Cengage Learning is a leading educational content, technology, and services company for the higher education and K–12, professional and library markets worldwide. The company provides superior content, personalized services and course-driven digital solutions that accelerate student engagement and transform the learning experience. Cengage Learning is headquartered in Boston, MA with an office hub located in San Francisco, CA. Cengage Learning employees reside in around 38 different countries with company sales in more than 165 countries around the world.

During the first quarter of 2017 Cengage reconstructed its segment reporting from International and Domestic into Learning, Gale and International:

Learning (renamed Domestic segment) includes a variety of digital and print educational solutions and associated services for the academic, skills and school markets in the United States.

The Gale segment offers research platforms around the world, which provide access to the company’s content. It includes collections of primary source materials and aggregated periodicals to learners at libraries, colleges, universities, schools and businesses.

The International segment distributes educational solutions across all major academic disciplines for use in approximately 165 countries and territories around the world.

Note: Cengage’s fiscal year runs from April to March. Therefore we summarize developments for both fiscal 2017 and fiscal 2018 in the current edition of this report.

Analysis Key Developments

Adjusted revenues at Cengage, for the fiscal year ended in March 2018, remained flat to the prior year and amounted to 1.46 billion USD. Furthermore, the company’s adjusted EBITDA decreased from 470 million USD in fiscal 2017 to 403 million USD in fiscal 2018.

The Learning division closed the fiscal year 2018 again with a loss of 33 million USD compared to fiscal 2017, therefore adjusted revenues amounted to 945 million USD. The decline was due to lower enrollments, continued pressure on print products, and efforts to address student affordability.

The International segment closed fiscal 2018 with an increased performance. In the fiscal year ending March 2018, the segments adjusted revenues rose by 30 million USD, or 12% compared to 2017 and totaled 284 million USD, primarily due to strong sales of higher education products in Australia, sales growth in our ELT products in EMEA and Latin America, partially offset by a decline in sales of higher education products in Asia.

During fiscal 2018 the Gale segments adjusted revenues slightly increased by 1.7% to 233 million USD (2017: 229 million USD). The growth was primarily due to strong performance in Asia, Australia, Latin America, the U.S. public market, partially offset by the ongoing decline in the U.S. print business and declines in EMEA.

Internal Organization

During the third quarter of the fiscal year 2016, Cengage initiated a restructuring program designed to streamline operations and improve cost structure. The reconstruction resulted in three new divisions: Learning, Gale and International

In March 2018, Gary Fortier was appointed the Chief People Officer for Cengage.

In January 2018, Jamison Ely submitted his resignation from the Board of Directors and as a member and Chairman of the Compensation Committee of Cengage Learning Holdings II, Inc. He was replaced by Kermit Cook starting in February 2018.

Also in January 2018, the executives Fernando Bleichmar and Todd Markson, were appointed Chief Product Officer and Chief Strategy Officer.

In May 2017 Cengage announced that the company’s executive vice president and chief financial officer, John Lehay, will step down at the end of 2017.

Also in May 2017, Laura Stevens has started her new position as the Executive Vice President and General Counsel for Cengage.

In May 2018, Cengage and Vidal Source, an Inclusive Access provider for higher education institutions, announced the expansion of their existing collaboration to support the distribution, fulfillment and marketing of Cengage Unlimited.

In February 2018, Cengage and the technology company Chegg announced a partnership to increase students’ access to more affordable materials.

In March 2018, Cengage and Barnes Noble Education, Inc. announced that beginning in August, Cengage Unlimited subscriptions will be offered at Barnes Noble Education’s 1,480 campus stores and their school branded e-commerce sites through its Barnes Noble College and MBS Textbook Exchange subsidiaries.

In December 2017, the company announced the launch of Cengage Unlimited. The subscription service, a “Netflix for education.” is the first of its kind. In August 2018, students gained access to all the company’s digital higher education materials—more than 20,000 products across 70 disciplines and more than 675 courses.

International

In fiscal 2018 the company generated 1.15 billion USD of its revenues within the United States and 319.1 million USD from the rest of the world. Cengage’s four major regional markets are served by physical locations in Asia (based in Singapore), EMEA (based in Andover, England), Australia (based in Melbourne, Australia), and Latin America (based in Mexico City, Mexico).

Digital

For the fiscal year ending March 31, 2018, the company’s total Learning digital product sales comprised approximately 53% (2017: 50%) of the total Learning adjusted revenues. Over the last year, Cengage’s core digital gross sales increased by 8%, while student activation of digital solutions grew by 17%. Moreover, the company’s digital solutions were available for approximately 95% of the academic portfolio of learning solutions.