Vocational education company Adtalem Global Education (NYSE: ATGE) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 12.9% year on year to $466.1 million. The company’s full-year revenue guidance of $1.77 billion at the midpoint came in 0.9% above analysts’ estimates. Its non-GAAP profit of $1.92 per share was 16.2% above analysts’ consensus estimates.
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Adtalem (ATGE) Q1 CY2025 Highlights:
- Revenue: $466.1 million vs analyst estimates of $446.4 million (12.9% year-on-year growth, 4.4% beat)
- Adjusted EPS: $1.92 vs analyst estimates of $1.65 (16.2% beat)
- Adjusted EBITDA: $127.8 million vs analyst estimates of $111.2 million (27.4% margin, 14.9% beat)
- The company lifted its revenue guidance for the full year to $1.77 billion at the midpoint from $1.75 billion, a 1.3% increase
- Management raised its full-year Adjusted EPS guidance to $6.50 at the midpoint, a 4.8% increase
- Operating Margin: 19.4%, in line with the same quarter last year
- Free Cash Flow Margin: 52%, up from 34.2% in the same quarter last year
- Market Capitalization: $4.28 billion
Company Overview
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE: ATGE) is a global provider of workforce solutions and educational services.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Adtalem grew its sales at a 10.5% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Adtalem’s annualized revenue growth of 9.7% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
This quarter, Adtalem reported year-on-year revenue growth of 12.9%, and its $466.1 million of revenue exceeded Wall Street’s estimates by 4.4%.
Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges.
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Operating Margin
Adtalem’s operating margin has risen over the last 12 months and averaged 18% over the last two years. On top of that, its profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.
This quarter, Adtalem generated an operating profit margin of 19.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Adtalem’s EPS grew at a spectacular 21.9% compounded annual growth rate over the last five years, higher than its 10.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t expand.
In Q1, Adtalem reported EPS at $1.92, up from $1.50 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Adtalem’s full-year EPS of $6.39 to grow 8.2%.
Key Takeaways from Adtalem’s Q1 Results
We enjoyed seeing Adtalem beat analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.5% to $119 immediately after reporting.
Adtalem put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
