APEI Earnings Call Highlights Strong Growth and Challenges

American Public Education, Inc. ((APEI)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for American Public Education, Inc. (APEI) conveyed a generally positive sentiment, highlighting strong enrollment growth at Rasmussen University and Hondros College, alongside financial outperformance expected in 2024. However, the call also acknowledged challenges such as a slight decline in EBITDA margins at APUS and increased costs anticipated to impact first quarter 2025 earnings.

Outperformance in Financial Guidance

APEI exceeded both fourth quarter and full year 2024 financial guidance for revenue, net income, and adjusted EBITDA. The fourth quarter revenue was reported at $164.1 million, marking a 7.4% increase from the previous year. Adjusted EBITDA saw a significant rise, reaching $31.4 million, a 22.2% increase year-over-year.

Rasmussen University Enrollment Growth

Rasmussen University continued its positive enrollment trend with a 4% year-over-year increase in the fourth quarter of 2024. This momentum carried into the first quarter of 2025, with a 7% increase compared to the first quarter of 2024.

Positive Trends in Hondros College

Hondros College reported a remarkable 19% enrollment growth in the fourth quarter of 2024 compared to the same period in 2023. This marks the twentieth consecutive quarter of year-over-year enrollment growth, with a 9.6% increase in the first quarter of 2025.

APUS Net Course Registrations Growth

APUS experienced a 7% year-over-year increase in net course registrations during the fourth quarter of 2024, contributing to a nearly 4% revenue increase due to the overall growth in registrations.

APUS EBITDA Margin Slight Decline

The EBITDA margins at APUS slightly declined to 34.5% in the fourth quarter of 2024, down from 35% in the same quarter of 2023. This was attributed to investments in modernizing the online curriculum and IT infrastructure.

First Quarter 2025 EBITDA Guidance

APEI expects a decline in adjusted EBITDA for the first quarter of 2025 due to increased advertising and labor costs, despite anticipating mid-single-digit revenue growth.

Portal Downtime Impact on APUS Enrollments

Scheduled maintenance of the Army and Air Force TA portals extended beyond the planned downtime, negatively impacting APUS’s net course registrations for the first quarter of 2025.

Forward-Looking Guidance

APEI outlined ambitious plans to consolidate its institutions into a single entity by the end of 2025, aiming for revenue synergies and cost savings. For 2025, the company projected revenue between $650 million and $660 million, with adjusted EBITDA expected to range from $75 million to $85 million. The company also reported a strong cash position of $158.9 million at the end of the year.

In summary, the earnings call for American Public Education, Inc. highlighted a positive outlook with strong enrollment growth and financial performance, despite some challenges. The company’s forward-looking guidance suggests continued growth and strategic consolidation to optimize operations and achieve cost efficiencies.