Cengage Group, a prominent global education and technology company, recently reported its financial results for the second quarter and first half of Fiscal Year 2024. The company saw a massive increase in its adjusted cash revenue for the second quarter, reaching $570 million, marking a 10% rise from the prior period. Additionally, adjusted cash EBITDA less pre-publication costs (ELPP) surged to $260 million, showing a strong increase of 13%. Furthermore, for the first half of Fiscal Year 2024, Cengage Group’s adjusted cash revenue hit $840 million, reflecting a substantial growth of 9% over the prior year. In response to these exceptional financial results, Michael Hansen, CEO of the company, expressed his confidence in delivering the third consecutive year of mid-single-digit revenue growth.
The company’s work on its ‘education for employment’ strategy has demonstrated that learners are able to secure employment and see improvements in their earning potential as they engage with Cengage’s workforce skills programs. Notably, Cengage Work, a segment of the company, experienced an impressive 20% increase in adjusted cash revenue during the first half of Fiscal Year 2024. The business also sustained inherently strong unit economics, leading to profit during this fiscal year. As a result, Cengage Group saw positive growth across all three of its business units, indicating that the company is on track for sustainable revenue growth. With a continued focus on driving scale and efficiencies through their evolving operating model, the company is projected to achieve margin expansion. Looking ahead, Cengage Group is confident in its fiscal year 2024 outlook, with expected adjusted cash revenue growth in the range of 4-5% compared to the previous year.
Cengage Academic, one of the company’s business units, made significant progress in the first half of Fiscal Year 2024 with adjusted cash revenue reaching $523 million compared to $492 million in the prior period. On the other hand, the U.S. Higher Education segment experienced marginal growth, pointing toward a future trajectory of returning to growth. The business unit, Secondary, ended the first half with a remarkable 29% increase in adjusted cash revenues to $169 million. Despite a 7% decrease in adjusted cash revenue for International Higher Education, Cengage Group’s continued strategy to stem dilutive reimportation to the US market has positively influenced its performance. These key financial outcomes and business developments have contributed to the company’s significant deleveraging of its balance sheet with a net leverage of 3.8x at the end of the second quarter of Fiscal Year 2024, as compared to 6.3x a year earlier.
