Apei outlines $640M-$644M full-year revenue target as enrollment momentum drives Q4 guidance

Earnings Call Insights: American Public Education, Inc. (APEI) (APEI) Q3 2025

MANAGEMENT VIEW

* Angela Selden, President and CEO, introduced Ed Codispoti as the new CFO, highlighting his experience at NV5 and Alumina Holdings, and thanked outgoing CFO Rick Sunderland for over 12 years of service and his role in APEI's transformation.
* Selden reported that "APEI's third quarter 2025 performance... again exceeded our guidance ranges for all metrics, including revenue, net income, EPS, and adjusted EBITDA through continued registration and enrollment momentum and expanding margins." She cited APUS registrations rising 8%, Rasmussen enrollments up 10%, and Hondros College of Nursing enrollments increasing 18% year-over-year.
* The company completed the sale of Graduate School USA in July 2025, aligning growth strategy to focus on core degree-granting institutions.
* Selden explained that the planned combination of APEI’s institutions encountered a procedural change, requiring a new application to the HLC, with review expected in February 2026 and targeted completion at the start of Q3 2026.
* Balance sheet improvements were noted, with unrestricted cash and equivalents at $193.1 million as of September 30, 2025, following the removal of a $24.5 million letter of credit restriction. The redemption of preferred equity is expected to save $6 million annually, and the sale of Graduate School USA removed a $28 million lease liability.
* "Recent redemption of our preferred equity at the end of the second quarter... will save approximately $6 million annually from the elimination of the cash dividend payments," Selden stated. The company expects annual cash flow improvement of $10 million on a pretax basis from these actions.
* Enrollment and revenue growth at Rasmussen and Hondros are projected to continue, with the "filling the back row" strategy maximizing campus capacity for improved margins.
* Codispoti, Executive VP & CFO, commented: "I'm delighted to be on today's earnings call as I begin my fourth week with the company," and outlined his background and excitement to drive growth at APEI.

OUTLOOK

* Full-year 2025 consolidated revenue guidance was revised to $640 million to $644 million, reflecting a $20 million to $24 million impact from the government shutdown, offset by $22 million outperformance at APUS and Rasmussen and an $18 million reduction due to the Graduate School USA sale.
* Fourth quarter 2025 revenue is expected between $150 million and $153.5 million. Net income available to common stockholders is projected between $5.9 million and $8.3 million, or $0.32 to $0.45 per diluted share. Adjusted EBITDA is expected in the range of $18.5 million to $22 million.
* Full-year net income guidance is $17.2 million to $19.6 million, with adjusted EBITDA expected at $75 million to $79 million, and CapEx at $15 million to $17 million. Free cash flow is guided to $58 million to $64 million.
* Selden confirmed that the company is "optimistic today as we've ever been about the long-term potential of our company."

FINANCIAL RESULTS

* Total revenue for Q3 2025 was $163.2 million, up $10.1 million or 7% year-over-year. Excluding Graduate School USA, revenue growth would have been 12%.
* Net income available to common shareholders was $5.6 million, compared to $700,000 in the prior year. EPS was $0.30 per diluted share, up from $0.04. Adjusted EBITDA rose 60% to $20.7 million, with a margin of 13% versus 8% prior year.
* APUS Q3 revenue increased to $83.1 million, with EBITDA at $26.2 million, up 19% year-over-year. Rasmussen revenue was $60.8 million, up 16%, with total enrollment at 14,900 and EBITDA of $825,000. Hondros College of Nursing revenue was $18.4 million, up 19%, with enrollment at 3,700 and EBITDA loss at $336,000.
* Cash flow from operations for the first nine months was $73.5 million, up 56%. Free cash flow for the period was $45.2 million. Cash and equivalents stood at $193.1 million at quarter end, with net cash position at $96.7 million.

Q&A

* Thomas White, D.A. Davidson: Asked about the impact and recovery from tuition assistance disruption at APUS. Selden replied that registrations are rebounding in December, and "this should be a short-term matter and not a long-term decline in our expectations for TA enrollment."
* White also inquired about delays in the institution combination. Selden stated, "We remain very committed to the combination of our 3 institutions, and nothing has changed about our conviction around that," emphasizing the procedural nature of the delay and unchanged timeline for Q3 2026.
* Stephen Sheldon, William Blair: Asked about Q4 guidance assumptions for APUS. Sunderland responded that there was a "definitely a slowdown in October" and that guidance reflects uncertainty in December depending on the timing of the CR.
* Jasper Bibb, Truist Securities: Asked about capacity left in the "filling the back row" strategy at Rasmussen. Selden indicated more details would be provided at the upcoming Investor Day and noted significant opportunity remains.
* Eric Martinuzzi, Lake Street: Questioned nonmilitary registration trends. Janson said, "We've seen very nice acceleration in the growth of both the extended family segments as well as the veteran segments."
* Griffin Boss, B. Riley: Asked about cost-saving initiatives. Janson detailed savings in S&P, staff reductions in nonstudent-facing functions, and adjustments to variable compensation.

SENTIMENT ANALYSIS

* Analysts' tone was largely positive, frequently congratulating management on resilience and execution, while probing for details on government shutdown impacts, cost controls, and growth sustainability.
* Management’s tone during prepared remarks was confident and optimistic, with Selden stating, "We are as optimistic today as we've ever been about the long-term potential of our company." In Q&A, management provided detailed and direct responses, acknowledging government shutdown uncertainty but reiterating confidence in recovery and growth.
* Compared to the previous quarter, both management and analysts maintained a constructive tone, but this quarter included more questions on risk mitigation and guidance adjustments due to the government shutdown.

QUARTER-OVER-QUARTER COMPARISON

* Revenue guidance for the full year was revised downward from $650 million–$660 million in Q2 to $640 million–$644 million, primarily due to the government shutdown impact and the sale of Graduate School USA.
* Adjusted EBITDA guidance was lowered from $81 million–$88 million in Q2 to $75 million–$79 million.
* Rasmussen and Hondros continued to deliver robust enrollment growth, while APUS faced a temporary disruption in military enrollments.
* Management confidence remains strong, but more attention was paid to operational risks and mitigation strategies, reflecting increased external uncertainty this quarter.
* Analysts’ questions shifted from growth and synergy opportunities in Q2 to more immediate concerns about government funding and enrollment recovery in Q3.

RISKS AND CONCERNS

* The government shutdown temporarily reduced APUS military enrollment and created uncertainty regarding tuition assistance payments and registration timing.
* Management addressed this by implementing cost-saving measures, reducing variable costs, and streamlining operations.
* Analysts raised concerns about the duration of the shutdown, timing of enrollment recovery, and possible permanent demand effects. Selden stated, "this should be a short-term matter and not a long-term decline."
* The delay in the institution combination process was described as procedural, with management maintaining confidence in the targeted timeline.

FINAL TAKEAWAY

APEI's third quarter showcased strong enrollment momentum and margin expansion across its core units, with management reaffirming confidence in its strategic direction despite external headwinds from the government shutdown. The company’s revised full-year revenue and EBITDA guidance reflect near-term challenges, but leadership anticipates enrollment recovery and operational improvements will support continued growth and profitability into 2026, guided by a more flexible balance sheet and focused institutional strategy.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/apei/earnings/transcripts]

MORE ON AMERICAN PUBLIC EDUCATION

* American Public Education, Inc. (APEI) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4841636-american-public-education-inc-apei-q3-2025-earnings-call-transcript]
* American Public Education GAAP EPS of $0.30 beats by $0.39, revenue of $163.21M beats by $2.45M [https://seekingalpha.com/news/4519640-american-public-education-gaap-eps-of-0_30-beats-by-0_39-revenue-of-163_21m-beats-by-2_45m]
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