Strategic Education, Inc. Reports First Quarter 2024 Results

HERNDON, Va. , April 25 /Businesswire/ - Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended March 31, 2024.

“As we begin a new year, we are pleased with strength across our business and proud of the organization’s ongoing commitment to the success of our students,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “The U.S. Higher Education segment delivered another quarter of strong growth driven by employer affiliated enrollment; the Education Technology Services segment continued to see strength, including from Sophia subscriptions; and the Australia/New Zealand segment returned to total enrollment growth.”

STRATEGIC EDUCATION CONSOLIDATED RESULTS

Three Months Ended March 31

• Revenue increased 13.1% to $290.3 million compared to $256.6 million for the same period in 2023. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 13.9% to $292.3 million in the first quarter of 2024 compared to $256.6 million for the same period in 2023. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
• Income from operations was $41.4 million or 14.2% of revenue, compared to loss from operations of $1.3 million for the same period in 2023. Adjusted income from operations, which is a non-GAAP financial measure, was $35.8 million compared to $8.2 million for the same period in 2023. The adjusted operating income margin, which is a non-GAAP financial measure, was 12.4% compared to 3.2% for the same period in 2023.
• Net income was $29.7 million compared to net loss of $2.0 million for the same period in 2023. Adjusted net income, which is a non-GAAP financial measure, was $26.7 million compared to $5.8 million for the same period in 2023.
• Adjusted EBITDA, which is a non-GAAP financial measure, was $54.3 million compared to $27.2 million for the same period in 2023.
• Diluted earnings per share was $1.23 compared to diluted loss per share of $0.09 for the same period in 2023. Adjusted diluted earnings per share, which is a non-GAAP financial measure, increased to $1.11 from $0.24 for the same period in 2023. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, was $1.11. Diluted weighted average shares outstanding increased slightly to 24,060,000 from 24,023,000 adjusted diluted weighted average shares outstanding, which is a non-GAAP financial measure, for the same period in 2023.

U.S. Higher Education Segment Highlights

• The U.S. Higher Education segment (USHE) is comprised of Capella University and Strayer University.
• For the first quarter, student enrollment within USHE increased 9.8% to 87,731 compared to 79,935 for the same period in 2023.
• For the first quarter, FlexPath enrollment was 23% of USHE enrollment compared to 21% for the same period in 2023.
• Revenue increased 11.3% to $219.2 million in the first quarter of 2024 compared to $196.9 million for the same period in 2023, driven by higher first quarter enrollment.
• Income from operations was $28.0 million in the first quarter of 2024 compared to $9.6 million for the same period in 2023. The operating income margin was 12.8%, compared to 4.9% for the same period in 2023.

Education Technology Services Segment Highlights

• The Education Technology Services segment (ETS) is comprised primarily of Enterprise Partnerships, Sophia Learning, and Workforce Edge.
• For the first quarter, employer affiliated enrollment was 29.2% of USHE enrollment compared to 26.3% for the same period in 2023.
• For the first quarter, average total subscribers at Sophia Learning increased approximately 42% from the same period in 2023.
• As of March 31, 2024, Workforce Edge had a total of 68 corporate agreements, collectively employing approximately 1,470,000 employees.
• Revenue increased 29.8% to $23.6 million in the first quarter of 2024 compared to $18.2 million for the same period in 2023, driven by growth in Sophia Learning subscriptions and employer affiliated enrollment.
• Income from operations was $10.1 million in the first quarter of 2024 compared to $5.8 million for the same period in 2023. The operating income margin was 42.7%, compared to 31.8% for the same period in 2023.

Australia/New Zealand Segment Highlights

• The Australia/New Zealand segment (ANZ) is comprised of Torrens University, Think Education, and Media Design School.
• For the first quarter, student enrollment within ANZ increased 4.8% to 20,197 compared to 19,269 for the same period in 2023.
• Revenue increased 14.1% to $47.4 million in the first quarter of 2024 compared to $41.5 million for the same period in 2023, driven by higher first quarter enrollment and revenue-per-student. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 19.1% to $49.4 million in the first quarter of 2024 compared to $41.5 million for the same period in 2023, driven by higher first quarter enrollment and revenue-per-student.
• Loss from operations was $2.3 million in the first quarter of 2024 compared to loss from operations of $7.2 million for the same period in 2023. Loss from operations on a constant currency basis, which is a non-GAAP financial measure, was $2.2 million in the first quarter of 2024 compared to loss from operations of $7.2 million for the same period in 2023.

Balance Sheet and Cash Flow

At March 31, 2024, Strategic Education had cash, cash equivalents, and marketable securities of $253.6 million, and $61.3 million outstanding under its revolving credit facility. For the first three months of 2024, cash provided by operations was $77.6 million compared to $35.2 million for the same period in 2023. Capital expenditures for the first three months of 2024 were $9.2 million compared to $8.3 million for the same period in 2023.

For the first quarter of 2024, consolidated bad debt expense as a percentage of revenue was 4.2%, compared to 3.8% of revenue for the same period in 2023.

COMMON STOCK CASH DIVIDEND

Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on June 3, 2024 to shareholders of record as of May 24, 2024.

CONFERENCE CALL WITH MANAGEMENT

Strategic Education will host a conference call to discuss its first quarter 2024 results at 10:00 a.m. (ET) today. This call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section. To participate in the live call, investors should register here prior to the call to receive dial-in information and a PIN.

About Strategic Education, Inc.

Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We primarily serve working adult students globally through our core focus areas: 1) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs including the Jack Welch Management Institute at Strayer University, and non-degree web and mobile application development courses through Strayer University’s Hackbright Academy and Devmountain; 2) Education Technology Services, developing and maintaining relationships with employers to build education benefits programs providing employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, enabling education benefits programs through low-cost online general education-level courses that are ACE-recommended for college credit; and 3) Australia/New Zealand, comprised of Torrens University, Think Education, and Media Design School that collectively offer certificate and degree programs in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce and find a path to bettering their lives.

Forward-Looking Statements

This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:

• the pace of student enrollment;
• Strategic Education’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements;
• rulemaking and other action by the Department of Education or other governmental entities, including without limitation action related to borrower defense to repayment applications, gainful employment, 90/10, and increased focus by the U.S. Congress on for-profit education institutions;
• competitive factors;
• risks associated with the opening of new campuses;
• risks associated with the offering of new educational programs and adapting to other changes;
• risks associated with the acquisition of existing educational institutions, including Strategic Education’s acquisition of Torrens University and associated assets in Australia and New Zealand;
• the risk that the benefits of the acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected;
• the risk that the acquisition of Torrens University and associated assets in Australia and New Zealand may not advance Strategic Education’s business strategy and growth strategy;
• risks relating to the timing of regulatory approvals;
• Strategic Education’s ability to implement its growth strategy;
• the risk that the combined company may experience difficulty integrating employees or operations;
• risks associated with the ability of Strategic Education’s students to finance their education in a timely manner;
• general economic and market conditions; and
• additional factors described in Strategic Education’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Many of these risks, uncertainties and assumptions are beyond Strategic Education’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.