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PE

PERDOCEO EDUCATION Corp (PRDO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered strong top-line and margin expansion: revenue rose 19.3% year over year to $176.4M, operating margin expanded to 21.1%, and diluted EPS increased to $0.47 (adj. EPS $0.50) as CTU/AIUS grew organically and USAHS contributed its first month post-close .
  • The company exceeded its own Q4 guidance: adjusted operating income of $43.2M vs $39–$42M guided and adjusted EPS of $0.50 vs $0.46–$0.49 guided; FY24 also finished above the high end on both AOI ($192.2M) and adj. EPS ($2.29) .
  • 2025 outlook introduced: Q1 adj. operating income $61–$63M and adj. EPS $0.64–$0.67; FY25 adj. operating income $215–$235M and adj. EPS $2.31–$2.51, with USAHS accretive and organic growth expected at CTU/AIUS; tax assumptions ~25.5% (Q1) and ~26.0% (FY) .
  • Strategic drivers: student retention/engagement near multi-year highs, increased prospective interest, data/technology-driven enrollment processes, and USAHS acquisition (closed Dec 2) expanding into graduate health sciences; cash and investments remained robust at $591.5M .

What Went Well and What Went Wrong

  • What Went Well

    • Strong growth and execution: Q4 revenue +19.3% YoY to $176.4M; operating income +133% YoY to $37.2M; adjusted operating income +123% YoY to $43.2M .
    • Positive operating narrative: “Quarterly operating performance at CTU and AIUS was ahead of our expectations…This broad momentum sets us up well for 2025” — Todd Nelson, CEO .
    • Capital and portfolio positioning: closed USAHS acquisition, adding graduate health sciences; management reiterated USAHS will be accretive to 2025 operating income and adjusted operating income .

  • What Went Wrong

    • FY24 revenue declined 4.0% due to prior AIUS operational changes and CTU professional development simplification (despite CTU growth excluding the latter) .
    • USAHS margin dilution in initial month: USAHS posted a Q4 operating loss (-$2.64M) as integration began (one month consolidated) .
    • Regulatory overhang: management flagged potential changes under the new administration/DoE as a watch item for 2025 outreach and compliance processes .

Financial Results

Sequential performance (oldest → newest):

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$166.7 $169.8 $176.4
Operating Income ($M)$46.0 $44.8 $37.2
Adjusted Operating Income ($M)$50.9 $48.6 $43.2
Diluted EPS ($)$0.57 $0.57 $0.47
Adjusted EPS ($)$0.60 $0.59 $0.50
Operating Margin %27.6% 26.4% 21.1%
Net Income Margin %23.0% 22.5% 17.8%

Q4 YoY and guidance comparison:

MetricQ4 2023Q4 2024YoYQ4 2024 Guidance (Nov-12)Q4 2024 Actual vs Guidance
Revenue ($M)$147.9 $176.4 +19.3% ——
Operating Income ($M)$15.9 $37.2 +133.2% ——
Adjusted Operating Income ($M)$19.4 $43.2 +122.9% $39–$42 Above high end
Diluted EPS ($)$0.26 $0.47 +80.8% ——
Adjusted EPS ($)$0.27 $0.50 +85.2% $0.46–$0.49 Above high end
Operating Margin %10.8% 21.1% +1,030 bps——
Net Income Margin %11.6% 17.8% +620 bps——

Segment detail (Q4):

SegmentRevenue Q4’23 ($000s)Revenue Q4’24 ($000s)Op Inc Q4’23 ($000s)Op Inc Q4’24 ($000s)
CTU104,590 114,760 25,376 42,015
AIUS43,172 51,433 600 4,907
USAHS—10,041 —(2,640)
Corporate/Other157 197 (10,033) (7,107)
Total147,919 176,431 15,943 37,175

KPIs and cash:

KPIQ4 2023Q4 2024
Total Student Enrollments (CTU)26,000 28,100
Total Student Enrollments (AIUS)8,500 9,500
Total Student Enrollments (USAHS)—3,800
Total Enrollments (All)34,500 41,400
Cash, Restricted Cash & ST Investments ($M)$604.2 $591.5
Net Cash from Operating Activities ($M, Q4)$13.2 $17.6
Capital Expenditures ($M, Q4)$1.6 $1.6
Dividend per Share (declared)—$0.13 (paid Mar 13, 2025)

Drivers and color:

  • Organic growth: CFO noted Q4 organic revenue growth of ~12.5% excluding USAHS; AIUS lag impacts were annualized and CTU benefited from strong retention/engagement and corporate engagements .
  • Efficiency: Lower operating expenses vs. 2023 and rightsizing of CTU’s professional development offerings supported margin expansion .
  • USAHS: closed Dec 2; one month consolidated; expected to be accretive in 2025 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Operating IncomeQ4 2024$39–$42M (11/12/24) $43.2M (actual) Above high end
Adjusted EPSQ4 2024$0.46–$0.49 (11/12/24) $0.50 (actual) Above high end
Adjusted Operating IncomeFY 2024$188–$191M (11/12/24) $192.2M (actual) Above high end
Adjusted EPSFY 2024$2.25–$2.28 (11/12/24) $2.29 (actual) Above high end
Adjusted Operating IncomeQ1 2025—$61–$63M New
Adjusted EPSQ1 2025—$0.64–$0.67 New
Adjusted Operating IncomeFY 2025—$215–$235M New
Adjusted EPSFY 2025—$2.31–$2.51 New
Effective Tax RateQ1 / FY 2025—~25.5% / ~26.0% Assumption
Quarterly DividendNext payment—$0.13 per share (3/13/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Technology/Data & AIQ2: technology upgrades in onboarding/support ; Q3: leveraging data analytics; exploring AI-based solutions Continue investing in student technology and data analytics to drive efficient onboarding and engagement Increasing focus
Regulatory backdropQ3 noted DoE rulemaking and guidance updates; monitoring potential impacts New administration may review DoE organization, issue new regs/guidance; too early to assess impact Elevated vigilance
Retention/EngagementQ3: retention at multi-year highs; 4Q double-digit revenue growth expected Entering 2025 near multi-year highs; expect continued strength Sustained strength
Enrollment momentumQ2: CTU +14.7%, AIUS -18.2% YoY (Jun) ; Q3: CTU +13.6%, AIUS +4.0% (Sep) Dec 31: CTU +8.1%, AIUS +11.8% YoY; total +20% Improving trajectory
Corporate engagementsQ3: key growth lever at CTU; rising corporate enrollments Continued growth in corporate engagements Expanding
M&A (USAHS)Q2: definitive agreement signed ; Q3: expected to close Dec Closed Dec 2; accretive to 2025 AOI/adj. AOI Completed; integrating
Capital allocationQ2: dividend raised to $0.13 ; Q3: ongoing dividends Q4: $0.13 declared; dividends remain “integral and growing” Shareholder-friendly
TaxesQ3 ETR 26.9% (FY 26–27% expected) Q4 ETR ~27.2%; 2025 ETR 25.5–26.5% expected Slightly lower expected in 2025

Management Commentary

  • “Quarterly operating performance at CTU and AIUS was ahead of our expectations…This broad momentum sets us up well for 2025” — Todd Nelson, CEO .
  • “We expect St. Augustine to be accretive to Perdoceo’s operating income and adjusted operating income in 2025 and to provide further growth…in 2026.” — Todd Nelson .
  • “Adjusted operating income was $43.2 million…This increase was primarily due to ~12.5% organic revenue growth (ex-USAHS) as well as lower expenses.” — Ashish Ghia, CFO .
  • “We ended the year with $591.5 million in cash…Excluding the ~$137.8M USAHS payment, this balance represents an increase of ~ $125 million vs year-end 2023.” — CFO .

Q&A Highlights

Note: The available transcript includes prepared remarks; a Q&A section was not available in the provided source. Key clarifications from prepared remarks:

  • Organic strength: Q4 organic revenue growth ~12.5% ex-USAHS; AIUS headwinds annualized with normalized marketing/admissions .
  • Outlook levers: 2025 AOI growth driven by USAHS accretion plus CTU/AIUS organic growth; adjusted EPS includes ~$0.23/share incremental D&A/finance lease expenses from USAHS that are excluded from AOI .
  • Enrollment/retention: multi-year high retention/engagement expected to persist; elevated prospective interest to offset changes to federal loan initiatives .
  • Tax: 2025 ETR 25.5–26.5% expected .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2024 were unavailable due to access limitations at the time of analysis. We therefore benchmarked results against company guidance and prior-year actuals instead .
  • If/when S&P Global consensus becomes available, we would expect upward estimate revisions for 2025 AOI/EPS given above-high-end execution in Q4 and initial FY25 outlook .

Key Takeaways for Investors

  • Execution beat: Q4 revenue, adjusted operating income and adjusted EPS all exceeded the company’s own guidance, powered by organic growth and expense efficiency; this should support positive estimate/target recalibration despite lack of third-party consensus access in this review .
  • Momentum into 2025: Initial FY25 adj. AOI ($215–$235M) and adj. EPS ($2.31–$2.51) imply growth vs FY24, with USAHS accretive and CTU/AIUS set to grow despite regulatory and student-loan initiative changes .
  • Enrollment/retention strength: Double-digit AIUS growth and continued CTU gains signal healthier demand and onboarding efficacy; total enrollments +20% YoY at year-end should flow into early 2025 .
  • Mix and integration watch: Near-term USAHS dilution (startup integration) turned into expected 2025 accretion; track campus investments, D&A step-up, and finance lease expenses embedded in EPS guidance (~$0.23/share) .
  • Capital deployment: Dividend maintained at $0.13/share with commentary pointing to an “integral and growing” role; strong cash ($591.5M) supports organic investments and selective M&A/returns .
  • Risk monitor: Regulatory changes under a new administration, evolving DoE guidance, and outreach rules remain the main external swing factors; management expects to offset headwinds with retention/engagement and corporate channels .