• Revenue: $417 million, a 13% increase compared to last year.
• Adjusted EBITDA Margin: Expanded by 140 basis points.
• Adjusted Earnings Per Share: Increased by 39% to $1.29.
• Total Enrollment: Improved by 11.2% year over year, exceeding 90,000 students.
• Chamberlain Revenue: $167.9 million, a 17.8% increase year over year.
• Chamberlain Enrollment: Increased by 11.7% year over year.
• Walden Revenue: $161.5 million, a 14.1% increase year over year.
• Walden Enrollment: Increased by 12.2% year over year.
• Medical and Veterinary Segment Revenue: $88 million, a 3.9% increase year over year.
• Free Cash Flow: $79 million for the first three months of fiscal year 2025.
• Cash and Equivalents: $265 million at the end of the first quarter.
• Fiscal Year 2025 Revenue Guidance: Projected between $1.69 billion and $1.73 billion.
• Fiscal Year 2025 Adjusted EPS Guidance: Projected between $5.75 and $5.95.

• Warning! GuruFocus has detected 4 Warning Sign with ATGE.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Adtalem Global Education Inc (NYSE:ATGE) reported a 13% increase in revenue for the quarter, reaching $417 million.
• Adjusted EBITDA margin expanded by 140 basis points, leading to a 39% increase in adjusted earnings per share to $1.29.
• Total enrollment improved for the 10th consecutive quarter, up 11.2% year over year, with over 90,000 students enrolled.
• Chamberlain University achieved its highest ever total enrollment for the second consecutive year, with a 11.7% increase.
• Walden University saw a 12.2% growth in enrollment year over year, surpassing pre-pandemic levels, particularly in nursing and social and behavioral sciences.

Negative Points

• Despite revenue growth, Chamberlain's adjusted EBITDA margin was slightly lower by 10 basis points due to increased marketing and student support costs.
• Marketing expenses were increased year over year, which could impact short-term profitability despite long-term benefits.
• The medical and veterinary segment showed only a modest revenue increase of 3.9%, with enrollment slightly decreasing by 0.7% compared to the prior year.
• There is a shift in marketing expenses from the first quarter to the second quarter, which may affect quarterly financial comparisons.
• The company faces ongoing remediation plans at its two medical schools, which could pose challenges if not managed effectively.

Q & A Highlights

Q: Can you provide more details on the impressive growth at Chamberlain and its sustainability? A: Steve Beard, President and CEO, explained that Chamberlain is experiencing positive trends in new enrollment, particularly in the post-licensure RN to BSN category, alongside strong persistence rates. Despite the RN to BSN category not growing overall, Chamberlain continues to gain market share. The demand for post-licensure and doctoral degrees remains strong, suggesting sustainable growth in enrollments.

Q: Regarding the shift in marketing expenses from Q1 to the rest of the year, is this across all verticals, and how will it be distributed? A: Steve Beard noted that marketing resources are allocated dynamically based on opportunities, so the shift is not across all verticals. Bob Plin, CFO, added that most of the marketing expense shift is to Q2, with some extending to the back half of the year.

Q: Despite strong revenue growth at Chamberlain, margins were flat. Are there other investments affecting operating leverage? A: Steve Beard mentioned that even with some marketing shifted to Q2, there was still a year-over-year increase in marketing spend for Chamberlain. The focus is on a mix of branding and performance marketing, which is an investment for future growth. Bob Plin added that there are also incremental investments in student support to maintain high persistence rates.

Q: Why increase marketing investment given strong enrollment performance, and will marketing costs be leveraged this year? A: Steve Beard explained that the marketing spend includes both performance marketing for immediate returns and brand marketing for long-term benefits. The strategy is to invest for both current and future success. Bob Plin confirmed that marketing costs will be leveraged, similar to last year when marketing spend increased by 4% against a 9% revenue increase.

Q: Is the full-year guidance increase solely due to the Q1 beat, or is there an improved outlook for the rest of the year? A: Bob Plin stated that there is an improved outlook for revenue for the rest of the year. While some EPS shift is due to expenses like marketing, the revenue outlook is positive, reflecting strong momentum and potential upside.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.