Earnings grew despite a decline in student enrollments at the online Capella University.
Capella Education Co. said Tuesday that third-quarter earnings per share jumped 23 percent, handily beating analysts’ forecasts.
But the company’s shares fell 3.8 percent after executives said they expected enrollment declines to persist at its online university in coming quarters.
Capella said net earnings rose 17 percent to $6 million, or 48 cents a share, above the consensus forecast of 40 cents.
Revenue rose 1.4 percent to $100.7 million, slightly exceeding analysts’ estimate of just under $100 million.
“Our return to operating income growth is further indication of our strengthening fundamentals,” CEO Kevin Gilligan said in a statement.
Like other online education services, the company’s Capella University has seen weaker demand since 2010 when a fast period of growth during the 2008-09 economic downturn ended. Revenue fell 2 percent last year to about $420 million and continued to drop at a similar rate through the first two quarters of this year.
Despite the slight gain in revenue for the most recent quarter, executives said they expect fourth-quarter revenue to drop by a half-percent to 1.5 percent compared with a year ago.
Added CFO Steve Polacek, “Our business is more stable than a few quarters ago, despite a still volatile demand environment.”
The third-quarter earnings and revenue growth came despite a 1.4 percent drop in total enrollment and a 1.3 percent decrease in new enrollment compared to a year ago. Total enrollment for the quarter was 34,503.
Total enrollment is projected to dip 1.5 to 2.5 percent more in the fourth quarter, the company said. New enrollment is also expected to decline by a few percent.
Steve Alexander • 612-673-4553