Perdoceo Education Stock

Perdoceo Education Corporation (Perdoceo) provides a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs.

The company’s academic institutions – Colorado Technical University (‘CTU’) and the American InterContinental University System (‘AIUS’ or ‘AIU System’) – provide degree programs from the associate through doctoral level, as well as non-degree seeking and professional development programs. The company’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. Perdoceo's institutions are committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

Through the company’s two accredited academic institutions, the company offers a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The company pursues a student-first mindset in its efforts to provide student support throughout the academic life cycle, from enrollment and orientation through ongoing coaching and learning leading up to graduation, which enhances overall student learning experiences and academic outcomes. The company is committed to investing in its academic institutions and student support technology, which enables its student support teams to provide customized service that contributes to positive student experiences. The company is continuing to expand the use of artificial intelligence (‘AI’) and machine learning to additional areas of the student academic life cycle. The company’s technology innovations provide students with tools that enable them to focus on educational content in a manner that is best suited to their personal learning style.

Segments

CTU

CTU is committed to providing quality and industry-relevant higher education to a diverse student population through innovative technology and experienced faculty, enabling the pursuit of personal and professional goals. CTU is focused on serving adult, non-traditional students seeking career advancement, as well as addressing employer’s needs for a well-educated workforce. CTU offers academic programs in the career-oriented disciplines of business and management, nursing, healthcare management, computer science, engineering, information systems and technology, project management, cybersecurity and criminal justice. Additionally, CTU also offers non-degree and professional development programs.

AIUS

AIUS is committed to providing quality and accessible higher education opportunities for a diverse student population, including adult and other non-traditional learners and the military community. AIUS places emphasis on the educational, professional and personal growth of each student. AIUS offers academic programs in the career-oriented disciplines of business studies, information technologies, education, health sciences and criminal justice. AIUS also provides non-degree and professional development programs.

AIUS is consisted of three universities: the American InterContinental University (‘AIU’), Trident University International (‘Trident’ or ‘TUI’) and California Southern University (‘CalSouthern’). The AIUS structure provides a framework for all three universities to continue to serve their unique student populations while benefitting from one university system. Although all universities operate under a shared governance structure and have a common mission, the system structure allows each to retain its name and customize its programs and instructional and student service models to the needs of its unique student populations.

Student Enrollments Statistics

Total student enrollments as of December 31, 2023 were approximately 34,500 students, with approximately 97% enrolled in the company’s institutions’ fully-online academic programs for the year ended December 31, 2023. Substantially all of the students attending the company’s institutions reside within the United States of America.

Strategic Priorities

The key elements of the company’s strategy are to enhance academic outcomes; improve academic quality and integrity; comply with regulations; optimize student enrollment processes; enhance student retention and engagement; use technology as a differentiator; leverage efficient and effective scalable shared services to support organic growth at the company’s universities and as a key enabler for inorganic growth strategies; and invest in student-serving processes that support the company’s overall academic operations.

Marketing, Student Recruitment and the Student Enrollment Process

The company’s academic institutions seek motivated students with both the desire and ability to complete their academic programs of choice. To promote interest among potential students, the company’s institutions develop and engage in a variety of marketing activities which build awareness of the company’s institutions among prospective students. The company’s marketing programs are designed to focus on enrolling students who will be more likely to succeed at one of the company’s academic institutions and eventually complete their degree of choice.

Perdoceo primarily serves a non-traditional and diverse student population, including adult learners. The company’s students have a broad range of educational and employment experiences which contributes to their college-level readiness. Each of the company’s universities has an admissions function responsible for interacting with prospective students interested in applying to an institution after they have expressed interest in learning more about the company’s academic institutions and programs. Generally, to be qualified for admission to one of the company’s universities, an applicant must have received a high school diploma or a recognized equivalent, such as a General Education Development certificate. Some of the company’s programs may also require applicants to meet specific program admissions requirements.

The company uses data analytics to help it identifies and focuses on prospective students who are more likely to succeed at one of the company’s universities. The company’s prospective student outreach process uses technology to provide a more customized approach to enable the company to more effectively provide prospective students with relevant information to help them make more informed academic decisions.

One of the company’s technology initiatives over the last few years to expand the use of AI and machine learning throughout the academic life cycle is AI-based virtual assistant ‘chatbots’ that the company has named Lucy at AIUS and Rosie at CTU. Both Lucy and Rosie have streamlined the process for prospective students who want to learn about the company’s institutions and can address a majority of their questions while continuing to learn from their interactions. If these chatbots are unable to address a question, the prospective student is referred to the company’s admissions personnel for additional assistance.

The company’s technology enhancements enable its admissions staff to customize their prospective student outreach and engagement strategies based on students’ prior educational experience, degree and areas of program interest, thus providing a more meaningful and relevant interaction with the prospective student. Prospective students have an improved overall experience in communications with the company’s admissions personnel due to these enhancements.

Admissions advisors serve as one of the prospective students’ primary contacts, providing information to help them make informed enrollment decisions and assisting them with the completion of the enrollment process. The admissions advisors also have a responsibility to provide guidance and support through the enrollment application process and student orientation, as well as assist each student as they transition into their first class.

Once a decision has been made to enroll at one of the company’s academic institutions, the financial aid team works with the prospective student, providing them with necessary information, including about various loans and grants available to finance their education. The focus is on getting these students financially prepared for school in a timely manner so that they can focus on their academic activities.

Every enrolled student is offered an orientation that is designed to prepare them to begin classes at the company’s institutions. This orientation process also provides the opportunity for students to understand the company’s academic and support services. Completion of these activities better prepares a student to make an informed decision about pursuing their education as well as allows them to be more successful as it simulates their classroom experience both online and in a campus-based environment. Completion of orientation does not financially obligate students, nor does it require students to continue their education with the university.

Additionally, first-time students who attend online programs at the company’s universities and do not want to continue have 21 days after the start of their program to notify the university of their intention to withdraw. Students who notify and withdraw from the university within 21 days will not be responsible for any tuition-related expenses and are refunded any amounts they have paid in tuition and other institutional fees.

Employer Supported Students

The company’s universities have focused on strategic engagement with certain employers that support their workforces through education benefits, such as tuition assistance programs. During 2023, both academic institutions continued to focus on and invest in engaging these students. The company expects this continued engagement to result in new student interest through increased awareness of its institutions for the employees of these employers. Engaging with these employers provides the company with an opportunity to connect with and educate a population of students the company would otherwise not likely have access to. Students who attend the company’s institutions from these employers are awarded grants from the applicable university to partially offset their tuition costs, the amount of which can vary and depend on the employer’s approach to supporting the educational pursuits of its workforce. Although the amount paid by these students results in lower revenue per student due to the grants awarded from the applicable university, the recruiting, marketing and support costs associated with these students are lower as well and many of these students are able to graduate from their chosen program of study with little or no debt. Further, these students are more likely to start class and tend to be more persistent in their pursuit of long-term learning, which will result in higher life-time value per student. As of December 31, 2023, approximately 32.0% and 7.1% of total student enrollments at CTU and AIUS, respectively, attend due to these employer sponsored engagements.

Student Retention and Academic Outcomes

The company’s institutions focus on improving student retention and enhancing academic outcomes. Investments in student serving processes, including the use of technology, is a key focus to support these efforts. The company’s faculty and student advisors provide frequent assistance and feedback to students during their course of academic study. The company supports increased communication between the company’s faculty and students by providing faculty with various technology enablers, such as a two-way messaging platform and enhanced data reporting and analytics to help them provide meaningful academic support and information. As is the case at any postsecondary educational institution, a portion of the company’s students withdraw from their academic programs for a variety of academic, financial or personal reasons, and these efforts are designed to help the company’s students remain in school and succeed in their academic program.

The company’s student advising model promotes collaboration between faculty and student advisors, which enhances effectiveness and provides students with consistent support and communication. Student advisors continue to work with students throughout their academic program to provide relevant and specific feedback and guidance as they progress through their classes. Additionally, a team of staff members from advising, admissions and financial aid works directly with each new student creating a student-service atmosphere and encouraging quality interactions.

Coupled with the student advising model, the company’s academic institutions continually review course content and sequencing to ensure workload levels build gradually as students develop skills and acclimate to course expectations, which improves academic outcomes. Courses have been redesigned to accommodate skill development holistically, which will support progressive learning.

AIUS' student-centric framework focuses on having students interact with their admissions advisor from enrollment through the end of their first academic session and be subsequently supported by faculty and student advisors. This structure improves overall student experiences and retention. This cross-functional strategy is aimed at improving student engagement throughout the student’s academic life cycle, with particular emphasis on the important onboarding phase and first academic term as the students adjust to their academic program. In 2023, AIUS launched a ‘Ready’ course, which allows students to experience the classroom atmosphere weeks before classes begin.

CTU leverages data analytics to provide proactive outreach and personalized advising to improve student retention and academic outcomes. This approach is intended to help the company reaches the right student at the right time with the right support, which the company expects will increase learning and course completion by its students. The company continues to refine its data analytics process to enable the company’s student advisors to be more effective in their student engagement efforts.

Program Development

The company’s universities develop and deliver a variety of programs primarily resulting in the award of credentials ranging from certificates to doctoral degrees in career-oriented programs of study in core curricula areas of business studies, information technology and health education.

The company’s curricula, instructional delivery tools and experienced faculty comprise the learning experience that provides the company’s student population with a unique opportunity to develop the knowledge, skills and competencies required for specific careers. The curriculum development process focuses on desired career needs, while considering relative competencies necessary to achieve these career needs, as well as any applicable recommendations set forth by advisory boards, programmatic accrediting agencies and industry standards. Subsequently, learning objectives are identified and courses are developed which foster student engagement in activities and optimally result in the attainment of program learning outcomes.

Over the past two years, the company’s institutions have continued the expansion of their offerings with the acquisition of non-degree professional development programs. These online courses offer upskilling and reskilling opportunities where one can develop skills and knowledge in a specific endeavor or area of interest.

Instructional Delivery

The company’s instructional delivery for its degree programs is based on the belief that learning depends on instructional methodologies that facilitate student engagement with the instructor, with other students and with the course content. This engagement is fundamental to student learning outcomes, regardless of whether instruction occurs within a physical or virtual classroom. The company continues to focus on innovation in its delivery of online education to enhance the learning experience for students.

During 2023, the company finalized a multi-year project to enhance and upgrade its student technology infrastructure. This included several upgrades to the company’s virtual campus and mobile platforms and a redesign of the company’s digital toolsets and technology that its faculty and student support teams utilize to serve and educate students throughout their academic life cycle. These upgrades are expected to further enhance student experiences, especially for the company’s non-traditional adult learners, while driving efficiencies within the business.

Learning Management System

Construction of, and ongoing enhancement to, a virtual campus that engages online students with their instructor, peers and content is critical to the achievement of student learning outcomes. CTU and AIUS’ online instructional delivery is accomplished using innovative, student-focused learning management systems. While online content delivery is very common today, the company’s course content delivery systems have several features that make them distinctive. Designed around students, the company’s course content delivery systems allow for a rich, engaging student experience that represents innovative online methods of delivering content.

The company’s institutions have implemented the use of sophisticated personalized learning technologies through the company’s virtual campus that provide intelligent, adaptive systems to power the delivery of personalized learning. The company has a perpetual license to this technology and the company’s personalized learning content was developed by teams of the company’s own instructors and has been integrated across many of the company’s curricula.

Mobile Applications

Students at CTU and AIU have access to a mobile application and two-way messaging platform which were created to complement students’ mobile-centric lives. During 2023, the company had upgraded its mobile technology framework allowing for better performance and increased stability. Approximately 95% of the company’s students within these universities have opted in for the mobile application and to receive mobile notifications. The company’s students and staff are using the messenger application due to its ease and simplicity. The student benefits of these technological innovations include the ability to connect with their university in a different way, communicate efficiently with faculty, upload required documentation, track grades and degree progress in real-time and participate in courses from the palm of their hand, all of which contribute to increased student engagement. CTU and AIU also have a faculty mobile application which provides informative dashboards, the ability to complete tasks on the go and enhanced outreach and communication capabilities that make teacher-student interactions easier and more effective.

Seasonality

The company does traditionally increase its marketing investments during the first and third quarters (year ended December 2023) in relation to the traditional back to school seasons.

Accreditation, State Regulation and Other Compliance Matters

Institutional Accreditation

Both CTU and AIUS are accredited by the Higher Learning Commission (‘HLC’) (www.hlcommission.org), an institutional accrediting agency that is recognized by the Department. CTU’s next re-affirmation of accreditation is scheduled for 2033. CTU had a comprehensive evaluation in 2023, during which HLC found that CTU continued to meet HLC’s criteria for accreditation. AIUS’ next re-affirmation of accreditation is scheduled for 2024. AIUS had a comprehensive evaluation in 2018, during which HLC found that AIUS continued to meet HLC’s criteria for accreditation.

Programmatic Accreditation

In addition to the institutional accreditation described above, CTU and AIUS have specialized programmatic accreditation for particular educational programs.

State Regulation

Under the Higher Education Act and Department regulations, approval by such agencies is necessary to maintain eligibility to participate in Title IV Programs. Each of the company’s ground-based campuses is authorized by the state in which it is located. Additionally, the company’s online institutions have separate state approval or recognition from the relevant state agency via participation in a consortia program called the State Authorization Reciprocity Agreement (‘SARA’) in the states in which they enroll and/or recruit students.

CTU and AIUS are approved to participate in SARA by their home states (Colorado and Arizona, respectively).

Other Compliance Matters

Under the terms of the agreement with the FTC, the company agreed to continue its compliance with the Federal Trade Commission Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act, including compliance with the national do not call registry.

Student Financial Aid and Related Federal Regulation

The company’s institutions are approved to participate in the U.S. Department of Education’s Title IV federal aid programs. The company’s institutions also participate in a number of state financial aid programs, tuition assistance programs of the United States Armed Forces and other employers and education benefits administered by the Department of Veterans Affairs (‘VA’).

Title IV Program grants are generally made to the company’s students under the Federal Pell Grant (‘Pell Grant’) program and the Federal Supplemental Educational Opportunity Grant (‘FSEOG’)program.

Some of the company’s students who are veterans use their benefits under the Montgomery GI Bill or the Post-9/11 Veterans Educational Assistance Act of 2008, as amended (‘Post-9/11 GI Bill’), to cover their tuition. A certain number of the company’s students are also eligible to receive funds from other education assistance programs administered by the VA.

Both CTU and AIUS have signed each of the DoD’s standard MOUs, including the most recent in August 2019 which is effective through 2024.

A group of influential U.S. senators, consumer advocacy groups and some media outlets have strongly and repeatedly encouraged the Department, DoD and the VA and its state approving agencies to take action to limit or terminate the participation of institutions such as the company in existing tuition assistance programs. The company continues to see one of the most challenging operating environments in recent memory as the Department has undertaken a complete overhaul of almost all of the major regulatory requirements associated with its participation in Title IV Programs and which disproportionally negatively impact the for-profit postsecondary education sector.

The company has implemented various measures intended to reduce the percentage of the company’s institution’s 90-10 revenue attributable to federal Program funds, including emphasizing employer-paid and other direct-pay education programs such as the company’s corporate engagements, diversifying the company’s educational offerings to increase the portion of the company’s students who do not rely on Title IV Programs, recruitment of international students, the use of externally funded scholarships and grants and counseling students to carefully evaluate the amount of necessary Title IV Program borrowing consistent with Department regulations and guidance.

History

The company was founded in 1994. It was incorporated in 1994. The company was formerly known as Career Education Corporation and changed its name to Perdoceo Education Corporation in 2020.