Higher education company Perdoceo Education (NASDAQ:PRDO) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 25.7% year on year to $209.6 million. Its non-GAAP profit of $0.67 per share was 3.1% above analysts’ consensus estimates.
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Perdoceo Education (PRDO) Q2 CY2025 Highlights:
- Revenue: $209.6 million vs analyst estimates of $206.9 million (25.7% year-on-year growth, 1.3% beat)
- Adjusted EPS: $0.67 vs analyst estimates of $0.65 (3.1% beat)
- Adjusted EBITDA: $61.55 million vs analyst estimates of $60.01 million (29.4% margin, 2.6% beat)
- Management raised its full-year Adjusted EPS guidance to $2.51 at the midpoint, a 1.4% increase
- Operating Margin: 24.5%, down from 28.1% in the same quarter last year
- Free Cash Flow Margin: 38.9%, up from 22.6% in the same quarter last year
- Market Capitalization: $1.88 billion
Company Overview
Formerly known as Career Education Corporation, Perdoceo Education (NASDAQ:PRDO) is an educational services company that specializes in postsecondary education.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Perdoceo Education’s 3.1% annualized revenue growth over the last five years was sluggish. This wasn’t a great result compared to the rest of the consumer discretionary sector, but there are still things to like about Perdoceo Education.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Perdoceo Education’s annualized revenue growth of 2.9% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
This quarter, Perdoceo Education reported robust year-on-year revenue growth of 25.7%, and its $209.6 million of revenue topped Wall Street estimates by 1.3%.
Looking ahead, sell-side analysts expect revenue to grow 19.1% over the next 12 months, an improvement versus the last two years. This projection is commendable and implies its newer products and services will fuel better top-line performance.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Perdoceo Education’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 24.7% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.
This quarter, Perdoceo Education generated an operating margin profit margin of 24.5%, down 3.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Perdoceo Education’s EPS grew at a decent 10.5% compounded annual growth rate over the last five years, higher than its 3.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
In Q2, Perdoceo Education reported adjusted EPS at $0.67, up from $0.60 in the same quarter last year. This print beat analysts’ estimates by 3.1%. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
Key Takeaways from Perdoceo Education’s Q2 Results
It was good to see Perdoceo Education narrowly top analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed. Zooming out, we think this was a mixed quarter. The stock traded up 1.7% to $29.30 immediately after reporting.
Is Perdoceo Education an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.