Perdoceo Growth Nearly Stalls as Acquisition Tailwind Fades
Perdoceo Education's revenue growth slowed to 1.8% in the second quarter, down from 25.7% a year earlier, as enrollment gains that followed its 2024 acquisition of USAHS largely evaporated.
Perdoceo Education (PRDO) reported second-quarter revenue growth of just 1.8%, a sharp slowdown from the 25.7% pace posted in the same period a year earlier, as the online education company's post-acquisition growth surge continued to fade. The deceleration has unfolded steadily over the past four quarters, with year-over-year revenue growth of 20.0% in the fourth quarter of 2024 giving way to 4.1% in the first quarter of 2025 before slowing further.
The pattern traces directly to enrollment. Total student enrollment grew 17.4% in June 2024 and 15.1% in September 2024, both periods still benefiting from the December 2023 acquisition of USAHS. By March 2025 that growth had narrowed to 1.1%, and by June 2025 it was just 0.7%. Full-year 2024 revenue rose 24.2% to $846.1 million with adjusted operating income up 25.8%, largely on the strength of that acquisition; in the first half of 2025, revenue growth has slowed to 3.0% year to date, indicating the tailwind has largely lapped out.
Operating income growth has decelerated alongside the top line, slowing to 6.8% year-over-year in the second quarter from 22.0% in the first quarter, with adjusted operating income growth falling to 4.4% from 14.1% over the same span. Perdoceo's Colorado Technical University segment, its largest, posted operating income of $44.5 million in the quarter, down 5.1% year-over-year despite revenue growth of only 0.9%, as increased legal fees tied to previously disclosed legal matters weighed on margins — a drag not present in the first-quarter release, when CTU operating income had still grown 8.1%.
The American InterContinental University System segment turned negative for the first time in this run, with enrollment down 1.0% to 10,510 students and revenue down 1.8% to $57.2 million, driven by a modest decline in Trident University enrollment and softness in non-Title IV programs. That segment had still shown flat-to-slightly-positive revenue growth of 0.4% in the first quarter, making the second-quarter decline a fresh development.
USAHS, the segment at the center of the 2023 acquisition, remained the one bright spot. Its revenue rose 10.2% to $40.5 million, an acceleration from 9.8% growth in the prior quarter, while enrollment climbed 6.0%. The segment swung to a $3.6 million operating profit from a $1.7 million loss a year earlier, and its year-to-date operating income improved to a $10.0 million profit from a $2.0 million loss over the same period in 2024.
Operating cash flow fell 5.3% to $74.6 million from $78.8 million, though capital expenditures dropped 43.8% to $1.5 million, and the company's cash and investments balance grew to $734.8 million from $643.5 million at the end of 2024. Perdoceo raised its quarterly dividend 13.3% to $0.17 a share from $0.15, marking the third consecutive annual increase and following a 15.4% raise announced in the second quarter of 2024. The release did not disclose any share repurchases under its capital-allocation update, a change from the same quarter last year, when the company announced a new $75 million buyback authorization and reported $46.1 million of year-to-date repurchases.
For the third quarter, Perdoceo guided to operating income of $54.5 million to $55.5 million, roughly flat with the $54.9 million reported in the second quarter. Full-year 2025 operating income guidance of $221.2 million to $226.2 million implies growth of 12.9% to 15.4% over 2024's $196.0 million, a target that assumes a rebound from the current run rate given the deceleration seen through the first half of the year.