Laureate Education (NASDAQ:LAUR) Posts Better-Than-Expected Sales In Q1

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Higher education company Laureate Education (NASDAQ:LAUR) announced better-than-expected results in Q1 CY2024, with revenue up 9.6% year on year to $275.4 million. The company expects the full year's revenue to be around $1.57 billion, in line with analysts' estimates. It made a GAAP loss of $0.07 per share, improving from its loss of $0.17 per share in the same quarter last year.

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Laureate Education (LAUR) Q1 CY2024 Highlights:

• Revenue: $275.4 million vs analyst estimates of $269.3 million (2.3% beat)
• Adjusted EBITDA: $30.6 million vs analyst estimates of $25.0 million (22.4% beat)
• EPS: -$0.07 vs analyst estimates of -$0.03 (-$0.04 miss)
• Full year guidance for revenue and adjusted EBITDA both exceeded expectations
• Gross Margin (GAAP): 7.8%, down from 10.3% in the same quarter last year
• Free Cash Flow of $17.3 million, down 48.6% from the previous quarter
• Enrolled Students: 459,400
• Market Capitalization: $2.30 billion

Eilif Serck-Hanssen, President and Chief Executive Officer, said, “Last month we celebrated our 25th anniversary and reflected on the positive impact we have had on millions of lives, including through expanding access to higher education in Mexico and Peru. I extend my sincere gratitude to all faculty and staff, past and present, who have played a significant role in our success.”

Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.

Education ServicesA whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.

Sales GrowthA company’s long-term performance can give signals about its business quality. Any business can put up a good quarter or two, but many enduring ones muster years of growth. Laureate Education's revenue declined over the last five years, dropping 14.4% annually. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Laureate Education's annualized revenue growth of 17% over the last two years is a reversal from its five-year trend, suggesting some bright spots.

We can dig even further into the company's revenue dynamics by analyzing its number of enrolled students, which reached 459,400 in the latest quarter. Over the last two years, Laureate Education's enrolled students averaged 8.2% year-on-year growth. Because this number is lower than its revenue growth during the same period, we can see the company's monetization of its consumers has risen.

This quarter, Laureate Education reported solid year-on-year revenue growth of 9.6%, and its $275.4 million of revenue outperformed Wall Street's estimates by 2.3%. Looking ahead, Wall Street expects sales to grow 4.6% over the next 12 months, a deceleration from this quarter.

Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Laureate Education has shown decent cash profitability, giving it some reinvestment opportunities. The company's free cash flow margin has averaged 10.2%, slightly better than the broader consumer discretionary sector.

Laureate Education's free cash flow came in at $17.3 million in Q1, equivalent to a 6.3% margin and down 16.2% year on year. Over the next year, analysts' consensus estimates show they're expecting Laureate Education's LTM free cash flow margin of 12.7% to remain the same.

Key Takeaways from Laureate Education's Q1 Results We were impressed by how significantly Laureate Education blew past analysts' adjusted EBITDA expectations this quarter, showing strong profitability. We were also glad its revenue outperformed Wall Street's estimates. Full year guidance for both revenue and adjusted EBITDA came in ahead of expectations. On the other hand, its number of enrolled students fell short of Wall Street's estimates. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 4.5% after reporting and currently trades at $15.24 per share.