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What: Shares of University of Phoenix-parent Apollo Group , tumbled again today, falling as much as 10% after cutting its full-year revenue guidance and reporting a sharp drop in enrollment in its quarterly earnings release.
So what: The biggest player in the for-profit education sector said that profits for the period just ended dropped 40%, but after adjustments, EPS was down just 11% to $1.05. That easily cleared Wall Street estimates at $0.85, but revenue dropped 16% to $946.8 million, missing expectations at $964.6 million. Perhaps more importantly, enrollment fell 17% and new student enrollment, a key metric in the industry, declined by 25%. The company also said it expected revenue of $3.65 to $3.7 million for the fiscal year ending Aug. 31, below projections at $3.71 million.
Now what: For-profit educators have been taking a beating in the last year or two, both by a White House that has been cracking down on educators abusing the federal student loan program and by a consumer market that seems to find decreasing value in an industry that spends more on marketing than on education. Unlike competitors such as DeVry, which have found new revenue streams abroad, Apollo has no such safety valve. Today's news is only the latest in a series of red flags for the educator.
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