Aspen Group Delivers Positive Operating Income in Third Quarter Fiscal 2025

_{² Net income (loss) in Fiscal Q3 2025 and Fiscal year 2025 includes a non-cash (loss) gain of $(935,363) and $970,769, respectively, related to the change in the fair value of put warrant liability.}

_{³ Non-GAAP financial measures. See reconciliations of GAAP to non-GAAP financial measures under "Non-GAAP-Financial Measures” starting on page 4.}

Michael Mathews, Chairman and CEO of AGI, stated: "The third quarter showcased strong internal performance. First, we have experienced stabilization in sequential revenue levels at both Aspen University and United States University over the past four quarters with only a maintenance marketing spend rate. Second, management's commitment to effective cost management and operational efficiency resulted in the year-over-year improvement in gross margin and the reduction in operating expenses. These factors worked together to yield positive operating income and operating cash flow of $0.7 million. The third quarter net loss was entirely attributed to a non-cash expense of $935,000 due to the fair value adjustment of put warrants, attributed to gains in AGI's share price during the quarter. Moreover, we are pleased to report Adjusted EBITDA of $1.7 million.”

Mr. Mathews added, "We are particularly encouraged by the recent renewal of Aspen University's accreditation by the Distance Education Accrediting Commission through January 2029. The demand for Aspen University's online post-licensure nursing degree programs and the United States University's family nurse practitioner program remains steady, despite our limited marketing spend rate.”

Fiscal Q3 2025 Financial and Operational Results (compared to Fiscal Q3 2024)

Revenue decreased by 9% to $10.9 million compared to $12.1 million. The following table presents the Company's revenue, both per-subsidiary and total:

Aspen University's ("AU”) revenue decline of $1.7 million, or 28%, reflects the completion of the teach-out of the pre-licensure program and lower post-licensure enrollments as a result of the decrease in marketing spend initiated in late Fiscal Q1 2023.

United States University ("USU”) revenue was up 10% compared to the prior year period. MSN-FNP program enrollments decreased in the quarter due to regular seasonal fluctuations and lower marketing spend initiated in late Fiscal Q1 2023. Lower new enrollments were offset by strong demand from existing students returning from inactive status and higher revenue per student driven by more students entering their second year of the MSN-FNP program, which includes clinical rotations, and by tuition increases.

GAAP gross profit decreased $0.2 million to $7.5 million primarily due to the overall student body decrease of 21%.   Gross margin was 68% compared to 64%. AU's gross margin was 67% versus 61%, and USU's gross margin was 70% versus 68%. The increase in gross margin is the result of lower instructional costs from completing the AU BSN Pre-licensure program teach-out and increased efficiencies in the usage of faculty at both AU and USU.

AU instructional costs and services represented 25% of AU revenue, and USU instructional costs and services represented 27% of USU revenue. AU marketing and promotional costs represented 2% of AU revenue, and USU marketing and promotional costs represented 1% of USU revenue.

In Fiscal Q3 2025, net income and EBITDA were impacted by a $0.9 million non-cash expense related to the fair value adjustment of the put warrants, attributed to gains in Aspen Group's share price in the quarter. At the end of each quarter if our stock price has increased, we will incur a charge; contrarily, if our stock price has decreased, we will incur a gain from the put warrants.

The following tables present the Company's net income (loss), both per subsidiary and total:

The following tables present the Company's Non-GAAP Financial Measures, both per subsidiary and total. See reconciliations of GAAP to non-GAAP financial measures under "Non-GAAP-Financial Measures” starting on page 4.

Adjusted EBITDA improved by $1.5 million due to the reduction in instructional costs and services related to the teach-out of the pre-licensure program, increased instructional efficiencies at AU and USU and a decrease in general and administrative costs attributed to our restructurings.

Operating Metrics

New Student Enrollments

Total enrollments for AGI decreased 30% from Fiscal Q3 2024. The year-over-year company-wide decrease of new student enrollments is primarily the result of the on-going maintenance level of marketing spend. As a result of the restructurings and increased instructional efficiencies, we anticipate we will increase marketing spend in Fiscal 2026 to a level necessary to provide enrollments needed to grow the student body and increase positive operating cash flow.

New student enrollments for the past five quarters are shown below:

Total Active Student Body

AGI's active degree-seeking student body, including AU and USU, declined 21% year-over-year to 6,039 at January 31, 2025 from 7,649 at January 31, 2024. AU's total active student body decreased by 31% year-over-year to 3,564 at January 31, 2025 from 5,146 at January 31, 2024. On a year-over-year basis, USU's total active student body decreased by 1% to 2,475 at January 31, 2025 from 2,503 at January 31, 2024.

Total active student body for the past five quarters is shown below: