UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~February 3028, ~~2025~~2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-42899

Phoenix Education Partners, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	38-3922540
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4035 S. Riverpoint Parkway Phoenix, AZ	85040
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (800) 990-2765

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $0.01 per share

     PXED

     New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~January~~March 631, 2026, the registrant had 35,~~759~~810,~~730~~977 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
	Overview	ii
	OVERVIEW	ii
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	56
	Notes to Unaudited Condensed Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1921
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2831
Item 4.	Controls and Procedures	2831
PART II.	OTHER INFORMATION	2932
Item 1.	Legal Proceedings	2932
Item 1A.	Risk Factors	2932
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2932
Item 3.	Defaults Upon Senior Securities	2932
Item 4.	Mine Safety Disclosures	2932
Item 5.	Other Information	2932
Item 6.	Exhibits	3033
Signatures		3134

OVERVIEW

In this Quarterly Report on Form 10-Q for the period ended ~~November~~February 3028, ~~2025~~2026 (this “Quarterly Report on Form 10-Q”), unless otherwise indicated or the context otherwise requires, references to the “Company,” the “Issuer,” “we,” “us” and “our” refer, prior to our conversion into a corporation, to AP VIII Queso Holdings, L.P. and its consolidated subsidiaries and, after our conversion into a corporation, to Phoenix Education Partners, Inc. and its consolidated subsidiaries. References to the “University” refer to The University of Phoenix, Inc., our indirect wholly-owned subsidiary. Apollo Education Group, Inc., our direct wholly-owned subsidiary and the direct parent of the University, has been renamed Phoenix Education Operating Corp (“PEOC”).

Our fiscal year ends on August 31 of each year and our four fiscal quarters comprising our fiscal year, end on the last day of November, February, May and August, respectively. The term “fiscal,” with respect to any year, refers to the period ending on August 31 of such year. All condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
(In thousands, except par value)	~~November~~February 3028, ~~2025~~2026		August 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	~~151~~194,~~285~~597	$	136,504
Restricted cash and cash equivalents		3936,~~739~~752		36,497
Marketable securities		126,~~191~~770		9,005
Accounts receivable, net		8235,~~558~~015		58,957
Prepaid income taxes		214,~~361~~956		3,160
Other current assets		2729,~~744~~362		21,827
Total current assets		~~315~~317,~~878~~452		265,950
Marketable securities		1413,~~891~~951		12,803
Property and equipment, net		38,~~713~~510		38,846
Goodwill		3,732		3,732
Intangible assets, net		86,~~634~~019		87,294
Operating lease right-of-use assets, net		4038,~~131~~335		41,920
Deferred income taxes, net		2223,~~284~~413		20,566
Other assets		2724,~~309~~982		22,451
Total assets	$	~~549~~546,~~572~~394	$	493,562
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2430,~~332~~521	$	25,696
Accrued compensation and benefits		1828,~~371~~033		28,534
Student deposits		79,~~624~~928		11,049
Deferred revenue		6138,120		37,210
Current operating lease liabilities		9,~~241~~541		8,948
Other current liabilities		4741,~~282~~591		50,608
Total current liabilities		~~167~~157,~~970~~734		162,045
Long-term operating lease liabilities		6158,~~604~~798		64,352
Other long-term liabilities		36,~~841~~298		27,110
Total liabilities		~~266~~252,~~415~~830		253,507
Commitments and contingencies (Note 13 and Note 14)
Equity:(1)
General partner		—		—
Limited partners (35,596 shares outstanding as of August 31, 2025)		—		246,735
Preferred Stock ($0.01 par value; 5,000 shares authorized, no shares issued and outstanding)		—		—
Common Stock ($0.01 par value; 1,495,000 shares authorized, 35,725 shares issued and outstanding as of November 30, 2025)		357		—
Common Stock ($0.01 par value; 1,495,000 shares authorized, 35,811 shares issued and outstanding as of February 28, 2026)		358		—
Additional paid-in capital		~~264~~272,~~516~~814		—
Retained earnings		1517,~~454~~889		—
Accumulated other comprehensive income, net		8165		39
Total Phoenix Education Partners, Inc. equity		~~280~~291,~~408~~126		246,774
Noncontrolling interests		2,~~749~~438		(6,719	)
Total equity		~~283~~293,~~157~~564		240,055
Total liabilities and equity	$	~~549~~546,~~572~~394	$	493,562

(1)

See Note 1. Nature of Operations and Significant Accounting Policies for a description of our Initial Public Offering, conversion into a corporation and name change.

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended November 30,
	Three Months Ended February 28,						Six Months Ended February 28,
(In thousands, except per share data)	~~2025~~2026			~~2024~~2025			2026			2025
Net revenue	$	~~262~~222,~~027~~461		$	~~254~~223,~~692~~406		$	484,488		$	478,098
Costs and expenses:
Instructional and support		~~115~~105,~~248~~242			~~108~~107,~~123~~210			220,490			215,333
General and administrative		~~106~~98,~~557~~105			8190,~~955~~428			204,662			172,383
Strategic alternatives, restructuring and other		145,~~628~~108			46,~~946~~103			19,736			11,049
Total costs and expenses		~~236~~208,~~433~~455			~~195~~203,~~024~~741			444,888			398,765
Operating income		2514,~~594~~006			5919,~~668~~665			39,600			79,333
Interest income		1,~~761~~776			32,~~858~~198			3,537			6,056
Interest expense		(~~215~~550	)		(~~114~~111	)		(765	)		(225	)
Income before income taxes		2715,~~140~~232			6321,~~412~~752			42,372			85,164
Provision for income taxes		114,~~662~~763			165,~~294~~648			16,425			21,942
Net income		1510,~~478~~469			4716,~~118~~104			25,947			63,222
Net income attributable to noncontrolling interests		(24	)		(702	)
Net loss (income) attributable to noncontrolling interests		311			21			287			(681	)
Net income attributable to Phoenix Education Partners, Inc.	$	1510,~~454~~780		$	4616,~~416~~125		$	26,234		$	62,541
Earnings per share:(1)
Basic	$	0.4330		$	10.3145		$	0.73		$	1.76
Diluted	$	0.4028		$	10.2343		$	0.68		$	1.66
Shares used in computing earnings per share:
Basic		35,~~650~~778			35,~~505~~560			35,714			35,532
Diluted		38,~~891~~888			37,~~630~~898			38,744			37,764

(1)

See Note 1. Nature of Operations and Significant Accounting Policies for a description of our Initial Public Offering, conversion into a corporation and name change.

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended November 30,
	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025			2026		2025
Net income	$	1510,~~478~~469		$	4716,~~118~~104		$	25,947	$	63,222
Other comprehensive income (loss) (net of tax)(1):
Change in fair value of available-for-sale securities		42(16	)		(4315	)		26		(58	)
Comprehensive income		1510,~~520~~453			4716,~~075~~089			25,973		63,164
Comprehensive income attributable to noncontrolling interests		(24	)		(702	)
Comprehensive loss (income) attributable to noncontrolling interests		311			21			287		(681	)
Comprehensive income attributable to Phoenix Education Partners, Inc.	$	1510,~~496~~764		$	4616,~~373~~110		$	26,260	$	62,483

(1)

The tax effect during the three and six months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025 was not material.

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)	Common Stock(1) (Shares)			GeneralPartner		Limited Partners			Common Stock (Amount)			Additional Paid-inCapital			RetainedEarnings			Accumulated Other ComprehensiveIncome, net			Total Phoenix Education Partners, Inc.Equity			NoncontrollingInterests			TotalEquity
Balance as of August 31, 2024		35,501		$	—	$	327,259		$	—		$	—		$	—		$	45		$	327,304		$	21,626		$	348,930
Noncontrolling interest issued in business combination		—			—		—			—			—			—			—			—			4,147			4,147
Change in fair value of available-for-sale securities, net of tax		—			—		—			—			—			—			(43	)		(43	)		—			(43	)
Share-based compensation		77			—		—			—			—			—			—			—			646			646
Tax withholdings for share-based award settlements		(18	)		—		—			—			—			—			—			—			(315	)		(315	)
Payments of dividend equivalents		—			—		—			—			—			—			—			—			(141	)		(141	)
Net income		—			—		46,416			—			—			—			—			46,416			702			47,118
Balance as of November 30, 2024		35,560		$	—	$	373,675		$	—		$	—		$	—		$	2		$	373,677		$	26,665		$	400,342
Balance as of August 31, 2025		35,596		$	—	$	246,735		$	—		$	—		$	—		$	39		$	246,774		$	(6,719	)	$	240,055
Corporate conversion		—			—		(246,735	)		356			236,935			—			—			(9,444	)		9,444			—
Change in fair value of available-for-sale securities, net of tax		—			—		—			—			—			—			42			42			—			42
Share-based compensation		—			—		—			—			29,499			—			—			29,499			—			29,499
Tax withholdings for share-based award settlements		(61	)		—		—			(1	)		(1,916	)		—			—			(1,917	)		—			(1,917	)
Shares issued under share-based compensation plans		190			—		—			2			(2	)		—			—			—			—			—
Net income		—			—		—			—			—			15,454			—			15,454			24			15,478
Balance as of November 30, 2025		35,725		$	—	$	—		$	357		$	264,516		$	15,454		$	81		$	280,408		$	2,749		$	283,157
Change in fair value of available-for-sale securities, net of tax		—			—		—			—			—			—			(16	)		(16	)		—			(16	)
Share-based compensation		—			—		—			—			9,667			—			—			9,667			—			9,667
Shares issued under share-based compensation plans		129			—		—			1			(1	)		—			—			—			—			—
Tax withholdings for share-based award settlements		(43	)		—		—			—			(1,368	)		—			—			(1,368	)		—			(1,368	)
Common stock dividend ($0.21 per share) and dividend equivalents		—			—		—			—			—			(8,345	)		—			(8,345	)		—			(8,345	)
Net income (loss)		—			—		—			—			—			10,780			—			10,780			(311	)		10,469
Balance as of February 28, 2026		35,811		$	—	$	—		$	358		$	272,814		$	17,889		$	65		$	291,126		$	2,438		$	293,564
(In thousands)	Common Stock(1) (Shares)			GeneralPartner		Limited Partners			Common Stock (Amount)			Additional Paid-inCapital			RetainedEarnings			Accumulated Other ComprehensiveIncome, net			Total Phoenix Education Partners, Inc.Equity			NoncontrollingInterests			TotalEquity
Balance as of November 30, 2024		35,560		$	—	$	373,675		$	—		$	—		$	—		$	2		$	373,677		$	26,665		$	400,342
Change in fair value of available-for-sale securities, net of tax		—			—		—			—			—			—			(15	)		(15	)		—			(15	)
Share-based compensation		—			—		—			—			—			—			—			—			617			617
Tax withholdings for share-based award settlements		—			—		—			—			—			—			—			—			(10	)		(10	)
Dividends and dividend equivalents to noncontrolling interests		—			—		—			—			—			—			—			—			(13,820	)		(13,820	)
Capital distributions to limited partners ($3.85 per share)		—			—		(134,001	)		—			—			—			—			(134,001	)		—			(134,001	)
Net income (loss)		—			—		16,125			—			—			—			—			16,125			(21	)		16,104
Balance as of February 28, 2025		35,560		$	—	$	255,799		$	—		$	—		$	—		$	(13	)	$	255,786		$	13,431		$	269,217

(1)

See Note 1. Nature of Operations and Significant Accounting Policies for a description of our Initial Public Offering, conversion into a corporation and name change.

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~EQUITY

(Unaudited)

	Three Months Ended November 30,
(In thousands)	Common Stock(1) (Shares)			GeneralPartner			Limited Partners			Common Stock (Amount)			Additional Paid-inCapital			RetainedEarnings			Accumulated Other ComprehensiveIncome, net			Total Phoenix Education Partners, Inc.Equity			NoncontrollingInterests			TotalEquity
($ in thousands)	2025			2024
Balance as of August 31, 2025		35,596		$	—		$	246,735		$	—		$	—		$	—		$	39		$	246,774		$	(6,719	)	$	240,055
Operating activities:
Corporate conversion		—			—			(246,735	)		356			236,935			—			—			(9,444	)		9,444			—
Net income	$	15,478		$	47,118
Change in fair value of available-for-sale securities, net of tax		—			—			—			—			—			—			26			26			—			26
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		—			—			—			—			39,166			—			—			39,166			—			39,166
Share-based compensation		29,499			646
Shares issued under share-based compensation plans		319			—			—			3			(3	)		—			—			—			—			—
Depreciation and amortization		5,480			5,192
Tax withholdings for share-based award settlements		(104	)		—			—			(1	)		(3,284	)		—			—			(3,285	)		—			(3,285	)
Non-cash lease expense		1,789			1,824
Common stock dividend ($0.21 per share) and dividend equivalents		—			—			—			—			—			(8,345	)		—			(8,345	)		—			(8,345	)
Impairment charges and asset disposal losses		20			34
Net income (loss)		—			—			—			—			—			26,234			—			26,234			(287	)		25,947
Provision for credit losses on accounts receivable		9,579			11,281
Balance as of February 28, 2026		35,811		$	—		$	—		$	358		$	272,814		$	17,889		$	65		$	291,126		$	2,438		$	293,564
Deferred income taxes		8,759			12,378
(In thousands)	Common Stock(1) (Shares)			GeneralPartner			Limited Partners			Common Stock (Amount)			Additional Paid-inCapital			RetainedEarnings			Accumulated Other ComprehensiveIncome, net			Total Phoenix Education Partners, Inc.Equity			NoncontrollingInterests			TotalEquity
Changes in assets and liabilities, excluding the impact of acquisition:
Balance as of August 31, 2024		35,501		$	—		$	327,259		$	—		$	—		$	—		$	45		$	327,304		$	21,626		$	348,930
Accounts receivable		(33,180	)		(40,846	)
Noncontrolling interest issued in business combination		—			—			—			—			—			—			—			—			4,147			4,147
Prepaid income taxes		799			(920	)
Change in fair value of available-for-sale securities, net of tax		—			—			—			—			—			—			(58	)		(58	)		—			(58	)
Other assets		(10,563	)		(4,144	)
Share-based compensation		77			—			—			—			—			—			—			—			1,263			1,263
Accounts payable		(1,364	)		(13,175	)
Tax withholdings for share-based award settlements		(18	)		—			—			—			—			—			—			—			(325	)		(325	)
Accrued compensation and benefits		(10,163	)		(17,845	)
Dividends and dividend equivalents to noncontrolling interests		—			—			—			—			—			—			—			—			(13,961	)		(13,961	)
Student deposits		(3,425	)		(37,146	)
Capital distributions to limited partners ($3.85 per share)		—			—			(134,001	)		—			—			—			—			(134,001	)		—			(134,001	)
Deferred revenue		23,910			12,510
Net income		—			—			62,541			—			—			—			—			62,541			681			63,222
Operating lease liabilities		(2,455	)		(4,101	)
Balance as of February 28, 2025		35,560		$	—		$	255,799		$	—		$	—		$	—		$	(13	)	$	255,786		$	13,431		$	269,217
Other liabilities		(3,096	)		(6,809	)
Net cash provided by (used in) operating activities		31,067			(34,003	)
Investing activities:
Purchases of property and equipment		(4,716	)		(5,792	)
Purchases of marketable securities		(6,029	)		(9,075	)
Sales of marketable securities		—			8,475
Maturities of marketable securities		600			2,000
Acquisition, net of cash acquired		—			(1,982	)
Net cash used in investing activities		(10,145	)		(6,374	)
Financing activities:
Payments of dividend equivalents		(721	)		(141	)
Payroll taxes paid on share-based awards		(2,178	)		(764	)
Net cash used in financing activities		(2,899	)		(905	)
Net change in cash and restricted cash		18,023			(41,282	)
Cash and restricted cash, beginning of period		173,001			356,170
Cash and restricted cash, end of period	$	191,024		$	314,888
Supplemental disclosure information:
Income tax payments, net	$	2,104		$	4,868
Noncontrolling interest issued in business combination	$	—		$	4,147

(1)

See Note 1. Nature of Operations and Significant Accounting Policies for a description of our Initial Public Offering, conversion into a corporation and name change.

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended February 28,
($ in thousands)	2026			2025
Operating activities:
Net income	$	25,947		$	63,222
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		39,166			1,263
Depreciation and amortization		11,205			10,814
Non-cash lease expense		3,585			3,594
Impairment charges and asset disposal losses		520			84
Provision for credit losses on accounts receivable		16,075			23,354
Deferred income taxes		7,811			12,840
Changes in assets and liabilities, excluding the impact of acquisition:
Accounts receivable		7,867			(12,954	)
Prepaid income taxes		(11,796	)		(4,403	)
Other assets		(10,083	)		(629	)
Accounts payable		4,825			(7,683	)
Accrued compensation and benefits		(501	)		(6,059	)
Student deposits		(1,121	)		(52,893	)
Deferred revenue		910			2,996
Operating lease liabilities		(4,961	)		(6,154	)
Other liabilities		(9,495	)		(5,243	)
Net cash provided by operating activities		79,954			22,149
Investing activities:
Purchases of property and equipment		(10,085	)		(10,892	)
Purchases of marketable securities		(10,066	)		(11,082	)
Sales of marketable securities		—			8,475
Maturities of marketable securities		11,204			2,650
Acquisition, net of cash acquired		—			(1,982	)
Other investing activities		(46	)		(35	)
Net cash used in investing activities		(8,993	)		(12,866	)
Financing activities:
Payments of dividend and dividend equivalents		(9,066	)		—
Payroll taxes paid on share-based awards		(3,547	)		(774	)
Payments of dividend and dividend equivalents to noncontrolling interests		—			(13,961	)
Capital distributions to limited partners		—			(134,001	)
Net cash used in financing activities		(12,613	)		(148,736	)
Net change in cash and restricted cash		58,348			(139,453	)
Cash and restricted cash, beginning of period		173,001			356,170
Cash and restricted cash, end of period	$	231,349		$	216,717
Supplemental disclosure information:
Income tax payments, net	$	20,410		$	10,812
Noncontrolling interest issued in business combination	$	—		$	4,147

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Nature of Operations and Significant Accounting Policies

Description of Business

Prior to completing our initial public offering (“IPO”) on October 10, 2025, AP VIII Queso Holdings, L.P. (“Queso”, and together with its subsidiaries, the “Company”, “we”, “us”, or “our”) was a limited partnership that was formed in accordance with the laws of Delaware on January 9, 2014. Queso made an election to be classified as a corporation for federal income tax purposes and its fiscal year was from September 1 to August 31. Prior to the IPO, Queso converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Phoenix Education Partners, Inc. (“Phoenix Education Partners”). In connection with our conversion into a corporation, all of the 1,028,000 outstanding limited partnership units of Queso were converted on a 1-for-33.858 basis into an aggregate of 34,805,541 shares of our common stock. Following our conversion into a corporation, Phoenix Education Partners holds all of the property and assets ~~of Queso~~ and assumed all of the debts and obligations of Queso.

Initial Public Offering

At our IPO closing, certain of our existing shareholders sold 4,250,000 shares at the IPO price of $32.00 per share. The existing shareholders sold an additional 637,500 shares on October 15, 2025 at the IPO price. The selling shareholders received all of the proceeds from these sales. Accordingly, we did not receive any proceeds from the sale of shares associated with the offering. We expensed all offering costs, primarily consisting of ~~accounting~~legal, ~~legal~~accounting, printing and filing services, and other third-party fees related to the IPO, as incurred because we did not receive any proceeds from the offering. We ~~incurred~~did ~~approximately~~not $5incur ~~million~~any ~~of these~~ offering costs ~~during~~in the three months ended ~~November~~February 3028, ~~2025~~2026 and ~~did~~incurred ~~not~~approximately ~~incur~~$5 ~~any~~million of ~~these~~ offering costs in the six months ended February 28, 2026. During the three and six months ended ~~November~~February 3028, ~~2024~~2025, we incurred approximately $4 million of offering costs. This expense is included in strategic alternatives, restructuring and other on our condensed consolidated statements of income.

Prior to the IPO, we owned approximately 98% of the outstanding shares of the University’s common stock. In connection with the IPO, all of the outstanding shares of the University’s common stock owned by persons other than the Company were converted into shares of our common stock at a ratio equal to one share of the Company’s common stock for each share of the University’s common stock. As a result, we issued 790,714 shares of the Company’s common stock upon the conversion of 790,714 outstanding shares of the University’s common stock. Following the closing of the IPO, the University is a wholly-owned subsidiary of the Company.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Phoenix Education Partners, ~~Inc.~~ on a consistent basis with the audited consolidated financial statements for the year ended August 31, 2025, and contain all adjustments, including normal recurring adjustments, necessary to fairly state the information set forth herein. These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosures necessary to present the unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of our 2025 Annual Report on Form 10-K for the year ended August 31, 2025, as filed with the SEC on November 20, 2025. The results of operations for the three and six months ended ~~November~~February 3028, ~~2025~~2026 are not necessarily indicative of the results that may be expected for the year ending August 31, 2026 or any other future period, and we make no representations related thereto.

In accordance with Accounting Standards Codification Topic 260, Earnings Per Share, we have applied retrospective presentation to our earnings per share for all periods presented in our financial statements to reflect the shares of common stock resulting from our IPO. Refer to Note 11. Earnings Per Share for additional information.

~~Estimates~~Beginning in the first quarter of fiscal year 2026 and after the IPO, ~~Assumptions~~we began separately presenting tax withholding for share‑based award settlements and ~~Judgments~~dividend and dividend equivalents to noncontrolling interests on our condensed consolidated statements of equity and condensed consolidated statements of cash flows. We have reclassified prior periods to conform to our current period presentation.

The preparation of these unaudited condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates, assumptions and judgments that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during applicable reporting periods. Although we believe our estimates, assumptions and judgments are reasonable, actual results may differ from our estimates under different assumptions, judgments or conditions.7

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Estimates, Assumptions and Judgments

Principles of Consolidation

These unaudited condensed consolidated financial statements include the assets, liabilities, revenues and expenses of Phoenix Education Partners, our wholly-owned subsidiaries and other subsidiaries that we control, substantially all of which represents the University. We eliminate intercompany transactions and balances in consolidation.

We record noncontrolling interests to recognize the noncontrolling ownership interests in our consolidated subsidiaries. We allocate a portion of the net income (loss) of such subsidiaries to our noncontrolling interests generally based on the respective noncontrolling shareholder’s ownership interest in the consolidated subsidiary.

Seasonality

~~Although~~The ~~the~~ University’s non-term academic model, ~~encompassing~~encompasses a series of courses taken consecutively over the length of the program, ~~reduces~~which we would expect to limit 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.

Revenue Recognition

We recognize revenue in a manner to depict the transfer of goods or services to our customers at an amount that reflects the consideration we expect to receive in exchange for our goods or services. The University generates all of our consolidated net revenue, and substantially all of the University’s net revenue is generated from tuition-bearing degree programs. The University’s students generally fund their education through loans and/or grants from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), military benefit programs, tuition assistance from their employers, or personal funds.

As of ~~November~~February 3028, ~~2025~~2026 and August 31, 2025, we had $1213.24 million and $13.1 million, respectively, of contract liabilities for discount programs that represent material rights to students ~~that~~which are included in other current liabilities on our condensed consolidated balance sheets. Additionally, we had contract liabilities consisting of deferred revenue and student deposits as reflected on our condensed consolidated balance sheets. The substantial majority of our contract liabilities as of ~~August~~a ~~31,~~respective ~~2025~~period ~~were~~end will be recognized in net revenue during the ~~three~~following ~~months~~sequential ~~ended~~quarter ~~November 30, 2025~~ due to ~~timing of~~ course ~~starts~~start timing and ~~the~~course duration ~~of courses~~.

Related Party Transactions

WePrior ~~received~~to ~~management~~our ~~consulting and advisory professional services and incurred related expense of $0.2 million and $0.5 million in the three months ended November 30~~IPO, ~~2025~~we ~~and~~paid ~~2024, respectively, which includes certain reimbursable costs, payable to~~ affiliates of Apollo Global Management, Inc. (“Apollo”) and The Vistria Group, LP (“Vistria”) for management consulting and advisory professional services. Apollo and Vistria are affiliated with entities that have ownership interests in Phoenix Education Partners. ~~Fees associated with these services are included in strategic alternatives, restructuring and other on our condensed consolidated statements of income.~~ Our management consulting agreements with Apollo and Vistria were terminated effective as of the pricing of our IPO and amounts we paid for such services during the six months ended February 28, 2026 were immaterial.

We remain a “controlled company” of Apollo subsequent to the IPO and we have related party transactions with certain Apollo-affiliated portfolio companies. During the three months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025, we ~~had~~paid ~~related~~Rackspace ~~party~~Technology, ~~transactions~~Inc. ~~with~~$1.5 ~~certain~~million ~~Apollo-affiliated~~and ~~portfolio~~$1.1 ~~companies~~million, ~~which~~respectively, ~~includes~~and ~~payments of~~ $13.83 million and $12.01 million during the ~~respective~~six ~~periods~~months toended ~~Rackspace~~February ~~Technology~~28, ~~Inc.~~2026 and 2025, respectively, for technology services.

~~New Accounting Standards~~8

Income Taxes - Income Tax Disclosures

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

~~consolidated~~New ~~balance~~Accounting sheets, consolidated statements of income or consolidated statements of cash flows, but we are currently evaluating the impact it may have on our financial statement disclosures in our 2026 Annual Report on Form 10-K.Standards

Income Taxes - Income Tax Disclosures

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies and enhances certain required income tax disclosures. ASU 2023-09 was effective for our fiscal year that began on September 1, 2025. ASU 2023-09 will not impact our consolidated balance sheets, consolidated statements of income or consolidated statements of cash flows, but will impact our financial statement disclosures in our 2026 Annual Report on Form 10-K.

Financial Instruments - Credit Losses

In July 2025, the FASB issued ASU 2025‑05, Financial Instruments—Credit Losses (Topic 326‑20): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of current accounts receivable and current contract assets. ASU 2025-05 will be effective for our fiscal year beginning on September 1, 2026 and we are currently evaluating the impact it may have on our consolidated financial statements.

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations, as well as disclosures about selling expenses. ASU 2024-03 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and will be effective for our fiscal year beginning on September 1, 2027. We are currently evaluating the impact it may have on our financial statement disclosures.

Intangibles - Goodwill and Other - Internal-Use Software

In September 2025, the FASB issued ASU 2025‑06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which is intended to improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. ASU 2025-06 will be effective for our fiscal year beginning on September 1, 2028 and we are currently evaluating the impact it may have on our consolidated financial statements.

Interim Reporting

In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to clarify the applicability of interim reporting guidance, the types of interim reporting and the form and content of interim GAAP financial statements. ASU 2025-11 will be effective for our fiscal year beginning on September 1, 2028 and we are currently evaluating the impact it may have on our interim condensed consolidated financial statements.

Note 2. Strategic Alternatives, Restructuring and Other

Strategic alternatives, restructuring and other includes the following during the respective periods:

	Three Months Ended November 30,
	Three Months Ended February 28,					Six Months Ended February 28,
($ in thousands)	~~2025~~2026		~~2024~~2025			2026		2025
Strategic alternatives	$	~~4,921~~356	$	~~875~~4,124		$	5,277	$	4,999
Cybersecurity incident		~~4,500~~329		—			4,829		—
Lease restructuring, net		2,020		2,027
Lease restructuring expense (credit), net		1,585		(311	)		3,605		1,716
Other		32,~~187~~838		2,~~044~~290			6,025		4,334
Strategic alternatives, restructuring and other	$	145,~~628~~108	$	46,~~946~~103		$	19,736	$	11,049

Strategic alternatives ~~consists~~represents of costs incurred for our IPO and ~~costs incurred~~ for pursuing other strategic ~~ownership~~ alternatives ~~considered prior to our IPO~~ (see Note 1. Nature of Operations and Significant Accounting Policies). See Note 13. Commitments and Contingencies for information on the cybersecurity incident. ~~See~~During ~~Note~~the 8.three ~~Other~~months ~~Liabilities~~ended ~~for~~February ~~information~~28, on2025, ~~the~~we ~~University’s~~recognized a net credit in lease restructuring ~~activities.~~resulting from a reduction

~~Note 3. Acquisition~~9

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

~~employees through machine learning-based skills inference. In the first quarter of fiscal year 2025, PEOC acquired a controlling interest~~ in ~~Empath~~our ~~pursuant~~estimated tofuture ancash ~~Agreement~~flows ~~and~~associated ~~Plan of Merger, by merging Talent Mobility, LLC~~ with ~~Empath,~~our ~~with~~exited ~~Empath~~space ~~surviving~~(See asNote ~~a subsidiary of PEOC~~8. ~~Empath~~Other ~~was~~Liabilities ~~subsequently~~for ~~renamed~~information ~~“Talent~~on ~~Mobility,~~the ~~Inc.”~~University’s ~~PEOC~~restructuring ~~paid approximately $2 million, net of cash acquired, to facilitate this merger and did not incur material transaction costs~~activities).

Note 3. Acquisition

As of August 31, 2024, Talent Mobility, LLC, a wholly-owned subsidiary of Phoenix Education Operating Corp. (“PEOC”), had a minority ownership interest in Empath, Inc. (“Empath”). Empath provides clients with a company-wide skills inventory for its employees through machine learning-based skills inference. In the first quarter of fiscal year 2025, PEOC acquired a controlling interest in Empath pursuant to an Agreement and Plan of Merger, by merging Talent Mobility, LLC with Empath, with Empath surviving as a subsidiary of PEOC. Empath was subsequently renamed “Talent Mobility, Inc.” PEOC paid approximately $2 million, net of cash acquired, to facilitate this merger and did not incur material transaction costs.

We accounted for this merger as a business combination and allocated the purchase price to the assets acquired and liabilities assumed at fair value as summarized below:



($ in thousands)
Cash	$	2,418
Finite-lived intangibles - Technology (3 year useful life)		7,254
Goodwill		3,732
Deferred income taxes		(1,706	)
Other		(99	)
Total assets acquired and liabilities assumed, net		11,599
Less: Fair value of noncontrolling interests		(4,147	)
Total fair value of consideration transferred		7,452
Less: Cash acquired		(2,418	)
Less: Fair value of equity method investment		(2,452	)
Less: Note forgiven		(600	)
Cash paid for acquisition, net of cash acquired	$	1,982

We determined fair value using the following assumptions, the majority of which include significant unobservable inputs (Level 3), that we believe reasonable market participants would use while employing the concept of highest and best use of the respective items:

•

Intangibles – We valued the technology primarily using the replacement cost approach. We determined this acquired intangible asset is finite-lived and we are amortizing the asset on a straight-line basis over three years, which we believe reflects the pattern in which the economic benefits of the asset are expected to be consumed.

•

Other – The carrying value of all other assets acquired and liabilities assumed approximated their fair value at the time of acquisition.

•

Noncontrolling interests – We estimated the fair value of the noncontrolling interests principally as the noncontrolling ownership percentage of the implied fair value of the acquired entity, and applied a discount for lack of control.

The goodwill resulting from the merger is principally attributable to the future earnings potential associated with customer enrollment growth and other intangibles that do not qualify for separate recognition, such as the assembled workforce. The operating results of Empath are included in our consolidated financial statements from the date of acquisition and its results are not material to our consolidated results of operations. Pro forma financial information is not presented as Empath’s results were not material to our condensed consolidated statements of income.

Note 4. Financial Instruments

Cash and cash equivalents and Restricted cash and cash equivalents

We consider all highly liquid investments with original maturities to us of three months or less from the date we purchase the investment to be cash equivalents.

Restricted cash and cash equivalents are presented separately from cash and cash equivalents on our condensed consolidated balance sheets. The following provides a reconciliation of cash and restricted cash as presented on our condensed consolidated statements of cash flows as of the respective periods:10

	November 30,
($ in thousands)	2025		2024
Cash and cash equivalents	$	151,285	$	262,073
Restricted cash and cash equivalents		39,739		52,815
Total cash and restricted cash	$	191,024	$	314,888

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements


	February 28,
($ in thousands)	2026		2025
Cash and cash equivalents	$	194,597	$	166,370
Restricted cash and cash equivalents		36,752		50,347
Total cash and restricted cash	$	231,349	$	216,717

Fair value measurements

The following summarizes our cash and cash equivalents, restricted cash and cash equivalents and marketable securities by financial instrument category as of the respective periods:

	November 30, 2025
	February 28, 2026
($ in thousands)	AmortizedCost		UnrealizedGains		UnrealizedLosses			Fair Value		Cash and CashEquivalents(1)		CurrentMarketableSecurities		NoncurrentMarketableSecurities
Cash	$	~~133~~114,~~006~~878	$	—	$	—		$	~~133~~114,~~006~~878	$	~~133~~114,~~006~~878	$	—	$	—
Level 1:
Money market funds		58116,~~018~~471		—		—			58116,~~018~~471		58116,~~018~~471		—		—
Level 2:
Corporate bonds		2620,~~975~~635		~~122~~105		(1519	)		2720,~~082~~721		—		126,~~191~~770		1413,~~891~~951
Total	$	~~217~~251,~~999~~984	$	~~122~~105	$	(1519	)	$	~~218~~252,~~106~~070	$	~~191~~231,~~024~~349	$	126,~~191~~770	$	1413,~~891~~951


	August 31, 2025
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	129,113	$	—	$	—		$	129,113	$	129,113	$	—	$	—
Level 1:
Money market funds		39,574		—		—			39,574		39,574		—		—
Level 2:
Corporate bonds		26,070		71		(19	)		26,122		4,314		9,005		12,803
Total	$	194,757	$	71	$	(19	)	$	194,809	$	173,001	$	9,005	$	12,803

(1)

Cash and cash equivalents includes restricted cash and cash equivalents.

We measure our financial instruments at fair value on a recurring basis as follows:

•

Money market funds—We use Level 1 inputs that primarily consist of real-time quotes for transactions in active exchange markets involving identical assets.

•

Other financial instruments—We use a market approach with Level 2 observable inputs for all other securities. The Level 2 inputs include quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.

Our marketable securities have maturities that occur within three years. We may sell certain of our marketable securities prior to their stated maturities for strategic reasons including, but not limited to, investment yield and credit risk management. We have not recognized significant gains or losses related to such sales. Additionally, all of our securities are investment grade and are classified as available for sale. We have no related allowance for credit losses as of ~~November~~February 3028, ~~2025~~2026.

1011

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 5. Accounts Receivable, Net

Accounts receivable, net consists of the following as of the respective periods:

($ in thousands)	~~November~~February 3028, ~~2025~~2026			August 31, 2025
Student accounts receivable	$	~~120~~73,~~128~~337		$	91,127
Allowance for credit losses		(4340,~~102~~420	)		(42,000	)
Net student accounts receivable		7732,~~026~~917			49,127
Other receivables		52,~~532~~098			9,830
Accounts receivable, net	$	8235,~~558~~015		$	58,957

The following summarizes the activity in allowance for credit losses during the respective periods:

	Three Months Ended November 30,
	Three months ended February 28,						Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025			2026			2025
Beginning allowance for credit losses	$	4243,~~000~~102		$	4942,~~200~~354		$	42,000		$	49,200
Provision for credit losses on accounts receivable		96,~~579~~496			1112,~~281~~073			16,075			23,354
Write-offs, net of recoveries		(89,~~477~~178	)		(1810,~~127~~681	)		(17,655	)		(28,808	)
Ending allowance for credit losses	$	4340,~~102~~420		$	4243,~~354~~746		$	40,420		$	43,746

Note 6. Goodwill and Intangibles

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the net identifiable assets acquired and liabilities assumed. See Note 3. Acquisition for goodwill acquired in the first quarter of fiscal year 2025.

~~Intangibles~~Intangible assets consist of the following as of the respective periods:

	November 30, 2025							August 31, 2025
	February 28, 2026							August 31, 2025
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Curriculum	$	~~659~~706	$	(~~356~~414	)	$	~~303~~292	$	659	$	(301	)	$	358
Technology		7,254		(3,~~023~~627	)		43,~~231~~627		7,254		(2,418	)		4,836
Total finite-lived intangibles		7,913		(3,379	)		4,534		7,913		(2,719	)		5,194
Total finite-lived intangible assets		7,960		(4,041	)		3,919		7,913		(2,719	)		5,194
Trademark		20,600		—			20,600		20,600		—			20,600
Accreditation		61,500		—			61,500		61,500		—			61,500
Total indefinite-lived intangibles		82,100		—			82,100		82,100		—			82,100
Total indefinite-lived intangible assets		82,100		—			82,100		82,100		—			82,100
Total intangible assets, net	$	90,~~013~~060	$	(34,~~379~~041	)	$	86,~~634~~019	$	90,013	$	(2,719	)	$	87,294

Our finite-lived ~~intangibles~~intangible assets are amortized on a straight-line basis. Amortization expense was $0.7 million in both the three months ended ~~November~~February 3028, 2026 and 2025 and ~~2024~~$1.3 million and $1.4 million in the six months ended February 28, 2026 and 2025, respectively.

The weighted average remaining useful life of our finite-lived ~~intangibles~~intangible assets as of ~~November~~February 3028, ~~2025~~2026 was approximately 21.5 years. The estimated future amortization expense of our finite-lived ~~intangibles~~intangible assets as of ~~November~~February 3028, ~~2025~~2026 is as follows:

($ in thousands)		Remainder of 2026				2027				2028				~~Total~~2029				Total
Estimated future amortization expense		$	1,~~957~~306			$	2,~~542~~558			$	3553			$	~~4,534~~2			$	3,919

1112

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 7. Leases

Lease expense is included in instructional and support, general and administrative and strategic alternatives, restructuring and other on our condensed consolidated statements of income. The components of our operating lease costs were ~~the~~as ~~following~~follows during the respective periods:

	Three Months Ended November 30,
	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025			2026			2025
Operating lease cost	$	3,~~288~~243		$	3,~~518~~366		$	6,531		$	6,884
Variable lease cost		~~897~~666			~~419~~1,000			1,563			1,419
Less: Sublease income(1)		(12,~~564~~085	)		(1,~~474~~460	)		(3,649	)		(2,934	)
Total lease cost, net	$	21,~~621~~824		$	2,~~463~~906		$	4,445		$	5,369

(1)

We expect to recognize $3533.2 million in sublease income for periods subsequent to ~~November~~February 3028, ~~2025~~2026, through March 2031, the sublease termination date. Sublease income represents all of our consolidated lease income and is recorded as an offset to lease expense in strategic alternatives, restructuring and other on our condensed consolidated statements of income.

Future payments related to our operating lease liabilities were as follows for periods subsequent to ~~November~~February 3028, ~~2025~~2026:

($ in thousands)
Remainder of 2026	$	106,~~673~~720
2027		16,265
2028		16,590
2029		16,922
2030		17,260
2031		10,185
Total operating lease payments		8783,~~895~~942
Less: liability accretion		(1715,~~050~~603	)
Present value of operating lease liabilities		7068,~~845~~339
Less: current operating lease liabilities		(9,~~241~~541	)
Long-term operating lease liabilities	$	6158,~~604~~798

The following provides supplemental information related to leases during the respective periods:

	Three Months Ended November 30,
	Six Months Ended February 28,
	2025		2024
	2026		2025
Cash paid for amounts included in the measurement of operating lease liabilities(1)	$	47.09 million	$	59.84 million
Operating lease ROU assets obtained in exchange for lease liabilities		None		None

(1)

Cash paid for amounts included in the measurement of operating lease liabilities for the ~~three~~six months ended ~~November~~February 3028, ~~2024,~~2025 includes rent paid on campus leases that expired during the prior fiscal year.

Note 8. Other Liabilities

Other current liabilities consist of the following as of the respective periods:

($ in thousands)	~~November~~February 3028, ~~2025~~2026		August 31, 2025
Accrued advertising	$	710,~~211~~744	$	14,740
Contract liabilities for discount programs		1213,~~242~~409		13,079
Restructuring obligations(1)		3,~~041~~092		2,991
Other		2414,~~788~~346		19,798
Total other current liabilities	$	4741,~~282~~591	$	50,608

1213

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Other long-term liabilities consist of the following as of the respective periods:

($ in thousands)	~~November~~February 3028, ~~2025~~2026		August 31, 2025
Restructuring obligations(1)	$	1211,~~134~~345	$	12,909
Uncertain tax positions(2)		22,485		11,994
Uncertain tax position(2)		22,661		11,994
Other		2,~~222~~292		2,207
Total other long-term liabilities	$	36,~~841~~298	$	27,110

(1)

The University’s restructuring activities over recent years have been completed and principally included closing ground locations, rationalizing leased administrative office facilities, and workforce reductions. Our liability, including current and long-term, associated with these activities was $1514.24 million and $15.9 million as of ~~November~~February 3028, ~~2025~~2026 and August 31, 2025, respectively, and principally represents the present value of future estimated non-rent, executory costs associated with an exited lease that will be paid over the respective lease term through fiscal year 2031. The decrease in the liability during the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026 was principally attributable to payments related to such lease. The gross, undiscounted, obligation associated with this liability was approximately $1817 million as of ~~November~~February 3028, ~~2025~~2026.

(2)

This uncertain tax position relates to a worthless stock deduction taken in fiscal year 2019. We have recorded an uncertain tax position liability as we use the net operating losses associated with the unrecognized tax benefits.

Note 9. Revolving Credit Facility

On November 13, 2025, we entered into a senior secured revolving credit facility in an aggregate principal amount of $100 million (the “Revolving Facility”). The Revolving Facility is available for general corporate purposes, including letters of credit, for the Company and its subsidiaries. The Revolving Facility matures on November 13, 2030. Borrowings under the Revolving Facility bear interest at a rate equal to, at our option, either (a) a term Secured Overnight Financing Rate (“SOFR”) (subject to a floor of zero), plus an applicable margin of 2.50% per annum or (b) a base rate (subject to a floor of 1.00%) determined by reference to the highest of (i) the greater of the federal funds effective rate and the overnight bank funding rate, in each case plus 0.50% per annum, (ii) the rate of interest per annum determined by the administrative agent under the Revolving Facility as its prime commercial lending rate for loans denominated in U.S. dollars and (iii) the one-month term SOFR plus 1.00% per annum, plus an applicable margin of 1.50% per annum. The Revolving Facility also has a commitment fee equal to 0.375% per annum of the unutilized commitments.

In addition, the Revolving Facility requires us to comply on a quarterly basis, ~~commencing~~ with ~~our second fiscal quarter ending February 28, 2026, with~~ a maximum leverage ratio if borrowings under the Revolving Facility on such date ~~exceeds~~exceed 35% of the then outstanding commitments under the Revolving Facility.

As of ~~November~~February 3028, ~~2025~~2026, we had no outstanding borrowings under the Revolving Facility and were in compliance with the terms and conditions of the Revolving Facility.

Note 10. Income Taxes

We are subject to income taxes in the United States and various state jurisdictions. We compute our interim income tax provision by applying our estimated effective tax rate expected to be applicable for the fiscal year, adjusted for discrete items, if applicable, to our income before income taxes for the period. Our effective ~~income~~ tax rate is dependent upon several factors, such as tax rates in state jurisdictions and the relative amount of income we earn in such jurisdictions. We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain.

Our income tax expense for the three and six months ended ~~November~~February 3028, ~~2025,~~2026 was $114.78 million and $16.4 million, or 4331.03% and 38.8% of ~~pre-tax~~income before income taxes for the respective periods. The effective ~~income~~ tax ~~rate~~rates differed from the federal statutory rate of 21% primarily due to state income taxes and certain non-deductible executive compensation and transaction costs related to the IPO.

Our income tax expense for the three and six months ended ~~November~~February 3028, ~~2024,~~2025 was $165.36 million and $21.9 million, or 26.0% and 25.78% of ~~pre-tax~~income before income taxes for the respective periods. The effective ~~income~~ tax ~~rate~~rates differed from the federal statutory rate of 21% primarily due to state income taxes.

Income Tax Audits

Our U.S. federal income tax return for fiscal year 2023 is currently under review by the Internal Revenue Service and our U.S. federal income tax returns for fiscal years 2022 and 2024 are currently open for review. Additionally, tax years as early as fiscal year 2020 remain subject to examination by state or local tax authorities.

1314

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 11. Earnings Per Share

In connection with our IPO, Queso converted into a Delaware corporation and all of its 1,028,000 outstanding limited partnership units were converted on a 1-for-33.858 basis into an aggregate of 34,805,541 shares of our common stock. Additionally, all of the outstanding shares of the University’s common stock owned by persons other than the Company were converted into shares of the Company’s common stock at a ratio equal to one share of the Company’s common stock for each share of the University’s common stock. As a result, we issued 790,714 shares of the Company’s common stock upon the conversion of 790,714 outstanding shares of the University’s common stock, and the University is now a wholly-owned subsidiary of the Company. Further, we will issue shares of the Company’s common stock on a 1-for-1 basis upon the vesting and/or future exercise of the University’s outstanding share-based awards. We have applied retrospective presentation to our earnings per share for all periods presented in our financial statements such that weighted average shares outstanding reflects these conversions resulting from the IPO.

We calculate earnings per share by dividing net income attributable to Phoenix Education Partners, Inc. by the weighted average shares outstanding. For diluted weighted average shares outstanding, we calculate the dilutive effect of share-based awards by applying the treasury stock method.

The components of basic and diluted earnings per share consist of the following for the respective periods:

	Three Months Ended November 30,
	Three months ended February 28,				Six Months Ended February 28,
(In thousands, except per share data)	~~2025~~2026		~~2024~~2025		2026		2025
Numerator:
Net income attributable to Phoenix Education Partners, Inc. (basic and diluted)	$	1510,~~454~~780	$	4616,~~416~~125	$	26,234	$	62,541
Denominator:
Basic weighted average shares outstanding		35,~~650~~778		35,~~505~~560		35,714		35,532
Dilutive effect of stock options(1)		23,~~820~~003		2,~~089~~285		2,912		2,188
Dilutive effect of restricted stock units(1)		~~421~~107		3653		118		44
Diluted weighted average shares outstanding		38,~~891~~888		37,~~630~~898		38,744		37,764
Basic income per share attributable to Phoenix Education Partners, Inc.	$	0.4330	$	10.3145	$	0.73	$	1.76
Diluted income per share attributable to Phoenix Education Partners, Inc.	$	0.4028	$	10.2343	$	0.68	$	1.66

(1)

Diluted shares during both the three and six months ended ~~November~~February 3028, ~~2025~~2026 excludes approximately 0.5 million performance share units, ~~and~~that ~~the~~are ~~three~~contingently ~~months~~issuable ~~ended~~shares ~~November~~as ~~30,~~they ~~2024~~vest ~~excludes~~upon achievement of performance conditions. Additionally, approximately 2.1 million outstanding stock options and 0.1 million restricted stock units are excluded from both the three and six months ended February 28, 2025 because such awards ~~are~~were contingently issuable shares. ~~The~~as ~~contingently~~they ~~issuable~~vested ~~awards~~upon ~~vest~~certain ~~upon~~changes in control or achievement of performance conditions.

Note 12. Share-Based Awards

Share-Based Awards – The University of Phoenix, Inc. Management Equity Plan

Prior to the IPO, we had outstanding stock option and restricted stock unit equity awards that were issued under the University of Phoenix, Inc. Management Equity Plan. Upon the future vesting of the University’s outstanding restricted stock units, we will issue shares of the Company’s common stock on a 1-for-1 basis. Upon the future exercise of the University’s outstanding stock options, we will have the right to either issue shares of the Company’s common stock in exchange for the shares of the University’s common stock received upon exercise on a 1-for-1 basis or purchase the shares of the University’s common stock received upon exercise for cash.

In connection with the IPO, we modified approximately 1.7 million outstanding stock options that previously vested solely upon a change in control or ownership, which resulted in 0.9 million of such stock options vesting at the IPO and the remaining 0.8 million vesting on the first anniversary of the IPO. The weighted average fair value of these stock options at the modification date was $21.69, and we recognized $2327.14 million of share-based compensation expense in the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026, as a result. As of ~~November~~February 3028, ~~2025~~2026, we had $149.29 million of unrecognized share-based compensation expense for these stock options that we expect to recognize over a period of less than one year.

For the above modification, we used the Black-Scholes model to estimate the fair value of the stock options using the following weighted average inputs:

~~Share price: $32.00 per share (IPO price)~~15

Risk-free interest rate: 3.8%

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

•

Share price: $32.00 per share (IPO price)

•

Risk-free interest rate: 3.8%

•

Volatility: 35.6%

•

Dividend yield: zero due to stock option recipients’ expected participation in dividends

•

Term: 1.1 years.

We did not grant any share-based awards under the University of Phoenix, Inc. Management Equity Plan during the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026 and do not expect to grant any new awards in the future under such plan. The following provides a summary of the University’s stock option activity:

	Options Outstanding
	Number of Shares(in thousands)			WeightedAverage ExercisePrice per Share		WeightedAverageRemainingContractualTerm (Years)		AggregateIntrinsic Value(in thousands)
Balance at August 31, 2025		4,930		$	8.61
Granted		—		N/A
Exercised(1)		(~~136~~227	)	$	7.7053			$	35,~~142~~283
Forfeited, canceled or expired		(6	)	$	10.61
Balance at November 30, 2025		4,788		$	8.63		5	$	120,064
Balance at February 28, 2026		4,697		$	8.66		5	$	98,355
Vested and expected to vest as of November 30, 2025		4,788		$	8.63		5	$	120,064
Vested and expected to vest as of February 28, 2026		4,697		$	8.66		5	$	98,355
Exercisable as of November 30, 2025		3,612		$	7.99		5	$	92,906
Exercisable as of February 28, 2026		3,925		$	8.27		5	$	83,711

(1)

We did not receive any cash from stock option exercises in the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026.

In addition to the expense associated with the stock options described above, we have $0.54 million of unrecognized share-based compensation expense related to the University’s restricted stock units that we expect to recognize over a period of less than one year.

Share-Based Awards – Phoenix Education Partners Omnibus Incentive Plan

In connection with our IPO, our new Omnibus Incentive Plan became effective with aan initial reserve of approximately 4.1 million shares of our common stock for issuance of awards thereunder. ~~Restricted~~During ~~stock units granted pursuant to~~ the ~~Omnibus Incentive Plan generally vest over~~ three ~~years~~months ~~and~~ended ~~contain~~February ~~service~~28, ~~conditions~~2026, ~~exclusively~~we orregistered ~~service~~an ~~and~~approximately ~~performance conditions~~1.8 ~~During~~million ~~the~~additional ~~three~~shares ~~months~~of ~~ended~~our ~~November~~common ~~30,~~stock ~~2025,~~for weissuance ~~granted~~under the ~~following:~~Omnibus Incentive Plan.

Restricted stock units granted pursuant to the Omnibus Incentive Plan generally vest over three years and contain service conditions exclusively or service and performance conditions.

In connection with our IPO, we granted the following share-based awards:

•

1.3 million restricted stock units with a grant date fair value of $32 per share subject only to service vesting over three years.

•

0.5 million performance share units with a grant date fair value of $33.50 per share subject to service ~~vesting~~ and performance- vesting conditions over three years with the number of common shares that will ultimately be issued calculated by multiplying the number of performance shares by a payout percentage that ranges from 0% up to 200%. These awards also contain a market-based performance multiplier that can increase or decrease the number of performance shares earned by up to 15%, subject to the 0% floor and 200% maximum, based on the Company’s Total Shareholder Return relative to a subset of peer companies.

•

0.1 million of unrestricted shares of common stock with a grant date fair value of $32 per share.

AsWe ofalso ~~November~~granted ~~30,~~an ~~2025,~~immaterial weamount ~~expect to recognize approximately $39.7 million and $15.4 million~~ of ~~unrecognized~~restricted ~~share-based~~stock ~~compensation~~units ~~expense~~after ~~related~~the toIPO ~~unvested~~in ~~stock~~the ~~units~~three ~~and~~months ~~unvested~~ended ~~performance~~February ~~share units~~28, ~~respectively,~~2026 ~~over~~that awill ~~weighted~~vest ~~average~~one ~~period~~year offrom ~~approximately~~the ~~2.8~~grant ~~years~~date.

~~Phoenix~~As ~~Education~~of ~~Partners~~February ~~Employee~~28, ~~Stock~~2026, ~~Purchase~~we ~~Plan~~expect to recognize approximately $36.9 million and $14.0 million of unrecognized share-based compensation expense related to unvested stock units and unvested performance share units, respectively, over a weighted average period of approximately 2.6 years.

In connection with the IPO, we adopted an Employee Stock Purchase Plan (“ESPP”) pursuant to which all eligible employees of the Company are able to purchase shares of our common stock at a favorable price and upon favorable terms on specified dates. As of November 30, 2025, we have reserved an aggregate of 0.8 million shares of our common stock for issuance thereunder. The Company has not determined a date for the first offering period; therefore, no shares have been issued under the ESPP.16

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

~~Share-based~~Phoenix ~~Compensation~~Education Partners Employee Stock Purchase Plan

In connection with the IPO, we adopted an Employee Stock Purchase Plan (“ESPP”) pursuant to which all eligible employees of the Company are able to purchase shares of our common stock at a favorable price and upon favorable terms on specified dates. As of February 28, 2026, we have reserved an aggregate of 1.2 million shares of our common stock for issuance thereunder. The Company has not determined a date for the first offering period; therefore, no shares have been issued under the ESPP.

Share-Based Compensation

The following details total share-based compensation during the respective periods:

	Three Months Ended November 30,
	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	~~2025~~2026		~~2024~~2025		2026		2025
Instructional and support	$	62,~~761~~492	$	~~222~~211	$	9,253	$	433
General and administrative		227,~~738~~175		~~424~~406		29,913		830
Share-based compensation	$	299,~~499~~667	$	~~646~~617	$	39,166	$	1,263

Note 13. Commitments and Contingencies

Guarantees

We have indemnified officers and directors and certain affiliates from losses and other amounts arising from certain events or occurrences. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have liability insurance that mitigates our exposure and enables us to recover a portion of any future amounts paid. The fair value of these indemnification agreements, if any, cannot be estimated.

Sponsorship Rights Agreement

In August 2018, PEOC entered into an agreement for sponsorship rights on a stadium in Glendale, Arizona, which is the home of the Arizona Cardinals football team in the National Football League. The agreement term is in effect until 2030 with options to extend. Pursuant to the agreement, PEOC was required to pay $1.5 million for the initial contract year, which ~~increases~~was set to increase 3% per year until 2030. In December 2025, PEOC amended the Sponsorship Rights Agreement to, among other things, lower the annual increase from 3% to 1.5% for the remaining contract term. As of ~~November~~February 3028, ~~2025~~2026, our remaining contractual obligation pursuant to the agreement, as amended, was approximately $119 million.

Letters of Credit

We had a $32 million outstanding cash collateralized letter of credit as of ~~November~~February 3028, ~~2025~~2026, which supports a sublease for a facility we have exited.

Subsequent to February 28, 2026, we replaced our existing cash collateralized letter of credit with a new letter of credit, on substantially the same terms, through our Revolving Facility. As a result, we expect corresponding reductions in restricted cash and available capacity under our Revolving Facility.

Surety Bonds

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 ~~November~~February 3028, ~~2025~~2026, the face amount of these surety bonds was less than $1 million.

Litigation and Other Matters

We are subject to various claims and contingencies that arise from time to time in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. We do not believe any of these are material for separate disclosure and we do not believe any of these, individually or in the aggregate, will have a material effect on our consolidated financial position, results of operations or cash flows.

~~The following is a description of pending litigation, settlements, and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business.~~17

Cybersecurity Incident

We experienced a cybersecurity incident involving the Oracle E-Business Suite software platform (“Oracle EBS”). We are one of a number of organizations, including other academic institutions, from which an unauthorized third-party exfiltrated data by exploiting a previously unknown software vulnerability in Oracle EBS. The incident did not impact our business operations or student programming.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

~~remediate~~The ~~the vulnerability~~ following ~~their~~is ~~release~~a indescription ~~October~~of ~~2025.~~pending ~~We believe that certain personal information~~litigation, ~~including names and contact information~~settlements, ~~dates of birth, social security numbers,~~ and ~~bank~~other ~~account~~proceedings ~~and~~that ~~routing~~fall ~~numbers,~~outside ~~with respect to numerous individuals was accessed without authorization. To our knowledge,~~ the ~~unauthorized~~scope ~~third-party~~of ~~has~~ordinary ~~not publicly disseminated the data. We are continuing to review the impacted data~~ and ~~are~~routine ~~providing~~litigation ~~the~~incidental ~~required notifications~~ to ~~affected~~our ~~parties and applicable regulatory entities~~business.

InCybersecurity connection with this cybersecurity incident, we are currently aware of the filing of a number of putative class action lawsuits in which the University is either a single defendant or co-defendant with Oracle, or co-defendant with Oracle and other companies. On January 5, 2026, some of these lawsuits were consolidated into a single matter, along with other lawsuits against unrelated defendants which stem from the same Oracle EBS software vulnerability discussed above. This consolidated putative class action is titled In re Oracle Corporation Data Breach Litigation, pending in federal court in the Western District of Texas (Case No. 1:25-cv-01805).Incident

We experienced a cybersecurity incident involving the Oracle E-Business Suite software platform (“Oracle EBS”). We are one of a number of organizations, including other academic institutions, from which an unauthorized third-party exfiltrated data by exploiting a previously unknown software vulnerability in Oracle EBS. The incident has not impacted our business operations or student programming.

Upon detecting the incident on November 21, 2025, we promptly took steps to investigate and respond with the assistance of leading third-party cybersecurity firms. While the investigation remains ongoing, we believe that the software vulnerability was used in August 2025 to copy certain data maintained in our Oracle EBS environment. We promptly installed Oracle EBS software patches to remediate the vulnerability following their release in October 2025. We believe that certain personal information, including names and contact information, dates of birth, social security numbers, and bank account and routing numbers, with respect to numerous individuals was accessed without authorization. To our knowledge, the unauthorized third-party has not publicly disseminated the data. We are continuing to review the impacted data and are providing the required notifications to affected parties and applicable regulatory entities and also implemented measures to enhance security and reduce the risk of a similar incident occurring in the future.

In connection with this cybersecurity incident, we are currently aware of the filing of a number of putative class action lawsuits in which the University is either a single defendant or co-defendant with Oracle, or co-defendant with Oracle and other companies. On January 5, 2026, some of these lawsuits were consolidated into a single matter, along with other lawsuits against unrelated defendants which stem from the same Oracle EBS software vulnerability discussed above. This consolidated putative class action is titled In re Oracle Corporation Data Breach Litigation and is pending in federal court in the Western District of Texas (Case No. 1:25-cv-01805). The remaining lawsuits may eventually be consolidated with the Western District of Texas case or may proceed separately.

The complaints generally allege that the University and other co-defendants failed to protect the plaintiffs’ confidential information in violation of various federal and/or state laws.

Because of the many questions of fact and law that may arise, the outcome of these legal proceedings are uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss, if any, for these actions and, accordingly, we have not accrued any liability associated with these actions.

During the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026, we recorded $4.58 million of expense associated with this cybersecurity incident that is included in strategic alternatives, restructuring and other on our condensed consolidated statements of income. The expense principally represents costs to notify the affected parties, fees from third-party cybersecurity firms, and legal fees related to the incident response. Although we ~~continue to investigate this event and~~ expect to incur additional expenses related ~~expenses~~to this event in future periods, we maintain a comprehensive cybersecurity insurance policy, which covers costs associated with the incident response, investigatory and remediation expense, potential regulatory action, business interruption, and costs associated with investigating, defending, and resolving legal proceedings related to the incident, subject to deductibles, exclusions and limits.

Class Action Lawsuit

On April 1, 2025, Janielle Dawson filed a class action complaint against the University in the United States District Court for the Northern District of Illinois. The complaint alleges that the University violated the Video Privacy Protection Act, Electronic Communications and Privacy Act, and the Illinois Eavesdropping Act by integrating third-party tracking technology in its website and thereby disclosing to third parties its users’ personally identifiable and other protected information. The complaint seeks to recover damages on behalf of plaintiff and other members of the class.

During our second quarter of fiscal year 2026, we filed a motion to dismiss this matter, which the court granted in part and denied in part. Subsequently, the parties mutually agreed to explore resolution of this matter via mediation, which is currently scheduled in June 2026.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 14. Regulatory Matters

Borrower Defense to Repayment Claims

Under the Higher Education Act, the Department of Education’s regulations specify acts or omissions of a school that a student loan borrower may assert as a defense to repayment of a federal student loan (referred to as a BDR claim) and thereby seek to obtain a discharge and refund of such loan. Under the BDR Rules, the Department of Education has indicated that it believes it may also assert such a claim on behalf of a student borrower. Additionally, the Department of Education may initiate a recoupment proceeding against a school to collect loan amounts that are discharged or refunded as the result of BDR claims. The BDR Rules have been significantly revised in recent years. Currently, a complex framework of rules applies different loan relief and recoupment standards and procedures based upon the date that the loan in question was first disbursed. Additionally, the BDR Rules are subject to various pending litigation that increases related complexity and uncertainty.

The Department of Education began sending borrower defense applications to the University in June 2020. As part of the fact-finding process, the Department sends individual student applications to the University and allows the University the opportunity to submit responses to the borrower defense applications. The University has submitted, or will submit within the timeframe prescribed by the Department, initial substantive responses to these applications to the Department.

In September 2023, the Department of Education announced that it had approved more than 1,200 BDR claims and discharged nearly $37 million federal student loans from borrowers who made claims regarding the University’s “Let’s Get to Work” ad campaign, which ran from 2012 to 2014 based on its announced finding that the University substantially misrepresented its relationships with outside companies in the ad campaign. The Department of Education further indicated its intent to commence a recoupment effort against the University for approximately $37 million in discharged loans, but the Department of Education has not yet commenced any such action. While the discharged loans related to these BDR claims appear also to have been subject to automatic discharge under the terms of BDR-related litigation, the settlement of which itself could not serve as the basis of a recoupment action by the Department of Education under its stated position, it remains possible that the Department of Education could attempt to seek recoupment of such discharged payments in the future, and we cannot predict the timing or scale of such recoupment efforts if pursued.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

which ran from 2012 to 2014 based on its announced finding that the University substantially misrepresented its relationships with outside companies in the ad campaign. The Department of Education further indicated its intent to commence a recoupment effort against the University for approximately $37 million in discharged loans, but the Department of Education has not yet commenced any such action. While the discharged loans related to these BDR claims appear also to have been subject to automatic discharge under the terms of BDR-related litigation, the settlement of which itself could not serve as the basis of a recoupment action by the Department of Education under its stated position, it remains possible that the Department of Education could attempt to seek recoupment of such discharged payments in the future, and we cannot predict the timing or scale of such recoupment efforts if pursued.

Because of the many questions of fact and law that may arise, the outcome of BDR claims is uncertain at this point. Based on the information available to us at present, we cannot estimate a reasonably possible range of loss for BDR claims and, accordingly, we have not accrued any liability associated with such claims.

Note 15. Segment Reporting

We have one operating and reportable segment, the University, which represents all of our consolidated net revenue in the three and six months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025. Our chief operating decision maker (“CODM”), Christopher Lynne, Chief Executive Officer of the Company, currently evaluates performance and manages our operations at the consolidated level.

Our CODM evaluates performance for the segment and decides how to allocate resources and capital based on profitability metrics, including operating income, that are reported on our condensed consolidated statements of income. Our CODM considers variances in actual results compared to prior periods, and variances in actual results compared to budgets and forecasts for this profit measure when making decisions about resource allocation and assessing performance. Total asset information is evaluated at the consolidated level and, as a result, such information has not been presented below.

No individual customer accounted for more than 10% of our consolidated net revenue in the three and six months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025.

PHOENIX EDUCATION PARTNERS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The following provides information on net revenue, significant expenses and net income for our single reportable segment during the respective periods:

	Three Months Ended November 30,
	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025			2026			2025
Net revenue	$	~~262~~222,~~027~~461		$	~~254~~223,~~692~~406		$	484,488		$	478,098
Costs and expenses:
Compensation and related costs(1)		~~133~~112,~~300~~785			~~101~~103,~~637~~058			246,085			204,695
Advertising		4348,~~060~~248			4148,~~147~~597			91,308			89,744
Provision for credit losses on accounts receivable		96,~~579~~496			1112,~~281~~073			16,075			23,354
Strategic alternatives, restructuring and other		145,~~628~~108			46,~~946~~103			19,736			11,049
Other(2)		35,~~866~~818			3633,~~013~~910			71,684			69,923
Total costs and expenses		~~236~~208,~~433~~455			~~195~~203,~~024~~741			444,888			398,765
Operating income		2514,~~594~~006			5919,~~668~~665			39,600			79,333
Interest income		1,~~761~~776			32,~~858~~198			3,537			6,056
Interest expense		(~~215~~550	)		(~~114~~111	)		(765	)		(225	)
Income before income taxes		2715,~~140~~232			6321,~~412~~752			42,372			85,164
Provision for income taxes		114,~~662~~763			165,~~294~~648			16,425			21,942
Net income	$	1510,~~478~~469		$	4716,~~118~~104		$	25,947		$	63,222

(1)

The increase in compensation and related costs during the three and six months ended ~~November~~February 3028, ~~2025~~2026 compared to the three and six months ended ~~November~~February 3028, ~~2024~~2025 was principally due to share-based compensation resulting from our IPO. See Note 12. Share-Based Awards for further information.

(2)

Other principally consists of costs related to the delivery and administration of our educational programs, depreciation and amortization, information technology infrastructure costs, legal and professional fees, and other general and administrative costs.

1820

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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, 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;

•

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, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements.

1921

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 ~~approximately~~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 sale of shares associated with the offering.

In connection with the expiration of the IPO lock-up period on April 6, 2026, shares of our common stock issued upon prior or future exercises of University stock options by the option holders (other than our Section 16 officers, who remain subject to a one-year lock-up) became eligible for sale, subject to normal trading window restrictions, in the public market. Upon exercise, we may elect to settle such awards through net share settlement or repurchase of the options for cash. The extent to which these options are exercised, and the method of settlement we elect, will affect either or both the number of shares of our common stock outstanding and our liquidity.

As of the date of this filing, we cannot reasonably estimate the extent of future option exercises or the method of settlement that will be elected, and accordingly, the potential impact on our outstanding share count and liquidity is uncertain. In addition, following the expiration of the lock-up period, sales of shares by our employees and former employees may adversely affect the market price of our common stock.

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. In addition, in 2018, we implemented our Tuition Price Guarantee program under which a student’s tuition price per course is frozen at the tuition rates in effect at his or her enrollment date, thereby giving each of our students certainty in the price of tuition through the duration of their programs even if rates are subsequently increased for students who enroll at later dates. 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 7176.56% for the ~~2023/~~2024/2025 cohort (our most recent completed cohort for retention rate purposes), which represents a 5.1 ~~This~~percentage ~~retention~~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 42.19% increase in the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026 as compared to the prior year period. 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 isare impacted by ~~many of~~ 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 34% of our Average Total Degreed Enrollment in the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026, which represents an approximate 4 percentage point increase compared to the prior year period. This represents a valuable opportunity to drive growth, diversify our student population and ~~net~~reinforce ~~revenue,~~the ~~drive~~durability ~~growth~~of ~~and~~our ~~reduce~~net ~~acquisition~~revenue ~~costs~~ as these students generally have higher retention and graduation rates. In addition, we have begun to expand discussions with employers beyond our degree offerings to include our comprehensive suite of talent development solutions and professional development offerings. While the development of our talent development solutions is in the early stages, 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, 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 ~~enrollments~~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 and we expect our investments will reduce friction points and increase efficiencies throughout the University.22

20continued 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.

~~Seasonality~~Cost Structure. ~~Although~~Our ~~the~~ability ~~University’s~~to ~~non-term~~grow ~~academic~~profitably ~~model,~~depends ~~encompassing~~on aour ~~series~~ability ofto ~~courses~~manage ~~taken~~our ~~consecutively~~cost ~~over~~structure. ~~the~~Our ~~length~~margin ofexpansion ~~the~~over ~~program,~~recent ~~reduces~~years ~~seasonal~~has ~~enrollment~~been ~~fluctuations,~~largely wederived ~~have~~from ~~historically~~the ~~experienced,~~operating ~~and~~leverage ~~expect~~resulting tofrom ~~continue~~the toincrease ~~experience,~~in ~~lower~~ net revenue inrelative to our ~~second~~costs ~~fiscal~~that ~~quarter~~are ~~(December~~more ~~through~~fixed ~~February)~~in ~~compared~~nature toand ~~other~~our ~~quarters~~exit ~~due~~from toall ~~the~~but ~~University’s~~one ~~holiday~~of ~~breaks~~our ~~when~~ground nocampuses. ~~related~~We ~~net~~intend ~~revenue~~to isaugment ~~recognized.~~this ~~While~~historical ~~our~~ operating ~~costs~~leverage ~~generally~~through doadditional ~~not~~strategic ~~fluctuate~~and ~~significantly~~operational oninitiatives ato ~~quarterly~~enhance ~~basis,~~support wefor ~~have~~students ~~historically~~in ~~experienced,~~a ~~and~~more ~~expect~~efficient tomanner. We continue to ~~experience,~~invest ~~increased marketing expense~~ in ~~our~~optimization, ~~second~~which ~~and~~we ~~fourth~~expect ~~fiscal~~will ~~quarters~~reduce ~~due~~friction topoints ~~course~~and ~~starts~~increase ~~that~~efficiencies ~~occur~~throughout ~~during~~the ~~traditional back-to-school seasons~~University.

Seasonality. The University’s non-term academic model encompasses a series of courses taken consecutively over the length of the program, which we would expect to limit 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 November 30,
	Three Months Ended February 28,						Six Months Ended February 28,
	2025			2024
	2026			2025			2026			2025
(Enrollment statistics rounded to the nearest hundred; dollars in thousands)
Average Total Degreed Enrollment		8582,600			8281,~~200~~100			84,100			81,700
Net income attributable to Phoenix Education Partners, Inc.	$	1510,~~454~~780		$	4616,~~416~~125		$	26,234		$	62,541
Net income attributable to Phoenix Education Partners, Inc. margin		54.98	%		187.2	%		5.4	%		13.1	%
Adjusted EBITDA	$	7534,~~177~~817		$	7032,~~140~~304		$	109,994		$	102,444
Adjusted EBITDA margin		2815.7	%		2714.5	%		22.7	%		21.4	%

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 ~~time~~ 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 doare not ~~have a~~ standardized ~~meaning~~, and other companies in our industry may calculate ~~measures of~~ 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 example, Average Total Degreed Enrollment for the three months ended ~~November~~February 3028, ~~2025~~2026 is calculated as the aggregate Total Degreed Enrollment for the three months from ~~September~~December 2025 through ~~November~~February ~~2025~~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 ~~the~~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 margin as net income attributable to Phoenix Education Partners divided by net revenue, expressed as a percentage.~~

2123

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 Six Months Ended ~~November~~February 3028, ~~2025~~2026 Compared to the Three and Six Months Ended ~~November~~February 3028, ~~2024~~2025

The following details our consolidated results of operations during the respective periods:

	Three Months Ended November 30,
	Three Months EndedFebruary 28,									Six Months EndedFebruary 28,
							% of Net Revenue						% Change
							% Change									% Change
($ in thousands)	~~2025~~2026			~~2024~~2025			2026 versus 2025			~~2024~~2026			2025 ~~versus 2024~~			2026 versus 2025
Net revenue	$	~~262~~222,~~027~~461		$	~~254~~223,~~692~~406			(0.4	)%	$	484,488		$	~~2.9~~478,098	%		1.3	%
Costs and expenses
Instructional and support		~~115~~105,~~248~~242			~~108~~107,~~123~~210			44(1.08	)%		~~42.5~~220,490	%		~~6.6~~215,333	%		2.4	%
General and administrative		~~106~~98,~~557~~105			8190,~~955~~428			408.65	%		~~32.2~~204,662	%		~~30.0~~172,383	%		18.7	%
Strategic alternatives, restructuring and other		145,~~628~~108			46,~~946~~103			5(16.63	)%		~~1.9~~19,736	%	*	11,049			78.6	%
Total costs and expenses		~~236~~208,~~433~~455			~~195~~203,~~024~~741			~~90.~~2.3	%		~~76.6~~444,888	%		~~21.2~~398,765	%		11.6	%
Operating income		2514,~~594~~006			5919,~~668~~665			9(28.8	)%		~~23.4~~39,600	%		~~(57.1~~79,333	)%		(50.1	)%
Interest income		1,~~761~~776			32,~~858~~198			0(19.72	)%		~~1.5~~3,537	%		~~(54.4~~6,056	)%		(41.6	)%
Interest expense		(~~215~~550	)		(~~114~~111	)	*	~~(0.1~~	)%		—(765	)		~~88.6~~(225	%)	*
Income before income taxes		2715,~~140~~232			6321,~~412~~752			10(30.40	)%		~~24.9~~42,372	%		~~(57.2~~85,164	)%		(50.2	)%
Provision for income taxes		114,~~662~~763			165,~~294~~648			4(15.57	)%		~~6.4~~16,425	%		~~(28.4~~21,942	)%		(25.1	)%
Net income		1510,~~478~~469			4716,~~118~~104			5(35.90	)%		~~18.5~~25,947	%		~~(67.2~~63,222	)%		(59.0	)%
Net income attributable to noncontrolling interests		(24	)		(702	)		—			(0.3	)%		(96.6	)%
Net loss (income) attributable to noncontrolling interests		311			21		*				287			(681	)	*
Net income attributable to Phoenix Education Partners, Inc.	$	1510,~~454~~780		$	4616,~~416~~125			5(33.91	)%	$	~~18.2~~26,234	%	$	~~(66.7~~62,541	)%		(58.1	)%

*Not meaningful

Net revenue

~~Net~~We ~~revenue~~generate ~~increased $7.3 million~~all, or ~~2.9%~~substantially all, toof ~~$262.0~~our ~~million~~consolidated innet ~~the~~revenue ~~three~~from ~~months~~tuition-bearing ~~ended~~degree ~~November~~programs ~~30,~~offered ~~2025~~by ~~from~~the ~~$254~~University.7 ~~million~~Under in the ~~prior year period. Since 2018, under our Tuition Price Guarantee, each student~~University’s ~~tuition~~non-term ~~price~~academic ~~per~~delivery ~~course~~model, isstudents ~~frozen~~generally atenroll ~~the tuition rates~~ in ~~effect~~a atprogram ~~his~~of orstudy ~~her~~encompassing ~~enrollment~~a ~~date.~~series ~~The~~of ~~increase~~courses intaken ~~net~~consecutively ~~revenue~~over ~~was~~the ~~principally~~length ~~attributable~~of tothe ~~enrollment growth~~program, asand ~~measured~~net byrevenue ~~Average~~is ~~Total~~recognized ~~Degreed~~evenly ~~Enrollment,~~over ~~which increased 4.1% in~~ the ~~three~~duration ~~months~~of ~~ended November 30, 2025 as compared to~~ the ~~prior~~course ~~year period~~(e. ~~The increase in Average Total Degreed Enrollment resulted from new student growth and improved student retention~~g., ~~The~~daily ~~increase~~over infive ~~net~~weeks ~~revenue~~for ~~was~~a ~~partially~~five-week ~~offset by an increase in discounts during the three months ended November 30~~course, ~~2025~~other ~~compared~~than to the ~~prior~~University’s ~~year~~holiday ~~period~~breaks ~~mainly~~when ~~attributable~~no torelated anet ~~higher~~revenue ~~percentage~~is ~~of our Average Total Degreed Enrollment through employer relationships~~recognized).

Net revenue decreased $0.9 million, or 0.4%, in the three months ended February 28, 2026 compared to the prior year period. The decrease in net revenue was principally attributable to an increase in discounts mainly resulting from a higher percentage of our enrollment through employer relationships. This decrease was partially offset by enrollment growth, as measured by Average Total Degreed Enrollment, which increased 1.8% during the three months ended February 28, 2026 compared to the prior year period. The enrollment increase was primarily due to improved student retention.

Net revenue increased $6.4 million, or 1.3%, in the six months ended February 28, 2026 compared to the prior year period. The increase in net revenue was principally attributable to enrollment growth as measured by Average Total Degreed Enrollment, which increased 2.9% compared to the prior year period primarily due to improved student retention. This increase was partially offset by an increase in discounts mainly resulting from a higher percentage of our enrollment through employer relationships.

Instructional and support

Instructional and support ~~increased~~principally ~~$7.1~~consists ~~million,~~of orcosts ~~6.6%,~~related to ~~$115.2 million in~~ the ~~three~~delivery ~~months ended November 30, 2025 from $108.1 million in the prior year period. This resulted in such expenses increasing as a percentage of net revenue by 1.5%. The increase in instructional~~ and ~~support~~administration ~~was principally attributable to a $6.5 million increase in share-based compensation expense resulting from our IPO (see Note 1. Nature~~ of ~~Operations and Significant Accounting Policies and Note 12. Share-Based Awards to~~ our ~~condensed~~educational ~~consolidated~~programs ~~financial statements)~~ and ~~variable~~includes costs ~~associated~~related ~~with~~to ~~the~~faculty, ~~increase~~academic ~~in net revenue~~administrators, ~~including faculty wages and curriculum expense that generally fluctuate with changes in~~ enrollment. ~~The increase in instructional~~ and ~~support~~student ~~was~~advisory ~~partially~~personnel ~~offset~~(including byshare-based ~~decreases during the three months ended November 30~~compensation), ~~2025 in~~ credit losses onassociated with uncollectible accounts receivable, ~~and~~ financial aid processing costs, ~~which~~and ~~were~~depreciation ~~higher~~of inapplicable ~~the~~property ~~prior~~and ~~year~~equipment. ~~period~~Instructional asand wesupport ~~addressed~~also ~~financial~~includes ~~aid~~course ~~processing~~development ~~changes~~costs ~~following~~(including ~~the~~amortization ~~Department~~ of ~~Education’s~~related ~~implementation~~intangible ofassets) ~~an updated financial aid application form~~ and ~~transitioned~~costs toassociated ~~disbursing~~with ~~financial~~delivering ~~aid by~~ course ~~(see further disclosure below in “Liquidity and Capital Resources”)~~content.

Instructional and support decreased $2.0 million, or 1.8%, in the three months ended February 28, 2026 compared to the prior year period which resulted in a 0.7% decrease as a percentage of net revenue from 48.0% to 47.3%. The decrease was principally

attributable to decreases in credit losses on accounts receivable and financial aid processing costs, which were higher in the prior year period as we addressed financial aid processing changes following the Department of Education’s implementation of an updated financial aid application form and transitioned to disbursing financial aid by course (see “Liquidity and Capital Resources”). The decrease was partially offset by a $2.3 million increase in share-based compensation expense resulting from our IPO (see Note 1. Nature of Operations and Significant Accounting Policies and Note 12. Share-Based Awards to our condensed consolidated financial statements).

Instructional and support increased $5.2 million, or 2.4%, in the six months ended February 28, 2026 compared to the prior year period, which resulted in a 0.5% increase as a percentage of net revenue from 45.0% to 45.5%. This increase was principally attributable to an $8.8 million increase in share-based compensation expense resulting from our IPO (see Note 1. Nature of Operations and Significant Accounting Policies and Note 12. Share-Based Awards to our condensed consolidated financial statements). The increase was partially offset by decreases in credit losses on accounts receivable and financial aid processing costs as described above.

General and administrative

General and administrative ~~increased~~principally ~~$24.6~~consists ~~million,~~of orcosts ~~30.0%,~~related to ~~$106.6~~management ~~million~~and employees in ~~the~~administrative ~~three~~functions ~~months~~(including ~~ended~~share-based ~~November 30~~compensation), ~~2025~~marketing ~~from~~expense, ~~$82.0~~legal ~~million~~and inprofessional ~~the~~fees, ~~prior~~information ~~year~~technology ~~period.~~infrastructure ~~This~~costs, ~~resulted~~depreciation ~~in such expenses increasing as a percentage~~ of ~~net~~property ~~revenue~~associated bywith ~~8.4%.~~our ~~The~~administrative ~~increase~~functions, inrent ~~general~~ and ~~administrative~~related ~~was~~expenses ~~principally~~associated ~~attributable~~with ~~to a $22.3 million increase in share-based compensation expense resulting from~~ our ~~IPO~~corporate ~~(see~~facilities ~~Note 1. Nature of Operations~~ and ~~Significant~~other ~~Accounting~~related ~~Policies and Note 12~~costs. ~~Share-Based Awards to our~~

22General and administrative increased $7.7 million and $32.3 million, or 8.5% and 18.7%, in the three and six months ended February 28, 2026, respectively, compared to the prior year periods. This resulted in such expense increasing 3.6% as a percentage of net revenue from 40.5% to 44.1% in the three months ended February 28, 2026, and 6.1% as a percentage of net revenue from 36.1% to 42.2% in the six months ended February 28, 2026. The increases in expense were principally attributable to increases in share-based compensation of $6.8 million and $29.1 million resulting from our IPO in the three and six months ended February 28, 2026, respectively, compared to the prior year periods (see Note 1. Nature of Operations and Significant Accounting Policies and Note 12. Share-Based Awards to our condensed consolidated financial statements).

condensed consolidated financial statements) and investments we have made in our marketing function, including increased advertising, to support our growth.

Strategic alternatives, restructuring and other

Strategic alternatives, restructuring and other includes the following during the respective periods:

	Three Months EndedNovember 30,
	Three Months Ended February 28,					Six Months Ended February 28,
($ in thousands)	~~2025~~2026		~~2024~~2025			2026		2025
Strategic alternatives	$	~~4,921~~356	$	~~875~~4,124		$	5,277	$	4,999
Cybersecurity incident		~~4,500~~329		—			4,829		—
Lease restructuring, net		2,020		2,027
Lease restructuring expense (credit), net		1,585		(311	)		3,605		1,716
Other		32,~~187~~838		2,~~044~~290			6,025		4,334
Strategic alternatives, restructuring and other	$	145,~~628~~108	$	46,~~946~~103		$	19,736	$	11,049

Strategic alternatives, restructuring and other ~~increased~~decreased $91.70 million, ~~to $14.6 million~~ in the three months ended ~~November~~February 3028, ~~2025~~2026 ~~from~~compared ~~$4.9~~to ~~million in~~ the prior year period., ~~This~~which ~~increase~~ was principally due to ~~costs~~a ~~associated~~reduction ~~with~~in strategic alternatives expense following our IPO. ~~and~~This was partially offset by an increase in lease restructuring expense principally attributable to a ~~cybersecurity~~net ~~incident~~credit recognized in the prior year period resulting from a reduction in our estimated future cash flows associated with our exited space (see Note 138. ~~Commitments~~Other ~~and~~Liabilities ~~Contingencies~~ to our condensed consolidated financial statements) ~~in the three months ended November 30, 2025~~.

Strategic alternatives, restructuring and other increased $8.7 million in the six months ended February 28, 2026 compared to the prior year period, which was principally due to costs associated with a cybersecurity incident (see Note 13. Commitments and Contingencies to our condensed consolidated financial statements), and an increase in lease restructuring expense as described above.

Interest income

Interest income decreased $20.14 million, or 5419.42%, ~~to $1.8 million~~ in the three months ended ~~November~~February 3028, ~~2025~~2026 ~~from~~compared ~~$3.9~~to ~~million in~~ the prior year period., ~~This~~which ~~decrease~~ was principally attributable to a decrease in ~~average cash and cash equivalents and marketable securities held and a decrease in~~ interest rate yields.

Interest income decreased $2.5 million, or 41.6%, in the six months ended February 28, 2026 compared to the prior year period. The decrease was principally attributable to a decrease in average cash and cash equivalents and marketable securities held and a decrease in interest rate yields.

Interest expense

WeInterest ~~incurred~~expense ~~insignificant~~increased ~~interest~~$0.4 ~~expense~~million ~~during~~and $0.5 million in the three and six months ended ~~November~~February 3028, ~~2025~~2026, ~~and~~respectively, ~~2024~~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 $40.69 million, or 2815.47%, in the three months ended February 28, 2026 compared to ~~$11~~the prior year period.7 ~~million~~Our ineffective income tax rate for the three months ended ~~November~~February 3028, ~~2025~~2026 ~~from~~was ~~$16~~31.3% ~~million~~compared to 26.0% 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.

Provision for income taxes decreased $5.5 million, or 25.1%, in the six months ended February 28, 2026 compared to the prior year period. Our effective income tax rate infor the ~~three~~six months ended ~~November~~February 3028, ~~2025~~2026 was 4338.08% compared to 25.78% in the prior year period. The increase in our effective ~~income~~ tax rate was primarily due to the completion of our IPO, which resulted in certain IPO and executive compensation costs becoming nondeductible.

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 ~~below~~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 (credit), 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 (credit), 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

•

1 For our first quarter of 2026, we changed our definition of this measure to start with “Net income attributable to Phoenix Education Partners” 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.

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 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

1 During our first quarter of 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.

(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. ~~You~~Investors ~~are~~should ~~cautioned~~ not to 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 November 30,
	Three Months EndedFebruary 28,						Six Months EndedFebruary 28,
($ in thousands)	~~2025~~2026			~~2024~~2025			2026			2025
Net income attributable to Phoenix Education Partners, Inc.	$	1510,~~454~~780		$	4616,~~416~~125		$	26,234		$	62,541
Special items and share-based compensation:
Restructuring lease expense(a)		2,020			2,027
Restructuring lease expense (credit), net(a)		1,585			(311	)		3,605			1,716
Strategic alternatives expense(b)		~~4,921~~356			~~875~~4,124			5,277			4,999
Cybersecurity incident expense(c)		~~4,500~~329			—			4,829			—
Impairment charges and asset disposal losses(d)		20500			3450			520			84
Litigation charges and regulatory expense(e)		1,203			1,~~205~~480			2,406			2,685
Non-cash share-based compensation expense(f)		299,~~499~~667			~~646~~617			39,166			1,263
Other(g)		1,~~964~~135			1,~~195~~036			3,099			2,231
Income tax effects of special items and share-based compensation(h)		(52,~~933~~942	)		(1,~~468~~725	)		(8,875	)		(3,193	)
Adjusted net income attributable to Phoenix Education Partners, Inc.	$	5322,~~648~~613		$	5021,~~930~~396		$	76,261		$	72,326


	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	2026			2025			2026			2025
Net income attributable to Phoenix Education Partners, Inc.	$	10,780		$	16,125		$	26,234		$	62,541
Restructuring lease expense (credit), net(a)		1,585			(311	)		3,605			1,716
Strategic alternatives expense(b)		356			4,124			5,277			4,999
Cybersecurity incident expense(c)		329			—			4,829			—
Impairment charges and asset disposal losses(d)		500			50			520			84
Litigation charges and regulatory expense(e)		1,203			1,480			2,406			2,685
Non-cash share-based compensation expense(f)		9,667			617			39,166			1,263
Depreciation and amortization		5,725			5,622			11,205			10,814
Interest income, net of interest expense		(1,226	)		(2,087	)		(2,772	)		(5,831	)
Provision for income taxes		4,763			5,648			16,425			21,942
Other(g)		1,135			1,036			3,099			2,231
Adjusted EBITDA	$	34,817		$	32,304		$	109,994		$	102,444
Net income attributable to Phoenix Education Partners, Inc. margin		4.8	%		7.2	%		5.4	%		13.1	%
Adjusted EBITDA margin		15.7	%		14.5	%		22.7	%		21.4	%
Net revenue used in computing net income attributable to Phoenix Education Partners, Inc. margin and adjusted EBITDA margin	$	222,461		$	223,406		$	484,488		$	478,098

(a)

	Three Months Ended November 30,
($ in thousands)	2025			2024
Net income attributable to Phoenix Education Partners, Inc.	$	15,454		$	46,416
Restructuring lease expense(a)		2,020			2,027
Strategic alternatives expense(b)		4,921			875
Cybersecurity incident expense(c)		4,500			—
Impairment charges and asset disposal losses(d)		20			34
Litigation charges and regulatory expense(e)		1,203			1,205
Non-cash share-based compensation expense(f)		29,499			646
Depreciation and amortization		5,480			5,192
Interest income, net of interest expense		(1,546	)		(3,744	)
Provision for income taxes		11,662			16,294
Other(g)		1,964			1,195
Adjusted EBITDA	$	75,177		$	70,140
Net income attributable to Phoenix Education Partners, Inc. margin		5.9	%		18.2	%
Adjusted EBITDA margin		28.7	%		27.5	%
Net revenue used in computing net income attributable to Phoenix Education Partners, Inc. margin and adjusted EBITDA margin	$	262,027		$	254,692

Restructuring lease expense (credit), 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)

~~Restructuring~~Strategic ~~lease~~alternatives expense ~~represents~~consists ~~non-cancelable~~of ~~lease~~costs ~~obligations,~~incurred ~~including any offset from sublease income, and other related expenses~~ for ~~leased space we have exited as part of~~ our ~~ground~~IPO ~~campus~~ and ~~administrative~~costs ~~space~~incurred ~~rationalization~~for ~~plans.~~pursuing Instrategic 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 onlinealternatives. 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.

~~Strategic alternatives expense consists of costs incurred for our IPO and costs incurred for pursuing strategic ownership alternatives considered prior to our IPO.~~27

(c)

Represents expense associated with a cybersecurity incident we detected on November 21, 2025 (see Note 13. 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 ~~include~~includes $1.2 million and $2.4 million in both the three and six months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025, respectively, associated with a multi-year insurance policy pertaining to borrower defense to repayment claims (see Note 1314. ~~Commitments~~Regulatory ~~and~~Matters ~~Contingencies~~ 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 six months ended ~~November~~February 3028, ~~2025~~2026 compared to the respective prior year ~~period~~periods resulted from our IPO (see Note 1. Nature of Operations and Significant Accounting Policies and Note 12. Share-Based Awards to our condensed consolidated financial statements).

(g)

~~Other~~Represents ~~consists of management fees pursuant to a management consulting agreement (see Note 1. Nature of Operations and Significant Accounting Policies to our condensed consolidated financial statements) and~~ other expenses that we do not believe are ~~not~~ indicative of our ongoing operations. ~~The management consulting agreement was terminated effective as of the pricing of our IPO and therefore no management fees will accrue or be payable for periods after that date.~~

(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 $100 million revolving credit facility, which we have not drawn on as of ~~November~~February 3028, ~~2025~~2026 (see “Off-Balance Sheet Arrangements” below).

Our principal uses of cash are, and we expect to continue to be, payments of our operating expenses, such as ~~wages~~employee compensation and ~~benefits,~~ marketing ~~and~~related ~~advertising~~costs, and investments to maintain and enhance our digital technology platform and various technology systems to support and improve the student experience.

25We paid a regular, quarterly cash dividend of $0.21 per share of common stock in our second quarter 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 third 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.

~~support~~On ~~and~~April ~~improve~~3, ~~the student experience. Additionally~~2026, our board of directors ~~approved~~adopted a ~~regular,~~share ~~quarterly~~repurchase ~~cash~~program ~~dividend~~ of ~~$0.21~~up ~~per share of common stock that will be paid~~ to ~~shareholders~~an aggregate of ~~record~~$50 ~~and~~million ~~holders~~ of ~~certain share-based awards during~~ our ~~second~~common ~~quarter~~stock of(the ~~fiscal~~“April ~~year~~ 2026. WeRepurchase ~~plan~~Program”). toAs ~~pay~~of ~~additional~~the ~~regular,~~date ~~quarterly~~of ~~cash~~this ~~dividends in subsequent quarters~~filing, ~~subject~~we tohave ~~the~~not ~~discretion~~utilized any of ~~our~~the ~~board~~authorized ~~of directors~~amount.

We ~~believe~~expect that any repurchases under the April 2026 Repurchase Program will be funded using our existing cash and cash equivalents. The timing and ~~marketable~~amount ~~securities~~of any repurchases will depend on a variety of factors, ~~revolving~~including ~~credit~~our ~~facility~~stock price, general market conditions, liquidity and capital requirements, and other uses of cash, ~~generated~~including ~~from~~potential ~~operating~~cash ~~activities~~outflows ~~will~~associated with the settlement of share-based compensation awards. Repurchases under the program may be ~~sufficient~~made from time to ~~meet~~time ~~our~~through ~~working~~open ~~and~~market purchases, privately negotiated purchases or other ~~capital~~acquisitions ~~requirements~~of ~~for~~shares of our common stock, including pursuant to Rule 10b5-1 or Rule 10b-18 of the ~~foreseeable~~Securities ~~future~~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.

Cash and cash equivalents, restricted cash and cash equivalents and marketable securities

Our cash and cash equivalents, ~~including~~ 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:

	Three Months Ended November 30,
($ in thousands)	2025		2024		% Change
Cash and cash equivalents	$	151,285	$	136,504		10.8	%
Restricted cash and cash equivalents		39,739		36,497		8.9	%
Current marketable securities		12,191		9,005		35.4	%
Noncurrent marketable securities		14,891		12,803		16.3	%
Total	$	218,106	$	194,809		12.0	%

Total cash and cash equivalents (including restricted cash and cash equivalents) and marketable securities (including current and noncurrent marketable securities) increased $23.3 million, or 12.0%, to $218.1 million during the three months ended November 30, 2025 from $194.8 million principally due to $31.1 million of cash generated from operating activities. This was partially offset by $4.7 million of capital expenditures.


	As of
($ in thousands)	February 28, 2026		August 31, 2025		% Change
Cash and cash equivalents	$	194,597	$	136,504		42.6	%
Restricted cash and cash equivalents		36,752		36,497		0.7	%
Current marketable securities		6,770		9,005		(24.8	)%
Noncurrent marketable securities		13,951		12,803		9.0	%
Total	$	252,070	$	194,809		29.4	%

AsTotal ~~of November 30, 2025, our~~ cash and cash equivalents (including restricted cash and cash equivalents) ~~approximate~~and ~~fair value because of the short-term nature of the financial instruments. Our~~ marketable securities (including current and noncurrent marketable securities) ~~have~~increased ~~original~~$57.3 ~~maturities to us greater than three months~~million, ~~and~~or ~~contractual maturities that will occur within three years~~29.4%, ~~Our~~during ~~marketable securities are classified as available-for-sale and are measured at fair value. We determine~~ the ~~fair~~six ~~value~~months ofended ~~these~~February ~~investments using a market approach with Level 2 observable inputs including quoted prices for similar assets in active markets~~28, or2026 ~~quoted~~principally ~~prices~~due ~~for~~to ~~identical or similar assets in markets that are not active~~$80.0 Wemillion ~~may sell certain~~ of ~~our~~cash ~~marketable~~generated ~~securities~~from ~~prior~~operating ~~to their stated maturities for strategic reasons including, but not limited to, investment yield and credit risk management~~activities. WeThis ~~have~~was ~~not~~partially ~~recognized~~offset ~~significant~~by ~~gains or losses related to such sales~~$10.1 ~~Additionally,~~million ~~all~~ of ~~the~~capital ~~securities~~expenditures ~~we hold are investment grade,~~ and wecash ~~had~~paid ~~no related allowance~~ for ~~credit losses as of November 30, 2025~~dividends.

Operating cash flows

The following provides a summary of our operating cash flows during the respective periods:

	Three Months Ended November 30,
	Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025
Net income	$	1525,~~478~~947		$	4763,~~118~~222
Non-cash items		5578,~~126~~362			3151,~~355~~949
Changes in assets and liabilities, excluding impact of acquisition		(39,537	)		(112,476	)
Changes in assets and liabilities, excluding the impact of acquisition		(24,355	)		(93,022	)
Net cash provided by (used in) operating activities	$	31,067		$	(34,003	)
Net cash provided by operating activities	$	79,954		$	22,149

~~Three~~For the six months ended ~~November~~February 3028, ~~2025~~2026, –we ~~Our~~generated ~~non-cash items primarily consisted of~~ $2980.50 million of ~~share-based~~net ~~compensation,~~cash aprovided ~~$9.6~~by ~~million~~operating ~~provision~~activities, ~~for~~which ~~credit~~was ~~losses~~principally onattributable ~~accounts~~to ~~receivable,~~net ~~$8.8~~income ~~million~~ of ~~deferred income taxes, and~~ $525.59 million ~~of depreciation~~ and ~~amortization.~~the following:

~~The~~Adjustments ~~changes~~to inreconcile ~~assets~~net ~~and~~income ~~liabilities~~to ~~primarily~~net ~~consisted of a $33.2 million increase in accounts receivable (excluding provision for credit losses in non-~~cash ~~items~~provided ~~discussed above), a $10.6 million increase in other assets and a $10.2 million decrease in accrued compensation and benefits, partially offset~~ by aoperating ~~$23.9 million increase in deferred revenue.~~activities:

•

26$39.2 million of share-based compensation;

•

~~Three months ended November 30, 2024 – Our non-cash items primarily consisted of~~ $1216.41 million ~~of deferred income taxes, an $11.3 million~~ provision for credit losses on accounts receivable,; and ~~$5.2 million of depreciation and amortization.~~

•

~~The changes in assets and liabilities primarily consisted of a~~ $4011.82 million ~~increase~~of indepreciation ~~accounts receivable (excluding provision for credit losses in non-cash items discussed above), a $37.1 million decrease in student deposits (see further discussion below)~~ and ~~decreases in accrued compensation and benefits and accounts payable, partially offset by a $12~~amortization.~~5 million increase in deferred revenue.~~

~~The~~Changes ~~decrease~~ in ~~student~~assets ~~deposits~~and was primarily due 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.liabilities:

•

Net inflow of $7.9 million from a decrease in accounts receivable (excluding provision for credit losses in non-cash items discussed above) primarily from course start timing at the beginning and end of the period;

•

Net outflow of $11.8 million from an increase in prepaid income taxes primarily due to estimated tax payments made during the period;

•

Net outflow of $10.1 million from an increase in other assets primarily from the payment of deferred financing costs for our revolving credit facility; and

•

Net outflow of $9.5 million from a decrease in other liabilities primarily from the timing of seasonal advertising and certain payments of accrued operating expenses.

For the six months ended February 28, 2025, we generated $22.1 million of cash provided by operating activities, which was principally attributable to $63.2 million of net income and $51.9 million of non-cash adjustments. This was partially offset by a net cash outflow of $93.0 million from changes in assets and liabilities, which was primarily the result of 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:

	Three Months Ended November 30,
	Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025
Purchases of property and equipment	$	(410,~~716~~085	)	$	(510,~~792~~892	)
Marketable securities (purchases) sales and maturities, net		(5,429	)		1,400
Marketable securities maturities and sales, net of purchases		1,138			43
Acquisition, net of cash acquired		—			(1,982	)
Net cash used in investing activities	$	(10,145	)	$	(6,374	)
Other investing activities		(46	)		(35	)
Net cash used in investing activities	$	(8,993	)	$	(12,866	)

~~Three~~Net ~~months~~cash ~~ended~~used ~~November~~in ~~30,~~investing ~~2025~~activities ~~and~~for ~~2024~~the –six ~~Cash~~months ~~used~~ended inFebruary ~~investing~~28, ~~activities~~2026 and 2025 was $109.10 million and $612.49 million, ~~for the three months ended November 30~~respectively, ~~2025~~ and ~~2024,~~principally ~~respectively.~~consisted ~~Capital~~of capital expenditures ~~during~~for ~~both periods principally represent~~ internal software development. In ~~addition~~the prior year period, we also paid $2.0 million, net of cash acquired, ~~in the three months ended November 30, 2024~~ to acquire a controlling interest in Empath, Inc. (see Note 3. Acquisition to our condensed consolidated financial statements for more information).

Financing cash flows

The following provides a summary of our financing cash flows during the respective periods:

	Three Months Ended November 30,
	Six Months Ended February 28,
($ in thousands)	~~2025~~2026			~~2024~~2025
Payments of dividend equivalents	$	(721	)	$	(141	)
Payments of dividend and dividend equivalents	$	(9,066	)	$	—
Payroll taxes paid on share-based awards		(23,~~178~~547	)		(~~764~~774	)
Net cash used in financing activities	$	(2,899	)	$	(905	)
Payments of dividend and dividend equivalents to noncontrolling interests		—			(13,961	)
Capital distributions to limited partners		—			(134,001	)
Net cash used in financing activities	$	(12,613	)	$	(148,736	)

~~Three~~Net ~~months~~cash ~~ended November 30, 2025 and November 30, 2024 – Cash~~ used in financing activities was $212.96 million and $0148.97 million for ~~three~~the six months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025, respectively. The cash flows in both periods represented ~~payroll~~dividends ~~taxes~~ and dividend equivalents ~~paid~~and ~~associated~~payments ~~with~~for payroll taxes on share-based awards. In the prior year period, we also distributed $134.0 million to our limited partners.

Off-Balance Sheet Arrangements

We had a $32 million outstanding cash collateralized letter of credit as of ~~November~~February 3028, ~~2025~~2026, which supports a sublease for a facility we have exited. ~~Additionally,~~Subsequent ~~our~~to ~~insurers~~February ~~issue~~28, ~~surety~~2026, ~~bonds~~we ~~that~~replaced ~~are~~our ~~required~~existing bycash ~~various~~collateralized ~~states~~letter ~~where~~of wecredit ~~operate,~~with ora ~~that~~new ~~are~~letter ~~required~~of ~~for~~credit, ~~other~~on ~~purposes.~~substantially Wethe ~~are~~same ~~obligated~~terms, tothrough ~~reimburse~~ our ~~insurers~~Revolving ~~for any surety bonds that are paid~~Facility. As ofa ~~November 30~~result, ~~2025,~~we ~~the~~expect ~~face~~corresponding ~~amount~~reductions ofin ~~these~~restricted ~~surety~~cash ~~bonds~~and ~~was~~available ~~less~~capacity ~~than~~under $1our ~~million~~Revolving Facility.

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 February 28, 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 ~~three~~six months ended ~~November~~February 3028, ~~2025~~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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are subject to the impact of interest rate changes and may be subject to changes in the market values of our investments. We invest our excess cash in cash equivalents and marketable securities, ~~and~~including ~~earnings~~money ~~from~~market ~~such~~funds ~~investments~~and ~~may~~investment-grade becorporate ~~adversely~~bonds. ~~affected~~The infair ~~the~~value ~~future~~and ~~should~~investment ~~interest~~income ~~rates~~of ~~decline.~~these ~~Our~~instruments ~~future~~fluctuate ~~investment~~based ~~income~~on ~~may~~changes ~~fall~~in ~~short~~market ofinterest ~~expectations~~rates. ~~due~~A todecline ~~changes~~ in interest rates orcould adversely affect our future investment income, and we may ~~suffer~~incur losses in principal if ~~forced~~we are required to sell securities that have declined in market value ~~due~~as toa ~~changes~~result inof rising interest rates. During the three months ended November 30, 2025 and 2024, our interest rate yields were approximately 3% and 4%, respectively, and we earned $1.8 million and $3.9 million of interest income, respectively.

WeDuring dothe ~~not~~three ~~currently~~months ~~have~~ended ~~material~~February ~~risk~~28, ~~associated~~2026, ~~with~~our ~~interest~~investment ~~expense~~portfolio asgenerated wean ~~did~~average ~~not~~yield ~~have~~of ~~any~~approximately ~~outstanding~~3%, ~~debt~~resulting asin interest income of ~~November~~$1.8 ~~30,~~million ~~2025~~for the quarter.

Based on the composition of our investments as of February 28, 2026, a hypothetical 100-basis-point increase or decrease in market interest rates would not have a material impact on our condensed consolidated financial statements.

We do not currently have material risk associated with interest expense as we did not have any outstanding borrowings under our Revolving Facility as of February 28, 2026.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended ~~November~~February 3028, ~~2025~~2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various claims and contingencies that arise from time to time in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material effect on our consolidated financial position, results of operations or cash flows.

A description of pending litigation, settlements, and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business is provided in Note 13. Commitments and Contingencies to our ~~unaudited~~ condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which are incorporated herein by reference.

Item 1A. Risk Factors.

In addition to the information set forth in this Quarterly Report on Form 10-Q, ~~the~~investors ~~reader~~ should carefully consider the factors discussed in Item 1A, “Risk Factors,” in our 2025 Annual Report on Form 10-K. There have been no material changes to the risk factors previously disclosed in our 2025 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The Company did not repurchase any shares of its common stock during the three months ended February 28, 2026.

Recent Sales of Unregistered Equity Securities

~~Prior~~The toCompany ~~the~~did ~~IPO,~~not wesell ~~operated~~any asunregistered aequity ~~Delaware~~securities ~~limited~~during ~~partnership under~~ the ~~name~~three APmonths ~~VIII~~ended ~~Queso~~February ~~Holdings~~28, L2026.P. On October 7, 2025, AP VIII Queso Holdings, L.P. converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Phoenix Education Partners, Inc. In connection with the Corporate Conversion, all of the 1,028,000 previously outstanding limited partnership units of AP VIII Queso Holdings, L.P. were converted on a 1-for-33.858 basis into an aggregate of 34,805,541 shares of our common stock.

In connection with the IPO, on October 9, 2025, all of the outstanding shares of the University’s common stock owned by persons other than us were converted into shares of our common stock at a ratio equal to one share of our common stock for each share of the University’s common stock. As a result, we issued 790,714 shares of our common stock upon the conversion of 790,714 previously outstanding shares of the University’s common stock, and the University is now a wholly owned subsidiary of the Company.

The offers, sales and issuances of the securities described in the immediately preceding section were deemed to be exempt from registration under Section 4(a)(2) in that the transactions were by an issuer and did not involve any public offering within the meaning of Section 4(a)(2).

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering. All recipients had adequate access, through their relationships with us, to information about us. The offers, sales and issuances of these securities were made without any general solicitation or advertising.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Director and Officer Trading Arrangements

During the three and six months ended ~~November~~February 3028, ~~2025~~2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

ExhibitNumber		Description
3.1		Certificate of Incorporation of Phoenix Education ~~Partners~~Partner, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 15,. 2025)
3.2		Bylaws of Phoenix Education Partners, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2025)
10.1		Stockholders’ Agreement by and among Phoenix Education Partners, Inc., TVG-I-E-AEG Holdings, LP and AP VIII Socrates Holdings, L.P.(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2025)
10.2		Registration Rights Agreement by and among Phoenix Education Partners, Inc. and the Holders party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2025)
10.3		The University of Phoenix, Inc. Amended & Restated Stockholders’ Agreement by and among the University of Phoenix, Inc., Phoenix Education Operating Corp. and Phoenix Education Partners, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2025)
10.4†		Phoenix Education Partners, Inc. 2025 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K filed with the SEC on November 20, 2025)
10.5†		Phoenix Education Partners, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.21 of the Company’s Annual Report on Form 10-K filed with the SEC on November 20, 2025)
10.6†		Phoenix Education Partners, Inc. Senior Executive Severance Pay Plan (incorporated by reference to Exhibit 10.28 of the Company’s Annual Report on Form 10-K filed with the SEC on November 20, 2025)
10.7		Revolving Credit Agreement, dated November 13, 2025, by and among, Phoenix Education Partners, Inc., the lenders and issuing banks party thereto, and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025)
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

~~† Indicates management contract or compensatory plan.~~33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Phoenix Education Partners, Inc.
Date: January 13, 2026	By:	/s/ Blair Westblom
Date: April 7, 2026	By:	/s/ Blair Westblom
		Blair Westblom
		Chief Financial Officer

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