Is everyone as excited about this week's earnings call as I am? Any guesses on what we will learn?
Some guesses are:
Cengage Unlimited is an unmitigated success!!!
Digital Activations break new record!!!!
Cost saving measures will be put into place to reduce losses
Cengage continues to lead in the Ed Tech space.
@4esp+17RM6fss Apex made plenty of money off of the Cengage acquisition. The entire acquisition was financed with debt that was piled on Cengage as is the case with almost every private equity deal. Notice that it was Cengage that filed for bankruptcy and not Apax. Not only did they not lose any money they were able to scoop up Cengage secured debt for pennies on the dollar with their insider knowledge that the company was filing for bankruptcy.
Apax partners didn’t make nearly as much as they wanted if they had been able to flip Cengage in an IPO, but once they realized they were holding a losing hand they started raiding the balance sheet by paying themselves dividends.
Apax didn’t care about overpaying because private equity is a rigged game. If the investment is bad the employees lose. If it’s a great investment the employees usually also lose by getting merged with a competitor. Private equity partners win regardless of the outcome. That’s why people like KC are bottom feeding s c u m.
@4esp+17RM6fss. Agree. I loved working at Thomson. We weren't scared of anyone...Pearson, MGH. We had great products and a very motivated team. We made great money and you are right. The benefits were phenomenal.
But that's why Thomson is Thomson. They are/were geniuses about knowing when to get out of businesses that are about ready to tank. They took every dollar they could and then sold it for a stunning amount.
I would absolutely love to be able to have a beer with Richard Harrington and hear the whole story of how he fleeced the s—ers at APAX.
The investors are never going to get their money back. I remember the meeting back when we were at 25 announcing that Thomson had sold us to Apax. It was a little nerve wracking but for people who only had a couple years in at the time it was also really good.
We all got fully vested into the 401k, we all got paid our bonus from Thomson, though it was pro rated, for the year the following Friday and the general feeling was that Apax paid so much for the company that they would want to put more money on it to make sure they got their money back.
Working at Thomson was a fantastic experience. Tons of collaboration, promotions and real career paths and goals and bonuses. Travel for almost everyone in the company, most employees even had Amex cards with generous expense packages. Cengage has been an unmitigated disaster. I think I can maybe remember three years when bonuses were paid since we became the Center of Engagement.
@3qnr+17RM6fss. Totally right. I really have mixed feelings about this. I worked at Cengage during those days and before. Everyone who half a brain knew that management was just kicking the can down the road. They'd been doing it for years.
No one in leadership pre-Cengage was willing to bite the bullet to right-size the business. And why should they have? They could continue stuffing channels and raising prices, while things crumbled around them. Most of those folks are now retired comfortably. A few are now in the final stages of their careers where they jump from dead end job, to dead end job, trying to close this chapter of their lives.
This is a case of a market finally winning after years and years of "funny money."
As much as the virtue signiling and transparency mumbo jumbo of the current regime jumbo makes me laugh, its really all leadership currently has. They are paying for the sins that happened decades ago.
At this point, all the investors can hope for is their money back.
As a current cengage soup stirrer I just want to say I really enjoy entering the exact same data across different platforms plus I enjoy checking new boxes in the CRM every semester that never amount to an increase in sales. Guess what though doing these time consuming tasks may not bring more sales or revenue of course but what does happen is that my incompetent and dim witted DM’s are able to see I’m busy wasting my time on empty time consuming worthless tasks and as an aggressive soup stirrer I must say this really simmers my sweet broth if you know what I mean... DMs are the physical consequence of cengages ineptness and stupidity, we all know this.
@3nhr+17RM6fss Yep. Its telling that the analysts on the earnings calls no longer ask when and where the growth is. Anyone who is paying attention to the business knows that significantly shrinking overhead is the only way to profitability in this business.
7 or 8 years ago Cengage took in $2 billion in yearly revenue. Given current revenue trends the company is on track to post revenue 50% lower than that in a year or two. The only way a company like that can stay profitable is by continuously cutting.
Its easy to see that the pay cuts and other cost savings are pretty much the only things that allowed them to pound their chests about actually increasing EBITDA.
This is a no-growth, highly leveraged business. It's crystal clear that their strategy is to continue to strip out costs as there is nowhere to grow. It makes sense.
The pay cut was actually a brilliant idea. It artificially made fall numbers look better than they actually are. All you need to look at is the fact that sales were down another 7% but profits were up.
Cengage is truly death by a thousand cuts.
And the new drinking game is take a drink every time you hear or read the words "underpinned" or "headwinds."
Cengage stock is now $8.50. Gained $3.25. Interesting.
Bonus year then?
50 million loss is a rounding error, they were forecasting a loss of 200 million so losing a pleasant 50 million is a net gain of 150 million . In the trade we call this Hungarian soup kitchen accounting...
However, I think all of us ladies can agree that there's nothing more satisfying than soup guy presenting his methods at the NES? You know who you are.
I'm not a financial expert but the OP was pretty spot on with the whole unmitigated digital success.
Am I reading this wrong or did we just lose 50 million dollars?
https://cengage.widen.net/content/uq9wpv1xtn/pdf/Q2-FY21-Investor-Financials-FINAL-11.11-vFFF.pdf?u=fn2gt2
The Incel is back.
What's most important is the ladies who work as 'learning consultants' will receive even more make work boxes to check in the CRM and more ridiculous spreadsheets with your top 50 adoptions that do nothing to help sale more units... Anything to make the ladies happy who do nothing but make up pointless busy work for themselves... Low IQ ladies make cengage go round and round
Looking forward... we’ll be “continuing to transform and simplify our operating model”
Cengage also paid consultants a hefty sum to come up with "Cengage."
The name MindTap is pretty decent. I remember when they introduced the name “Cengage” which means Center of Engagement. The consensus around the 25 cent soda machine was that it sounded like a muffler company.
Fun fact: Cengage paid a consulting company 6-figures to come up with the name MindTap.
And never fear for a job. Because people continue to hire Brian Kibby.
The smartest guys in the room ruined some awesome companies.
I predict: Hello Cengage employees (and indeed McGraw Hill and Pearson and Wiley folks as well). We have a major announcement and it is good news! We have run these organizations through a time machine and somehow landed in 1985, and the world is once again your oyster. We made this choice because after all of the lies and stories we told about "synergy" we realized you would all have caught on that this was just a c—and-bull story and there is no longer any point in continuing with it. The following reversals have taken place: The approximately 400 mergers and acquisitions that have occurred in the last 35 years have all been undone, and you have been dispersed to the small, wonderful book companies for which your parents and grandparents worked. These are some great names in the book / technology business: Random House, Scott Foresman, Norton, William C. Brown, West Publishing; Wadsworth; even some amazing technology companies such as ALEKS etc. We have done away with stupid, corporate sounding names, with Mindtap getting a special extra flush down history's toilet ; I could go on, but you get the idea. What great little book publishers and technology companies might we add to this list? The other great news is that textbooks now cost a lot, but one doesn't need to mortgage one's future to buy a book or software any longer, so your day will no longer be spent simply arguing with your customers . Oh, and there's more! You now have titles up and down the curriculum again! No more "What do you got that's big?" introductions, and no more "get the f— out of my sightline, you bloodsucker..." conversations in the doorways of respected faculty at institutions around the world. Also: healthcare! And Rush Limbaugh didn't make it through the machine, or Brian Kibby.