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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A highlight strong financial performance, positive enrollment growth, and effective fraud control measures. Despite some increased expenses and cybersecurity costs, the company maintains a positive outlook with no material adverse impacts from regulatory changes. The growth in the B2B segment and AI investments further support a positive sentiment. The lack of updated guidance due to seasonal factors is not concerning. Overall, the sentiment is positive, indicating a likely stock price increase in the short term.
Revenue First quarter revenue grew 2.9% year-over-year to $262 million, driven by a 4.1% increase in average total degreed enrollment to 85,600 students. The growth was supported by new student growth and retention gains from fiscal year 2025 continuing into first quarter 2026.
Adjusted EBITDA Adjusted EBITDA increased 7.2% to $75.2 million, reflecting continued revenue growth, enhanced productivity, and operational efficiency while sustaining strong student outcomes. Adjusted EBITDA margin was 28.7%, up from 27.5% in the prior period.
Net Income Net income attributable to the company was $15.5 million or $0.40 diluted earnings per share compared to $46.4 million a year ago or $1.23 diluted earnings per share. The decrease was primarily due to noncash share-based compensation and other expenses resulting from the initial public offering.
Adjusted Net Income Adjusted net income attributable to the company increased 5.3% to $53.6 million, up from $50.9 million in the prior-year period.
Cash and Liquidity Total cash and cash equivalents, restricted cash and cash equivalents, and marketable securities were $218.1 million as of November 30, 2025, compared to $194.8 million as of August 31, 2025. The increase was primarily attributable to $31.1 million of cash generated by operating activities, partially offset by $4.7 million of capital expenditures.
Expenses Instructional and support expenses increased $7.1 million to $115.2 million, and general and administrative expenses increased $24.6 million to $106.6 million. Both increases were principally attributable to the share-based compensation expense increase.
Cybersecurity Incident Costs $4.5 million of expense was recorded for the cybersecurity incident, representing costs to notify affected parties, fees from third-party cybersecurity firms, legal fees, and other related expenses.
AI integration in programs: Embedding AI into programs, course content, and learning experiences to prepare students for AI fluency and practical career-relevant skills.
AI for operational excellence: Using AI to remove friction, increase personalization, automate complexity, and improve enrollment conversion and retention.
Employer-affiliated enrollment growth: Employer-affiliated enrollment increased to 34% of total enrollment, up from 31% in the prior year.
Revenue growth: First quarter revenue grew 2.9% year-over-year to $262 million.
Adjusted EBITDA growth: Adjusted EBITDA increased 7.2% to $75.2 million, reflecting enhanced productivity and operational efficiency.
Cybersecurity incident costs: $4.5 million expense incurred due to a cybersecurity incident involving Oracle E-Business Suite software platform.
Dividend declaration: Announced inaugural quarterly cash dividend of $0.21 per share, reflecting confidence in cash generation and disciplined capital allocation.
Regulatory updates: Negotiated Rulemaking Committee reached consensus on accountability measures, with all University of Phoenix programs passing preliminary performance metrics.
Cybersecurity Incident: The university experienced a cybersecurity breach involving Oracle E-Business Suite software, leading to unauthorized access to personal information. This incident resulted in $4.5 million in expenses for notification, cybersecurity services, legal fees, and other related costs. Additional expenses are expected in future periods, despite having cybersecurity insurance.
Regulatory Compliance: The Department of Education's preliminary program performance accountability metrics were released, and while all University of Phoenix programs passed, the regulatory environment remains a potential risk area requiring ongoing compliance and monitoring.
Share-Based Compensation Expenses: Noncash share-based compensation expenses significantly impacted net income, reducing it from $46.4 million to $15.5 million year-over-year. This expense is not expected to be indicative of long-term trends but represents a short-term financial challenge.
Revenue Guidance: The company reiterated its fiscal 2026 net revenue guidance of $1.025 billion to $1.035 billion.
Adjusted EBITDA Guidance: The company reaffirmed its fiscal 2026 adjusted EBITDA guidance of $244 million to $249 million.
Dividend Projections: Phoenix Education Partners announced a regular quarterly common stock dividend of approximately $0.21 per share, payable on February 18, 2026, with an annualized dividend of approximately $0.84 per share, subject to Board approval.
Capital Allocation Strategy: The company emphasized its commitment to reinvesting in the business, supporting student outcomes, driving enrollment growth, advancing technology platforms, and enhancing operational efficiency while maintaining strong liquidity and returning capital to shareholders.
AI and Technology Integration: The company plans to embed AI into programs and course content to prepare students for a rapidly changing workforce. Additionally, AI will be leveraged to improve operational efficiency, enhance personalization, and automate processes to improve student outcomes.
Declaration of inaugural regular quarterly cash dividend: The company announced a regular quarterly cash dividend of approximately $0.21 per share of common stock, approved by the Board of Directors. This is consistent with the dividend amount outlined during the IPO process. The annualized dividend is expected to be approximately $0.84 per share, subject to Board approval.
The earnings call summary and Q&A highlight strong financial performance, positive enrollment growth, and effective fraud control measures. Despite some increased expenses and cybersecurity costs, the company maintains a positive outlook with no material adverse impacts from regulatory changes. The growth in the B2B segment and AI investments further support a positive sentiment. The lack of updated guidance due to seasonal factors is not concerning. Overall, the sentiment is positive, indicating a likely stock price increase in the short term.
The earnings call summary indicates moderate financial growth with a 6% revenue increase and improved margins. However, cash reserves dropped significantly, and FY '26 revenue guidance is weak at 2%-3%. The Q&A highlights management's confidence in enrollment controls and policy impacts, but there's ambiguity in guidance and potential risks from enrollment challenges. The absence of a new partnership or major strategic initiatives tempers optimism. The overall sentiment is neutral, reflecting balanced positive and negative factors without strong catalysts for significant stock movement.
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