Sophia L.P. (dba Ellucian)

Ellucian's legacy maintenance contracts (for perpetual license customers) are based on the headcount at time of the initial sale (subject to annual price escalators), so are unaffected by enrollment levels. This contrasts with the subscription offering recently launched over the past few years, which is priced based on student full-time equivalents. Contracts for this product provide for upside when enrollment increases (along with price escalators), while including floors that provide a level of downside protection. Given the nascency of Ellucian's subscription offering, we believe most of its customers have yet to migrate and are still on the legacy license and maintenance model where revenue is less variable. As such, we believe Ellucian should be relatively unaffected by the declining enrollment

...Enrollment declines at higher educational institutions could pose a risk for Ellucian. The vast majority of the recent lower enrollment appears to be at community colleges. Sophia L.P. (dba Ellucian) estimates its market share at this level to be in the high-80% area. However, the total enrollment declines across all higher education levels (community college, public four-year, private profit/nonprofit) varies from state to state, with certain states seeing increases in enrollment. Ellucian's legacy maintenance contracts (for perpetual license customers) are based on the headcount at time of the initial sale (subject to annual price escalators), so are unaffected by enrollment levels. This contrasts with the subscription offering recently launched over the past few years, which is priced based on student full-time equivalents. Contracts for this product provide for upside when enrollment increases (along with price escalators), while including floors that provide a level of downside protection....

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