PERDOCEO EDUCATION Corp (PRDO)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered strong top-line and adjusted profitability: revenue $213.0M (+26.6% YoY), operating income $51.7M (+11.8% YoY), adjusted operating income $63.5M (+28.9% YoY), diluted EPS $0.65 and adjusted EPS $0.70 .
• Strength driven by USAHS acquisition and CTU enrollment growth; AIUS OI rose on lower OpEx; total enrollments up 16.7% to 48,200 as of March 31 .
• FY 2025 outlook raised: adjusted OI $220–$235M (from $215–$235M), reported EPS $2.21–$2.37 (from $2.11–$2.31), adjusted EPS $2.40–$2.56 (from $2.31–$2.51); Q2 2025 guide adj OI $59–$61M, adj EPS $0.64–$0.66 .
• Catalysts: sustained high retention/engagement, positive prospective interest, growing corporate student programs, and disciplined capital return ($25.2M buybacks; $0.13 dividend declared) .

What Went Well and What Went Wrong

What Went Well

• Enrollment and retention momentum: “CTU and AIUS continued to operate at historically high levels of student retention and engagement” with increased prospective interest; USAHS spring performance solid with ~4,200 students and >90% retention trend carried into 2025 .
• Segment execution: CTU revenue +5.3% and OI +9.3%; AIUS OI +28% on lower OpEx; USAHS accretive to adjusted OI despite early D&A/lease impacts .
• Cash generation and capital allocation: CFO highlighted operating cash flow $65.1M, $25.2M repurchases (985K shares) and $0.13 dividend; cash and investments reached $612.2M .

What Went Wrong

• Margin headwinds: total operating margin fell to 24.3% from 27.5% YoY, reflecting integration costs and higher marketing spend; interest expense increased with lease financing .
• AIUS revenue slightly declined (-0.8% YoY) and total enrollments decreased 4.5%; management expects Q2 enrollment growth but noted quarter-to-quarter variability driven by enrollment days and marketing mix .
• USAHS reported a small operating loss (-$0.3M) as reported, with D&A/lease expenses hitting GAAP results; management noted these are excluded in adjusted OI and will impact 2025 EPS (~$0.24 diluted) .

Financial Results

Non-GAAP adjustments: amortization of acquired intangibles added back $0.06 per share with a $(0.01) tax effect to derive adjusted EPS; D&A lifted adjusted OI by $11.8M in Q1 .

Guidance Changes

Key assumptions: effective tax rate ~26.5% for Q2 and ~26.0% for FY; outlook excludes future buyback impact and assumes stable regulatory backdrop and continued high retention/engagement .

Earnings Call Themes & Trends

Management Commentary

• CEO: “First quarter results exceeded our expectations as CTU and AIUS continued to operate at historically high levels of student retention and engagement, and experienced increased levels of prospective student interest...” .
• CFO: “With better-than-anticipated operating trends, we now expect the full year 2025 adjusted operating income to range between $220 million and $235 million… Adjusted EPS is expected to range between $2.40 and $2.56” .
• CFO on tax rate: “Effective tax rate of 22.7% for the quarter, reduced by stock-based comp (5.5%) and release of tax reserves (1.3%)” .
• CEO on USAHS: “St. Augustine… remains focused on preparing health care professionals… pleased with spring term performance” .

Q&A Highlights

• The published transcript consists of prepared remarks; a Q&A session was not included in the available materials. Guidance details and assumptions were clarified in prepared comments (tax rate, buyback exclusions, regulatory assumptions) .

Estimates Context

• FY 2025 S&P Global consensus: revenue $844.41M and EPS $2.55; FY 2024 actual was $681.26M revenue and $2.29 EPS. Company guides FY 2025 adjusted EPS $2.40–$2.56 and adjusted OI $220–$235M, broadly bracketing EPS consensus and implying significant YoY growth with USAHS contribution [GetEstimates]* .
• Quarterly estimates coverage is limited (one analyst); the latest dataset shows EPS $0.61 and revenue $207.0M for a future quarter, underscoring sparse coverage; use caution when benchmarking near-term quarterly results [GetEstimates]*.

*Values retrieved from S&P Global.

Key Takeaways for Investors

• Strong beat vs company’s prior Q1 guidance across OI, adjusted OI, and EPS; sequential acceleration from Q4 driven by USAHS and CTU growth .
• FY 2025 outlook raised across reported and adjusted EPS and operating income; signals confidence in retention/engagement and demand trends .
• Near-term margin dynamics: integration D&A/leases and higher marketing spend weigh on GAAP margins, but adjusted profitability trends are robust; expect continued adj OI expansion .
• Enrollment trajectory supportive: total enrollments +16.7% YoY; CTU strength offsets AIUS softness; management expects AIUS enrollment growth in Q2 .
• Capital returns remain a pillar (dividend and buybacks) with ample liquidity ($612.2M cash/investments); remaining repurchase authorization $21.9M may be opportunistic .
• Watch regulatory developments (Title IV, borrower defense); outlook assumes no adverse change; any shift could alter marketing/outreach practices and demand .
• Stock narrative: raised FY guide, enrollment momentum, and disciplined capital return are positive catalysts; monitor Q2 execution on adjusted OI/EPS and AIUS enrollment inflection .

Appendix: Additional Data

• Capital allocation in Q1: repurchased 985K shares for $25.2M ($25.58 avg price); declared $0.13 dividend payable June 13, 2025 .
• Cash flow: operating cash flow $65.1M (+19.5% YoY); capex $1.7M (~0.8% of revenue) .
• Non-GAAP reconciliation: adjusted OI adds D&A; adjusted EPS adds back acquired intangibles amortization net of tax .