Phoenix Education Partners Q1 Earnings Call Highlights

Key Points

• Q1 results: Net revenue rose 2.9% to $262 million with average total degree enrollment up 4.1% to 85,600 and adjusted EBITDA up 7.2% to $75.2 million (margin 28.7%), driven in part by growing employer-affiliated enrollment now representing about 34% of students.
• Capital position and dividend: The company ended the quarter with no outstanding debt and $218.1 million in cash/marketable securities, and announced an inaugural quarterly cash dividend of about $0.21 per share (payable Feb. 18, 2026), while prioritizing reinvestment and shareholder returns.
• Cybersecurity and outlook: A disclosed Oracle E-Business Suite zero-day led to $4.5 million of Q1 incident-related costs (vulnerability remediated; further expenses possible but covered by insurance), and management reiterated fiscal 2026 guidance of $1.025–$1.035 billion in net revenue and $244–$249 million in adjusted EBITDA.

Phoenix Education Partners NYSE: PXED reported first-quarter fiscal 2026 results that management said were in line with expectations, highlighting enrollment growth, improving retention, and continued investment in student outcomes and operational efficiency. Executives also discussed regulatory developments, a previously disclosed cybersecurity incident, and the company’s inaugural quarterly dividend.

First-quarter results and enrollment trends

Net revenue rose 2.9% year over year to $262 million, which CFO Blair Westbloom attributed to a 4.1% increase in average total degree enrollment to 85,600 students. CEO Chris Lynne said the quarter reflected “disciplined execution” and a solid start to the year consistent with the company’s full-year outlook provided in November.

Adjusted EBITDA increased 7.2% to $75.2 million, and adjusted EBITDA margin expanded to 28.7% from 27.5% a year earlier. Management attributed the margin improvement to revenue growth, improved productivity among student-facing teams, and lower financial aid processing costs and bad debt expense, “in part due to our transition to disbursing financial aid by course,” Westbloom said.

On the enrollment mix, Lynne said employer-affiliated enrollment continues to be a key driver and now represents about 34% of total enrollment, up from roughly 31% in the first quarter of fiscal 2025. During Q&A, management said the enrollment growth was “broad-based” across programs, citing work to keep offerings aligned with in-demand fields.

Profitability, IPO-related expenses, and cash position

Net income attributable to the company was $15.5 million, or $0.40 per diluted share, compared with $46.4 million, or $1.23 per diluted share, in the year-ago quarter. Westbloom said the decline was primarily due to “non-cash share-based compensation and other expenses that resulted from the initial public offering.”

On an adjusted basis, net income attributable to the company increased 5.3% to $53.6 million from $50.9 million, and adjusted diluted EPS rose $0.03 to $1.38. Westbloom noted that adjusted EBITDA excluded $29.5 million of non-cash share-based compensation, $4.5 million of costs tied to the cybersecurity incident, and other items detailed in the earnings materials.

Management emphasized liquidity and balance sheet strength. Westbloom said the company ended the quarter with no outstanding debt and no borrowings under its revolving credit facility. As of November 30, 2025, total cash and cash equivalents, restricted cash, and marketable securities were $218.1 million, up from $194.8 million as of August 31, 2025. The increase was primarily driven by $31.1 million of cash generated by operating activities, partially offset by $4.7 million of capital expenditures.

Dividend announcement and capital allocation

Reflecting what Lynne described as confidence in “the durability of our cash generation,” the company announced a regular quarterly cash dividend of approximately $0.21 per share. Westbloom said the dividend will be payable on February 18, 2026 to shareholders of record as of January 28, 2026, and that the company expects to pay quarterly dividends of approximately $0.21 per share (about $0.84 annually), subject to board approval.

Westbloom said capital allocation priorities remain focused on reinvesting in the business to support student outcomes, sustain enrollment growth, advance the technology platform, and improve operational efficiency, while maintaining liquidity and returning capital to shareholders.

Regulatory environment and fraud controls

Management discussed recent developments from the Department of Education’s negotiated rulemaking process. Lynne said the committee reached consensus on accountability measures related to changes enacted under the One Big Beautiful Bill Act, and that “no new material areas of risk were introduced.” He added that the company was encouraged by preliminary program performance accountability metrics released by the Department of Education, stating that all University of Phoenix programs for which metrics were provided were “passing.”

During Q&A, Lynne said the preliminary earnings data covered a “majority, greater than 50%” of the company’s programs, with missing data likely tied to smaller programs that may not have large enough cohorts. He added that, historically, the company has monitored disciplines that could face structural earnings pressure, citing behavioral sciences as an area previously considered as a potential risk due to comparatively lower earnings levels, while reiterating that the company does not anticipate material adverse impact from the evolving regulation.

Executives also addressed the broader focus on fraud in the federal student aid system and the company’s controls against unusual enrollment activity. Lynne said suspicious activity remains present in the market, but that after moving detection and verification processes earlier in the application funnel in fiscal 2025, Phoenix has seen volumes deter and trend downward since the fourth quarter of fiscal 2025. He added that productivity enhancements discussed previously continued into the first quarter, supporting new student growth.

When asked to quantify the impact of detection and verification measures, management declined to provide a specific estimate, but said the controls have been effective and are embedded into normal operations, while requiring ongoing calibration due to continued marketplace activity.

AI initiatives, cybersecurity, and fiscal 2026 outlook

Lynne said the company is pursuing AI in a “disciplined, deliberate manner” with two priorities: preparing students to be AI-fluent by embedding AI into programs and course content, and using AI institutionally to drive operational excellence. He cited examples including AI-assisted appointment setting and outreach in certain situations to improve enrollment conversion and retention, as well as pilots using large language models with proprietary data to enhance 24/7 AI chat assistance for students.

Management also revisited the cybersecurity incident involving Oracle E-Business Suite software disclosed in an early December Form 8-K. Lynne said an unauthorized third party exploited a zero-day vulnerability to obtain certain personal information without authorization, and that the vulnerability has been remediated. He said the incident did not impact student and academic programming and was addressed promptly. The company recorded $4.5 million of related expenses, largely tied to notification, third-party cybersecurity firms, legal fees, and other incident response costs. Lynne said additional expenses are expected in future periods, but the company maintains a comprehensive cybersecurity insurance policy, subject to deductibles, exclusions, and limits.

For fiscal 2026, management reiterated guidance for net revenue of $1.025 billion to $1.035 billion and adjusted EBITDA of $244 million to $249 million. Westbloom said the first quarter reinforced confidence in the full-year outlook, while Lynne noted that quarterly variability between revenue growth and enrollment growth can be influenced by factors including the prior year’s mix of students who did not persist beyond initial courses, the timing of course starts, and enrollment composition such as the expansion of employer-affiliated enrollment, which typically carries higher discount rates.

About Phoenix Education Partners NYSE: PXED

Our Mission To provide access to higher education opportunities that enable students to develop the knowledge and skills necessary to achieve their professional goals, improve the performance of their organizations and provide leadership and service to their communities. We are a mission-driven organization operating at the forefront of the rapidly evolving post-secondary education market. As one of the largest online education providers and a pioneer in our field, we benefit from the dynamic interplay between technological innovation, education, employment and economic trends.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.