Phoenix Education Partners, Inc. (PXED) Q3 2026: Revenue Growth with Declining Profitability — Cautiously Disappointing

Phoenix Education Partners, Inc. (NYSE: PXED) reported its financial results for the third quarter of fiscal year 2026, revealing a slight increase in revenue but a significant decline in net income compared to the previous year.

Key Findings

• Net Revenue: $271.8 million, up $0.1 million or +0.04% YoY from $271.7 million in Q3 2025.
• Net Income: $39.2 million, down $14.6 million or -27.1% YoY from $53.8 million in Q3 2025.
• Diluted Earnings Per Share (EPS): $1.01, down $0.41 or -28.9% YoY from $1.42 in Q3 2025.
• Adjusted EBITDA: $78.1 million, down $5.3 million or -6.4% YoY from $83.4 million in Q3 2025.
• Adjusted Diluted EPS: $1.43, down $0.14 or -8.9% YoY from $1.57 in Q3 2025.

Analyst Opinion

This quarter presents a mixed bag for shareholders. While the revenue growth, albeit marginal, indicates some resilience in the business, the substantial decline in net income and EPS raises concerns about profitability. The decrease in net income is attributed to increased share-based compensation related to the company's IPO, higher advertising expenses, and costs associated with strategic alternatives and restructuring. These factors suggest that while Phoenix Education Partners is generating revenue, it is facing challenges in managing costs effectively, which could impact future profitability.

Financial Metrics Breakdown

• Average Total Degreed Enrollment: Increased to 85,300 from 84,800 YoY.
• Net Income for the First Nine Months of 2026: $65.4 million, down from $116.4 million in the same period last year.
• Adjusted EBITDA for the First Nine Months of 2026: $188.1 million, up from $185.8 million YoY.
• Cash and Cash Equivalents: Increased to $269.4 million from $194.8 million as of August 31, 2025.

Dividend and Share Buyback

During Q3 2026, Phoenix Education Partners declared a regular common stock cash dividend of $0.21 per share, to be paid on August 14, 2026. Additionally, the company initiated a share repurchase program of up to $50 million, repurchasing 0.1 million shares for an aggregate price of $4.0 million at an average price of $29.29 per share. As of May 31, 2026, $46.0 million remains available for repurchases under this program.

Forward-Looking Catalysts

Looking ahead, investors should monitor the company's ability to manage costs effectively and improve profitability in the upcoming quarters. The guidance for fiscal year 2026 anticipates net revenue in the range of $1,020.0 million to $1,025.0 million and adjusted EBITDA between $246.0 million and $250.0 million. The performance against these targets will be crucial for assessing the company's operational efficiency and overall financial health moving forward.

In summary, while Phoenix Education Partners has shown slight revenue growth, the decline in profitability metrics is a concern for shareholders. The upcoming quarters will be critical in determining whether the company can navigate its cost challenges and enhance shareholder value.

Note: All amounts in the following tables are in thousands.

	Three Months Ended		Nine Months Ended
	May 31, 2026	May 31, 2025	May 31, 2026	May 31, 2025
Net revenue	$271,800	$271,700	$756,300	$749,800
Cost of services and expenses
Insurance and support	$110,000	$110,000	$330,000	$325,000
General and administrative	$97,700	$83,300	$302,000	$255,000
Strategic alternatives and other	$11,900	$6,837	$31,600	$17,000
Total cost of services and expenses	$219,600	$200,000	$664,600	$599,000
Operating income	$51,800	$71,100	$91,400	$150,000
Interest income	$2,183	$2,278	$5,720	$8,300
Interest expense	$(651)	$(107)	$(1,400)	$(332)
Income before income tax	$53,332	$73,271	$95,720	$158,000
Provision for income taxes	$14,400	$18,600	$30,800	$40,000
Net income	$38,932	$54,683	$64,829	$117,000
Net loss attributable to non-controlling interests	$(261)	$(808)	$548	$(1,000)
Net income attributable to Phoenix Education Partners, Inc.	$39,133	$53,825	$65,384	$116,000
Earnings per share
Basic	$1.09	$1.51	$1.83	$3.27
Diluted	$1.01	$1.42	$1.69	$3.08
Shares used in computing earnings per share, basic	35,800	35,500	35,700	35,000
Diluted	38,900	37,900	38,700	37,000

	As of May 31, 2026	As of August 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$155,020	$136,504
Restricted cash and cash equivalents	$2,973	$36,497
Marketable securities	$75,051	$9,005
Accounts receivable, net	$96,475	$58,957
Prepaid income taxes	$8,173	$3,160
Other current assets	$23,176	$21,827
Total current assets	$360,868	$265,950
Marketable securities	$36,396	$12,803
Property and equipment, net	$38,282	$38,846
Goodwill	$3,732	$3,732
Intangible assets, net	$85,424	$87,294
Operating lease right-of-use assets, net	$36,532	$41,920
Deferred income taxes, net	$24,517	$20,566
Other assets	$22,896	$22,451
Total assets	$608,647	$493,562
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$24,375	$25,696
Accrued compensation and benefits	$19,557	$28,534
Student deposits	$7,594	$11,049
Deferred revenue	$76,046	$37,210
Current operating lease liabilities	$9,822	$8,948
Other current liabilities	$51,047	$50,608
Total current liabilities	$188,441	$162,045
Long-term operating lease liabilities	$55,879	$64,352
Other long-term liabilities	$37,895	$27,110
Total liabilities	$282,215	$253,507
Equity:
General partner	—	—
Limited partners	—	$246,735
Preferred Stock	—	—
Common Stock	$360	—
Additional paid-in capital	$275,155	—
Retained earnings	$48,747	—
Accumulated other comprehensive income, net	$(7)	$39
Total Phoenix Education Partners, Inc. equity	$324,255	$246,774
Noncontrolling interests	$2,177	$(6,719)
Total equity	$326,432	$240,055
Total liabilities and equity	$608,647	$493,562

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