Operator: Good day, everyone, and thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Perdoceo Education Corporation First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the floor over to Nick Nelson from Alpha IR. Nick, the floor is now yours.

Nick Nelson: Thank you, operator. Good afternoon, everyone, and thank you for joining us for our first quarter 2026 earnings call. With me on the call today is Todd Nelson, President and Chief Executive Officer; and Ashish Ghia, Chief Financial Officer. This conference call is being webcast live within the Investor Relations section of the company’s website at perdoceoed.com. A webcast replay will also be available on our site for 90 days following the call, and you can always contact the Alpha IR Group for Investor Relations support. Let me remind you that this afternoon’s earnings release and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 as amended. These statements are currently — are based on assumptions made by and information currently available to Perdoceo Education Corporation and involves risks and uncertainties that could cause actual future results, performance, business prospects and opportunities to differ materially from those expressed in or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, those factors identified in Perdoceo’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or changed circumstances or for any other reason. In addition, today’s remarks refer to non-GAAP financial measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. The earnings release that accompanies today’s call contains financial and other quantitative information to be discussed today as well as reconciliations of the GAAP to non-GAAP financial measures and is available within the Investor Relations page of the company’s website.

With that, I’d like to turn the call over to Todd Nelson. Todd?

Todd Nelson: Thank you, Nick. Good afternoon, everyone, and thank you for joining us for our first quarter 2026 earnings call. Our academic institutions are committed to supporting adult learners by offering flexible educational pathways that help working professionals grow in their careers while also training and educating the health care workforce to provide quality medical care across communities nationwide. CTU and AIUS continue to serve a broad population of career-minded students through fully online and hybrid programs, while the University of St. Augustine for Health Sciences prepares graduate level health science professionals in physical therapy, occupational therapy, speech language pathology and nursing. First quarter operating performance exceeded our expectations and further highlighted the success of our balanced approach in operating our academic institutions.

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By delivering on our financial commitments while also investing in our student onboarding enrollment, academic and student support processes, we continue to position the company for sustainable and responsible long-term growth. I’ll start by discussing some key highlights for the first quarter. Ashish will then provide more details on our operating and financial performance and discuss the 2026 outlook. As always, I’d like to thank our faculty, student support staff and all other employees for their outstanding and ongoing commitment and hard work in serving and educating our students. Net income for the first quarter was $54 million or $0.85 per diluted share, an increase of 30.8% versus the prior year quarter earnings per share, while adjusted earnings per diluted share, which excludes certain noncash items, increased 28.6% to $0.90 as compared to $0.70 in the prior year.

These results were ahead of our expectations. Student retention continued to trend near multiyear highs, and we further increased our investments in marketing admissions to serve increased interest from prospective students looking to pursue a degree at our academic institutions. With that context, here are a few additional highlights for the quarter. First, total student enrollments increased by 1.9% at CTU and 3.1% at St. Augustine, which was partially offset by a 2.2% expected decline at AIUS. Strategic investments in technology continue to improve student experiences across our academic institutions while enhancing the operating effectiveness of our functional areas, ongoing artificial intelligence efforts, focus on our students and classroom learning as well as enhancing various operating and functional processes.

Faculty where feasible, are utilizing AI in their classrooms with the goal of enabling students to leverage AI both personally and professionally. Academic leadership is exploring various AI-focused courses and programs with plans to launch later this year, pending required approvals. We are also selectively leveraging generative artificial intelligence to identify and engage with prospective students who we believe are more likely to succeed at one of our academic institutions. We also have several pilots and tests in process that continue to evolve and shape the use of AI across various student support and functional areas, including software engineering and development. We will continue to share updates and success as relevant. Our institutions’ corporate student programs remain a meaningful avenue supporting total student enrollment growth, particularly at CTU.

Through these programs, our institution provide accredited degree opportunities to employees of our partner organizations, supporting their potential career advancement while helping corporate partners strengthen employee development and retention. We continue to invest strategically in technology and talent to expand the program and enhance academic outcomes across our institutions. In summary, we are executing against our objectives of sustainable and responsible growth and remain optimistic for 2026 and beyond. Ashish will now provide more details on the financial results, our 2026 outlook and student enrollment trends. Ashish?

Ashish Ghia: Thank you, Todd. I will review the first quarter results and then discuss our balance sheet and 2026 outlook before handing the call back to Todd for his closing remarks. Please note all comparisons discussed on this call are versus the comparative prior year period, unless otherwise stated. In addition, total student enrollment numbers and any referenced student enrollment trends discussed during this call do not include learners pursuing nondegree-seeking and professional development programs and degree-seeking non-Title IV self-paced programs at our universities. Turning to the first quarter. Net income for the quarter was $54 million or $0.85 per diluted share as compared to $43.7 million or $0.65 per diluted share.

Operating income grew by 22% to $63.1 million, while adjusted operating income, which we believe is more indicative of the underlying operating performance and excludes depreciation and amortization, grew 14.1% to $72.5 million as compared to $63.5 million, resulting in an adjusted EPS of $0.90 per diluted share. First quarter revenue increased 4.1% to $221.7 million from $213 million. Improvement in these reported metrics was primarily supported by organic revenue growth across all our academic institutions, while operating-related efficiencies were partially reinvested in various student-related processes. From an operations perspective, both CTU and AIUS continued to invest in marketing and admissions during the quarter to serve prospective student interest for their academic programs, while retention levels trended near multiyear highs.

Our institutions also continue to explore and deploy technology, including AI-based tools designed to strengthen academic outcomes and improve the overall student experience. University of St. Augustine for Health Sciences continued to expand its program offerings through the introduction of new modalities at existing campus locations, giving prospective students more flexibility in how they pursue a degree. St. Augustine prepares health care practitioners through a combination of on-ground and online offerings and its selective admissions process, generally requiring prospective students to hold an undergraduate degree and complete a comprehensive application admissions process has allowed them to maintain strong academic outcomes and student experiences.

As of March 31, total student enrollments increased by 1.1% as compared to the prior year quarter. Total enrollments at CTU grew 1.9% to 34,050 students, marking the 10th consecutive quarter of enrollment growth. From a year-over-year enrollment comparability perspective, please note that CTU will continue to lap strong record quarters from last year while also graduating a record number of students in 2026 as compared to 2025. We expect total enrollment trends at CTU to be supported by sustained strength in student retention, ongoing expansion of the corporate student program and consistent levels of prospective student interest. Additionally, CTU will accelerate investments in marketing while also refining the use of AI to more effectively engage with prospective students.

As expected, total enrollments at AIU System decreased 2.2%. This decline was expected and primarily due to lower enrollments at Trident University, a part of AIU System. Looking forward, we expect reported total enrollments to increase in the second quarter and accelerate further in the third quarter as compared to the prior year quarters. Please note that in addition to underlying trends in student retention and engagement, the number of enrollment days in any given quarter will continue to impact quarterly enrollment comparability at AIU System. And from a full year perspective, we expect both revenue and operating income to grow in 2026 as AIU System plans to continue investing in marketing and admissions, while student retention is anticipated to remain near multiyear highs.

At University of St. Augustine for Health Sciences, new student enrollments were higher for the spring term as compared to the prior year with just under 4,400 total students enrolled for the term. The enrollment increase from prior year was primarily as a result of growth in programs such as nursing and speech language pathology as well as the introduction of new modalities for the occupational therapy program. We also expect new student enrollment growth for our summer term and fall term, the latter, which is traditionally the biggest term of the year. With expected growth in new enrollments, supported by ongoing expansion of their program offerings through the introduction of new modalities and program versions at current campus locations as well as consistently high student retention trends, we believe St. Augustine will meaningfully contribute to the overall revenue and adjusted operating income growth for 2026 and is expected to further grow into 2027.

Note that St. Augustine has a traditional university calendar with 3 academic terms and multiple campuses for in-person classes in California, Texas and Florida. Commensurately, we may share student enrollment data for the beginning of an academic term, which are typically different from total student enrollment numbers reported at the end of each fiscal quarter. In summary, we expect total company revenue to increase each remaining quarter of 2026 versus ’25. Growth in total student enrollments and sustained improvement in student retention and engagement will drive this expected revenue growth. Moving on to our segment results. In the first quarter, CTU’s revenue increased 4% to $120.8 million, while operating income increased 8.1% to $50.5 million, primarily due to the total enrollment and revenue growth trends I previously discussed.

Additionally, lower bad debt expense more than offset investments in marketing and admissions. AIU Systems first quarter revenue increased to $57.8 million, while operating income increased 12% to $12.6 million. Investments in marketing were more than offset with lower bad debt expense. St. Augustine had a strong quarter with revenue of $43 million, increasing 9.8% as compared to the prior year quarter, while operating income increased to $6.3 million as compared to an operating loss in the prior year quarter. Excluding depreciation and amortization, adjusted operating income increased to $13.3 million as compared to $8.5 million. Moving on to Corporate and Other. Operating losses for the quarter were $6.3 million, a slight increase from the $5.9 million in the prior year.

Turning to income taxes. For the first quarter, we recorded a provision for income tax of $14.2 million, resulting in an effective tax rate of 20.8%. The tax effect of stock-based compensation and the release of previously recorded tax reserves reduced the effective tax rate by 5.6% and 1.2%, respectively. We expect that for the full year 2026, our effective tax rate will be between 22.5% and 23.5%. This includes an estimated benefit for the tax effect of stock-based compensation and the release of previously recorded tax reserves for uncertain tax positions. The full year effective tax rate assumption also includes a 1.5% nonrecurring tax benefit related to the resolution of a prior period state tax matter. As a reminder, various tax provisions from the 2025 reconciliation bill will, in general, continue to reduce cash expenditures for U.S. federal and state income taxes from what it would have otherwise been.

Additionally, various tax attributes acquired with the acquisition of St. Augustine will also lower our federal and state income tax payments. For 2026, we estimate our cash paid for income taxes to be in the range of 23% to 24% of pretax income. Turning now to our balance sheet and liquidity. For the first quarter, net cash flows provided by operations were $69.4 million versus $65.1 million in the prior year quarter. This growth versus the prior year was primarily supported by year-over-year improvement in adjusted operating income. We ended the quarter with $680 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments, which represent an increase of approximately $36.5 million from our prior year-end position.

Key uses of cash during the quarter include approximately $18 million return of capital to shareholders in the form of quarterly dividend and stock repurchases, $10.3 million for the payment of employee taxes via share repurchases for stock investing and $1.7 million of capital expenditures. For full year 2026, we expect capital expenditures to be approximately 1.5% of revenue. Before turning to our 2026 outlook, I will address our balanced approach to capital allocation. We have $91.9 million of authorization remaining under our current share repurchase program and anticipate utilizing it over time, subject to market conditions, organic and inorganic investment opportunities, share valuation and other factors that guide our disciplined approach to capital allocation.

Additionally, consistent with our dividend policy and continued confidence in our long-term outlook, the Board of Directors declared a quarterly dividend of $0.15 per share payable on June 12, 2026, to the holders of record of Perdoceo’s common stock at the close of business on June 1, 2026. Future quarterly dividend payments are expected to be paid out of free cash flows for the relevant year, subject to Board approval and the company’s available retained earnings, financial condition and other relevant factors. Subject to the conditions previously outlined, we continue to view quarterly dividend payments as an integral and growing part of our balanced capital allocation strategy. We generally expect [indiscernible] dividend amounts at least on an annual basis with the next review expected in the third quarter of 2026.

We will now discuss our outlook for 2026. We now expect the full year 2026 adjusted operating income to range between $254 million to $263 million. This compares to an adjusted operating income of $237.6 million in 2025, with the expected increase primarily due to assumptions for organic revenue growth across our academic institutions, while lower operating expenses in certain categories should offset investments in marketing, academics and other student support processes. Adjusted earnings per diluted share are expected to be between $3.05 and $3.16 versus $2.61 in 2025, a 19% increase at the midpoint. This outlook reflects our current beliefs that the consistent high levels of student retention and student engagement that we experienced in 2025 will continue through 2026.

Prospective student interest in our academic programs will continue to remain at current levels, in part supported by incremental marketing investments in brand awareness and visibility. Any changes to the regulatory or legislative environment will not have a meaningful impact on prospective student interest or necessitate any operational changes. There will not be a material impact on student enrollments due to the elimination of the Grad plus loan program, the annual and lifetime graduate loan limits or their ability to finance their education through private lending sources. Full year revenue is expected to increase versus 2025, supported by the rollout of the new program versions within physical and occupational therapy at St. Augustine and continued organic growth at CTU and AIU System.

At St. Augustine, we expect revenue growth each quarter, resulting in double-digit adjusted operating income growth for the full year. At AIU System, while the academic session calendar will impact quarterly enrollment comparability, we expect both revenue and operating income to grow for the full year, supported by strong retention and engagement and continued investment in marketing and admissions. Supporting our organic growth expectations at CTU are strong levels of prospective student interest in its academic programs, ongoing growth in marketing — in corporate student program and investments in marketing as well as the corporate student program. Partially offsetting these growth trends will be a record number of students expected to graduate in 2026.

Additionally, please note that from a year-over-year enrollment comparability perspective, CTU will continue to lap strong enrollment growth from previous quarters. For the second quarter of 2026, we expect adjusted operating income to be in the range of $63 million to $64 million as compared to $61.5 million in the prior year quarter, with adjusted earnings per diluted share to range between $0.79 and $0.80 per diluted share versus $0.67 in the second quarter of 2025. The second quarter EPS range assumption includes a nonrecurring $0.05 per share benefit related to the resolution of a prior period state tax matter. Our 2026 outlook also assumes continued investments in technology, data analytics, real estate, academics and student support processes.

We believe these investments have supported improved academic outcomes and enhanced student experiences. In addition, we plan to continue expanding the corporate student program teams at CTU and AIU System to support further growth and engagement. Please refer to our earnings release filed today for important information about the key assumptions and factors underlying the discussion from today’s call as well as our GAAP to non-GAAP reconciliations. With that, I will turn the call over to Todd for his closing remarks. Todd?

Todd Nelson: Thank you, Ashish. I am pleased with the first quarter operating performance and with the continued progress our academic institutions are making in serving and educating our students. We are investing with purpose and remain focused on our overall objective of sustainable and responsible long-term growth. As always, I want to thank our faculty and staff for their dedication to our students. Their work is what drives everything we do. Thank you for joining us today, and we look forward to speaking with you again next quarter.

Operator: Thank you. And this does conclude today’s conference call. You may now disconnect. Have a great day, everyone.

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PERDOCEO EDUCATION CORP

Q1 2026

Earnings Transcript

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