Phoenix Education Partners, Inc. (NYSE:PXED) released its first-quarter fiscal 2026 financial results, with management stating the performance aligned with expectations. Net revenue increased 2.9% year-over-year to $262 million. Chief Financial Officer Blair Westbloom attributed this rise to a 4.1% growth in average total degree enrollment, which reached 85,600 students.
Adjusted EBITDA grew 7.2% to $75.2 million, with the margin expanding to 28.7%. Westbloom noted margin improvement stemmed from revenue growth, enhanced productivity among student-facing teams, and lower financial aid processing costs. He said this was partly due to a transition to disbursing financial aid by course.
Chief Executive Officer Chris Lynne described the quarter as reflecting disciplined execution and a solid start consistent with the full-year outlook provided in November. He highlighted that employer-affiliated enrollment continues to be a key driver, now representing about 34% of total students, up from roughly 31% in the prior-year quarter.
Net income attributable to the company was $15.5 million, or $0.40 per diluted share, compared to $46.4 million, or $1.23 per share, a year ago. Westbloom said the decline was primarily due to non-cash share-based compensation and other expenses resulting from the initial public offering. On an adjusted basis, net income increased 5.3% to $53.6 million.
The company ended the quarter with no outstanding debt and no borrowings under its revolving credit facility. Total cash, cash equivalents, restricted cash, and marketable securities stood at $218.1 million as of November 30, 2025, up from $194.8 million at the end of the prior quarter.
Reflecting confidence in cash generation, the company announced its inaugural regular quarterly cash dividend of approximately $0.21 per share. Westbloom stated the dividend is payable on February 18, 2026, to shareholders of record as of January 28, 2026. He said capital allocation priorities remain focused on reinvesting in the business to support student outcomes and growth while returning capital to shareholders.
Management discussed regulatory developments from the Department of Education's negotiated rulemaking process. Lynne said the committee reached consensus on accountability measures related to changes under the One Big Beautiful Bill Act, adding that no new material areas of risk were introduced. He stated the company was encouraged by preliminary program performance accountability metrics, noting that all University of Phoenix programs for which metrics were provided were passing.
Executives also addressed fraud controls in the federal student aid system. Lynne said suspicious activity remains present in the market but noted that after moving detection and verification processes earlier in the application funnel in fiscal 2025, Phoenix has seen volumes deter and trend downward since the fourth quarter of fiscal 2025.
Regarding artificial intelligence, Lynne said the company is pursuing AI in a disciplined manner with two priorities: preparing students to be AI-fluent and using AI institutionally to drive operational excellence. He cited examples including AI-assisted appointment setting and pilots using large language models to enhance chat assistance for students.
Management revisited a previously disclosed cybersecurity incident involving Oracle E-Business Suite software. Lynne said an unauthorized third party exploited a zero-day vulnerability to obtain certain personal information without authorization, and the vulnerability has been remediated. The incident did not impact student and academic programming. The company recorded $4.5 million of related expenses in the quarter for notification, third-party cybersecurity firms, legal fees, and other response costs. Lynne said additional expenses are expected in future periods but noted the company maintains a comprehensive cybersecurity insurance policy.
For fiscal 2026, management reiterated guidance for net revenue of $1.025 billion to $1.035 billion and adjusted EBITDA of $244 million to $249 million. Westbloom said the first quarter reinforced confidence in the full-year outlook.