Phoenix Education Partners, Inc Q4 FY2025 earnings call

• The university serves working adults, with 75% employed, average age 38, over 50% first-generation college, and nearly 2/3 caring for family. It offers 72 degree-granting and 33 nondegree certificate programs.
• In fiscal 2025, average total degreed enrollment grew to nearly 82,000, supported by strong retention. Enrollment through employer relationships was 32% of average total degreed enrollment.
• Leveraging AI and automation to enhance marketing, retention, and student-facing efficiency. The College of Nursing received a 10-year accreditation, and the Department of Education renewed the Title IV program participation agreement through June 30, 2031.
• The federal government shutdown had no material impact, and short-term relief was provided to military students during funding lapses.

In fiscal 2025, Phoenix Education Partners achieved solid financial performance. Net revenue grew 6% to $1.01 billion compared to $950 million in fiscal 2024. Average total degreed enrollment increased 3.7% to 81,900, up from 78,900 in fiscal 2024. Adjusted EBITDA was $243.9 million in fiscal 2025, up from $229.1 million in fiscal 2024. Enrollment through employer relationships grew to 32% of average total degreed enrollment, a rise from 30% in fiscal 2024.

• For fiscal 2026, revenue is expected to be in the range of $1.025 billion to $1.035 billion.
• Adjusted EBITDA is expected to be between $244 million and $249 million. These expectations reflect consistent top line growth, disciplined expense management, and investment in student outcomes.

• Unusual enrollment activity in prior years required controls, which impacted enrollment. Advanced algorithms are used to identify and manage such activity, but there's always a risk of spikes.
• Regulatory and policy changes, though currently no material adverse impact is expected, but monitoring is ongoing.

Q: Congrats on the strong finish to the year. Unpack expectations for FY '26.

A: Chris Lynne discussed revenue trends, noting reversal of higher revenue per student trends, underlying applicant demand strength, and confidence in controls to manage enrollment.

Q: Drill down into total degree enrollment by different verticals, specifically health care and nursing.

A: Christopher Lynne said healthy growth in nursing programs, with B2B driving growth in health care and nursing, though education had flatness due to productivity challenges from controls.

Q: Give more detail on enrollment growth and revenue per student underpinning '26 revenue outlook.

A: Chris Lynne explained reversal of higher revenue per student trends, expecting normalization by late fiscal '26, with healthy new student demand and retention driving the outlook.

Q: Quantify impact of suspicious activity controls on enrollment and confidence in no spikes.

A: Christopher Lynne discussed advanced algorithms for identifying suspicious activity, controls moved to application process, and confidence in algorithms and department collaboration to prevent spikes.

Q: Regarding technology investment, capacity to expand enrollment.

A: Christopher Lynne said the platform has scale to manage growth, with focus on AI investments to expand capacity and enhance student outcomes.

Q: Speak to policy announcements from the Department of Ed and impact on the university.

A: Christopher Lynne stated no material changes expected, with negotiated rule-making processes not causing concerns, and no impact anticipated from discussed policy shifts