Perdoceo Education (PRDO) Q3 2024 earnings summary

Executive summary

• Total student enrollments increased 11.0% year-over-year, with CTU up 13.6% and AIUS up 4.0%, reaching multi-year highs in retention rates.

• Q3 2024 operating results exceeded expectations, with strong student retention and engagement at both CTU and AIUS.

• Operating income for Q3 2024 increased 4.0% to $44.8 million, driven by lower expenses offsetting revenue declines.

• Revenue for Q3 2024 declined 5.6% to $169.8 million, reflecting operational changes and academic calendar impacts.

• The pending acquisition of the University of St. Augustine for $142–$144 million in cash is expected to close in December, expanding health science offerings and being accretive to adjusted operating income in 2025.

Financial highlights

• Net income for Q3 2024 was $38.3 million ($0.57 per diluted share), down from $41.3 million ($0.62 per share) in the prior year; adjusted EPS was $0.59 versus $0.64.

• Q3 revenue was $169.8 million, down 5.6% year-over-year; year-to-date revenue was $504.8 million, down 10.2%.

• Adjusted operating income rose to $48.6 million from $47.2 million, and Q3 operating income was $44.8 million (+4.0%).

• Net cash flows from operations year-to-date were $144.0 million, up from $98.8 million in the prior year.

• Cash, equivalents, and short-term investments at quarter-end totaled $722.6 million, an increase of $118.4 million since year-end.

Outlook and guidance

• Full-year 2024 adjusted operating income is now expected between $188 million and $191 million, up from prior guidance.

• Adjusted EPS for 2024 is projected at $2.25–$2.28, with Q4 adjusted EPS outlook $0.46–$0.49.

• Q4 2024 adjusted operating income expected at $39–$42 million.

• Effective tax rate for full year 2024 expected between 26% and 27%.

• Guidance assumes stable student interest, no major regulatory changes, and a 26.5% effective tax rate.