8 June 2023
Cengage Group, a leading global education and technology company, reported its financial results for the fourth quarter and full year ended March 31, 2023. Adjusted Cash Revenue for fiscal year 2023 was $1.48 billion, an 8% increase as reported and a 6% increase on a pro forma basis over the prior fiscal year. Adjusted Cash EBITDA less pre-publication costs (Adjusted Cash ELPP) was $351 million, up 8% as reported and 7% on a pro forma basis over fiscal year 2022.
Additionally, on May 22, 2023, the company closed its previously announced $530 million Series A Convertible Preferred Stock issuance led by an entity managed by affiliates of Apollo Global Management. The transaction raised proceeds of $525 million after 1% OID, used to redeem $500 million of senior unsecured notes on June 7, 2023, replacing debt with equity capital and thereby strengthening the company’s capital structure. As part of the transaction, Itai Wallach, Partner, Private Equity, Apollo Global Management and Vikram Mahidhar, Data and Digital Transformation Operating Partner in the Apollo Portfolio Performance Solutions Group, were appointed to the company’s Board of Directors.
“We are pleased to finish the fiscal year 2023 ahead of our financial expectations. Our solid financial performance reflects the strength and scale of our portfolio, and resilience of our business in an uncertain macroeconomic environment. In fiscal 23, our digital sales grew 6% and surpassed $1 billion for the first time. The investment from Apollo is testament to our performance and confidence in our strategy. This significant cash infusion meaningfully reduces our outstanding debt while providing financial flexibility to continue investing in future growth opportunities,” said Michael Hansen, Chief Executive Officer, Cengage Group. “We enter fiscal 2024 excited by the momentum we’ve generated in the business and look forward to pursuing future growth opportunities.”
- Cengage Academic adjusted cash revenue was $911 million, compared with $901 million last year, up 1% driven by strong growth in Secondary and a solid performance in International Higher Education, offsetting moderating declines in US Higher Education:
- The Secondary business closed an excellent year with adjusted cash revenues up 23% to $184 million. Core strategic programs, which account for over 90% of net sales, all performed strongly: Advanced Placement/Career & Technical Education was up 14%; Middle & High School over 20%; and Math around 80%, driven by significant success in the Florida state adoption.
- International Higher Education adjusted cash revenue for the year increased 5% to $130M driven by strong growth in Europe Middle East Africa (“EMEA”) and lower returns associated with increased digital penetration. Digital reached 41% of annual net sales as the business continues to leverage products and capabilities developed in US Higher Education.
- In U.S. Higher Education where digital net sales represent 88% or $519 million of the total in FY23, a solid digital performance was outweighed by print declines resulting in overall adjusted cash revenues of $597 million, down -5%. Institutional digital sales, a strategic focus, grew 32% to $182M, with Inclusive Access and Cengage Unlimited Institutional offerings growing at broadly comparable rates.
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