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Higher education company Laureate Education (NASDAQ:LAUR) reported Q2 CY2024 results topping analysts' expectations, with revenue up 8% year on year to $499.2 million. The company expects the full year's revenue to be around $1.56 billion, in line with analysts' estimates. It made a GAAP profit of $0.83 per share, improving from its profit of $0.35 per share in the same quarter last year.
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Laureate Education (LAUR) Q2 CY2024 Highlights:
- Revenue: $499.2 million vs analyst estimates of $483.7 million (3.2% beat)
- EPS: $0.83 vs analyst estimates of $0.63 (31.7% beat)
- The company dropped its revenue guidance for the full year from $1.57 billion to $1.56 billion at the midpoint, a 1% decrease
- Gross Margin (GAAP): 36.1%, in line with the same quarter last year
- Free Cash Flow of $29.53 million, up 71% from the previous quarter
- Enrolled Students: 444,200, up 19,800 year on year
- Market Capitalization: $2.40 billion
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.
Education ServicesA whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one tends to sustain growth for years. Laureate Education struggled to generate demand over the last five years as its sales dropped by 13.9% annually, a rough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Laureate Education's annualized revenue growth of 15.5% over the last two years is above its five-year trend, suggesting some bright spots.
Laureate Education also discloses its number of enrolled students, which reached 444,200 in the latest quarter. Over the last two years, Laureate Education's enrolled students averaged 7.3% year-on-year growth. Because this number is lower than its revenue growth during the same period, we can see the company's monetization has risen.
This quarter, Laureate Education reported solid year-on-year revenue growth of 8%, and its $499.2 million of revenue outperformed Wall Street's estimates by 3.2%. Looking ahead, Wall Street expects sales to grow 6.3% over the next 12 months, a deceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Laureate Education has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company's free cash flow margin averaged 11.3% over the last two years, slightly better than the broader consumer discretionary sector.
Laureate Education's free cash flow clocked in at $29.53 million in Q2, equivalent to a 5.9% margin. The company's cash profitability regressed as it was 3.5 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren't a big deal because investment needs can be seasonal, but we'll be watching to see if the trend extrapolates into future quarters.
Over the next year, analysts' consensus estimates show they're expecting Laureate Education's free cash flow margin of 11.5% for the last 12 months to remain the same.
Key Takeaways from Laureate Education's Q2 ResultsWe were impressed by how significantly Laureate Education blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates. Overall, this quarter seemed fairly positive and shareholders should feel optimistic. The stock traded up 1.7% to $15.80 immediately after reporting.
