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AP

AMERICAN PUBLIC EDUCATION INC (APEI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $162.8M, up 6.5% YoY and above guidance; diluted EPS was ($0.02) as net loss to common reflected a $3.5M loss on preferred redemption; adjusted EBITDA rose 38% YoY to $15.1M .
  • Guidance changes: FY 2025 revenue maintained at $650–$660M; FY net income lowered to $18–$24M (sale of GSUSA and preferred redemption losses); FY adjusted EBITDA raised to $81–$88M; Q3 2025 guided to $159–$161M revenue and $15–$17M adjusted EBITDA .
  • Strategic simplification accelerated: full redemption of Series A Preferred Stock, sale of two corporate buildings, DOE lifted growth restrictions and released $24.5M RU letter of credit; GSUSA sale closed July 25, 2025 .
  • Operational momentum: APUS net course registrations +7.3% YoY; RU enrollment +7.4% YoY with positive EBITDA; HCN enrollment +13.5% YoY; segment EBITDA/operating leverage improving, particularly at RU .
  • Near-term catalyst: Investor Day set for Nov 20, 2025 to outline 2026+ strategy including campus/program expansion and system consolidation timeline .

What Went Well and What Went Wrong

What Went Well

  • “We exceeded the expectations we set for the second quarter with continued enrollment growth in our education units.” – CEO Angela Selden, highlighting beats on revenue, net income, EPS and adjusted EBITDA .
  • Balance sheet improved: preferred equity redeemed (saving ~$6M annual cash dividends), $24.5M restricted cash released, two buildings sold; GSUSA divested, removing a $28M PV lease liability from the balance sheet .
  • RU operating leverage materializing: RU delivered positive EBITDA ($0.2M) vs ($4.7M) YoY as enrollments rose; APUS registrations up 7.3%, and HCN enrollments up 13.5% YoY .

What Went Wrong

  • G&A rose 10.8% YoY to $38.1M, including $1.7M professional fees tied to consolidation/GSUSA sale; G&A as % of revenue increased to 23.4% from 22.5% .
  • Net loss to common ($0.3M) driven by a $3.5M loss on preferred redemption; EBITDA (GAAP) of $11.1M was below consensus while adjusted EBITDA was strong .
  • GSUSA remained a drag pre-sale: Q2 revenue $3.4M and EBITDA loss ($2.5M); sequential RU margin compression tied to normalization of nursing course materials costs and April merit increases .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$152.9 $164.6 $162.8
Diluted EPS ($)($0.06) $0.41 ($0.02)
Net Income/(Loss) to Common ($USD Millions)($1.16) $7.46 ($0.324)
EBITDA ($USD Millions)$7.45 $16.24 $11.11
Adjusted EBITDA ($USD Millions)$10.93 $21.25 $15.10
Operating Income ($USD Millions)$2.22 $12.25 $7.03

Segment revenue and operating income:

SegmentQ2 2024 RevenueQ1 2025 RevenueQ2 2025 RevenueQ2 2024 Op IncomeQ1 2025 Op IncomeQ2 2025 Op Income
APUS$77.05 $83.95 $81.73 $18.29 $24.13 $21.44
RU$53.03 $59.25 $59.52 ($8.83) ($0.072) ($1.98)
HCN$16.41 $17.68 $18.13 ($0.744) ($0.746) ($0.402)
Corporate & Other (incl. GSUSA)$6.40 $3.68 $3.38 ($6.50) ($11.06) ($12.04)

KPIs:

KPIQ2 2024Q1 2025Q2 2025
APUS Net Course Registrations89,800 102,500 96,400
RU Total Student Enrollment13,600 14,500 14,600
HCN Total Student Enrollment3,300 3,600 3,700

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Revenue ($USD Millions)FY 2025$650–$660 $650–$660 Maintained
Net Income to Common ($USD Millions)FY 2025$23–$30 $18–$24 Lowered (reflects GSUSA sale loss & preferred redemption loss)
Adjusted EBITDA ($USD Millions)FY 2025$77–$87 $81–$88 Raised
CapEx ($USD Millions)FY 2025$18–$22 $18–$22 Maintained
Consolidated Revenue ($USD Millions)Q3 2025n/a$159–$161 Introduced
Adjusted EBITDA ($USD Millions)Q3 2025n/a$15–$17 Introduced
Diluted EPS ($)Q3 2025n/a($0.15)–($0.04) Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesIT transition services and efficiency focus; plan to modernize tech stack Appointment of James Kenigsberg as interim Chief Innovation & Technology Officer; push to “data-first, AI-enabled” institution, intelligent infrastructure, predictive analytics, personalized tools Increasing strategic emphasis and leadership alignment
Regulatory/Macro (DOE/DoD)FY25 guidance assumed preferred redemption; strong military platform DOE lifted RU growth restrictions; released $24.5M letter of credit; DoD TA “big bill” adds $100M authorization through 2029; management views funding as supportive TAM expansion Regulatory tailwinds; improved flexibility
Consolidation into one systemAnnounced plan to combine APUS/RU/HCN; expected YE 2025 HLC and state approvals obtained; timing discussion ongoing with DOE; Investor Day (Nov 20) to outline multi-year campus/program strategy Executing approvals; timeline clarity coming
Nursing product performance (RU/HCN)RU returned to positive EBITDA in 2H24; improving enrollments; HCN double-digit growth RU 5th consecutive quarter of YoY enrollment growth; RU EBITDA positive; HCN +18% YoY in Q3 starts; NCLEX pacing as expected Continued improvement and operating leverage
Capital allocationPreferred redemption planned for 2025 Preferred fully redeemed; priorities: growth initiatives (healthcare expansion, tech), tuck-in campus acquisitions; no Q2 buybacks; dividends not prioritized Simplified capital structure; growth-focused deployment

Management Commentary

  • “At APEI, we continue to simplify our business, execute on our growth strategy and deliver on our stated financial results… We exceeded the expectations we set for the second quarter with continued enrollment growth in our education units.” – Angela Selden, CEO .
  • “We redeemed our preferred equity… which will save approximately $6 million of go-forward annual cash expenses… and completed the sale of two corporate administrative buildings. …the Department of Education released the letter of credit of $24.5 million of cash… we have completed the sale of GSUSA…” – Angela Selden, CEO .
  • “Second quarter adjusted EBITDA was $15.1 million… represented an adjusted EBITDA margin of 9.3% as compared to 7.1% in the prior year.” – Rick Sunderland, CFO .
  • On RU sequential margin: “Costs… are fully loaded [in Q2]… annual salary merit increases beginning April 1.” – CFO clarifying margin dynamics .
  • On DoD TA funding: “The $100 million is authorized through September 2029… we are seeing strength in military registrations.” – CFO; CEO added distribution mechanics remain to be clarified .

Q&A Highlights

  • Military TA funding: DoD authorization of $100M through 2029 supports TAM expansion; strength in military registrations; distribution mechanics (rates, class counts) still being clarified by DoD .
  • RU margins: Q2 sequential margin lower due to normalization of nursing course materials vendor discounts and April merit increases; operating leverage expected to accelerate with enrollment growth .
  • Consolidation timing/marketing: HLC and state approvals obtained; DOE timing pending; future single system landing page with shared catalog breadth; local nursing brands (RU, HCN) retained for market effectiveness; marketing is shared service, but leads currently not shared .
  • Capital deployment priorities: Focus on healthcare expansion, technology, tuck-in campus acquisitions; maintain composite score; buybacks/dividends lower priority; no Q2 repurchases .
  • GSUSA sale: Clarified removal of a $28M PV lease liability; Q3 loss of $7–$8.5M contemplated in guidance .

Estimates Context

Results vs S&P Global consensus:

MetricQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD)$161,733,000*$164,551,000*$160,876,170*$162,766,000*
EPS (Primary) ($)0.14*0.618*(0.068)*0.197*
EBITDA ($USD)$14,363,000*$17,995,000*$13,152,000*$11,148,000*

Values retrieved from S&P Global.
Notes: Q2 2025 revenue and EPS both beat consensus; EBITDA (GAAP) missed consensus while adjusted EBITDA exceeded company guidance (non-GAAP). S&P “actual” EBITDA reflects GAAP EBITDA, which differs from adjusted EBITDA reported by the company (Values retrieved from S&P Global).

Forward consensus (S&P Global):

  • Q3 2025: Revenue $160.77M*, EPS ($0.085), EBITDA $16.16M; Q4 2025: Revenue $151.60M*, EPS $0.377*, EBITDA $19.75M* (Values retrieved from S&P Global).

Key Takeaways for Investors

  • Beat on revenue and EPS vs consensus; GAAP EBITDA below consensus but adjusted EBITDA strong, highlighting non-GAAP add-backs and progress on operating leverage; expect continued focus on adjusted metrics in narrative (Values retrieved from S&P Global).
  • Strategic simplification (preferred redemption, building sales, GSUSA divestiture, RU restrictions lifted) increases flexibility and cash generation; ~$6M annual dividend cash savings a recurring benefit .
  • RU operating leverage is the swing factor: sustained enrollment growth and reduced marketing spend per lead drive margin expansion; management targets accelerated EBITDA flow-through as seats fill .
  • Military TAM expansion supported by DoD TA funding authorization; APUS registration growth steady; watch for clarity on distribution mechanics impacting revenue lift .
  • FY 2025 guidance quality: revenue maintained, net income lowered for one-time losses, adjusted EBITDA raised; Q3 guide embeds GSUSA sale loss—execution on core segments should underpin beats ex one-offs .
  • Investor Day (Nov 20, 2025) is a near-term narrative catalyst—expect multi-year expansion plan (campuses/programs), consolidation timeline, and capital deployment roadmap .
  • Trading implications: Near-term volatility around Q3 GAAP loss (GSUSA sale) but improving core unit momentum; medium-term thesis hinges on RU/HCN operating leverage and APUS steady growth with supportive regulatory backdrop .

Financial Results Details and Context

  • Q2 2025 revenue +6.5% YoY to $162.8M; net loss to common ($0.3M) due to $3.5M preferred redemption loss; adjusted EBITDA +38% YoY to $15.1M; cash, cash equivalents and restricted cash $176.6M, unrestricted cash $174.9M .
  • Segment drivers: APUS +$4.7M YoY, RU +$6.5M YoY, HCN +$1.7M YoY; Corporate & Other (incl. GSUSA) down $3.0M YoY .
  • Cost dynamics: Total costs +3.4% YoY; increases in compensation, professional fees, classroom/course materials, partially offset by IT, D&A and occupancy reductions .
  • Enrollment KPIs: APUS registrations 96,400 (+7.3% YoY); RU total enrollment 14,600 (+7.4% YoY); HCN total enrollment 3,700 (+13.5% YoY) .

Guidance and Outlook Mechanics

  • Q3 2025: APUS registrations 97k–99k (+5–7% YoY), RU enrollment ~14.9k (+10% YoY), HCN ~3.7k (+18% YoY); Revenue $159–$161M; adjusted EBITDA $15–$17M; diluted EPS ($0.15)–($0.04) including GSUSA sale loss of $7–$8.5M .
  • FY 2025: Revenue $650–$660M; net income to common $18–$24M; adjusted EBITDA $81–$88M; CapEx $18–$22M .
  • Free cash flow expectation (Adj. EBITDA – CapEx): $59–$70M per management for FY 2025 .

Estimates: Where They May Adjust

  • Sell-side likely raises adjusted EBITDA trajectory given Q2 beat vs company guidance and raised FY range; GAAP EBITDA may continue to lag consensus when one-offs occur. RU unit profitability inflection and APUS steady growth could drive upward revisions to FY 2025–2026 EPS and EBITDA if enrollment momentum persists (Values retrieved from S&P Global) .
  • Q3 GAAP loss from GSUSA sale is transitory; ex one-offs, core EBITDA trending favorably; expect models to bifurcate GAAP vs non-GAAP and re-rate on adjusted free cash flow .

Additional Relevant Press Releases

  • Earnings call scheduling (Aug 6, 2025) .
  • Full redemption of Series A Senior Preferred Stock ($44.5M cash including accrued dividends) and building sales update (June 27, 2025) .
  • Appointment of interim Chief Innovation & Technology Officer (Aug 11, 2025): AI-enabled institutional transformation .