Phoenix Education Partners, Inc.

Good afternoon, and welcome to Phoenix Education Partners' second quarter fiscal 2026 earnings conference call. At this time, all participants are in listen-only mode. Following prepared remarks, we will open the call for questions. I would now like to turn the call over to Beth Coroneli, Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to the Phoenix Education Partners Second Quarter Fiscal 2026 Earnings Conference Call. Speaking in today's call are Chris Lynn, our Chief Executive Officer, and Blair Westbloom, 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 gap measures can be found in our earnings release and SEC filings. Unless otherwise noted, comments in the call will focus on comparisons to the prior year period. We also direct you to the supplemental earnings slides provided in the Phoenix Education Partners website. I'll now turn the call over to Chris.

Thank you, Beth, and good afternoon, everyone. We appreciate you joining us. Today we'll walk through our results for the second quarter of fiscal 2026, and the continued progress we're making on our strategy. Guided by our mission, we remain focused on advancing student success through flexible, career-relevant education for working adults. Our students balance professional and personal responsibilities as they pursue their education and our strategy remains centered on supporting their success through personalized, technology-enabled programs. Fiscal 2026 also represents an important milestone for the University of Phoenix. Later this year, we will celebrate our 50th anniversary, marking five decades of serving working adult learners while continuously adapting to the evolving needs of the workforce. Our commitment to student satisfaction is reflected in the recent Ankura Ruffalo-Noel Levitz Priorities Survey for Online Learners, a national study spanning 150 institutions and approximately 90,000 learners, which shows consistently high satisfaction among currently enrolled online students. The university administered, through the Knollevich platform, the survey to a random sample of 20,000 actively enrolled associate, undergraduate, graduate, and doctoral students representing each college and degree level, with approximately 2,500 students responding. The university performed above the national averages across all 26 measured attributes. with 85% of our students reporting being very satisfied or satisfied with their online university experience, compared to 73% of students in the national benchmarked institutions. These results combined with strong retention results underscore our commitment to delivering strong student outcomes and ensuring that working adult learners develop skills that translate directly into their careers. Turning to our results, the second quarter reflects continued progress across our key priorities, Enrollment growth driven by record retention, margin expansion, and a strong balance sheet that gives us the flexibility to invest in students and return capital to shareholders, all underscoring the durability of our model and commitment to student success. For the quarter, average total degree enrollment was up 1.8%, net revenue was down 0.4%, and adjusted EBITDA was up 7.8% from the prior year. Average total degree enrollment was driven by strong retention trends. Our retention rate from the most recent annual cohort was 76.6%, up approximately 500 basis points from the prior year, and significantly improved from the 59.7% retention rate from the annual cohort ending in 2017, prior to our transformation. This sustained progress reflects the continued disciplined execution of initiatives across the student life cycle, aimed at enhancing engagement, persistence, and ultimately student outcomes. Net revenue was in line with expectations and adjusted EBITDA outperformed as a result of disciplined cost management and lower bad debt expense. Our employer-affiliated or B2B channel continues to be a meaningful growth driver. Employer-affiliated students represented 35% of total enrollment in the quarter, up from 31% in the comparable period in 2025. reflecting continued expansion of both existing and new employer relationships. This channel now represents over a third of our total enrollment and helps reinforce the durability of our revenue as B2B students typically have higher retention. We are seeing increasing demand from employers seeking to upskill and reskill their workforce, and our flexible career-relevant programs are well-positioned to meet that need. We align our curriculum to in-demand skills, with students building verified job-relevant capabilities throughout their coursework, an approach that differentiates us with both employers and individual learners. We also enable our students and alumni to showcase these capabilities through shareable, employer-informed skill badges, and have now issued over one million of these digital badges to date. Complementing our B2B momentum, we are continuing to invest in technology and artificial intelligence to better serve students and employer needs. We are making meaningful progress deploying AI across the university. Examples include an AI-assisted student onboarding experience, delivering 24-7 support for students and faculty, increasing advisor productivity, expanding our software development capacity, and driving greater efficiency in credit evaluation. We are using AI-driven personalization to enhance engagement and student support as well as improved conversion in our marketing and enrollment funnel. We believe these initiatives are contributing to our performance and will continue to support margin improvement. We are also investing in how the university shows up across the next generation of search and discovery platforms. As social media and AI increasingly shape how prospective students explore and evaluate their education options, we continue to optimize our presence across these emerging interfaces and ensure our outcomes-focused content reaches students wherever they are and wherever they begin their journey. We believe that our response over time has been effective, as evidenced by our leading brand position across marketing platforms. While underlying demand for our brand remains strong, we experienced changes to search algorithms which affected our marketing funnel. As we've done consistently for years, we proactively leveraged our leading brand targeted content and digital expertise to adapt and optimize within the shifting marketing environment. As we headed into the third quarter, we have continued to see healthy underlying demand and are encouraged by the early signs of improvement in the marketing funnel from our proactive initiatives and our ability to maintain our brand leadership position. We also believe the university is well positioned for the needs of today's workforce. We are in the early stages of what many are calling the great reskilling of the American workforce. Estimates suggest that 60% of the global workforce will need to acquire new skills by 2030 to remain competitive in an AI-transformed economy. We believe the majority of jobs in the future will be held by workers fluent in AI. The workers most affected by this change are mid-career adults who need flexible, career-relevant education that fits around their professional and personal lives. the exact population this university has served for five decades. We have been committed to the AI fluency of our students since we adopted the ethical use of AI by all of our students in our skills-aligned curriculum approximately two and a half years ago. And we will continuously adapt our curriculum and thoughtfully add AI skill development related to specific disciplines and careers that are rapidly evolving in their use of AI. Our progress is demonstrated. by the reporting from 79% of the students surveyed in the most recent Ruffalo Noel Levitt's priority survey for online learners, that they are satisfied with their confidence applying AI tools in real world scenarios. As we enter the second half of the year, underlying demand and retention remains strong. We remain focused on disciplined execution and thoughtful investment to support student outcomes and financial performance. Our approach continues to be guided by our mission, to enhance the adult learner experience, including strengthening engagement and retention. With that, I'll turn it over to Blair.

Thank you, Chris. Net revenue for the second quarter was $222.5 million, down 0.4%, compared with $223.4 million in the prior year period, reflecting the impact of discounts. Average total degree enrollment increased 1.8% for the second quarter, for approximately 82,600 students compared to 81,100 in the prior year, driven by strong retention trends. Net income attributable to Phoenix Education Partners was $10.8 million, or $0.28 per diluted share, compared to $16.1 million, or $0.43 per diluted share, in the prior year. The decrease is primarily driven by higher share-based compensation expense associated with our IPO. Adjusted EBITDA for the second quarter increased 7.8% to $34.8 million, compared to $32.3 million in the prior year. Adjusted diluted earnings per share was $0.58 in the second quarter, compared to $0.56 in the prior year. Adjusted EBITDA margin for the second quarter expanded to 15.7%, up from 14.5%, driven by lower VAT debt expense primarily due to higher retention, partially offset by an increase in costs attributable to being a public company. For the first six months of fiscal 2026, net revenue was $484.5 million, an increase of 1.3% compared to $478.1 million in the prior year. Average total degree enrollment was up 2.9% for the first six months for approximately 84,100 students compared to 81,700 reflecting continued strength and retention. Net income attributable to Phoenix Education Partners was $26.2 million, or $0.68 per diluted share, compared to $62.5 million, or $1.66 per diluted share in the prior year, with a year-over-year decrease primarily driven by share-based compensation expense associated with our IPO. For the first six months, adjusted EBITDA increased 7.4%, to $110 million, compared to $102.4 million in the prior year. And adjusted diluted earnings per share was $1.97, compared to $1.92 in the prior year. Adjusted EBITDA margin for the first six months increased from 21.4% in the prior year to 22.7% in the current year, representing a 130 basis point improvement. These results reflect the increase in net revenue, as well as lower budget expense, primarily due to higher retention and lower financial aid processing costs. We continue to maintain a strong balance sheet with substantial liquidity and no outstanding debt. As of February 28, 2026, total cash and cash equivalents and marketable securities were approximately $252.1 million, compared to $194.8 million at the end of the prior fiscal year. The increase was primarily driven by approximately $80 million of cash generated from operating activities, partially offset by approximately $10 million of capital expenditures and previously announced dividend payments. Our capital allocation priorities remain unchanged, investing in student success and our technology platform, maintaining a strong balance sheet, and returning capital to shareholders. Consistent with these priorities and our belief in the long-term value of our stock, today we announce the authorization of a $50 million share repurchase program by the Board of Directors. This authorization provides flexibility within our capital allocation framework and the ability to manage solution effectively over time. During the quarter, we paid a dividend of 21 cents per share. And today we announced another quarterly dividend of 21 cents per share, payable in May. We expect to continue to pay quarterly dividends of approximately 21 cents per share or approximately 84 cents per share annually, subject to board approval. We will also continue to actively evaluate M&A opportunities that would be complementary to our existing platform and align with our capital allocation strategy. With respect to our fiscal 2026 outlook, We are reiterating our net revenue guidance of $1.025 billion to $1.035 billion and adjusted EBITDA guidance of $244 million to $249 million. As discussed, underlying demand and retention remain strong. We are maintaining our net revenue guidance, but currently expect to trend toward the lower end of the full-year range, reflecting the near-term marketing dynamics discussed. Given our execution today, we are confident in our adjusted EBITDA outlook and believe we are trending towards the upper end of our guided range. This reflects discipline, cost management, and efficiencies driven by our strategic and operational initiatives, including AI and technology-enabled capabilities, which we expect to support margin expansion over time. We operate from a position of financial strength, supported by strong cash generation and and disciplined capital allocation. We are confident in the long-term durability of our business and remain focused on execution while continuing to invest in student success and long-term value creation. I'll now ask the operator to begin the question and answer session.

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jasper Biff with Truist. Please go ahead.

Hey, good afternoon, everyone. Wanted to follow up on some of the marketing themes you discussed. Can you maybe give a little bit more detail on the trends you've seen over the past couple months on starts or application growth as the company navigated the channel shift you discussed from Gen AI to search or search to Gen AI?

Hi Jasper, this is Chris. Good to hear from you. We've been navigating changes to online search for quite some time now and Coming into the quarter, we did experience another algorithm shift in AI search on Google, which had an impact to how prospective students were navigating their search process. We responded to it. quickly, working with Google to understand, and this is something we're very good at, we've done for years, to understand these algorithm shifts. An example of some of our responses to that were learning that the AI overviews on Google now are more reliant as a primary source on YouTube. And for many years now, we've been number one in our sector in social media. We've developed a lot of outcomes-based content that is out there that's really generated strength for us. And so one of the things we did is we migrated a lot of that content over to YouTube. And so we made changes like that that have, you know, we talked about in our opening remarks that we've seen improvements in some of these recent trends coming into Q3 back in line with the trends that we were expecting for this year. To answer questions directly about applications, really this happened going into our January enrollment period. So there was some impact on the January enrollments. And the way I would characterize it is we're seeing healthy demand at the top of the funnel. We're seeing changes in how that demand is coming to the university through multiple channels. And we've been reacting to those changes to make sure that we meet the demand where it comes to us effectively. And we feel like we've responded well in line with how we've been managing these types of changes over time for the last several years and are happy with the trends that we're seeing going into Q3.

It all makes sense. I'm not sure how much you can address with this, but I think the education department changed the rules around private equity ownership in this space. The company's majority shareholder is obviously a private equity firm. Does that change anything on how they think about their investment or timeline there that they've conveyed to you?

The short answer is no. And I think the changes you're referring to are related to the program participation agreements. And we just entered into a six-year agreement last year. And based on any of the guidance received, we don't anticipate any impact. Got it.

Thanks. You're welcome.

Your next question comes from the line of Alex Paris with Barrington Research. Please go ahead.

Hi, guys. Thanks for taking my questions, and congrats on the outperformance in the quarter. Just to clarify your answer on the previous question, Chris, you said coming into the second quarter, these changes were made at online search? Yes. and it had an impact on Q2 enrollment?

Yeah, it was ahead of the January enrollment season, later in January, we saw some impact which ended up being, we believe, a result of an algorithm shift in Google's AI overviews. When we were seeing that, that was in the the late or early winter, so November, December timeframe. Early on, it looked like some seasonality that we were trying to understand. We later recognized that the algorithms did shift. And so the way we responded to that was multifold. We had a lot of responses, really just continuing to do a lot of the same things that we've been doing for years. I think one of the more material responses changes we made was learning that Google had shifted to YouTube as being a primary source for the AI overviews. And despite the fact that we were very strong in content across social media, we weren't where we can be with YouTube. So we made some large shifts in the January and February timeframe to address that. And when I mentioned that we're seeing trends return back to as we expected for the year, that began to occur back in early March.

Okay. Gotcha. I just wanted to clarify that. So you saw the initial impact early in the second quarter. You made some changes. And then early here in the third quarter, once in March, you're seeing some improvement.

Yeah. I would say the impact was noticeable really in the later part of the second quarter. But the algorithm shift happened in the early part of the second quarter.

Okay. Gotcha. So the shift early in the quarter, the impact late in the second quarter, and then here early in the third quarter, you're seeing some improvement in response to some of the changes that you've made, you think?

Yeah. I mean, we've seen continuing through all of this, we've seen strong demand for our brand, which is the very top of the funnel, one of the most effective ways of looking at that is just the inquiry searches for a brand on Google. And then the next measurement we look at is how that demand comes to us on our website. And it comes from various channels. And we've seen strength in how that inbound demand is coming to us that's returned back to, you know, what I would call normal, you know, relative to our recent history here in the early part of Q3.

Gotcha. And then so the second question is for Blair, and your comment regarding revenues and the guidance for the balance of the year. You said that revenues should trend to the lower end of the full year range because of some of these marketing issues?

Yeah, that's great, Alan. As discussed, we would expect revenues to come in in the lower part of the range, given the marketing dynamics that we've observed.

Yeah, I mean, the way we looked at it is we took the best information available.

We didn't feel, based on that, that we should change the range, but we did want to guide the lower end, given these dynamics we saw.

And again, it sounds like conservatism, given you said that things have kind of returned to normal here in, I don't know, month of March or early April.

I would call it, Alex, prudence. I think you'll learn the style of this management team over time. We try to be prudent. I would also say that there's always a cycle time. When you see demand, it works its way through the funnel. I think it's prudent because we're seeing what we need to see, but we also know that there's seasonality in terms of when students actually begin their classes, and so we took that all into consideration with our guidance.

Okay, that's great. And then just to button it up, adjusted EBITDA, on the other hand, is trending towards the upper end of the full-year range, and that's due to cost management as well as lower bad debt related to the better retention. Do I have that right?

Yeah, absolutely, and it's also a reflection of the good work that our teams are doing leveraging our technology and AI solutions. That's been a big part of our story for years. And we're seeing nice traction in getting efficiency. You heard it in our opening remarks that, you know, our story has been we've been effective at gaining improvement in student outcomes while reducing the cost to deliver those outcomes. And we continue to see the ability to do that, not only improve retention, but improve the efficiencies in generating these results, and we believe that we're going to maintain those types of efficiencies through the remainder of the year.

That's great. Thank you both for the additional color. I'll get back to you. You're welcome. Thanks, Alex.

Your next question comes from the line of George Tong with Goldman Sachs. Please go ahead.

Hi, thanks. Good afternoon. Can you provide an update on your fraud prevention initiatives and your estimate of how much of an impact that is currently having on enrollment performance?

Hey, George. Yeah, thanks for the question. Very similar to last quarter, we feel really good about the infrastructure that we put in place last year. If you recall, you know, we did see a lot of friction as we were putting the infrastructure in place. And then in Q4 of last year, we made a choice to include some of the analytical detection and verification processes at the top of the funnel. And we saw a lot of friction in Q4. That improved significantly coming into Q1. It's improved even further into Q2. What I would say today is we have a very strong agile system of detection based on strong analytics and prevention with verification, fraud detection with our bank accounts that's working very well. We think that this is doing a couple of things. While there is a lot of UEA activity in the marketplace, we are seeing evidence that as it relates to us, While we still see a lot of volume try to get into our funnel, it's dissipated quite a bit. So we do think that our systems of controls have deterred the volume from trying to penetrate our university as often. And we've gotten better and better at that balance of reducing friction significantly for well-intended students so that they can have a normal process of working their way through the enrollment process. So, you know, we feel really good about where we're at. We have it under control through Q2. It's a day-to-day thing, but our systems are great. And, you know, I would say there is a little bit of friction that will exist as long as this activity exists in the marketplace, but it's not something that we consider material to date.

Got it. That's helpful. And then your retention rate expanded quite a bit, 500 bits a year in the quarter. Can you elaborate on the initiative that drove this level of improvement and if this rate of improvement is sustainable or more one-time in nature?

Yeah. Thanks for that question. I'll say there's a – we're – in the probably eighth year, if I'm doing my math, or ninth year of a transformation that we've been talking a lot about, we've seen many, many years of consistent, meaningful improvement in our retention rates, which ultimately will lead to stronger graduation rates. And, you know, it's a myriad of things. I mean, we've built a technology digital-first platform inside and outside the classroom that leverages our data in really powerful ways to predictively meet our students when and where they need us with solutions. And we have hundreds of solutions that we're constantly focused on that are removing friction or finding ways to get more effective outcomes to our students. Some of the bigger needle movers we talked about were mobile-ready courses in those early courses where students are acclimating into the institution. That's had a meaningful uptick because as they have success in those early courses, they get more confident and then they end up persisting. If they can get through the first two or three courses, they persist at much higher rates and graduate much higher rates. Dispersed by course, we've talked about in the past, has also been a really meaningful needle mover. But there's numerous other things and that's part of our story. We're really excited about... this moment at which AI technologies are, we're in a position to leverage these technologies in ways to continue to do what we've been doing, which is improve these retention outcomes for our students and satisfaction outcomes while reducing the cost to deliver them. And we're seeing an acceleration of AI initiatives across the board from our AI-assisted student onboarding to human-in-the-loop solutions that are taking cycle times and supporting our students down considerably while getting to more effective solutions in a much more efficient way. Samples are our transcript evaluations. We've seen those cycle times improve. We still have our transcript evaluators in the process, but we're leveraging AI and other technologies to make that process much more effective. Or call summarizations that we're leveraging across our student-facing positions that enable us to take many, many minutes, sometimes more than 10 minutes, out of the preparation process of supporting a student and put us in a position to give them even better support, leveraging AI to better summarize where we are with that student and what next steps we could be taking. So we expect it to continue. Now, in terms of the one time, 500 basis points improvement for undergrad programs in fiscal 25 was an enormous We're very proud of it. I would not expect that year to year. That is really, you don't see that often. You know, you get 100 basis point improvement in any given year, and that's a pretty meaningful jump. But we have continued to improve versus last year.

So we do expect to continue to improve retention going forward. That's a really important part of our strategy.

Got it. Very helpful. Thank you. You're welcome.

Your next question comes from the line of Griffin Boss with the Raleigh Securities. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. I just want to jump right back into that discussion on retention, more so directed at the expansion of your employer-affiliated students with the B2B segment, if you will. So we've talked about this plenty in the past. I'm just curious. I mean, you've expanded that from, what was it, 31%. a year ago now it's at 35% of total enrollment where can you just remind us where you think that that level can go or maybe what you aspire to do obviously this is a big strategy for Phoenix in terms of retention but um you talked about in quarters past how this, uh, uh, you can see kind of overall revenue growth, uh, trailing enrollment growth, uh, given, you know, some of the myriad, uh, things that you've discussed today on top of B2B, but, um, is that going to continue into or past the third quarter at this point? Um, just kind of where, where you're at on the B2B, um, uh, initiatives at this point.

Yeah. Thanks Griffin. Um, I really want to address two parts of your question. One, where we're going with our B2B growth, and two, the relationship between revenue and enrollment. I want to be really, really clear on how I think you should be considering that. In terms of B2B growth, I mean, this is a big part. Obviously, we've discussed for a while of our long-term strategy. We think we're well-positioned to meet the restilling needs. of employers and their employees who are working adult students. And we're positioned well to continue healthy growth in that segment. You know, we increased the size of our account management teams this year by about 25%. We're seeing the benefit of that both in expanding growth within existing relationships as well as growing new employer relationships as well. And we believe we can continue healthy growth in that area. We're not in a position to give you a long-term view on that, but we have well over a majority of our students are working adults. We have over 2,500 employer alliances that cover a large percentage of the market share of employed working adults. So we do think that there is a strong upside in growing that channel. In terms of the revenue and enrollment relationship, we do have a discounted rate on average for B2B And I think we mentioned that in our opening remarks. That's been very much in line with our expectations. And just as a reminder, our B2B students retain at higher rates. It's a very durable revenue stream. And over time, they have very similar profitability characteristics as our B2C students. And the bigger the channel gets, the more effective it is at reducing the acquisition cost. of growing that channel. So we feel really good about that being in line with expectations. But the other relationship between revenue and enrollment to keep in mind that I talked about in previous quarters is last year we had a higher volume of students enter our risk-free period. This is not anything to do with B2B, but we had a larger percentage. And we offer a risk-free period to students that have certain risk characteristics that don't correspond to higher retention rates. So we offer them the opportunity to try our courses out before they enroll. That did result in more of those students deciding to enroll but not persisting beyond their initial courses. So I mention this early in the year for a reason because we anticipated in this quarter and in Q3 that that would affect we have atypical relationship between our average enrollment and revenue as a result of that experience last year. We're not having that experience this year. We have students that, in terms of student mix, that we expect to persist much longer. But it is affecting that trajectory in Q2 and Q3, and we expect that to reverse back to more normal friends in Q4.

Got it. Understood, Chris. Thank you for the detail. That's it for me, and great to see the progress. Thanks for taking my question. Thanks, Griffin.

Your next question comes from the line of Jeff Silber with BMO Capital Markets. Please go ahead.

Hey, thank you so much. This is Ryan on for Jeff. I just had a question. I know business and IT are big program concentrations for you. I was wondering if you're seeing any shifting degree preferences from students as some of the newer students might be fearful about the potential Gen AI impact. I know we saw some of that in the fall clearinghouse data, so curious as it relates to your business.

Thank you. Yeah, thanks, Brian. Yeah, we're looking at that very closely. I think what I'd like to point out that we feel really good about is we've made multi-year investments in aligning all of our curriculum to career-relevant PLCs. And that's across all of our programs. We're very comfortable with the breadth of our program offerings, including our business and IT programs. And what that means is that in every course a student takes, they can earn verified skills that map to the career-relevant skills that employers need today. We've embedded AI fluency into the skills-aligned curriculum over the last two and a half years. And so we feel very good about the differentiation between of our programs from a skills alignment and the relevancy to the workforce needs today. And we're seeing that, you know, we believe that's evident in the growth that we're seeing directly in the B2B relationships because these, you know, we're growing existing relationships where we still compete against other universities and colleges and we're able to expand our growth and we believe that differentiation is a very helpful driver to that growth. And we're seeing growth in all of our programs. One of the strong trends I also read about is in health care and nursing. That has been a nice tailwind for our health care programs and nursing programs. Health care employers are the largest segment we have across our B2B portfolio, just under 30%. But we're seeing growth of all of our programs. within that segment. And many of our programs are business and IT because there is demand from those employers and those employees. So we feel comfortable with where we're at as it relates to the University of Phoenix's programs.

Thank you. And I appreciate the color on the B2B enrollments and the strength of those relationships. I'm just wondering how you're thinking about the non-B2B degreed enrollments and are you investing there and how has that kind of been trending? Thank you.

Yeah, so, you know, we have variability between B2C and B2B throughout the year. We're comfortable with the demand we're seeing across both programs, both channels. You know, we think that if we're meeting the needs for employers and workers, we're meeting the needs for those that don't have benefits under employers and are working mid-career, working adults. So we feel like that differentiation – is helpful across B2C and B2B, and we feel like we see plenty of evidence of that in our demand frameworks.

Your next question comes from the line of Stephanie Moore with Jefferies. Please go ahead.

Great. Good afternoon. Thank you. I wanted to appreciate all the feedback this afternoon. You know, maybe you could talk a little bit about the competitive landscape right now. You talked a lot about the investments that you've made, specifically kind of targeting from a marketing standpoint. But maybe just give us an update on just how you would characterize the pulse of the overall competitive landscape. And then as you think about your strategy over the course of the next one to two years, you know, what we could expect to see as you continue to look to differentiate yourself.

Thanks. Yeah, thanks for the question. You know, we have a very large addressable market, both students with some or no college, some college degree or some college credits that want to complete their degree, and those that have no college credits and want to complete their degree. And for a lot of those students, we may not be competing with anyone except for motivating them to pursue getting skills that could advance their careers. So we tend to focus on what are the needs of those potential students that we can support. Students have a need for skills today. They want career-relevant skills that not just wait for a degree, but that they're getting skills along the way that have value in the workforce. We believe that we're delivering on that in a very differentiated way. Each course, they're getting skills in weeks, not years. That's one of our primary campaigns. And we don't have many competitors that can say the same thing based on the substance of what they deliver. And so we think that that positions us very well to meet the needs. There's also other things that we do very well at, saving time and money. We're very effective at helping students with previous college credits leverage those college credits to save time and money. So we make sure that we differentiate the experience that those students have in getting credit on the front end. The more effective we are there, the better we compete with other institutions like ourselves. There's a lot of flexibility. Our empathetic support process It's something that busy working adults who are a little bit cautious about pursuing college again, they see that as a very strong value proposition. So the more effective we are at telling people what we do really well and helping them understand how we do it better than our competitors tends to help us be effective in the marketplace.

And we just continue to lean into those distinctions effectively in our marketing efforts.

Got it. And just as a follow-up, I mean, I think we're all, you know, as a society, thinking of the way we use education is differently now with AI. So I guess maybe just to wrap it up, I mean, do you feel like there's a strategy in which you can kind of advertise your approach not only to everything you just outlined, but, you know, that in a Gen AI world, you know, maybe how you pursue education could be different? I guess I'm just high-level question. Yeah.

I'm thrilled you asked it. Look, we think the evolution of AI is extremely powerful to our business model and how we serve our students. We talk a lot about that. But to answer your question, when you look at the workforce trends, what's existing today and where the world's going, we talked about this in my opening remarks about this great re-skilling, as they call it, we're living that. I mean, this is a rare moment where we're looking at our own institution and working on reskilling our entire employee base to help them leverage tools that magnify their ability to pursue the goals that we have. There's a lot of organizations like us that have a big vision, and the use of AI is powerful at a person level, at a workflow level, and at a corporate level in helping institutions get to the visions that they have. So the entire workforce is going to need these skills in order to drive the goals of tomorrow. And we know that the workers that are fluent and are capable in using AI are going to have the jobs of tomorrow. We're extremely well positioned. We think this is a tailwind for the university. We adopted AI into our curriculum almost two and a half years ago. We were a first mover here. Now all institutions are trying to figure out how to do this. Our students are gaining fluency in AI. We're getting deeper and deeper into looking at what our employer partners and industry councils are looking for in the workplace and building those technical skill needs into our program. So we think we're well positioned to help our students gain skills for tomorrow. We also think our differentiation is we understand the adult learner. So when you look at the learner today, more and more learners are becoming what we have served for almost five decades. An adult learner that is constantly looking to upskill, that values the pursuit of a degree, but they're working, they have responsibilities along the way. AI has changed the game so much, the speed and movement of skills in the workforce is going to cause more and more learners to look like our learners And we're well positioned to deliver value. And we know they want value along the way as well as through the degree. And we have a curriculum that offers them skills along the way as well as the degree. So we think we're very well positioned within the trends that we're seeing in the workforce today as it relates to AI.

Excellent. Really appreciate all the insight. Thank you.

Thank you.

That concludes our question and answer session. I will now turn the call back over to Chris Lim for closing remarks.

Thank you. Our results this quarter reflect continued progress in executing our strategy. We remain confident in the strength of our mission, the resilience of our model, and our ability to continue to deliver strong student outcomes. I want to thank our faculty and team members for their continued dedication to our mission.