For-profit education company Apollo Group Inc. said Monday its fiscal second-quarter net income tumbled 79 percent, hurt by a drop in enrollment, but the results beat Wall Street predictions and Apollo shares jumped 7 percent in premarket trading.
For the quarter ended Feb. 28, the University of Phoenix parent company earned $13.5 million, or 12 cents per share, down from $63.9 million, or 51 cents per share, in the same quarter last year. Excluding restructuring charges and other one-time items, the company said its adjusted profit was 34 cents per share.
Revenue dropped 13 percent to $838.4 million, from $962.7 million in the year-ago period.
Analysts, on average, expected a profit of 19 cents per share, on $824.9 million in revenue, according to FactSet.
Apollo attributed the drop in profit to lower enrollment and higher marketing costs, which were partially offset by lower restructuring and bad-debt costs. Enrollment at the University of Phoenix fell more than 15 percent to 300,800, while new degreed enrollment dropped 20 percent to 38,900.
Apollo projected fiscal 2013 revenue of $3.65 billion to $3.75 billion, while analysts expect $3.73 billion.
The for-profit education industry enjoyed a big boom when the recession first hit, but student demand has faded. In addition, increased criticism of the schools, new federal regulations and the still-struggling economy have weighed on enrollments.
The drop in enrollment has dented Apollo’s profits, and the company said in October that it was closing 115 of its smaller locations to cope with lower enrollment and plunging profits.
Apollo shares rose $1.22, or 7.2 percent, to $18.26 in premarket trading.