Capella Education See Revenue, Enrollment Gains

Pioneer online university diversifies, bolsters non-degree programs.

Capella Education See Revenue, Enrollment Gains
Minneapolis-based Capella Education Company reported a modest gain in its second quarter revenue. Capella reported $106.7 million for the second quarter, up 2 percent from year ago. But the company’s net profit dipped to $9.7 million for the quarter, down 6 percent from a year ago.
“We delivered solid second quarter results for Capella Education Company as we continued to successfully execute our strategies in a changing market environment,” said Kevin Gilligan, Capella’s chairman and CEO, in a statement. “We also made significant steps toward our goal of providing the most direct path between learning and employment in the job-ready skills market, positioning Capella for accelerated growth in 2017 and beyond.”
Capella was a pioneer of online higher education, but is now diversifying its offerings amid sluggish growth in the “distance learning” industry. That means that Capella is ramping up its non-degree programs and adding new lines of business with an eye towards educational options focused on preparing learners for skills that are needed in the current jobs market.
Earlier this year Capella announced RightSkill, a partnership with online job search web site CareerBuilder. The RightSkill program is designed to offer non-degree classes tailored to employer needs that students can complete in 90 days or less.
During the second quarter, Capella acquired two companies: San Francisco-based Hackbright Academy and Provo, Utah-based DevMountain. Hackbright and DevMountain are both “boot camps” that teach tech-related skills through in-person classes, something that Capella has not previously offered.
Its Post-Secondary group, comprised almost entirely of the Capella University subsidiary, accounted for $105.8 million of the company’s second quarter revenues. The Post-Secondary segment posted an operating margin of 20.4 percent for the second quarter. Capella University reported a 2.4 percent increase in its total enrollment for the second quarter.
The fledgling Job-Ready Skills segment – including RightSkill, Hackbright and DevMountain – currently accounts for less than 1 percent of the company’s revenue. For the second quarter, the segment posted revenue of $900,000 and an operating loss of $3.5 million.
In February, Capella announced plans to sell off Arden University, its UK-based subsidiary. Capella saw a second quarter loss of $1.4 million from Arden, now classified under “discontinued operations” in the company’s financials.
Capella reported net income of $40.2 million on revenue of $430.3 million for 2015. The company has posted a profit every year since 2003.
Twin Cities Business recently took an in-depth look at Capella and its changing business model.
At the time, Gilligan offered his assessment of the challenges in the online education market and Capella’s road ahead.
“The bad news is the market’s not growing. The good news is that the market is still very large. So there’s room for high-quality players to increase their share of the market,” said Gilligan. “And we believe by focusing on creating the most direct path between learning and employment, we can address unserved needs and create new sources of growth.”

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