Cengage Group Announces First Half Fiscal Year 2024 Results Driven by Strong Second Quarter Performance
Boston, MA – November 9, 2023 - Cengage Group, a leading global education and technology company, reported its financial results for the second quarter and first half of Fiscal Year 2024, ended September 30, 2023. Adjusted Cash Revenue for the second quarter was $570 million, up 10% on the prior period, with Adjusted Cash EBITDA less Pre-Publication costs (ELPP) at $260 million, 13% ahead. With a strong second quarter underpinned by a successful back to school season, Adjusted Cash Revenue for the first half of Fiscal Year 2024 was $840 million, a 9% increase over the prior year. ELPP for the first half of Fiscal Year 2024 was $262 million, an increase of 14% over the first half of fiscal year 2023.
“We closed the first half of Fiscal 2024 strongly and remain on track to deliver our third consecutive year of mid-single-digit revenue growth. As we continue to drive efficiencies through our operating model and expand margins, profit growth is expected to outpace our revenue increase,” said Michael Hansen, Chief Executive Officer, Cengage Group. “Importantly, our entire portfolio of businesses contributed to our momentum as we strive for sustainable revenue growth and margin expansion across all three of our business units.”
Hansen continued, “As we enter the second half of 2024, we are acutely aware that our customers including students, instructors and administrators, seek education that delivers tangible education outcomes. Aligned to our ‘education for employment’ strategy, we are committed to delivering the products and services that customers trust to help them achieve their goals. The launch of our recent Cengage Work Outcomes Report delivers clearly stated evidence that our workforce skills programs help learners secure employment and increase their earnings potential – two of the primary goals of most who seek education to improve their lives.”
You can learn more and download the full report on our Cengage Work website here.
You can find more information about Cengage Group’s First Half Fiscal Year 2024 results below, and by visiting cengagegroup.com/investors.
Cengage Group First Half Fiscal Year 2024 Financial Results
|
$ million |
H1 23 |
H1 24 |
Delta |
|
Adjusted Cash Revenue |
$769 |
$840 |
9% |
|
Digital Net Sales |
$550 |
$624 |
13% |
|
Adjusted Cash EBITDA1 |
$261 |
$299 |
15% |
|
Adjusted Cash ELPP |
$231 |
$262 |
14% |
|
Unlevered Free Cash Flow |
$53 |
$59 |
$6 |
|
Net Leverage |
6.3x |
3.8x |
2.5x |
Cengage Group Second Quarter 2024 Financial Results
|
$ million |
Q2 23 |
Q2 24 |
Delta |
|
Adjusted Cash Revenue |
$519 |
$570 |
10% |
|
Adjusted Cash EBITDA1 |
$245 |
$280 |
14% |
|
Adjusted Cash ELPP |
$230 |
$260 |
13% |
1 Adjusted Cash EBTIDA has been added to the financial highlights as an increasingly important metric in our business and relevant in the comparative assessment of our performance.
Financial & Business Highlights:
First Half FY24 Adjusted Cash Revenue $840M up +9% year-over-year
- Cengage Academic: Adjusted Cash Revenue was $523 million in the first half of FY24, compared with $492 million in the prior year period, up 6%. This reflects improving momentum in US Higher ED, and the performance of Secondary, where solid underlying growth was boosted by meaningful sales order timing effects.
- U.S. Higher Education: Adjusted Cash Revenues for the first half reached $299 million, marginally behind the prior period. This improved first half performance gives us increasing confidence in our expectation that the business is on a trajectory to return to growth.
- The Secondary business ended the first half with Adjusted Cash Revenues up 29% to $169 million. With sales timing effects expected to reverse in the second half, the business is expected to deliver solid mid-single digit Adjusted Cash Revenue growth in Fiscal 24.
- International Higher Education: Adjusted Cash Revenue for the first half decreased 7% to $56 million, principally driven by our strategy to stem dilutive reimportation to the US market.
- Cengage Work: Adjusted Cash Revenue was $62 million in the first half of FY24, up 20% compared with the prior year period. Work has moved firmly and sustainably into profitability in FY24, with adjusted cash ELPP of $3 million, reflecting the scaling of the business and its inherent strong unit economics.
- Cengage Select first half revenue increased 13% to $239 million. Research maintained its growth momentum from Fiscal 23, increasing Adjusted Cash Revenues by 4% to $122 million compared to the prior period. English Language Teaching adjusted cash revenues improved to $78 million, up 35%, reflecting the combination of strong underlying double-digit growth and significant temporary timing effects in sales orders and returns.
First Half FY24 Adjusted Cash EBITDA $299M, up 15% year-over-year
- Adjusted Cash EBITDA reflects the strong flow through of revenue growth, on top of continued margin progression as we continue to drive scale and productivity in our evolving operating model.
First Half FY24 Adjusted Cash ELPP $262M, up +14% year-over-year
Strengthened & Deleveraged Balance Sheet
- Cengage has significantly deleveraged its balance sheet with net leverage of 3.8x at the end of the second quarter of FY24, compared with net leverage of 6.3x a year earlier.
Fiscal Year 2024 Outlook
With the completion of a successful fall season, Cengage Group is re-confirming the outlook for fiscal year ended March 31, 2024. Adjusted cash revenue is expected to grow in the range of 4-5% compared to last fiscal year. We expect solid ELPP growth to outpace revenue growth with margin expansion driven by our continuing focus on driving scale and efficiencies through our evolving operating model.
About Cengage Group
With more than 100 years of serving learners, Cengage Group is a global edtech company that enables student choice. No matter how, where, when or why someone wants to learn, our portfolio of education businesses supports all students, from middle school through graduate school and skills education, with quality content and technology. Collectively, our three business units – Cengage Academic, Cengage Work, and Cengage Select – help millions of students each year in more than 125 countries achieve their education and career goals and lead choice-filled lives. Visit us at www.cengagegroup.com or find us on LinkedIn and Twitter.
Forward-Looking Statements
This press release, the investor presentation and related discussion on the investor call contain "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "assess," "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "estimate," "project," "foresee," "likely," "focus," "grow," "achieve," "deliver," "execute," "gain," or "anticipate" or similar expressions that concern our strategies, objectives, plans or goals. All statements that are not strictly historical in nature are forward-looking. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, many of which are outside our control. Our actual results and financial condition may differ from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements. You should consider such factors, many of which are outlined in the "Risk Factors" section of our FY23 Annual Report for the fiscal year ended March 31, 2023, and in our quarterly report for the quarter ended June 30, 2023, and the "Special Note Regarding Forward-Looking Statements" section of the same report. The Company's Fiscal Year 2024 Quarterly Report for the quarter ended September 30, 2023 will be posted to the Company's website shortly. Such reports can be accessed at cengagegroup.com/investors. We cannot assure you that forward-looking statements will prove to be accurate, as actual actions, results and future events could differ materially from those anticipated or implied by such statements. Any forward-looking statement made by us in this press release, the investor presentation and related discussion on the investor call, is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.
This release contains non-GAAP financial measures. See the appendix in the investor presentation available at cengagegroup.com/investors for a definition of these non-GAAP financial measures and the rationale for their use.
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