The PRDO (NASDAQ: PRDO) “Enrollment Engine”: Growth Surge or Quality Quandary?

Perdoceo Education is firing on all cylinders in the online learning boom, with Q3 2025 results underscoring robust demand for flexible degrees. Revenue rocketed 24.8% to $211.9M—smashing estimates by 2.4%—while net income climbed to $39.9M, delivering diluted EPS of $0.60 (adjusted $0.65, a 6.6% beat). This marks the third straight quarter of acceleration, as working adults flock to brands like Capella and Strayer amid reskilling needs.

Operationally, the fuel is total enrollments, up 15.1% YoY to 46,520, with CTU leading at +6.7% (32,000 students) and new USAHS adding 4,420. AIUS dipped 2.9%, but overall retention hit record highs on tech upgrades and support investments. Gross margins held strong at 77.3%, though operating margins slipped to 24.1% from 26.4% on ramped marketing to chase prospects—spend up 20% amid peer-reported “ghost student” scrutiny. Regulatory tailwinds from FAFSA fixes are boosting accessibility, but softening new starts signal potential saturation.

The balance sheet is a cash machine: $668.6M in total liquidity (unrestricted cash $159.5M), negligible debt ($56.9M lease liability), and YTD operating cash flow of $185.1M funding $50M in buybacks. No dilution—shares outstanding flat. Guidance firmed up FY25 adjusted EPS to $2.54-$2.56 (up 12% YoY midpoint), with revenue implied at ~$830M. If enrollment momentum holds, free cash conversion could top 100%.

The bull case accelerates: AI-driven personalization and workforce partnerships could sustain 15-20% enrollment CAGR into 2026, expanding margins back to 28%. 

The bear case creeps in: if new student trends weaken further (as peers warn), marketing inefficiency erodes ROIs, capping growth at single digits. PRDO trades at $31.50 today—up 8% post-earnings—and at just 12x forward EPS, it’s a steal in edtech’s rebound.

The Filing: 

• Nov 4 10-Q: $211.9M revenue (+24.8% YoY). 

• Net income: $39.9M (vs. $28.5M). 

• Operating income: $51.0M (GAAP). 

The Context: 

• Enrollments: +15.1% to 46,520. 

• Cash: $668.6M total; YTD op cash $185.1M. 

• Stock +8% post-earnings — 2.4x sales.

The Sharper Take: 

• Bull: Retention + partnerships = 20% CAGR 2026. 

• Bear: New starts stall = marketing margin drag.

Investor Action:

1. (Buy Signal): Bet on the reskilling tailwind; EPS trajectory undervalued vs. peers.

2. Monitor Q4 new enrollments at 12K+; shortfalls here mute the rally to $35.

3. Accumulate below $30; pass if peer “ghost student” probes escalate regulatory risks.