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AP

AMERICAN PUBLIC EDUCATION INC (APEI)·Q3 2025 Earnings Summary

Executive Summary

  • APEI delivered a clean beat across key metrics: revenue $163.2M (+6.6% YoY), GAAP diluted EPS $0.30, and adjusted EBITDA $20.7M (13% margin), all above the company’s Q3 guidance ranges; APUS registrations rose 8%, while Rasmussen (+16% revenue) and Hondros (+19% revenue) maintained double-digit growth .
  • Management lowered FY 2025 outlook (revenue to $640–$644M; adj. EBITDA to $75–$79M; net income to $17.2–$19.6M) to reflect the federal government shutdown’s impact on APUS in Q4, while confirming strong nursing enrollment momentum (+9% in Q4 at Rasmussen; +9% at Hondros) .
  • Versus S&P Global consensus, APEI beat on revenue ($163.2M vs $160.8M*) and on Primary EPS (SPGI actual $0.54* vs -$0.09* consensus); note company-reported GAAP diluted EPS was $0.30 [functions.GetEstimates].
  • Stock catalysts: resolution of the CR/Defense appropriations enabling normalized TA flow at APUS, sustained campus “fill the back row” utilization gains at Rasmussen, and any incremental color at the Nov 20 Investor Day (NYC) on 2026 trajectory and the planned institutional combination .

What Went Well and What Went Wrong

What Went Well

  • Broad-based outperformance: “we have again exceeded our guidance ranges for all metrics” (revenue, net income, EPS, adj. EBITDA), aided by APUS registrations +8% YoY and double-digit enrollment growth at Rasmussen and Hondros .
  • Margin expansion and operating leverage: adj. EBITDA +60% YoY to $20.7M and adj. EBITDA margin +424 bps YoY to 13%, with APUS and Rasmussen gross margin improvements driving expense ratio gains .
  • Balance sheet strengthening: unrestricted cash reached $191.3M at 9/30; preferred stock redemption saves ~$6M annual cash dividends; sale of GSUSA eliminated ~$28M lease liability, boosting annual cash flow by ~$10M pre-tax .

What Went Wrong

  • Government shutdown headwind: Q4 APUS net course registrations guided down 23%–33% YoY (65,000–74,400) due to muted military enrollments; FY guide cut reflects an estimated $20–$24M revenue impact .
  • GSUSA sale-related costs: Q3 included a $3.9M loss on sale and ~$0.8M of related professional fees; Corporate/Other operating loss widened .
  • Near-term OpEx pressure: higher advertising spend (+$2.7M YoY) as the company invests to drive enrollments; selling and promotional ratio ticked up to 22.1% .

Financial Results

Consolidated P&L and Profitability (Sequential trend)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$164.6 $162.8 $163.2
YoY Growth+6.6% +6.5% +6.6%
GAAP Diluted EPS ($)$0.41 ($0.02) $0.30
Adjusted EBITDA ($M)$21.2 $15.1 $20.7
Adj. EBITDA Margin12.9% (calc) 9.3% (calc) 12.7% (calc)

Q3 2025 vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($M)$163.2 $160.8*+$2.4M (beat)
Primary EPS ($)$0.54*($0.09)*+$0.63 (beat)
NoteGAAP diluted EPS was $0.30 ; SPGI “Primary EPS” differs in definition.
Values marked with * retrieved from S&P Global (Capital IQ).

Segment Breakdown – Q3 2025

SegmentRevenue ($M)EBITDA ($M)EBITDA Margin
APUS$83.1 $26.2 32%
Rasmussen (RU)$60.8 $0.8 1%
Hondros (HCN)$18.4 ($0.3) -2%
Corporate & Other$0.8 ($13.1) (EBITDA) n/a
Consolidated$163.2 $13.6 (EBITDA) ; $20.7 adj. EBITDA 8% EBITDA; 13% adj. EBITDA

KPIs (Q3 2025)

KPIQ3 2025Q3 2024YoY
APUS Net Course Registrations100,000 92,500 +8.1%
Rasmussen Total Student Enrollment14,900 13,500 +10.4%
Hondros Total Student Enrollment3,700 3,100 +17.6%

Guidance Changes

FY 2025 Guidance – Revision

MetricPeriodPrevious Guidance (Aug 6)Current Guidance (Nov 10)Change
Consolidated Revenue ($M)FY 2025$650 – $660 $640 – $644 Lowered
Net Income to Common ($M)FY 2025$18 – $24 $17.2 – $19.6 Lowered (narrowed)
Adjusted EBITDA ($M)FY 2025$81 – $88 $75 – $79 Lowered
CapEx ($M)FY 2025$18 – $22 $15 – $17 Lowered

Q4 2025 Outlook (New)

MetricPeriodCurrent Guidance
APUS Net Course RegistrationsQ4 202565,000 – 74,400 (-33% to -23% YoY)
Rasmussen EnrollmentQ4 202515,900 (+9% YoY); on-ground 7,100 (+13%), online 8,800 (+6%)
Hondros EnrollmentQ4 20254,000 (+9% YoY)
Consolidated Revenue ($M)Q4 2025$150.0 – $153.5 (-9% to -6% YoY)
Adj. EBITDA ($M)Q4 2025$18.5 – $22.0
Diluted EPS ($)Q4 2025$0.32 – $0.45

Q3 2025 – Guidance vs Actual (Execution Check)

MetricQ3 Guidance (Aug 6)Q3 ActualResult
Revenue ($M)$159.0 – $161.0 $163.2 Above high end
Adj. EBITDA ($M)$15.0 – $17.0 $20.7 Above high end
Diluted EPS ($)($0.15) – ($0.04) $0.30 Beat

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Institutional combination (APUS, RU, HCN)Goal to simplify and combine institutions; approvals in process; balance sheet actions (preferred redemption, asset sales) underway .Process change required a re-submission to HLC; targeting effectiveness at beginning of Q3’26 award year; continuing cross-pollination plans in interim .Timing shifted; conviction maintained
Nursing growth and “fill the back row”Rasmussen enrollment growth resumed; operating leverage building; RU growth +8–10% in 1H .5th straight quarter of YoY growth; on-ground +13% in Q4; strong ADN/BSN demand; utilization strategy working .Accelerating
APUS military TA exposureAPUS steady growth; risk flagged around government budget/ED processing .Government shutdown muted Oct–Nov TA; OBBA $100M enabling some TA; December improvement expected; cost saves enacted .Near-term headwind; transitory per mgmt
Cost actions & marginFocus on operating leverage; adj. EBITDA raised in 1H .Permanent RIFs and variable cost dial-backs; adj. EBITDA margin +424 bps YoY; 2025 FCF (adj. EBITDA – capex) guided to $58–$64M .Structural improvement
Balance sheet simplificationPreferred redemption planned; GSUSA sale planned .Preferred redeemed; GSUSA sold; LOC released; unrestricted cash $191.3M at 9/30 .Strengthened

Management Commentary

  • CEO Angela Selden: “we have again exceeded our guidance ranges for all metrics by continuing to grow revenue and enrollment and by expanding margins” .
  • On shutdown impact and mitigation: “several of the military branches are now authorizing tuition assistance (‘TA’) benefits through the $100 million…OBBA…we have implemented various cost savings measures” .
  • On utilization: “filling the back row…maxing out capacity at our current campuses has been successful, with increasing enrollments and improving EBITDA flow-through” .
  • CFO Ed Codispoti: Q3 revenue +7% YoY to $163.2M; adj. EBITDA +60% to $20.7M; APUS revenue +8% (EBITDA $26.2M), Rasmussen revenue +16% (swing to positive EBITDA), Hondros revenue +19% .
  • On cash and leverage: “net cash position was $96.7M at quarter end” and revolver fully available .

Q&A Highlights

  • TA disruption playbook: Management expects the impact to be calendar timing, not demand destruction, citing 2013 precedent; active campaigns to re-engage dropped students; grad military paying cash helps 90/10 mix .
  • Cost actions: permanent reductions in non-student-facing functions; variable comp tied to performance; dialed-back military marketing until reopening certainty; variable cost model at APUS cushions registration shortfalls .
  • Nursing demand: robust ROI (LPN ~$66K, ADN RN ~$88K pay levels) driving attraction; strong BSN momentum; broad-based geographic strength (MN, KS, IL, FL) .

Estimates Context

  • Q3 beats vs S&P Global: Revenue $163.2M vs $160.8M*; Primary EPS $0.54* vs ($0.09*) consensus; note company GAAP diluted EPS was $0.30 (definitions differ) [functions.GetEstimates].
  • Forward estimates (SPGI): Q4 2025 Primary EPS consensus $0.38* and revenue $151.6M* embed shutdown impact; Q1 2026 consensus EPS $0.47* and revenue $166.9M* imply recovery. Expect estimate revisions higher on 2025 EPS from Q3 beat, tempered by Q4 TA risk and lowered FY guide [functions.GetEstimates] .
    Values marked with * retrieved from S&P Global (Capital IQ).

Key Takeaways for Investors

  • Core execution intact: Multiple consecutive quarters of enrollment growth in healthcare and APUS registrations +8% underpin the beat; adj. EBITDA margin inflecting with expense ratios improving .
  • Transitory Q4 shock at APUS likely shifts revenue across months vs destroying demand; OBBA funds and potential CR passage are key near-term watch items .
  • Nursing is the growth engine: on-ground utilization and BSN acceleration support sustained double-digit enrollment growth and margin lift into 2026; Investor Day should frame capacity runway .
  • Simplification unlocking cash flow: preferred redemption, GSUSA exit, and LOC release add ~$10M pre-tax annual cash flow and bolster flexibility for growth and integration .
  • FY 2025 guide reset is largely macro-driven; focus shifts to Q1 2026 recovery cadence and regulatory milestones for the institutional combination (targeted for Q3 2026 effectivity) .
  • Trading setup: Strong Q3 beat vs low bar but Q4 guidance embeds uncertainty; stock likely sensitive to TA processing headlines, December APUS registrations, and Investor Day disclosures on medium-term margin targets .

Additional Relevant Press Releases (Q3/Q4 timing)

  • APEI appointed Edward H. Codispoti as EVP & CFO (effective Oct 20, 2025), enhancing finance leadership amid the next phase of growth and integration .
  • APEI announced Investor Day for Nov 20, 2025 (NYC) to detail long-term strategy and outlook (APUS, Rasmussen, Hondros leadership presenting) .