Taaleem Holdings PJSC, a prominent K-12 education provider in the UAE, has kicked off its fiscal year with remarkable performance, as reported in its Q1 2024/25 earnings release. The company, which operates 12 premium schools and manages 22 schools under public-private partnerships, announced a robust 14.8% year-over-year (YoY) increase in operating revenues, amounting to AED 306.1 million.

This impressive revenue growth can be attributed to a significant 18.7% rise in enrolment at premium schools. The acquisition of Lycée Libanais Francophone Privé Meydan (LLFPM) and the expansion of DBS Emirates Hills (DBS Islands) have played a crucial role in this growth trajectory, with a combined capital expenditure of AED 437.5 million.

Despite the increase in enrolment, the blended utilisation rate saw a temporary decline to 74.0% due to rapid capacity growth from recent expansions. However, the premium segment's capacity grew by 28.0% YoY, demonstrating Taaleem's commitment to expanding its educational footprint.

The company's EBITDA rose by 7.6% YoY to AED 108.0 million, reflecting a 35.3% margin. This growth offset the impact of higher non-linear costs, such as utilities and school supplies, in the first quarter. Meanwhile, net profit surged by 46.3% YoY to AED 68.2 million, with the profit margin increasing by 4.8 percentage points to 22.3%, partly due to a one-off deferred tax from the previous year.

Given Taaleem's strong financial performance and strategic expansions, the outlook for the company appears promising. However, potential investors should remain cautious and consider the temporary decline in utilisation rates. Thus, a 'hold' strategy is advisable for those already invested, allowing for further assessment of the company's performance in subsequent quarters.