Jeffrey Silber • BMO Capital Markets

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CFO Tony Amandy explained that enrollment follows a seasonal pattern, typically troughing during the back-to-school period and then growing incrementally each week until the following May, providing many opportunities for improvement. CEO Paul Thompson added that new digital tools being rolled out will help drive enrollment. Regarding labor, Amandy stated that costs have been 'extremely stable,' with record teacher numbers and strong retention.

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CFO Tony Amandi provided the Q1 breakdown: occupancy (-0.5%), tuition (+2.5%), B2B (+0.5%), NCOs (+0.5%), M&A (+1.0%), and closures (-1.0%). He described the M&A market as robust and consistent with recent quarters, with multiples averaging 3-5x, though some strategic deals have reached the 6x range.

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CFO Tony Amandi explained that tuition pricing is set based on costs, primarily teacher wages. Given stable hiring trends, the company is confident it can maintain a healthy margin spread with a lower tuition hike. CEO Paul Thompson added that the company's dedicated subsidy team, which maintains direct state-level relationships, has not reported any concerns about potential changes to state funding allocations.

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Chairman & CEO Steve Beard attributed the performance to the flexibility of their program offerings (campus, online, hybrid), a strong reputation for student success, and clear pathways to employment through employer partnerships. Regarding regulatory concerns, Beard stated they are not seeing any dampening in demand, expressing confidence in alternative financing options, like the new letter of intent with Sallie Mae, and noting that grandfathering provisions protect current students from disruption.

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Chairman and CEO Stephen Beard confirmed there has been no observed hesitancy in student enrollment behavior. Regarding segment margins, CFO Robert Phelan explained that the decline in the Medical and Veterinary segment was due to a combination of one-time costs and structural investments aimed at positioning the segment for sustained future growth.

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President and CEO Stephen Beard explained that Chamberlain's growth is driven by taking market share in the post-licensure RN to BSN category and strong student persistence, which he believes is sustainable. He also noted that marketing resources are allocated dynamically. CFO Bob Phelan added that while some planned marketing spend was shifted to Q2, year-over-year marketing investment for Chamberlain still increased. Stephen Beard also cited incremental investments in student support as a factor impacting margins.

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CEO Scott Staples described digital identity as the "hottest topic" in the industry, dominating client conversations, and confirmed continued new deal wins, though it's too early to share specific revenue metrics. CFO Steven Marks explained that while the full impact of the OBBBA tax law is still being assessed, the primary benefit for now is significantly higher free cash flow, which enhances their ability to deleverage and invest.

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CEO Scott Staples emphasized that the integration was treated as a 'merger' with a 'best-of-breed' approach, adopting the best processes and technology from either company, and highlighted the 'amazing culture fit' as key to the smooth integration. CFO Steven Marks added that while client platform migrations are blurring the lines, the 96% retention rate is 'very consistent' across both legacy First Advantage and legacy Sterling customer sets.

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CFO Steven Marks detailed plans to implement First Advantage's flexible fulfillment staffing models and harmonize duplicative platforms to create a more variable cost structure at the legacy Sterling business. CEO Scott Staples added that rolling out FA's automation tools, like AI-powered customer care, will also drive efficiencies. Marks confirmed the second-half improvement is based on easier comps and market stabilization, not a forecasted macro change.

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President, CEO & Director Brian Mueller attributed the enrollment surge to strong growth in teacher education programs for paraprofessionals, high demand for prerequisite science courses for nursing, and a rising number of recent high school graduates opting for fully online degrees. He noted that over 95% of partner programs are undergraduate, minimizing the impact of graduate loan changes. Mueller also cautioned that Q3 has tougher year-over-year comparisons despite being a seasonally strong quarter.

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CEO Brian Mueller attributed the strong enrollment to two key factors: the rollout of new, in-demand programs that competitors lack, and the expansion of direct contracts with corporations, school districts, and military bases. Regarding funding, Mueller stated he does not anticipate cuts to core student financial aid programs like Title IV and believes any changes would likely affect research grants, which do not significantly impact GCE, thus foreseeing no material impact on their operations or enrollment.

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CFO Dan Bachus clarified the 15-year GCU contract does not expire but has an early-out option in July that has not been exercised. CEO Brian Mueller stated GCE has 45 hybrid sites open and plans to add 6-8 per year toward its goal of 80. Mueller also noted no negative regulatory impact, believing the administration's focus on outcomes aligns well with GCE's model of producing graduates in high-demand fields like nursing and teaching with low debt, which he expects will be viewed favorably.

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CEO Brian Mueller explained that inflationary impacts on family spending were delayed but are now visible in ancillary revenues. He expressed confidence in a ground campus rebound due to new strategies for FAFSA issues, the appeal of 3-year degree programs, and less aggressive offers from financially strained in-state competitors. Regarding the election, Mueller was bullish, anticipating that a new administration would be more receptive to GCE's creative delivery models and view the company as a solution to higher education's challenges, in contrast to the restrictive stance of the previous administration. CFO Dan Bachus added that the drop in ancillary revenue growth was an anomaly compared to prior years.

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Chief Financial Officer Elizabeth Boland reported that the company opened five centers and closed eight, with more than half of the closures being in the US. She confirmed that the UK business is still on track to reach its goal of breakeven by year-end, a significant improvement from the nearly $10 million loss in the prior year, driven by strong operations and a supportive demand environment.

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CEO Stephen Kramer described the labor situation as much improved, with staff retention back to 2019 levels, which eases recruiting pressure. CFO Elizabeth Boland stated that the top priority for capital is investing in the business (M&A, new centers). Share repurchases and debt management are used to flexibly return capital and maintain a strong balance sheet while pursuing growth opportunities.

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CEO Stephen Kramer stated they are comfortable with wage estimates due to significant prior investments and do not anticipate unexpected inflation, though they retain pricing flexibility for new families if needed. CFO Elizabeth Boland explained that the share repurchase was an opportunistic use of capital, prompted by strong cash generation, future cash flow visibility, and well-priced debt.

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CEO Stephen Kramer explained the EdAssist performance is a mix of market factors (fewer people upskilling in a strong economy) and internal focus. He outlined a transformation plan involving team, platform, and marketing investments. Regarding government policy, he noted that such proposals have been discussed for years but have not materialized due to the immense financial resources required, with federal support historically focused on the neediest families.

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President & CEO Eilif Serck-Hanssen stated that the main intake is about halfway complete and trends are encouraging, highlighting high single-digit growth in the recent working adult intake. SVP & CFO Rick Buskirk attributed the $20 million revenue beat primarily to favorable foreign exchange rates ($18 million), with the remaining $2 million from operational outperformance carried over from strong prior enrollments.

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Eilif Serck-Hanssen, President and CEO, responded that the recent secondary intake, primarily for working adults, showed robust demand as these students are less dependent on household income. For the larger upcoming primary intake, he stated it is too early for specific guidance but the company assumes a similar economic environment to late last year and expects growth to mirror the 4-5% rate seen then.

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Eilif Serck-Hanssen, President and CEO, explained that while Laureate is not directly impacted by tariffs, a slowdown in GDP does affect consumer spending. He noted the company's guidance for 2025 assumes a modest 1% GDP growth in Mexico. Regarding capital allocation, Mr. Serck-Hanssen reaffirmed the target of converting 50% of adjusted EBITDA to unlevered free cash flow, which, after funding growth, is available to be returned to shareholders.

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CFO Rick Buskirk clarified the timing of a $13 million revenue and $11 million adjusted EBITDA shift from the first half to the second half of the year. CEO Eilif Serck-Hanssen explained that Mexico's post-election softness was driven by a pullback in government stimulus and increased consumer caution due to proposed judicial reforms. Regarding the university expansion, he noted the proposal represents less than 2% CAGR in public capacity over six years, slower than market growth, and is focused on rural areas with limited overlap with Laureate's urban network.

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CFO Eric Abouaf outlined the timeline, noting that internal work on carve-out operations is proceeding well. Key upcoming milestones include private regulatory filings in the fall, finalizing the management team following the CEO appointment, and, further into next year, a Mobility-specific investor day and roadshow. He confirmed the company is on track with its original 12-18 month timeline.

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CFO Eric Abouaf outlined the process, noting that internal work on carve-out operations is proceeding well. Key upcoming steps include private regulatory filings in the fall, the naming of the full management team in the coming months, and an investor day for Mobility planned for next year, followed by a roadshow. He reiterated confidence in the original 12-to-18-month timeline from the date of announcement.

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CFO Eric Aboaf explained that the adjustment was due to several 'puts and takes' within the cash flow statement. He specifically cited changes in the timing of tax payments and working capital movements as the primary factors leading to the revised forecast.

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Interim CFO Chris Craig stated that exposure to U.S. government contracts is less than 1% of consolidated revenue and that the company uses hedging programs to mitigate FX risk. President and CEO Martina Cheung added that while their base case doesn't assume a protracted trade war, the potential for small impacts from tariffs is factored into the current guidance.

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President & CEO Karl McDonnell explained the Australian caps restrict new international students needing visas and also limit the ability of onshore students to transfer, both of which have impacted Torrens University. He noted they expect to lap these declines in early 2026. McDonnell confirmed that the increase in the employer tuition assistance tax-free limit to index with inflation is a "net positive" and that the inclusion of workforce Pell grants could also be beneficial.

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Karl McDonnell, President and CEO, explained that the flat enrollment in U.S. Higher Education reflects normal cyclicality and expects it to normalize to mid-single-digit growth, driven by strong corporate partnerships. For the ETS segment, he attributed its success to the high-quality Sophia Learning product, effective marketing investments with near-term ROI, and the maturation of Workforce Edge client partnerships.

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President and CEO Karl McDonnell explained that the enrollment slowdown was a normalization toward their long-term mid-single-digit growth model. Regarding Australia, he and Chairman Robert Silberman clarified that proposed student caps were replaced by a ministerial direction to manage international student levels via visa processing speeds, which they are modeling as having a similar effect. McDonnell also noted they are monitoring the new U.S. administration's impact, highlighting their historical strength with federal government employees.

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President and CEO Karl McDonnell explained that the enrollment growth rate was normalizing to the expected mid-single-digit range. He and EVP & CFO Daniel Jackson detailed that Australia's proposed student caps aim to reduce immigration to pre-COVID levels but are not yet legislated. Karl McDonnell also confirmed the new Workforce Edge client was a large company that switched from a competitor, though he could not disclose the name.

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CEO Greg Hart described a mixed corporate spending environment, with macro caution balanced by a strategic need for AI upskilling. Regarding Pell grants, he noted that while he couldn't speak to specifics, the policy shift towards skills-based, credit-bearing credentials aligns perfectly with Coursera's strategy of working with bodies like ACE and ECTS to accredit its micro-credentials.

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CFO Ken Hahn clarified there was no specific timing shift. He explained that the company targets a full-year EBITDA margin and invests for growth within that constraint. The Q3 beat and subsequent guidance increase occurred because the company was unable to deploy enough recurring spend (like hiring) to meet its original targets. He added that they may deploy some non-recurring expenses in Q4 to support future growth.

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CFO Marie Perry stated the DOGE impact was less than 2% of total revenues in Q2, in line with expectations, and is projected to be the same in Q3. CEO Ted Hanson and President Shiv Iyer described the commercial segment tone as one of 'cautious optimism.' They noted strong bookings in consulting for cloud, data, and AI, and saw 'little incremental positive' signs in the assignment business, but are waiting for a recovery in major verticals like banking to signal a broader turn.

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CEO Ted Hanson explained that the contract modification process is fluid, with agencies having the ability to terminate for convenience, which provides a notice period. He stated that internal investments are being reallocated to high-demand areas like AI and data. Hanson affirmed that the company's long-term capital allocation principles, including strategic M&A and share repurchases, remain consistent despite short-term market conditions.

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CEO Theodore Hanson explained that while the market is still assessing the impact, ASGN's focus on high-demand areas like cyber, AI, and IT modernization is durable. He noted that two-thirds of their federal revenue comes from resilient agencies like the DoD and Intel. Hanson confirmed they have not seen a slowdown in payments, but new contract awards are a mixed bag, with some wins and some pauses depending on the specific agency.

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CFO Noémie Heuland confirmed that no expenses were shifted. She attributed the margin outperformance, particularly in Moody's Analytics, to deliberate execution on strategic priorities, including investment prioritization, vendor optimization, disciplined spending, and the deployment of internal productivity tools like GenAI, which have enhanced efficiency without material headcount growth.

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CEO Robert Fauber stated that there were no other significant slowdowns, attributing the change primarily to federal government and some ESG-related attrition. He noted that while sales cycles have not extended yet, the revised guidance prudently acknowledges the possibility of future delays in a volatile environment. He also highlighted that the sales pipeline remains robust, up double-digits year-over-year.

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CFO Noemie Heuland stated that revenue from the U.S. federal government is minimal, accounting for less than 1% of consolidated revenue. CEO Robert Fauber commented that while there could be sector-specific impacts from policy changes (e.g., tariffs, energy policy), Moody's would anchor its analysis on the credit implications, noting the global economy has proven surprisingly resilient to various shocks.

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CFO Noemie Heuland confirmed the implied Q4 EPS outlook is relatively flat to slightly down, which she stated is aligned with the expected moderation in top-line growth for the MIS segment. CEO Robert Fauber added that lower expected Q4 revenues in MIS would naturally result in a lower operating margin for that segment during the quarter.

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CFO Elizabeth Mann reported a de minimis impact from wildfires but noted a modest revenue benefit in the property estimating solutions (PES) business. This was driven by a tail from Q4 hurricanes and an active severe convective storm season. CEO Lee Shavel and Executive Robert Newbold added that the California wildfires have spurred significant client interest and dialogue around Verisk's advanced wildfire model.

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CFO Elizabeth Mann noted that while Verisk provides support, geographically concentrated wildfires do not have the same financial impact as widespread hurricanes. CEO Lee Shavel stated that revenue from the federal government is less than 1% of total revenue and that the company has minimal direct exposure to federal policy changes, as insurance is primarily state-regulated.

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Chief Financial Officer Elizabeth Mann responded that the company's policy is to provide full-year guidance rather than quarterly updates. She stated that with one quarter remaining, the company is tracking 'very much in line with that full year range,' without offering specific drivers for the high or low end of the implied Q4 outlook.

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CFO Craig Safian explained that multiyear contracts are typically non-cancelable commitments, which adds to business resilience. For non-federal renewals, he noted that Q1 and Q4 are the largest quarters. He also mentioned that while client retention is strong, wallet retention is being impacted by longer sales cycles for new and upsell business.

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CFO Craig Safian confirmed the price increase averaged slightly below 4% and was applied specifically by product and geography, with a focus on offsetting wage inflation. He reported no unusual pushback. Safian described the selling environment in Europe as consistent with H2 2024 and noted that China remains 'pretty challenging,' especially with larger clients.

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CFO Craig Safian explained that the upcoming annual price increase is just under 4%, in line with the historical 3-4% range aimed at offsetting wage inflation. He confirmed that the decline in Consulting contribution margin was primarily driven by a mix shift, as the prior-year quarter had a significantly higher volume of highly profitable contract optimization deals.

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CEO James Rhyu reframed the growth question, suggesting the real issue is a missed opportunity to drive similar growth in lower grades, which the company will address with investments in reading tutoring. Regarding constraints, Rhyu explained that the issue is not new enrollment caps but rather an acute spike in demand during a time of year when school enrollment windows are typically closed, a phenomenon that has always existed but is more pronounced now due to high demand.

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CEO James Rhyu attributed the outperformance to significant improvements in operational execution, a focus area from previous years, which has allowed Stride to gain market share. Rhyu stated that direct federal funding exposure is minimal, 'well less than 5%,' and that the company is prepared to manage any indirect impacts while focusing on its state-level business.

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CEO James Rhyu reiterated that last year's ESSER revenue impact was under 3% with an immaterial profit impact, shifting focus to strong forward-looking demand. He confirmed no significant programs were lost for the current year and none are currently known to be at risk, adding that the company continues to look for opportunities to add programs.

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CFO and COO Brian Scott highlighted the significant progress already made through a unified go-to-market strategy, key technology investments like Passport and ShiftWise Flex, and improved operational efficiency. CEO Caroline Grace added that while hospitals still focus on contract labor, it is less of a cost-saving lever than a year ago, with the conversation shifting toward broader, sustainable workforce solutions.

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President and CEO Cary Grace responded that while the company provides market data and transparency, the dynamic largely needs to work itself out. She explained that bill rates fell quickly post-COVID while clinician pay expectations, influenced by wage inflation, did not. She noted that the market is starting to rationalize, with clients raising rates for hard-to-fill specialties, which is a sign of normalization, but more time is needed for the gap to close.

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Executive M. Waddell stated that the company's exposure to the federal government is 'very low,' with any public sector work being substantially concentrated at the state and local levels. CFO Michael Buckley clarified that the higher Q1 tax rate is a first-quarter-specific event tied to annual stock vesting and that the rate should come back down for the remainder of the year.

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Chief Financial Officer Helen Shan explained that Q1 benefited from lower people costs and favorable timing of some credits. She expects expenses to ramp up from Q2 onward due to hiring and investments, particularly in technology infrastructure and cloud spend. She guided for the first-half margin to be closer to the midpoint of the full-year guidance range.

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CFO Helen Shan explained that Q1 benefited from lower people costs and timing of some credits. She anticipates expenses will ramp up from Q2 onward due to hiring and increased technology and infrastructure spending, bringing the H1 margin closer to the midpoint of the full-year guidance range.

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Executive Frederick Snow highlighted several themes: more enterprise-level deals, success in the wealth management space, and the strength of the core desktop product, particularly in banking. Executive Goran Skoko added that improved fixed income content has enhanced their ability to compete for higher-end terminals in wealth management. He also emphasized that recent wins involve expanding into adjacent workflows like performance reporting and portfolio analytics, diversifying ASV sources.

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