Although Apollo Group Inc. (NASDAQ: APOL) reported that fiscal second-quarter profit slumped 79% as enrollments fell, shares of the for-profit education company rallied on Monday as it handed better-than-expected non-GAAP earnings and revenue.
Apollo Group, which witnessed a solid demand for its courses after the recession hit the U.S. economy, reeled under pressure in the recent past as demand started to gradually fade away amid changing regulatory framework and sluggish macroeconomic environment. Earlier in October, the company said that it was shuttering 115 of its smaller locations in order to offset falling profitability and enrollments.
For the fiscal second quarter ended Feb 28, the Phoenix AZ based Company reported a profit of $13.5 million or 12 cents a share down from net income of $63.9 million or 51 cents a share, in the year-earlier quarter.
Excluding onetime items, adjusted earnings or non-GAAP earnings came at 34 cents a share compared to 57 cents, in the same period of last year but comfortably above Street’s estimate of 18 cents a share.
Revenue during the period fell 13% to $834.4 million but beat analysts’ consensus forecast of $823 million. Operating margin narrowed 3.6% in the recently concluded quarter from 10.8% in the year earlier quarter.
“Higher education is rapidly evolving as workforce demands and technological innovations drive change in our global economy,” CEO Greg Cappelli said in a statement.
The Company said that enrollments at the University of Phoenix slumped 15.5% during the quarter to 300,800 while new degreed enrollment plunged 20.1%.
Looking ahead at fiscal 2013, Apollo Group expects revenue to be in the range of $3.65 billion to $3.75 billion. Analysts’ consensus forecast was for revenue of $3.73 billion.
Operating income (excluding onetime charges and restructuring expenses) is expected to come in the range of $500 million to $550 million.
The Company also said during the earning call that it intends to lay off about 1000 of its workforce in the current fiscal.
Meanwhile, Apollo said that its board of directors approved shares buyback program worth $250 million, last week.
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