DV

Apollo Group (APOL), by far the largest for-profit education company, recently released its FY3Q09 results, beating street estimates and sending its shares up almost 8% today as a result. The following is a concise overview of the earnings, the analyst conference call, and Apollo's outlook.

Latest Performance

Strong demand for education in a weak economy

Apollo results show that indeed people re-educate themselves in a weak economy, as they should. The company reported 22% YoY growth in total enrolment, which now totals 420,700 students. Revenue growth even outpaced strong enrolment growth, growing 26% and breaking US$1bn for a single quarter. Also, if we compare enrolment growth in the latest quarter to the nine-month trailing growth number of 20%, then we see that does not appear to be any signs of a slow-down in enrolment growth, and in fact perhaps there was a bit of a pick-up. Breaking enrolment data down by degree type, using University of Phoenix data (a proxy for the entire company), enrolment growth was highest for shorter Associate degree programs, up 39%, vs. 13% growth for Bachelors degrees and 17% for Doctorates.

APOL exhibits pricing power...

Revenue growth outpaced enrolment growth as the company was able to exert pricing power YoY, increasing Associate, Bachelor, and Doctorate program tuitions by 10%, 4%, and 5% respectively. This was partially offset by a higher mix of Associate students since these degrees have lower absolute prices.