Phoenix Education Partners, Inc

Third quarter fiscal 2026 net revenue was $271.8 million, compared with $271.7 million in the prior year period. Average total degreed enrollment increased 0.6% to approximately 85,300 students from 84,800. Net income attributable to Phoenix Education Partners was $39.2 million, or $1.01 per diluted share, versus $53.8 million, or $1.42 per diluted share, a year ago. Adjusted EBITDA was $78.1 million, down 6.4% from $83.4 million, and adjusted diluted EPS was $1.43 versus $1.57. Adjusted EBITDA margin was 28.7% versus 30.7% last year. For the first nine months of fiscal 2026, net revenue was $756.3 million, up 0.9% from $749.8 million; average total degreed enrollment rose 2.2% to approximately 84,500; net income was $65.4 million, or $1.69 per diluted share, versus $116.4 million, or $3.08; adjusted EBITDA was $188.1 million, up 1.2% from $185.8 million; and adjusted EBITDA margin was 24.9% versus 24.8%. The company raised and tightened fiscal 2026 adjusted EBITDA guidance to $246 million to $250 million, and expects net revenue of $1.02 billion to $1.025 billion. Management said the revenue outlook reflects a transitional impact from digital enrollment/search changes, while the EBITDA update reflects disciplined cost control and operating initiatives. The company also said it expects quarterly dividends of $0.21 per share in subsequent quarters, subject to board approval.

Chris Lynne framed the quarter as a continuation of the company’s long-term strategy around working adults, career-relevant education, and employer alignment. He said demand for the brand remains strong, but the way prospective students evaluate schools is changing because of AI-powered search, creating a near-term transition that Phoenix is actively adapting to with campaigns like “Built for Real Life” and deeper AI integration. His tone was confident and strategic, emphasizing that the company’s clear differentiation, outcomes, and employer relationships should become more visible in AI-driven discovery over time.

Blair Westbloom said third-quarter performance was stable on the top line, with revenue of $271.8 million and enrollment of about 85,300, but profitability was pressured by higher advertising expense, IPO-related share-based compensation, and restructuring costs. She cited adjusted EBITDA of $78.1 million and margin of 28.7%, down from 30.7%, and noted $6.6 million of higher advertising spend tied to the accelerated marketing campaign. On the balance sheet, she highlighted $269.4 million of cash and marketable securities, no outstanding debt, $116.7 million of operating cash flow, $4 million of buybacks in the quarter, a $50 million repurchase authorization with about $46 million remaining, and a quarterly dividend of $0.21 per share.

Analysts focused on what changed in enrollment trends, with management pointing to AI-driven search shifts as the main near-term issue rather than weaker demand. Chris Lynne said the brand is still strong, but students are taking longer and making more iterative decisions online, while some temporary friction also came from the Department of Education’s new fraud and identity-verification controls, which required Phoenix to process flagged applicants. Questions also centered on advertising, stock-based compensation, 90/10 regulation, and buybacks; management said advertising was intentionally increased to accelerate “Built for Real Life,” the company is confident in its fraud controls, sees no immediate 90/10 problem, and will be thoughtful about repurchase pacing given float and volume.