Cengage Group Announces Fourth Quarter and Full Year Fiscal 2024 Results

Adjusted Cash Revenue grew 5% to $1.54 billion in Fiscal 2024

Adjusted Cash EBITDA up 10% to $461 million in Fiscal 2024

Strong momentum underpins positive outlook for Fiscal 25 - expect robust top line growth and accelerating adjusted cash EBITDA margin expansion  

BOSTON, June 6, 2024 /PRNewswire/ -- Cengage Group, a leading global education and technology company, announced its financial results for the fourth quarter and full year ended March 31, 2024. Adjusted Cash Revenue for fiscal year 2024 was $1.54 billion, a 5% increase over the prior fiscal year. Adjusted Cash EBITDA was $461 million, a 10% increase over fiscal year 2023, with EBITDA margin expanding by over 120 basis points to 30%.

"We had a strong fourth quarter, accelerating our growth and successfully closing out fiscal 24 with full year financial results just ahead of the top end of our guidance range," said Michael Hansen, Chief Executive Officer, Cengage Group. Hansen continued, "All three business units contributed to this strong performance, with Academic revenues growing 2% underpinned by US Higher Education's return to growth, 19% growth from Work and 8% growth from Select, propelled by another excellent year for our English Language Teaching business. These results mark the third consecutive year of increased revenue and profitability, underlining the strength of our portfolio of businesses."

Hansen added, "In our Q3 results, we shared a strategic initiative to implement a new operating model to support future growth and improve profitability. We have now executed these plans and expect to achieve incremental cost savings of $60M in fiscal 25, accelerating our profit growth and margin expansion. Over fiscal 25 and 26, we expect to generate total incremental savings of $90-100 million. We have good sales and profit momentum coming into the new fiscal year and are excited about the growth opportunities we see across our global business."

Financial & Business Highlights

FY 24 Adjusted Cash Revenue of $1.54 billion, up 5% year over year

Cengage Academic adjusted cash revenue was $922 million, a 2% increase over the prior year. This reflects a return to growth in US Higher Education, driven by our digital and institutional strategy, and strong growth in Secondary, which together outweighed sales weakness in International Higher Education.

• US Higher Education – Revenues of $613 million were up 3% over the prior year driven by sustained digital growth. Sales of digital products excluding bundles grew 7% to $526 million, maintaining the momentum of recent years, and outweighing the drag of print and bundle products. Institutional sales again grew over 20% and now represent 43% of the total.
• Secondary – Revenue grew 7% to $197 million driven by core middle and high school programs, a highly resilient performance against a weaker market backdrop.
• International Higher Education – Revenue declined by 9% to $111 million, the principal driver of which was pricing and channel actions taken in Europe to stem re-importation to the US.

Cengage Work adjusted cash revenue reached $126 million, a 19% increase over last year. The sustained high growth is built on leading positions in high demand job verticals, most notably allied healthcare and cybersecurity, and differentiated go-to-market and product strategies. Cengage Work reached an important inflection point in fiscal 24, moving firmly into profitability and contributing $10 million to Adjusted Cash EBITDA. This reflects the inherent strong unit economics and effective scaling of the business.

Cengage Select adjusted cash revenue was up 8% to $460 million compared with fiscal 2023. This reflects an excellent year for English Language Teaching and strong growth in the Milady business, on top of another robust performance in Research.

• English Language Teaching (ELT) adjusted cash revenues grew 18% to $164 million, reflecting strong growth across all regions and increasing adoption of the SPARK digital learning platform, introduced last year.
• Research adjusted cash revenue was up 2% to $217 million, underpinned by high database subscription renewal rates in the US and improving demand in Asia.

FY 24 Adjusted Cash EBITDA grew 10% to $461 million over $421 million in the prior fiscal year.

• Adjusted Cash EBITDA margin expanded by 122 basis points to 30% in fiscal 24, reflecting increasing scale benefits and cost efficiencies and the transition to profitability of Cengage Work.

Balance Sheet

Over the course of fiscal 24, Cengage Group successfully reset the capital structure of the company. Through the Q1 Apollo led $530 million preferred equity issue and the Q4 refinancing of its $1.6 billion term loan and new $200 million revolving credit facility, Cengage Group has meaningfully reduced net leverage, extended facility maturities and improved commercial terms, to provide significantly increased financial flexibility to support its growth strategy.

• In March 2024, the company successfully refinanced its $1.6 billion term loan, extending maturity to 2031 and improving commercial terms, and replaced its asset backed line of credit with a new five-year $200 million revolving facility.
• Net leverage at the end of the fiscal year was 3.0x, significantly improving by 1.5 turns from 4.5x last year.

About Cengage Group

Cengage Group, a global education technology company serving millions of learners, provides affordable, quality digital products and services that equip students with the skills and competencies needed to be job ready. For more than 100 years, we have enabled the power and joy of learning with trusted, engaging content, and now, integrated digital platforms. We serve the higher education, workforce skills, secondary education, English language teaching and research markets worldwide. Through our scalable technology, including MindTap and Cengage Unlimited, we support all learners who seek to improve their lives and achieve their dreams through education. Visit us at www.cengagegroup.com or find us on LinkedIn or X.

Forward Looking Statement

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 reports for the quarters ended June 30, 2023, September 30, 2023 and December 31, 2023, and the "Special Note Regarding Forward-Looking Statements" section of the same report. The Company's Fiscal Year 2024 Annual Report for the fiscal year ended March 31, 2024, 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 reconciliation to GAAP reporting measures.

Contacts

Emily Featherston, Sr. Director, Corporate Communications

[email protected] 

SOURCE Cengage Group