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The call conveyed predominantly positive operational momentum: stronger retention, modest enrollment growth, expanding adjusted EBITDA and margins, a healthier balance sheet, B2B channel expansion, and tangible AI-driven efficiency gains. However, near-term headwinds remain — a slight decline in Q2 net revenue, marketing funnel disruption from search/AI algorithm changes that pressure revenue timing, and materially higher share-based compensation that reduced GAAP net income. Management reiterated full-year guidance while signaling revenue may trend toward the lower end but expects adjusted EBITDA to trend toward the upper end. On balance, the positives around retention, margin expansion, liquidity and strategic investments outweigh the near-term revenue and expense challenges.
Phoenix reiterated fiscal 2026 guidance, maintaining net revenue of $1.025 billion to $1.035 billion (though management now expects to trend toward the lower end of that range given near‑term marketing dynamics) and adjusted EBITDA of $244 million to $249 million (with confidence it will trend toward the upper end driven by disciplined cost management, lower bad debt and AI/technology efficiencies); Q2 results included net revenue of $222.5 million (‑0.4% y/y), adjusted EBITDA of $34.8 million (+7.8%) and a 15.7% adjusted EBITDA margin (up from 14.5%), six‑month net revenue of $484.5 million (+1.3%) and adjusted EBITDA of $110.0 million (+7.4%) with a 22.7% margin (up 130 bps); operational metrics highlighted average degreed enrollment of ~82,600 in Q2 (+1.8) and ~84,100 for the first six months (+2.9%), employer‑affiliated students at 35% of enrollment (up from 31%), a most‑recent cohort retention rate of 76.6% (≈+500 bps y/y), cash and marketable securities of ~$252.1 million (no outstanding debt), an authorized $50 million share repurchase program, and a continuing quarterly dividend of ~$0.21 per share (≈$0.84 annually, subject to Board approval).
Average total degreed enrollment rose 1.8% in Q2 to ~82,600 (from 81,100) and was up 2.9% for the first 6 months to ~84,100 (from 81,700). Retention from the most recent annual cohort improved to 76.6%, up ~500 basis points year-over-year, driving enrollment quality and lower bad debt.
Adjusted EBITDA increased 7.8% year-over-year in Q2 to $34.8 million (from $32.3M). For the first 6 months adjusted EBITDA rose 7.4% to $110.0 million (from $102.4M). Adjusted EBITDA margin expanded to 15.7% in Q2 (from 14.5%) and 22.7% for the first 6 months (up 130 bps).
Total cash, cash equivalents and marketable securities were ~$252.1 million as of Feb 28, 2026, up from $194.8 million at prior fiscal year-end (approximately +29.4%), with no outstanding debt and strong operating cash generation (~$80M generated year-to-date).
Employer-affiliated students comprised 35% of total enrollment in Q2, up from 31% year-over-year, representing over one-third of enrollment and higher retention/durability versus B2C students.
Meaningful progress deploying AI across the university (AI-assisted onboarding, 24/7 support, adviser productivity, transcript evaluation improvements). Management attributes part of margin expansion and retention improvement to these technology-enabled efficiencies.
University outperformed national benchmarks on the Ruffalo Noel Levitz online learner survey: 85% of students reported being very satisfied or satisfied vs 73% national average. Over 1 million employer-informed digital skill badges have been issued; 79% of surveyed students reported confidence applying AI tools in real-world scenarios.
Board authorized a $50 million share repurchase program and declared a quarterly dividend of $0.21 per share (targeting ~$0.84 annually subject to Board approval), while reaffirming capital priorities: invest in students/technology, maintain strong balance sheet, and return capital.
Management reiterated FY2026 net revenue guidance of $1.025B–$1.035B and adjusted EBITDA guidance of $244M–$249M, indicating confidence in reaching the upper end of the adjusted EBITDA range despite anticipating revenue toward the lower end.
Good afternoon, and welcome to Phoenix Education Partners Second Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Beth Coronelli, Vice President of Investor Relations. Please go ahead.
Thank you. Welcome to the Phoenix Education Partners' Second Quarter Fiscal 2026 Earnings Conference Call. Speaking on today's call are Chris Lynne, our Chief Executive Officer; and Blair Westblom, our Chief Financial Officer. Before we begin, I would like to remind everyone that certain statements and projections of future results made in this presentation constitute forward-looking statements that are based on current market, competitive and regulatory expectations and are subject to risks and uncertainties that could cause actual results to vary materially. Listeners should not place undue reliance on such statements. We undertake no obligation to update publicly any forward-looking statements after this presentation. The risks related to these forward-looking statements are described in our filings with the SEC, including our most recent Form 10-K, Form 10-Q and other public filings. We will also discuss certain non-GAAP financial measures.
You should consider our non-GAAP results as supplements to and not in lieu of our GAAP results. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and SEC filings. Unless otherwise noted, comments on the call will focus on comparisons to the prior year period. We also direct you to the supplemental earnings slides provided on the Phoenix Educa...