Q2 Fiscal 2025 Highlights
- Reports revenue of $11.5 Million
- Gross margin increased to 71% from 63%
- Net loss of $(4.2) million reflects $(4.9) million one-time non-cash lease related impairment charges for right-of-use assets and tenant leasehold improvements
- Adjusted EBITDA improved by 42% year-over-year due to continued cost controls
Second Quarter Fiscal Year 2025 Summary Results
| Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||
| $ in millions, except per share data | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Revenue | $ | 11.5 | $ | 13.8 | $ | 22.8 | $ | 28.5 | |||||||
| Gross Profit1 | $ | 8.1 | $ | 8.7 | $ | 15.6 | $ | 18.5 | |||||||
| Gross Margin (%)1 | 71 | % | 63 | % | 69 | % | 65 | % | |||||||
| Operating Income (Loss) | $ | (4.8 | ) | $ | (0.5 | ) | $ | (5.5 | ) | $ | (0.2 | ) | |||
| Net Income (Loss) Available to Common Stockholders 2 | $ | (4.2 | ) | $ | (1.6 | ) | $ | (4.4 | ) | $ | (2.3 | ) | |||
| Earnings (Loss) per Share Available to Common Stockholders | $ | (0.16 | ) | $ | (0.06 | ) | $ | (0.17 | ) | $ | (0.09 | ) | |||
| EBITDA3 | $ | (3.0 | ) | $ | 0.4 | $ | (1.9 | ) | $ | 1.8 | |||||
| Adjusted EBITDA3 | $ | 1.5 | $ | 1.1 | $ | 2.0 | $ | 3.0 | |||||||
1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs and services, and amortization expense of $0.5 million and $0.5 million, and $0.9 million and $1.0 million for the three and six months ended October 31, 2024 and 2023, respectively.
2 Net income (loss) in fiscal Q2 2025 and year-to-date fiscal 2025 includes a noncash impairment charge of $(4.9) million. Additionally, fiscal Q2 2025 and year-to-date fiscal 2025 contain a non-cash gain of $1.1 million and $1.9 million, respectively, related to the change in the fair value of put warrant liability. See further explanation on page 2.
3 Non-GAAP financial measures. See reconciliations of GAAP to non-GAAP financial measures under "Non-GAAP-Financial Measures” starting on page 5.
"We made significant strides toward stabilizing our revenue in the second quarter of fiscal 2025 while achieving positive cash flow through disciplined cost management,” said Michael Mathews, Chairman and CEO of AGI. "Despite maintaining a disciplined marketing spend, we achieved notable improvements in our financial performance, particularly gross margin. Our gross margin expanded primarily due to the lower instructional costs from completing the AU Pre-licensure BSN program teach-out and increased efficiencies in USU's instructional operations. Additionally, restructuring efforts reduced general and administrative expenses by 14% year-over-year. While our net loss was impacted by a one-time, noncash leasehold impairment charge, the lower instructional costs and expense reduction initiatives in the second quarter collectively drove a 42% year-over-year improvement in Adjusted EBITDA for the quarter and delivered modest year-to-date positive cash from operations.”
Mr. Mathews concluded, "As of the filing of our quarterly report for the first quarter fiscal year 2025 with OTC Market, AGI is now fully compliant with the QB listing requirements. We have recently begun the process to resume trading on the OTCQB.”
Fiscal Q2 2025 Financial and Operational Results (compared to Fiscal Q2 2024)
Revenue decreased by 17% to $11.5 million compared to $13.8 million. The following table presents the Company's revenue, both per-subsidiary and total:
| Three Months Ended October 31, | |||||||||||
| 2024 | $ Change | % Change | 2023 | ||||||||
| AU | $ | 4,773,693 | $ | (2,519,431 | ) | (35)% | $ | 7,293,124 | |||
| USU | 6,686,086 | 150,363 | 2% | 6,535,723 | |||||||
| Revenue | $ | 11,459,779 | $ | (2,369,068 | ) | (17)% | $ | 13,828,847 | |||
Aspen University's ("AU”) revenue decline of $2.5 million, or 35%, reflects the completion of the teach-out of the pre-licensure program and lower post-licensure enrollments in prior quarters as a result of the decrease in marketing spend initiated in late Fiscal Q1 2023. The active student body at AU decreased by 33% year-over-year to 3,827 at October 31, 2024 from 5,679 at October 31, 2023.
United States University ("USU”) revenue was up 2% compared to the prior period. MSN-FNP program enrollments decreased in the quarter due to lower marketing spend initiated in late Fiscal Q1 2023. Lower enrollments were offset by higher revenue per student driven by more students entering their second year of the MSN-FNP program, which includes clinical rotations, and by tuition increases. The active student body at USU decreased by 6% to 2,560 at October 31, 2024 from 2,733 at October 31, 2023.
GAAP gross profit decreased 7% to $8.1 million compared to $8.7 million primarily due to the overall student body decrease of 24%. Gross margin was 71% compared to 63%. AU's gross margin was 67% versus 61%, and USU's gross margin was 74% versus 67%. The increase in gross margin is the result of lower instructional costs from completing the AU Pre-licensure BSN program teach-out, increased efficiencies in USU's instructional operations and lower marketing spend.
AU instructional costs and services represented 26% of AU revenue, and USU instructional costs and services represented 23% of USU revenue. AU marketing and promotional costs represented 1% of AU revenue, and USU marketing and promotional costs represented 1% of USU revenue.
In Fiscal Q2 2025 and year-to-date Fiscal 2025, our bottom line was materially impacted by a $4.9 million non-cash right-of-use assets and tenant leasehold improvements impairment charge. The charge is the result of the fact that AU is no longer able to utilize space for BSN Pre-licensure operations due to the completion of the teach-out. The charge represents the entirety of the remaining impairment exposure due to the teach-out. The impact of the charge to our operating expenses, net loss and EBITDA is presented in the following table:
| Three Months Ended October 31, | Six Months Ended October 31, | ||||||||||||||||||||
| 2024 | $ Change | % Change | 2023 | 2024 | $ Change | % Change | 2023 | ||||||||||||||
| Impairments of right-of-use assets and tenant leasehold improvements | $ | 4,937,154 | $ | 4,937,154 | NM | $ | - | $ | 4,937,154 | $ | 4,937,154 | NM | $ | - | |||||||
NM - Not meaningful
The following tables present the Company's net income (loss), both per subsidiary and total:
| Three Months Ended October 31, 2024 | ||||||||||||||
| Consolidated | AGI Corporate | AU | USU | |||||||||||
| Net income (loss) available to common stockholders | $ | (4,153,422 | ) | $ | (935,442 | ) | $ | (5,350,264 | ) | $ | 2,132,284 | |||
| Net loss per share available to common stockholders | $ | (0.16 | ) | |||||||||||
| Three Months Ended October 31, 2023 | |||||||||||||
| Consolidated | AGI Corporate | AU | USU | ||||||||||
| Net income (loss) available to common stockholders | $ | (1,611,813 | ) | $ | (3,807,821 | ) | $ | 581,707 | $ | 1,614,301 | |||
| Net loss per share available to common stockholders | $ | (0.06 | ) | ||||||||||
The following tables present the Company's Non-GAAP Financial Measures, both per subsidiary and total. See reconciliations of GAAP to non-GAAP financial measures under "Non-GAAP-Financial Measures” starting on page 5.
| Three Months Ended October 31, 2024 | ||||||||
| Consolidated | AGI Corporate | AU | USU | |||||
| EBITDA | $(2,962,755) | $(496,585) | $(4,747,931) | $2,281,761 | ||||
| EBITDA Margin | (26)% | NM | (99)% | 34% | ||||
| Adjusted EBITDA | $1,549,020 | $(1,478,554) | $515,798 | $2,511,776 | ||||
| Adjusted EBITDA Margin | 14% | NM | 11% | 38% | ||||
| Three Months Ended October 31, 2023 | ||||||||
| Consolidated | AGI Corporate | AU | USU | |||||
| EBITDA | $419,073 | $(2,680,982) | $1,339,102 | $1,760,953 | ||||
| EBITDA Margin | 3% | NM | 18% | 27% | ||||
| Adjusted EBITDA | $1,087,205 | $(2,487,843) | $1,585,674 | $1,989,374 | ||||
| Adjusted EBITDA Margin | 8% | NM | 22% | 30% | ||||
Adjusted EBITDA improved by $0.5 million due to the reduction in instructional costs and services related to the teach-out of the pre-licensure program, increased instructional efficiencies at USU and a decrease in general and administrative costs attributed to our restructurings.
Operating Metrics
New Student Enrollments
Total enrollments for AGI decreased 30% from Fiscal Q2 2024 but increased 15% sequentially, despite the reduction in internet advertising spend across all programs to maintenance levels. The sequential increase in enrollments reflected an unusually strong month of August as prospective students enrolled prior to an annual tuition increase which took effect in September 2024.
New student enrollments at AU decreased 37% year-over-year and at USU decreased 19% year-over-year. The new student enrollment decrease year-over-year was primarily impacted by our reduction in marketing spend. We anticipate the resumption of marketing spend in late Fiscal 2025 at a level necessary to provide enrollments needed to grow the student body and allow for the generation of positive operating cash flow.
New student enrollments for the past five quarters are shown below:
| Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | |||||
| Aspen University | 808 | 473 | 427 | 413 | 508 | ||||
| USU | 548 | 325 | 370 | 410 | 442 | ||||
| Total | 1,356 | 798 | 797 | 823 | 950 |
AGI's active degree-seeking student body, including AU and USU, declined 24% year-over-year to 6,387 at October 31, 2024 from 8,412 at October 31, 2023. AU's total active student body decreased by 33% year-over-year to 3,827 at October 31, 2024 from 5,679 at October 31, 2023. On a year-over-year basis, USU's total active student body decreased by 6% to 2,560 at October 31, 2024 from 2,733 at October 31, 2023.
Total active student body for the past five quarters is shown below:
| Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | |||||
| Aspen University | 5,679 | 5,146 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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