Steady Learning Curve at Capella

Capella Education Co. (CPLA), an accredited and exclusively online academic institution, recently reported second-quarter results. The company reported earnings of $0.56 per share, which beat expectations by $0.06, and were up 51.4% year over year.

Quarterly revenue increased 21.3% year over year to $80.1 million. Total active enrollment grew 23.4% to 29,281 students. Enrollment growth was also noticed across the board with Doctoral programs reporting an increase of 12.4%, Masters 28.2% and Bachelor’s 35.4%.

Performance in the second quarter was driven by the company’s differentiated strategic positioning and implementation of fundamental strategies. The company’s fundamental strategies included: building leadership positions in targeted markets, expanding the addressable market, driving productivity and developing talent.

During the quarter, the company also entered a new educational market: Public Service Leadership. These programs feature an innovative multidisciplinary educational approach that bring together faculty and professionals from public administration, public safety and health care and leverages online technology to develop cross-functional leadership skills required to successfully address increasingly complex public service challenges. Management believes that the new program will increase addressable market by 20% through its unique interdisciplinary approach.

Management guided to a strong third quarter and slightly raised its full-year forecast. For the third quarter, enrollment and revenue are expected to grow in the range of 23.5% to 25.0%. Revenue growth is expected to come primarily from strong new enrollment and solid persistence. Revenue is also expected to be affected by a change in the timing of colloquia events. Colloquia are expected to contribute approximately 2 percentage points to revenue growth but are expected to decline year over year in the fourth quarter.

For the full year, based on the year-to-date results, average quarterly enrollment growth is expected to slightly exceed previous guidance of 18% to 21%. Revenue growth is expected to be at the upper end of the 18% to 21% stated previously.

Read the full analyst report on CPLA