Adtalem’s third quarter results exceeded Wall Street’s revenue and earnings expectations, but the company’s shares declined notably following the release. Management identified strong enrollment growth across Walden University and the Medical and Veterinary segment as key drivers of performance, while also candidly addressing operational missteps in Chamberlain’s marketing and enrollment processes. CEO Stephen Beard called Chamberlain’s slower enrollment growth “an execution issue, and it’s fixable,” attributing the softness to local marketing campaigns that failed to deliver expected results and conversion rates that lagged historical norms. Beard emphasized that these issues were specific to Chamberlain and not indicative of broader competitive or industry trends affecting the portfolio.
Is now the time to buy ATGE? Find out in our full research report (it’s free for active Edge members).
Adtalem (ATGE) Q3 CY2025 Highlights:
- Revenue: $462.3 million vs analyst estimates of $453.3 million (10.8% year-on-year growth, 2% beat)
- Adjusted EPS: $1.75 vs analyst estimates of $1.58 (10.9% beat)
- Adjusted EBITDA: $112 million vs analyst estimates of $108.3 million (24.2% margin, 3.4% beat)
- The company reconfirmed its revenue guidance for the full year of $1.92 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $7.75 at the midpoint
- Operating Margin: 18.6%, up from 17.3% in the same quarter last year
- Market Capitalization: $3.54 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Adtalem’s Q3 Earnings Call
- Jack Slevin (Jefferies) asked about the range of outcomes for Chamberlain’s enrollment recovery. CEO Stephen Beard distinguished the recent slowdown as a “one-time dislocation” due to execution, not a lasting trend, and expects recovery as operational adjustments are implemented.
- Jack Slevin (Jefferies) questioned Chamberlain’s margin trajectory amid enrollment softness. Beard indicated that margin expansion is anticipated as top-line growth returns, with current pressure tied to the September performance miss.
- Jack Slevin (Jefferies) inquired about Adtalem’s technology infrastructure after peer issues. Beard expressed confidence in the company’s tech stack, noting active innovation and no comparable risks to those seen at competitors.
- Jeffrey Silber (BMO Capital Markets) pressed on whether Chamberlain’s challenges reflected competitive share loss. Beard maintained that Chamberlain’s market position remains strong, with no evidence of increased competition impacting recent results.
- Alexander Paris (Barrington Research) asked about the rollout and Title IV eligibility of Google Cloud AI credentials. Beard explained these are ancillary certificate programs with no extra cost to students currently and that integration into degree programs may follow after accreditation considerations.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory analyst team will monitor (1) the trajectory of Chamberlain’s enrollment and margin recovery as operational changes are implemented, (2) the impact of digital and AI program enhancements—particularly through the Google Cloud partnership—on overall enrollment and student outcomes, and (3) the effectiveness of new partnerships in expanding the company’s reach and pipeline. Ongoing capital allocation decisions and the February Investor Day will also offer important updates on strategy execution.
Adtalem currently trades at $98.35, down from $141.83 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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