About Cengage Learning Holdings II

Cengage Learning Holdings II, Inc. operates as an education and technology company built for learners. The company serves the higher education, school (consisting of grade levels of kindergarten to the 12th grade (K-12)), professional, library and workforce training markets worldwide. Segments The company operates through three segments: Learning, Gale and International. Learning In the United States, this segment produces various digital and print educational solutions and associated services for the academic (non-profit and for-profit higher education institutions), school (K-12) and skills markets. Gale This segment offers research and learning platforms to libraries worldwide and the company publishes original content, primary source archives and aggregated periodicals for colleges, universities, schools and businesses. International This segment distributes educational solutions across all major academic disciplines, provide English language teaching (ELT) products and adapt the company’s Learning offerings for use in approximately 170 countries and territories worldwide. Products and Services Academic The company’s Academic offerings comprise: Digital Solutions: The company provides customers with a range of digital solutions. Courseware Solutions MindTap comprises an interactive suite of digital learning solutions designed to engage students and offer instructors choice in content, platforms, devices and learning tools. Born out of industry demand and developed based on pedagogically sound principles, MindTap incorporates customizable ‘MindApps’ developed by the company and independent developers that actively encourage students to interact with their course content, as well as their peers and instructors. MindTap combines authoritative content with a structured delivery platform to enable instructors and students to incorporate open content in the context of their coursework. MindTap also allows faculty to see individualized engagement scores per student and areas where students require additional support. The company has approximately 940 MindTaps in the market across disciplines and are able to add platform features and functionality across all MindTap or develop discipline-specific features as needed. Homework Solutions The company provides online homework solutions that combine its content with digitally assignable and gradeable work for students. The company’s interactive learning solutions are designed to save instructors time, help students focus on what they need to learn and improve academic performance with demonstrable outcomes. These successful discipline-specific platforms include solutions, such as WebAssign, SAM and OWL, which are also integrated into the MindTap platform. Other Digital Solutions These include fully customized online course programs, institutional learning platforms, online skills solutions and supplementary materials. Cengage Unlimited The company is the first to introduce to the industry a subscription model, Cengage Unlimited, which gives students on-demand access to all of its digital learning platforms, eBooks, online homework and study tools in one place. Cengage Unlimited reduces the cost of learning materials and provides access to quality content for all students. Joint distribution and marketing partnerships with key channel partners (such as Barnes & Noble; Follett; Amazon.com, Inc.; VitalSource; Redshelf; MBS; Chegg; and others), as well as engagements with independent bookstores, allow students to purchase Cengage Unlimited everywhere - either at the local campus bookstore, online through various eCommerce partners, or on the company’s proprietary eCommerce channel, Cengage.com. As of March 31, 2020, approximately 2.6 million students had subscribed to Cengage Unlimited. In the fourth quarter of 2020, the company announced that it would offer an eTextbook subscription option for Cengage Unlimited, excluding homework solutions, giving students access to approximately 14,000 eBooks, and approximately four print rentals, study tools and more. Print Textbooks and Materials The company publishes various print products, including textbooks, study guides, laboratory exercises, instructor editions and supplemental products. These materials are based on authoritative content from its list of primary authors across all major academic disciplines and maintain major positions in various major disciplines. The company publishes textbooks by several of the talented and well-known academic authors, such as Ron Larson in mathematics and N. Gregory Mankiw in economics. In various cases, the company’s print products are sold together and complement its digital solutions. Services The company offers various services to complement its products. The company’s services include course development, custom content development and direct assistance to instructors and students to support implementation and ongoing use of its digital and print solutions. Skills The company provides materials in a range of skill areas, extending its offerings for the education industry to professionals already in the workforce. The company’s products include customized materials for employers to provide training to their employees. For example, the company offers Milady Beauty & Wellness solutions to train licensed beauty technicians and spa and salon managers. The company employs a direct professional sales force focused on sales to employers, training programs and directly to professionals seeking additional skills training. School The company holds primary positions in select elective disciplines, including Advanced Placement & Electives, Career and Technical Education, and ELT. The company’s offerings to the school market are part of a partnership with National Geographic and the brand and content are leveraged across its ELT products, the National Geographic Learning science and social studies programs, and elementary school level science curriculum using the collection of National Geographic content, including images, video, maps, illustrations, and articles. Gale Gale differentiates itself as a humanities and social sciences publisher and education-focused company serving lifelong learning needs through K-12, public and academic libraries. It holds a position within the research space as both a producer of original content in digital and print form, and an aggregator of primary sources journals and databases. Gale has partnerships with major research libraries and national archives to digitize rare historical content from worldwide, affording a worldwide product experience and opening new avenues of scholarship for researchers. Its digital content repository serves as the source for various online research databases that are used in libraries and learning institutions worldwide. Gale extends its content from the library to the classroom by integrating into learning managements systems, as well as the company’s courseware. Through digital products that are mobile-responsive and adaptable, Gale delivers content and technology that integrate into classroom curriculum, driving utilization within student, faculty and researcher workflow. Gale sells directly to libraries in communities, schools and universities, as well as to library consortia. Gale has direct representatives in all major developed countries, having expanded and is expanding its sales presence in the Middle East and Asian markets. In addition to selling to libraries, Gale licenses its proprietary and third party content for integration within web-based information providers. Gale has strategic business distribution arrangements with various major information services, including Associated Press; Amazon.com, Inc.; Bloomberg; Google, Inc.; LexisNexis; National Geographic Society; Smithsonian Institution; and The British Library. International The company is a major international provider in the worldwide industry for course materials with operations in Asia, EMEA (Europe, the Middle East and Africa), Australia and Latin America. The company adapts domestic course materials for various local industries internationally. The company also publishes and sells course materials produced by local authors and provides learning and reference solutions in various formats to individuals and businesses located outside the United States. The company serves the higher education, vocational, K-12, library reference, and ELT industries in select geographic areas with a focus on high-growth markets worldwide. The company’s business covers four principal regions that serve various industries through local offices and staff with experience in the industries they serve. The company’s four major regional industries are served by physical locations in Asia (headquartered in Singapore), EMEA (headquartered in Andover, England), Australia (headquartered in Melbourne, Australia), and Latin America (headquartered in Mexico City, Mexico). The company’s regional operations publish adaptations of the U.S. course materials, as well as indigenous course materials, and distribute other available content, including research databases. The company has offices in approximately 30 countries, a sales force in approximately 40 countries, and billings into approximately 170 countries and territories worldwide. Sales and Distribution Model The company’s solutions are adopted by instructors and sold to bookstores, institutions, through intermediaries and directly to students. The company employs a professional sales force who focuses on securing adoptions, as well as helping faculty and students realize the full potential of the adopted solution. The company also employs a sales force that focuses primarily on institutional sales opportunities. The company distributes its products primarily through campus college bookstores and online book retailers, which sell directly to students. The company also sells directly to students through Cengage.com offering digital solutions, eBooks, textbook rentals, print textbooks, study aids, and supplemental materials. Strategy During 2020, the company’s strategy was to accelerate penetration of its high-quality digital courseware; lead the industry in affordability and monetize its print base; nourish its growth engines; and evolve towards a technology-first organization and operating model. Seasonality The company’s revenues, operating profit and operating cash flows are impacted by the inherent seasonality of its business. For the year ended March 31, 2020, the company derived approximately 55.1% of its adjusted revenues and approximately 74.3% of its adjusted EBITDA less pre-publication costs in the second and fourth fiscal quarters, which coincide with the academic calendar. For example, the company incurs a net cash deficit from all of its activities in the first and fourth quarters of its fiscal year. Competition The company’s competitors in the U.S. and International higher education industry are Pearson; McGraw-Hill Education, Inc.; Macmillan; WW Norton; Oxford University Press; and John Wiley & Sons, Inc. Worldwide, the company’s Gale brand competes with ProQuest, EBSCO Information Services, and SAGE Publications Inc. In addition, the company is competing with Open Education Resources.