Phoenix Education Partners, Inc Q1 FY2026 earnings call

· Disciplined execution with steady growth, strong retention, and investment in student success. · AI implementation with two priorities: preparing students to be AI fluent and leveraging AI for operational excellence. · Regulatory updates: negotiated rulemaking committee reached consensus on accountability measures, preliminary program performance metrics showed all University of Phoenix programs passing. · Cyber incident: Oracle E-Business Suite vulnerability remediated, $4.5 million expense recorded. · Declared inaugural regular quarterly cash dividend of approximately 21¢ per share.

Net revenue for the first quarter grew 2.9% year-over-year to $262 million. Average total degree enrollment increased 4.1% to 85,600 students. Employer-affiliated enrollment now accounts for approximately 34% of total enrollment, up from 31% in the first quarter of 2025. Adjusted EBITDA increased 7.2% to $75.2 million. Net income attributable to the company was $15.5 million or 40¢ diluted earnings per share, down from $46.4 million or $1.23 diluted earnings per share in the prior year period due to noncash share-based compensation and other IPO-related expenses.

· Reiterating net revenue guidance of $1.025 billion to $1.035 billion. · Reiterating adjusted EBITDA guidance of $244 million to $249 million. · First quarter performance reinforces full-year outlook.

· Cyber incident involving Oracle E-Business Suite software platform, although remediated, incurred $4.5 million expense. · Regulatory risks related to program performance accountability metrics being preliminary, but no new material risks introduced during negotiated rulemaking.

Q: Congrats on the result. Nice to see solid enrollment growth despite identity verification changes last year. Talk more about gainful employment changes and fraud crackdown.

A: NEG regs reached consensus, program performance metrics showed all programs passing. No adverse impact anticipated from regulation. Fraud activity still in market but controls put in place are effective.

Q: Regarding preliminary DOE data on programs, how comprehensive was it?

A: Majority greater than 50% of programs with earnings info covered, net positive. Programs in behavioral sciences were areas of potential risk but preliminary info was positive.

Q: On new student enrollment comps, when do they get easier?

A: Productivity enhancements carried into Q1, trend to continue in Q2 and Q3, Q4 comps tougher due to historical trend reversal.

Q: On OpEx side, any higher expenses from cybersecurity event?

A: Anticipate additional expenses but not material, covered by cybersecurity policy. Recurring cyber expenses not expected to increase materially.

Q: On stock-based comp, future run rate?

A: Large noncash expense in Q1 not indicative of long-term run rate, associated with pre-IPO option modifications, will normalize post-IPO.

Q: On detection and verification impact, quantify?

A: Controls effective, seen in productivity improvements, but not able to quantify specifically.

Q: On loan caps and regulatory items, impact?

A: No material impact expected from loan caps or other regulatory items.

Q: On B2B employer engagement, update?

A: Account management effective, growing employer affiliates, new investments in adding new employers showing success.

Q: On pricing as growth lever and AI impact on jobs, thoughts?

A: Pricing could be a lever if needed, AI will cause job displacement and reskilling, focus on equipping students with AI skills.