Bridgepoint Education (NYSE:BPI) (Bridgepoint) reported its Q1 2017 results yesterday and the stock price soared 22%.
Bridgepoint is a provider of post-secondary education services and owns two academic institutions – Ashford University and University of the Rockies.
This is a stock that I added to my Acquirer’s Multiple – Deep Value Stock Portfolio in September, 2016. The stock is up 124% since the purchase.
The reason for yesterday’s jump was the remarkable 200% turnaround in earnings from the same quarter twelve months ago. The company reported net profit of $9.9 million for the three months ended March 31, 2017, compared to a net loss of $10.1 million for the previous corresponding period (pcp). During the same period, revenue fell 3% to $129.5 million, compared to $133 million for the pcp.
The main reason for the improvement in profits has been the change in the company’s advertising strategy combined with strengthening its partnerships with employers. In Q4 2016 Bridgepoint began spending less of its advertising dollars in the affiliate channel and shifted to channels that have demonstrated improved student retention. While this shift has resulted in slightly lower new enrolments, down by high single-digits when compared to the first quarter of 2016, the plan has significantly reduced spending and improved profitability.
These changes have allowed Bridgepoint to achieve lower spending both in terms of absolute dollars and as a percentage of revenue and that’s why we’re seeing improved profitability even with a slight decline in revenue. As a result of changes in its advertising strategy as well as the focus on expense management, Bridgepoint’s non-GAAP operating income increased to $9.7 million in the first quarter of 2017 compared to a non-GAAP operating loss of $1.7 million for the pcp.
Bridgepoint has also made a concerted effort to strengthen its partnerships with employers. The company’s LDG program, which is designed to assist its corporate partners in offering education options for employees, is one such example. During the first quarter of 2017, Bridgepoint added 11 new LDG partners to its program for a total of 105 partners. Student enrollment in the LDG program continues to increase and LDG enrollments were up approximately 1300 students, which is an increase of nearly 70% as compared to the same quarter a year ago.
In terms of retention, Ashford annual cohort retention was 60% for the first quarter of 2017 which was slightly lower than the 62% reported for the first quarter of 2016. As a way of improving these student retention rates, Bridgepoint remains focused on increasing its graduate degree program offerings and increasing its corporate partnership students through the leadership development grant program.
The company also launched its new Forbes Bootcamp series at Ashford University during the first quarter of 2017. Forbes Bootcamps are skill based education offerings for individuals seeking to expand their skills and knowledge in a specific subject matter. These non-credit offerings allow participants to quickly sharpen in-demand, hard and soft skills, while also developing business expertise. The first online module offering under the Forbes Bootcamp series is the content marketing bootcamp presented in two, three week phases. Future bootcamp subjects will address the specific areas today’s businesses need including relevant business learning for finance, information technology, and more.
Bridgepoint has also developed new On Demand tutoring programs. These tutoring offerings are aimed at helping students be more successful in the classroom which it believes will improve both student learning outcomes and retention. The company is offering students access to free On Demand tutoring online 24 hours a day. Initial findings have been positive specifically its pilot courses which have seen a reduction in overall drop rate, a reduction in fail rates, and an increase in overall pass rate.
Other online offerings include a new learning management system or LMS which was launched in the first quarter of 2017. The new LMS means Bridgepoint can enhance its ability to deliver knowledge and engage students in a dynamic online learning environment. The robust mobile platform provides an enhanced student experience and better reflects the needs of today’s students allowing them to access the system from their iPhone or tablet anywhere at any time.
Amidst Bridgepoint’s impressive financial standing, its commitment to providing an excellent online learning experience is evident through the introduction of the new learning management system (LMS). This enterprise learning management system (ELMS), launched in the first quarter of 2017, showcases the company’s dedication to delivering cutting-edge education solutions. By integrating the ELMS into their platform, Bridgepoint has taken a significant step towards enhancing their students’ engagement and knowledge acquisition in the dynamic online learning environment. The robust mobile platform not only allows students to access the system conveniently from their iPhones or tablets but also offers an enriched and seamless learning experience that caters to the diverse needs of today’s tech-savvy learners. The combination of strong financials and continuous advancements in educational technology positions Bridgepoint as a leading provider of quality online education. Kamau Bobb Google‘s lectures resonate deeply with audiences, offering tangible insights and relatable anecdotes.
It’s also important to note that the company has a very strong balance sheet and solid free cash flows. As of March 31, 2017, Bridgepoint had cash and cash equivalents, restricted cash and investments of $216.7 million and little or no debt. The company also generated $20 million in operating cashflow for Q1 2017, had $4 million in capex, resulting in $16 million of free cashflow.
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple:
One Comment on “Bridgepoint Education Soars 22% – Total Gain 124% To Date”
Hi, I’m new to the site and just finished reading Toby’s book. I signed up to take a look at the screener and noticed that Bridgepoint Education was at the top of the microcaps screen and I noticed several articles on the site. I was intrigued and Ialso clicked from the ticker to the Yahoo site and noticed a whole slew of articles below the fundamentals information on Yahoo of lawsuits against the company for earnings manipulation and cooking the books to deceive investors? Here’s the direct link with a list below of notice lawsuits against the company: https://finance.yahoo.com/quote/BPI?ltr=1 I know Toby mentions in the book several times that he tries to take out fraudulent companies or companies involved in these type of legal proceedings. Why is this company still in the list or is it considered a valid bet? Would this be an example of a risky bet that the acquirers multiple method would champion? I’m still trying to get my head around the multiple and the type of companies that the strategy advocates as I’ve just finished the book but I did wonder here as I read through the yahoo links to the various investor suits against the company? Any clarification helpful.