Strategic Education Reports Second Quarter 2024 Results

July 31, 2024

HERNDON, Va.–(BUSINESS WIRE)–Strategic Education, Inc.  (NASDAQ: STRA) today announced financial results for the period ended June 30, 2024.

“We are pleased with strong second quarter results as our organization remains focused on promoting economic mobility for working adults,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “The U.S. Higher Education segment continued to see strength driven by employer affiliated enrollment; the Education Technology Services segment delivered another quarter of strong growth, including from Sophia subscriptions; and the Australia/New Zealand segment posted another quarter of total enrollment growth.”

STRATEGIC EDUCATION CONSOLIDATED RESULTS

Three Months Ended June 30

  • Revenue increased 8.5% to $312.3 million compared to $287.7 million for the same period in 2023. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 8.9% to $313.4 million in the second quarter of 2024 compared to $287.7 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 $41.9 million or 13.4% of revenue, compared to $16.8 million or 5.8% of revenue for the same period in 2023. Adjusted income from operations, which is a non-GAAP financial measure, was $43.9 million compared to $27.2 million for the same period in 2023. The adjusted operating income margin, which is a non-GAAP financial measure, was 14.1% compared to 9.5% for the same period in 2023.
  • Net income was $29.9 million compared to $14.2 million for the same period in 2023. Adjusted net income, which is a non-GAAP financial measure, was $32.3 million compared to $19.7 million for the same period in 2023.
  • Adjusted EBITDA, which is a non-GAAP financial measure, was $63.3 million compared to $45.4 million for the same period in 2023.
  • Diluted earnings per share was $1.24 compared to $0.59 for the same period in 2023. Adjusted diluted earnings per share, which is a non-GAAP financial measure, increased to $1.33 from $0.82 for the same period in 2023. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, was $1.34. Diluted weighted average shares outstanding increased to 24,179,000 from 23,964,000 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 second quarter, student enrollment within USHE increased 8.4% to 87,077 compared to 80,353 for the same period in 2023.
  • For the second quarter, FlexPath enrollment was 22% of USHE enrollment compared to 21% for the same period in 2023.
  • Revenue increased 6.9% to $216.6 million in the second quarter of 2024 compared to $202.7 million for the same period in 2023, driven by higher second quarter enrollment.
  • Income from operations was $19.8 million in the second quarter of 2024 compared to $6.7 million for the same period in 2023. The operating income margin was 9.2%, compared to 3.3% 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 second quarter, employer affiliated enrollment was 29.3% of USHE enrollment compared to 27.1% for the same period in 2023.
  • For the second quarter, average total subscribers at Sophia Learning increased approximately 37% from the same period in 2023.
  • As of June 30, 2024, Workforce Edge had a total of 71 corporate agreements, collectively employing approximately 1,540,000 employees.
  • Revenue increased 25.6% to $24.5 million in the second quarter of 2024 compared to $19.5 million for the same period in 2023, driven by growth in Sophia Learning subscriptions and employer affiliated enrollment.
  • Income from operations was $10.0 million in the second quarter of 2024 compared to $6.2 million for the same period in 2023. The operating income margin was 40.9%, compared to 31.6% 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 second quarter, student enrollment within ANZ increased 6.4% to 19,113 compared to 17,966 for the same period in 2023.
  • Revenue increased 8.6% to $71.1 million in the second quarter of 2024 compared to $65.5 million for the same period in 2023, driven by higher second quarter enrollment and revenue-per-student. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 10.3% to $72.2 million in the second quarter of 2024 compared to $65.5 million for the same period in 2023, driven by higher second quarter enrollment and revenue-per-student.
  • Income from operations was $14.1 million in the second quarter of 2024 compared to $14.3 million for the same period in 2023. The operating income margin was 19.8%, compared to 21.8% for the same period in 2023. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $14.4 million in the second quarter of 2024 compared to $14.3 million for the same period in 2023. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 19.9%, compared to 21.8% for the same period in 2023.

BALANCE SHEET AND CASH FLOW

At June 30, 2024, Strategic Education had cash, cash equivalents, and marketable securities of $256.2 million, and $61.3 million outstanding under its revolving credit facility. For the first six months of 2024, cash provided by operations was $101.9 million compared to $40.7 million for the same period in 2023. Capital expenditures for the first six months of 2024 were $19.9 million compared to $17.8 million for the same period in 2023.

For the second quarter of 2024, consolidated bad debt expense as a percentage of revenue was 4.3%, compared to 4.4% 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 September 16, 2024 to shareholders of record as of September 6, 2024.

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, which offers 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.