PXED 2026 회계연도 4분기 실적 발표 콘퍼런스 콜: AI 검색이 2027 회계연도 전망에 부담으로 작용

피닉스 에듀케이션 파트너스(PXED)는 2026 회계연도 매출 및 등록 학생 수가 완만한 성장을 기록한 가운데, 4분기 수익성은 비용 통제와 신용손실충당금 감소에 힘입어 개선되었다고 발표했다. 경영진은 AI 기반 검색 변화에 따른 등록 수 영향이 매출에 반영됨에 따라 2027 회계연도가 전환의 해가 될 것으로 예상하고 있다.

핵심 요약

• 4분기 순매출은 전년 동기 대비 1.3% 증가한 2억 6,070만 달러를 기록했으며, 평균 총 학위과정 등록 학생 수는 8만 1,500명으로 2.8% 증가했다.
• 4분기 조정 EBITDA는 8.6% 증가한 6,150만 달러를 기록했다. 비용 통제와 신용손실충당금 감소에 힘입어 조정 EBITDA 마진은 23.6%로 160베이시스포인트(bp) 확대되었다.
• 2026 회계연도 순매출은 1.0% 증가한 10억 1,700만 달러, 조정 EBITDA는 2.1% 증가한 2억 4,900만 달러를 기록했다. 연간 순이익은 주로 IPO 관련 주식 기반 보상 비용 및 광고비 증가로 인해 8,890만 달러로 감소했다.
• 기업 제휴 등록 학생 수는 2026 회계연도에 13% 가까이 증가하여 평균 총 학위과정 등록 학생 수의 약 35%를 차지했다. 4분기 비중은 전년 동기 대비 270베이시스포인트 상승한 36%에 달했다.
• 경영진은 2027 회계연도 순매출 가이던스로 9억 7,000만~10억 달러, 조정 EBITDA 가이던스로 2억 2,500만~2억 4,000만 달러를 제시했으며, 이는 주로 AI 관련 검색 변화 이후 신규 학생 등록 둔화가 매출에 시차를 두고 미친 영향을 반영한 것이다.
• 피닉스 에듀케이션은 2026 회계연도를 현금, 제한된 현금 및 매도가능증권 3억 3,170만 달러, 미상환 부채 없음, 영업활동 현금흐름 1억 9,630만 달러로 마감했다. 이사회는 분기 배당금을 주당 0.23달러로 10% 인상했다.

주요 재무 실적

연간 GAAP 순이익 감소는 주로 IPO 관련 주식 기반 보상 비용 증가와 광고비 증가에 기인했다. 매출 증가와 신용손실충당금 감소가 이를 일부 상쇄했다. 조정 희석 주당순이익(EPS)은 IPO 이후 희석 주식 수가 증가함에 따라 소폭 감소했다.

사업 및 영업 실적

재등록률(Retention)은 등록 학생 수와 매출을 지지하는 핵심 요소로 유지되었다. 경영진은 가장 최근 코호트 비교에서 510베이시스포인트의 개선이 이루어져 온라인 검색 환경 변화로 인한 신규 등록 감소 압력을 상쇄하는 데 기여했다고 강조했다.

기업 제휴 등록 학생 수는 지속적으로 우수한 실적을 나타냈다. 피닉스 에듀케이션은 약 600개의 적극적으로 관리되는 기업 제휴처와 협력하고 있으며, 약 2,500개 기업의 학비 지원 제도를 통해 교육 프로그램을 제공하고 있다. 경영진은 전담 관리를 받는 계정이 비관리 계정에 비해 역사적으로 약 3배 높은 평균 침투율을 기록해 왔다고 밝혔다.

헬스케어 부문이 눈에 띄는 성장 원동력이었다. 헬스케어는 평균 총 학위과정 등록 학생 수의 약 3분의 1을 차지했으며, 2026 회계연도 전체 헬스케어 등록 학생 수는 약 13% 증가했다. 기업 제휴 채널 내 헬스케어 등록 학생 수는 약 20% 성장했다.

회사는 2021년 이후 가장 강력한 신규 프로그램 파이프라인을 계획하고 있다. 향후 18개월 동안 예정된 프로그램의 약 60%가 간호, 헬스케어 및 전문 경영 분야에 집중되어 있다. 피닉스 에듀케이션은 또한 형사사법 행정 분야에서 첫 3년제 학사과정을 개설했으며, 헬스케어, AI, IT 및 경영 전문 분야에서 추가 과정을 계획하고 있다.

경영진은 2026 회계연도 매 분기마다 리드(기망 학생) 대비 등록 전환율이 전년 동기 대비 개선되었다고 밝혔다. 회사는 등록 장벽을 줄이고 프로세스 초기 단계에서 기업 학비 지원 혜택을 식별하기 위해 AI 기반 도구와 맞춤형 아웃리치를 확대하고 있다.

피닉스 에듀케이션은 9월 30일 퓨얼50(Fuel50) 인수를 완료했다. 퓨얼50의 AI 기반 인력 지능(workforce intelligence) 플랫폼은 기업과의 관계를 강화하고 인력 역량 요구사항을 교육 및 커리어 개발 기회와 연결하는 것을 목표로 한다. 퓨얼50은 기존 브랜드로 운영을 지속할 예정이다.

11월 2일 이후 등록하는 신입생을 대상으로 요금체계가 개편되었다. 등록금과 교재·수업료(resource fees)는 이제 과목당 하나의 올인원(all-in) 가격으로 제시되며, 학생이 등록한 프로그램을 마칠 때까지 고정된다. 경영진은 이번 인상이 신입생에게만 적용되기 때문에 2027 회계연도 매출 기여도는 미미할 것이나, 향후 수년간 누적 효과가 더 커질 것으로 예상된다고 밝혔다.

경영진 가이던스

2027 회계연도에 대해 피닉스 에듀케이션은 다음과 같이 전망한다:

매출 전망은 전반적인 검색 환경이 4분기에 경험한 수준과 유사하게 유지될 것으로 가정하며, AI 관련 검색 트래픽의 의미 있는 회복은 가정하지 않는다. 경영진은 검색 환경 개선이 상방 요인이 될 수 있지만 가이던스에는 이러한 회복이 반영되어 있지 않다고 설명했다.

조정 EBITDA 전망은 예상보다 낮은 매출과 기업 관계, 학술 프로그램, 표적 학생 유치 및 전환에 대한 추가 투자를 반영한다. 이러한 압력은 대부분 인력 관련 비용 절감인 약 3,500만 달러의 비용 절감을 통해 부분적으로 상쇄될 것으로 예상된다. 조직 개편은 교수진을 제외한 전체 인력의 약 5%에 영향을 미쳤다.

경영진은 전년 동기 분기가 검색 혼란 이전이었기 때문에 2027 회계연도 1분기의 조정 EBITDA 전년 대비 비교가 가장 어려울 것으로 예상하고 있다. 비교 지표는 연중 시간이 지남에 따라 개선될 것으로 전망된다. 회사는 2027 회계연도를 전환기로 보고 있으며, 2028 회계연도에는 성장세로 돌아설 것으로 기대하고 있다.

리스크 및 주시해야 할 사항

• 온라인 검색에 대한 AI 통합은 2026 회계연도 2분기부터 특히 비기업 제휴 채널을 중심으로 웹사이트 노출도와 트래픽을 감소시켰다. 경영진은 지원 건수가 낮아진 기저 수준에서 안정을 찾았으나, 오가닉 SEO 트래픽의 유의미한 회복은 관측되지 않았다고 밝혔다.
• 매출의 3분의 2 이상이 이전 연도 학생 코호트에서 발생한다. 이는 가시성을 제공하지만, 신규 학생 등록 둔화가 장기간에 걸쳐 공시 매출에 영향을 줄 수 있음을 의미한다.
• 기업 제휴 학생들은 할인된 수강료로 등록한다. 이 채널이 포트폴리오에서 차지하는 비중이 커짐에 따라 다른 모든 조건이 동일하다면 학생당 매출에 지속적인 압박을 가할 수 있다.
• 기업 채널 투자는 유료 검색 광고에 비해 영업 및 등록 주기가 길다. 또한 학비 지원 일정으로 인해 신입생 입학이 다음 연도로 이월될 수도 있다.
• 퓨얼50은 2027 회계연도에 매출 기여를 할 것으로 예상되지만 의미 있는 조정 EBITDA 기여는 없을 것으로 보이며, 전략적 및 재무적 편익은 장기적 기회 요소로 서술되어 있다.

애널리스트 Q&A 주요 내용

경영진은 2분기 급격한 알고리즘 변화 이후 브랜드 검색을 통한 지원 건수가 전반적으로 안정적으로 유지되었다고 밝혔다. 비브랜드 유료 검색 효율성은 가을학기 등록 키워드 경쟁 심화로 7월에 악화되었으나 이후 수 주 동안 정상 범위로 회복되었다.

AI 생성 결과에서의 노출도를 개선하기 위해 피닉스 에듀케이션은 웹사이트, 제3자 연구, 동문 지지 및 소셜 플랫폼을 통해 근거 기반 주장을 배포하는 자체 프로세스를 구축했다. 회사는 인용량과 긍부정 정서를 측정하기 위해 10,000개 이상의 프롬프트를 추적하고 있다. 경영진은 초기 개선세를 발표했으나 AI 검색에 적응하는 것은 장기적인 과정이 될 것이라고 경고했다.

경영진은 기업 제휴 이니셔티브, 맞춤형 헬스케어 프로그램, 신규 학술 과정, 높아진 전환율이 탄력을 받으면서 2027 회계연도 전반에 걸쳐 등록 추세가 개선될 것으로 예상하고 있다. 다만 이러한 이니셔티브는 선제적 투자가 필요하며 공시 매출에 영향을 미치기까지 시간이 걸릴 것이다.

학생당 매출이 2027 회계연도 매출 감소의 주된 요인이 되지는 않을 것으로 보인다. 경영진은 이번 전망을 주로 등록 학생 수 문제로 규정했다. 할인된 기업 제휴 등록 비중이 늘어나는 점은 여전히 학생당 매출의 역풍으로 작용하고 있으며, 신입생 요금 인상 효과는 2028 회계연도와 2029 회계연도에 보다 본격화될 것으로 예상된다.

자본 배분과 관련해 경영진은 상대적으로 제한된 유통 주식 수 대비 주가가 저평가되어 있다는 시각의 균형을 맞추어야 하므로, 장내 주식 매입이 상당한 현금 사용처가 되지는 않을 것이라고 밝혔다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to Phoenix Education Partners Fourth Quarter and Fiscal Year 2026 Earnings Conference Call.

[Operator Instructions] I will now hand the conference over to Beth Coronelli, Vice President of Investor Relations. Please go ahead.

Elizabeth Coronelli

Welcome to the Phoenix Education Partners Fourth Quarter and Fiscal Year 2026 Earnings Conference Call. Speaking on today's call are Chris Lynne, our Chief Executive Officer; and Michael Cochran, Interim Chief Financial Officer and Senior Vice President, Corporate Development.

Before we begin, I would like to remind everyone that certain statements and projections of future results made in this presentation constitute forward-looking statements that are based on current market, competitive and regulatory expectations and are subject to risks and uncertainties that could cause actual results to vary materially. Listeners should not place undue reliance on such statements. We undertake no obligation to update publicly any forward-looking statements after this call. The risks related to these forward-looking statements are described in our filings with the SEC, including our annual report on Form 10-K filed today and other public filings.

We will also discuss certain non-GAAP financial measures. You should consider our non-GAAP results as supplements to and not in lieu of our GAAP results. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and SEC filings. Unless otherwise noted, comments on the call will focus on comparisons to the prior year period. We also direct you to the supplemental earnings slides provided on the Phoenix Education Partners website.

I'll now turn the call over to Chris.

Christopher Lynne

Thank you, Beth, and good afternoon, everyone. First, I want to introduce you to and thank Michael Cochran, our Interim Chief Financial Officer. Michael joined Phoenix Education Partners as Senior Vice President of Corporate Development. He came to us from Morgan Stanley and brings extensive capital markets experience and knowledge of our business, having worked closely with management in its return to the public markets. We have a comprehensive search underway for a permanent successor.

As we previously announced, Blair Westblom has left Phoenix Education to pursue other opportunities. Blair played an important role in the company's journey, including helping guide the university through its return to the public markets. We thank her for her contributions and wish her well in her next chapter. This month, the University of Phoenix is marking its 50th anniversary. For 5 decades, we focused on expanding access to higher education for working adults, helping them build the knowledge and skills to achieve their educational and career goals. That mission remains highly relevant today, particularly as technology and AI change how people learn and work.

The fourth quarter and full year fiscal 2026 reflected disciplined execution across our strategic priorities. We delivered modest growth in revenue and enrollment, supported by continued strength in retention and employer-affiliated enrollment with stronger adjusted EBITDA growth in the fourth quarter, while we continue to invest in the student experience, academic innovation, technology and AI.

Our multiyear gains in retention, including a 510 basis point improvement in our most recent cohort comparison, reflect sustained investment in personalized engagement, technology-enabled support, flexible learning pathways and skills aligned curriculum, helping students stay engaged and progress towards their goals. Employer-affiliated enrollment grew nearly 13% year-over-year in fiscal 2026, representing approximately 35% of average total degreed enrollment. We believe this sustained growth reflects the value of our skills-aligned curriculum, which enables working adults to develop and apply career-relevant knowledge while earning their degrees.

As we have discussed over the course of fiscal 2026, the integration of AI into online search is fundamentally changing how consumers discover and evaluate products and services, including higher education. During the second quarter, significant changes in search algorithms reduced visibility and traffic to our website, creating a headwind to enrollment, particularly in our nonemployer affiliated channel.

We believe the initial impact of these changes has stabilized, and we've been moving rapidly to adapt our marketing strategy to this evolving environment. Importantly, we believe AI-driven search represents a change beyond how prospective students find us. It is changing how they evaluate their educational options, placing greater emphasis on credible evidence-based information that demonstrates the value and differentiation of an institution. In response, we've substantially evolved our approach to digital marketing. We've structured our marketing organization and distribution to systematically create and distribute hundreds of evidence-based claims, demonstrating the university's differentiated value across the digital ecosystem.

Through our website, third-party validation, social media, alumni advocacy and other channels, we're working to ensure that the strength of our programs, student experience and outcomes are increasingly visible and reflected in AI-generated search results. While still early, we're seeing encouraging improvements in both citations and sentiment across thousands of AI search prompts that we track. We believe this approach positions us to compete more effectively as AI increasingly influences how prospective students research and select educational institutions.

It is also important to understand how these changes affect our financial performance over time. Our strong retention helped maintain modest growth in overall enrollment and revenue despite the pressure caused by the AI impact on search. However, these pressures that began in the second quarter of fiscal 2026 will have a more pronounced impact on the revenues in fiscal 2027 as those students will represent a larger portion of our total enrollment population. That's an important reason we view fiscal 2027 as a transition year.

We believe we're positioned to see improving enrollment trends as the year progresses. We've accelerated investments in four key growth areas: expanding our employer relationships, strengthening our academic portfolio, becoming more targeted in how we are reaching prospective students and increasing conversion of the meaningful traffic to our website. We expect these strategies to gain traction over the course of the year. While these enrollment improvements will take time to translate into reported revenue, we believe they position us to exit fiscal 2027 with improving enrollment momentum and a stronger foundation for returning to sustainable growth in line with the long-term expectations established when we went public.

In addition to continued retention gains, let me discuss further these four strategic priorities for growth. First, expanding employer-affiliated enrollment. This channel has become an increasingly important and differentiated driver of our growth, which has been driven by effective account management and deeper engagement with employers. Our active account management teams work with approximately 600 employer affiliates to communicate available education benefits, explain the value of our skills aligned curriculum, connect eligible employees with relevant programs and encourage participation.

Historically, accounts with dedicated management have achieved average penetration rates approximately 3x those of unmanaged accounts, underscoring the opportunity to drive additional enrollment within our existing relationships. Today, our programs are offered through tuition benefit programs for approximately 2,500 employers. We believe this success also reflects the differentiated value of our skills-aligned curriculum, which enables working adults to develop knowledge and skills they can apply on the job with every course they take, creating value for both employees and employers. We further strengthened that proposition by embedding applied AI skills throughout our curriculum. Together, these factors have helped drive sustained momentum in employer-affiliated enrollment, including the nearly 13% growth we delivered in fiscal 2026. We see a significant opportunity to continue expanding this channel. And as we navigate the disruption in online search, we're accelerating investments in this proven growth channel.

Second, accelerating the expansion of our academic portfolio. We have the strongest planned pipeline of new programs since 2021, focused on growth in high-demand offerings informed by student interests and changing needs of employers. This includes expanding in health care, which currently represents approximately 1/3 of our average total degreed enrollment as well as other high-demand fields within business, technology and AI. 60% of our new programs over the next 18 months are in nursing, health care and specialized areas of business. Included in our new program pipeline is our continued commitment to providing students with more efficient and affordable ways to earn their degrees, with expansion in numerous 3-year bachelor's degree pathways. We launched our first in criminal justice administration in September with encouraging early results, with additional pathways planned in health care, AI, IT and business specializations.

Third, we're becoming more targeted in how we reach prospective students. We're focusing on industries and programs where we see favorable growth dynamics, while broadening our acquisition approach beyond the channels most affected by changes in online search. This includes supplementing our broad-based institutional marketing with more targeted program-specific campaigns and direct channels to reach prospective students with a strong interest in specialized career relevant offerings. Health care-related programs have been particularly strong with enrollment increasing approximately 13% year-over-year.

And fourth, improving conversion. We are using technology and AI to personalize engagement, reduce friction and help prospective students identify educational pathways that fit their needs. We continue to see meaningful demand of our programs, and we've made significant progress in our ability to engage prospective students and convert that interest into registrations. In fact, our prospect-to-registration conversion rate improved year-over-year in every quarter of fiscal 2026.

To build on that progress, we're expanding personalized outreach and using AI-enabled tools to provide more timely and relevant support through the enrollment process. An example of this personalization includes our ability to help prospective students identify education benefits available through their employers earlier in the process, which increases conversion through the funnel. Additionally, our AI-enabled [ One Team Assistant ] provides our advisers with a comprehensive and proactive view of a prospect's enrollment status, helping an adviser to provide high-quality guidance more effectively, which supports increased conversions and lower enrollment costs. We believe these investments, together with our expanded academic portfolio and employer-supported business, will help strengthen new student enrollment as fiscal 2027 progresses.

AI is also reshaping the workplace, and employers continue to see value in higher education. Research from Lumina Foundation and Gallup found that 76% of U.S. employers said that a degree or credential will remain as important or become more important for getting a job at their organization. The research also found that nearly half of employers expect AI to make college degrees more important over the next 5 years.

We believe this reinforces the importance of domain knowledge and expertise in an AI-enabled workplace. Applying AI effectively requires critical thinking and judgment to evaluate information and apply it in meaningful ways. A college degree helps build that foundation, while ongoing upskilling and reskilling enable working adults to build on their experience and adapt as technology and employer needs evolve. Student feedback from recent University of Phoenix surveys provides further evidence of the value of career-relevant skills. 85% of recent University of Phoenix students surveyed reported developing skills immediately applicable to their careers, while 79% of students in our latest student survey expressed satisfaction with their confidence applying AI tools in real-world scenarios. During fiscal 2026, we integrated AI skill building modules into every course and expanded AI-enabled learning and support. We're also advancing our collaboration with OpenAI, expanding access to ChatGPT and supporting its practical application across the university.

We've begun working directly with OpenAI and our faculty to explore better ways to support students in using AI and enhance the learning experience. Our objective extends beyond teaching students to use AI tools. We're helping them develop the judgment, adaptability and practical capabilities to apply AI effectively as the workplace continues to evolve. We believe this strengthens our value proposition to employers as well as students. As companies navigate significant changes in the skills required for their workforces, we're focusing on helping working adults develop capabilities they can apply immediately while preparing for future career opportunities. Over time, we see an opportunity to become a more strategic partner to employers in workforce transformation, helping companies better understand their evolving skill needs and creating stronger connections between education, skills development and career advancement. That broader vision is an important part of the strategic rationale of our acquisition of Fuel50, which we've completed on September 30.

Fuel50, which will continue to operate under its own brand, is a pioneer in skills intelligence. Its AI-powered workforce intelligence platform helps employers understand workforce capabilities, anticipate evolving workforce needs and connect employees with development and career opportunities. We see Fuel50 as a strategic extension of our mission, positioning us further upstream in workforce development where employers are identifying the skills they need to compete and planning how to develop their talent. Over time, we believe Fuel50's capabilities can deepen our understanding of the evolving skills employers need from their employees, strengthen our employer relationships and provide valuable insights to inform the continued evolution of our academic offerings. Together, these capabilities support our longer-term vision of building stronger connections between the skills employers need and the educational and career opportunities working adults are seeking. We're excited to welcome the Fuel50 team and explore opportunities to create additional value together.

After nearly a decade without increasing tuition, we have updated pricing for new students enrolled on or after November 2. For these students, tuition and the resource fee will be presented as one transparent, all-in, per-course price under our locked-in pricing guarantee, with that price fixed through the completion of the students enrolled program. Access and affordability remains central to our mission. We focus on students' total cost and time required to earn a degree, including tuition transparency, accelerated pathways and eligible transfer and prior learning credits. In fiscal 2026, our bachelor's degree graduates had an average of more than 40 transfer credits, along with additional credits for prior learning applied toward their degrees. For each graduate, that represents more than 13 courses, an estimated 16 months of coursework saved and more than $17,000 in estimated tuition savings.

We're also aligning our cost structure with our evolving business, creating capacity to continue investing in our strategic priorities. Following a voluntary separation program in early fiscal 2027, we made additional organization changes. Approximately 5% of our workforce, excluding faculty, was impacted. We approach these decisions carefully, prioritizing capabilities most important to our students and our long-term strategy.

Before I close, I'd like to welcome Michael Weston from Apollo to the Phoenix Education Partners Board of Directors. He brings extensive financial and industry experience, and we look forward to the valuable perspective and contributions he will bring to the Board. 50 years after our founding, the environment around us continues to evolve, but our mission remains unchanged. While the financial impact of the fiscal 2026 search disruption will continue to be reflected in our fiscal 2027 results, we believe the investments we're making in channels with proven historical performance and the underlying strength of our business will drive improving enrollment trends as the year progresses and position us to return to growth in fiscal 2028. We're focused on strengthening student outcomes, diversifying how we reach and serve working adults, deepening employer-affiliated relationships, aligning our academic offerings with workforce needs and maintaining financial discipline.

I'll now turn it over to Michael Cochran.

Michael Cochran

Thank you, Chris. Good afternoon, everybody. I'm pleased to be serving as Interim CFO and to take you through our fourth quarter and full year financial results, balance sheet and capital allocation as well as our fiscal 2027 outlook. But before I do that, I want to take a moment to thank our incredibly strong finance team for all their support during this transition.

Turning to our results. For the fourth quarter, net revenue was $260.7 million compared with $257.4 million in the prior year period, an increase of 1.3%. Average total degreed enrollment increased 2.8% to 81,500 students compared to 79,300 in the prior year period. This growth was supported by continued strength in retention, which helped offset the AI search-related impact on our enrollment. Employer-affiliated enrollment represented 36% of average total degreed enrollment for the quarter, up 270 basis points versus the prior year period.

Net income attributable to Phoenix Education Partners was $23.5 million, or $0.60 per diluted share compared with $17.5 million, or $0.46 per diluted share in the prior year period. The increase was primarily due to higher net revenue, lower provision for credit losses and lower strategic alternatives, restructuring and other expenses, partially offset by higher share-based compensation associated with our IPO. Adjusted EBITDA increased 8.6% to $61.5 million compared with $56.6 million in the prior year period. Our adjusted EBITDA margin increased to 23.6%, up from 22% in the prior year period, reflecting continued expense discipline and lower provision for credit losses.

Lastly, adjusted diluted earnings per share was $1.07 compared with $1.03 in the prior year period. For the full year, net revenue increased 1% to $1.017 billion compared with $1.007 billion in the fiscal 2025. Average total degreed enrollment increased approximately 2.2% to 83,700 students compared with 81,900 in fiscal 2025. Net income attributable to Phoenix Education Partners was $88.9 million, or $2.29 per diluted share compared with $133.9 million, or $3.51 per diluted share in fiscal 2025. The decrease was primarily due to higher share-based compensation associated with our IPO as well as increased advertising expense, partially offset by higher net revenue and lower provision for credit losses. Adjusted EBITDA increased 2.1% to $249 million compared with $243.9 million in the prior year. Our adjusted EBITDA margin increased to 24.5% from 24.2% in the prior year. Lastly, adjusted diluted earnings per share was $4.47 compared with $4.50. The decrease was driven by the increase in diluted shares primarily as a result of the IPO.

Turning to the balance sheet. We ended fiscal 2026 with $331.7 million of cash, restricted cash, and marketable securities and no outstanding debt, and we generated $196.3 million of cash flow from operating activities. Our strong balance sheet and free cash flow generation remain a fundamental strength of our business, enabling us to invest in student outcomes in the core business, evaluate strategic M&A opportunities and return capital to shareholders, all while maintaining our strong financial responsibility standing with the Department of Education.

During the year, we returned $32.7 million of capital, including $7.1 million via repurchases of our common stock and $25.6 million in dividends. We continue to reassess our capital return strategy in light of our significant free cash flow generation and are pleased to announce that our Board of Directors has approved a 10% increase to our quarterly cash dividend to $0.23 per share. Lastly, we continue to build out our M&A pipeline. Following year-end, we closed our acquisition of Fuel50 on September 30 and funded that transaction using cash on hand. Fuel50's operating results will be included in our consolidated results from that point going forward.

Turning now to the fiscal 2027 outlook. It's important to first stress that over 2/3 of our revenues come from prior year's student cohorts, which provides us a high degree of visibility into our outlook. We expect net revenue to be in the range of $0.970 billion to $1 billion and adjusted EBITDA to be in the range of $225 million to $240 million. As Chris mentioned, our revenue outlook primarily reflects the flow-through impact of AI search on enrollment since Q2. Out of prudence, we also assumed broader search conditions consistent with those experienced in Q4. Should those conditions improve, we see a potential path to improved results.

Helping to offset this headwind is continued strong retention progression, the impact of our recently enacted price increase, and the benefit of our strategic growth initiatives, which will become more pronounced as the year goes on. Our adjusted EBITDA guidance reflects the flow-through impact of the lower revenue outlook and expanded investment behind our key strategic growth priorities, offset by approximately $35 million of cost-based savings that were implemented to better align our expense base with our current operating environment, the majority of which were workforce related. Lastly, this outlook includes 11 months of results from Fuel50, which is expected to contribute approximately $10 million to revenue and is not expected to have a material contribution to our adjusted EBITDA.

While we don't provide quarterly guidance, we expect the first quarter to have the most challenging year-over-year adjusted EBITDA comparison as Q1 fiscal 2026 preceded the search disruption that began in the second quarter. We expect comparisons to improve as the year progresses, supported by the increasing benefit of our strategic initiatives as well as our cost actions. As Chris discussed, we view fiscal 2027 as an important transition year as we adapt to the changes in online search and accelerate the investments we've been making in our broader growth strategy. While the financial impact of the fiscal 2026 search disruption will continue to be reflected in our fiscal 2027 results, we expect to return to growth in fiscal 2028 and our long-term growth expectations communicated at the time of the IPO remain unchanged.

The fundamentals of our business remain strong. We believe the strength of our programs and the value of our degrees will ultimately be an advantage in a world where students are making highly informed evidence-based decisions. Employer-supported enrollment continues to show strong momentum. Our recently implemented price increase will see a compounding benefit to revenues as new cohorts matriculate over the next few years. Retention and conversion continue to improve. Our academic portfolio is creating new opportunities to serve working adults and the operating leverage we've developed through our technology and AI investments is helping us fund these priorities while still maintaining financial discipline. We believe these factors taken together lay the foundation for us to emerge from this transition with a more diversified growth model, a stronger operating platform and return to delivering sustainable growth over the long term.

With that, I'll ask the operator to begin the question-and-answer session.

Operator

[Operator Instructions] Your first question comes from the line of George Tong with Goldman Sachs.

질의응답

Keen Fai Tong

You're assuming search conditions remain consistent with 4Q in the fiscal '27 guidance and you see potential upside if conditions improve. Can you talk a little bit more about what you're seeing today that gives you confidence that the AI search headwind has stabilized rather than continuing to deteriorate?

Christopher Lynne

George, it's Chris. Thanks for that question. Yes. So just to bring you back to fiscal '26 and as we discussed in our opening remarks, we saw an algorithm shift in Q2 that was precipitous and quick and it reset a baseline in terms of the volume we were getting from our branded channels, which is search on our brand, SEO and direct type into our website.

What we've seen since is essentially a stabilization in that reset baseline for all the quarters all the way through today in our branded channels. And the best measure of that is really applications. There's a little bit of noise in terms of traffic to our site for obvious reasons. But our applications have been stable through today. So that's the context for that. The other thing worth mentioning is in Q4, we did see in our nonbrand search, so that is when we pay for keywords that align to our programs that are not associated with our brand, that channel was very strong throughout most of fiscal '26.

In fact, it was more efficient than the previous year, and it was growing even after Q2 had that algorithm shift with Google. However, in July, we saw efficiencies plummet going into the fall class. And we believe that was a result of some anomalies, but mainly a lot of competition bidding up terms ahead of the fall class. So that was another area that we saw some unusual activity. This is actually something that happened really after our last earnings call, by the way. But we've seen that come back in line to normal range of efficiencies pretty quickly, and it's been maintained there for the recent several weeks. And that, over time, has been a pretty predictable channel. o we think that what happened in July was unusual.

So coupling those two areas, I think that would characterize what we refer to as search. But I do want to separate the two because really, it's those branded channels that we've been talking about over the last several quarters. They've been relatively stable. And so we're assuming that stabilization will continue through the remainder of the year in our outlook. But it's also worth mentioning, we're not assuming any meaningful recovery in our outlook, which if we do see that recovery, as you said, that would be upside.

Keen Fai Tong

And related to that, you expect enrollment trends to improve as fiscal 2027 progresses, even assuming current search conditions persist. What specifically needs to happen to drive that enrollment inflection during the year?

Christopher Lynne

Yes. Thanks for that question, too. So when we are referring to enrollment trends, what we've been doing is really twofold. So we've talked about search, and it's important to note that we made pretty significant changes to how we operate in this new AI-enabled environment. So we think we're very well positioned with search, and we're seeing stability, but also a level of efficiency that can support our outlook as we look forward. But it's more the diversification into channels that have been proven over time. These are channels that require a little more investment upfront and have a longer cycle time to when they start to bear fruit, most notably B2B.

So we've expanded in many ways into B2B into more direct relationships with B2B, expanding programs in targeted verticals like health care, where we're seeing very healthy growth. And that is something that we expect to build throughout the year. For B2B, it's just worth noting that there is seasonality there because the tuition assistance programs for most companies follows a calendar year time frame. So as you build your pipeline of registrations and enrollments, they really don't start to matriculate when they're new until the next calendar year when they can get the full benefit because the benefits are associated with how many courses they take over a calendar year. We're also rolling out new programs. That program pipeline is going to be rolled out throughout the year. And then we expect the continuing improvement in conversion from prospect to registration in our funnel. As I mentioned in my remarks, we've seen improvement every quarter of the previous year. And with AI and technology, we're expecting to see continued improvement throughout the year.

Operator

Your next question comes from the line of Jeff Silber with BMO Capital Markets.

Jeffrey Silber

Going back to the quarter that you just reported, if I look at revenues per average degreed enrollment, it did go down. I know it tends to be a little bit lumpy. But was there any specific reason that it was down? And what are the implications in terms of your guidance for next year for revenue per enrollment?

Michael Cochran

Yes. Thanks. This is Michael. I'll take that. So probably not surprisingly, the biggest contributor to that, which has been the case for a number of quarters and you will expect to be the case going forward, is B2B. These are students who are coming in at a discount to the full rate. I'd say it's slightly offset this quarter by improved progression. But those are really the biggest dynamics that go into this. And again, just given higher growth of B2B channel over time, that's going to become a bigger proportion of our portfolio. So that trend would generally keep all else equal as well, and that's part of the guidance as well.

Jeffrey Silber

And I'm sorry, in terms of revenue per enrollment in fiscal '27, what's the impact of the tuition increase?

Michael Cochran

Sorry. For the tuition increase, so important to note, this only applies to new students, right? So the benefit of that increase really is not particularly material this year. But each year, it builds on itself. So next year, it's going to be more material. The following year, it's going to compound even further. So as far as the actual contribution in fiscal '27, it's not a material element.

Jeffrey Silber

And then I'm sorry, just going back to the fourth quarter. You did see accelerated growth in average total degreed enrollment. Were there any specific programs or degree types that really were behind that?

Christopher Lynne

Yes. I'd have to go back and look at the acceleration, but I am familiar with where our programs are growing. Well, overall, we're seeing growth across our B2B programs. I think that's worth noting. I think it's also the best indication of where there is strength in the portfolio, even in areas that we think we can capture more strength in our B2C portfolio because we're getting a better indication of where value is for both employers and our students.

With that said, health care is growing at a very strong rate. Health care is about 1/3 of our B2B enrollment. It's growing within B2B at about 20%. And overall, for all of our programs for the year, it was up 13%. I'm not sure exactly where it landed in Q4. And then we see pockets of strength in specialized programs throughout. We have a pretty wide range of programs. So it really -- you have to get to a more granular level to see where the strengths and weaknesses in the portfolio are. So we're seeing a spattering of strength in other areas as well where there's high demand.

Operator

Your next question comes from the line of Greg Parrish with Morgan Stanley.

Gregory Parrish

Maybe just where is this LLM shift -- where is it driving customers, right? We've seen in other places, mom-and-pops, local players being an early beneficiary. What does it mean for you, right? Is it liberal arts or state colleges that might have an online course or student aid that without AI, it might have been more difficult to find. I'm just throwing something against the wall. But maybe just help us understand like where the net volume is going if it's right now, it's just taking away from you.

Christopher Lynne

That's a great question. I'd be speculating a little bit here in terms of where the net volume is going. When we look at our experience, one thing is we're coming from a history of a channel that has been extremely strong for us. One of the unique strengths that we have is our brand is very strong. That, coupled with a history of very data-driven, sophisticated digital marketing has created an extremely efficient channel. So when you look at the disruption, that efficient channel remains a strong channel for us, but we see a drop against our history. But I think our history in some ways, is unique to others who maybe don't have as big a brand.

When we look at what's happening, I would speculate that there is some element right now that we're creating demand in the marketplace. And then that demand is -- not only are they going to a new experience, but a lot of their experience of learning about what they want to pursue with their degrees is now captured in that AI mode outside of the university. And so that gives them an opportunity to evaluate other programs at other schools. And I think that's part of what we're experiencing is that, yes, they may be selecting other options. We think there's some evidence that they may be taking longer in their selection process. But I'd be speculating further if I told you where I think that demand is ultimately going.

Gregory Parrish

I know it's tough evolving market at the moment. But maybe just to stay here for a second. How do you really alter how you're showing up in LLM? I'm sure you've been testing various strategies. I don't know if you've had any early success. And what can really drive the needle in how you're showing up?

Christopher Lynne

Yes. Thank you for asking that question. We've actually done a considerable amount of work here and have built quite a bit of confidence of how this will work going forward and have even demonstrated to ourselves through our process that we can move the needle. When I talk about reorganizing marketing and our distribution, this is pretty transformational.

In this new world we're in, every area in your organization has to rethink the world in terms of how LLMs work and how to optimize. And basically, first and foremost, you have to have a value proposition that you want to show up in this new AI mode. We have hundreds and hundreds of evidence-backed claims that we need to get out in the digital universe. We created something that we internally call our evidence factory, but that's really pushing that evidence through a series of mechanisms, either our website, third-party studies, alumni advocacy, social networks, like the whole spectrum and pushing it through in a way that we've built pretty sophisticated ability to track prompts. When I say track prompts, we track over 10,000 prompts that relate to all of the types of prompting that associates with students that may have interest in our programs. And we can see how often we show up in citation volume, we can see the sentiment as we push those evidence-based claims through that process.

So we've been speeding up our ability to put the throughput through that process. We have numerous examples. One of the recent ones was a HarrisX study that had very favorable results where 98% of employers that had -- that employed Phoenix graduates were satisfied with their performance. And there was a lot of other really promising or positive data for our students. So we move that through that ecosystem, and we were able to see that citation show up more and more when there were promptings around employer reputation or how do employers view the degree, which we had some sentiment challenges there from opinion sites from a decade or older that we're working through.

So we're seeing measurable improvement. We've also seen, for example, that claim in channels that we can measure direct attribution back into our system has improved volume and conversion. So that's just one claim. We have hundreds. And so that's going to be a big part of our story going forward is really activating this ecosystem that we've built, and we are quite confident that we can make an impact. Now we're also confident that it's likely to be a long journey, which is why we're not building into the outlook that we provided any rapid recovery in the AI search environment.

Operator

Your next question comes from the line of Jasper Bibb with Truist Securities.

Jasper Bibb

Just thinking through the fiscal '27 guidance, it sounds like the issue has been more new starts because of this AI transition. Could you just frame for us what you're seeing on new starts right now? How much might those be down? And what are you assuming in your guidance?

Christopher Lynne

Yes. I'll take that. Michael may want to add to this. So we've seen an impact -- a negative impact on new starts really in the B2C channel. I think it is worth noting that the B2B channel, given it's got a resistance to AI search, we did see new student growth even after the AI search algorithm change. But we're seeing that impact in new starts heavily through this quarter. It's worth noting that prior to this algorithm shift, we had a very strong quarter, both for B2B and B2C in terms of new student enrollment in the prior Q1. So that's what we're seeing in terms of trends through today. And then as we look forward, it's going to take some time to build back the growth throughout the year, primarily due to some of the timing of our newer initiatives.

One thing that's worth -- I mentioned B2B, it's going to start to kick in more in the calendar year associated with the programs and how we're rolling new students out. It is worth mentioning that one positive of having had this disruption that I see is a channel like B2B has been incredibly successful for us. But when you weigh putting resources into an extremely efficient search channel, which was a pretty large percentage of our acquisition channel over time, where you have a very quick cycle time, a very predictable efficiency and unit acquisition cost, it's always been a little bit challenging leaning in heavily into B2B that has a longer cycle time and ramp-up. And so the situation has actually forced that, which I think is going to be -- turn out to be a real strength over time for us.

Jasper Bibb

And then just wanted to follow up on Jeff's question about revenue per student in '27. I understand the more recent pricing adjustment won't be material. But I guess more broadly, as you think about the revenue decline implied in guidance, how much is in enrollment versus revenue per student?

Michael Cochran

Yes, it's a good question. Thanks. I would expect the revenue per student is not going to be the material driver of that. It really is more of an enrollment story. So there's not a whole lot more than that. It's going to be more or less a continuation of the same trends that we've been experiencing for the last few quarters.

Christopher Lynne

It will be more relevant earlier in fiscal '28 and then again in fiscal '29 due to the compounding build of pricing changes.

Jasper Bibb

Okay. If I could sneak one more in. I just want to ask how much revenue and EBITDA you're assuming in your guidance from Fuel50?

Michael Cochran

Yes. So I think as we said in the prepared remarks, we're assuming 11 months of contribution, $10 million of revenue for Fuel50 and no material contribution on the bottom line.

Operator

Your next question comes from the line of Jack Slevin with Jefferies.

Jack Slevin

Maybe to just expand a little on that last point on Fuel50. I appreciate what you've got in the year, but maybe just looking for a little bit of color on what some of the actions you might take as that gets integrated to realize some earnings contribution from that going forward? Or what are the bigger levers you're looking at trying to pull over the next 2 to 3 years to grow that business and to get some synergies with the core?

Christopher Lynne

Yes. Thank you. This is Chris. I'll take that question. Yes, Fuel50 was an opportunity that we're really excited about that is very consistent with the vision that we're pursuing at the university, which is frankly, longer term in nature that we've been making nice progress with. We've built a differentiated curriculum that we believe is providing students with skills that are relevant in the workplace today.

Our survey data shows it. We think the growth that we're seeing with our employers demonstrates the value of our skills-aligned curriculum. But we really want to complete that loop and create a true skills-to-opportunity ecosystem because our vision is to be a partner to our student through the life of their career. And we've made a lot of progress there, but we see Fuel50 as an opportunity to move upstream, build deeper, more strategic relationships, which we've been pursuing for years with employers so that we can be -- have our finger on the pulse of how skills are changing, especially given the speed at which they are changing in the workforce. And so we see Fuel50 as an opportunity to build more strategic solutions end-to-end over time and to build that type of relationship with employers over time.

As far as what's right in front of us, our focus is, first and foremost, to help Fuel50 continue to accelerate its efforts in becoming a workforce transformation partner. They've built a great product, but there's work to be done for them to continue to build momentum in the market. And we know that when we have more strategic relationships with employers, which we will pursue, that we naturally get an expansion in our core product, which is our degree programs under tuition assistance program. So we think that synergy opportunity is available to us nearer term. And then longer term, we're looking to really connect that skills-to-opportunity ecosystem together. So I look at this as a long-term investment that we're excited about, and we hope to share some of these early milestone gains over the year.

Jack Slevin

And then maybe just to follow-up. Appreciate the color on the buyback authorization and some of what you've used up thus far. Is there any way to think about scenarios of how you might try to pace utilization of that authorization, just looking at the cash on the balance sheet and the current share price. I'm trying to get an understanding of how to think about that.

Michael Cochran

Yes, sure. Good question. I'll take that. So look, I think in the broader context of capital allocation, that's one of multiple pieces. I think to your specific question around the buybacks, look, if you're asking us, I think we would love to buy back our shares at this price. I think we all agree, at least on our side that we are undervalued. We have to balance that, though, with the reality that we have a fairly limited float that we're not trying to have an impact on. And so there's always a little bit of a give and take there. It's a consideration, but I wouldn't expect buybacks in the open market to be a material use of our cash here going forward.

Operator

Your next question comes from the line of Griffin Boss with B. Riley.

Griffin Boss

I just wanted to jump back to the price increases. So when you're looking at '27 and you take out the contribution of Fuel50 top line expected to grow between 3% and 6%. Obviously, as you've mentioned multiple times, the majority of that is driven by these AI search headwinds. But is there anything baked into that guidance for increased churn or lower enrollment growth due to these price increases? And then on that same page, are you seeing any -- or expect any pushback from employers in the B2B channel despite the fact that those carry some tuition discounts related to these increases?

Christopher Lynne

Yes. I want to make sure we understood some of the assumptions that you stated at the beginning. But in terms of the impact of pricing on churn or any risk in terms of putting a pricing increase into the market, we conducted a very thorough elasticity study to make sure we understood what the market would withstand. We knew pricing was elastic. It validated that. It also validated that working learners care very much about transparency and predictability of prices.

And so we feel comfortable with what we put forward and some indication of that it has gone well because the price increase went into effect actually this week. But notifications went into effect over a month ago, and we didn't get any real concerns or pushback from any of our constituents, including employers. I think you asked about employers. For some of our best programs, those that benefit from those programs are actually pretty shielded from the price increase. And some of the programs, they may take on a little bit of a price increase. But overall, it really didn't have a big impact on their employees. So we didn't hear much from employers about it as well.

Operator

Your next question comes from the line of Rob Sanderson with Loop Capital Markets.

Robert Sanderson

I've got two questions, please. Maybe just want to go back to the dead horse on the traffic funnel first. But we've been hearing a lot through [ Internetland ], pretty meaningful disruption in organic SEO traffic. You mentioned in your answer to George earlier, it seemed like more of a focus on paid keywords. So question is really, is this mostly an SEO disruption? Or is it more on paid marketing channels? And then on the paid marketing side, is this really -- how much of this do you think is because advertising on Google's AI mode is just very new and your teams will have to ramp up competency and Google's ad products are still pretty nascent and are going to get better, something that should probably improve through the new year. So question one, SEO versus SEM, and then I'll come back for a follow-up.

Christopher Lynne

Okay. Yes. Thanks, Rob. And thanks for letting me clarify some of that. So when we talk about branded channels for us, that includes SEO. It also includes the paid branded search with Google primarily. And it also includes those that come directly to our website. So when we talked about stabilization in what we're seeing, we're really looking at the combination of those 3.

In terms of SEO, that has been disrupted. We haven't seen a big recovery in SEO. It wasn't a significant percentage of our overall volume, but I think SEO disruption is here to stay for most enterprises in this new world of AI search. The more meaningful portion of that is the paid search on our brand, which is historically and still remains an efficient source for us. So you are paying for that, but you pay a lot less. And so we look at that as branded because it's had a very similar dynamic to those other channels historically.

So that was what I was talking about in terms of branded. I think you caught what I was talking about nonbrand when we had this anomaly in July because nonbrand, which is the rest of paid search, that's not our brand. That's been a pretty efficient channel for us most of fiscal '26, but we did have a disruption in Q4 and the beginning of Q1 there. And those efficiency levels have come back into normal ranges as of the last several weeks. So it feels like it was more of a blip, but something we're looking at carefully.

In terms of the other side of your question, look, we think we're early days in AI search. So we could all speculate I think where Google would likely go would be to find monetization models that have similarities to old monetization models, but in a new environment. So any kind of paid search models associated with AI search, we would look forward to that because we have a history of a lot of strength in being able to optimize channels like that and take advantage of a lot of the strengths we have with our brand and our value propositions. I also would anticipate at some point that the organic aspects of AI search are going to start to be easier to attribute than they are today. But I'd be speculating like anyone else about what that's going to look like in the future.

Robert Sanderson

And then a second question. Just I wanted to talk a little -- or ask a bit about AI-related demand from enterprise channels. There appears to be tremendous interest. There's a very high recognition of need. There's a belief that it's strategically important. But it seems like still a lot less actual activity. So I wanted to get your thoughts, Chris, like what do you think the binding constraints on growing this opportunity faster? Is it really curriculum? Is it lack of funding or focus by corporate programs, the calendar year flip you mentioned, and just simply breaking inertia? Or what are the binding constraints? And what can you do to smooth some of that?

Christopher Lynne

Rob, I want to make sure I understand your question. Are you talking about demand for employers for AI skills or...

Robert Sanderson

Yes. Reskilling of employees to meet the changing environment. Like that's something that we survey recruiters and HR departments about. And it seems like this should be -- this is an opportunity you're going after. So I just wanted to get your thoughts on maybe what are the friction points to make this move faster?

Christopher Lynne

Well, it's interesting. We've done an Optimism survey for -- I think we're in our sixth year. And every year, you see a disparity between perceptions of workers and perception of employers. And what we learned in the last one is that workers are frankly upskilling themselves. So a lot of employers think that they're focused on reskilling and upskilling their employees. But in this new world of AI, some of the data we see is that employees are really taking the bull by the horns right now. And employers, to your point, they're all over the place. And I'm not by any means an expert here. You may know more from the surveys that you have. But I think employers are trying to figure out where they go.

All employers are similar now. We're going through our own internal transformation, which requires a lot of upskilling. And it's all about picking priorities and really picking areas of the organization where you can see the return on helping your employees move through that upskilling process. So what we're seeing is our students are getting a lot of value from AI. We know employers need that value. But to your point, I think we need to find our spots in terms of being a better partner to employers. And that has a lot to do with who are the willing buyers within employer organizations. And we still see a lot of different needs across employers, but they're not always consistent. It just depends on what the need is at any specific employer.

Now with that said, you're seeing C-suite leaders are very focused on the need to transform their entire workforce. I'm sure if you're doing any survey data with HR leaders, they're feeling a pressure like never before in terms of transforming the workforce and a lot of that is the reskilling required by AI. I know Fuel50, their conversations are all about workforce transformation. That's where the demand is, where the interest is. But to your point, I think companies are trying to figure this out.

And not to be anecdotal, but I've seen examples where companies do invest, for example, on large reskilling initiatives. But we're so early in this process that one of the examples, I can't disclose it because it's confidential, but a large reskilling initiative across tens of thousands of employees resulted in token costs going through the roof. And it stalled the entire transformation because they had to rein in their token cost. So I think those types of learnings are occurring in enterprises. And the good news for us is I think we're closer to those conversations. But to your point, we've got to find the right pathways to make sure that we can scale our solutions for employers.

Operator

There are no further questions at this time. I will now turn the call back to Chris Lynne for closing remarks.

Christopher Lynne

Thank you, operator, and thank you, everyone, for your questions and joining us today. As we begin fiscal 2027, we believe that we have a clear set of priorities and a strong financial foundation that gives us the flexibility to continue investing in our students and advancing our strategic priorities. I want to thank our faculty and employees for everything they do to support our students and thank our students, alumni, employer partners and shareholders for their continued support. We look forward to updating you in the next quarter. Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.