Cengage Announces Second Quarter Fiscal 2021 Results; Strong Financial Performance Driven by Growth in Digital Learning
Digital Now Accounts for 68 Percent of the Company’s Adjusted Cash Revenues
BOSTON—November 12, 2020— Cengage, an education and technology company, today announced financial results for the second quarter of fiscal 2021, ending September 30, 2020. This period covers the critical back-to-school selling season, over which the company saw solid growth in the U.S. Higher Education business, driven by digital solutions, and a continuation of strong performance in Ed2go, the company’s Online Skills business, which has grown by more than 40 percent year-to-date. Digital revenues now account for 68 percent of Cengage’s total adjusted cash revenues, which for the second quarter totaled $534M, bringing first-half adjusted cash revenue to $723M.
“We have outperformed the competition, and driven revenue growth despite substantial market headwinds,” said Michael E. Hansen, CEO at Cengage. “The COVID-19 pandemic has created a great deal of uncertainty and turbulence for the education system worldwide in recent months. Despite this turbulence, Cengage was able to quickly pivot to support educators and learners, leaning on our strong foundation of quality, digital learning offerings. And in U.S. Higher Ed, we were able to pass a critical inflection point, where digital acceleration drove strong sales growth despite a decline in student enrollments of about four percent.”
In U.S. Higher Ed, the company reported a 15 percent increase in digital courseware activations through the first half of FY21. Cengage Unlimited continued to drive the company’s affordability initiatives, with the total student savings surpassing $270M since its launch in fall 2018. Cengage Unlimited now has nearly 3M subscribers. Recognizing the need for additional affordable options, Cengage introduced a new subscription offering this August, Cengage Unlimited eTextbooks, giving students access to more than 14,000 ebooks, study tools and more for $69.99 a semester. The new subscription option contributed to a more than 40 percent increase in ebook sales from prior year.
Cengage has grown partnerships with institutions by 50 percent this year, including partnering with Ivy Tech Community College, one of the largest community college systems in the country, to provide the college’s 90,000 students with day-one access to textbooks and course materials through Cengage Unlimited.
The COVID-19 pandemic has dramatically heightened the need for education alternatives as a means of supporting the global workforce in the face of unprecedented unemployment. As more individuals seek out the opportunity to reskill, Cengage announced its commitment to expanding its Online Skills business as the company continues to innovate to meet the needs of learners. The company’s existing Online Skills business grew paid users by 25 percent with significant growth in users opting for longer vocational courses. In addition to this paid growth, over 100k unique users took advantage of free, short upskilling courses targeted at helping our users during COVID-19.
Cengage also broadened its global presence in the second quarter to Canada, through the acquisition of Nelson’s Canadian higher education business. The business is performing ahead of expectations after a strong back-to-school season.
For more information about the company’s second quarter FY21 performance, visit: https://www.cengage.com/investor/
Cengage is the education and technology company built for learners. As the largest US-based provider of teaching and learning materials for higher ed, we offer valuable options at affordable price points. Our industry-leading initiatives include Cengage Unlimited, the first-of-its-kind all-access digital subscription service. We embrace innovation to create learning experiences that build confidence and momentum toward the future students want. Headquartered in Boston, Cengage also serves K-12, library and workforce training markets around the world. Visit us at www.cengage.com or find us on Facebook or Twitter.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), this release contains non-GAAP financial measures. For more information, including a definition of these Non-GAAP financial measures, rationale for their use and a reconciliation to the most comparable GAAP measures visit: www.cengage.com/investor.