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Cengage Learning Holdings II Inc (CNGO)
OTHER OTC:CNGO
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Cengage Learning Holdings II
(OTC:CNGO)
Rating:58Neutral
Price Target:―
Positive Factors
Cash Flow Management
Strong cash flow management indicates efficient operations and the ability to sustain business activities despite net losses, providing financial stability.
Strategic Acquisitions
Strategic acquisitions and partnerships enhance product offerings and market reach, supporting long-term growth and competitive positioning.
Cost Savings Initiatives
Successful cost savings initiatives improve profitability and operational efficiency, positioning the company better for future financial health.
Negative Factors
High Financial Leverage
High financial leverage increases risk, potentially limiting the company's ability to invest in growth opportunities and manage economic downturns.
Profitability Challenges
Ongoing profitability challenges can hinder the company's ability to reinvest in its business and may affect long-term sustainability.
Decline in International Revenue
Revenue decline in international markets suggests challenges in global competitiveness and market penetration, impacting overall growth potential.
Cengage Learning Holdings II (CNGO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend YieldN/A
Average Volume (3M)0.00
Price to Earnings (P/E)―
Beta (1Y)0.07
Revenue Growth-2.01%
EPS Growth-48.45%
CountryUS
Employees4,400
SectorServices
Sector StrengthN/A
IndustryPublishing
Share Statistics
EPS (TTM)-0.39
Shares Outstanding62,400,000
10 Day Avg. Volume0
30 Day Avg. Volume0
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.19
Enterprise Value/Revenue2.17
Enterprise Value/Gross Profit4.40
Enterprise Value/Ebitda10.97
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Cengage Learning Holdings II Business Overview & Revenue Model
Company DescriptionCengage Learning Holdings II, Inc., together with its subsidiaries, operates as an education technology company worldwide. The company operates through three segments: Cengage Academic, Cengage Work, and Cengage Select. It offers eTextbooks; Cengage Unlimited, a subscription service for digital higher education materials; eTextbook subscription service; Cengage Infuse, an embedded course kit with a user experience for instructors; print textbooks, study guides, laboratory exercises, instructor editions, and supplemental products; and course and custom content development, and direct assistance to instructors and students for implementation and ongoing use of digital and print solutions. The company also provides various platforms, such as MindTap for as business and economics, social sciences, trades, and skills; WebAssign for mathematics and physics; Skills Assessment Manager for introductory computing; Cengage NOW for accounting; and Online Web-Based Learning for such as chemistry. In addition, it offers ed2go, an online learning platform; K-12, public, and academic libraries under the Gale brand, as well as licenses its proprietary and third-party content for integration with web-based information providers; English language curriculum and digital solutions under the NGL brand; educational resources for career-focused beauty and wellness education providers; and literacy materials to K-6 students under the Nelson brand. Further, the company Infosec, a cybersecurity education platform comprising Bootcamps, which provides instructor-led, digital course experiences for cybersecurity certifications or skill sets; Infosec Skills that offers training for reskilling and upskilling in the cybersecurity profession; and Infosec IQ, which offers security awareness training for non-technical learners to recognize, avoid, and report cyber-attacks and security incidents. The company was founded in 1903 and is headquartered in Boston, Massachusetts.
How the Company Makes MoneyCengage makes money primarily through the sale of educational content and digital learning solutions. Its revenue model is based on product sales, subscriptions, and licensing agreements. Cengage generates income from selling textbooks and digital course materials directly to students and educational institutions. Additionally, the company offers subscription services for access to its online learning platforms, which provide interactive and personalized learning experiences. Partnerships with educational institutions and other stakeholders also play a significant role in driving revenue, as these collaborations often result in customized content and solutions tailored to specific educational needs. Cengage's focus on digital transformation and innovation in educational technology also contributes to its earnings, as it increasingly shifts towards digital and subscription-based models.
Cengage Learning Holdings II Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook for Cengage Group, with significant growth and innovation in segments like Higher Education and Work, driven by AI and strategic initiatives. However, these positives were balanced by declines in adjusted cash revenue and challenges in the School and English Language Learning segments, leading to a neutral overall sentiment.Q1-2026 Updates
Positive Updates
Resegmentation and New Operating Model
Cengage Group completed the resegmentation into four distinct units: Higher Education, Work, School, and English Language Learning, along with implementing a new global operating model to enhance innovation and operational efficiency.
AI-Powered Tools and Innovations
The company is embedding AI into products, scaling the AI-powered student assistant to over 100 higher ed titles, and expanding AI tools in the Work segment, enhancing learning experiences and internal efficiencies.
Growth in Higher Education Segment
U.S. Higher Education showed growth with institutional sales up 19% year-over-year and digital sales up 8% year-over-year, with institutional revenues reaching $333 million.
Strong Performance in Work Segment
Ed2Go delivered 24% revenue growth, marking the 11th consecutive quarter of double-digit growth driven by strong demand and improvements in enrollment productivity.
Improved Cash Flow and Liquidity
Free cash flow improved by $36 million year-over-year with total liquidity increasing to $343 million, driven by lower cash burn and improved working capital performance.
Negative Updates
Decline in Adjusted Cash Revenue and EBITDA
Adjusted cash revenue for Q1 was $254 million, down 8% year-over-year, and adjusted cash EBITDA was $15 million, down 61% year-over-year due to lower revenue and higher costs.
Challenges in School Segment
The School segment had a challenging first quarter with 2026 being an off-cycle adoption year leading to a lack of large deals, and $5 million of Q1 billings slipping into Q2.
Decline in English Language Learning Segment
Q1 adjusted cash revenue for the English Language Learning segment declined 8% year-over-year due to strategic exit from a low-margin contract, although normalized trailing 12-month revenues grew 8%.
Company Guidance
In the first quarter of fiscal year 2026, Cengage Group reported adjusted cash revenue of $254 million, representing an 8% year-over-year decline, primarily due to a nonrecurring revenue stream in fiscal year 2025 and a low adoption year in their School segment. When normalized, revenue was down just 2%. The company's adjusted cash EBITDA was $15 million, down 61% from the previous year, mainly due to lower revenue and higher cost of sales linked to an enhanced partnership with Big Ideas Learning. The Higher Education and Work segments contributed 70% to adjusted cash revenues, with the U.S. Higher Ed segment showing a 7% increase in cash revenues year-over-year, driven by a 19% rise in institutional sales and an 8% increase in digital sales. The Work segment saw a 24% revenue growth, marked by strong demand in job-aligned skills and triple-digit growth in employer sales through Ed2Go. Despite a challenging quarter for the School segment due to timing issues and the off-cycle adoption year, Cengage remains optimistic about future growth, supported by strategic content investments and market positioning for upcoming adoption cycles. The English Language Learning segment saw an 8% revenue decline due to the exit from a low-margin contract, though normalized revenues grew 8% on a trailing 12-month basis. The company improved its cash flow by $36 million and reduced its first-quarter cash burn to $109 million, enhancing its liquidity to $343 million, with a net leverage ratio of 2.9x. Cengage expects fiscal year 2026 to continue its trajectory of revenue and EBITDA growth, as it enters its main sales season with a strong pipeline and execution strategy.Cengage Learning Holdings II Financial Statement Overview
Summary
Cengage Learning Holdings II shows mixed financial health. The income statement reflects strong gross margins and moderate revenue growth, but persistent net losses indicate profitability challenges. The balance sheet reveals high leverage and financial risk due to a negative equity base. Cash flow is robust, with efficient cash management offsetting net losses. Overall, financial stability is a concern with high debt levels, though cash flow performance is a strong point.Income Statement
Cengage Learning Holdings II shows a mixed performance in its income statement. The TTM data indicates a gross profit margin of 49.35%, which is relatively strong. However, the net profit margin is negative due to continuous net losses, indicating challenges in achieving profitability. Revenue growth has been moderate, reflecting some growth potential despite industry challenges. The EBIT margin stands at 12.79%, suggesting moderate operational efficiency, while the EBITDA margin of 19.80% highlights good cost management before depreciation and amortization.65
Positive
Balance Sheet
The company's balance sheet reveals a high debt-to-equity ratio due to low stockholders' equity, signaling financial risk. The return on equity is negative, reflecting net losses and low equity base. The equity ratio is a mere 1.49%, indicating high leverage and potential solvency concerns. Overall, the financial stability is weak, and the company is heavily reliant on debt financing.50
Neutral
Cash Flow
Cash flow analysis shows strength in operating cash flow with an increase to $187.6 million in TTM, leading to a robust operating cash flow to net income ratio, despite net losses. Free cash flow grew significantly, demonstrating improved cash generation capabilities. The free cash flow to net income ratio is favorable, indicating efficient cash management in offsetting net losses.70
Positive
| Breakdown | TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.48B | 1.50B | 1.42B | 1.37B | 1.24B | 1.33B |
| Gross Profit | 730.20M | 805.70M | 604.20M | 586.70M | 492.60M | 503.60M |
| EBITDA | 293.00M | 331.80M | 385.70M | 356.10M | 287.60M | -479.60M |
| Net Income | -71.90M | -80.90M | -40.20M | -44.60M | -110.10M | -908.90M |
Balance Sheet | ||||||
| Total Assets | 2.60B | 2.60B | 2.65B | 2.73B | 2.74B | 2.83B |
| Cash, Cash Equivalents and Short-Term Investments | 233.10M | 264.90M | 269.30M | 348.00M | 457.50M | 366.00M |
| Total Debt | 2.20B | 1.68B | 2.20B | 2.30B | 2.30B | 2.37B |
| Total Liabilities | 2.90B | 2.49B | 2.96B | 2.99B | 2.96B | 2.96B |
| Stockholders Equity | -298.10M | 114.70M | -308.80M | -258.20M | -212.30M | -133.80M |
Cash Flow | ||||||
| Free Cash Flow | 133.30M | 48.20M | 26.40M | 93.30M | 161.70M | 4.50M |
| Operating Cash Flow | 187.60M | 166.50M | 155.80M | 205.90M | 273.30M | 154.40M |
| Investing Cash Flow | -119.10M | -120.80M | -132.20M | -296.30M | -113.50M | -150.40M |
| Financing Cash Flow | -38.80M | -50.10M | -100.80M | -18.70M | -70.30M | 27.20M |
Cengage Learning Holdings II Technical Analysis
Positive
23.50
Price Trends
23.50
Neutral
22.57
Positive
21.33
Positive
Market Momentum
0.02
Positive
100.00
Negative
100.00
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNGO, the sentiment is Positive. The current price of 23.5 is equal to the 20-day moving average (MA) of 23.50, equal to the 50-day MA of 23.50, and above the 200-day MA of 21.33, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 100.00 is Negative, neither overbought nor oversold. The STOCH value of 100.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNGO.
Cengage Learning Holdings II Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $9.58B | 30.29 | 17.13% | 1.06% | 7.82% | 19.39% | |
72 Outperform | $9.03B | 16.52 | 11.74% | 2.09% | 1.93% | 34.40% | |
66 Neutral | $669.93M | 37.85 | -0.19% | 3.06% | 2.25% | -103.50% | |
66 Neutral | $2.20B | 23.25 | 13.45% | 3.41% | -8.50% | ― | |
58 Neutral | $1.47B | ― | -343.54% | ― | -2.01% | -48.45% | |
56 Neutral | $13.39B | 17.94 | 10.03% | 0.93% | 7.13% | -12.93% | |
42 Neutral | $9.53M | ― | -12.07% | ― | -32.68% | -3656.21% |
* Services Sector Average
Performance Comparison
CNGO
Cengage Learning Holdings II
23.50
5.75
32.39%
EDUC
Educational Development
1.10
-0.95
-46.34%
WLY
John Wiley Sons Cl A
41.47
-0.32
-0.77%
NYT
New York Times
57.57
5.80
11.20%
PSO
Pearson
14.04
0.66
4.93%
SCHL
Scholastic
26.29
-3.23
-10.94%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.