Q3 Fiscal 2025 Highlights (compared to Q3 Fiscal 2024)
Gross margin increased by 400 basis points to 68%
Lowered operating expense by $3.3 million to deliver operating income of $0.4 million
Net loss of $(0.9) million reflects a $(0.9) million non-cash fair value adjustment of put warrants
Delivers positive Adjusted EBITDA of $1.7 million as compared to $0.2 million
PHOENIX, March 13, 2025 (GLOBE NEWSWIRE) — Aspen Group, Inc. (OTCQB:ASPU) (“AGI” or the “Company”), an education technology holding company, today announced financial results for its third quarter fiscal year 2025 ended January 31, 2025.
Third Quarter Fiscal Year 2025 Summary Results
Three Months Ended January 31,
Nine Months Ended January 31,
$ in millions, except per share data
2025
2024
2025
2024
Revenue
$
10.9
$
12.1
$
33.7
$
40.5
Gross Profit1
$
7.5
$
7.7
$
23.1
$
26.2
Gross Margin (%)1
68
%
64
%
69
%
65
%
Operating Income (Loss)
$
0.4
$
(1.8
)
$
(5.1
)
$
(1.9
)
Net Income (Loss)
$
(0.9
)
$
(3.9
)
$
(5.2
)
$
(6.1
)
Earnings (Loss) per Share
$
(0.04
)
$
(0.15
)
$
(0.20
)
$
(0.24
)
EBITDA2, 3
$
0.2
$
(0.9
)
$
(1.8
)
$
0.8
Adjusted EBITDA2
$
1.7
$
0.2
$
3.7
$
3.1
_______________________
1 GAAP gross profit calculation includes marketing and promotional costs, instructional costs and services, and amortization expense of $0.5 million and $0.5 million, and $1.4 million and $1.5 million for the three and nine months ended January 31, 2025 and 2024, respectively.
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:
Three Months Ended January 31,
2025
$ Change
% Change
2024
AU
$
4,430,489
$
(1,698,219
)
(28)%
$
6,128,708
USU
6,513,479
584,340
10%
5,929,139
Revenue
$
10,943,968
$
(1,113,879
)
(9)%
$
12,057,847
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:
Three Months Ended January 31, 2025
Consolidated
AGI Corporate
AU
USU
Net income (loss)
$
(908,747
)
$
(2,479,960
)
$
(106,590
)
$
1,677,803
Net loss per share available to common stockholders
$
(0.04
)
Three Months Ended January 31, 2024
Consolidated
AGI Corporate
AU
USU
Net income (loss)
$
(3,880,437
)
$
(4,787,637
)
$
(380,174
)
$
1,287,374
Net loss per share available to common stockholders
$
(0.15
)
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.
Three Months Ended January 31, 2025
Consolidated
AGI Corporate
AU
USU
EBITDA
$157,934
$(2,064,706)
$393,777
$1,828,863
EBITDA Margin
1%
NM
9%
28%
Adjusted EBITDA
$1,703,731
$(1,022,970)
$656,540
$2,070,161
Adjusted EBITDA Margin
16%
NM
15%
32%
Three Months Ended January 31, 2024
Consolidated
AGI Corporate
AU
USU
EBITDA
$(943,597)
$(2,715,226)
$333,751
$1,437,878
EBITDA Margin
(8)%
NM
5%
24%
Adjusted EBITDA
$178,442
$(2,414,628)
$928,304
$1,664,766
Adjusted EBITDA Margin
1%
NM
15%
28%
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:
Q3’24
Q4’24
Q1’25
Q2’25
Q3’25
Aspen University
473
427
413
508
359
USU
325
370
410
442
196
Total
798
797
823
950
555
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:
Q3’24
Q4’24
Q1’25
Q2’25
Q3’25
Aspen University
5,146
4,559
4,145
3,827
3,564
USU
2,503
2,489
2,477
2,560
2,475
Total
7,649
7,048
6,622
6,387
6,039
Nursing Students
Nursing student body for the past five quarters is shown below.
Q3’24
Q4’24
Q1’25
Q2’25
Q3’25
Aspen University
4,032
3,526
3,198
2,948
2,745
USU
2,270
2,262
2,254
2,300
2,297
Total
6,302
5,788
5,452
5,248
5,042
Liquidity
The Fiscal Q3 2025 ending unrestricted cash balance was $0.8 million. We implemented the following during Fiscal Q3 2025 to help us further stabilize on-going cash flow. First, we renegotiated the 15% Senior Secured Debentures in October 2024, reducing ongoing principal payments and changing the timing of principal payments from monthly to quarterly. Second, the Company initiated a fourth restructuring late in the fourth quarter of calendar 2024, which is projected to reduce annual operating expenses by over $1.5 million.
Cost reductions associated with the four restructuring plans and other corporate cost reductions were implemented to ensure that the Company will have sufficient cash to meet its working capital needs for the next 12 months.
Non-GAAP – Financial Measures
This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of AGI nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Our management uses and relies on EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. We believe that management, analysts, and shareholders benefit from referring to the following non-GAAP financial measures to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.
We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between AGI and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each.
AGI defines Adjusted EBITDA as EBITDA excluding: (1) bad debt expense; (2) stock-based compensation; (3) severance; (4) impairments of right-of-use assets and tenant leasehold improvements and (5) non-recurring charges. The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA and of net income (loss) margin to the Adjusted EBITDA margin:
Three Months Ended January 31,
2025
2024
Net loss
$
(908,747
)
$
(3,880,437
)
Interest expense, net
353,629
1,992,185
Taxes
3,751
28,531
Depreciation and amortization
709,301
916,124
EBITDA
157,934
(943,597
)
Bad debt expense
450,000
450,000
Stock-based compensation
107,012
222,076
Severance
35,421
—
Impairment of right-of-use assets
—
105,314
Non-recurring charges – Other
953,364
344,649
Adjusted EBITDA
$
1,703,731
$
178,442
Net income / loss Margin
(8)%
(32)%
Adjusted EBITDA Margin
16%
1%
The following tables present a reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA and of Net income (loss) margin to the Adjusted EBITDA margin by business unit:
Three Months Ended January 31, 2025
Consolidated
AGI Corporate
AU