Financial Data and Key Metrics Changes - First quarter revenue grew 2.9% year over year to $262 million, driven by a 4.1% increase in average total degree enrollment to 85,600 students [6][13] - Adjusted EBITDA increased 7.2% to $75.2 million, with an adjusted EBITDA margin of 28.7%, up from 27.5% in the prior period [7][16] - Net income attributable to the company decreased to $15.5 million, or $0.40 diluted earnings per share, compared to $46.4 million, or $1.23 diluted earnings per share a year ago [13][14] Business Line Data and Key Metrics Changes - Employer-affiliated enrollment accounted for approximately 34% of total enrollment, up from 31% in the first quarter of 2025 [6] - Adjusted net income attributable to the company increased 5.3% to $53.6 million, up from $50.9 million in the prior year period [14] Market Data and Key Metrics Changes - The company reported a solid start to the year with financial performance consistent with expectations, reinforcing the full-year outlook provided in the previous earnings call [5][12] - The company maintained a strong balance sheet with no outstanding debt and ended the quarter with $218.1 million in cash and marketable securities [17] Company Strategy and Development Direction - The company remains focused on expanding access to higher education that delivers relevant, career-aligned skills for working adults, emphasizing flexible programs and strong academic outcomes [5] - The integration of AI into programs and operational processes is a priority, aimed at enhancing student outcomes and driving operational excellence [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of cash generation and announced a regular quarterly cash dividend of approximately $0.21 per share, reflecting a disciplined approach to capital allocation [11][17] - The company reiterated its full-year guidance for net revenue of $1.025 billion to $1.035 billion and adjusted EBITDA of $244 million to $249 million, indicating a strong outlook for the year [18] Other Important Information - A cybersecurity incident involving the Oracle E-Business Suite resulted in $4.5 million of expenses, but the incident did not impact student and academic programming [10][11] - The company is actively managing regulatory changes and does not anticipate any material adverse impact from recent developments in the Department of Education [22][71] Q&A Session Summary Question: Can you discuss the recent changes at the Department of Education and their impact? - Management noted that the recent Negotiated Rulemaking reached consensus on accountability measures, which they view positively, and all programs for which metrics were provided are passing [22][23] Question: How comprehensive was the preliminary data provided by the Department of Education? - Management indicated that greater than 50% of their programs had earnings information available, which is encouraging [29] Question: Are there any programs that might face challenges under the new regulations? - Management identified behavioral sciences as a potential area of risk due to historically lower earnings but remains optimistic based on preliminary data [32] Question: What impact have the detection and verification measures had on enrollment? - Management reported that the controls implemented have effectively reduced fraudulent attempts and improved productivity in the enrollment process [65][66] Question: How does the company view pricing as a growth lever? - Management believes that while pricing could be a lever, they can maintain affordability and improve margins through operational efficiencies [88] Question: What are the company's thoughts on AI and job displacement? - Management acknowledged that AI will lead to workforce changes and emphasized the importance of preparing students to be fluent in AI to remain competitive in the job market [90][92]
AP VIII Queso Holdings(PXED) - 2026 Q1 - Earnings Call Transcript