Apollo Education Group Inc shares plummeted after the company posted lower than expected fiscal Q2 revenue and cut its annual revenue forecast.
Apollo owns and operates four higher-learning institutions: the University of Phoenix, Western International University, Axia College, and the College for Financial Planning.
The private education services reported revenue of $578.6 million for the quarter, a 14 percent year-over-year and $6 million shy of analysts’ estimates.
It posted a loss of $33.6 million (31 cents a share) compared with profit a year-earlier of $14.6 million (13 cents a share).
Analysts polled by Thomson Reuters expected a loss of 16 cents a share.
The University of Phoenix, a wholly owned subsidiary of Apollo Education, is one of the largest higher education providers in North America.
Number of new students has declined
Apollo said that the number of new students registering for courses in the quarter ended February 28 fell by 13 percent.
Shares of the company dropped by over 24 percent to as low as $21.14 on Wednesday – the biggest intraday drop in four years.
The Phoenix-based company said that some students have stopped taking courses because of software compatibility problems with its online classroom.
CEO Greg Cappelli commented on Apollo’s performance in the quarter:
“While we faced challenges in the second quarter, we believe Apollo Education Group has the right long-term strategy in place. In a time of unprecedented change in the higher education industry, we are focused on enhancing outcomes through a deep understanding of student and employer needs.”
“This includes differentiating University of Phoenix through its program-based colleges and diversifying our organization with the expansion of Apollo Global and other targeted growth initiatives. We are aligning education to careers, offering students tangible skills and helping employers develop a high-performance workforce.”
Apollo will fix the technology problems, says CEO
In a conference call today he said:
“We adjusted our marketing type and spend, as well as our contact strategies this quarter,”
“We’re on track to fix the technology platform issues, which we believe adversely impacted retention.”
Apollo said that revenue for the year ending August will be from $2.63 billion to $2.68 billion. It had previously expected revenue of $2.74 billion to $2.8 billion.