Highlights from Apollo's (APOL) Q2 Conference Call: Adj-Income Soars 78%, Op Margin Rose 780 Basis Points
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Apollo Group (Nasdaq: APOL) reported its Q2 results last night after the close, announcing its earnings for the quarter came in about 12 cents better than the Street estimate. Despite strength in the broader markets, traders are selling shares of Apollo today. The stock is currently down more than 15%, most recently trading at $66.31.
Below are some highlights from the company's Q2 conference call:
- Net income excluding a securities litigation charge, rose 78% to $125 million, sales sales increase by 26% to $876 million.
- Enrollment growth at University of Phoenix contributed about 20 points of that total revenue growth. Also, recent price increases at University of Phoenix contributed about four points, and the other two points came from increased revenues at Apollo Global and other schools.
- Total enrollment growth at University of Phoenix was driven by very strong new student enrollment growth of 23% as well as from continued year-over-year improvement in student retention.
- Operating margin for the quarter rose 780 basis points from 15.7% to 23.5%. This increase as a percent of revenue was driven by a 460 basis point improvement in instructional costs and services and a 330 basis point improvement in selling and promotional expenses, partially offset by a 20 basis point increase in general and administrative expenses.
- Bad debt expense rose to 4.1% of sales, versus 3.8% in the same quarter last year.
- Selling and promotional expenses rose 11.9% on a year-over-year basis, and as a percentage of revenue declined 330 basis points to 25.8%. Apollo said it was the first time in 5 quarter that it saw a decline, which was mainly the result of more effective advertising spend as well as improved enrollment counselor effectiveness.
- General & administrative expenses rose 29.3%.
- Sees FY09 share-based compensation to range from $70-$75 million.
- During the first half of this year, Apollo generated $297 million in adj-free cash flow, a 56% rise from the same period last year.
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