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Phoenix Education (PXED) is plunging following its 1Q26 earnings release, its second report since its October 9 IPO. While the company exceeded Q1 EPS and revenue expectations, the decision to merely reaffirm its FY26 guidance despite the upside performance has triggered a sell-the-news reaction, as investors were likely positioned for a more aggressive outlook.

• 1Q26 financials surpassed estimates with net revenue of $262 mln (up 2.9% yr/yr) and adjusted EBITDA of $75.2 mln (up 7.2% yr/yr). Adjusted EBITDA margin expanded to 28.7% from 27.5% yr/yr, aided by enhanced productivity in student-facing teams and lower financial aid processing costs.
• Adjusted diluted EPS reached $1.38, beating the FactSet consensus estimate of $1.24 and growing from $1.35 in the prior-year period.
• Average Total Degreed Enrollment grew 4.1% yr/yr to 85,600 students, up from 82,200 a year ago, driven by disciplined enrollment execution and improved retention gains from fiscal 2025.
• Employer-affiliated enrollment continues to be a primary growth engine, now accounting for approximately 34% of total enrollment, compared to 31% in 1Q25.
• The board declared an inaugural quarterly dividend of approximately $0.21 per share, reflecting management's confidence in the durability of the company’s cash generation.
• Management reaffirmed its FY26 guidance, projecting revenue of $1.025–$1.035 bln and adjusted EBITDA of $244–$249 mln, opting for a conservative stance early in the fiscal year.

Briefing.com Analyst Insight:

PXED’s second report since going public delivered solid fundamental growth, but the stock is taking a hit because management chose to be "prudent" rather than raise its full-year outlook after the Q1 beat. The decision to only reaffirm guidance likely stems from typical first-quarter seasonality, specifically the impact of the December holiday break on student activity, and a lingering revenue-per-student lag caused by the "risk-free period" churn seen in late 2025. While the $4.5 mln cost from an Oracle zero-day vulnerability was a minor headwind, the long-term thesis remains intact: PXED is successfully shifting toward a B2B-heavy enrollment model and integrating AI "fluency" into its curriculum to maintain relevance for working adults. However, until the company proves it can convert enrollment gains into more significant top-line acceleration in the second half, the stock may struggle to regain its post-IPO momentum.