Q2 Fiscal 2024 Highlights
- Gross margin increased by 300 basis points to 63%
- Operating loss improved 66% to
($0.5) million from($1.5) million - Narrowed net loss to
($1.6) million from($2.3) million - 4th consecutive quarter of positive EBITDA; generated positive cash from operations
- AGI total enrollment grew by 5% YoY and 34% sequentially; USU enrollment rose by 8% YoY
Second Quarter Fiscal Year 2024 Summary Results
Three Months Ended | Six Months Ended | ||||||||||||||
$ in millions, except per share data | 2023 | 2022 | 2023 | 2022 | |||||||||||
Revenue | $ | 13.8 | $ | 17.1 | $ | 28.5 | $ | 36.0 | |||||||
Gross Profit1 | $ | 8.7 | $ | 10.2 | $ | 18.5 | $ | 18.4 | |||||||
Gross Margin (%)1 | 63 | % | 60 | % | 65 | % | 51 | % | |||||||
Operating Income (Loss) | $ | (0.5 | ) | $ | (1.5 | ) | $ | (0.2 | ) | $ | (4.7 | ) | |||
Net Income (Loss) | $ | (1.6 | ) | $ | (2.3 | ) | $ | (2.3 | ) | $ | (6.0 | ) | |||
Earnings (Loss) per Share | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.09 | ) | $ | (0.24 | ) | |||
EBITDA2 | $ | 0.4 | $ | (0.6 | ) | $ | 1.8 | $ | (2.8 | ) | |||||
Adjusted EBITDA2 | $ | 1.1 | $ | 0.5 | $ | 3.0 | $ | (0.6 | ) |
_______________________
1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs and services, and amortization expense of
2 Non-GAAP financial measures. See reconciliations of GAAP to non-GAAP financial measures under “Non-GAAP–Financial Measures” starting on page 5.
“In the second quarter of fiscal year 2024, we narrowed our net loss by 30% on a year-over-year basis, delivered our fourth consecutive quarter of positive EBITDA and generated cash from operations,” said
Fiscal Q2 2024 Financial and Operational Results (compared to Fiscal Q2 2023)
Revenue decreased by 19% to
Three Months Ended | ||||||||||||
2023 | $ Change | % Change | 2022 | |||||||||
AU | $ | 7,293,124 | $ | (3,048,779 | ) | (29)% | $ | 10,341,903 | ||||
USU | 6,535,723 | (196,921 | ) | (3)% | 6,732,644 | |||||||
Revenue | $ | 13,828,847 | $ | (3,245,700 | ) | (19)% | $ | 17,074,547 |
GAAP gross profit decreased 15% to
Gross margin was 63% compared to 60%. AU's gross margin was 61% versus 60%, and USU's gross margin was 67% versus 67%. The increase in gross margin is the result of lower marketing spend and lower instructional costs and services associated with the enrollment stoppage in the pre-licensure program.
AU instructional costs and services represented 31% of AU revenue, and USU instructional costs and services represented 30% of USU revenue. AU marketing and promotional costs represented 3% of AU revenue, and USU marketing and promotional costs represented 2% of USU revenue.
The following tables present the Company’s net income (loss), both per subsidiary and total:
Three Months Ended | |||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||
Net income (loss) | $ | (1,611,813 | ) | $ | (3,807,821 | ) | $ | 581,707 | $ | 1,614,301 | |||
Net loss per share | $ | (0.06 | ) |
Three Months Ended | |||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||
Net income (loss) | $ | (2,293,640 | ) | $ | (5,150,209 | ) | $ | 1,067,885 | $ | 1,788,684 | |||
Net loss per share | $ | (0.09 | ) |
The following tables present the Company’s Non-GAAP Financial Measures, both per subsidiary and total. See reconciliations of GAAP to non-GAAP financial measures under “Non-GAAP–Financial Measures” starting on page 5.
Three Months Ended | |||||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||||
EBITDA | |||||||||||||||
EBITDA Margin | 3% | NM | 18% | 27% | |||||||||||
Adjusted EBITDA | |||||||||||||||
Adjusted EBITDA Margin | 8% | NM | 22% | 30% |
_____________________
NM – Not meaningful
Three Months Ended | |||||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||||
EBITDA | |||||||||||||||
EBITDA Margin | (4)% | NM | 18% | 28% | |||||||||||
Adjusted EBITDA | |||||||||||||||
Adjusted EBITDA Margin | 3% | NM | 20% | 32% |
EBITDA improved by
Q3'23 | Q4'23 | Q1'24 | Q2'24 | TTM | |||||||||||||||
Net loss | $ | (1,555,040 | ) | $ | (783,954 | ) | $ | (639,438 | ) | $ | (1,611,813 | ) | $ | (4,590,245 | ) | ||||
EBITDA | $ | 116,162 | $ | 812,041 | $ | 1,344,405 | $ | 419,073 | $ | 2,691,681 |
_____________________________
TTM – Trailing twelve months
Operating Metrics
New Student Enrollments
Total enrollments for AGI increased 5% from Q2 Fiscal `23 and 34% sequentially, despite the reduction in internet advertising spend across all programs to maintenance levels. The increase in enrollments reflects the demand for postgraduate nursing degrees, our unique and affordable monthly payment plans and students obtaining legacy pricing prior to
New student enrollments for the past five quarters are shown below:
Q2'23 | Q3'23 | Q4'23 | Q1'24 | Q2'24 | |||||
784 | 695 | 574 | 626 | 808 | |||||
USU | 506 | 374 | 360 | 389 | 548 | ||||
Total | 1,290 | 1,069 | 934 | 1,015 | 1,356 |
New student enrollments, bookings and ARPU for Q2’24 versus Q2’23 are shown below (rounding differences may occur):
First Quarter Bookings1and Average Revenue Per Enrollment (ARPU)1 | |||||||||||
Q2'23 Enrollments | Q2'23 Bookings1 | Q2'24 Enrollments | Q2'24 Bookings1 | Percent Change Total Bookings & ARPU1 | |||||||
784 | $ | 8,450,250 | 808 | $ | 6,663,300 | ||||||
USU | 506 | 9,016,920 | 548 | 9,765,360 | |||||||
Total | 1,290 | $ | 17,467,170 | 1,356 | $ | 16,428,660 | (6)% | ||||
ARPU | $ | 13,540 | $ | 12,116 | (11)% |
_____________________
1 “Bookings” are defined by multiplying Lifetime Value (LTV) by new student enrollments for each operating unit. “ARPU” is defined by dividing total Bookings by total new student enrollments for each operating unit.
Total Active Student Body
Total active student body for the past five quarters is shown below:
Q2'23 | Q3'23 | Q4'23 | Q1'24 | Q2'24 | |||||
7,973 | 7,232 | 6,670 | 6,001 | 5,679 | |||||
USU | 2,984 | 2,724 | 2,729 | 2,590 | 2,733 | ||||
Total | 10,957 | 9,956 | 9,399 | 8,591 | 8,412 |
Nursing Students
As of
Nursing student body for the past five quarters is shown below.
Q2'23 | Q3'23 | Q4'23 | Q1'24 | Q2'24 | |||||
6,640 | 5,899 | 5,392 | 4,766 | 4,470 | |||||
USU | 2,752 | 2,450 | 2,490 | 2,349 | 2,432 | ||||
Total | 9,392 | 8,349 | 7,882 | 7,115 | 6,902 |
Liquidity
On
Cash provided by operations in Q2 Fiscal `24 was
Additional Information
For additional information on the financial statements and performance, please refer to the
Conference Call
Subsequent to the call, a transcript of the audio cast will be available from the Company’s website at www.aspu.com. There will also be a seven-day dial-in replay which can be accessed by dialing toll-free (844) 512-2921 (
Non-GAAP – Financial Measures
This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of AGI nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Our management uses and relies on EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. We believe that management, analysts, and shareholders benefit from referring to the following non-GAAP financial measures to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.
We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between AGI and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each.
AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; (3) severance; and (4) non-recurring charges or income. The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA and of net income (loss) margin to the Adjusted EBITDA margin:
Three Months Ended | |||||||||||||||||||
Net loss | $ | (2,293,640 | ) | $ | (1,555,040 | ) | $ | (783,954 | ) | $ | (639,438 | ) | $ | (1,611,813 | ) | ||||
Interest expense, net | 708,705 | 714,801 | 639,517 | 936,460 | 1,040,720 | ||||||||||||||
Taxes | 46,501 | 37,249 | 22,677 | 84,171 | 40,076 | ||||||||||||||
Depreciation and amortization | 935,070 | 919,152 | 933,801 | 963,212 | 950,090 | ||||||||||||||
EBITDA | (603,364 | ) | 116,162 | 812,041 | 1,344,405 | 419,073 | |||||||||||||
Bad debt expense | 450,000 | 450,000 | 450,000 | 450,000 | 450,000 | ||||||||||||||
Stock-based compensation | 458,336 | 394,510 | 387,452 | 87,449 | 218,132 | ||||||||||||||
Severance | — | — | 149,043 | — | — | ||||||||||||||
Non-recurring charges - Other | 232,367 | — | — | — | — | ||||||||||||||
Adjusted EBITDA | $ | 537,339 | $ | 960,672 | $ | 1,798,536 | $ | 1,881,854 | $ | 1,087,205 | |||||||||
Net loss Margin | (13)% | (12)% | |||||||||||||||||
Adjusted EBITDA Margin | (3)% | 8% |
The following tables present a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA and of net income (loss) margin to the Adjusted EBITDA margin by business unit:
Three Months Ended | |||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||
Net income (loss) | $ | (1,611,813 | ) | $ | (3,807,821 | ) | $ | 581,707 | $ | 1,614,301 | |||
Interest expense, net | 1,040,720 | 1,040,720 | — | — | |||||||||
Taxes | 40,076 | 7,997 | 18,601 | 13,478 | |||||||||
Depreciation and amortization | 950,090 | 78,122 | 738,794 | 133,174 | |||||||||
EBITDA | 419,073 | (2,680,982 | ) | 1,339,102 | 1,760,953 | ||||||||
Bad debt expense | 450,000 | — | 225,000 | 225,000 | |||||||||
Stock-based compensation | 218,132 | 193,139 | 21,572 | 3,421 | |||||||||
Adjusted EBITDA | $ | 1,087,205 | $ | (2,487,843 | ) | $ | 1,585,674 | $ | 1,989,374 | ||||
Net income (loss) Margin | (12)% | NM | 8% | 25% | |||||||||
Adjusted EBITDA Margin | 8% | NM | 22% | 30% |
_____________________
NM – Not meaningful
Three Months Ended | |||||||||||||||
Consolidated | AGI Corporate | AU | USU | ||||||||||||
Net income (loss) | $ | (2,293,640 | ) | $ | (5,150,209 | ) | $ | 1,067,885 | $ | 1,788,684 | |||||
Interest expense, net | 708,705 | 710,237 | (1,239 | ) | (293 | ) | |||||||||
Taxes | 46,501 | 8,350 | 27,776 | 10,375 | |||||||||||
Depreciation and amortization | 935,070 | 68,860 | 757,770 | 108,440 | |||||||||||
EBITDA | (603,364 | ) | (4,362,762 | ) | 1,852,192 | 1,907,206 | |||||||||
Bad debt expense | 450,000 | — | 225,000 | 225,000 | |||||||||||
Stock-based compensation | 458,336 | 404,391 | 37,338 | 16,607 | |||||||||||
Non-recurring charges - Other | 232,367 | 232,367 | — | — | |||||||||||
Adjusted EBITDA | $ | 537,339 | $ | (3,726,004 | ) | $ | 2,114,530 | $ | 2,148,813 | ||||||
Net income (loss) Margin | (13)% | NM | 10% | 27% | |||||||||||
Adjusted EBITDA Margin | 3% | NM | 20% | 32% |
Definitions
Lifetime Value ("LTV") – is calculated as the weighted average total amount of tuition and fees paid by every new student that enrolls in the Company’s universities, after giving effect to attrition.
Bookings – is defined by multiplying LTV by new student enrollments for each operating unit.
Average Revenue per Enrollment ("ARPU") – is defined by dividing total bookings by total enrollments.
Adjusted EBITDA Margin – is defined as Adjusted EBITDA divided by revenue. We believe Adjusted EBITDA margin is useful for management, analysts and investors as this measure allows for a more meaningful comparison between our performance and that of our competitors. Adjusted EBITDA margin has certain limitations in that it does not take into account the impact to our consolidated statement of operations of certain expenses.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including our liquidity, receipt of payment from the
About
Investor Relations Contact
Managing Director
Hayden IR
385-831-7337
Kim@HaydenIR.com
GAAP Financial Statements
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,906,332 | $ | 1,353,635 | |||
Restricted cash | 4,100,000 | 4,370,832 | |||||
Accounts receivable, net of allowance of | 22,654,843 | 22,121,237 | |||||
Prepaid expenses | 629,040 | 609,900 | |||||
Other current assets | 4,921,735 | 3,068,918 | |||||
Total current assets | 34,211,950 | 31,524,522 | |||||
Property and equipment: | |||||||
Computer equipment and hardware | 1,643,665 | 1,655,130 | |||||
Furniture and fixtures | 2,190,450 | 2,169,090 | |||||
Leasehold improvements | 8,052,440 | 8,055,363 | |||||
Instructional equipment | 756,568 | 756,568 | |||||
Software | 12,180,811 | 11,648,505 | |||||
24,823,934 | 24,284,656 | ||||||
Less: accumulated depreciation and amortization | (13,765,150 | ) | (11,922,435 | ) | |||
Total property and equipment, net | 11,058,784 | 12,362,221 | |||||
5,011,432 | 5,011,432 | ||||||
Intangible assets, net | 7,900,000 | 7,900,000 | |||||
Courseware, net | 360,628 | 291,438 | |||||
Long-term contractual accounts receivable | 17,334,007 | 13,004,428 | |||||
Deferred financing costs | — | 73,897 | |||||
Operating lease right-of-use assets, net | 12,585,726 | 13,431,074 | |||||
Deposits and other assets | 594,566 | 210,536 | |||||
Total assets | $ | 89,057,093 | $ | 83,809,548 |
CONSOLIDATED BALANCE SHEETS (CONTINUED) | |||||||
(Unaudited) | |||||||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,916,185 | $ | 2,250,902 | |||
Accrued expenses | 2,921,285 | 2,355,370 | |||||
Advances on tuition | 2,377,593 | 2,975,680 | |||||
Deferred tuition | 4,762,952 | 2,892,333 | |||||
Due to students | 2,535,736 | 2,624,831 | |||||
Current portion of long-term debt | 4,684,290 | 5,000,000 | |||||
Operating lease obligations, current portion | 2,497,946 | 2,502,810 | |||||
Other current liabilities | 688,268 | 109,328 | |||||
Total current liabilities | 23,384,255 | 20,711,254 | |||||
Long-term debt, net | 15,535,401 | 10,000,000 | |||||
Operating lease obligations, less current portion | 16,311,827 | 17,551,512 | |||||
Total liabilities | 55,231,483 | 48,262,766 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, | |||||||
0 issued and 0 outstanding at | — | — | |||||
Common stock, | |||||||
25,548,046 issued and 25,548,046 outstanding at | |||||||
25,592,802 issued and 25,437,316 outstanding at | 24,061 | 25,593 | |||||
Additional paid-in capital | 112,144,189 | 113,429,992 | |||||
— | (1,817,414 | ) | |||||
Accumulated deficit | (78,342,640 | ) | (76,091,389 | ) | |||
Total stockholders’ equity | 33,825,610 | 35,546,782 | |||||
Total liabilities and stockholders’ equity | $ | 89,057,093 | $ | 83,809,548 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
Revenue | $ | 13,828,847 | $ | 17,074,547 | $ | 28,468,719 | $ | 35,968,460 | |||||||
Operating expenses: | |||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 4,584,193 | 6,347,008 | 8,977,048 | 16,552,559 | |||||||||||
General and administrative | 8,371,546 | 10,883,118 | 16,842,424 | 21,415,138 | |||||||||||
Bad debt expense | 450,000 | 450,000 | 900,000 | 800,000 | |||||||||||
Depreciation and amortization | 950,090 | 935,070 | 1,913,302 | 1,856,178 | |||||||||||
Total operating expenses | 14,355,829 | 18,615,196 | 28,632,774 | 40,623,875 | |||||||||||
Operating loss | (526,982 | ) | (1,540,649 | ) | (164,055 | ) | (4,655,415 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest expense | (1,040,720 | ) | (710,372 | ) | (1,977,201 | ) | (1,291,665 | ) | |||||||
Other (expense) income, net | (4,035 | ) | 3,882 | 14,252 | 15,291 | ||||||||||
Total other expense, net | (1,044,755 | ) | (706,490 | ) | (1,962,949 | ) | (1,276,374 | ) | |||||||
Loss before income taxes | (1,571,737 | ) | (2,247,139 | ) | (2,127,004 | ) | (5,931,789 | ) | |||||||
Income tax expense | 40,076 | 46,501 | 124,247 | 76,822 | |||||||||||
Net loss | $ | (1,611,813 | ) | $ | (2,293,640 | ) | $ | (2,251,251 | ) | $ | (6,008,611 | ) | |||
Net loss per share - basic and diluted | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.09 | ) | $ | (0.24 | ) | |||
Weighted average number of common stock outstanding - basic and diluted | 25,548,046 | 25,282,947 | 25,557,646 | 25,242,833 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Six Months Ended | |||||||
2023 | 2022 | ||||||
(Unaudited) | (Unaudited) | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (2,251,251 | ) | $ | (6,008,611 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Bad debt expense | 900,000 | 800,000 | |||||
Depreciation and amortization | 1,913,302 | 1,856,178 | |||||
Stock-based compensation | 305,581 | 504,666 | |||||
Amortization of warrant-based cost | 14,000 | 14,000 | |||||
Amortization of deferred financing costs | 156,020 | 269,133 | |||||
Amortization of debt discounts | 193,020 | 59,000 | |||||
Non-cash lease benefit | (399,201 | ) | (229,809 | ) | |||
Common stock issued for services | — | 24,500 | |||||
Tenant improvement allowances | — | 418,280 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (5,763,185 | ) | (3,761,463 | ) | |||
Prepaid expenses | (19,140 | ) | (242,310 | ) | |||
Other current assets | (1,852,817 | ) | (26,956 | ) | |||
Deposits and other assets | (384,030 | ) | 41,608 | ||||
Accounts payable | 665,283 | 921,112 | |||||
Accrued expenses | 565,915 | 326,053 | |||||
Due to students | (89,095 | ) | (898,160 | ) | |||
Advances on tuition and deferred tuition | 1,272,532 | 2,882,106 | |||||
Other current liabilities | 578,940 | 424,685 | |||||
Net cash used in operating activities | (4,194,126 | ) | (2,625,988 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of courseware and accreditation | (120,863 | ) | (48,532 | ) | |||
Disbursements for reimbursable leasehold improvements | — | (418,280 | ) | ||||
Purchases of property and equipment | (558,565 | ) | (842,044 | ) | |||
Net cash used in investing activities | (679,428 | ) | (1,308,856 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from 15% Senior Secured Debentures, net of original issuance discount | 11,000,000 | — | |||||
Repayment of 2018 Credit Facility | (5,000,000 | ) | — | ||||
Repayment of portion of 15% Senior Secured Debentures | (100,000 | ) | — | ||||
Payments of deferred financing costs | (744,581 | ) | (60,833 | ) | |||
Payment of commitment fee for 2022 Credit Facility | — | (200,000 | ) | ||||
Proceeds from sale of common stock, net of underwriter costs | — | 9,535 | |||||
Net cash provided by (used in) financing activities | 5,155,419 | (251,298 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) | ||||||
Six Months Ended | ||||||
2023 | 2022 | |||||
(Unaudited) | (Unaudited) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 281,865 | $ | (4,186,142 | ) | |
Cash, cash equivalents and restricted cash at beginning of period | 5,724,467 | 12,916,147 | ||||
Cash, cash equivalents and restricted cash at end of period | $ | 6,006,332 | $ | 8,730,005 | ||
Supplemental disclosure of cash flow information: | ||||||
Cash paid for interest | $ | 1,639,701 | $ | 802,167 | ||
Cash paid for income taxes | $ | 24,525 | $ | 22,522 | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Warrants issued as part of the 15% Senior Secured Debentures | $ | 154,000 | $ | — | ||
Warrants issued as part of the 15% Senior Secured Debentures as amended | $ | 56,496 | $ | — |
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying consolidated balance sheet to the total amounts shown in the accompanying unaudited consolidated statements of cash flows:
2023 | 2022 | ||||
(Unaudited) | (Unaudited) | ||||
Cash and cash equivalents | $ | 1,906,332 | $ | 2,306,480 | |
Restricted cash | 4,100,000 | 6,423,525 | |||
Total cash, cash equivalents and restricted cash | $ | 6,006,332 | $ | 8,730,005 |
Source:
2024 GlobeNewswire, Inc., source