NextEd Group (ASX:NXD) management highlighted what it described as “tangible progress” in first-half FY2026 results, pointing to higher profitability, a structurally lower cost base and improved cash generation following a reset undertaken in FY2025.
Chief Executive Officer Mark Kehoe said the period showed “clear evidence of earnings improvement,” supported by a shift toward higher-margin vocational and higher education pathway programs, stronger student lifetime value and the use of AI to improve efficiency. Chief Financial Officer and Chief Operating Officer Andrew Nye added that the FY2025 cost actions delivered “a step change in profitability despite a softer revenue line.”
Profitability improved despite slightly lower revenue
Key group-level metrics discussed on the call included:
- Underlying EBITDA: AUD 6.7 million, up 16.7%
- NPAT loss: reduced to AUD 0.7 million, a 92% improvement year over year
- Operating costs: down 9% in the half
- Operating cash flow: around AUD 3 million (management cited AUD 3.0 million and AUD 3.3 million during the call), more than triple the prior period’s AUD 1.0 million
- Cash balance: AUD 16 million at 31 December with no external borrowings
Nye said gross profit was AUD 24.1 million and the gross margin was “broadly maintained,” with the main driver of improved earnings being the lower operating cost base. He also stated the underlying EBITDA margin improved by 2.3 percentage points.
International segment remained the earnings anchor
Management characterized international as the company’s largest and most scalable segment. Kehoe said Greenwich continued to gain share in a “disciplined policy environment,” with student mix shifting toward programs that extend duration and increase per-student value.
Highlights cited for international included:
- ELICOS market share: nearly 19%, up 8.8% year over year
- Vocational (VET) market share: 2.7%, up 69% year over year
- International vocational students: up 30% in high-margin courses
- Visa approval rates: 26% above the industry average, which management linked to compliance strength and student mix
- Student lifetime value: over AUD 8,000 per student, up 35% year over year
On the financial breakdown, Nye said international revenue rose 1% to AUD 33.8 million, with vocational growth offsetting softer English volumes. Segment EBITDA was AUD 6.2 million, described as broadly stable year over year.
In Q&A, Kehoe attributed market share gains to a combination of factors, including share captured following the closure of International House Sydney, as well as organic growth supported by student outcomes, agent engagement, compliance levels and visa approval rates. He also said NextEd had launched new courses over the last 18 months, including early childhood, and expected further growth potential in VET given the comparatively smaller market share versus ELICOS.
Mixed segment performance: Technology and design improved; domestic vocational remained soft
Nye said “technology and design is the standout improvement,” noting that while revenue in the segment declined, earnings rose to AUD 1.8 million due to a restructured cost base and a tighter delivery model within AIT.
Domestic vocational was described as a soft spot. Nye said revenue declined 21% to AUD 3.5 million, primarily due to the impact of government funding changes, with EBITDA also down accordingly. Kehoe told callers the business had been “reset,” with new management in place, increased sales discipline and early signs of process improvement. He noted domestic vocational remains a relatively small part of the group, but said management sees an opportunity to grow it.
Go Study also performed strongly, with Nye reporting revenue up 10% and EBITDA up 75%, driven by stronger recruitment activity and operating leverage.
Structural cost reset and property optimization continued
Nye said the cost reset was “real and structural,” stating the company has permanently removed AUD 4.8 million, or 17.4%, from the six-month cost base since H1 2024. He pointed to lower salary costs following FY2025 restructuring, reduced property costs after rationalizing surplus space and tighter control of other operating expenses.
Property optimization was also highlighted as ongoing. Nye said three sublease arrangements executed early in the calendar year are expected to deliver around AUD 0.5 million per annum of additional benefit, and the company continues landlord discussions—particularly for larger CBD footprints. He added weekday utilization remains around 50% across the national network.
In response to a question about cost expectations, management referenced prior AGM guidance for operating cost reductions of AUD 0.5 million to AUD 1.0 million, and said it is now expecting operating costs to be lower by AUD 1.0 million to AUD 1.5 million versus FY2025 on a full-year basis.
AI initiatives emphasized as an “execution lever”
Kehoe said AI is embedded in both curriculum and operations, describing it as applied capability rather than experimentation. He cited AUD 300,000 in savings at Greenwich from AI-driven automation of student application workflows, including document recognition and robotic processing integrated into enrollment systems, with further automation underway.
On the academic side, management said OpenAI Codex has been integrated into the AIT IT degree, and an AI Foundations co-curricular program will be offered to more than 7,000 students from March at no additional cost. Kehoe said the collaboration with OpenAI differentiates NextEd and supports product relevance.
In Q&A, management also discussed potential opportunities to extend AI-related training into a corporate/B2B market, citing demand for AI foundational literacy across the workforce. Kehoe said the Greenwich automation results serve as a “proof point” for improved operating leverage through AI, and that management sees multiple opportunities to apply AI to processes, student outcomes and cost reduction.
Looking ahead, management said its next phase centers on expanding international market share, deepening vocational and higher education penetration, improving retention and student lifetime value, and maintaining disciplined capital allocation. On cash flow seasonality, Nye said the company would expect a “slight uptick” in second-half operating cash flow, all else equal, given the timing of term starts and typical June cash balance dynamics.
About NextEd Group (ASX:NXD)
NextEd Group Limited provides educational services in Australia, Europe, and South America. It operates through four segments: Technology & Design, International Vocational, Go Study, and Domestic Vocational. The Technology & Design segment offers face-to-face and online courses in information technology, digital design, interactive multimedia, computer coding, digital marketing, games and apps programming, and interior design. The International Vocational segment provides English language intensive courses, and vocational education and training courses for international students.
