Zovio Inc Reports Second Quarter 2019 Results

CHANDLER, Ariz., Aug. 7, 2019 /PRNewswire/ -- Zovio Inc (Nasdaq: ZVO), an education technology services company, today announced its results for the three and six months ended June 30, 2019.

"During the second quarter, we further executed on our strategy to establish Zovio as a leading education technology services company. Importantly, in July, we received approval for Ashford University to return to an independent, non-profit institution, which represented an inflection point in the separation and transformation of Ashford and Zovio. In addition, we saw the expansion of key partnerships with recently acquired Fullstack and TutorMe, as well as the benefit of our investments, both of which are laying the foundation for Zovio's education technology ecosystem. At the same time, we continue to focus on establishing a strong foundation for Ashford as an independent, self-sustaining nonprofit delivering strong academic outcomes," commented Andrew Clark, Founder, President and CEO of Zovio. "We believe through the execution of our strategic priorities we will create long-term growth and meaningful value for all our stakeholders."

Financial Results for the Three Months Ended June 30, 2019

Revenue for the three months ended June 30, 2019 was $107.5 million, compared with revenue of $119.0 million for the three months ended June 30, 2018.

Operating loss for the three months ended June 30, 2019 was $20.3 million, compared with operating income of $9.3 million for the three months ended June 30, 2018.

Net loss for the three months ended June 30, 2019 was $17.6 million, compared with net income of $15.1 million for the three months ended June 30, 2018.

Diluted loss per share for the three months ended June 30, 2019 was $0.58, compared with diluted income per share of $0.55 for the three months ended June 30, 2018.

The Company recognized an income tax benefit of approximately $2.4 million for the three months ended June 30, 2019, compared with an income tax benefit of $5.5 million for the three months ended June 30, 2018.

Non-GAAP Financial Results for the Three Months Ended June 30, 2019

Non-GAAP operating loss for the three months ended June 30, 2019 was $4.8 million, compared with non-GAAP operating income of $13.3 million for the three months ended June 30, 2018. Non-GAAP operating loss for the three months ended June 30, 2019 excludes restructuring and impairment charges of $5.4 million, separation transaction costs of $1.8 million and acquisition costs of $8.3 million. Non-GAAP operating income for the three months ended June 30, 2018 excludes restructuring and impairment expense of $2.7 million, separation transaction costs of $1.1 million and a legal settlement charge of $0.1 million.

Non-GAAP net loss for the three months ended June 30, 2019 was $4.6 million, compared with non-GAAP net income of $13.3 million for the three months ended June 30, 2018. Non-GAAP net loss for the three months ended June 30, 2019 excludes restructuring and impairment charges of $5.4 million, separation transaction costs of $1.8 million, acquisition costs of $8.3 million and an income tax benefit of approximately $2.5 million. The income tax benefit is primarily associated with the acquisitions in the second quarter of 2019. Non-GAAP net income for the three months ended June 30, 2018 excludes restructuring and impairment expense of $2.7 million, separation transaction costs of $1.1 million, a legal settlement charge of $0.1 million as well as the related income tax benefit of $5.8 million for the three months ended June 30, 2018.

Non-GAAP diluted loss per share for the three months ended June 30, 2019 was $0.15, compared with non-GAAP diluted income per share of $0.49 for the three months ended June 30, 2018.

Financial Results for the Six Months Ended June 30, 2019

Revenue for the six months ended June 30, 2019 was $217.3 million, compared with revenue of $235.8 million for the six months ended June 30, 2018.

Operating loss for the six months ended June 30, 2019 was $27.5 million, compared with operating income of $8.7 million for the six months ended June 30, 2018.

Net loss for the six months ended June 30, 2019 was $24.2 million, compared with net income of $16.4 million for the six months ended June 30, 2018.

Diluted loss per share for the six months ended June 30, 2019 was $0.84, compared with diluted income per share of $0.60 for the six months ended June 30, 2018.

The Company recognized an income tax benefit of $2.4 million for the six months ended June 30, 2019, compared with an income tax benefit of $7.1 million for the six months ended June 30, 2018.

Non-GAAP Financial Results for the Six Months Ended June 30, 2019

Non-GAAP operating loss for the six months ended June 30, 2019 was $8.6 million, compared with non-GAAP operating income of $13.7 million for the six months ended June 30, 2018. Non-GAAP operating loss for the six months ended June 30, 2019 excludes restructuring and impairment charges of $5.4 million, separation transaction costs of $4.0 million, acquisition costs of $9.2 million, and other non-GAAP costs of $0.2 million. Non-GAAP operating loss for the six months ended June 30, 2018 excludes restructuring and impairment charges of $2.6 million, separation transaction costs of $2.3 million and a legal settlement charge of $0.1 million.

Non-GAAP net loss for the six months ended June 30, 2019 was $7.9 million, compared with non-GAAP net income of $13.8 million for the six months ended June 30, 2018. Non-GAAP net loss for the six months ended June 30, 2019 excludes restructuring and impairment charges of $5.4 million, separation transaction costs of $4.0 million, acquisition costs of $9.2 million, other non-GAAP costs of $0.2 million and an income tax benefit of $2.5 million. The income tax benefit is primarily associated with the acquisitions in the second quarter of 2019. Non-GAAP net income for the six months ended June 30, 2018 excludes restructuring and impairment charges of $2.6 million, separation transaction costs of $2.3 million, a legal settlement charge of $0.1 million, as well as the related income tax benefit of $7.5 million.

Non-GAAP diluted loss per share for the six months ended June 30, 2019 was $0.27, compared with non-GAAP diluted income per share of $0.50 for the six months ended June 30, 2018.

Balance Sheet and Cash Flow

As of June 30, 2019, the Company had combined cash, cash equivalents and investments of $107.0 million, compared with combined cash, cash equivalents and investments of $168.4 million as of December 31, 2018.

The Company used $22.1 million of cash in operating activities during the six months ended June 30, 2019, compared with $9.2 million of cash used in operating activities during the six months ended June 30, 2018.

Student Enrollment

Total student enrollment at the Company's academic institution was 37,910 students at June 30, 2019, compared with total student enrollment of 40,097 at June 30, 2018.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP diluted income (loss) per share, EBITDA and Adjusted EBITDA. These non-GAAP measures exclude legal settlement expense, restructuring and impairment charges, separation transaction costs, acquisition costs, other non-GAAP costs, as well as certain income tax adjustments, as applicable. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and are not based on a comprehensive set of accounting rules. Management believes non-GAAP financial measures are useful in providing investors with an understanding of how specific line items in the consolidated statements of income are affected by items that may not be indicative of the operating results of the Company's core business. To the extent that other companies use similar methods in calculating and reporting non-GAAP operating results, the Company believes provision of supplemental non-GAAP financial information allows for a meaningful comparison of the Company's performance against the performance of other companies. The Company further believes that these non-GAAP financial measures provide useful information regarding its ongoing operating activities and business trends related to its results of operations, as well as a meaningful comparison with historical financial results. The Company's management and board of directors utilize these non-GAAP financial measures, together with the Company's financial statements prepared in accordance with GAAP, in developing operating budgets and evaluating the Company's performance. These non-GAAP financial measures are intended to supplement GAAP financial information, and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Refer to the accompanying tables for a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Earnings Conference Call and Webcast

Zovio Inc will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States is (877) 395-6119, and the dial-in number for other callers is (647) 689-5537. The access code for all callers is 3457926. A live broadcast of the call will also be available on the Company's website at http://ir.zovio.com.

About Zovio Inc

Zovio Inc (NASDAQ: ZVO) is an education technology services company that partners with higher education institutions and employers to deliver innovative, personalized solutions to help learners and leaders achieve their aspirations. Zovio leverages its core strengths and applies its technology and capabilities to priority market needs. Using advanced data and analytics, Zovio identifies the most meaningful ways to enhance the learner experience and deliver strong outcomes for higher education institutions, employers, and learners. Zovio's purpose is to help everyone be in a class of their own. For more information, visit www.zovio.com.

Forward-Looking Statements

This news release may contain forward-looking statements which are not statements of historical fact and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding management's intentions, hopes, beliefs or expectations, and statements regarding the Company's outlook for the remainder of 2019 and beyond. These forward-looking statements are based on current information and expectations and are subject to various risks and uncertainties. The Company's actual performance or results may differ materially from those expressed in or suggested by such statements due to various factors, including without limitation: our ability to successfully transition to being an education technology services company, and the success of our strategies with respect to student initiatives.

Additional information on factors that could cause actual plans implemented and actual results achieved to differ materially from those set forth in the forward-looking statements is included from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on March 12, 2019, the Company's quarterly reports on Form 10-Q and the Company's current reports on Form 8-K which are available at www.zovio.com. You should not place undue reliance on any forward-looking statements. Forward-looking statements are made on the basis of management's good faith beliefs, expectations and assumptions regarding future events based on information available at the time such statements are made. Forward-looking statements speak only as of the date they are made. The Company assumes no obligation to update or revise any forward-looking statements to reflect actual results or any changes in assumptions, expectations or other factors affecting such forward-looking statements, except to the extent required by applicable securities laws.

Contact: Nolan Sundrud, Director of Corporate Communications
866.475.0317 x11636
[email protected]

SOURCE Zovio