Perdoceo Education Corporation — Third Quarter 2026 Earnings Summary

Financial Performance

• Third quarter 2026 revenue increased 1.9% year-over-year to $215.9 million, compared to $211.9 million in the prior year quarter.
• Year-to-date 2026 revenue increased 2.6% to $651.0 million, compared to $634.5 million in the prior year-to-date period.
• Third quarter 2026 earnings per diluted share rose 16.7% to $0.70, compared to $0.60 in the prior year quarter; adjusted earnings per diluted share grew 18.5% to $0.77.
• Year-to-date 2026 earnings per diluted share were $2.31, compared to $1.87 in the prior year-to-date period; adjusted earnings per diluted share were $2.48.
• Third quarter 2026 operating income increased 8.1% to $55.1 million, compared to $51.0 million in the prior year quarter; adjusted operating income increased 8.4% to $66.1 million.
• Year-to-date 2026 operating income increased 12.3% to $173.1 million, compared to $154.1 million in the prior year-to-date period; adjusted operating income increased 9.0% to $203.1 million.
• Net income for the third quarter 2026 was $44.4 million, compared to $39.9 million in the prior year quarter.
• Net income for the year-to-date 2026 was $146.3 million, compared to $124.6 million in the prior year-to-date period.
• Net cash provided by operating activities for the third quarter 2026 was $79.7 million, compared to $41.2 million in the prior year quarter.
• Net cash provided by operating activities for the year-to-date 2026 was $223.8 million, compared to $185.1 million in the prior year-to-date period.
• Cash, cash equivalents, restricted cash, and available-for-sale short-term investments totaled $776.9 million as of September 30, 2026, compared to $643.5 million as of December 31, 2025.
• Deferred revenue increased to $81.4 million as of September 30, 2026, from $37.8 million as of December 31, 2025.

Guidance and Future Outlook

• Fourth quarter 2026 operating income is projected to be between $47.9 million and $50.9 million.
• Full year 2026 operating income is projected to be between $221.0 million and $224.0 million.
• Fourth quarter 2026 adjusted operating income is projected to be between $56.9 million and $59.9 million.
• Full year 2026 adjusted operating income is projected to be between $260.0 million and $263.0 million.
• Fourth quarter 2026 earnings per diluted share is projected to be between $0.63 and $0.67; full year 2026 is projected to be between $2.93 and $2.97.
• Fourth quarter 2026 adjusted earnings per diluted share is projected to be between $0.68 and $0.72; full year 2026 is projected to be between $3.15 and $3.19.
• Outlook assumes prospective student interest and retention trends remain consistent with recent experiences.
• Outlook assumes no material impact from federal budget reconciliations, legislative activity, or changes in federal student aid availability.
• Outlook assumes no significant impact from new regulations, administrative actions, or government shutdowns.
• Outlook assumes any impact from the elimination of the Grad PLUS loan program will not be material due to access to private lending.
• Outlook assumes no significant operating impacts from the settlement with the U.S. Federal Trade Commission or other legal matters.
• Outlook assumes any impact on inquiry volume from increased AI use by prospective students will be offset by growth from other channels.
• Outlook assumes an effective income tax rate of approximately 25.5% for the fourth quarter and 23.3% for the full year.
• Outlook excludes any future impact from the Company's stock repurchase program.

Business Segments and Product Lines

• Total student enrollments increased 1.6% to 47,260 as of September 30, 2026, compared to 46,520 in the prior year period.
• Colorado Technical University (CTU) enrollments decreased 0.5% to 31,870; revenue increased 0.3% for the quarter and 1.7% year-to-date.
• American InterContinental University System (AIUS) enrollments increased 7.5% to 10,830; revenue decreased 0.1% for the quarter and 0.5% year-to-date.
• University of St. Augustine for Health Sciences (USAHS) enrollments increased 3.2% to 4,560; revenue increased 9.8% for the quarter and 9.9% year-to-date.
• USAHS operating income for the quarter was $4.6 million, compared to $66,000 in the prior year quarter; year-to-date operating income was $14.6 million, compared to a loss of $1.9 million in the prior year period.
• AIUS operating income for the quarter was $11.6 million, a 24.9% increase from the prior year quarter; year-to-date operating income was $36.7 million, a 14.9% increase.
• CTU operating income for the quarter was $44.9 million, a 6.1% decrease from the prior year quarter; year-to-date operating income was $139.9 million, a 1.0% decrease, impacted by increased legal fees.
• The Company continues to invest in student support, technology, and personalized learning platforms like intellipath®.

Market and Competitive Landscape

• Management reported strong prospective student interest and student retention trending near historical highs.
• The Company anticipates the acquisition of South University will establish its graduate health sciences offerings and extend the breadth of its academic program offerings.
• South University operates 11 campus locations across Georgia, Florida, Alabama, South Carolina, Virginia, Texas, and North Carolina, plus an online division.
• South University is institutionally accredited by The Southern Association of Colleges and Schools Commission on Colleges through 2034.

Risks and Challenges

• CTU operating income includes increased legal fees related to previously disclosed legal matters.
• Potential risks include declines in enrollment, changes in federal student aid availability, regulatory compliance issues (including 90/10 regulations), and borrower defense to repayment regulations.
• Risks include the final outcome of legal challenges to loan discharge efforts, increased focus on for-profit education institutions, and potential impacts from management changes.
• Risks include the ability to successfully defend litigation, complete the proposed acquisition of South University, and execute the stock repurchase program.
• Risks include changes in the overall U.S. economy and the impact of Artificial Intelligence on inquiry volumes.

Management Commentary and Tone

• President and CEO Todd Nelson stated third quarter operating performance was ahead of expectations.
• Management expressed commitment to investing in student support and technology to enhance student experiences and academic outcomes.
• Management indicated they are on track to complete the acquisition of South University as early as April 2027.
• Management expects to continue generating long-term, sustainable, and responsible growth.
• Management expects the South University transaction to be immediately accretive to adjusted operating income beginning in 2027 and to provide further growth in 2028.

Other Key Points

• On November 5, 2026, the board declared a quarterly dividend of $0.17 per share, payable December 11, 2026.
• During the third quarter 2026, the Company repurchased 0.6 million shares for $19.9 million, with $65.1 million remaining under the current share repurchase program.
• On September 14, 2026, the Company entered a definitive agreement to acquire 100% of South University.
• The acquisition consideration includes approximately $130 million to $150 million at closing, $18 million in deferred consideration paid over 24 months, and up to $56 million in earn-out payments tied to EBITDA thresholds for 2027, 2028, and 2029.
• The purchase price and deferred/earn-out payments are expected to be funded using the Company's available cash balances.
• The Company's capital allocation strategy prioritizes investments in student enrollment, student support, technology projects, and acquisition opportunities alongside dividends and share repurchases.