Perdoceo Education (PRDO) Q2 2024 earnings summary

Executive summary

• Q2 2024 results exceeded expectations, driven by strong student retention and engagement at both CTU and AIUS, with operational improvements and technology investments supporting performance.

• Total student enrollments rose 4.2% year-over-year, with CTU up 14.7% and AIUS down 18.2%, reflecting operational changes at AIUS and growth at CTU.

• Announced a definitive agreement to acquire the University of St. Augustine for Health Sciences for $142–$144 million in cash, expected to diversify offerings and be accretive to adjusted operating income in 2025.

• Quarterly dividend increased by 18.2% to $0.13 per share, the first increase since policy implementation, reflecting confidence in financial position.

Financial highlights

• Q2 2024 revenue was $166.7 million, down 10.6% year-over-year; YTD revenue was $335.0 million, down 12.3%.

• Q2 net income was $38.4 million ($0.57 per diluted share), down 29.7% year-over-year; adjusted EPS was $0.60.

• Q2 operating income was $46.0 million (27.6% margin), down 4.3% year-over-year; adjusted operating income was $50.9 million.

• Ended Q2 with $675.2 million in cash, equivalents, and short-term investments.

• Year-to-date net cash flows from operations were $93.0 million, up from $66.2 million in the prior year.

Outlook and guidance

• Full-year 2024 adjusted operating income expected between $179 million and $190 million; adjusted EPS projected at $2.13–$2.25.

• Q3 2024 adjusted operating income expected at $45–$47 million, with adjusted EPS of $0.50–$0.54.

• Revenue at CTU and AIUS expected to be lower for the full year, but enrollment growth and improved retention anticipated to offset declines by year-end; AIUS expected to return to enrollment growth by year-end 2024.

• Effective tax rate for full year 2024 projected between 26.5% and 27.5%.