Cengage Group, a leading global education and technology company, reported its financial results for the second quarter and first half of Fiscal Year 2025, ended September 30, 2024.

Adjusted Cash Revenue for the first half of Fiscal Year 2025 was $841 million, flat against a high comparative which benefitted from earlier ordering and favorable timing of several large deals. Adjusted Cash EBITDA for the first half of Fiscal Year 2025 was $323 million, an increase of 8 percent over the first half of Fiscal Year 2024. Operating cash flow was $128 million, more than double the $60 million in the prior period.

“As we close out a successful fall season and first half of Fiscal 2025, we are on track and expect to deliver our fourth consecutive year of solid revenue growth. While first half revenues were held back by temporary sales timing effects, which are expected to reverse in the second half, our EBIDTA has increased by $23 million. This strong margin expansion underscores the increasing impact of our cost efficiency program and new operating model, which are substantially complete,” said Michael Hansen, Chief Executive Officer, Cengage Group.

Hansen added, “We expect revenue growth and margin expansion to further accelerate in the full year, while we also fund AI initiatives and other investments in our business. We continue to focus our investment efforts in delivering differentiated products and services that help our customers realize tangible education outcomes and help fuel sustained business growth over the medium term.”

Earlier this month, Cengage Work, the company’s workforce skills training business, released the second edition of its learner outcomes report, which found 90 percent of learners enrolled in a Cengage Work course completed it, far above the industry averages of 50-70 percent. This report is a continuation of the company’s commitment to transparently measure educational outcomes and gather valuable feedback, ensuring offerings align with learners’ needs.

Additionally in the second quarter, Cengage Group extended its agreement with the National Geographic Society until 2043. As a premier education partner of the Society, this long-established strategic relationship allows Cengage to leverage the unique content, brand and other resources of the Society to drive learner engagement and outcomes through highly differentiated products for Secondary students and English language learners around the world. Learn more about the partnership here.

You can find more information about Cengage Group’s First Half Fiscal Year 2025 results below, and by visiting cengagegroup.com/investors.

Cengage Group First Half Fiscal 2025 Financial Results

$ millions	FY24	FY25	Delta
Adjusted Cash Revenue	$842	$841	0%
Digital Net Sales	$627	$631	1%
Adjusted Cash EBITDA	$300	$323	8%
Adjusted Cash EBITDA Margin	36%	38%	282 bps
Operating Cash Flow	$60	$128	$68
Net Leverage	3.2x	2.9x	0.3x

Cengage Group Second Quarter Fiscal 2025 Financial Results

$millions	Q2 FY24	Q2 FY25	Delta
Adjusted Cash Revenue	$571	$564	-1%
Digital Net Sales	$441	$436	-1%
Adjusted Cash EBITDA	$281	$286	2%

Financial + Business Highlights

Fiscal Year 2025 Outlook

• Cengage Group is re-confirming expectations for the fiscal year ending March 31, 2025:Fourth consecutive year of solid adjusted cash revenue growth
  • Strong, double-digit growth in adjusted cash EBITDA and accelerated margin expansion
    Improved cash generation and operating cash conversion
  • Continued deleveraging of the business, with ending net leverage 2.5X or lower, driven by EBITDA growth and cash generation

First Half FY25 Adjusted Cash Revenue was $841 million, flat year-over-year

• Cengage Academic: Adjusted Cash Revenue was flat at $522 million in the first half of FY25. This reflects robust sustained growth in US Higher Education moderated by temporary sales timing shortfalls in Secondary.
  • The US Higher Education business continues to demonstrate strong digital and institutional revenue momentum, which underpins the 3 percent improvement in first half adjusted cash revenues to $309 million. Having returned to growth in fiscal 24, the US Higher Ed business is on track to grow again this year, with growth expected to improve in the second half and outpace FY24. In the trailing 12-month period, Institutional revenues, comprising Inclusive Access and the company’s unique Cengage Unlimited Institutional offering, grew 29% to $249 million and now represent around 40 percent of annual revenues. First half adjusted cash revenues for International Higher Education were $55 million, essentially flat against the prior period.
  • The Secondary business also had a solid fall season. First half adjusted cash revenues were $158 million, 6% behind a high FY24 first half comparative which benefitted from temporary sales timing effects. These effects are expected to largely reverse in the second half, underpinned by a solid sales pipeline.
• Cengage Work first half adjusted cash revenues reached $71 million, up 15% over the prior year. This sustained high double-digit growth was driven by ed2go, where first half revenue increased 20% as more learners look to Advanced Career Training courses to prepare for in-demand careers. The Infosec business, a leading cybersecurity education provider, had a solid first half, with revenue up 4% compared to the prior year. Cengage Work is expected to broadly maintain its strong first half growth through the full fiscal year.
• In Cengage Select, first half adjusted cash revenues were $231 million, 3 percent behind a high comparative which was boosted by positive sales timing effects. The ELT (English Language Teaching) business grew adjusted cash revenues by 7 percent in the first half to $84 million, sustaining the strong underlying growth momentum this business has consistently delivered over many years. For the full year, ELT revenues are expected to be broadly flat, with strong underlying growth in core markets offset by a one-time rebasing of a large Ministry of Education contract. First half adjusted cash revenues in Research were $113 million, $9 million behind a high prior period comparative which benefitted from favorable timing of large archive sales and earlier subscription renewals. The Research business is going into the second half with a solid sales pipeline and renewal rates running at 93 percent, underpinning the expectation that timing effects will reverse over the rest of the year.

First Half FY25 Adjusted Cash EBITDA $323 million, up 8% year-over-year

• Adjusted Cash EBITDA reached $323 million and margin improved 282 basis points. This reflects the increasing benefits of the cost savings program and new operating model, together with the profitable scaling of Cengage Work, which more than doubled its EBITDA contribution to $11 million.
• The implementation of the new operating model is substantially complete. The company remains on track to realize over $100 million of expected incremental savings over fiscal years 25 and 26, of which over $60 million is expected this fiscal year.

Strong Balance Sheet + Improved Net Leverage

• At the end of the first half, cash balances were $247 million, and total liquidity was $442 million including the revolving credit facility.
• The combination of trailing 12-months EBITDA growth and strong cash generation improved net leverage to 2.9X at the end of September, compared to 3.2X a year ago.