LINC Q1 Earnings Call: Student Growth and New Campus Investments Offset Revenue Miss

Education company Lincoln Educational (NASDAQ:LINC) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 13.7% year on year to $117.5 million. Its non-GAAP profit of $0.11 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Lincoln Educational’s first quarter results were shaped by strong student enrollment growth, the expansion of its hybrid teaching model, and targeted campus investments. CEO Scott Shaw highlighted the impact of the Lincoln 10.0 hybrid model, which blends online and hands-on instruction to offer flexibility and improved graduation rates. The company benefited from higher student starts, particularly in transportation and skilled trades, while phasing out lower-demand programs. Marketing efficiencies also contributed, as cost per student start fell. Despite a shortfall in revenue against Wall Street expectations, management attributed double-digit revenue growth to sustained demand for skilled trades training and operational improvements at newly opened and relocated campuses.

For the remainder of the year, management expects continued momentum driven by additional program replications, the opening of new campuses, and ongoing efficiency gains. CFO Brian Meyers noted that the company’s raised full-year EBITDA guidance reflects confidence in operational leverage and enrollment trends. Shaw pointed to broader national trends favoring skilled trades and highlighted that regulatory changes and government initiatives are expected to support demand. He explained, “Our growth strategy is simple. We will continue to expand our network of schools by replicating our most in-demand programs at our existing campuses while building new campuses in new and existing markets.” The company is also closely monitoring regulatory developments and expects minimal impact from tariffs or economic headwinds in the near term.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to strong demand for skilled trade programs, successful campus expansion, and improved marketing efficiency. The company also benefited from leveraging its hybrid teaching model and optimizing its program mix.

• Hybrid teaching model success: The Lincoln 10.0 approach, combining online learning with hands-on instruction, increased student flexibility and graduation rates. This model also drove operational efficiencies, helping to control costs and support margin expansion.
• Strong skilled trades enrollment: Student starts in transportation and skilled trades programs rose over 30%, fueled by program replication at more campuses and rising national interest in trade careers. This offset enrollment declines in discontinued nursing, massage therapy, and culinary programs.
• Campus development momentum: The opening of new campuses, including the relocation of Nashville and the East Point campus in Atlanta, contributed to enrollment growth and are expected to deliver stronger financial returns as new programs come online.
• Marketing efficiency gains: Management cited a 20% year-on-year reduction in cost per student start, achieved through improved lead generation and greater referral activity. These savings supported margin improvement and are expected to persist, though perhaps at a lesser rate.
• Program mix optimization: The company continued to phase out lower-demand programs and invest in high-interest, high-return offerings, such as welding and electrical training, to align with employer needs and maximize student outcomes.

Drivers of Future Performance

Lincoln Educational’s outlook is anchored in continued expansion of its program offerings, new campus openings, and operational leverage, while navigating regulatory changes and shifting market preferences.

• Accelerated campus expansion: The company plans to open three new campuses in 2025 and is exploring further opportunities in underserved markets. Management expects these sites to contribute significantly to future revenue and EBITDA once fully operational.
• Program replication and innovation: Ongoing rollout of in-demand programs, like electrical and welding, at existing and new campuses is expected to drive enrollment growth. Management believes that aligning offerings with labor market needs will sustain demand.
• Regulatory and economic environment: Leadership is monitoring changes in federal education policy and workforce initiatives, anticipating that government support for skilled trades will continue to benefit demand. Management also expects minimal impact from tariffs and macroeconomic uncertainty in the near term.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be tracking (1) the ramp-up of new campus openings and the contribution of new programs to enrollment, (2) the sustainability of marketing efficiencies and operating leverage, and (3) progress on regulatory approvals for program expansions. We will also monitor how phasing out low-demand programs and the national focus on skilled trades shape student demand and financial outcomes.

Lincoln Educational currently trades at a forward EV-to-EBITDA ratio of 11.8×. Should you double down or take your chips? Find out in our full research report (it’s free).

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