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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 0-23245

PERDOCEO EDUCATION CORPORATION

(Exact name of registrant as specified in its charter)

Delaware | 36-3932190
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
231 N. Martingale Road Schaumburg, Illinois | 60173
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code: (847) 781-3600

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.01 par value |  | PRDO |  | Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☒ |  | Accelerated filer | ☐
Non-accelerated filer |  | ☐ |  | Smaller reporting company | ☐
Emerging growth company |  | ☐ |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

Number of shares of registrant’s common stock, par value $0.01, outstanding as of May 3, 2021: 70,439,842

PERDOCEO EDUCATION CORPORATION

FORM 10-Q

TABLE OF CONTENTS

|  | Page
PART I—FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Condensed Consolidated Balance Sheets | 1
| Condensed Consolidated Statements of Income (Unaudited) | 2
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | 2
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | 3
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 4
| Notes to Unaudited Condensed Consolidated Financial Statements | 5
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 24
Item 4. | Controls and Procedures | 24
PART II—OTHER INFORMATION |
Item 1. | Legal Proceedings | 26
Item 1A. | Risk Factors | 26
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26
Item 6. | Exhibits | 26
SIGNATURES | 28

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

|  | March 31, |  |  | December 31, |
(In Thousands, Except Share and Per Share Amounts) |  | 2021 |  |  | 2020 |
ASSETS |  | (unaudited) |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash and cash equivalents, unrestricted |  | $ | 86,031 |  |  | $ | 105,684 |
Restricted cash |  |  | 4,000 |  |  |  | 4,000 |
Total cash, cash equivalents and restricted cash |  |  | 90,031 |  |  |  | 109,684 |
Short-term investments |  |  | 360,986 |  |  |  | 300,676 |
Total cash and cash equivalents, restricted cash and short-term investments |  |  | 451,017 |  |  |  | 410,360 |
Student receivables, gross |  |  | 82,592 |  |  |  | 84,599 |
Allowance for credit losses |  |  | (41,110 | ) |  |  | (39,917 | )
Student receivables, net |  |  | 41,482 |  |  |  | 44,682 |
Receivables, other |  |  | 2,684 |  |  |  | 2,873 |
Prepaid expenses |  |  | 10,023 |  |  |  | 8,209 |
Inventories |  |  | 594 |  |  |  | 596 |
Other current assets |  |  | 253 |  |  |  | 341 |
Total current assets |  |  | 506,053 |  |  |  | 467,061 |
NON-CURRENT ASSETS: |  |  |  |  |  |  |  |
Property and equipment, net of accumulated depreciation of $104,548 and $101,380 as of March 31, 2021 and December 31, 2020, respectively |  |  | 25,696 |  |  |  | 27,761 |
Right of use asset, net |  |  | 42,425 |  |  |  | 44,773 |
Goodwill |  |  | 118,312 |  |  |  | 118,312 |
Intangible assets, net of amortization of $5,011 and $4,178 as of March 31, 2021 and December 31, 2020, respectively |  |  | 14,689 |  |  |  | 15,522 |
Student receivables, gross |  |  | 3,970 |  |  |  | 3,533 |
Allowance for credit losses |  |  | (2,675 | ) |  |  | (2,230 | )
Student receivables, net |  |  | 1,295 |  |  |  | 1,303 |
Deferred income tax assets, net |  |  | 35,584 |  |  |  | 40,351 |
Other assets |  |  | 6,311 |  |  |  | 6,434 |
TOTAL ASSETS |  | $ | 750,365 |  |  | $ | 721,517 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Lease liability-operating |  | $ | 9,677 |  |  | $ | 9,789 |
Accounts payable |  |  | 10,767 |  |  |  | 13,259 |
Accrued expenses: |  |  |  |  |  |  |  |
Payroll and related benefits |  |  | 15,207 |  |  |  | 22,661 |
Advertising and marketing costs |  |  | 11,643 |  |  |  | 10,249 |
Income taxes |  |  | 6,627 |  |  |  | 1,402 |
Other |  |  | 12,294 |  |  |  | 11,921 |
Deferred revenue |  |  | 37,004 |  |  |  | 34,534 |
Total current liabilities |  |  | 103,219 |  |  |  | 103,815 |
NON-CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Lease liability-operating |  |  | 40,423 |  |  |  | 43,405 |
Other liabilities |  |  | 18,378 |  |  |  | 18,390 |
Total non-current liabilities |  |  | 58,801 |  |  |  | 61,795 |
STOCKHOLDERS' EQUITY: |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding |  |  | - |  |  |  | - |
Common stock, $0.01 par value; 300,000,000 shares authorized; 87,795,103 and 87,264,910 shares issued, 70,432,568 and 70,062,364 shares outstanding as of March 31, 2021 and December 31, 2020, respectively |  |  | 878 |  |  |  | 873 |
Additional paid-in capital |  |  | 662,485 |  |  |  | 658,423 |
Accumulated other comprehensive income |  |  | 14 |  |  |  | 364 |
Retained earnings |  |  | 173,088 |  |  |  | 142,335 |
Treasury stock, at cost; 17,362,535 and 17,202,546 shares as of March 31, 2021 and December 31, 2020, respectively |  |  | (248,120 | ) |  |  | (246,088 | )
Total stockholders' equity |  |  | 588,345 |  |  |  | 555,907 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |  | $ | 750,365 |  |  | $ | 721,517 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

|  | For the Quarter Ended March 31, |
(In Thousands, Except Per Share Amounts) |  | 2021 |  |  | 2020 |
REVENUE: |  |  |  |  |  |  |  |
Tuition and fees |  | $ | 182,831 |  |  | $ | 170,394 |
Other |  |  | 807 |  |  |  | 600 |
Total revenue |  |  | 183,638 |  |  |  | 170,994 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |
Educational services and facilities |  |  | 28,974 |  |  |  | 26,911 |
General and administrative |  |  | 110,045 |  |  |  | 103,529 |
Depreciation and amortization |  |  | 4,002 |  |  |  | 2,639 |
Asset impairment |  |  | - |  |  |  | 612 |
Total operating expenses |  |  | 143,021 |  |  |  | 133,691 |
Operating income |  |  | 40,617 |  |  |  | 37,303 |
OTHER INCOME: |  |  |  |  |  |  |  |
Interest income |  |  | 359 |  |  |  | 1,487 |
Interest expense |  |  | (109 | ) |  |  | (41 | )
Miscellaneous income (expense) |  |  | 142 |  |  |  | (13 | )
Total other income |  |  | 392 |  |  |  | 1,433 |
PRETAX INCOME |  |  | 41,009 |  |  |  | 38,736 |
Provision for income taxes |  |  | 10,245 |  |  |  | 9,604 |
INCOME FROM CONTINUING OPERATIONS |  |  | 30,764 |  |  |  | 29,132 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax |  |  | (11 | ) |  |  | (26 | )
NET INCOME |  |  | 30,753 |  |  |  | 29,106 |
NET INCOME PER SHARE - BASIC: |  | $ | 0.44 |  |  | $ | 0.42 |
NET INCOME PER SHARE - DILUTED: |  | $ | 0.43 |  |  | $ | 0.41 |
WEIGHTED AVERAGE SHARES OUTSTANDING: |  |  |  |  |  |  |  |
Basic |  |  | 70,149 |  |  |  | 69,839 |
Diluted |  |  | 71,482 |  |  |  | 71,714 |

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

|  | For the Quarter Ended March 31, |
(In Thousands) |  | 2021 |  |  | 2020 |
NET INCOME |  | $ | 30,753 |  |  | $ | 29,106 |
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax: |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (129 | ) |  |  | (48 | )
Unrealized loss on investments |  |  | (221 | ) |  |  | (839 | )
Total other comprehensive loss |  |  | (350 | ) |  |  | (887 | )
COMPREHENSIVE INCOME |  | $ | 30,403 |  |  | $ | 28,219 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

|  | Common Stock |  |  | Treasury Stock |  |  |  |  |  |  | Accumulated Other |  |  |  |  |  |  |  |  |
(In Thousands) |  | Issued Shares |  |  | $0.01 Par Value |  |  | Purchased Shares |  |  | Cost |  |  | Additional Paid-in Capital |  |  | Comprehensive Income (Loss) |  |  | Retained Earnings |  |  | Total |
BALANCE, January 1, 2021 |  |  | 87,265 |  |  | $ | 873 |  |  |  | (17,203 | ) |  | $ | (246,088 | ) |  | $ | 658,423 |  |  | $ | 364 |  |  | $ | 142,335 |  |  | $ | 555,907 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 30,753 |  |  |  | 30,753 |
Foreign currency translation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (129 | ) |  |  | - |  |  |  | (129 | )
Unrealized loss on investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (221 | ) |  |  | - |  |  |  | (221 | )
Share-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,753 |  |  |  | - |  |  |  | - |  |  |  | 3,753 |
Common stock issued |  |  | 530 |  |  |  | 5 |  |  |  | (160 | ) |  |  | (2,032 | ) |  |  | 309 |  |  |  | - |  |  |  | - |  |  |  | (1,718 | )
BALANCE, March 31, 2021 |  |  | 87,795 |  |  | $ | 878 |  |  |  | (17,363 | ) |  | $ | (248,120 | ) |  | $ | 662,485 |  |  | $ | 14 |  |  | $ | 173,088 |  |  | $ | 588,345 |
|  | Common Stock |  |  | Treasury Stock |  |  |  |  |  |  | Accumulated Other |  |  |  |  |  |  |  |  |
(In Thousands) |  | Issued Shares |  |  | $0.01 Par Value |  |  | Purchased Shares |  |  | Cost |  |  | Additional Paid-in Capital |  |  | Comprehensive Income (Loss) |  |  | Retained Earnings |  |  | Total |
BALANCE, January 1, 2020 |  |  | 85,953 |  |  | $ | 860 |  |  |  | (15,802 | ) |  | $ | (227,315 | ) |  | $ | 639,335 |  |  | $ | 344 |  |  | $ | 18,071 |  |  | $ | 431,295 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,106 |  |  |  | 29,106 |
Foreign currency translation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (48 | ) |  |  | - |  |  |  | (48 | )
Unrealized loss on investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (839 | ) |  |  | - |  |  |  | (839 | )
Treasury stock purchased |  |  | - |  |  |  | - |  |  |  | (1,284 | ) |  |  | (17,309 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (17,309 | )
Share-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,212 |  |  |  | - |  |  |  | - |  |  |  | 3,212 |
Common stock issued |  |  | 256 |  |  |  | 2 |  |  |  | (62 | ) |  |  | (687 | ) |  |  | 411 |  |  |  | - |  |  |  | - |  |  |  | (274 | )
BALANCE, March 31, 2020 |  |  | 86,209 |  |  | $ | 862 |  |  |  | (17,148 | ) |  | $ | (245,311 | ) |  | $ | 642,958 |  |  | $ | (543 | ) |  | $ | 47,177 |  |  | $ | 445,143 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|  | For the Quarter Ended March 31, |
(In Thousands) |  | 2021 |  |  | 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net income |  | $ | 30,753 |  |  | $ | 29,106 |
Adjustments to reconcile net income to net |  |  |  |  |  |  |  |
cash provided by operating activities: |  |  |  |  |  |  |  |
Asset impairment |  |  | - |  |  |  | 612 |
Depreciation and amortization expense |  |  | 4,002 |  |  |  | 2,639 |
Bad debt expense |  |  | 13,719 |  |  |  | 12,862 |
Compensation expense related to share-based awards |  |  | 3,753 |  |  |  | 3,212 |
Deferred income taxes |  |  | 4,767 |  |  |  | 9,468 |
Changes in operating assets and liabilities |  |  | (12,286 | ) |  |  | (13,131 | )
Net cash provided by operating activities |  |  | 44,708 |  |  |  | 44,768 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Purchases of available-for-sale investments |  |  | (126,009 | ) |  |  | (111,753 | )
Sales of available-for-sale investments |  |  | 64,408 |  |  |  | 52,893 |
Purchases of property and equipment |  |  | (1,042 | ) |  |  | (1,015 | )
Business acquisition |  |  | - |  |  |  | (34,065 | )
Net cash used in investing activities |  |  | (62,643 | ) |  |  | (93,940 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Issuance of common stock |  |  | 314 |  |  |  | 413 |
Purchase of treasury stock |  |  | - |  |  |  | (17,309 | )
Payments of employee tax associated with stock compensation |  |  | (2,032 | ) |  |  | (687 | )
Net cash used in financing activities |  |  | (1,718 | ) |  |  | (17,583 | )
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |  |  | (19,653 | ) |  |  | (66,755 | )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period |  |  | 109,684 |  |  |  | 108,687 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period |  | $ | 90,031 |  |  | $ | 41,932 |
Supplemental non-cash disclosure: |  |  |  |  |  |  |  |
Amounts placed in escrow during the period to secure indemnification obligations from business acquisition |  | $ | - |  |  | $ | 4,000 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY

Perdoceo’s academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. Our accredited institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Our universities offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to support students and enhance learning. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company,” “Perdoceo” and “PEC” refer to Perdoceo Education Corporation and our wholly-owned subsidiaries.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the quarter ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021.

The unaudited condensed consolidated financial statements presented herein include the accounts of Perdoceo Education Corporation and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a postsecondary education provider that offers a variety of academic programs. We organize our business across two reporting segments: CTU and AIU.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting guidance adopted in 2021

In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions, including the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items and the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also simplify the accounting for income taxes by requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax and requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For all public business entities, ASU 2019-12 is effective for annual periods and interim periods beginning after December 15, 2020. We have evaluated and adopted this guidance effective January 1, 2021. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

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4. FINANCIAL INSTRUMENTS

Investments consist of the following as of March 31, 2021 and December 31, 2020 (dollars in thousands):

|  | March 31, 2021 |
|  |  |  |  |  | Gross Unrealized |  |  |  |  |
|  | Cost |  |  | Gain |  |  | (Loss) |  |  | Fair Value |
Short-term investments (available for sale): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal bonds |  | $ | 139 |  |  | $ | 1 |  |  | $ | - |  |  | $ | 140 |
Non-governmental debt securities |  |  | 354,136 |  |  |  | 145 |  |  |  | (208 | ) |  |  | 354,073 |
Treasury and federal agencies |  |  | 6,770 |  |  |  | 5 |  |  |  | (2 | ) |  |  | 6,773 |
Total short-term investments (available for sale) |  | $ | 361,045 |  |  | $ | 151 |  |  | $ | (210 | ) |  | $ | 360,986 |

|  | December 31, 2020 |
|  |  |  |  |  | Gross Unrealized |  |  |  |  |
|  | Cost |  |  | Gain |  |  | (Loss) |  |  | Fair Value |
Short-term investments (available for sale): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal bonds |  | $ | 139 |  |  | $ | 1 |  |  | $ | - |  |  | $ | 140 |
Non-governmental debt securities |  |  | 288,578 |  |  |  | 331 |  |  |  | (176 | ) |  |  | 288,733 |
Treasury and federal agencies |  |  | 11,799 |  |  |  | 6 |  |  |  | (2 | ) |  |  | 11,803 |
Total short-term investments (available for sale) |  | $ | 300,516 |  |  | $ | 338 |  |  | $ | (178 | ) |  | $ | 300,676 |

In the table above, unrealized holding gains (losses) relate to short-term investments that have been in a continuous unrealized gain (loss) position for less than one year.

Our non-governmental debt securities primarily consist of commercial paper and certificates of deposit. Our treasury and federal agencies primarily consist of U.S. Treasury bills and federal home loan debt securities. We do not intend to sell our investments in these securities prior to maturity and it is not likely that we will be required to sell these investments before recovery of the amortized cost basis.

Fair Value Measurements

FASB ASC Topic 820 – Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of March 31, 2021, we held investments that are required to be measured at fair value on a recurring basis. These investments (available for sale) consist of municipal bonds, non-governmental debt securities and treasury and federal agencies securities. Available for sale securities included in Level 2 are estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for identical or similar assets or liabilities in inactive markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

All of our available for sale investments were measured under Level 2 as of March 31, 2021 and December 31, 2020. Additionally, money market funds of $20.9 million and $1.7 million included within cash and cash equivalents on our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively, were measured under Level 1 and certificates of deposit, commercial paper and treasury bills of $5.5 million and $5.1 million included within cash and cash equivalents on our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively, were measured under Level 2.

Equity Method Investment

Our investment in an equity affiliate, which is recorded within other noncurrent assets on our condensed consolidated balance sheets, represents an international investment in a private company. As of March 31, 2021, our investment in an equity affiliate equated to a 30.7%, or $3.2 million, non-controlling interest in CCKF, a Dublin-based educational technology company providing intelligent systems to power the delivery of individualized and personalized learning.

During the quarters ended March 31, 2021 and 2020, we recorded approximately $0.2 million of gain and $0.1 million of gain, respectively, related to our proportionate investment in CCKF within miscellaneous income (expense) on our unaudited condensed consolidated statements of income.

We make periodic operating maintenance payments related to proprietary rights that we use in our intellipath® personalized learning technology. The total fees paid during the quarters ended March 31, 2021 and 2020 were as follows (dollars in thousands):

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| Maintenance Fee Payments |
For the quarter ended March 31, 2021 | $ | 423 |
For the quarter ended March 31, 2020 (1) | $ | 1,443 |

________________________

(1)During the first quarter of 2020, the Company prepaid maintenance payments for the full year 2020, of which approximately $0.4 million was recognized as expense for the quarter ended March 31, 2020.

Credit Agreement

On December 27, 2018, the Company; its wholly-owned subsidiary, CEC Educational Services, LLC; and the subsidiary guarantors thereunder, entered into a credit agreement with BMO Harris Bank N.A. (“BMO Harris”), in its capacities as the sole lender, the letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the credit agreement. The credit agreement provides the Company with the benefit of a $50.0 million revolving credit facility and is scheduled to mature on January 20, 2022. The loans and letter of credit obligations under the credit agreement are required to be 100% secured with cash and marketable securities deposited with the bank. As of March 31, 2021 and December 31, 2020, there were no outstanding borrowings under the revolving credit facility.

5. REVENUE RECOGNITION

Disaggregation of Revenue

The following tables disaggregate our revenue by major source for the quarters ended March 31, 2021 and 2020 (dollars in thousands):

|  | For the Quarter Ended March 31, 2021 |  |  | For the Quarter Ended March 31, 2020 |
|  | CTU |  |  | AIU |  |  | Corporate and Other(3) |  |  | Total |  |  | CTU |  |  | AIU |  |  | Corporate and Other(3) |  |  | Total |
Tuition |  | $ | 99,605 |  |  | $ | 74,498 |  |  | $ | - |  |  | $ | 174,103 |  |  | $ | 97,551 |  |  | $ | 64,545 |  |  | $ | - |  |  | $ | 162,096 |
Technology fees |  |  | 5,483 |  |  |  | 2,795 |  |  |  | - |  |  |  | 8,278 |  |  |  | 5,120 |  |  |  | 2,657 |  |  |  | - |  |  |  | 7,777 |
Other miscellaneous fees(1) |  |  | 292 |  |  |  | 158 |  |  |  | - |  |  |  | 450 |  |  |  | 372 |  |  |  | 149 |  |  |  | - |  |  |  | 521 |
Total tuition and fees |  |  | 105,380 |  |  |  | 77,451 |  |  |  | - |  |  |  | 182,831 |  |  |  | 103,043 |  |  |  | 67,351 |  |  |  | - |  |  |  | 170,394 |
Other revenue(2) |  |  | 442 |  |  |  | 26 |  |  |  | 339 |  |  |  | 807 |  |  |  | 545 |  |  |  | 45 |  |  |  | 10 |  |  |  | 600 |
Total revenue |  | $ | 105,822 |  |  | $ | 77,477 |  |  | $ | 339 |  |  | $ | 183,638 |  |  | $ | 103,588 |  |  | $ | 67,396 |  |  | $ | 10 |  |  | $ | 170,994 |

__________________

| (1) | Other miscellaneous fees include student activity fees and graduation fees.

| (2) | Other revenue primarily includes contract training revenue and miscellaneous non-student related revenue.

| (3) | Revenue recorded within Corporate and Other relates to miscellaneous non-student related revenue.

Performance Obligations

Our revenue, which is derived primarily from academic programs taught to students who attend our universities, is generally segregated into two categories: (1) tuition and fees, and (2) other. Tuition and fees represent costs to our students for educational services provided by our universities. Our universities charge tuition and fees at varying amounts, depending on the university, the type of program and specific curriculum. Our universities bill students a single charge that covers tuition, fees and required program materials, such as textbooks and supplies, which we treat as a single performance obligation. Generally, we bill student tuition at the beginning of each academic term and recognize the tuition as revenue on a straight-line basis over the academic term. As part of a student’s course of instruction, certain fees, such as technology fees and graduation fees, are billed to students. These fees are earned over the applicable term and are not considered separate performance obligations.

Other revenue, which consists of contract training revenue, bookstore sales and miscellaneous non-student related revenue, is billed and recognized as goods are delivered or services are performed. Contract training revenue results from individual training courses that are stand-alone courses and not part of a degree or certificate program. Bookstore sales are primarily initiated by the student and are not included in the enrollment agreement at the onset of a student’s entrance to the institution. These types of sales constitute a separate performance obligation from classroom instruction.

Our institutions’ academic year is generally at least 30 weeks in length but varies both by institution and program of study and is divided by academic terms. Academic terms are determined by regulatory requirements mandated by the federal government and/or applicable accrediting body, which also vary by university and program. Academic terms are determined by start dates, which vary by university and program and are generally 8-12 weeks in length.

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Contract Assets

For each term, the portion of tuition and fee payments received from students but not yet earned is recorded as deferred revenue and reported as a current liability on our condensed consolidated balance sheets, as we expect to earn these revenues within the next year. A contract asset is recorded for each student for the current term for which they are enrolled for the amount charged for the current term that has not yet been received as payment and to which we do not have the unconditional right to receive payment because the student has not reached the point in the student’s current academic term at which the amount billed is no longer refundable to the student. On a student by student basis, the contract asset is offset against the deferred revenue balance for the current term and the net deferred revenue balance is reflected within current liabilities on our condensed consolidated balance sheets. For AIU’s Trident programs, students are billed as they register for courses, including courses related to future terms. Any billings for future terms would meet the definition of a contract asset as we do not have the unconditional right to receive payment as the academic term has not yet started. Contract assets related to future terms are offset against the deferred revenue associated with the respective future term.

Due to the short-term nature of our academic terms, the contract asset balance which exists at the beginning of each quarter will no longer be a contract asset at the end of that quarter, with the exception of the contract assets associated with future terms. The decrease in contract asset balances are a result of one of the following: it becomes a student receivable balance once a student reaches the point in a student’s academic term where the amount billed is no longer refundable to the student; a refund is made to withdrawn students for the portion entitled to be refunded under each institutions’ refund policy; we receive funds to apply against the contract asset balance; or a student makes a change to the number of classes they are enrolled in which may cause an adjustment to their previously billed amount. As of the end of each quarter, a new contract asset is determined on a student by student basis based on the most recently started term and a student’s progress within that term as compared to the date at which the student is no longer entitled to a refund under each institution’s refund policy. Contract assets associated with future terms remain as contract assets until the academic term begins and the student reaches the point in that academic term that they are no longer entitled to a refund.

The amount of deferred revenue balances which are being offset with contract assets balances as of March 31, 2021 and December 31, 2020 were as follows (dollars in thousands):

|  | As of |
|  | March 31, 2021 |  |  | December 31, 2020 |
Gross deferred revenue |  | $ | 58,022 |  |  | $ | 85,402 |
Gross contract assets |  |  | (21,018 | ) |  |  | (50,868 | )
Deferred revenue, net |  | $ | 37,004 |  |  | $ | 34,534 |

Deferred Revenue

Changes in our deferred revenue balances for the quarters ended March 31, 2021 and 2020 were as follows (dollars in thousands):

|  | For the Quarter Ended |  |  | For the Quarter Ended |
|  | March 31, 2021 |  |  | March 31, 2020 |
|  | CTU |  |  | AIU |  |  | Total |  |  | CTU |  |  | AIU |  |  | Total |
Gross deferred revenue, January 1 |  | $ | 28,522 |  |  | $ | 56,880 |  |  | $ | 85,402 |  |  | $ | 27,845 |  |  | $ | 35,359 |  |  | $ | 63,204 |
Business acquisition, beginning balance |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,395 |  |  |  | 13,395 |
Revenue earned from prior balances |  |  | (25,689 | ) |  |  | (42,403 | ) |  |  | (68,092 | ) |  |  | (25,149 | ) |  |  | (31,518 | ) |  |  | (56,667 | )
Billings during period(1) |  |  | 101,784 |  |  |  | 52,561 |  |  |  | 154,345 |  |  |  | 103,044 |  |  |  | 46,648 |  |  |  | 149,692 |
Revenue earned for new billings during the period |  |  | (79,691 | ) |  |  | (35,048 | ) |  |  | (114,739 | ) |  |  | (77,894 | ) |  |  | (35,833 | ) |  |  | (113,727 | )
Other adjustments |  |  | 210 |  |  |  | 896 |  |  |  | 1,106 |  |  |  | 140 |  |  |  | 883 |  |  |  | 1,023 |
Gross deferred revenue, March 31 |  | $ | 25,136 |  |  | $ | 32,886 |  |  | $ | 58,022 |  |  | $ | 27,986 |  |  | $ | 28,934 |  |  | $ | 56,920 |

______________

| 1) | Billings during period includes adjustments for prior billings.

Cash Receipts

Our students pay for their costs through a variety of funding sources, including federal loan and grant programs, institutional payment plans, employer reimbursement, Veterans’ Administration and other military funding and grants, private and institutional scholarships and cash payments. Cash receipts from government related sources are typically received during the current academic term. We typically receive funds after the end of an academic term for students who receive employer reimbursements. Students who

8

have not applied for any type of financial aid generally set up a payment plan with the university and make payments on a monthly basis per the terms of the payment plan.

If a student withdraws from one of our universities prior to the completion of the academic term, we refund the portion of tuition and fees already paid that, pursuant to our refund policy and applicable federal and state law and accrediting agency standards, we are not entitled to retain. Generally, the amount to be refunded to a student is calculated based upon the percent of the term attended and the amount of tuition and fees paid by the student as of their withdrawal date. In certain circumstances, we have recognized revenue for students who have withdrawn that we are not entitled to retain. We have estimated a reserve for these limited circumstances based on historical evidence in the amount of $2.3 million as of March 31, 2021 and December 31, 2020. Students are typically entitled to a partial refund until approximately halfway through their term. Pursuant to each university’s policy, once a student reaches the point in the term where no refund is given, the student would not have a refund due if withdrawing from the university subsequent to that date.

Management reassesses collectability when a student withdraws from the university and has unpaid tuition charges for the current term which the university is entitled to retain per the applicable refund policy. Such unpaid charges do not meet the threshold of reasonably collectible and are recognized as revenue in accordance with ASC Topic 606 when cash is received and the contract is terminated and neither party has further performance obligations. We have no remaining performance obligations for students who have withdrawn from our universities, and once the refund calculation is performed and funds are returned to the student, if applicable under our refund policy, no further consideration is due back to the student. We recognized $0.4 million and $0.3 million of revenue for the quarters ended March 31, 2021 and 2020, respectively, for payments received from withdrawn students.

6. STUDENT RECEIVABLES

Student receivables represent funds owed to us in exchange for the educational services provided to a student. Student receivables are reflected net of an allowance for credit losses at the end of the reporting period. Student receivables, net, are reflected on our condensed consolidated balance sheets as components of both current and non-current assets. We do not charge interest or fees on any of our payment plans.

Our students pay for their costs through a variety of funding sources, including federal loan and grant programs, institutional payment plans, employer reimbursement, Veterans’ Administration and other military funding and grants, private and institutional scholarships and cash payments. Cash receipts from government related sources are typically received during the current academic term. We typically receive funds after the end of an academic term for students who receive employer reimbursements. Students who have not applied for any type of financial aid generally set up a payment plan with the institution and make payments on a monthly basis per the terms of the payment plan. For those balances that are not received during the academic term, the balance is typically due within the current academic year which is approximately 30 weeks in length. Generally, a student receivable balance is written off once a student is out of school and it reaches greater than 90 days past due.

Our standard student receivable allowance is based on an estimate of lifetime expected credit losses for student receivables. Our estimation methodology considers a number of quantitative and qualitative factors that, based on our collection experience, we believe have an impact on our repayment risk and ability to collect student receivables. Changes in the trends in any of these factors may impact our estimate of the allowance for credit losses. These factors include, but are not limited to: internal repayment history, changes in the current economic, legislative or regulatory environments, internal cash collection forecasts and the ability to complete the federal financial aid process with the student. These factors are monitored and assessed on a regular basis. Overall, our allowance estimation process for student receivables is validated by trend analysis and comparing estimated and actual performance.

Student Receivables Under Extended Payment Plans

We have an immaterial amount of student receivables that are due greater than 12 months from the date of our condensed consolidated balance sheets. As of March 31, 2021 and December 31, 2020, the amount of non-current student receivables under payment plans that are longer than 12 months in duration, net of allowance for credit losses, was $1.3 million for each period.

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Allowance for Credit Losses

We define student receivables as a portfolio segment under ASC Topic 326 – Financial Instruments – Credit Losses. Changes in our current and non-current allowance for credit losses related to our student receivable portfolio in accordance with the guidance under ASU 2016-13 for the quarters ended March 31, 2021 and 2020 were as follows (dollars in thousands):

|  | For the Quarter Ended March 31, |
|  | 2021 |  |  | 2020 |
Balance, beginning of period |  | $ | 42,147 |  |  | $ | 31,964 |
Beginning balance related to business acquisition |  |  | - |  |  |  | 2,174 |
Provision for credit losses |  |  | 13,724 |  |  |  | 12,862 |
Amounts written-off |  |  | (13,067 | ) |  |  | (11,601 | )
Recoveries |  |  | 981 |  |  |  | 696 |
Balance, end of period |  | $ | 43,785 |  |  | $ | 36,095 |

Fair Value Measurements

The carrying amount reported in our condensed consolidated balance sheets for the current portion of student receivables approximates fair value because of the nature of these financial instruments as they generally have short maturity periods. It is not practicable to estimate the fair value of the non-current portion of student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists.

7. LEASES

We lease most of our administrative and educational facilities under non-cancelable operating leases expiring at various dates through 2032. Lease terms generally range from five to ten years with one to four renewal options for extended terms. In most cases, we are required to make additional payments under facility operating leases for taxes, insurance and other operating expenses incurred during the operating lease period, which are typically variable in nature.

We determine if a contract contains a lease when the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Upon identification and commencement of a lease, we establish a right of use (“ROU”) asset and a lease liability.

Quantitative information related to leases is presented in the following table (dollars in thousands):

| For the Quarter Ended March 31, 2021 |  | For the Quarter Ended March 31, 2020 |
Lease expenses (1) |  |  |  |  |  |
Fixed lease expenses - operating | $ | 3,015 |  | $ | 3,148 |
Variable lease expenses - operating |  | 1,513 |  |  | 1,915 |
Sublease income |  | (499 | ) |  | (788 | )
Total lease expenses | $ | 4,029 |  | $ | 4,275 |
Other information |  |  |  |  |  |
Gross operating cash flows for operating leases (2) | $ | (5,221 | ) | $ | (6,190 | )
Operating cash flows from subleases (2) | $ | 530 |  | $ | 676 |
| As of March 31, 2021 |  | As of March 31, 2020 |
Weighted average remaining lease term (in months) – operating leases |  | 73 |  |  | 74 |
Weighted average discount rate – operating leases |  | 5.0 | % |  | 5.0 | %

__________________

| (1) | Lease expense and sublease income represent the amount recorded within our unaudited condensed consolidated statements of income. Variable lease amounts represent expenses recognized as incurred which are not included in the lease liability. Fixed lease expenses and sublease income are recorded on a straight-line basis over the lease term and therefore are not necessarily representative of cash payments during the same period.

| (2) | Cash flows are presented on a consolidated basis and represent cash payments for fixed and variable lease costs.

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Subleases

For certain of our leased locations we have vacated the facility and have fully or partially subleased the space. For each sublease that has been entered into, we remain the guarantor under the lease and therefore become the intermediate lessor. We have three subleases within three leased facilities with terms ranging from less than one year to two years. We have recognized sublease income of $0.5 million and $0.8 million for the quarters ended March 31, 2021 and 2020, respectively, as an offset to lease expense on our unaudited condensed consolidated statements of income.

8. CONTINGENCIES

An accrual for estimated legal fees and settlements of $0.5 million and $1.0 million at March 31, 2021 and December 31, 2020, respectively, is presented within other current liabilities on our condensed consolidated balance sheets.

We record a liability when we believe that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that was previously accrued and make adjustments as further information develops, circumstances change or contingencies are resolved. Significant judgment is required to determine both probability and the estimated amount. We may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (1) if the damages sought are indeterminate; (2) if the proceedings are in early stages; (3) if there is uncertainty as to the outcome of pending appeals, motions or settlements; (4) if there are significant factual issues to be determined or resolved; and (5) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any.

We receive informal requests from state attorneys general and other government agencies relating to specific complaints they have received from students or former students which seek information about the student, our programs and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state. We are subject to a variety of other claims, lawsuits, arbitrations and investigations that arise from time to time out of the conduct of our business, including, but not limited to, matters involving prospective students, students or graduates, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, and employment matters. Periodically matters arise that we consider outside the scope of ordinary routine litigation incidental to our business. While we currently believe that these matters, individually or in aggregate, will not have a material adverse impact on our financial position, cash flows or results of operations, these matters are subject to inherent uncertainties, and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on our business, reputation, financial position and cash flows.

9. INCOME TAXES

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our provision for income taxes and effective tax rate from continuing operations:

|  | For the Quarter Ended March 31, |
(Dollars in Thousands) |  | 2021 |  |  | 2020 |
Pretax income |  | $ | 41,009 |  |  | $ | 38,736 |
Provision for income taxes |  | $ | 10,245 |  |  | $ | 9,604 |
Effective rate |  |  | 25.0 | % |  |  | 24.8 | %

As of December 31, 2020, a valuation allowance of $29.0 million was maintained with respect to our foreign tax credits not supported by an Overall Domestic Loss (“ODL”) account balance and state net operating losses. After considering both positive and negative evidence related to the realization of the deferred tax assets, we have determined that it is necessary to continue to maintain a $29.0 million valuation allowance against our non-ODL supported foreign tax credits and state net operating losses as of March 31, 2021.

The effective tax rate for the quarter ended March 31, 2021 was benefitted by the release of previously recorded tax reserves, which reduced the effective tax rate by 1.3%. The effective tax rate for the quarter ended March 31, 2020 was benefitted by the tax effect of stock-based compensation and the release of previously recorded tax reserves, which reduced the effective tax rate by 1.9%.

We estimate that it is reasonably possible that the gross liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $1.5 million in the next twelve months as a result of the completion of various tax audits currently in

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process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter ended March 31, 2021 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of March 31, 2021, we had accrued $1.8 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and local tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service has completed its examination of our U.S. income tax returns through our tax year ended December 31, 2014.

10. SHARE-BASED COMPENSATION

Overview

The Company’s 2016 Incentive Compensation Plan (the “2016 Plan”) was approved by stockholders in May 2016. Under the 2016 Plan, Perdoceo may grant to eligible participants awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. The vesting of all types of awards is subject to possible acceleration in certain circumstances. If a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested awards is generally forfeited.

Restricted Stock Units

For the quarters ended March 31, 2021 and 2020, the Company granted approximately 0.3 million and 0.2 million restricted stock units, respectively, to be settled in shares of stock which are not “performance-based,” with a grant-date fair value of approximately $3.6 million and $3.5 million, respectively.

Additionally, for the quarters ended March 31, 2021 and 2020, the Company granted approximately 0.4 million and 0.3 million restricted stock units, respectively, to be settled in shares of stock which are “performance-based,” with a grant-date fair value of approximately $4.2 million and $3.9 million, respectively. The performance-based restricted stock units are subject to performance conditions which are determined at the time of grant and typically cover a three-year performance period. These performance conditions may result in all units being forfeited even if the requisite service period is met.

Stock Options

There were no stock options granted during each of the quarters ended March 31, 2021 and 2020.

Share-Based Compensation Expense

Total share-based compensation expense for the quarters ended March 31, 2021 and 2020 for all types of awards was as follows (dollars in thousands):

|  | For the Quarter Ended March 31, |
Award Type |  | 2021 |  |  | 2020 |
Stock options |  | $ | 160 |  |  | $ | 405 |
Restricted stock units settled in stock |  |  | 3,588 |  |  |  | 2,803 |
Restricted stock units settled in cash |  |  | - |  |  |  | (240 | )
Total share-based compensation expense |  | $ | 3,748 |  |  | $ | 2,968 |

As of March 31, 2021, we estimate that compensation expense of approximately $23.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants. This amount excludes any estimates of forfeitures.

11. WEIGHTED AVERAGE COMMON SHARES

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock Method and reflects the additional shares that would be outstanding if dilutive stock options were exercised and restricted stock units were settled for common shares during the period.

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The weighted average number of common shares used to compute basic and diluted net income per share for the quarters ended March 31, 2021 and 2020 were as follows (shares in thousands):

| For the Quarter Ended March 31, |
| 2021 |  |  | 2020 |
Basic common shares outstanding |  | 70,149 |  |  |  | 69,839 |
Common stock equivalents |  | 1,333 |  |  |  | 1,875 |
Diluted common shares outstanding |  | 71,482 |  |  |  | 71,714 |

For the quarters ended March 31, 2021 and 2020, certain unexercised stock option awards are excluded from our computations of diluted earnings per share, as these shares were out-of-the-money and their effect would have been anti-dilutive. The anti-dilutive options that were excluded from our computations of diluted earnings per share were 0.5 million and 0.6 million shares for the quarters ended March 31, 2021 and 2020, respectively.

12. SEGMENT REPORTING

Our segments are determined in accordance with FASB ASC Topic 280—Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment is comprised of an accredited postsecondary education institution that offers a variety of academic programs. These segments are organized by key market segments and to enhance brand focus within each segment to more effectively execute our business plan. As of March 31, 2021, our two segments are:

| ♦ | Colorado Technical University (CTU) is committed to providing industry-relevant higher education to a diverse student population through innovative technology and experienced faculty, enabling the pursuit of personal and professional goals. CTU is focused on serving adult, non-traditional students seeking career advancement, as well as the employer’s needs for a well-educated workforce. The university offers academic programs in the career-oriented disciplines of business and management, nursing, healthcare management, computer science, engineering, information systems and technology, project management, cybersecurity and criminal justice. Students pursue their degrees through fully-online programs, local campuses and blended formats, which combine campus-based and online education. As of March 31, 2021, students enrolled at CTU represented approximately 62% of our total enrollments. Approximately 95% of CTU’s students are enrolled in programs offered fully online. CTU’s campus-based and blended-format students are currently pursuing their education solely through CTU’s online platform as a result of the COVID-19 pandemic.

| ♦ | The American InterContinental University System (AIU) is comprised of two universities: American InterContinental University and Trident University International (“Trident” or “TUI”). AIU is committed to providing quality and accessible higher education opportunities for a diverse student population, including adult or other non-traditional learners and the military community. AIU places emphasis on the educational, professional and personal growth of each student, and pursues this aim with a commitment to institutional integrity and ethics. AIU offers academic programs in the career-oriented disciplines of business studies, information technologies, education, health sciences and criminal justice. Students pursue their degrees through fully-online programs, local campuses and blended formats, which combine campus-based and online education. As of March 31, 2021, students enrolled at AIU represented approximately 38% of our total enrollments. Approximately 97% of AIU’s students are enrolled in programs offered fully online. Substantially all of AIU’s campus-based and blended-format students are currently pursuing their education solely through AIU’s online platform as a result of the COVID-19 pandemic.

Summary financial information by reporting segment is as follows (dollars in thousands):

|  | For the Quarter Ended March 31, |
|  | Revenue |  |  | Operating Income (Loss) |
|  | 2021 |  |  | % of Total |  |  | 2020 |  |  | % of Total |  |  | 2021 |  |  | 2020 |
CTU |  | $ | 105,822 |  |  |  | 57.6 | % |  | $ | 103,588 |  |  |  | 60.6 | % |  | $ | 36,143 |  |  | $ | 34,619 |
AIU (1) |  |  | 77,477 |  |  |  | 42.2 | % |  |  | 67,396 |  |  |  | 39.4 | % |  |  | 11,323 |  |  |  | 9,376 |
Corporate and Other (2) |  |  | 339 |  |  | NM |  |  |  | 10 |  |  | NM |  |  |  | (6,849 | ) |  |  | (6,692 | )
Total |  | $ | 183,638 |  |  |  | 100.0 | % |  | $ | 170,994 |  |  |  | 100.0 | % |  | $ | 40,617 |  |  | $ | 37,303 |

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|  | Total Assets as of (3) |
|  | March 31, 2021 |  |  | December 31, 2020 |
CTU |  | $ | 102,237 |  |  | $ | 96,922 |
AIU |  |  | 129,961 |  |  |  | 141,602 |
Corporate and Other (2) |  |  | 518,167 |  |  |  | 482,993 |
Total |  | $ | 750,365 |  |  | $ | 721,517 |

(1) | AIU’s revenue and operating income for the quarter ended March 31, 2020, include results of operations related to Trident from the March 2, 2020 date of acquisition and therefore do not reflect a full quarter of activity for Trident.

(2) | Corporate and Other includes results of operations and total assets for closed campuses.

(3) | Total assets do not include intercompany receivable or payable activity between institutions and corporate and investments in subsidiaries.

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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion below and other items in this Quarterly Report on Form 10-Q contain “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “plan,” “seek,” “should,” ”will,” “continue to,” “outlook,” “focused on” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2020 that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. Among the factors that could cause actual results to differ materially from those expressed in, or implied by, our forward-looking statements are the following:

| • | declines in enrollment or interest in our programs;

| • | our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education (the “Department”)), as well as applicable accreditation standards and state regulatory requirements;

| • | the impact of various versions of “borrower defense to repayment” regulations;

| • | rulemaking by the Department or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions;

| • | the success of our initiatives to improve student experiences, retention and academic outcomes;

| • | our continued eligibility to participate in educational assistance programs for veterans and other military personnel;

| • | increased competition;

| • | the impact of management changes; and

| • | changes in the overall U.S. economy which may continue to be impacted by the global COVID-19 pandemic.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:

| • | Overview

| • | Consolidated Results of Operations

| • | Segment Results of Operations

| • | Summary of Critical Accounting Policies and Estimates

| • | Liquidity, Financial Position and Capital Resources

OVERVIEW

Our academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. Our accredited institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Our universities offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to support students and enhance learning. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

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On March 2, 2020, the Company acquired substantially all of the assets of Trident University International (“Trident University”), an accredited university offering online undergraduate, master’s and doctoral programs with a strong focus on graduate programs. Trident University’s operations were brought within the AIU segment, preserving the “Trident” name and programs as part of American InterContinental University’s operations. Results of operations related to the acquisition of substantially all of the assets of Trident University (the “Trident acquisition”) are included in the consolidated financial statements from the date of acquisition. Effective November 5, 2020, AIU implemented a university system model, the American InterContinental University System, which is comprised of two universities: American InterContinental University and Trident University International (“Trident” or “TUI”). The system structure provides a new framework for American InterContinental University and Trident to continue to serve their unique student populations while benefitting from one university system.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a postsecondary education provider that offers a variety of academic programs. We organize our business across two reporting segments: CTU and AIU. These segments are organized by key market segments and to enhance brand focus within each segment to more effectively execute our business plan.

Regulatory Environment and Political Uncertainty

We operate in a highly regulated industry, which has significant impacts on our business and creates risks and uncertainties. In recent years, Congress, the Department, states, accrediting agencies, the CFPB, the FTC, state attorneys general and the media have scrutinized the for-profit postsecondary education sector. Congressional hearings and roundtable discussions were held regarding various aspects of the education industry and reports were issued that are highly critical of for-profit colleges and universities. A group of influential U.S. senators, consumer advocacy groups and some media outlets have strongly and repeatedly encouraged the Departments of Education, Defense and Veterans Affairs to take action to limit or terminate the participation of for-profit educational institutions, including Perdoceo, in existing tuition assistance programs.

The results of the 2020 Presidential and Congressional elections are likely to significantly impact legislative and regulatory actions affecting our business. A loss or material reduction in Title IV Programs or the amount of student financial aid for which our students are eligible would materially impact our student enrollments and profitability and could impact the continued viability of our business as currently conducted.

We encourage you to review Item 1, “Business,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K to learn more about our highly regulated industry and related risks and uncertainties, in addition to the MD&A and Risk Factors in our 2021 Quarterly Reports on Form 10-Q.

Note Regarding Non-GAAP measures

We believe it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of our core business. As a general matter, we use non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of our core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, we believe that non-GAAP financial information is used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance.

We believe certain non-GAAP measures allow us to compare our current operating results with respective historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by items we do not consider reflective of underlying operating performance. In evaluating the use of non-GAAP measures, investors should be aware that in the future we may incur expenses similar to the adjustments presented below. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine or non-recurring. A non-GAAP measure has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance with and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.

Non-GAAP financial measures, when viewed in a reconciliation to respective GAAP financial measures, provide an additional way of viewing the Company's results of operations and the factors and trends affecting the Company's business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.

2021 First Quarter Overview

Our financial results for the first quarter ended March 31, 2021 (“current quarter”) reflected improvements in revenue and operating income as compared to the prior year quarter. Additionally, total student enrollments improved as compared to the prior year

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quarter end. The financial results include the Trident acquisition commencing on the March 2, 2020 date of acquisition and therefore the quarter ended March 31, 2020 reflects one month of financial results for Trident as compared to a full quarter of results for Trident for the current quarter. During the current quarter we continued to make targeted investments within our student support processes as well as other initiatives.

Total student enrollments increased 9.7% as of March 31, 2021 as compared to March 31, 2020, with CTU increasing by 12.8% and AIU increasing by 5.0%. We believe our investments in technology and student-serving functions have positively contributed to student experiences and student learning. Both CTU and AIU have continued to increase their student-serving staff and leverage data analytics and technology to enhance the effectiveness of their services to students. Additionally, CTU’s academic calendar redesign positively impacted the total student enrollments as of March 31, 2021 due to a session start date on March 30th this year as compared to a session start date that was in April in the prior year.

During the current quarter we made investments in two initiatives, both of which are designed to allow students to use their employer’s or their own resources to complete their program with little or no debt. One investment relates to expanding our corporate partnership program within CTU. This additional staff should be fully trained and integrated in the second half of the year. Our corporate partnership team identifies, contacts and supports corporations, leveraging their tuition assistance programs to provide debt-free education to their employees through one of our universities. An additional investment that we focused on during the quarter relates to implementing workforce development training programs, which are shorter duration programs. We identified several non-degree, online courses that we believe will offer learning opportunities where one can develop skills and knowledge in a specific endeavor or area of interest. Our training programs are designed to assist adult learners in obtaining additional credentials that are job-focused and can help workers increase skills and prepare for changes in the workplace. We expect to begin offering these programs before the end of the second quarter. We plan to grow these programs first at Trident and then possibly across our other universities.

With respect to the COVID-19 pandemic, we have not experienced any material disruptions to date as our strong balance sheet and technology infrastructure provided us with the ability to adapt our operations in response. While we continue to monitor for future impacts of a potential worsening of global economic conditions on our university operations, we are also monitoring for changes in prospective student interest or student engagement levels as social distancing requirements are relaxed and the U.S. economy continues to reopen.

Financial Highlights

Revenue for the first quarter ended March 31, 2021 increased $12.6 million or 7.4% as compared to the prior year quarter, reflecting revenue growth at both CTU and AIU as a result of the positive enrollment results discussed above and, for AIU, the Trident acquisition. Operating income for the current quarter increased to $40.6 million as compared to operating income of $37.3 million for the prior year quarter. The growth in revenue along with operating efficiencies was partially offset with increases in all general and administrative expense categories primarily due to the Trident acquisition and investments in student-serving functions.

Revenue within our CTU segment increased $2.2 million or 2.2% for the first quarter of 2021 as compared to the prior year quarter reflecting the increase in total student enrollments. Operating income for CTU increased by $1.5 million to $36.1 million for the current quarter as compared to operating income of $34.6 million for the prior year quarter driven by the increase in revenue as well as operating efficiencies partially offset with increased expenses relating to marketing and admissions.

Revenue within our AIU segment increased $10.1 million or 15.0% for the first quarter of 2021 as compared to the prior year quarter due to the Trident acquisition as well as organic total student enrollment growth. Operating income for AIU increased by $1.9 million to $11.3 million for the current quarter as compared to the prior year quarter driven by the increase in revenue as well as operating efficiencies, partially offset with increased expenses within all general and administrative categories primarily as a result of the Trident acquisition and investments in student-serving functions.

Within our Corporate and Other category, operating loss of $6.8 million increased from $6.7 million in the prior year quarter as the reduction in operating losses associated with closed campuses was offset with increased employee related and other corporate support expenses.

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant and non-cash items, as a means to understand the performance of its operations. (See tables below for a GAAP to non-GAAP reconciliation.) Adjusted operating income for the total company was $44.6 million for the current quarter as compared to $39.9 million in the prior year quarter with the improvement primarily driven by revenue gowth at both CTU and AIU and efficiencies within operating processes partially offset with increases in all general and administrative expense categories primarily due to the Trident acquisition and investments in student-serving functions.

Beginning in 2021, we no longer adjust operating income or earnings per diluted share for expenses related to vacated facilities at closed campuses as these expenses are expected to be immaterial. The prior period amounts were recast to maintain comparability to 2021 non-GAAP measures.

Adjusted operating income and adjusted earnings per diluted share for the quarters ended March 31, 2021 and 2020 is presented below (dollars in thousands, unless otherwise noted):

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|  | ACTUAL |
|  | For the Quarter Ended March 31, |
Adjusted Operating Income |  | 2021 |  |  | 2020 (3) |
Operating income |  | $ | 40,617 |  |  | $ | 37,303 |
Depreciation and amortization (1) |  |  | 4,002 |  |  |  | 2,639 |
Adjusted Operating Income |  | $ | 44,619 |  |  | $ | 39,942 |
|  | ACTUAL |
|  | For the Quarter Ended March 31, |
Adjusted Earnings Per Diluted Share |  | 2021 |  |  | 2020 (3) |
Reported Earnings Per Diluted Share |  | $ | 0.43 |  |  | $ | 0.41 |
Pre-tax adjustments included in operating expenses: |  |  |  |  |  |  |  |
Amortization for acquired intangible assets (1) |  |  | 0.01 |  |  |  | - |
Total pre-tax adjustments |  | $ | 0.01 |  |  | $ | - |
Tax effect of adjustments (2) |  |  | - |  |  |  | - |
Total adjustments after tax |  |  | 0.01 |  |  |  | - |
Adjusted Earnings Per Diluted Share |  | $ | 0.44 |  |  | $ | 0.41 |

_________________

(1) | Amortization for acquired intangible assets relate to definite-lived intangible assets associated with the Trident acquisition.

(2) | The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

(3) | 2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

Regulatory Updates

On March 11, 2021, President Biden signed a multi-faceted legislative package that includes new economic stimulus measures broadly targeting various aspects of the U.S. economy. Congress included in this legislation a modification to the 90-10 Rule applicable to for-profit institutions that alters the measurement under the rule from the percentage of Title IV Program tuition revenue an institution receives to the percentage of “federal educational assistance” an institution receives. While the required ratio to maintain Title IV Program eligibility will remain at below 90%, specific details on the modified rule and what constitutes “federal educational assistance” are expected to be determined pursuant to a negotiated rulemaking process. The legislation directs the Department to commence negotiated rulemaking no earlier than October 1, 2021 and specifies that the modified rule shall apply for institutional fiscal years beginning on or after January 1, 2023 to provide institutions time to evaluate and comply with the modified rule. See Item 1, “Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – ’90-10 Rule’” in our Annual Report on Form 10-K for the year ended December 31, 2020 for more information about the 90-10 Rule.

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CONSOLIDATED RESULTS OF OPERATIONS

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the quarters ended March 31, 2021 and 2020 (dollars in thousands):

|  | For the Quarter Ended March 31, |
|  |  | 2021 |  |  | % of Total Revenue |  |  |  | 2020 |  |  | % of Total Revenue |  |  | 2021 vs 2020 % Change |
TOTAL REVENUE |  | $ | 183,638 |  |  |  |  |  |  | $ | 170,994 |  |  |  |  |  |  |  | 7.4 | %
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Educational services and facilities (1) |  |  | 28,974 |  |  |  | 15.8 | % |  |  | 26,911 |  |  |  | 15.7 | % |  |  | 7.7 | %
General and administrative: (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advertising and marketing |  |  | 36,794 |  |  |  | 20.0 | % |  |  | 35,057 |  |  |  | 20.5 | % |  |  | 5.0 | %
Admissions |  |  | 25,840 |  |  |  | 14.1 | % |  |  | 24,693 |  |  |  | 14.4 | % |  |  | 4.6 | %
Administrative |  |  | 33,687 |  |  |  | 18.3 | % |  |  | 30,917 |  |  |  | 18.1 | % |  |  | 9.0 | %
Bad debt |  |  | 13,724 |  |  |  | 7.5 | % |  |  | 12,862 |  |  |  | 7.5 | % |  |  | 6.7 | %
Total general and administrative expense |  |  | 110,045 |  |  |  | 59.9 | % |  |  | 103,529 |  |  |  | 60.5 | % |  |  | 6.3 | %
Depreciation and amortization |  |  | 4,002 |  |  |  | 2.2 | % |  |  | 2,639 |  |  |  | 1.5 | % |  |  | 51.6 | %
Asset impairment |  |  | - |  |  |  | 0.0 | % |  |  | 612 |  |  |  | 0.4 | % |  | NM |
OPERATING INCOME |  |  | 40,617 |  |  |  | 22.1 | % |  |  | 37,303 |  |  |  | 21.8 | % |  |  | 8.9 | %
PRETAX INCOME |  |  | 41,009 |  |  |  | 22.3 | % |  |  | 38,736 |  |  |  | 22.7 | % |  |  | 5.9 | %
PROVISION FOR INCOME TAXES |  |  | 10,245 |  |  |  | 5.6 | % |  |  | 9,604 |  |  |  | 5.6 | % |  |  | 6.7 | %
Effective tax rate |  |  | 25.0 | % |  |  |  |  |  |  | 24.8 | % |  |  |  |  |  |  |  |
INCOME FROM CONTINUING OPERATIONS |  |  | 30,764 |  |  |  | 16.8 | % |  |  | 29,132 |  |  |  | 17.0 | % |  |  | 5.6 | %
LOSS FROM DISCONTINUED OPERATIONS, net of tax |  |  | (11 | ) |  |  | 0.0 | % |  |  | (26 | ) |  |  | 0.0 | % |  |  | -57.7 | %
NET INCOME |  | $ | 30,753 |  |  |  | 16.7 | % |  | $ | 29,106 |  |  |  | 17.0 | % |  |  | 5.7 | %

(1) | Educational services and facilities expense includes costs attributable to the educational activities of our universities, including: salaries and benefits of faculty, academic administrators and student support personnel, and costs of educational supplies and facilities, such as rents on leased facilities and certain costs of establishing and maintaining computer laboratories. Also included in educational services and facilities expense are rents on leased administrative facilities, such as our corporate headquarters, and costs of other goods and services provided by our campuses, including costs of textbooks and laptop computers.

(2) | General and administrative expense includes operating expenses associated with, including salaries and benefits of personnel in, corporate and campus administration, marketing, admissions, information technology, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials and bad debt expense.

Revenue

Revenue for the first quarter of 2021 (“current quarter”) increased 7.4% or $12.6 million as compared to the prior year quarter supported by a 9.7% increase in total student enrollments. The current quarter revenue increase was also benefitted by three months of revenue related to Trident as compared to only one month of revenue in the prior year quarter.

Educational Services and Facilities Expense (dollars in thousands)

|  | For the Quarter Ended March 31, |
|  |  | 2021 |  |  |  | 2020 |  |  | 2021 vs 2020 % Change |
Educational services and facilities: |  |  |  |  |  |  |  |  |  |  |  |
Academics & student related |  | $ | 23,833 |  |  | $ | 21,512 |  |  | 10.8% |
Occupancy |  |  | 5,141 |  |  |  | 5,399 |  |  | -4.8% |
Total educational services and facilities |  | $ | 28,974 |  |  | $ | 26,911 |  |  | 7.7% |

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The educational services and facilities expense for the current quarter increased by 7.7% or $2.1 million as compared to the prior year quarter. Academics and student related costs increased by 10.8% or $2.3 million for the current quarter as compared to the prior year quarter, primarily as a result of the Trident acquisition. Occupancy expenses for the current quarter improved by 4.8% or $0.3 million as compared to the prior year quarter, primarily driven by decreases associated with our closed campuses as those leased facilities reach the end of their lease terms.

General and Administrative Expense (dollars in thousands)

|  | For the Quarter Ended March 31, |
|  |  | 2021 |  |  |  | 2020 |  |  | 2021 vs 2020 % Change |
General and administrative: |  |  |  |  |  |  |  |  |  |  |  |
Advertising and marketing |  | $ | 36,794 |  |  | $ | 35,057 |  |  | 5.0% |
Admissions |  |  | 25,840 |  |  |  | 24,693 |  |  | 4.6% |
Administrative |  |  | 33,687 |  |  |  | 30,917 |  |  | 9.0% |
Bad debt |  |  | 13,724 |  |  |  | 12,862 |  |  | 6.7% |
Total general and administrative expense |  | $ | 110,045 |  |  | $ | 103,529 |  |  | 6.3% |

The general and administrative expense for the current quarter increased by 6.3% or $6.5 million as compared to the prior year quarter, driven by increases in administration, advertising and marketing, admissions and bad debt expenses. The administrative expense increased by 9.0% or $2.8 million for the current quarter as compared to the prior year quarter, primarily driven by increased employee related and other corporate support expenses within Corporate and Other as compared to the prior year quarter, as well as increases within AIU primarily related to the Trident acquisition.

The advertising and marketing expense for the current quarter increased by 5.0% or $1.7 million as compared to the prior year quarter, due to increased spending to address prospective student interest. This increase supported the positive total student enrollment growth within both CTU and AIU. Admissions expense increased by 4.6% or $1.1 million for the current quarter as compared to the prior year quarter, primarily as a result of the Trident acquisition.

Bad debt expense incurred by each of our segments during the quarters ended March 31, 2021 and 2020 was as follows (dollars in thousands):

|  | For the Quarter Ended March 31, |
|  |  | 2021 |  |  | % of Segment Revenue |  |  |  | 2020 |  |  | % of Segment Revenue |  |  | 2021 vs 2020 % Change |
Bad debt expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CTU |  | $ | 6,323 |  |  |  | 6.0 | % |  | $ | 6,683 |  |  |  | 6.5 | % |  |  | -5.4 | %
AIU |  |  | 7,415 |  |  |  | 9.6 | % |  |  | 6,201 |  |  |  | 9.2 | % |  |  | 19.6 | %
Corporate and Other |  |  | (14 | ) |  | NM |  |  |  | (22 | ) |  | NM |  |  | NM |
Total bad debt expense |  | $ | 13,724 |  |  |  | 7.5 | % |  | $ | 12,862 |  |  |  | 7.5 | % |  |  | 6.7 | %

Bad debt expense increased by 6.7% or $0.9 million for the current quarter as compared to the prior year quarter, in line with the increase in revenue. Bad debt as a percentage of revenue remained flat at 7.5% for the current quarter and prior year quarter. AIU’s 40 basis point increase as a percentage of revenue was offset with CTU’s 50 basis point decrease as a percentage of revenue as we continue to see quarterly fluctuations in bad debt expense. We regularly monitor our reserve rates, which includes a review of our analysis of historical student receivable collectability which we update quarterly based on the most recent data available, along with current known factors which we believe could affect future collectability of our student receivables, including the number of students that do not complete the financial aid process. Our student support teams have maintained their focus on financial aid documentation collection and are counseling students through the Title IV process so that they are better prepared to start school. We have also focused on emphasizing employer-paid and other direct-pay education programs such as corporate partnerships as students within these programs typically have lower bad debt expense associated with them.

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Operating Income

Operating income increased by 8.9% or $3.3 million for the current quarter as compared to the prior year quarter. The increase was primarily due to the increased revenue for the current quarter as compared to the prior year quarter but also reflects efficiencies within operating processes. Partially offsetting the revenue growth and efficiencies within operating processes were increased expenses within all general and administrative expense categories primarily due to the Trident acquisition as well as investments in student-serving functions. Depreciation and amortization expense also increased as compared to the prior year quarter as a result of increased investments in technology initiatives and the Trident acquisition.

Provision for Income Taxes

For the quarter ended March 31, 2021, we recorded a provision for income taxes of $10.2 million or 25.0% as compared to a provision for income taxes of $9.6 million or 24.8% for the prior year quarter. The effective tax rate for the quarter ended March 31, 2021 was benefitted by the release of previously recorded tax reserves, which reduced the effective tax rate by 1.3%. The effective tax rate for the quarter ended March 31, 2020 was benefitted by the tax effect of stock-based compensation and the release of previously recorded tax reserves, which reduced the effective tax rate by 1.9%. For the full year 2021, we expect our effective tax rate to be between 26.0% and 27.0%.

SEGMENT RESULTS OF OPERATIONS

The following tables present unaudited segment results for the reported periods (dollars in thousands):

|  | For the Quarter Ended March 31, |
|  | REVENUE |  |  | OPERATING INCOME (LOSS) |  |  | OPERATING MARGIN |
|  |  | 2021 |  |  |  | 2020 |  |  | % Change |  |  |  | 2021 |  |  |  | 2020 |  |  | % Change |  |  |  | 2021 |  |  |  | 2020 |
REVENUE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CTU |  | $ | 105,822 |  |  | $ | 103,588 |  |  |  | 2.2 | % |  | $ | 36,143 |  |  | $ | 34,619 |  |  |  | 4.4 | % |  |  | 34.2 | % |  |  | 33.4 | %
AIU (1) |  |  | 77,477 |  |  |  | 67,396 |  |  |  | 15.0 | % |  |  | 11,323 |  |  |  | 9,376 |  |  |  | 20.8 | % |  |  | 14.6 | % |  |  | 13.9 | %
Corporate and other (2) |  |  | 339 |  |  |  | 10 |  |  | NM |  |  |  | (6,849 | ) |  |  | (6,692 | ) |  |  | -2.3 | % |  | NM |  |  | NM |
Total |  | $ | 183,638 |  |  | $ | 170,994 |  |  |  | 7.4 | % |  | $ | 40,617 |  |  | $ | 37,303 |  |  |  | 8.9 | % |  |  | 22.1 | % |  |  | 21.8 | %

__________________

(1) | AIU’s revenue and operating income for the quarter ended March 31, 2020, include results of operations related to Trident from the March 2, 2020 date of acquisition and therefore do not reflect a full quarter of activity for Trident.

(2) | Results of operations for closed campuses are included within Corporate and Other.

Total student enrollments represent all students who are active as of the last day of the reporting period. Active students are defined as those students who are considered in attendance by participating in class related activities.

Beginning in the first quarter of 2021, we redesigned CTU’s academic calendar to strategically place breaks between sessions and provide more opportunities for students to continue with their academic programs. We believe this redesign will improve student experiences and engagement. CTU’s academic calendar redesign, along with the previous academic calendar redesign at AIU, may impact the comparability of revenue-earning days and enrollment days as well as new enrollment results between periods and new enrollment results may not be reflective of operating performance and enrollment growth. As a result, we no longer report new student enrollment results and focus our discussions on total student enrollments.

|  | TOTAL STUDENT ENROLLMENTS |
|  | As of March 31, |
|  |  | 2021 |  |  |  | 2020 |  |  | % Change |
CTU |  |  | 27,300 |  |  |  | 24,200 |  |  |  | 12.8 | %
AIU |  |  | 16,800 |  |  |  | 16,000 |  |  |  | 5.0 | %
Total |  |  | 44,100 |  |  |  | 40,200 |  |  |  | 9.7 | %

CTU. Current quarter revenue increased by 2.2% or $2.2 million due to total student enrollment growth as compared to the prior year quarter. CTU experienced an increase in total student enrollments of 12.8% as of the end of the quarter as compared to the prior year quarter end. CTU’s academic calendar redesign positively impacted the total student enrollments as of March 31, 2021 due to a session start date on March 30th this year as compared to a session start date that was in April in the prior year.

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Current quarter operating income for CTU increased by 4.4% or $1.5 million as compared to the prior year quarter driven by the increase in revenue as well as efficiencies within operating processes, which were partially offset with increased advertising and marketing and admissions expense for the current quarter as compared to the prior year quarter.

AIU. Current quarter revenue increased by 15.0% or $10.1 million driven by the Trident acquisition as well as total student enrollment growth of 5.0% as of the end of the quarter as compared to the prior year quarter end. The current quarter benefitted from a full quarter of revenue related to Trident as compared to one month in the prior year quarter. AIU’s increase in total student enrollments reflects consistent levels of prospective student interest which were well-served by AIU’s student enrollment and support teams.

Current quarter operating income for AIU increased by 20.8% or $1.9 million as compared to the prior year quarter, primarily driven by the increase in revenue as well as efficiencies within operating processes, which were partially offset with increases in all general and administrative expenses categories during the current quarter as compared to the prior year quarter primarily due to the Trident acquisition which has a full quarter of operating expenses during the current quarter as compared to one month in the prior year quarter.

Corporate and Other. This category includes unallocated costs that are incurred on behalf of the entire company and remaining expenses associated with closed campuses. Total Corporate and Other operating loss for the current quarter increased by 2.3% or $0.2 million as compared to the prior year quarter, primarily as a result of increased employee related and other corporate support expenses which more than offset the decreased operating losses associated with our closed campuses.

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A detailed discussion of the accounting policies and estimates that we believe are most critical to our financial condition and results of operations that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties is included under the caption “Summary of Critical Accounting Policies and Estimates” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020. Note 2 “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 also includes a discussion of these and other significant accounting policies, and Note 3 "Recent Accounting Pronouncements" in this Form 10-Q describes accounting policies adopted in 2021.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of March 31, 2021, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”) totaled $451.0 million. Restricted cash as of March 31, 2021 was $4.0 million and relates to amounts held in an escrow account to secure post-closing indemnification obligations of the seller pursuant to the Trident acquisition. Our cash flows from operating activities have historically been adequate to fulfill our liquidity requirements. We have historically financed our operating activities, organic growth and acquisitions primarily through cash generated from operations and existing cash balances. We expect to continue to generate cash during 2021. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, our working capital needs, capital expenditures and lease commitments through at least the next 12 months primarily with cash generated by operations and existing cash balances.

Our credit agreement allows us to borrow up to a maximum amount of $50.0 million and is scheduled to mature on January 20, 2022. The credit agreement contains customary affirmative, negative and financial maintenance covenants, including a requirement to maintain a balance of cash, cash equivalents and marketable securities in our domestic accounts with the bank of at least $50.0 million at all times. Amounts borrowed under the credit agreement are required to be 100% secured with deposits of cash and marketable securities with the bank. Under the credit agreement, the Company’s ability to make restricted payments, including payments in connection with an acquisition or a repurchase of shares of our common stock, is subject to limitations. Taking into consideration restricted payments already made by the Company during the term of the credit agreement, the Company may make up to an additional $184.4 million of restricted payments through January 20, 2022.

We maintain a balanced capital allocation strategy that focuses on maintaining a strong balance sheet and adequate liquidity, while (i) prudently investing in organic growth projects at our universities, such as student-serving initiatives and new academic program development, and (ii) evaluating diverse strategies to enhance stockholder value, including acquisitions of quality educational institutions or programs and share repurchases. Ultimately, our goal is to deploy resources in a way that drives long term stockholder value while supporting and enhancing the academic value of our institutions.

On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program which authorizes the Company to repurchase up to $50.0 million of our common stock from time to time depending on market conditions and other considerations. The program expires on December 31, 2021. Since the November 4, 2019 inception date, the Company repurchased approximately 1.6 million shares for $21.7 million.

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The discussion above reflects management’s expectations regarding liquidity; however, as a result of the significance of the Title IV Program funds received by our students, we are highly dependent on these funds to operate our business. Any reduction in the level of Title IV f unds that our students are eligible to receive or any impact on timing or our ability to receive Title IV Program funds, or any requirement to post a significant letter of credit to the Department, may have a significant impact on our operations and our financial condition. In addition, our financial performance is dependent on the level of student enrollments which could be impacted by external factors. See Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for t he year ended December 31, 20 20.

Sources and Uses of Cash

Operating Cash Flows

During the quarters ended March 31, 2021 and 2020, net cash flows provided by operating activities totaled $44.7 million and $44.8 million, respectively.

Our primary source of cash flows from operating activities is tuition collected from our students. Our students derive the ability to pay tuition costs through the use of a variety of funding sources, including, among others, federal loan and grant programs, state grant programs, private loans and grants, institutional payment plans, private and institutional scholarships and cash payments. For the quarter ended March 31, 2021, approximately 81% of our institutions’ aggregate cash receipts from tuition payments came from Title IV Program funding as compared to 80% for the full year of 2020. This percentage differs from the Title IV Program percentage calculated under the 90-10 Rule due to the treatment of certain funding types and certain student level limitations on what and how much to count as prescribed under the rule.

For further discussion of Title IV Program funding and other funding sources for our students, see Item 1, “Business - Student Financial Aid and Related Federal Regulation,” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Our primary uses of cash to support our operating activities include, among other things, cash paid and benefits provided to our employees for services, to vendors for products and services, to lessors for rents and operating costs related to leased facilities, to suppliers for textbooks and other institution supplies, and to federal, state and local governments for income and other taxes.

Investing Cash Flows

During the quarters ended March 31, 2021 and 2020, net cash flows used in investing activities totaled $62.6 million and $93.9 million, respectively. The prior year quarter included a payment of $34.1 million for the Trident acquisition.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a net cash outflow of $61.6 million and $58.9 million for the quarters ended March 31, 2021 and 2020, respectively.

Capital Expenditures. Capital expenditures were $1.0 million for each of the quarters ended March 31, 2021 and 2020. Capital expenditures represented less than 1.0% of total revenue for each of the quarters ended March 31, 2021 and 2020. For the full year 2021, we expect capital expenditures to be approximately 1.5% to 2.0% of revenue.

Financing Cash Flows

During the quarters ended March 31, 2021 and 2020, net cash flows used in financing activities totaled $1.7 million and $17.6 million, respectively. The prior year quarter included $17.3 million of payments to repurchase shares of our common stock.

Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were $2.0 million for the quarter ended March 31, 2021 and $0.7 million for the quarter ended March 31, 2020.

Changes in Financial Position

Selected condensed consolidated balance sheet account changes from December 31, 2020 to March 31, 2021 were as follows (dollars in thousands):

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|  | March 31, |  |  | December 31, |  |  |  |  |
|  | 2021 |  |  | 2020 |  |  | % Change |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |  |  |  |  |
Total cash and cash equivalents, restricted cash and short-term investments |  | $ | 451,017 |  |  | $ | 410,360 |  |  |  | 10 | %
NON-CURRENT ASSETS: |  |  |  |  |  |  |  |  |  |  |  |
Deferred income tax assets, net |  |  | 35,584 |  |  |  | 40,351 |  |  |  | -12 | %
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |  |  |  |  |
Accrued expenses - payroll and related benefits |  |  | 15,207 |  |  |  | 22,661 |  |  |  | -33 | %
Accrued expenses - income taxes |  |  | 6,627 |  |  |  | 1,402 |  |  |  | 373 | %

Total cash and cash equivalents, restricted cash and short-term investments: The increase is primarily driven by cash provided by operating activities as a result of the increase in total revenue within CTU and AIU during the current quarter, partially offset with cash outflows related to the payment of annual incentive compensation.

Deferred income tax assets, net: The decrease reflects the usage of deferred tax assets associated with the offset of income taxes payable.

Accrued expenses - payroll and related benefits: The decrease is driven primarily by the payments during the current quarter of annual incentive compensation.

Accrued expenses – income taxes: The increase is driven by the exhaustion of previous net operating losses which the Company utilized to offset its income taxes payable in prior periods. With the exhaustion of net operating losses, the Company began making income tax payments with respect to the first quarter of 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, primarily changes in interest rates. We use various techniques to manage our interest rate risk. We have no derivative financial instruments or derivative commodity instruments, and believe the risk related to cash equivalents and available for sale investments is limited due to the adherence to our investment policy, which focuses on capital preservation and liquidity. In addition, we use asset managers who conduct initial and ongoing credit analysis on our investment portfolio and monitor that investments are in compliance with our investment policy. Despite the investment risk mitigation strategies we employ, we may incur investment losses as a result of unusual and unpredictable market developments and may experience reduced investment earnings if the yields on investments deemed to be low risk remain low or decline.

Interest Rate Exposure

Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell investments that have declined in market value due to changes in interest rates. At March 31, 2021, a 10% increase or decrease in interest rates applicable to our investments or borrowings would not have a material impact on our future earnings, fair values or cash flows.

Any outstanding borrowings under our revolving credit facility bear annual interest at fluctuating rates under either the Base Rate Loan or as determined by the London Interbank Offered Rate (“LIBOR”) for the relevant currency, plus the applicable rate based on the type of loan. Under the credit agreement, if LIBOR cannot be determined or an announcement is made about a specific date after which LIBOR will no longer be used for determining interest rates for loans, an alternative to LIBOR or a mechanism to establish an alternate rate is specified. As of March 31, 2021, we had no outstanding borrowings under this facility.

Our financial instruments are recorded at their fair values as of March 31, 2021 and December 31, 2020. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates applicable to our investments or borrowings is not significant.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We completed an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q (“Report”) under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief

24

Financial Officer concluded that, as of March 3 1, 20 2 1, our disclosure controls and procedures were effective to prov ide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the rules and forms provided by the U.S. Securities and Exchange Commission (“SEC”), and (ii) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II – OTHER INFORMATION

Item 1. | Legal Proceedings

Note 8 “Contingencies” to our unaudited condensed consolidated financial statements is incorporated herein by reference.

Item 1A. | Risk Factors

In addition to the information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, Item 1A “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 24, 2021.

Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds

On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. The timing of purchases and the number of shares repurchased pursuant to the program will be determined by the Company’s management and will depend on a variety of factors including stock price, trading volume and other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors. Repurchases will be made in open market transactions, including block purchases, conducted in accordance with Rule 10b-18 under the Exchange Act as well as may be made pursuant to trading plans established under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The stock repurchase program does not obligate the Company to purchase shares and the Company may, in its discretion, begin, suspend or terminate repurchases at any time, without any prior notice. The program expires on December 31, 2021. As of March 31, 2021, approximately $28.2 million was available under the stock repurchase program.

The following table sets forth information regarding purchases made by us of shares of our common stock on a monthly basis during the quarter ended March 31, 2021:

Issuer Purchases of Equity Securities

Period |  | Total Number of Shares Purchased (1) |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 28,231,593 |
January 1, 2021—January 31, 2021 |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | 28,231,593 |
February 1, 2021—February 28, 2021 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28,231,593 |
March 1, 2021—March 31, 2021 |  |  | 159,989 |  |  |  | 12.70 |  |  |  | - |  |  |  | 28,231,593 |
Total |  |  | 159,989 |  |  |  |  |  |  |  | - |  |  |  |  |

(1) | Includes 159,989 shares delivered back to the Company for payment of withholding taxes from employees for vesting restricted stock units pursuant to the terms of the Company’s 2016 Incentive Compensation Plan.

(2) | On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program of up to $50.0 million which expires December 31, 2021.

Item 6. | Exhibits

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the “Exhibit Index,” which is attached hereto and incorporated by reference herein.

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|  | INDEX TO EXHIBITS |  |
Exhibit Number |  | Exhibit |  | Incorporated by Reference to:
*10.1 |  | 2021 Annual Incentive Award Program pursuant to the Career Education Corporation 2016 Incentive Compensation Plan |  | Exhibit 10.1 to our Form 8-K filed on March 9, 2021
+31.1 |  | Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 |  |
+31.2 |  | Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 |  |
+32.1 |  | Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |  |
+32.2 |  | Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |  |
+101.INS |  | Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |  |
+101.SCH |  | Inline XBRL Taxonomy Extension Schema Document |  |
+101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |
+101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |
+101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document |  |
+101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |
+104 |  | The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included in Exhibit 101) |  |
|  | ____ |  |
|  | * Management contract or compensatory plan or arrangement required to be filed as an Exhibit on this Form 10-Q. |  |
|  | +Filed herewith. |  |

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| PERDOCEO EDUCATION CORPORATION
Date: May 6, 2021 | By: |  | /s/ TODD S. NELSON
|  |  | Todd S. Nelson President and Chief Executive Officer (Principal Executive Officer)
Date: May 6, 2021 | By: |  | /s/ ASHISH R. GHIA
|  |  | Ashish R. Ghia Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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