Phoenix Education Partners, Inc.

Ladies and gentlemen, good afternoon and welcome to Phoenix Education Partners' third quarter fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. Following prepared remarks, we will open the call for questions. 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 third quarter fiscal 2026 earnings conference call. Speaking on today's call are Chris Lynn, 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 in the call will focus on comparisons to the prior year period. We also direct you to the supplemental earnings slides provided on 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 as we discuss our third quarter fiscal 2026 results and the continued execution of our long-term strategies. Thank you all for joining us today. University of Phoenix has helped students adapt, grow and succeed through periods of economic and technological transformation. Today, we are building on that legacy by continuing to enhance the learning experience, incorporating employer-informed curriculum and preparing learners with in-demand skills, creating greater opportunities for career mobility. As we celebrate our 50th anniversary this year, we are reminded that our ability to evolve alongside the needs of learners and employers has been one of our defining strengths. That same commitment to innovation and adaptability continues to guide our strategy today. Turning to our results, the third quarter reflected continued progress across our strategic priorities. Revenue and enrollment were generally consistent with prior year, supported by continued strength and retention and healthy growth in employer supported enrollment. Retention remains one of the strongest indicators of value students placed on the University of Phoenix experience. The sustained improvement we've achieved reflects multi-year investments across the learner journey, including technology-enabled support, personalized engagement, flexible learning pathways, and skills-aligned curriculum. Together, these efforts continue to support student retention and the long-term durability of our enrollment base. During the quarter, we accelerated the successful launch of our Built for Real Life campaign, an evidence-based omni-channel campaign that highlights our differentiation through the attributes working adults value most, exceptional flexibility, affordable tuition, and practical career-relevant education, all supported by consistently high levels of student and alumni satisfaction. At University of Phoenix, our AI strategy is centered on three priorities, elevating the learner experience, equipping students with the AI skills employers increasingly value, and enhancing how we operate across the university. During the quarter, we made exciting progress expanding AI-enabled learning and AI skill development for students, which I'll discuss in more detail later in my remarks. We also continue to scale AI to drive operational efficiency across the university, including the launch of our one-team assistant, which provides AI-generated summaries, including status and next best actions to help our advisors best support our students. Our students continue to benefit from skills-aligned curriculum. To date, students have earned more than 1.1 million digital skills badges, providing another way to demonstrate verified workforce-relevant skills to current and prospective employers. We continue to see growing demand for learners and employers for education aligned with evolving workforce and technology needs. Approximately 36% of our third quarter enrollment came through employer-supported relationships, up from approximately 33% a year ago. reflecting the growing alignment between our educational offerings and employer needs. This alignment is reflected in feedback from employers. I am happy to report that results from a recent employer research survey conducted by the Harris Poll indicated that 98% of employers survey reported overall satisfaction with University of Phoenix graduates. During the quarter, we further expanded our work with employers to support upskilling, career mobility and talent development, University of Phoenix was recently recognized by Wabash, a New York Stock Exchange listed provider of end-to-end supply chain solutions, as a 2025 platinum supplier for its collaboration in supporting workforce development and operational priorities. We believe this recognition reflects the value of helping employers align learning, skills development, and business needs while helping organizations build the workforce capabilities they need to succeed. Looking ahead, We will continue expanding our academic portfolio to meet evolving workforce needs with new offerings planned across several high demand disciplines and more flexible pathways designed to make degree completion faster and more affordable. This includes the approval and planned fall launch of one of our first three year bachelor's degree paths in the College of Social and Behavioral Sciences and Criminal Justice Administration. In today's workforce, preparing learners for an AI enabled workplace is central to helping them develop practical career relevant skills they can apply throughout their careers. Recent findings from the University of Phoenix Career Institute Career Optimism Index underscore the importance of continuous learning and AI skill development. The study found that about half of workers say AI increases their confidence in pursuing new career opportunities, while more than half report greater confidence in developing new skills and adapting to evolving workplace technologies. Our goal isn't simply to teach students how to use AI tools. It's to prepare working adults to succeed as AI continues to transform the workplace. We are integrating generative AI throughout our curriculum to help students develop practical AI skills they can apply on the job. We're continuously expanding AI-powered learning experiences and now offer AI skill building modules in every course. We are currently enhancing teaching and learning through support tools and advanced AI training for faculty, expansion of our Socratic dialogue tool that simulates real world professional scenarios and have an AI agent that provides 24 seven support for writing and math. Earlier today, we announced a collaboration with OpenAI, an exciting opportunity to accelerate this work. Working with OpenAI, we plan to advance AI powered learning, explore collaborative research and expand access to AI technologies that help work in adult learners developed the skills they need for an increasingly AI-enabled workplace. As part of this relationship, we plan to provide eligible students with access to ChatGPT, giving them a hands-on experience with AI as they continue developing those skills throughout their education. As search and discovery continue to rapidly evolve, we remain focused on how prospective learners explore, evaluate, and ultimately choose University of Phoenix as they look for ways to advance their education and careers. We believe our strong brand Leading position across social media among our peer set, career relevant content, media expertise, and broad digital presence provide a solid foundation in this changing environment. This foundation has provided strong support for adjustments to our digital acquisition strategies that meet the evolving needs of prospective learners who increasingly use AI in their search process. The recent launch of the Built for Real Life campaign has been one of our more successful campaigns and is an important evolution in how we communicate what differentiates University of Phoenix. It has been effective at maintaining strong demand for our brand and is designed to provide authoritative, evidence-based content around the most important decision factors in a manner that influences AI-powered search. We will continue to adapt our approach to meet learners wherever they are making decisions about their education. I also want to briefly touch on the Department of Education's recent fraud prevention initiatives. As I've discussed on previous calls, we support the department's efforts to strengthen fraud prevention and protect the integrity of the federal student aid system. Importantly, the department's enhanced controls and the recent initial data we've reviewed from the department has reinforced our confidence in the effectiveness of the fraud detection and identity verification processes we already had in place. Before I close, I'd like to welcome Robert Brackenberry to the Phoenix Education Partners Board of Directors. Robert brings extensive leadership and governance experience, most recently serving as Deputy Chief Investment Officer for the State of Michigan Retirement System, where he helped oversee more than 170 billion in pension and trust assets for a fund with a long-term track record of outperformance amongst large public pension funds. Combined with a decade of higher education leadership experience, Robert brings valuable perspective, and we look forward to his contributions to our board. As we look to the future, an important part of our growth strategy and capital allocation approach is evaluating opportunities that complement our core business, enhance our ability to serve learners and employers, and strengthen our long-term value proposition. Playing a key role in leading these efforts, I'd also like to welcome Michael Cochran as our Senior Vice President, Corporate Development. Michael brings extensive transaction and strategic advisory experience, most recently as an executive director at Morgan Stanley, where he served as a key leader supporting the company and its return to the public markets. As we enter the final quarter of 2026, we remain focused on executing against our strategic priorities, supporting student success, strengthening employer relationships, and helping learners build the skills they need to succeed in a rapidly evolving workforce. The progress we continue to see in student outcomes reinforces our confidence in our strategy. Supported by a strong financial foundation, disciplined execution, and continued investment in our students, we remain confident in our long term trajectory and our ability to create value for learners, employers, and shareholders. With that, I'll turn the call over to Blair.