Lincoln Educational Services (LINC) Q2 FY26 earnings call: guidance and Q&A

How is Lincoln Tech performing in high school recruiting compared to competitors, what is the trend in skilled trades vs. automotive, and is the company seeing impact from direct employer hiring/training programs?

Scott Shaw stated that Lincoln Tech invested in high school recruiting last year, expecting strong August starts, with high school students making up about 40% of Q3 starts. He noted a continuous shift towards skilled trades (60% of population), which are more profitable. He has not seen a material impact from employer apprenticeship models, but is seeing strong employer demand for graduates, including new partnerships with AI organizations.

“today, when you look at our population, we're about 60% skilled trades, 20% health care and 20% automotive. And our skilled trades, I mean, we've been doing sealed trades for 80 years. HVAC started back in 1946. So I think we have a really good handle on the trades and our trades are, frankly, our most profitable business.”

asked by Alexander Paris · answered by Scott Shaw

What caused the Q2 student start growth to slow to 1% despite 9% enrollment growth, specifically regarding the "show rate" from enrolled students to actual starts, and what actions are being taken?

Scott Shaw explained that the 9% enrollment growth would have translated to 9% start growth if historical conversion rates held. The softness was due to process issues, including students defaulting on prior loans (making them ineligible for financial aid) and challenges with financial aid packaging. Actions include better financial aid packaging and enhanced communication with students.

“we had about 9% increase in enrollment. And unfortunately, based off the start rates had held to where they've been historically, we would have had 9% growth in our starts. The softness comes from multiple sources.”

asked by Alexander Paris · answered by Scott Shaw

How much of the Q2 start softness was directly attributable to AI search changes, and what is being baked into H2 guidance regarding this headwind?

Scott Shaw stated it's difficult to quantify the exact impact of AI, but lead volume slowed. He noted AI models sometimes highlight community colleges over Lincoln Tech due to simplistic cost comparisons, not full program benefits. The company is optimizing its website for large language models to provide better insights. He believes they are making progress, citing stronger August starts.

“The good news is we see that Lincoln Tech pops up more times than not as a great opportunity for people. However, with that said, we also see that sometimes the AI models are simplistic and what they look at is the cost in which case they may highlight a community college over us.”

asked by Lucas John Horton · answered by Scott Shaw

Given 22% revenue growth on 9% enrollment growth, what is driving the meaningful revenue per student uptick, specifically tuition pricing vs. program mix shift?

Brian Meyers clarified that tuition increases average 2% to 3% across programs. About half of the revenue per student increase came from a shift in a start class from late June to July 1, 2025 (pro forma into Q2 2025 for comparison), which brought additional revenue and book/tool revenue into Q2 2026. The other half was from tuition increases.

“About half of the -- I'll say, the increase came from that additional start class, the shift in start class the other half was for tuition increases that helped our revenue per student.”

asked by Lucas John Horton · answered by Brian Meyers

What factors are behind the better-than-expected student retention?

Scott Shaw attributed improved retention to programs providing better customer service, including more student service advisors at campuses. These advisors help students navigate life challenges that might otherwise lead to dropping out. He noted a 200 basis point improvement in retention this year.

“our goal is to get to 70% graduation rates. We're at about 200 basis points this year higher in our retention than we were last year. And it all comes down to providing better customer service.”

asked by Eric Martinuzzi · answered by Scott Shaw

Can Scott elaborate on the opportunity to partner with AI companies for labor supply in data center build-out and maintenance?

Scott Shaw mentioned existing partnerships like Johnson Controls for data center construction and maintenance. He also highlighted discussions with other AI organizations looking to hire Lincoln Tech graduates, some offering significant salaries ($70k-$100k) or specialized training programs. He emphasized the value of Lincoln Tech's national footprint and consistent program quality for these larger companies.

“Johnson Controls has been a longtime partner of ours, and we've done things with them with their fire and alarm systems, and now we're doing things with them for both the building of data centers as well as training for the maintenance of those data centers.”

asked by Griffin Boss · answered by Scott Shaw