HERNDON, Va.--(BUSINESS WIRE)--Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced that it will host a conference call to discuss its third quarter results on Thursday, November 6, 2025 at 10:00 a.m. ET. A news release outlining the results will be issued before the market opens the same day. This call will be available via webcast. To access the live webcast of the conference call on November 6, please go to www.strategiceducation.com in the Investor Relations sectio. ...

Ariel Sokol offers over twenty years of experience as a corporate finance professional at both established companies and startups. Mr. Sokol founded Kolari Consulting, a strategy consulting firm focusing on subscription and edtech businesses. Previously Mr. Sokol served as a VP of strategy and finance and General Manager of Institutional Business at education multinational Pearson in the Connections Education division, which provides online program management (OPM) virtual school solutions to charter school ...

Group 1 - Strategic Education, Inc. (NASDAQ:STRA) is recognized as one of the 14 Best Small Cap Stocks to Buy Right Now, with Truist Financial reiterating its Buy rating without a price target [1] - The company experienced a decline in Q2 FY2025 student enrollment within the U.S. Higher Education (USHE) segment by 0.8% to 86,339, and a 3.1% drop in the Australia/New Zealand (ANZ) segment to 18,524 year-over-year [2] - Despite the enrollment declines, Strategic Education saw strong growth in Sophia Learning, with total subscribers increasing nearly 40% and revenue rising 39.8% to $16.4 million [2] Group 2 - The overall revenue for Strategic Education was reported at $321.5 million, reflecting a 2.9% increase from the previous year, although it slightly missed consensus estimates [2] - The adjusted earnings per share were reported at $1.52, surpassing the estimates of $1.43 [2] - Analysts have set an average price target of $105 for Strategic Education, indicating an upside potential of approximately 28.11% from current levels [3] Group 3 - Strategic Education operates through three segments: U.S. Higher Education (USHE), Australia/New Zealand (ANZ), and Education Technology Services, providing both campus-based and online post-secondary education [3]

Core Insights - Strategic Education (STRA) reported revenue of $321.47 million for the quarter ended June 2025, marking a year-over-year increase of 3% and an EPS of $1.52 compared to $1.33 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $323.39 million by -0.59%, while the EPS exceeded the consensus estimate of $1.42 by +7.04% [1] Revenue Breakdown - Revenue from Australia/New Zealand was $69.14 million, below the two-analyst average estimate of $72.44 million, reflecting a year-over-year decline of -2.8% [4] - Revenue from Education Technology Services reached $36.69 million, surpassing the two-analyst average estimate of $35.2 million, with a significant year-over-year increase of 49.61% [4] - The U.S. Higher Education Segment generated $215.64 million, slightly above the average estimate of $215.46 million, representing a year-over-year change of -0.45% [4] Stock Performance - Over the past month, shares of Strategic Education have returned -3.60%, contrasting with the Zacks S&P 500 composite's increase of +2.71% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - Strategic Education (STRA), an EdTech company, reported disappointing Q2 results that did not meet Wall Street expectations [1] Company Overview - Strategic Education operates several educational brands including Strayer, Capella, Sophia Learning, and WorkForce Edge [1] Financial Performance - The Q2 results released by Strategic Education have not pleased investors, indicating potential challenges in financial performance [1]

Core Insights - Strategic Education reported adjusted non-GAAP earnings per share of $1.54, exceeding analyst estimates of $1.43, with revenue of $323.5 million, slightly above consensus by $0.5 million [1][2] - The company experienced year-over-year growth in both earnings and revenue, driven by strong performance in the Education Technology Services segment and employer partnerships, despite declines in traditional student enrollment [1][4] Financial Performance - Adjusted EPS (Non-GAAP) increased by 15.8% year-over-year from $1.33 in Q2 2024 to $1.54 in Q2 2025 [2] - Revenue (Non-GAAP) grew by 3.6% year-over-year from $312.3 million in Q2 2024 to $323.5 million in Q2 2025 [2] - Adjusted EBITDA (Non-GAAP) rose to $68.3 million, up 7.9% from $63.3 million in Q2 2024 [2] - Operating margin (Non-GAAP) improved to 15.2%, an increase of 1.1 percentage points from 14.1% in Q2 2024 [2] Strategic Focus - The company operates through three main university brands: Capella University, Strayer University, and Torrens University, with a focus on online delivery and employer-driven programs [3] - Strategic Education has prioritized partnerships with employers, particularly in high-demand fields like healthcare, and has introduced innovative programs like FlexPath for self-paced learning [4][6] - The Education Technology Services segment saw a revenue surge of nearly 50% to $36.7 million, with Sophia Learning reporting a 39.8% revenue increase and a 40% rise in average subscribers [6] Enrollment Trends - Total enrollment decreased by 0.8% to 86,339 students, but the proportion of students enrolled through employer partnerships reached a record 31.8%, up from 29.3% in Q2 2024 [7] - The healthcare portfolio outperformed, with enrollment up 8% year-over-year, representing 47% of the U.S. Higher Education total [7] - The Australia/New Zealand division faced a 2.8% revenue decline and a 3.1% drop in total enrollment due to regulatory challenges, although domestic student growth provided some offset [8] Cash Flow and Shareholder Returns - The company generated $77.7 million in free cash flow over the first six months of 2025, slightly down from $82.0 million in the prior year [9] - Capital expenditures for the first half of 2025 were $21.2 million, compared to $19.9 million in the same period in 2024, with total capital expenditures including cloud computing investments at $29.7 million [9] - The company repurchased 325,844 shares for $28.0 million and maintained its quarterly dividend at $0.60 per share [9] Management Outlook - Management expressed confidence in moderate revenue growth and margin expansion for 2025, supported by innovation and employer partnerships, but did not provide updated financial guidance [11] - Key areas to monitor include trends in employer-affiliated enrollment, performance of education technology offerings, and growth in domestic student numbers, particularly in Australia [12]

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Strategic Education, Inc. for the periods ended June 30, 2025, and December 31, 2024, including detailed notes explaining operations, accounting policies, revenue, restructuring, and regulatory updates [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased slightly to **$2,091,523 thousand** at June 30, 2025, reflecting modest increases in both total liabilities and stockholders' equity | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | **ASSETS** | | | | | | Cash and cash equivalents | $137,074 | $133,600 | $(3,474) | -2.53% | | Marketable securities | $46,949 | $31,350 | $(15,599) | -33.23% | | Tuition receivable, net | $76,127 | $97,878 | $21,751 | 28.57% | | Total current assets | $304,943 | $319,943 | $15,000 | 4.92% | | Goodwill | $1,206,883 | $1,231,105 | $24,222 | 2.01% | | Total assets | $2,049,735 | $2,091,523 | $41,788 | 2.04% | | **LIABILITIES & STOCKHOLDERS' EQUITY** | | | | | | Contract liabilities | $89,563 | $135,179 | $45,616 | 50.93% | | Total current liabilities | $216,460 | $254,480 | $38,020 | 17.56% | | Total liabilities | $387,236 | $424,806 | $37,570 | 9.70% | | Total stockholders' equity | $1,662,499 | $1,666,717 | $4,218 | 0.25% | | Total liabilities and stockholders' equity | $2,049,735 | $2,091,523 | $41,788 | 2.04% | [Unaudited Condensed Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2025, revenues increased by **2.9%** year-over-year, leading to a **9.2%** increase in net income, with similar trends for the six-month period | Metric (in thousands, except per share) | Q2 2024 | Q2 2025 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Revenues | $312,266 | $321,471 | $9,205 | 2.95% | | Total costs and expenses | $270,342 | $275,711 | $5,369 | 1.99% | | Income from operations | $41,924 | $45,760 | $3,836 | 9.15% | | Net income | $29,898 | $32,331 | $2,433 | 8.14% | | Basic EPS | $1.28 | $1.41 | $0.13 | 10.16% | | Diluted EPS | $1.24 | $1.37 | $0.13 | 10.48% | | Metric (in thousands, except per share) | YTD Q2 2024 | YTD Q2 2025 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Revenues | $602,516 | $625,061 | $22,545 | 3.74% | | Total costs and expenses | $519,236 | $539,507 | $20,271 | 3.90% | | Income from operations | $83,280 | $85,554 | $2,274 | 2.73% | | Net income | $59,600 | $62,075 | $2,475 | 4.15% | | Basic EPS | $2.55 | $2.69 | $0.14 | 5.49% | | Diluted EPS | $2.47 | $2.61 | $0.14 | 5.67% | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased for both the three and six months ended June 30, 2025, primarily driven by positive foreign currency translation adjustments | Metric (in thousands) | Q2 2024 | Q2 2025 | Change | % Change | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Net income | $29,898 | $32,331 | $2,433 | 8.14% | | Foreign currency translation adjustments | $13,592 | $26,353 | $12,761 | 93.88% | | Comprehensive income | $43,561 | $58,683 | $15,122 | 34.72% | | Metric (in thousands) | YTD Q2 2024 | YTD Q2 2025 | Change | % Change | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Net income | $59,600 | $62,075 | $2,475 | 4.15% | | Foreign currency translation adjustments | $(13,058) | $29,696 | $42,754 | -327.40% | | Comprehensive income | $46,756 | $91,771 | $45,015 | 96.28% | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased slightly to **$1,666,717 thousand** at June 30, 2025, influenced by stock-based compensation, common stock repurchases, and foreign currency translation adjustments | Metric (in thousands, except shares) | Dec 31, 2024 | Jun 30, 2025 | | :----------------------------------- | :----------- | :----------- | | Common stock, par value $0.01; shares issued and outstanding | 24,502,385 | 23,948,762 | | Common stock, par value | $245 | $239 | | Additional paid-in capital | $1,532,414 | $1,489,271 | | Accumulated other comprehensive loss | $(88,565) | $(58,869) | | Retained earnings | $218,405 | $236,076 | | Total stockholders' equity | $1,662,499 | $1,666,717 | - For the six months ended June 30, 2025, the company repurchased **717,146** shares of common stock, reducing additional paid-in capital by **$45,286 thousand** and retained earnings by **$15,173 thousand**[18](index=18&type=chunk) - Foreign currency translation adjustments positively impacted accumulated other comprehensive loss by **$29,696 thousand** for the six months ended June 30, 2025[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities slightly decreased, while net cash used in financing activities significantly increased, primarily due to common stock repurchases | Metric (in thousands) | YTD Q2 2024 | YTD Q2 2025 | Change | % Change | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Net cash provided by operating activities | $101,935 | $98,864 | $(3,071) | -3.01% | | Net cash used in investing activities | $(6,213) | $(4,627) | $1,586 | -25.53% | | Net cash used in financing activities | $(33,021) | $(98,429) | $(65,408) | 198.07% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $62,167 | $(1,673) | $(63,840) | -102.69% | | Cash, cash equivalents, and restricted cash — end of period | $244,092 | $144,983 | $(99,109) | -40.60% | - The significant increase in net cash used in financing activities was primarily driven by **$60.0 million** of share repurchases during the six months ended June 30, 2025[20](index=20&type=chunk)[200](index=200&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering business segments, accounting policies, revenue recognition, restructuring, and other financial and regulatory updates [1. Nature of Operations](index=8&type=section&id=1.%20Nature%20of%20Operations) Strategic Education, Inc. is an education services company providing post-secondary education and job-ready skills programs through its U.S. Higher Education, Education Technology Services, and Australia/New Zealand segments - Strategic Education, Inc. provides high-quality education through campus-based and online post-secondary offerings and programs to develop job-ready skills[22](index=22&type=chunk) - The company's three reportable segments are U.S. Higher Education (Capella University, Strayer University), Education Technology Services (Workforce Edge, Sophia Learning), and Australia/New Zealand (Torrens University, Think Education, Media Design School)[23](index=23&type=chunk) [2. Significant Accounting Policies](index=8&type=section&id=2.%20Significant%20Accounting%20Policies) This note outlines key accounting policies including financial statement presentation, operating expense categories, foreign currency translation, marketable securities, tuition receivable, goodwill, equity awards, and recently issued accounting standards - The company's financial statements are unaudited and include normal recurring adjustments, prepared in accordance with GAAP, and should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[25](index=25&type=chunk) - Restructuring costs include severance, asset impairment charges, and gains/losses on early termination of leased facilities[29](index=29&type=chunk) - Restricted cash balances for June 30, 2025, include **$2.1 million** for unpaid U.S. obligations, **$8.8 million** for advance tuition payments in Australia/New Zealand, and **$0.5 million** for a minimum protective endowment in Pennsylvania[33](index=33&type=chunk)[34](index=34&type=chunk) | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :-------------------- | :----------- | :----------- | | Tuition receivable | $127,012 | $146,249 | | Allowance for credit losses | $(50,885) | $(48,371) | | Tuition receivable, net | $76,127 | $97,878 | - The FASB issued ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), which the company is currently evaluating for impact on its financial statements[54](index=54&type=chunk)[56](index=56&type=chunk) [3. Revenue Recognition](index=12&type=section&id=3.%20Revenue%20Recognition) Revenue primarily from tuition is recognized ratably over the instruction period, with disaggregation by segment and management of contract liabilities for scholarship programs like 'Learn and Earn' and 'Tuition Cap' | Segment (in thousands) | Q2 2024 | Q2 2025 | YTD Q2 2024 | YTD Q2 2025 | | :--------------------- | :----------- | :----------- | :----------- | :----------- | | U.S. Higher Education | $216,613 | $215,635 | $435,849 | $436,643 | | Australia/New Zealand | $71,130 | $69,144 | $118,505 | $117,404 | | Education Technology Services | $24,523 | $36,692 | $48,162 | $71,014 | | Consolidated revenue | $312,266 | $321,471 | $602,516 | $625,061 | - Strayer University's 'Learn and Earn Scholarship' allows undergraduate students to earn one free course for every three successfully completed, with **$38.4 million** deferred for estimated redemptions as of June 30, 2025[65](index=65&type=chunk)[67](index=67&type=chunk) - Capella University's 'Tuition Cap' pricing waives tuition once a student reaches a designated dollar threshold, with **$16.3 million** in related contract liabilities as of June 30, 2025[68](index=68&type=chunk) [4. Restructuring and Related Charges](index=14&type=section&id=4.%20Restructuring%20and%20Related%20Charges) Restructuring costs for the six months ended June 30, 2025, totaled **$4.7 million**, primarily due to increased severance and asset impairment charges, contrasting with a prior year net benefit | Metric (in thousands) | Q2 2024 | Q2 2025 | YTD Q2 2024 | YTD Q2 2025 | | :-------------------- | :------ | :------ | :---------- | :---------- | | Severance and other employee separation charges | $1,000 | $1,300 | $1,300 | $2,800 | | Right-of-use lease asset charges | $0 | $700 | $0 | $800 | | Fixed asset impairment charges | $0 | $700 | $0 | $800 | | Net benefit from early lease terminations | $0 | $0 | $(6,200) | $0 | | Total Restructuring costs | $1,995 | $2,783 | $(3,515) | $4,697 | [5. Marketable Securities](index=14&type=section&id=5.%20Marketable%20Securities) The company's marketable securities portfolio primarily consists of held-to-maturity securities carried at amortized cost, totaling **$46.3 million** as of June 30, 2025, with no available-for-sale securities | Held-to-Maturity Securities (in thousands) | Dec 31, 2024 Amortized Cost | Jun 30, 2025 Amortized Cost | | :----------------------------------------- | :-------------------------- | :-------------------------- | | Term deposits | $21,653 | $16,418 | | U.S. treasury securities | $19,778 | $9,918 | | Corporate debt securities | $20,000 | $20,000 | | Total | $61,431 | $46,336 | - The company did not have any marketable securities classified as available-for-sale as of June 30, 2025[72](index=72&type=chunk) - Purchases of held-to-maturity securities increased to **$25.8 million** for the six months ended June 30, 2025, from **$8.6 million** in the prior year, while proceeds from maturities also increased[75](index=75&type=chunk) [6. Fair Value Measurement](index=16&type=section&id=6.%20Fair%20Value%20Measurement) Certain assets, primarily money market funds (Level 1), are measured at fair value on a recurring basis, while held-to-maturity marketable securities are carried at amortized cost with estimated fair value classified as Level 2 | Assets at Fair Value (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :---------------------------------- | :----------- | :----------- | | Money market funds (Level 1) | $92,416 | $85,271 | | Available-for-sale securities (Level 2) | $499 | $0 | | Total assets at fair value on a recurring basis | $92,915 | $85,271 | - The estimated fair value of held-to-maturity marketable securities was **$46.4 million** as of June 30, 2025, classified in Level 2[78](index=78&type=chunk) [7. Goodwill and Intangible Assets](index=17&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) Goodwill and indefinite-lived intangible assets are annually assessed for impairment, with total goodwill increasing to **$1,231,105 thousand** at June 30, 2025, mainly due to currency translation adjustments in the ANZ segment | Segment Goodwill (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :------------------------------ | :----------- | :----------- | | U.S. Higher Education | $632,075 | $632,075 | | Australia / New Zealand | $474,808 | $499,030 | | Education Technology Services | $100,000 | $100,000 | | Total Goodwill | $1,206,883 | $1,231,105 | - Goodwill for the Australia/New Zealand segment increased by **$24,222 thousand** due to currency translation adjustments for the six months ended June 30, 2025[81](index=81&type=chunk) - Indefinite-lived intangible assets (trade names) increased to **$248,172 thousand** as of June 30, 2025, also influenced by currency translation adjustments, with no impairment charges in the current period[83](index=83&type=chunk) [8. Other Current Assets](index=18&type=section&id=8.%20Other%20Current%20Assets) Other current assets increased to **$56,353 thousand** at June 30, 2025, primarily driven by increases in prepaid expenses and restricted cash | Other Current Assets (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :---------------------------------- | :----------- | :----------- | | Prepaid expenses | $20,841 | $30,616 | | Restricted cash | $9,082 | $10,883 | | Cloud computing arrangements | $9,402 | $9,036 | | Other | $5,468 | $5,818 | | Total Other current assets | $44,793 | $56,353 | [9. Other Assets](index=18&type=section&id=9.%20Other%20Assets) Other assets increased to **$66,241 thousand** at June 30, 2025, mainly due to higher cloud computing arrangements and other miscellaneous assets | Other Assets (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :-------------------------- | :----------- | :----------- | | Cloud computing arrangements, net of current portion | $18,328 | $23,925 | | Prepaid expenses, net of current portion | $15,678 | $15,343 | | Equity method investments | $13,428 | $11,397 | | Tuition receivable, net, non-current | $7,040 | $6,443 | | Other investments | $2,786 | $2,786 | | Other | $5,650 | $6,347 | | Total Other assets | $62,910 | $66,241 | - Equity method investments, primarily in limited partnerships focused on health care and education-related technology, decreased to **$11,397 thousand** at June 30, 2025, due to pro-rata share in net losses[88](index=88&type=chunk)[90](index=90&type=chunk) [10. Accounts Payable and Accrued Expenses](index=19&type=section&id=10.%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts payable and accrued expenses slightly decreased to **$99,189 thousand** at June 30, 2025, primarily due to lower accrued compensation and benefits, partially offset by higher trade payables | Accounts Payable and Accrued Expenses (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :--------------------------------------------------- | :----------- | :----------- | | Trade payables | $55,733 | $59,115 | | Accrued compensation and benefits | $38,843 | $32,040 | | Accrued student obligations and other | $7,173 | $8,034 | | Total Accounts payable and accrued expenses | $101,749 | $99,189 | [11. Long-Term Debt](index=19&type=section&id=11.%20Long-Term%20Debt) The company has an Amended Credit Facility providing a senior secured revolving credit facility of up to **$250 million**, with no outstanding borrowings as of June 30, 2025, and compliance with all covenants - The Amended Credit Facility provides a **$250 million** senior secured revolving credit facility, with an option to increase commitments up to the greater of **$300 million** or **100%** of consolidated EBITDA[95](index=95&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) - As of June 30, 2025, the company had no borrowings outstanding under the Revolving Credit Facility and was in compliance with all covenants[97](index=97&type=chunk)[197](index=197&type=chunk) - The facility includes financial maintenance covenants: a leverage ratio not greater than **2.00** to **1.00** and a coverage ratio not less than **1.75** to **1.00**[104](index=104&type=chunk) [12. Other Long-Term Liabilities](index=20&type=section&id=12.%20Other%20Long-Term%20Liabilities) Other long-term liabilities increased to **$42,211 thousand** at June 30, 2025, primarily due to an increase in long-term contract liabilities related to future free classes | Other Long-Term Liabilities (in thousands) | Dec 31, 2024 | Jun 30, 2025 | | :----------------------------------------- | :----------- | :----------- | | Contract liabilities, net of current portion | $34,505 | $36,070 | | Asset retirement obligations | $3,876 | $4,059 | | Other | $1,805 | $2,082 | | Total Other long-term liabilities | $40,186 | $42,211 | - Long-term contract liabilities represent revenue deferred for future free classes, expected to be realized after one year[100](index=100&type=chunk) [13. Equity Awards](index=20&type=section&id=13.%20Equity%20Awards) Stock-based compensation expense, net of tax, for the six months ended June 30, 2025, was **$8,353 thousand**, a slight decrease from the prior year | Stock-based Compensation (in thousands) | Q2 2024 | Q2 2025 | YTD Q2 2024 | YTD Q2 2025 | | :-------------------------------------- | :------ | :------ | :---------- | :---------- | | Instructional and support costs | $1,822 | $1,969 | $3,055 | $4,256 | | General and administration | $4,682 | $3,846 | $8,642 | $6,923 | | Restructuring costs | $69 | $41 | $205 | $148 | | Total stock-based compensation expense | $6,573 | $5,856 | $11,902 | $11,327 | | Tax benefit | $1,742 | $1,539 | $3,167 | $2,974 | | Stock-based compensation expense, net of tax | $4,831 | $4,317 | $8,735 | $8,353 | [14. Income Taxes](index=20&type=section&id=14.%20Income%20Taxes) Income tax expense for the six months ended June 30, 2025, remained consistent at **$25.4 million**, including a windfall tax impact of **$0.4 million**, with no material impact expected from the OBBB Act | Metric (in thousands) | YTD Q2 2024 | YTD Q2 2025 | | :-------------------- | :----------- | :----------- | | Income tax expense | $25,351 | $25,375 | | Shortfall tax impacts | $1,200 | $0 | | Windfall tax impacts | $0 | $400 | | Income taxes paid | $25,900 | $29,200 | - The company does not expect the One Big Beautiful Bill Act (OBBB), signed on July 4, 2025, to have a material impact on its 2025 annual effective tax rate[107](index=107&type=chunk) [15. Segment Reporting](index=21&type=section&id=15.%20Segment%20Reporting) Strategic Education operates through three segments: U.S. Higher Education (USHE), Education Technology Services (ETS), and Australia/New Zealand (ANZ), with performance assessed by the CEO based on income from operations - USHE segment includes Capella University, Strayer University, Jack Welch Management Institute MBA, Hackbright Academy, and Devmountain[109](index=109&type=chunk) - ETS segment focuses on employer partnerships for education benefits, including Workforce Edge and Sophia Learning, driving student enrollment for USHE institutions[110](index=110&type=chunk) - ANZ segment comprises Torrens University, Think Education, and Media Design School, offering certificate and degree programs in Australia and New Zealand[111](index=111&type=chunk) | Segment (in thousands) | Q2 2024 Revenue | Q2 2025 Revenue | Q2 2024 Income from Operations | Q2 2025 Income from Operations | | :--------------------- | :-------------- | :-------------- | :----------------------------- | :----------------------------- | | U.S. Higher Education | $216,613 | $215,635 | $19,825 | $20,759 | | Australia/New Zealand | $71,130 | $69,144 | $14,060 | $12,756 | | Education Technology Services | $24,523 | $36,692 | $10,034 | $15,028 | | Consolidated | $312,266 | $321,471 | $41,924 | $45,760 | | Segment (in thousands) | YTD Q2 2024 Revenue | YTD Q2 2025 Revenue | YTD Q2 2024 Income from Operations | YTD Q2 2025 Income from Operations | | :--------------------- | :------------------ | :------------------ | :--------------------------------- | :--------------------------------- | | U.S. Higher Education | $435,849 | $436,643 | $47,838 | $50,715 | | Australia/New Zealand | $118,505 | $117,404 | $11,805 | $10,660 | | Education Technology Services | $48,162 | $71,014 | $20,122 | $28,876 | | Consolidated | $602,516 | $625,061 | $83,280 | $85,554 | [16. Litigation](index=24&type=section&id=16.%20Litigation) The company is involved in ordinary course litigation and legal proceedings, with no material developments reported since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material developments in litigation and other legal proceedings have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[116](index=116&type=chunk) [17. Regulation](index=24&type=section&id=17.%20Regulation) This note details significant regulatory changes and their potential impact, including the OBBB Act, the 90/10 Rule, SARA policy modifications, negotiated rulemaking, and developments concerning Title IX and Title VI - The One Big Beautiful Bill Act (OBBB), signed July 4, 2025, eliminates Federal Direct PLUS loans for graduate students effective July 2026, sets new loan limits, and creates an accountability framework for programs based on earning outcomes[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - OBBB also introduces Workforce Pell Grants for eligible short-term, career-focused programs and delays the effective date of the 2022 borrower defense to repayment rules until July 1, 2035, reinstating the 2019 version[123](index=123&type=chunk)[124](index=124&type=chunk) - The 90/10 Rule now includes all federal education assistance funds in the '90' metric for fiscal years beginning on or after January 1, 2023, including military tuition assistance and veterans education benefits[127](index=127&type=chunk) - NC-SARA is considering **32** proposed policy changes in 2025, some of which could significantly alter distance education reciprocity agreements and potentially affect institutions' participation[129](index=129&type=chunk) - The 2024 Title IX Rule, effective August 1, 2024 (except where enjoined), expands sex discrimination to include sex stereotypes, characteristics, pregnancy, sexual orientation, and gender identity, and eliminates live hearings with cross-examination at the post-secondary level[132](index=132&type=chunk) - Executive Order 14173 and subsequent Department of Justice guidance direct agencies to enforce civil rights laws and combat illegal DEI/DEIA preferences, potentially impacting institutions receiving federal funds[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, including revenue and income performance, critical accounting policies, segment performance, non-GAAP measures, and liquidity and capital resources [Background and Segments Overview](index=30&type=section&id=Background%20and%20Segments%20Overview) Strategic Education, Inc. is an education services company operating through USHE, ETS, and ANZ segments, aiming to close the skills gap by connecting learning and employment - USHE enrollment decreased **0.8%** to **86,339** in Q2 2025 compared to Q2 2024[148](index=148&type=chunk) - Trailing 4-quarter student persistence within USHE was **87.4%** in Q1 2025, up from **86.9%** in Q1 2024[148](index=148&type=chunk) - Employer-affiliated enrollment as a percentage of USHE enrollment increased to **31.8%** in Q2 2025 from **29.3%** in Q2 2024[149](index=149&type=chunk) - Australia/New Zealand enrollment decreased **3.1%** to **18,524** in Q2 2025 compared to Q2 2024, primarily due to constraints on international enrollment[155](index=155&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management's discussion emphasizes estimates for revenue recognition, tuition receivable allowances, and goodwill/intangible asset impairment, with potential future impairment for the ANZ segment due to international student regulatory constraints - Revenue is primarily tuition, recognized ratably over the instruction period, with approximately **94%** of revenues from tuition for the six months ended June 30, 2025[154](index=154&type=chunk) - Bad debt expense as a percentage of revenue decreased to **4.0%** in Q2 2025 from **4.3%** in Q2 2024[163](index=163&type=chunk) - No impairment charges related to goodwill or indefinite-lived intangible assets were recorded for the three and six months ended June 30, 2025[164](index=164&type=chunk) - The ANZ reporting unit had **$499.0 million** of goodwill and **$63.6 million** of indefinite-lived intangible assets as of June 30, 2025, with potential future impairment if regulatory constraints on international students are not offset by domestic enrollment growth[166](index=166&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Consolidated revenue increased for both the three and six months ended June 30, 2025, primarily driven by strong ETS segment performance, leading to increases in net income and diluted EPS despite higher operating expenses [Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024](index=35&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202024) Consolidated revenue increased by **2.9%** to **$321.5 million**, primarily due to ETS segment growth, resulting in an **8.1%** rise in net income and a **10.5%** increase in diluted EPS - Consolidated revenue increased **2.9%** to **$321.5 million**, driven by Workforce Edge and Sophia Learning subscriptions in the ETS segment[170](index=170&type=chunk) - ETS segment revenue increased **49.6%** to **$36.7 million**[170](index=170&type=chunk) - USHE segment revenue decreased **0.5%** to **$215.6 million** due to enrollment decline[170](index=170&type=chunk) - ANZ segment revenue decreased **2.8%** to **$69.1 million** due to unfavorable foreign currency and enrollment decline[170](index=170&type=chunk) - Consolidated income from operations increased to **$45.8 million**, up **9.2%** YoY[174](index=174&type=chunk) [Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024](index=36&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202024) Consolidated revenue increased by **3.7%** to **$625.1 million**, largely due to the ETS segment, with net income growing by **4.1%** and diluted EPS by **5.7%** - Consolidated revenue increased to **$625.1 million**, primarily due to ETS segment growth[177](index=177&type=chunk) - ETS segment revenue increased **47.4%** to **$71.0 million**[177](index=177&type=chunk) - Restructuring costs increased to **$4.7 million**, compared to a **$3.5 million** net benefit in the prior year, mainly due to a **$6.2 million** gain on early lease terminations in 2024 not recurring[180](index=180&type=chunk) - Consolidated income from operations increased to **$85.6 million**, up **2.7%** YoY[181](index=181&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures, including Adjusted Total Costs and Expenses, Adjusted Income from Operations, and Adjusted Diluted Earnings per Share, to provide additional insight into business performance by excluding specific adjustments and presenting on a constant currency basis - Adjusted diluted EPS for Q2 2025 was **$1.52**, up from **$1.33** in Q2 2024[188](index=188&type=chunk) - Adjusted diluted EPS for YTD Q2 2025 was **$2.82**, up from **$2.44** in YTD Q2 2024[188](index=188&type=chunk) | Non-GAAP Metric (in thousands, except per share) | Q2 2025 (As Adjusted) | YTD Q2 2025 (As Adjusted) | | :----------------------------------------------- | :-------------------- | :------------------------ | | Total costs and expenses | $272,928 | $534,810 | | Income from operations | $48,543 | $90,251 | | Operating margin | 15.1% | 14.4% | | Income before income taxes | $50,487 | $94,410 | | Net income | $35,846 | $67,031 | | Diluted earnings per share | $1.52 | $2.82 | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash, cash equivalents, and marketable securities decreased to **$179.9 million** at June 30, 2025, with net cash used in financing activities significantly increasing due to **$60.0 million** in share repurchases | Metric (in millions) | Dec 31, 2024 | Jun 30, 2025 | | :------------------- | :----------- | :----------- | | Cash, cash equivalents, and marketable securities | $199.0 | $179.9 | - Net cash provided by operating activities for the six months ended June 30, 2025, decreased to **$98.9 million** from **$101.9 million** in the prior year, primarily due to unfavorable changes in working capital[198](index=198&type=chunk) - Net cash used in financing activities for the six months ended June 30, 2025, increased to **$98.4 million** from **$33.0 million**, driven by **$60.0 million** of share repurchases[200](index=200&type=chunk) - The company paid **$29.2 million** in cash dividends and repurchased **$60.0 million** of common stock during the six months ended June 30, 2025, with **$168.5 million** remaining in share repurchase authorization[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk on investments and borrowings, and foreign currency risk, primarily from the Australian dollar, which accounted for **18.8%** of consolidated revenues for the six months ended June 30, 2025 - A **1%** increase or decrease in interest rates would not materially impact future earnings, fair values, or cash flows related to cash equivalents or interest-earning marketable securities as of June 30, 2025[204](index=204&type=chunk) - For every **100** basis points increase in Term SOFR, the company would incur an incremental **$2.5 million** in annual interest expense if the entire **$250 million** Revolving Credit Facility was utilized[205](index=205&type=chunk) - Revenues denominated in foreign currencies (primarily AUD) accounted for **18.8%** of consolidated revenues for the six months ended June 30, 2025[206](index=206&type=chunk) - A hypothetical **10%** adverse change in average foreign currency exchange rates would decrease consolidated revenues by approximately **$11.7 million** for the six months ended June 30, 2025[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were effective as of June 30, 2025[207](index=207&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[207](index=207&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, with management believing the ultimate outcome will not materially adversely affect its financial position, results of operations, or cash flows - The company believes that the ultimate outcome of current legal proceedings will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows[208](index=208&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on regulatory changes that could significantly impact the company, including federal student aid eligibility, state authorization, Title IX compliance, student loan defaults, and the OBBB Act's effects on funding and loan programs - Capella University (**67.88%**) and Strayer University (**89.64%**) derived significant portions of their cash-basis revenues from federal education assistance in fiscal year 2024, making them susceptible to changes in the 90/10 Rule[210](index=210&type=chunk) - The 2024 Title IX Rule, effective August 1, 2024 (except where enjoined), expands sex discrimination definitions and eliminates live hearings with cross-examination at the post-secondary level, with multiple states challenging its lawfulness[224](index=224&type=chunk)[225](index=225&type=chunk) - The OBBB, signed July 4, 2025, eliminates Federal Direct PLUS loans for graduate students effective July 2026, sets new annual and aggregate loan limits, and could affect borrowers' ability to repay, potentially increasing default rates[231](index=231&type=chunk)[251](index=251&type=chunk) - The 2022 Borrower Defense to Repayment (BDTR) Rule's effective date is delayed until July 1, 2035, by the OBBB, reinstating the 2019 version[241](index=241&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - New gainful employment regulations, effective July 1, 2024, and OBBB's accountability framework, effective July 2026, establish metrics (debt-to-earnings ratio, earnings premium test) that programs must pass to maintain Title IV eligibility, potentially increasing administrative burdens and affecting enrollment[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) - OBBB also creates Workforce Pell Grants and makes changes to Pell Grant eligibility, which could impact students' ability to fund their education and thus affect enrollment and financial results[252](index=252&type=chunk)[253](index=253&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended June 30, 2025, the company repurchased **325,844** shares of common stock for **$28.0 million**, with **$168.5 million** remaining authorized for repurchases through December 31, 2025 | Period | Total shares purchased | Average price paid per share | | :---------------------- | :--------------------- | :--------------------------- | | April 1 to April 30, 2025 | 119,794 | $82.45 | | May 1 to May 31, 2025 | 136,262 | $87.82 | | June 1 to June 30, 2025 | 69,788 | $88.32 | | Total | 325,844 | $85.95 | - As of June 30, 2025, **$168.5 million** remained authorized for common stock repurchases through December 31, 2025[254](index=254&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[255](index=255&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, CEO and CFO certifications, and XBRL-related documents - Exhibits include Amended and Restated Articles of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and various Inline XBRL documents[257](index=257&type=chunk) [SIGNATURES](index=52&type=section&id=SIGNATURES) The report was duly signed on behalf of Strategic Education, Inc. by Daniel W. Jackson, Executive Vice President and Chief Financial Officer, on July 30, 2025 - The report was signed by Daniel W. Jackson, Executive Vice President and Chief Financial Officer, on July 30, 2025[261](index=261&type=chunk)

Financial Data and Key Metrics Changes - On a constant currency basis, revenue grew by 4% from the prior year, with disciplined expense management limiting operating expense growth to just 2%, resulting in operating income of $49 million, a 12% increase from the prior year [5] - Adjusted earnings per share increased by 16% to $1.54 compared to $1.33 from the prior year [6] - Operating margin increased by 110 basis points to 15.2% [5] Business Line Data and Key Metrics Changes - The Education Technology Services (ETS) division saw revenue and operating income both increase by 50% from the prior year to $37 million and $15 million respectively, with its share of operating income growing from 23% to 31% [6] - Sofia Learning, the direct-to-consumer portal, grew both average and total subscribers and revenue by 40% [7] - US higher education operating income increased by 5% from the prior year, with operating expenses decreasing by $2 million, or 1% [9] Market Data and Key Metrics Changes - Total enrollment in US higher education decreased by 1% from the prior year, but slightly higher revenue per student helped offset the decline, resulting in revenue being down by only 0.5% [7] - Employer affiliated enrollment increased by 8% from the prior year, now representing 32% of all US higher education enrollment [8] - In the Australia/New Zealand segment, total enrollment decreased by 3% from the prior year, but revenue increased slightly to $71 million [10] Company Strategy and Development Direction - The company is focusing on the Australian domestic market, where mid to high single-digit new student growth has been observed [10] - There is a plan to increase marketing investments in the domestic market in the back half of the year, which is expected to support growth in 2026 [19][39] - The company remains optimistic about the future growth of the Australia/New Zealand segment once international enrollment restrictions are lifted [10][37] Management's Comments on Operating Environment and Future Outlook - Management noted that the softness in new student enrollment is primarily at Strayer University, particularly among unaffiliated students, but expects enrollment to normalize in the mid-single-digit range over the long term [25] - The company does not expect any material adverse impact from the recent legislative changes, including the "one big beautiful bill" [21] - Management expressed confidence in the strong performance of the ETS division and its potential to contribute significantly to earnings [6][32] Other Important Information - The company repurchased approximately 325,000 shares during the quarter for a total of $28 million, with $169 million remaining on the share repurchase authorization [10] - The caps on employer-affiliated tuition assistance programs are expected to be a net positive for the company [40] Q&A Session Summary Question: Clarification on unaffiliated enrollment decline - Management indicated that the decline in unaffiliated enrollment is primarily at Strayer University and that the rate of decline was slightly better in the second quarter than in the first quarter [15] Question: Domestic vs. international enrollment split in ANZ - Management noted that the split between domestic and international enrollment has shifted towards more domestic due to regulatory restrictions on international students [19] Question: Legislative and regulatory impacts on higher education - Management stated that they do not expect any material adverse impact from the "one big beautiful bill" and are still digesting its components [21] Question: Weakness at Strayer and leading indicators - Management acknowledged pressure on unaffiliated undergraduate students at Strayer but expects enrollment to normalize over the long term [25] Question: Update on large employer partnerships - Management reported strong revenue growth from a large employer partnership and indicated that onboarding is progressing well [32]

Core Insights - Strategic Education (STRA) reported revenue of $321.47 million for the quarter ended June 2025, marking a year-over-year increase of 3% and an EPS of $1.52 compared to $1.33 a year ago, indicating a positive trend in earnings [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $323.39 million, resulting in a revenue surprise of -0.59%, while the EPS exceeded the consensus estimate of $1.42, leading to an EPS surprise of +7.04% [1] Revenue Breakdown - Revenue from Australia/New Zealand was $71.13 million, slightly below the two-analyst average estimate of $72.44 million, with no year-over-year change [4] - Revenue from Education Technology Services was reported at $24.52 million, significantly lower than the two-analyst average estimate of $35.2 million, also showing no year-over-year change [4] - The U.S. Higher Education Segment generated $216.61 million, surpassing the average estimate of $215.46 million based on two analysts, with no year-over-year change [4] Stock Performance - Over the past month, shares of Strategic Education have returned -7.7%, contrasting with the Zacks S&P 500 composite's +3.4% change, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3]

Statements Under the Private Securities Litigation Reform Act of 1995 INVESTOR PRESENTATION JULY 2025 Forward-looking statements Statements in this presentation are "forward-looking statements" under the federal securities laws. 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 wi ...