Executive Summary

Q2 FY2025 delivered double‑digit top-line growth and material operating leverage: revenue rose 13.9% to $447.7M, adjusted EBITDA increased 35.1% to $125.0M (27.9% margin), and adjusted EPS grew 47.2% to $1.81, while GAAP EPS was $1.98 .
Broad-based strength: Chamberlain (+17.9% revenue, +11.5% enrollment) and Walden (+16.7% revenue, +13.2% enrollment) led growth; MedVet rose modestly (+2.8% revenue) as remediation initiatives continued .
Guidance raised: FY2025 revenue to $1.73–$1.76B and adjusted EPS to $6.10–$6.30 (from $1.69–$1.73B and $5.75–$5.95 after Q1), citing stronger H1 execution and efficiencies; CFO targets >100 bps adjusted EBITDA margin expansion in FY2025 and ~23% adjusted tax rate .
Capital allocation/derisking: repurchased $38M in Q2 (471k shares at ~$80) and repaid $100M of Term Loan B on Jan 17, 2025; net leverage at 1.1x as of 12/31/24 .
Street context: detailed S&P Global consensus not available; however, on the call an analyst stated ATGE “significantly outperformed analyst expectations,” with management attributing upside to marketing efficiencies, improved conversion, and high persistence .

What Went Well and What Went Wrong

What Went Well

Enrollment and revenue momentum continued across core brands: total enrollment +11.6% YoY to 91,264 and revenue +13.9% to $447.7M; Chamberlain and Walden each posted their 8th/6th consecutive quarter of enrollment growth, respectively .
Margin expansion and operating leverage: adjusted EBITDA rose to $125.0M with margin up 440 bps YoY to 27.9%, driven by efficiencies and growth at Walden and Chamberlain; CFO noted >100 bps FY2025 margin expansion expected .
Strategic positioning and digital initiatives: CEO highlighted “Growth with Purpose” driving six straight quarters of enrollment growth and raised guidance; announced Walden President Michael Betts as Chief Digital Officer to accelerate tech/AI initiatives (e.g., Hippocratic AI) .

What Went Wrong

MedVet profitability softer YoY: operating income declined modestly YoY (-2.5%) and adjusted operating income -2.6%; enrollment was slightly down YoY (-0.7%), reflecting segment-specific headwinds and timing (no new enrollment period in Q2) .
GAAP-to-non-GAAP optics: GAAP EPS ($1.98) exceeded adjusted EPS ($1.81) due to exclusion of favorable litigation reserve and discontinued ops in non-GAAP—creating headline complexity for some investors .
Second-half growth to decelerate vs first half on tougher comps: management guided prudently, citing risk-adjusted posture; still expects a strong back half to meet the 9%–11% full-year revenue growth range .

Financial Results

Consolidated Performance (chronological: oldest → newest)

Metric	Q2 FY2024	Q1 FY2025	Q2 FY2025
Revenue ($M)	$393.2	$417.4	$447.7
Diluted EPS (GAAP)	$0.98	$1.18	$1.98
Adjusted EPS (non‑GAAP)	$1.23	$1.29	$1.81
Adjusted EBITDA ($M)	$92.6	$96.7	$125.0
Adjusted EBITDA Margin (%)	23.5%	23.2%	27.9%

Notes: Management attributes upside to enrollment growth and efficiency gains; GAAP vs non-GAAP differences reflect adjustments for items such as litigation reserve, amortization, and discontinued ops .

Segment Breakdown (Q2 FY2024 vs Q2 FY2025)

Segment	Revenue Q2 FY2024 ($M)	Revenue Q2 FY2025 ($M)	Adj. EBITDA Q2 FY2024 ($M)	Adj. EBITDA Q2 FY2025 ($M)	Enrollment Q2 FY2024	Enrollment Q2 FY2025
Chamberlain	$153.6	$181.0	$36.9	$52.6	35,592	39,691
Walden	$146.8	$171.3	$34.6	$52.1	40,971	46,399
Medical & Veterinary	$92.9	$95.4	$26.4	$26.7	5,209	5,174
Total	$393.2	$447.7	$92.6	$125.0	81,772	91,264

KPIs and Balance Sheet Highlights

KPI	Q2 FY2025	Prior Year/Notes
Total Enrollment	91,264 (+11.6% YoY)	81,772 est. sum of segment totals Q2 FY2024
Net Leverage	1.1x (12/31/24)	1.0x at 9/30/24
Share Repurchases	$38M in Q2; 471k shares (~$80/sh)	$34M in Q1
Debt Action	Repaid $100M Term Loan B on 1/17/25	Repriced TLB by -75 bps on 8/21/24

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$1.69B–$1.73B (10/29/24)	$1.73B–$1.76B (1/30/25)	Raised
Adjusted EPS	FY2025	$5.75–$5.95 (10/29/24)	$6.10–$6.30 (1/30/25)	Raised
Adj. EBITDA Margin	FY2025	~+100 bps YoY implied (Q1 call)	>+100 bps YoY (Q2 call)	Raised
Adjusted Tax Rate	FY2025	~23% (Q1 call)	~23% (Q2 call)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY2025)	Current Period (Q2 FY2025)	Trend
AI / Technology	AI tutor “Nurse Ally” rollout; Hippocratic AI partnership and AI certification (Chamberlain/Walden)	Michael Betts named Chief Digital Officer; continued Hippocratic AI integration	Increasing focus and formalized leadership
Marketing Efficiency	Incremental marketing in Q1 with spend shifted into Q2; leverage expected vs revenue	Chamberlain marketing flat YoY in Q2; improved efficiency and bottom‑funnel conversion	Better efficiency, targeted deployment
Enrollment Momentum	Total enrollment +11.2% YoY; Chamberlain/Walden strength	Total enrollment +11.6% YoY; Chamberlain +11.5%, Walden +13.2%	Sustained growth
Regulatory / Macro	Limited commentary in Q1	Expect lighter regulatory overhang; constructive DOE engagement; not speculating on specifics	Tone improving, constructive engagement
MedVet Remediation	Plans progressing; sequential trend improving	January new enrollment demand up YoY; remediation on track	Early improvement signs
Capital Allocation	Q1: $34M buyback; TLB repricing -75 bps	Q2: $38M buyback; $100M TLB repayment; net leverage 1.1x	Accelerated de‑risking + returns

Management Commentary

CEO strategic framing: “Growth with Purpose… has delivered exceptional results—marked by six straight quarters of enrollment growth… These consistent and sustainable results give us confidence to raise our expectations for fiscal 2025.”
On mission/scale: “Revenue grew by 14%… total enrollment was up 11.6% year-over-year… adjusted EBITDA margin expanded by 440 basis points… These aren’t just numbers. They represent real impact.”
Digital leadership: Appointment of Michael Betts as Chief Digital Officer to drive core tech stack, product engineering, data science, and innovation across institutions .
CFO on drivers: Q2 outperformance driven by enrollment growth, operational leverage, lower interest expense; Chamberlain BSN Online grew “over triple digits” in enrollments; marketing at Chamberlain flat YoY this quarter .

Q&A Highlights

Margin expansion trajectory: Management reiterated expectation of >100 bps adjusted EBITDA margin expansion in FY2025 and still anticipates 100+ bps in FY2026 .
Regulatory backdrop: Management expects lighter overhang with constructive DOE engagement; will not speculate on specifics; environment viewed as generally positive for career-focused programs with strong ROI .
Second-half growth cadence: Slower than first half due to tougher comps; guidance raised on a risk‑adjusted basis but still implies a strong back half .
MedVet remediation: January new enrollment demand up YoY; remediation efforts “unfolding consistent with expectations” .
Beat context: An analyst noted ATGE “significantly outperformed analyst expectations”; management cited marketing efficiency, stronger conversion, and high persistence as drivers .

Estimates Context

Wall Street consensus from S&P Global (detailed figures) was unavailable at this time due to access limits. However, on the call, BMO’s Jeff Silber stated ATGE “significantly outperformed analyst expectations” in Q2 FY2025, and management attributed the upside to marketing efficiency, bottom‑of‑funnel conversion, and high persistence .

Key Takeaways for Investors

Enrollment-driven, multi-segment momentum with disciplined cost control is expanding profitability; Q2 adjusted EBITDA margin reached 27.9% (+440 bps YoY) .
Guidance raised on both revenue and adjusted EPS underscores confidence in demand durability and operational execution; adjusted tax rate pegged ~23% .
Marketing ROI and improved conversion/persistence are tangible levers supporting continued beats versus internal/Street expectations per call context .
MedVet is showing early green shoots (January intake improvement), though YOY profitability remains mixed; watch for evidence of sustained enrollment recovery and margin rebuild next quarters .
Balance sheet strength and capital returns (buybacks, debt repayment) de‑risk the story and amplify EPS; net leverage 1.1x at 12/31/24 following $100M TLB paydown .
Digital/AI investments (CDO appointment; Hippocratic AI) should enhance student experience, persistence, and scalability—potentially a medium‑term margin and growth catalyst .
Near‑term trading catalysts: continued enrollment momentum at Chamberlain/Walden, evidence of MedVet recovery in subsequent intakes, and any further guidance revisions or margin expansion disclosure .

Appendix: Additional Data and Non-GAAP Considerations

Non-GAAP adjustments include restructuring, business integration expense, amortization of acquired intangibles, litigation reserve, debt modification costs, loss on assets held for sale, and income from discontinued operations; Q2 GAAP EPS exceeded adjusted EPS primarily due to exclusion of favorable litigation reserve and discontinued ops in non‑GAAP .
Balance sheet snapshot at 12/31/24: cash $194.0M, long-term debt $649.9M; net leverage 1.1x on trailing adjusted EBITDA .

Adtalem Global Education Inc. (ATGE)·Q2 2025 Earnings Summary