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PERDOCEO EDUCATION Corp (PRDO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered broad-based growth: revenue $209.6M (+25.7% YoY), GAAP EPS $0.62 (+8.8% YoY), and adjusted EPS $0.67 (+13.6% YoY), with continued strength in student retention and engagement and USAHS contribution .
  • Results modestly exceeded S&P Global consensus: adjusted EPS $0.67 vs $0.65* and revenue $209.6M vs $206.9M*; beats were driven by USAHS acquisition and organic enrollment growth at CTU and AIUS .
  • Management raised full-year guidance: adjusted operating income to $230–$236M (from $220–$235M) and adjusted EPS to $2.48–$2.55 (from $2.40–$2.56), reflecting stronger operating trends and USAHS accretion .
  • Capital return accelerated: dividend increased 15.4% to $0.15 and a new $75M buyback authorized, providing a near-term stock support catalyst .
  • Enrollment growth remains a core narrative: total enrollments +17.4% YoY to 46,500; CTU +7.4%, AIUS +7.1%, USAHS ~4,000 students (summer term) .

What Went Well and What Went Wrong

What Went Well

  • Strong topline and adjusted profit growth: revenue +25.7% to $209.6M and adjusted operating income +25.4% to $61.5M, supported by USAHS and organic growth at CTU and AIUS .
  • Enrollment momentum and retention: total enrollments +17.4% YoY; management highlighted “student retention and engagement trended near multi-year highs,” contributing to growth at CTU and AIUS .
  • Confident outlook and capital allocation: raised FY guidance and increased dividend to $0.15; new $75M repurchase authorization underscores balance sheet strength and shareholder return focus .

Selected quotes:

  • “Our academic institutions continued to generate strong levels of prospective student interest, while student retention and engagement trended near multi-year highs.” — CEO Todd Nelson .
  • “Adjusted operating income… grew 25.4%… supported by organic revenue growth at CTU and AIU System [and] the St. Augustine acquisition.” — CFO Ashish Ghia .
  • “The Board has approved a new $75,000,000 share repurchase authorization… [and] increased quarterly dividend from $0.13 to $0.15 per share.” — CFO Ashish Ghia .

What Went Wrong

  • Margin compression: total operating margin fell to 24.5% from 27.6% YoY, driven by higher educational services and depreciation/amortization expenses post-USAHS .
  • AIUS operating margin declined: AIUS operating margin 22.1% vs 24.1% prior year; CFO noted prior-year nonrecurring expense benefit complicates comparability .
  • USAHS reported an operating loss in Q2 (−$1.694M GAAP) as integration and D&A stepped up; adjusted contribution was positive but GAAP optics weighed on margins .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

MetricQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Revenue ($USD Millions)$166.740 $213.004 $209.581
Operating Income ($USD Millions)$46.006 $51.727 $51.399
Operating Margin (%)27.6% 24.3% 24.5%
GAAP Diluted EPS ($)$0.57 $0.65 $0.62
Adjusted Diluted EPS ($)$0.59 $0.70 $0.67

Performance vs S&P Global consensus (Q2 2025):

MetricConsensusActual
Revenue ($USD Millions)$206.924*$209.581
Adjusted/Primary EPS ($)$0.65*$0.67

Values retrieved from S&P Global.*

Segment Breakdown (Revenue and Operating Income)

SegmentRevenue Q2 2024 ($MM)Revenue Q2 2025 ($MM)Op Inc Q2 2024 ($MM)Op Inc Q2 2025 ($MM)
CTU$112.828 $117.970 $42.890 $46.262
AIUS$53.722 $54.723 $12.926 $12.080
USAHS—$36.697 —$(1.694)
Corporate & Other$0.190 $0.191 $(9.810) $(5.249)
Total$166.740 $209.581 $46.006 $51.399

KPIs

KPIQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Total Enrollments (students)39,600 48,200 46,500
CTU Enrollments29,700 33,400 31,900
AIUS Enrollments9,900 10,600 10,600
USAHS Enrollments—4,200 4,000
Cash & Short-term Investments ($MM)—$612.176 $659.589

Non-GAAP adjustments (Q2 2025 EPS): Amortization of acquired intangibles $0.06; tax effect $(0.01); adjusted EPS $0.67 vs GAAP $0.62 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating Income ($MM)FY 2025$178.0–$193.0 $187.8–$193.8 Raised low end
Adjusted Operating Income ($MM)FY 2025$220.0–$235.0 $230.0–$236.0 Raised both ends
GAAP EPS ($)FY 2025$2.21–$2.37 $2.29–$2.36 Narrowed, mid up
Adjusted EPS ($)FY 2025$2.40–$2.56 $2.48–$2.55 Narrowed, mid up
Effective Tax Rate (%)FY 2025~26.0% ~26.5% Slightly higher
Effective Tax Rate (%)Q3 2025N/A~29.0% New
Operating Income ($MM)Q3 2025N/A$46.8–$48.8 New
Adjusted Operating Income ($MM)Q3 2025N/A$57.0–$59.0 New
GAAP EPS ($)Q3 2025N/A$0.55–$0.57 New
Adjusted EPS ($)Q3 2025N/A$0.60–$0.62 New
D&A ($MM)FY 2025$42.0 $42.2 Slightly higher
Amortization of Acquired Intangibles ($ per share)FY 2025$0.26 $0.26 Maintained
Tax Effect of Adjustments ($ per share)FY 2025$(0.07) $(0.07) Maintained
Dividend ($ per share, quarterly)Current$0.13 (Q1 declared) $0.15 (Q2 declared) Raised
Share Repurchase Authorization ($MM)Current$50 (remaining ~$21.9 as of 3/31) $75 (new program) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Student Retention & EngagementMomentum set up 2025; retention/engagement strong “Near multi-year highs” sustaining enrollment growth Improving/stable
Generative AI & TechnologyPersonalization/intellipath; investments in tech Leveraging generative AI for prospect identification; upgrading admissions/enrollment tech Expanding adoption
USAHS AcquisitionClosed Dec 2024; expanded health sciences ~4,000 summer term students; positive adjusted OI; growth expected into 2026 Accretive trajectory
Corporate Student ProgramsGrowing at CTU/AIUS Continued growth; prioritizing investments in teams Growing
Regulatory/LegislativeMonitoring DOE rules; borrower defense, gainful employment Reconciliation bill “in line with expectations” and encouraging deregulatory efforts; no meaningful impact assumed in outlook Lower perceived risk
Tax OutlookFY ETR ~25.5–26.5% (Q1 guide) Q3 ETR ~29% and FY ~26.5%; cash tax benefits (bonus depreciation, R&D expensing, USAHS attributes) Slightly higher ETR; cash tax tailwinds
Capital AllocationDividend $0.13; buybacks in Q1 Dividend raised to $0.15; new $75M buyback; opportunistic repurchases More shareholder return

Management Commentary

  • Strategic focus: “We continue to invest in student enrollment and student support processes and technology… to further enhance academic outcomes and student experiences.” — CEO Todd Nelson .
  • Enrollment engine: “Total enrollment growth grew 17%… supported by 7% growth at both CTU and AIUS… We are selectively leveraging generative artificial intelligence to identify and engage with prospective students.” — CEO Todd Nelson .
  • Outlook drivers: “We are raising our full year adjusted operating income outlook to $230M–$236M… Adjusted EPS $2.48–$2.55… increase due to the St. Augustine acquisition as well as organic growth at CTU and AIU System.” — CFO Ashish Ghia .
  • Tax and cash: “Provisions allowing 100% bonus depreciation and immediate expensing of domestic research expenditures are expected to reduce our federal cash taxes… USAHS tax attributes also expected to reduce federal cash taxes in 2025.” — CFO Ashish Ghia .
  • Capital return: “Board… increased quarterly dividend… to $0.15… [and] authorized a new $75,000,000 share repurchase program.” — CFO Ashish Ghia .

Q&A Highlights

  • The published transcript contained prepared remarks only; no analyst Q&A section was included and the call concluded after management statements .
  • Guidance clarifications provided within prepared remarks: Q3 and FY 2025 ranges for operating income and EPS, and tax rate assumptions (Q3 ~29%, FY ~26.5%) .

Estimates Context

  • Q2 2025 beats vs S&P Global consensus: adjusted/primary EPS $0.67 vs $0.65* and revenue $209.6M vs $206.9M*; # of estimates was 1 for both EPS and revenue, limiting breadth of consensus .
  • Implication: modest upward pressure on FY adjusted EPS estimates likely, given raised guidance and sustained enrollment momentum; note USAHS D&A impact on GAAP EPS highlighted by management .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Earnings quality: broad revenue growth (+25.7% YoY) with adjusted EPS beat and raised FY guidance suggests positive estimate revisions and supports multiple resilience .
  • Growth drivers: organic CTU/AIUS enrollment strength plus USAHS accretion underpin multi-quarter trajectory into 2026; watch AIUS quarterly variability due to enrollment days .
  • Margin watch: GAAP operating margin compressed YoY (24.5% vs 27.6%) on higher educational services and D&A; adjusted metrics show stronger underlying performance .
  • Capital return: dividend raised to $0.15 and new $75M buyback provide downside support and optionality for opportunistic repurchases .
  • Regulatory risk appears manageable per management commentary; cash tax tailwinds from bonus depreciation/R&D expensing and USAHS attributes improve FCF conversion .
  • Near-term trading catalysts: FY guidance raise, dividend increase, buyback authorization, and continued enrollment updates could drive sentiment; monitor Q3 execution vs new quarterly ranges .
  • Medium-term: integration synergies and program expansion at USAHS, ongoing tech investments (including generative AI in marketing/admissions), and corporate student programs should sustain growth while balancing compliance and student outcomes .