How Does Cengage Company Work?

Cengage leverages strategic partnerships to enhance its supply chain and distribution networks. These collaborations are vital for expanding its reach and integrating new technologies into its educational solutions.

• Partnerships with technology firms for AI and cloud optimization.
• Collaborations with educational institutions for Inclusive Access programs.
• Institutional offerings of Cengage Unlimited to broaden student access.
• Direct-to-student sales channels complement institutional sales.

The company's mission is to directly connect education with employment outcomes, providing students with accessible, personalized learning and the skills needed for career success. Understanding the Revenue Streams & Business Model of Cengage provides further insight into how the company operates and delivers value.

The company's revenue is broken down across its key segments, showcasing varying growth rates and contributions. Understanding these segments is crucial to grasping the overall cengage business model.

• In fiscal year 2024, the Cengage Academic segment reported $922 million in adjusted cash revenue, a 2% increase, with U.S. Higher Education contributing $613 million (up 3%).
• The Cengage Work segment experienced a substantial 19% increase in adjusted cash revenue, reaching $126 million.
• Cengage Select, which includes English Language Teaching and Research, saw an 8% rise to $460 million.
• For the first half of fiscal year 2025, Cengage Academic revenue remained flat at $522 million, though U.S. Higher Education revenue grew by 3% to $309 million.
• Cengage Work's adjusted cash revenues increased by 15% to $71 million in the first half of FY25, largely due to ed2go's 20% growth.
• Cengage Select revenues for the first half of FY25 were $231 million, a 3% decline attributed to temporary timing effects.
• The company's focus on digital adoption is evident, with digital net sales growing 7% over the trailing 12 months (as of Q3 FY25) to $1.17 billion.
• This digital shift is a core aspect of how cengage works, aiming for 90% of annual sales to be digital by FY25.
• The company's performance and strategic direction can be further understood by examining the Competitors Landscape of Cengage.

Cengage's competitive advantages are built upon its digital transformation, innovative subscription services, and strategic integration of AI. The company's focus on workforce development and adaptability to technological advancements are crucial for its continued success in the education industry.

• Digital net sales comprise 78% of total revenues (Q3 FY25).
• Over $100 million in incremental cost savings expected from a new operating model.
• AI-powered Student Assistant to reach over one million students by Fall 2025.
• Acquisition of Visible Body enhances science content with AR/MR experiences.

Cengage is focused on strategic growth, with significant investments in AI integration and digital transformation. The company anticipates sustained revenue and EBITDA growth, aiming for improved profitability and cash generation.

• Expansion of AI-powered Student Assistant to over one million students by Fall 2025.
• Integration of AI into curricula and operational efficiencies using tools like Atolio.
• Digital products expected to comprise 90% of annual sales by FY2025.
• Reconfirmed FY2025 outlook includes strong double-digit growth in adjusted cash EBITDA, projected at 15% to $530 million-$535 million.
• Targeting net leverage of 2.5x or lower by the end of FY2025.
• Plans for FY2026 to mark the fifth consecutive year of revenue and EBITDA growth.
• Continued investment in differentiated products and services to deliver educational outcomes, aligning with the Mission, Vision & Core Values of Cengage.