Perdoceo's Q3 2025 Earnings Call: Contradictions Unveiled in Enrollment Trends, Capital Allocation, and Financial Growth Projections

Date of Call: None provided

Financials Results

• Revenue: $211.9M, up 24.8% YOY (from $169.8M)
• EPS: Adjusted EPS $0.65 per diluted share, up from $0.59 in the prior year; GAAP net income $39.9M, $0.60 per diluted share

Guidance:

• Full-year adjusted operating income expected to be $234M-$236M (vs $188.9M in 2024)
• Full-year adjusted EPS expected $2.54-$2.56 (vs $2.26 in 2024); ~ $0.24/sh related to St. Augustine depreciation/leases
• Q4 adjusted operating income expected $47.9M-$49.9M (vs $42.7M PY); Q4 adjusted EPS $0.53-$0.55 (vs $0.49 PY)
• Revenue and total student enrollments expected to increase in Q4 and full-year 2025, driven by St. Augustine acquisition and CTU organic growth
• Full-year effective tax rate expected 26.0%-26.5%

Business Commentary:

• Strong Enrollment Growth:
• Total student enrollments increased by 15.1% compared to the prior year, driven by 6.7% growth at Colorado Technical University (CTU) and the acquisition of the University of St. Augustine.

• Growth was supported by continued progress within the corporate student program, high levels of student retention and engagement, and interest from prospective students in pursuing a degree.

• Revenue Increase:

• Revenue for the third quarter reached $211.9 million, representing a 24.8% increase from the prior year.

• This growth was attributed to the acquisition of St. Augustine and total enrollment growth at CTU.

• Increased Operating Income:

• Third quarter operating income grew by 13.8% to $51 million, while adjusted operating income increased by 27.4% to $61 million.

• The increase was due to the positive contribution from all three academic institutions, favorable enrollment trends, and effective cost management.

• Capital Return to Shareholders:

• Perdoceo Education Corporation returned $94.1 million to shareholders through share repurchases and quarterly dividends in the first three quarters of 2025.

• This underscores the company's ongoing commitment to long-term value and disciplined capital deployment.

• 2025 Outlook and Enrollment Trends:

• The company expects revenue and total student enrollments to increase in the fourth quarter and for the full year 2025.
• This expected enrollment growth is anticipated to positively impact revenue and operating performance metrics going into 2026, driven by consistent high levels of student retention and engagement, and higher levels of prospective student interest.

Sentiment Analysis:

Overall Tone: Positive

• Management said 'Third quarter operating performance exceeded our expectations' with net income $39.9M and adjusted EPS $0.65 vs $0.59 PY; revenue $211.9M, up 24.8% YOY. Company raised full-year adjusted operating income outlook to $234M-$236M and forecasted continued enrollment and revenue growth into Q4 and 2026.

Contradiction Point 1

Student Enrollment and Retention Trends

It involves contradictory statements about the trends in student enrollment and retention, which are crucial for understanding the company's growth and financial performance.

What are the key highlights from the earnings call? - [Nick Nelson](Alpha IR Group)

2025Q3: Third quarter operating performance exceeded our expectations with net income of $39.9 million, or $0.60 per diluted share, while adjusted earnings per diluted share, which excludes certain non-cash items, was $0.65 as compared to $0.59 in the prior year. These operating results are supported by continued momentum in student retention and engagement that has been trending near multi-year highs, as well as increased interest from prospective students looking to pursue a degree at one of our academic institutions... - [Todd Nelson](CEO)

The question is not provided in the transcript. - [Nicholas Nelson](Unidentified Company)

2025Q2: Second quarter operating performance exceeded our expectations with net income of $41 million or $0.62 per diluted share, while adjusted earnings per diluted share, which excludes certain noncash items, was $0.67. During the quarter, we experienced total enrollment growth across our academic institutions, supported by continuing momentum in student retention and engagement that has been trending near multiyear highs as well as increased interest from prospective students looking to pursue a degree at our academic institutions. - [Todd S. Nelson](CEO)

Contradiction Point 2

Capital Allocation and Share Repurchase Authorization

It involves contradictory statements about the capital allocation decisions and share repurchase authorizations, which are important for understanding the company's financial strategy and shareholder returns.

The provided input contains an introduction to the earnings call rather than a specific question. Please provide the actual Q&A content for me to process and simplify according to your requirements. - [Nick Nelson](Alpha IR Group)

2025Q3: Capital allocation decisions throughout the year highlight, amongst other priorities, our continued commitment to returning capital to shareholders. Commensurately, during the quarter, we repurchased $20.6 million worth of shares under our recently approved $75 million share repurchase authorization. Through both share repurchases and quarterly dividends, we have returned a total of $94.1 million to shareholders for the first three quarters of 2025... - [Todd Nelson](CEO)

Not explicitly stated in the transcript. - [Nicholas Nelson](Unidentified Company)

2025Q2: Our capital allocation decisions during the year highlight, amongst other priorities, our continued commitment to returning capital to shareholders. During the first half of 2025, we purchased 1.6 million shares for $46 million at an average price of $28.19 per share. With less than $1 million remaining under our prior $50 million authorization and in line with our broader capital allocation strategy, the Board has approved a new $75 million share repurchase authorization for immediate use. - [Todd S. Nelson](CEO)

Contradiction Point 3

Net Income and Earnings per Share Growth

It involves discrepancies in the reported growth of net income and earnings per share between the two quarters, which are crucial financial metrics for investors and stakeholders.

Can you provide a detailed breakdown of Q3 revenue, including North American and European market performance compared to previous quarter projections? - [Nick Nelson](Alpha IR Group)

2025Q3: Net income increased to $39.9 million, or $0.60 per diluted share, while adjusted earnings per diluted share, which excludes certain non-cash items, was $0.65 as compared to $0.59 in the prior year. - [Todd Nelson](CEO)

Unknown question. - [Unknown Participant](Unknown Company)

2025Q1: Net income increased to $43.7 million or $0.65 per diluted share, and adjusted earnings per diluted share rose to $0.70. - [Ashish Ghia](CFO)

Contradiction Point 4

Student Enrollment Dynamics and Growth Factors

This contradiction highlights varying explanations for the drivers behind student enrollment growth, which is a critical aspect of the company's financial performance and strategic focus.

Can you provide details on Q3 revenue growth and contributing factors? - [Nick Nelson](Alpha IR Group)

2025Q3: Momentum in student retention and engagement that has been trending near multi-year highs, as well as increased interest from prospective students looking to pursue a degree at one of our academic institutions. - [Todd Nelson](CEO)

What factors contributed to the increase in total student enrollments? - [operator](Unknown Company)

2024Q4: Several factors contributed to the growth in total student enrollments. These include the success of marketing and admissions investments, which led to increased prospective student inquiry generation. - [Ashish Ghia](CFO)

Contradiction Point 5

Department of Education Student Loan Program Impact

This contradiction reveals differing assessments of the impact of Department of Education student loan programs on enrollment growth, which can affect strategic planning and financial forecasting.

What were the key highlights from the earnings call? - [Nick Nelson](Alpha IR Group)

2025Q3: This trend of students focusing on completing their education and securing a degree is further reinforced by the Department of Education's widely publicized student loan forgiveness initiatives... - [Todd Nelson](CEO)

How will recent Department of Education policy changes impact student enrollments? - [operator](Unknown Company)

2024Q4: Some Department of Education student loan programs that contributed to enrollment growth have ended or are expected to change in 2025. - [Ashish Ghia](CFO)