You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. The forward-looking statements are contained principally in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; and (iv) the competitive environment in which we operate. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Important factors that could cause our results to vary from expectations include, but are not limited to: •our ability to comply with the extensive regulatory requirements for our business, and the impact of a failure to comply with applicable regulations or regulatory requirements, standards or policies, which could subject us to significant monetary liabilities, Title IV repayment obligations (including as a result of sub-regulatory guidance), fines and penalties, including loss of or limitations upon access to U.S. federal student loans, grants and military program benefits for our students, and otherwise have a material adverse impact on our business; •shifts in higher education policy at the federal and state levels; •our ability to maintain our institutional accreditation and our eligibility to participate in Title IV programs; •our ability to enroll and retain students, including the impact of changes to internet search due to artificial intelligence; •our ability to adapt to changing market needs or new technologies, including artificial intelligence; •our ability to maintain existing, and develop additional, business-to-business, or B2B, relationships with employers; •our ability to attract or retain a qualified senior management team and qualified faculty members; •the impact of compliance reviews, claims, or litigation that government agencies, regulatory agencies, and third parties may conduct, bring or initiate against us based on alleged violations of the extensive regulatory requirements applicable to us; •our ability to establish, maintain, protect and enforce our intellectual property and proprietary rights and prevent third parties from making unauthorized use of such rights; •liability associated with any failure to comply with data privacy and data security laws and the unauthorized access, duplication, distribution or other use of confidential or personal information, including liability and costs associated with the cybersecurity incident we identified in November 2025; •additional tax liabilities; •our ability to pay dividends on our common stock or the timing or amount of any such dividends; and •other risk factors included under “Risk Factors” in our Annual Report on Form 10-K. These forward-looking statements are based on assumptions and subject to risks and uncertainties. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We anticipate that subsequent events and developments will cause our views to change. This Quarterly Report on Form 10-Q and the documents filed as exhibits hereto should be read completely and with the understanding that our actual future results may be materially different from what we expect. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, 22 dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements. Overview We, through our subsidiary The University of Phoenix, Inc., are a pioneer of online higher education for working adults in the United States. Since our founding in 1976, the University has been a mission-driven organization focused on offering a distinctive and affordable online higher education experience that is customized for working adults who did not fit the traditional 18- to 22-year-old campus-based student model. The University has been accredited since 1978 by the Higher Learning Commission (“HLC”), an institutional accrediting agency recognized by the Department of Education. In our nearly five decades of operation, we have served more than 1.1 million alumni (including those who have completed non-degree certificates) and conferred more than 1.3 million degrees. Initial Public Offering On October 10, 2025, we completed an IPO of 4.9 million shares of common stock at a price of $32.00 per share, which included 0.6 million shares sold to the underwriters pursuant to their option to purchase additional shares. The shares were offered by certain of the Company’s existing shareholders and, accordingly, we did not receive any proceeds from the offering. In connection with the expiration of the IPO lock-up period on April 6, 2026, securities held by our pre-IPO holders, other than our Section 16 officers who remain subject to a one-year lock-up, became eligible for sale in the public market, subject to applicable trading restrictions. As a result, shares of our common stock issuable upon the exercise of University stock options by such holders became eligible for sale to the extent such options are settled in shares. Upon exercise of these options, we may elect to repurchase options for cash, in which case no shares of University or Company common stock would be issued. Otherwise, option exercises may be settled through various methods, including net share settlement, cash exercises, or broker-assisted sell-to-cover transactions pursuant to which shares are sold in the market to satisfy the exercise price and applicable tax withholding obligations. We cannot reasonably estimate the extent of future option exercises, the timing of any related sales of shares, or the settlement methods that may be utilized and, accordingly, the potential impact on our outstanding share count, liquidity and stock price remains uncertain. Factors Affecting Results of Operations We believe our market position provides us with a significant opportunity to drive sustainable growth in the future. The following factors, among others described herein, have historically affected, and we expect in the future will similarly affect, our performance: Enrollment. The net revenue we generate in a given period largely depends on the total number of courses taken by the enrolled student population and the price per course. As part of our focus on affordable and accessible tuition, we have not raised tuition rates since 2018. Our student retention rates, calculated as (i) the number of confirmed undergraduate students who both started a degree or non-degree certificate program and posted attendance in a course within such program as of an applicable date, divided by (ii) the number of confirmed undergraduate students who started such a program, expressed as a percentage, have increased from 59.7% for the 2016/2017 cohort to 76.6% for the 2024/2025 cohort (our most recent completed cohort for retention rate purposes), which represents a 5.1 percentage point increase from the 2023/2024 cohort. The increase in retention is a key factor driving the growth in Average Total Degreed Enrollment in recent years, including a 2.2% increase in the nine months ended May 31, 2026 as compared to the prior year period. Enrollment is also affected by the manner in which prospective students discover, research and evaluate educational opportunities. Recently, enrollment has been influenced in part by changes in prospective student search and discovery behavior, including through artificial intelligence-enabled platforms. Although we continue to adapt our marketing and enrollment strategies, these changes may affect the timing and pace at which prospective students engage with the University and make enrollment decisions and impact the effectiveness of our enrollment process. We have invested and continue to invest in many areas of our business that we expect will further improve enrollment, retention and graduation rates, which drive sustainable growth. However, enrollment and retention of students at the University are impacted by the risks described in Item 1A, “Risk Factors” of our 2025 Annual Report on Form 10-K, many of which are beyond our control. Career-Relevant Education and Employer Relationships. Our career-oriented programs and learning platform position us for continued growth in the corporate-sponsored training and education market. Enrollment through our employer relationships represented approximately 35% of our Average Total Degreed Enrollment in the nine months ended May 31, 2026, which represents an approximate three percentage point increase compared to the prior year period. This represents a valuable opportunity to drive growth, diversify our 23 student population and reinforce the durability of our net revenue as these students generally have higher retention and graduation rates. We believe demand from employers and working adults for education aligned with evolving workforce and technology needs, including artificial intelligence-related capabilities, continues to support our long-term growth strategy. In addition, we continue to have discussions with employers regarding our comprehensive suite of talent development solutions and professional development offerings that extend beyond our degree offerings. While the development of our talent development solutions is in the early stages, we believe our ability to offer these solutions has broadened our relationships with key employers and provides an opportunity for growth. Regulatory Requirements. Our operations are subject to extensive U.S. federal and state regulation applicable to providers of post-secondary education who participate in Title IV programs. Failure to comply with applicable regulatory requirements, standards or policies could subject us to significant monetary liabilities, Title IV repayment obligations, fines and penalties, including loss of or limitations upon access to U.S. federal student loans and grants for our students. Any actions that limit our participation in Title IV programs or the amount of student financial aid for which our students are eligible would materially impact our student enrollment and profitability and could impact the continued viability of our business as currently conducted. See Item 1A, “Risk Factors” of our Annual Report on Form 10-K for a detailed discussion of regulatory requirements and related risks. Cost Structure. Our ability to grow profitably depends on our ability to manage our cost structure. Our margin expansion over recent years has been largely derived from the operating leverage resulting from the increase in net revenue relative to our costs that are more fixed in nature and our exit from all but one of our ground campuses. We intend to augment this historical operating leverage through additional strategic and operational initiatives to enhance support for students in a more efficient manner. We continue to invest in optimization, which we expect will reduce friction points and increase efficiencies throughout the University. Seasonality. The University’s non-term academic model encompasses a series of courses taken consecutively over the length of the program, which generally limits seasonal enrollment fluctuations. However, we have historically experienced, and expect to continue to experience, lower net revenue in our second fiscal quarter (December through February) compared to other quarters due to the University’s holiday breaks when no related net revenue is recognized. While our operating costs generally do not fluctuate significantly on a quarterly basis, we have historically experienced, and expect to continue to experience, increased marketing expense in our second and fourth fiscal quarters due to course starts that occur during traditional back-to-school seasons. Key Performance Metrics We review a number of operating and financial metrics, including the key performance metrics presented in the table below, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions: Three Months Ended May 31, Nine Months Ended May 31, 2026 2025 2026 2025 (Enrollment statistics rounded to the nearest hundred; dollars in thousands) Average Total Degreed Enrollment 85,300 84,800 84,500 82,700 Net income attributable to Phoenix Education Partners, Inc. $ 39,167 $ 53,841 $ 65,401 $ 116,382 Net income attributable to Phoenix Education Partners, Inc. margin 14.4 % 19.8 % 8.6 % 15.5 % Adjusted EBITDA $ 78,077 $ 83,375 $ 188,071 $ 185,819 Adjusted EBITDA margin 28.7 % 30.7 % 24.9 % 24.8 % Average Total Degreed Enrollment. Enrollment is the primary driver of our net revenue and a key non-financial metric that helps compare our performance on a consistent basis across periods. Additionally, enrollment is a reflection of our ability to retain continuing students and enroll new students, which are key components of our growth strategy. Enrollment measures in our industry are not standardized, and other companies in our industry may calculate enrollment measures differently than we do. Substantially all of our net revenue is generated from student enrollment in tuition-bearing degree programs encompassing a series of courses (e.g., most often five-week courses) taken consecutively over the length of the program. Over comparative periods, Total Degreed Enrollment generally increases as new students attend a credit-bearing course or continuing students return to the University, which increases are generally offset by graduations or continuing students not attending a credit-bearing course (e.g., by withdrawing from the University). We define “Total Degreed Enrollment” as the number of confirmed students (both new and continuing) enrolled in credit-bearing courses who post attendance at least one time during a calendar month (even if they withdraw later in the same month), excluding students who graduated as of the end of such month. Average Total Degreed Enrollment for the periods shown above represents the aggregate of monthly Total Degreed Enrollment during such period divided by the number of months in the period. For 24 example, Average Total Degreed Enrollment for the three months ended May 31, 2026 is calculated as the aggregate Total Degreed Enrollment for the three months from March 2026 through May 2026 divided by three. Net income attributable to Phoenix Education Partners, Inc., net income attributable to Phoenix Education Partners, Inc. margin, adjusted EBITDA and adjusted EBITDA margin. We believe these items are primary indicators of our operating performance because they are measures of profitability and assist with comparing our performance across periods and evaluating the effectiveness of our business strategies. Additionally, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that allow us to evaluate our profitability on a consistent basis across periods by excluding items that management and our board of directors do not believe are indicative of our core operating performance. We use adjusted EBITDA and adjusted EBITDA margin to supplement GAAP measures of performance and to compare our performance against peer companies utilizing similar measures. See “Non-GAAP Financial Measures and Reconciliations” below for the definitions of adjusted EBITDA and adjusted EBITDA margin, a reconciliation of net income attributable to Phoenix Education Partners, Inc. to adjusted EBITDA and the calculation of adjusted EBITDA margin. We calculate net income attributable to Phoenix Education Partners, Inc. margin as net income attributable to Phoenix Education Partners, Inc. divided by net revenue, expressed as a percentage. Results of Operations Three and Nine Months Ended May 31, 2026 Compared to the Three and Nine Months Ended May 31, 2025 The following details our consolidated results of operations during the respective periods: Three Months Ended May 31, Nine Months Ended May 31, % Change % Change ($ in thousands) 2026 2025 2026 versus 2025 2026 2025 2026 versus 2025 Net revenue $ 271,801 $ 271,703 0.0 % $ 756,289 $ 749,801 0.9 % Costs and expenses Instructional and support 110,284 110,446 (0.1 )% 330,774 325,779 1.5 % General and administrative 97,754 83,320 17.3 % 302,416 255,703 18.3 % Strategic alternatives, restructuring and other 11,937 6,837 74.6 % 31,673 17,886 77.1 % Total costs and expenses 219,975 200,603 9.7 % 664,863 599,368 10.9 % Operating income 51,826 71,100 (27.1 )% 91,426 150,433 (39.2 )% Interest income 2,183 2,278 (4.2 )% 5,720 8,334 (31.4 )% Interest expense (651 ) (107 ) * (1,416 ) (332 ) * Income before income taxes 53,358 73,271 (27.2 )% 95,730 158,435 (39.6 )% Provision for income taxes 14,452 18,622 (22.4 )% 30,877 40,564 (23.9 )% Net income 38,906 54,649 (28.8 )% 64,853 117,871 (45.0 )% Net loss (income) attributable to noncontrolling interests 261 (808 ) * 548 (1,489 ) * Net income attributable to Phoenix Education Partners, Inc. $ 39,167 $ 53,841 (27.3 )% $ 65,401 $ 116,382 (43.8 )% *Not meaningful Net revenue We generate all, or substantially all, of our consolidated net revenue from tuition-bearing degree programs offered by the University. Under the University’s non-term academic delivery model, students generally enroll in a program of study encompassing a series of courses taken consecutively over the length of the program, and net revenue is recognized evenly over the duration of the course (e.g., daily over five weeks for a five-week course, other than the University’s holiday breaks when no related net revenue is recognized). Net revenue increased $0.1 million, or flat as a percentage, in the three months ended May 31, 2026 compared to the prior year period, and Average Total Degreed Enrollment was materially consistent for both periods. Net revenue increased $6.5 million, or 0.9%, in the nine months ended May 31, 2026 compared to the prior year period. The increase was principally attributable to enrollment growth, as measured by Average Total Degreed Enrollment, which increased 2.2% compared to the prior year period primarily due to improved student retention. The increase was partially offset by an increase in discounts primarily resulting from a higher percentage of our enrollment through employer relationships. 25 Instructional and support Instructional and support principally consists of costs related to the delivery and administration of our educational programs and includes costs related to faculty, academic administrators, enrollment and student advisory personnel (including share-based compensation), credit losses associated with uncollectible accounts receivable, financial aid processing costs and depreciation of applicable property and equipment. Instructional and support also includes course development costs (including amortization of related intangible assets) and costs associated with delivering course content. Instructional and support decreased $0.2 million, or 0.1%, in the three months ended May 31, 2026 compared to the prior year period, and remained consistent as a percentage of net revenue at 40.6%. The decrease was principally attributable to a $4.0 million decrease in credit losses on accounts receivable, partially offset by a $2.8 million increase in compensation and related costs, including a $0.9 million increase in share-based compensation expense resulting from our IPO (see Note 1. Nature of Operations and Significant Accounting Policies and Note 13. Share-Based Awards to our condensed consolidated financial statements). Instructional and support increased $5.0 million, or 1.5%, in the nine months ended May 31, 2026 compared to the prior year period, and increased as a percentage of net revenue from 43.4% to 43.7%. The increase was principally attributable to a $14.6 million increase in compensation and related costs, including a $9.7 million increase in share-based compensation expense resulting from our IPO, partially offset by lower credit losses on accounts receivable of $11.3 million (see Note 1. Nature of Operations and Significant Accounting Policies and Note 13. Share-Based Awards to our condensed consolidated financial statements). General and administrative General and administrative principally consists of costs related to management and employees in administrative functions (including share-based compensation), marketing expense, legal and professional fees, information technology infrastructure costs, depreciation of property associated with our administrative functions, rent and related expenses associated with our corporate facilities and other related costs. General and administrative increased $14.4 million, or 17.3%, in the three months ended May 31, 2026 compared to the prior year period, and increased as a percentage of net revenue from 30.7% to 36.0%. The increase was principally attributable to higher compensation and related costs of $6.8 million, including a $6.9 million increase in share-based compensation resulting from our IPO, and higher advertising expense of $6.6 million (see Note 1. Nature of Operations and Significant Accounting Policies and Note 13. Share-Based Awards to our condensed consolidated financial statements). General and administrative increased $46.7 million, or 18.3%, in the nine months ended May 31, 2026 compared to the prior year period, and increased as a percentage of net revenue from 34.1% to 40.0%. The increase was principally attributable to higher compensation and related costs of $36.4 million, including a $36.0 million increase in share-based compensation resulting from our IPO, and higher advertising expense of $8.1 million (see Note 1. Nature of Operations and Significant Accounting Policies and Note 13. Share-Based Awards to our condensed consolidated financial statements). Strategic alternatives, restructuring and other Strategic alternatives, restructuring and other includes the following during the respective periods: Three Months Ended May 31, Nine Months Ended May 31, ($ in thousands) 2026 2025 2026 2025 Strategic alternatives $ 856 $ 2,402 $ 6,133 $ 7,401 Cybersecurity incident 267 — 5,096 — Lease restructuring expense 4,029 2,121 7,634 3,837 Litigation charges and regulatory expense(1) 4,977 1,203 7,383 3,609 Other 1,808 1,111 5,427 3,039 Strategic alternatives, restructuring and other $ 11,937 $ 6,837 $ 31,673 $ 17,886 (1)Beginning in the third quarter of fiscal year 2026, we began separately presenting Litigation charges and regulatory expense in the table above, which were previously included in Other. We have reclassified prior periods to conform to our current period presentation. Strategic alternatives, restructuring and other increased $5.1 million in the three months ended May 31, 2026 compared to the prior year period, which was principally due to an increase in lease restructuring expense driven by changes in our estimated future cash flows associated with exited space and an increase in litigation charges and regulatory expense related to a class action lawsuit (see Note 14. Commitments and Contingencies to our condensed consolidated financial statements). 26 Strategic alternatives, restructuring and other increased $13.8 million in the nine months ended May 31, 2026 compared to the prior year period, which was principally due to costs associated with the cybersecurity incident detected in November 2025, an increase in litigation charges and regulatory expense related to a class action lawsuit (see Note 14. Commitments and Contingencies to our condensed consolidated financial statements), and an increase in lease restructuring expense driven by changes in our estimated future cash flows associated with exited space. Interest income Interest income decreased $0.1 million, or 4.2%, in the three months ended May 31, 2026 compared to the prior year period, which was principally attributable to a decrease in interest rate yields. Interest income decreased $2.6 million, or 31.4%, in the nine months ended May 31, 2026 compared to the prior year period, which was principally attributable to decreases in (i) average cash and cash equivalents and marketable securities held and (ii) interest rate yields. Interest expense Interest expense increased $0.5 million and $1.1 million in the three and nine months ended May 31, 2026, respectively, compared to the prior year periods. The increases were primarily from amortization of deferred financing costs from our $100 million Revolving Facility. Provision for income taxes Provision for income taxes decreased $4.2 million, or 22.4%, in the three months ended May 31, 2026 compared to the prior year period. Our effective income tax rate for the three months ended May 31, 2026 was 27.1% compared to 25.4% in the prior year period. The increase in our effective tax rate was primarily due to certain executive compensation costs becoming nondeductible after the completion of our IPO, partially offset by excess tax benefits from share-based compensation. Provision for income taxes decreased $9.7 million, or 23.9%, in the nine months ended May 31, 2026 compared to the prior year period. Our effective income tax rate for the nine months ended May 31, 2026 was 32.3% compared to 25.6% in the prior year period. The increase in our effective tax rate was primarily due to the completion of our IPO, which resulted in certain IPO and executive compensation costs becoming nondeductible, partially offset by excess tax benefits from share-based compensation. Non-GAAP Financial Measures and Reconciliations To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we also provide the following non-GAAP financial measures: •Adjusted net income attributable to Phoenix Education Partners, Inc. We define adjusted net income attributable to Phoenix Education Partners, Inc. as net income attributable to Phoenix Education Partners, Inc., adjusted to eliminate the impact of restructuring lease expense, net, strategic alternatives expense, cybersecurity incident expense, impairment charges and asset disposal losses, litigation charges and regulatory expense, non-cash share-based compensation expense, certain tax effects and other items set forth in the applicable table below.1 •Adjusted EBITDA. We define adjusted EBITDA as net income attributable to Phoenix Education Partners, Inc., adjusted to eliminate the impact of restructuring lease expense, net, strategic alternatives expense, cybersecurity incident expense, impairment charges and asset disposal losses, litigation charges and regulatory expense, non-cash share-based compensation expense, depreciation and amortization, interest income, net of interest expense, provision for income taxes and certain other items set forth in the applicable table below.1 •Adjusted EBITDA margin. We define adjusted EBITDA margin as adjusted EBITDA divided by net revenue, expressed as a percentage. Adjusted net income attributable to Phoenix Education Partners, Inc., adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures and are included as supplemental disclosures because we believe they are useful indicators of our operating 1 During the first quarter of fiscal year 2026, we changed our definition of this measure to start with “Net income attributable to Phoenix Education Partners, Inc.” instead of “Net income” and began excluding expenses incurred related to our cybersecurity incident, which we do not believe are representative of our ongoing operations. We have retrospectively changed this measure for all periods presented to conform with our new definition. 27 performance. Derivations of net income and EBITDA are well recognized performance measurements in the education industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties to compare the operating performance of companies in our industry. We believe these non-GAAP measures help compare our performance on a consistent basis across periods and provide an additional analytical tool to assist with identifying underlying trends in our results of operations. While we believe that these non-GAAP measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the comparable GAAP measures. Adjusted net income attributable to Phoenix Education Partners, Inc., adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools. Additionally, other companies in our industry may calculate such measures differently than we do, limiting each measure’s usefulness as a comparative measure. Some of these limitations are: (i)they do not reflect costs or cash outlays for capital expenditures or contractual commitments; (ii)they do not reflect changes in, or cash requirements for, our working capital needs; (iii)they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and (iv)adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes. Because of these limitations, adjusted net income attributable to Phoenix Education Partners, Inc., adjusted EBITDA and adjusted EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Investors should not place undue reliance on this information. The following tables present reconciliations of net income attributable to Phoenix Education Partners, Inc. to adjusted net income attributable to Phoenix Education Partners, Inc. and net income attributable to Phoenix Education Partners, Inc. to adjusted EBITDA and adjusted EBITDA margin during the respective periods: Three Months Ended May 31, Nine Months Ended May 31, ($ in thousands) 2026 2025 2026 2025 Net income attributable to Phoenix Education Partners, Inc. $ 39,167 $ 53,841 $ 65,401 $ 116,382 Special items and share-based compensation: Restructuring lease expense, net(a) 4,029 2,121 7,634 3,837 Strategic alternatives expense(b) 856 2,402 6,133 7,401 Cybersecurity incident expense(c) 267 — 5,096 — Impairment charges and asset disposal losses(d) 89 29 609 113 Litigation charges and regulatory expense(e) 4,977 1,295 7,383 3,980 Non-cash share-based compensation expense(f) 8,458 645 47,624 1,908 Other(g) 1,719 1,057 4,818 3,288 Income tax effects of special items and share-based compensation(h) (3,794 ) (1,857 ) (12,669 ) (5,050 ) Adjusted net income attributable to Phoenix Education Partners, Inc. $ 55,768 $ 59,533 $ 132,029 $ 131,859 28 Three Months Ended May 31, Nine Months Ended May 31, ($ in thousands) 2026 2025 2026 2025 Net income attributable to Phoenix Education Partners, Inc. $ 39,167 $ 53,841 $ 65,401 $ 116,382 Restructuring lease expense, net(a) 4,029 2,121 7,634 3,837 Strategic alternatives expense(b) 856 2,402 6,133 7,401 Cybersecurity incident expense(c) 267 — 5,096 — Impairment charges and asset disposal losses(d) 89 29 609 113 Litigation charges and regulatory expense(e) 4,977 1,295 7,383 3,980 Non-cash share-based compensation expense(f) 8,458 645 47,624 1,908 Depreciation and amortization 5,595 5,534 16,800 16,348 Interest income, net of interest expense (1,532 ) (2,171 ) (4,304 ) (8,002 ) Provision for income taxes 14,452 18,622 30,877 40,564 Other(g) 1,719 1,057 4,818 3,288 Adjusted EBITDA $ 78,077 $ 83,375 $ 188,071 $ 185,819 Net income attributable to Phoenix Education Partners, Inc. margin 14.4 % 19.8 % 8.6 % 15.5 % Adjusted EBITDA margin 28.7 % 30.7 % 24.9 % 24.8 % Net revenue used in computing net income attributable to Phoenix Education Partners, Inc. margin and adjusted EBITDA margin $ 271,801 $ 271,703 $ 756,289 $ 749,801 (a)Restructuring lease expense, net represents non-cancelable lease obligations, including any offset from sublease income, and other related expenses for leased space we have exited as part of our ground campus and administrative space rationalization plans. In 2012, as a key component of the University’s transformation initiatives, the University began the process of completing the orderly closure of its ground campuses, as more enrolling students made the choice to take their programs online. The University completed the orderly closure of its campus locations in early fiscal year 2025, with only one physical location, in Phoenix, Arizona, currently enrolling new students. Additionally, the University completed its exit of 19 floors of its 22-floor administrative office buildings during fiscal year 2024 pursuant to its space rationalization plans. (b)Strategic alternatives expense generally consists of costs associated with strategic and capital market transactions, including our IPO and offering-related costs, strategic advisory fees, and costs associated with the evaluation or execution of strategic alternatives. (c)Represents expense associated with the cybersecurity incident detected in November 2025 (see Note 14. Commitments and Contingencies to our condensed consolidated financial statements). (d)Represents non-cash impairment charges and asset disposal losses. (e)Litigation charges and regulatory expense principally includes charges incurred to defend, settle or otherwise resolve legal matters that fall outside the scope of ordinary or routine litigation incidental to our business and expense associated with a multi-year insurance policy pertaining to borrower defense to repayment claims (see Note 14. Commitments and Contingencies and Note 15. Regulatory Matters to our condensed consolidated financial statements). (f)Represents non-cash equity-based compensation expense in accordance with Accounting Standards Codification Topic 718, Compensation: Stock Compensation. Although share-based compensation is a key incentive offered to our employees, we evaluate our business performance excluding share-based compensation expense because it is a non-cash expense. The increase in share-based compensation expense in the three and nine months ended May 31, 2026 compared to the respective prior year periods resulted from our IPO (see Note 1. Nature of Operations and Significant Accounting Policies and Note 13. Share-Based Awards to our condensed consolidated financial statements). (g)Represents other expenses that we do not believe are indicative of our ongoing operations. (h)Represents the income tax effect of these non-GAAP adjustments, calculated using the appropriate statutory tax rates. Liquidity and Capital Resources Our primary sources of cash are cash provided by operations and cash and cash equivalents and marketable securities on hand. We also have available liquidity through our Revolving Facility. 29 Our principal uses of cash are, and we expect to continue to be, payments of our operating expenses, such as employee compensation and marketing related costs, and investments to maintain and enhance our digital technology platform and various technology systems to support and improve the student experience. We paid a regular, quarterly cash dividend of $0.21 per share of common stock in each of our second and third quarters of fiscal year 2026. Additionally, our board of directors approved a regular, quarterly cash dividend of $0.21 per share of common stock that will be paid to shareholders of record and holders of certain share-based awards during our fourth quarter of fiscal year 2026. We plan to pay additional regular, quarterly cash dividends in subsequent quarters, subject to the discretion of and approval from our board of directors. On April 3, 2026, our board of directors adopted a share repurchase program of up to an aggregate of $50 million of our common stock (the “April 2026 Repurchase Program”). As of May 31, 2026, we have utilized $4.0 million of the authorized amount. We expect that any repurchases under the April 2026 Repurchase Program will be funded using our existing cash and cash equivalents. The timing and amount of any repurchases will depend on a variety of factors, including our stock price, general market conditions, liquidity and capital requirements, and other uses of cash, including potential cash outflows associated with the settlement of share-based compensation awards. Repurchases under the program may be made from time to time through open market purchases, privately negotiated purchases or other acquisitions of shares of our common stock, including pursuant to Rule 10b5-1 or Rule 10b-18 of the Securities Exchange Act of 1934, as amended. We believe that our existing cash and cash equivalents, marketable securities, Revolving Facility and cash generated from operating activities will be sufficient to meet our working capital and other cash requirements for the foreseeable future. Although we currently have substantial liquidity, our ability to deploy currently available liquidity is constrained by our need to maintain a Department of Education financial responsibility composite score of at least 1.5. See Item 1A, “Risk Factors” included in our Annual Report on Form 10-K for a discussion of composite score requirements and calculations. 30 Cash and cash equivalents, restricted cash and cash equivalents and marketable securities Our cash and cash equivalents, restricted cash and cash equivalents and marketable securities are placed with high-credit-quality financial institutions. The following provides a summary of these financial instruments as of the respective periods: As of ($ in thousands) May 31, 2026 August 31, 2025 % Change Cash and cash equivalents $ 155,020 $ 136,504 13.6 % Restricted cash and cash equivalents 2,973 36,497 (91.9 )% Current marketable securities 75,051 9,005 733.4 % Noncurrent marketable securities 36,396 12,803 184.3 % Total $ 269,440 $ 194,809 38.3 % Total cash and cash equivalents (including restricted cash and cash equivalents) and marketable securities (including current and noncurrent marketable securities) increased $74.6 million, or 38.3%, during the nine months ended May 31, 2026. The increase was principally due to $116.7 million of cash generated from operating activities, which was partially offset by $17.4 million of cash paid for dividends and dividend equivalents, $15.0 million of capital expenditures, net cash paid to settle share-based awards, and common stock repurchases. See Note 14. Commitments and Contingencies for information on our letter of credit and the related decrease in our restricted cash and cash equivalents balance. Operating cash flows The following provides a summary of our operating cash flows during the respective periods: Nine Months Ended May 31, ($ in thousands) 2026 2025 Net income $ 64,853 $ 117,871 Non-cash items 101,937 88,509 Changes in assets and liabilities, excluding the impact of acquisition (50,106 ) (154,591 ) Net cash provided by operating activities $ 116,684 $ 51,789 For the nine months ended May 31, 2026, we generated $116.7 million of net cash provided by operating activities, which was principally attributable to net income of $64.9 million and the following: Adjustments to reconcile net income to net cash provided by operating activities: •$47.6 million of share-based compensation; •$24.6 million provision for credit losses on accounts receivable; and •$16.8 million of depreciation and amortization. Changes in assets and liabilities: •Net outflow of $62.1 million from an increase in accounts receivable (excluding provision for credit losses in non-cash items discussed above) primarily from course start timing; •Net outflow of $9.0 million from a decrease in accrued compensation and benefits primarily due to timing of payroll payments; •Net outflow of $7.6 million from a decrease in operating lease liabilities for payments made on our operating lease obligations; •Net outflow of $5.0 million from an increase in prepaid income taxes primarily due to estimated tax payments made during the period; and •Net inflow of $38.8 million from an increase in deferred revenue primarily from course start timing. For the nine months ended May 31, 2025, we generated $51.8 million of cash provided by operating activities, which was principally attributable to $117.9 million of net income and $88.5 million of non-cash adjustments. This was partially offset by a net 31 cash outflow of $154.6 million from changes in assets and liabilities, which was primarily the result of an increase in accounts receivable (excluding provision for credit losses) primarily from course start timing and a decrease in student deposits attributable to a change in the timing of financial aid disbursements for the University’s students. Before the change, financial aid funds were typically disbursed in two installments that generally involved four courses. Such funding was included in student deposits on our condensed consolidated balance sheets until students began subsequent courses. Beginning in July 2024, the University began transitioning to financial aid disbursements by course with students transitioning after they complete their current academic year. Accordingly, student deposits decreased throughout fiscal year 2025 as the University’s students transitioned to single course financial aid disbursements. Investing cash flows The following provides a summary of our investing cash flows during the respective periods: Nine Months Ended May 31, ($ in thousands) 2026 2025 Purchases of property and equipment $ (15,005 ) $ (16,399 ) Marketable securities purchases, maturities and sales, net (89,547 ) 2,641 Acquisition, net of cash acquired — (1,982 ) Other investing activities (108 ) (58 ) Net cash used in investing activities $ (104,660 ) $ (15,798 ) Net cash used in investing activities for the nine months ended May 31, 2026 and 2025 was $104.7 million and $15.8 million, respectively. Net cash used in investing activities for the nine months ended May 31, 2026 was primarily driven by $89.5 million of net marketable securities purchases and $15.0 million of purchases of property and equipment, substantially all of which related to internal software development. Net cash used in investing activities for the nine months ended May 31, 2025 was primarily driven by $16.4 million of purchases of property and equipment, substantially all of which related to internal software development, and $2.0 million paid, net of cash acquired, to acquire a controlling interest in Empath, Inc., partially offset by $2.6 million of net marketable securities maturities and sales. See Note 3. Acquisition to our condensed consolidated financial statements for more information regarding our acquisition of Empath, Inc. Financing cash flows The following provides a summary of our financing cash flows during the respective periods: Nine Months Ended May 31, ($ in thousands) 2026 2025 Common stock repurchased $ (3,963 ) $ — Payments of dividends and dividend equivalents (17,375 ) — Payroll taxes paid on share-based awards (6,150 ) (774 ) Proceeds from stock option exercises 456 — Payments of dividends and dividend equivalents to noncontrolling interests — (13,961 ) Capital distributions to limited partners — (134,001 ) Net cash used in financing activities $ (27,032 ) $ (148,736 ) Net cash used in financing activities was $27.0 million and $148.7 million for the nine months ended May 31, 2026 and 2025, respectively. Net cash used in financing activities for the nine months ended May 31, 2026 was primarily driven by $17.4 million of payments of dividends and dividend equivalents, $6.2 million of payroll taxes paid on share-based awards and $4.0 million for common stock repurchases. Net cash used in financing activities for the nine months ended May 31, 2025 was primarily driven by $134.0 million of capital distributions to limited partners and $14.0 million of payments of dividends and dividend equivalents to noncontrolling interests. Off-Balance Sheet Arrangements As of May 31, 2026, we had a $28 million outstanding letter of credit under our Revolving Facility supporting a sublease. This letter of credit was issued during the third quarter of fiscal year 2026 to replace a cash collateralized letter of credit. The replacement released the cash collateral supporting the prior letter of credit, thereby reducing restricted cash and availability under the Revolving Facility. 32 Additionally, our insurers issue surety bonds that are required by various states where we operate, or that are required for other purposes. We are obligated to reimburse our insurers for any surety bonds that are paid. As of May 31, 2026, the face amount of these surety bonds was less than $1 million. Critical Accounting Estimates A detailed discussion of our critical accounting estimates and significant accounting policies is included under the caption “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2025 Annual Report on Form 10-K. During the nine months ended May 31, 2026, there have been no material changes to our critical accounting estimates or our significant accounting policies as disclosed in our 2025 Annual Report on Form 10-K. Recent Accounting Pronouncements See Note 1. Nature of Operations and Significant Accounting Policies to our condensed consolidated financial statements for recently issued accounting pronouncements adopted or not yet adopted as of the date of this Quarterly Report on Form 10-Q. JOBS Act Accounting Election The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our audited financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. See Note 1. Nature of Operations and Significant Accounting Policies to our audited consolidated financial statements for more information regarding new or revised accounting pronouncements. We have chosen to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies; (iii) comply with certain types of new requirements adopted by the PCAOB; and (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. We may remain an “emerging growth company” until August 31, 2031. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenue equals or exceeds $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an “emerging growth company” prior to such date.