the fairest test and the test that gives them the best result given the effort they put in to achieving their score. And we're doing that through specific test taker journey, journeys to find and support materials, prep materials being aligned to those journeys and being available to those students as they go through those journeys. So continuing to enhance our support tools and differentiate our product from a customer service and a customer responsiveness perspective. That's a high level business update for you. I'm now going to hand to Murray to take us through our financial results. Murray, over to you. Thanks, Andrew. So revenue at $3.00 $4,000,000 with growth of 26% on last year and 23% on a constant currency basis. Strong growth in English Language Testing of 19% on a constant currency basis and in student placement of 36% on a constant currency basis were the key drivers. The growth in IELTS revenue was strong across Asia and the rest of the world with 33 of our 50 markets having double digit growth rates. India had an exceptional first half performance, but we also had strong growth from Canada, Nigeria and Vietnam. We had a very strong performance in student placement revenue in both the Australian and multi destination product segments. Australian student placement grew 30% and multi destination revenue was up 43% on a constant currency basis. English language teaching revenue had growth of 13% on a constant currency basis, and Cambodia was the key driver of the growth with the new campus opened twelve months ago increasing capacity utilization. Digital Marketing and Events revenue was $20,000,000 and growth of 22% on a constant currency basis. Hot Courses' digital marketing revenue was the key driver and events revenue increased by 40% as we increased the number of events and had an increase in the client participation. Gross profit growth of 24% on a constant currency basis was a little higher than the revenue growth as IELTS margins improved due to price increases in India and Australia and a higher mix of student placement revenue saw GP margins improved 56.6% versus 56.3% in the PCP. Overhead growth overhead cost growth of 20% on a constant currency basis as the impact of student placement office expansion in the second half of last year and the investment in digital marketing capability and contact center resources to support our strategy is reflected. EBITDA at $66,800,000 is 33% above last year and on a constant currency basis is 31% above last year. Depreciation increased by 80% on a constant currency basis as our digital platform investment and office network expansion were capitalized and depreciation increased significantly versus the PCP. Net profit after tax at $40,700,000 is 34% above last year, with revenue growth and EBITDA margin improvement the key drivers to the performance. On a constant currency growth basis, the growth in net profit after tax is 31%. I'm going to move over to Page 14, the key operating metrics. So the key operating metrics highlight both the strong English language testing business and student placement business, both with strong volume growth. IELTS volumes up 18% or 101,000 tests versus the PCP. We benefited from an exceptional performance in India, but also from IDP's diverse network in 50 countries with double digit growth across the majority of our markets. Student placement volumes are 27,300 in the first half, 23% above last year, with Australia growing 9% and multi destination 40%. The Australian volume growth of 9% was underpinned by very strong growth in India. Multi destination volume growth continued to be strong to Canada and The UK in the first half. This was underpinned by India to all destinations, China and Indonesia to The UK, Bangladesh to Canada and The UK, and The UAE to The UK. The average test fee for IELTS was $271 in the first half with a 1% increase on a constant currency basis, a result of the price increases in our largest markets, India and Australia, but was offset somewhat by the impact of a higher mix of volume from lower than average price markets. The average student placement application processing fee has increased to $3,341 for the first half with growth of 16% on a constant currency basis, with a combination of a higher mix of postgrad and undergrad students placed, increases in student pays revenue, increases in tuition fees, improved commercial terms and a change in mix of institutions where students were placed. Both Australian student placement and multi destination student placement average price increased by 16%, with changes in the study sector mix, mix of institution and tuition fees increases common to both, while for Australian commission sorry, for Australia, commission increases and student essentials revenue added to the price increase, while for multi destination student pays revenue from China added to the price increase. I'm going to move over to the segmental earnings on Page 15. So we had strong growth in Asia that underpins the result for the half. Asia revenue grew 33% to $2.00 $4,000,000 with India, China, Vietnam and Bangladesh making the key contributions to that growth. Australasia revenue at $31,000,000 declined by 11% with declines in Australian and New Zealand IELTS volumes versus PCP, the key driver. The rest of the world grew 30% to $69,000,000 with strong Hot Courses digital marketing growth versus PCP and strong aisles growth in Canada and The Middle East, the key drivers. EBIT in Asia at $63,000,000 grew 32, a result of the strong revenue growth. Australasia EBIT at $6,000,000 declined by 26% as we added resources in digital marketing, a contact center and student essential support. The Rest of the World EBIT is at $18,000,000 with growth of 43% as hot courses performed strongly in the period and Canada and The Middle East had very strong EBIT growth versus the PCP. I'm going to hand back to Andrew now. Thanks, Murray. I think just in summary before we open up to questions, I mean clearly the strategy that we have in place leaning into the growth we can see across our diversified network is leading to a strong result with 26% increase in revenue and strong double digit growth across all our business lines. We certainly still, I think, that diversified network or platform are really benefiting from a continued structural underpinning growth, growth of the international student marketplace to the destinations that we support and growth in people seeking migration and work outcomes in other countries. Our digital transformation is on track. And as I said, we've pretty much completed the heavy lifting of getting the platform in place, putting the right marketing capability and sales capability in to take advantage of that and shifting our focus to really ensuring our business processes and our performance indicators are very aligned to getting a return from that as quickly as we possibly can. On the product innovation front, we continue to press very aggressively on rolling out computer delivered IELTS and are actively, in many cases, helping our customers switch from paper to computer delivered because we do believe, ultimately, there are some operational benefits that will come from a larger proportion of our tests being done on computer delivered. And it puts us in a much better, I think, competitive position globally to roll that out aggressively. We continue to have a significant investment in our people. I think primarily as it relates to new capabilities from a digital and from a marketing perspective, of course, whilst also ensuring that we keep the customer at the center of our strategy and everything we do. So with that said, I'd like to now open up the call, and we'd be happy to take some questions from the attendees on the call. Operator, if you could please facilitate, that would be great. Thank you. And we have our first questionnaire from Philip Pepe from Blue Ocean Equities. Firstly, congratulations on a very strong result, very impressive across the board, including cash flow, which you didn't mention in your slides, well done. Just a couple of quick questions. Very strong EBITDA growth in the first half, 33%. Can you match that in the second half? Or was there some volume pull through into the first half? Thanks for the question. The multi destination growth in the first half is significant, and that split will be 70% in the first half, 30% in the second half for multi destination revenue. So we won't be matching the EBITDA number, but we certainly expect it to continue to be growth. Excellent. And the balance potentially, fifty-fifty, I guess, given the nature. Revenue total revenue would be close to fifty-fifty, but certainly not the EBITDA, mix. It'll, more likely be sixty-sixty-forty. Got you. And again, great results on the average testing fee increase of 16%. Can you give us a feel for how much of that growth was the underlying cost fees increase and how much was your own margin improvement and add on services? Philip, I think, yes, in terms of answering that question, we do get into a little bit of complexity with the different destinations that sit under multi destination, if you like. I mean, we generally expect to get about four percent in fee growth, which just comes through the pricing increases institutions put through. However, I would say in this previous period, in particular in markets like Canada, we've seen some significant fee increases go into both college and undergraduate level. So generally, we're modeling on 4%, but we've seen I think a larger set of fee increases come through in some markets. And then we're benefiting from a mix shift. So we've seen through the first half our placement proportion to post grad in particular. And I didn't really mention on the call an increase in numbers to The US as well, which are primarily post grad. That shift in mix has enabled us to benefit from higher core Sean. And our next questionnaire is from William from OD Minute. Please ask your question, William. Hi, Andrew and Murray, and I reiterate that congratulations. It's a terrific set of results. Just back on the average placement fees again, specifically in Australia, was there still some renegotiation of commercial terms? My understanding was that was perhaps complete sort of twelve to eighteen months ago. Also are you seeing some of the high value universities use IDP a little bit more for their placements, which is why you've seen a little bit of that fee increase as well? I think if we're speaking specifically to Australia, We do have some continued commercial term benefits coming through. And those relate to an ongoing initiative we had to continue to push where we believe we can increases on commercial terms. And those are ongoing in of the in fact in some of the Group of Eight universities right now. In terms of institution mix, we do have good penetration into Australia, into the G08. So they are significant very significant clients for us. And again, as I said, in Australia, we've seen also a shift to more I think that's primarily, because we're placing a lot more Indian students into Australia who will come into Australia in in in to do a post graduate degree, having done their undergraduate degree at home. Okay, great. So can you perhaps put a number or able to quantify to a certain extent how much Student Essentials revenue made up of that fee increase there? Oh, very small amount. You know, this year you know, this year in aggregate across the board, you know, my expectation in total is probably only around 3,000,000 in revenue. So it's it's very small. The opportunity is, is significant, but we're still in early stages of really rolling that out. Okay. And going back to a previous slide, you mentioned that you had a 35% increase in leads as a result of the new digital platform. Is your expectation that, that increase in leads will start to convert in this half? Or is this still a little bit more of an FY 'twenty story? I think we'll start. Mean, we're already starting to see some conversion coming through. It's I mean, it's small. But certainly my expectation is as we get to the intake for Australia around June, July, there will be impact from the digital platform as it relates to conversion. I'll just give you a very simple example. I mean we now have over 9,000,000 unique student records in our marketing automation system, and that's building literally every day. And in that context, we have some hundreds of now automated promotions and programs that the system is running for us. And we're finding immediately that we're able to start to bring people back into the counseling process, who would have been leakage before we had the platform in place. And whilst the numbers are small because we're only just beginning, we can see that we're able to start to remediate some of the leakage you would have had in the previous model between someone coming to an event and then disappearing off to another agent or maybe applying themselves. We're able to bring some of those numbers back in. So I think it will start to have an impact. Okay. And then finally, you haven't historically placed a lot of Chinese students into Canada, but if you read the commentary out of the country, seems as though they're really trying to push for some more Chinese students. Is this something that you're starting to see? And you think you can start to capture some of that volume across the next twelve months? Yes. For China, our focus remains Australia and The U. K. I think when we look into the data, we are we have seen some challenges as it relates to Chinese students coming to Australia in terms of volume decline, small volume decline. But that's more than made up from the number of students going to The U. K. From China. Our hypothesis is we're seeing what would have been traditionally students coming to Australia making a different decision and going to The U. K. We can see that in the latest Visa number where there's been a significant uptick of U. K. International students coming from the Chinese cohort. And with the opportunity there, we will remain focused on The UK and Australia out of China, at least for the immediate future. Longer term, can see Canada as an opportunity, but we've got enough on our plate out of China as it is with those two markets right now. Our next question is from Sean Weak from Macquarie. Congrats on a solid result. Just if you want to make just first, could you just touch on IELTS domestically? Obviously, you've continued to seek some share there to PC. So just be good to understand the market dynamics that you're currently seeing and the opportunity that you see to regather share over time. Yes. I think as I mentioned before, I expected to continue to see a trickle down until we got CD IELTS in market and we had capacity. In and around the October, we finally got the computer delivered IELTS release to enable us to do three tests a day. And we've only just recently expanded to also now adding in wheaten tests. My view is right now from what I can see from our market share data, it's not public data and not data we publish. But through the last five months, we've held market share in Australia. And therefore, the aim now is to increase and we've just we've done some work with an external marketing organization on new messaging, and we're about to go into a period where we believe we really need now to push awareness of computer delivered mail outs, in particular, into the competitive test taker realm, which is primarily PTE in Australia because we don't believe the IELTS test takers and the test takers in general are fully aware of our offerings. So I think my view is given market share has stabilized. And of course, we're working with Cambridge and BC on some positive refinements to the test from a test taker perspective, which will be delivered in the coming nine to twelve months, which should start seeing our share position improve. Okay. Got it. And then maybe just in terms of OpEx, I mean, what's your feel for incremental OpEx that you expect to add on in the second half? So let me just talk about the first half first. So the BAU growth on OpEx was about 15%. So the headline growth was 20%. We actually had an investment in the first half of about $4,000,000 in occupancy and headcount as we invested in the new offices and the digital capability. In terms of the second half expenses, I don't see a significant step up. We've got another four or five offices we're opening, so it will be a little bit, but not a significant step up. Okay, great. And maybe just one final one. Just in terms of your thoughts around the acquisitions and any pipeline opportunities. And maybe you could just provide a comment or update on your thoughts around BC. I think in terms of acquisitions, as we flagged before, we definitely remain keen on being able to find acquisitions that add accretively into our platform strategy. And that's primarily around improving and being able to support the customers through their journey. That may lead to look to more digital assets that expand the breadth of our pipeline now with quite a sophisticated marketing automation system and the integration through the CRM and counseling, capturing more of the upstream leads and student engagement puts us in a really good position if we can do that to rapidly grow conversion of students. So I'm quite keen to continue to look at that funnel growth in terms of digital component to add in. And then in terms of BC, we remain in a very collaborative relationship, albeit we do compete, as everyone knows. And there continue to be ongoing discussions between the organizations, which have been in place now for some time on how we best ensure we support IELTS as being the leading high stakes English language test in the market. I mean, as you guys are aware, I mean, we granted some years ago, BC the testing rights to China. We are in constant conversations on how we best together distribute IELTS in an effective way, ensure its leadership position is maintained. But nothing no specific changes to that arrangement at the moment. Okay, great. Thanks, guys. Congrats again. Thank you. Our next question is from James Bayels from Morgan Stanley. Please ask your question, James. Congrats on the result. I'd like to start just on the domestic placement volume performance. That was a meaningful step up from the trajectory that was there before and better than you were sort of expecting earlier in the year. Can you just explain what happened and what we should extrapolate there? Yes. No, happy to explain that. I think clearly at the top of the list is India and significant interest in Australia and Australia's interest in India. There is a recognition by many of the institutions in Australia that diversifying into a better mix of international students is important for the institutions. And of course, as you guys know, we've followed, I guess, an investment strategy in India now for a couple of years where we would be by far the leading international student recruitment organization with the network that we have. That enabled us to grow Australian placements by almost 60% out of India alone. South Asia in itself, which includes markets like Bangladesh and Sri Lanka in total was 50% up to Australia. And the other dynamic, which I think is playing into that is our onshore business in Australia is coming back to strong growth. And you may recall, we've had some challenges with the onshore business in previous reporting periods. But with a number of international students onshore and the investments we've made in our new contact center and our new digital platform. Because the turnaround time in Australia for a student making a decision is much shorter than a student overseas making a decision, we're already capitalizing from some benefits of that platform investment in Australia. So those two things, I think, are the two primary reasons for why that number is coming maybe better than we previously expected. Great. And then on IELTS, can you just explain yours of it sounds like in full ramp up for computer delivered. What's British Council's attitude to that? And where are they in terms of their conversion to computer delivered? I think we're both in the race to get as much penetration of computer delivered out there amongst the 1,000 test centers that both organizations manage in combination. And we're both equally supportive of that push. It's very good for us competitively, again, to ensure that computer delivered IELTS and the benefits that brings the markets maintains our leading position. So we're both supportive of each other in pushing as hard as we can to get that network footprint in place around the world. I'd suggest to date, we are ahead of them. And in some markets, that has led to us improving market share position on IELTS volumes because of the speed in which we are able to move as a commercial organization. So they're in ramp up mode. We're running ahead of them at the moment. Great. Thanks, guys, and congrats. Thank you. The next question is from Aaron Yeoh from Goldman Sachs. Congrats on the great results. Just a couple of questions for me. First one, just with regards to the Chinese or the student placement business out of China, what percentage of your student placements out of China are currently placed in The UK? Out of China into The UK, it's almost probably 40%, sixty-forty. Australia, 40% China. Okay, great. And do you think that will continue to grow as a percentage of the mix over time? So I think for us, The UK out of China is remains a big opportunity. The UK, I think, right now is quite an attractive market. And as I've said previously, we on the ground in China, the feedback I get from the teams on the ground is there is some switching between Australia and to The UK. My view is over the next twelve to eighteen months, if Australia remains fairly flat as a market for Chinese students, U. K. Number will pass the Australian number out of China. Okay. Great. Given the strong, I guess, increase in the average placement fee that you guys had during the half, I was a bit surprised that the gross margin with the student placement business was lower, albeit you did call out some specific costs. Can you sort of go through in a bit more detail, I mean, what the sort of increase in expenses above that gross profit line were? And I mean, were they sort of more one off? And that being said, should we expect that sort of gross profit margin within student placement to increase over time? So there was two parts to the cost increase. One is the licensing fees for our new digital platform, where we also got licensing fees for our existing CRM system, which will roll off in FY 2020. So that, if you like, is a one off for FY 2019. The licensing fees for the existing CRM, dollars 1,000,000 should certainly drop off for FY 2020. The other part of it was the increase in sub agent commissions to for student placement. And we've seen an amount come back to volume to from sub agencies just picked up a little, and we've also seen some percentage increases in the commissions paid. And so that's the other item. So that will continue as we manage that part of the business. In terms of the sub agent commissions, I mean, is that largely in China? Yes. Yes, it is. And in terms of that sort of continuing, I thought the sort of move was sort of away from that sub Asian type model over time. Is that an incorrect sort of assumption? It's yes. The assumption is to get the balance right and to have the right mix between subagent and direct, in particular in China. And it is very much a part of the China business model. And for somebody like IDP with a very, very high quality global client list, we are quite an attractive, if you like, upper level organization to help smaller quality sub agents find their students a place and have that monetized. We will never have the physical reach in China to the opportunity that's available to us. So the strategy one years point ago was to formalize to balance and formalize that model. We're still doing a little bit of work on that. So right now, we're in the process of implementing specifically a sub agent platform in China, where we can support the sub agents with education and also expertise around the clients. But it will be part of the model going forward. Ideally, it sits around that fifty-fifty model. And I think in China, the other dynamic that you will see and we are seeing and putting some wood behind the arrow is our virtual agency. So our Caicos business now in China is close to representing probably around onethree, if not a little bit more of our direct student placement businesses coming out of KACOS, our virtual agency, which is growing 35%. So we'll have three, if you like, three kind of distribution acquisition models or student acquisition models. One will be direct, one will be our sub agent and the third will be our virtual agency. In my view, down the track. They're probably running about a third, a third, a third in terms of how we're sourcing students in that market. Okay, great. That was great color. Just one last question. In terms of the conversion to computer based testing, in terms of the countries which have converted as well, are they have they fully converted? Or is there still a mix between computer based testing paper based testing? And if that's the case, when do they sort of is it a plan that, that will always continue to be the case? Or will they fully convert by some stage? I think it's a great question. We'd love to see and the aim would be to see markets that are highly, if you like, computer literate. And let's say, let's take Australia as an example, we would like to move that to complete CD IELTS probably by the end of twenty twenty. The reality markets is there still remains a group of test takers who are much more comfortable with paper. And in that context, I think two things apply. One, we should continue to have a product that supports the customer preference. And two, the governments who have been very strongly supportive of IELTS for many years do recognize that if you have a high stakes test, which you're using for migration and work, it should be available in a form widely distributed that supports the capabilities of the people to take the test. And the reality is not everybody, especially in many of the markets that we operate, are necessarily comfortable with a keyboard. So I think paper will remain. Our aim though will be to drive penetration of computer delivered as far as we can possibly go to get the operational benefits from that. Great. Thanks very much guys. And our next question is from Julien from Evans and Partners. Please ask your question, Julien. Hi, guys. Very impressive set of numbers. Congratulations. One question I've got is on the benefit from the increase in leads coming from ideafare.com, the sort of 46% in over next year or so. What sort of multiplier on that do you expect? Yes. I think, well, the original model that we put in place was a 10% increase in our lead volumes to be harvested by the investment in the digital platform. So that would be taking something at 25% and moving it to 35%. And the aim down at the back end of the pipe is to improve conversion by 10%. And primarily, that's done through the marketing automation system. At the moment, this is I guess has now become a key performance indicator that we want to track, hence our presenting it to the market. And it will be something that we drive very hard to continue to increase. But we're already seeing in terms of the incremental lead generation, it is fulfilling our business case objectives that we had originally built into the assumptions and probably overachieving on it at this stage. I think the key thing to keep our eye on here is ultimately improvement in conversion. Are we able to convert those leads? It's one thing to reach a wider audience digitally and you would expect to be able to do that. But the key will be watching metrics. And we'll start to see that as we go into really FY 'twenty. It will be a metric that we can publish and we can track. And next question is from Tim Blumby from UBS. Please ask your question, Tim. Hi, guys. Just a couple of questions from me, if that's right. Andrew, when I look at the Australian student visas lodged, appears to be a pretty strong acceleration year on year. Just from your experience, how do you think about the time taken from the visas being lodged to granted to students actually being placed into the universities within Australia? Yes. So I guess, again, the devil is in the detail with this one because for IDP, we when I look at the Visa numbers and of course, my aim is always to be beating the Visa numbers. We should be taking market share with the investments and the team we've got. It's to look at our source countries and to look specifically at higher ed, and do the analysis, if you like, the benchmarking against that. If you're in an offshore country, again, and the timeframes between when we see actually not all visa lodgements end up being students who come to Australia either, which is another complexity, because often students who lodge a visa actually don't end up studying in Australia. They may defer or they may choose another destination. But generally, we kind of distill that through our own modeling and that's where I'd said we're looking at in the last period about a 7% benchmark from our countries coming into Australia. But it's a tough question to answer, because each country is very different. We've got 33 countries. So I think the visa numbers are one indicator, but they're not the sole indicator that we should be using. Got it. Yes. Got it. And second question just about further expansion. You mentioned going into the new market of Pakistan. How far through the global expansion into new countries do you think you are? And then could you talk a little bit more about how far you are in terms of further expansion into the existing countries such as India you're expanding out further? Yes. I think well, let's I mean, the big the two big international source markets for international students are China and India. Then for Australia, the third market is Nepal. So we look at the big markets, take China, we prioritize The UK and Australia, albeit we have a strong very strong client list in Canada and a strong client in The U. S. So at the right time, when I believe we've got the capacity in place in China, we will open up the channel to Canada and to The U. S. So in a very measured way, we continue to grow and there's expansion in all of our countries. If I look at India, we're going to be opening up another four offices. And beyond that, there's now the opportunity to invest in our virtual agency in a very strategic way to start reaching specific cities that we won't have a physical presence in. And we're currently reviewing whether we should establish a formalized sub agent model in India for certified IDP sub agents in markets where we don't have reach. Now out of India, I can I've got capability for all destination markets. Ireland, we just added on, as you guys would be aware, Canada, The U. S, Australia and New Zealand. But continued significant growth is available for us in that market from a market share perspective. And that's equally reflected to a smaller degree across the rest of the network. In terms of new markets, we have had a look at South America and we just don't think it's a quality enough market and there's too many political economic issues there for us to at this juncture want to put a footprint in. We have made a decision on Pakistan. It's a top 10 market for Australia and demographically looks to be a strong market into the future. And we've made the decision before the end of this year to open up three offices in Pakistan and begin recruiting for The UK and for Australia. The UK, a very strong market out of Pakistan. And we've currently got Nigeria under evaluation. Nothing to announce, but that's another market we've got our eye on. There's no more further questions at this time. I'd like to hand the call back to the speakers for any continuing remarks. Please go ahead. Well, thank you all for joining the call, and I look forward, I'm sure, over the course of the next two or three days with speaking more with everyone who's joined. Cheers, and we'll talk to you later. Thank you.