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Core Viewpoint - The article compares Strategic Education (STRA) and Universal Technical Institute (UTI) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Analyst Outlook - STRA has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while UTI has a Zacks Rank of 3 (Hold) [3] - STRA's improving analyst outlook suggests a more favorable investment opportunity compared to UTI [3] Group 2: Valuation Metrics - STRA has a forward P/E ratio of 15.09, significantly lower than UTI's forward P/E of 32.64 [5] - STRA's PEG ratio is 1.01, while UTI's PEG ratio is 2.18, indicating STRA is more reasonably priced relative to its expected earnings growth [5] - STRA's P/B ratio is 1.26, compared to UTI's P/B of 6.39, further highlighting STRA's valuation advantage [6] Group 3: Value Grades - STRA has a Value grade of A, while UTI has a Value grade of C, reflecting STRA's superior valuation metrics and earnings outlook [6]

Strategic Education, Inc. (STRA) , or SEI, reported impressive results for the first quarter of 2025. Its adjusted earnings and revenues topped the Zacks Consensus Estimate. On a year-over-year basis, both the top and bottom lines increased.The quarter witnessed robust employer-affiliated enrollment, strong growth from Sophia Learning subscriptions and continued enrollment growth in the U.S. Higher Education (“USHE”) segment.Inside STRA’s HeadlinesThe company reported adjusted earnings per share (EPS) of $1 ...

Enrollment and Retention - In Q1 2025, USHE enrollment increased to 87,854 compared to 87,731 in Q1 2024, reflecting a growth in student numbers [127]. - Trailing 4-quarter student persistence within USHE was 87.2% in Q4 2024, up from 87.0% in Q4 2023, indicating improved retention rates [127]. - Employer-affiliated enrollment as a percentage of USHE enrollment rose to 31.2% in Q1 2025 from 29.2% in Q1 2024, highlighting the effectiveness of employer partnerships [128]. - Total enrollment in the USHE segment increased to 87,854 in Q1 2025, up from 87,731 in Q1 2024, while enrollment in the Australia/New Zealand segment decreased to 20,082 from 20,197 [146]. Financial Performance - Revenue for Q1 2025 was $303.6 million, up from $290.3 million in Q1 2024, representing an increase of 4.5% [145]. - Adjusted income from operations for Q1 2025 was $41.7 million, up from $35.8 million in Q1 2024, representing a 10.9% increase [160]. - Adjusted net income for Q1 2025 was $31.2 million, compared to $26.7 million in Q1 2024, reflecting a 16.8% growth [160]. - Revenues for Q1 2025 were $303.6 million, an increase from $290.3 million in Q1 2024, marking a 4.4% rise [160]. - Operating margin improved to 13.7% in Q1 2025 from 12.4% in Q1 2024 [160]. Costs and Expenses - Income from operations decreased to $39.8 million in Q1 2025 from $41.4 million in Q1 2024, primarily due to higher restructuring costs and operating expenses [152]. - Consolidated instructional and support costs increased to $158.3 million in Q1 2025, but as a percentage of revenues, it decreased to 52.1% from 54.3% in Q1 2024 [147][149]. - General and administration expenses rose to $103.6 million in Q1 2025, with the percentage of revenues increasing to 34.1% from 33.3% in Q1 2024 [150]. - Restructuring costs increased to $1.9 million in Q1 2025 compared to a net benefit of $5.5 million in Q1 2024, primarily due to increased severance and personnel-related expenses [151]. Cash Flow and Dividends - Cash, cash equivalents, and marketable securities totaled $197.6 million as of March 31, 2025, down from $253.6 million a year earlier [163]. - Net cash provided by operating activities decreased to $67.7 million in Q1 2025 from $77.6 million in Q1 2024, a decline of 12.8% [165]. - Net cash used in financing activities increased to $56.1 million in Q1 2025, compared to $18.4 million in Q1 2024, primarily due to $32.0 million in share repurchases [168]. - The Board of Directors declared a quarterly cash dividend of $0.60 per share, totaling $14.8 million in cash dividends paid in Q1 2025 [169]. Revenue Sources and Risks - Approximately 94% of revenues for the three months ended March 31, 2025, consisted of tuition revenue, underscoring the reliance on tuition as a primary revenue source [133]. - Revenues from foreign currencies accounted for 15.9% of consolidated revenues in Q1 2025, exposing the company to foreign currency risk [174]. Education Technology and Programs - The USHE segment provides flexible and affordable programs primarily through Capella University and Strayer University, catering to working adults [127]. - Torrens University offers a range of undergraduate and graduate programs in Australia, focusing on high-demand fields such as business and health [126]. - The Education Technology Services segment is crucial for driving enrollment through employer relationships, which significantly contribute to revenue [128]. - Education Technology Services segment revenue surged by 45.2% to $34.3 million in Q1 2025, driven by new employer partnerships and growth in Sophia Learning subscriptions [146]. Tax and Bad Debt - The effective tax rate for Q1 2025 was 29.2%, down from 31.2% in Q1 2024, with income tax expense decreasing to $12.3 million from $13.4 million [154]. - Bad debt expense was 4.2% of revenue in both Q1 2025 and Q1 2024, with a potential $1.4 million impact on income from operations for a 1% change in the allowance for credit losses [142]. - Bad debt expense as a percentage of revenue remained consistent at 4.2% for both Q1 2025 and Q1 2024 [170].

Financial Data and Key Metrics Changes - Strategic Education, Inc. reported a revenue growth of 5% in Q1 2025, with adjusted operating income increasing by 16% [5] - The operating margin improved to 13.6%, and adjusted earnings per share rose by 16% to $1.29, compared to $1.11 in Q1 2024 [5] Business Line Data and Key Metrics Changes - U.S. higher education revenue grew by 1%, with operating income increasing by 7% year-over-year [7] - The education technology services (ETS) segment saw a significant revenue growth of 45% and operating income increased by 37%, driven by higher employer-affiliated enrollment and new partnerships [11] - In Australia and New Zealand (ANZ), total enrollment decreased by 1%, but revenue increased by 6% on a constant currency basis, primarily due to pricing [8] Market Data and Key Metrics Changes - Total enrollment in U.S. higher education slightly increased, with employer-affiliated enrollment rising by 7% [6] - In ANZ, international enrollment declined due to regulatory changes, while domestic enrollment grew as part of the strategy to focus on the domestic market [8][31] Company Strategy and Development Direction - The company is focusing on strengthening corporate partnerships and deepening relationships in Workforce Edge to drive future growth [20] - There is a strategic shift towards increasing domestic enrollment in Australia, with enhanced marketing efforts [31] Management's Comments on Operating Environment and Future Outlook - Management noted that the flat enrollment growth in the U.S. is part of normal cyclicality and expects normalization to mid-single digit growth [18] - The company remains confident in achieving its long-term performance goals, including adjusted operating margin expansion in 2025 [40] Other Important Information - The company repurchased approximately 390,000 shares for a total of $32 million during the quarter, with $197 million remaining in share repurchase authorization [13] Q&A Session Summary Question: Concerns about U.S. higher education enrollment growth - Management indicated that the flat growth is part of normal cyclicality and expects mid-single digit growth to return [18][20] Question: Drivers behind strong EPS performance - The strength in Sofia Learning and Workforce Edge partnerships contributed to the solid EPS performance [22][23] Question: International enrollment decline in ANZ - Management explained that new regulations have made it harder for transfer students to enroll, impacting international enrollment [34] Question: Adjusted operating expenses and spending levels - Management confirmed that spending plans remain on track, with some timing differences in headcount affecting Q1 results [37] Question: Domestic versus international enrollment mix in ANZ - Management noted a shift towards more domestic enrollment, with historical trends showing a 50/50 split [45][46] Question: Update on large employer partner launch - The launch has been well-received, with demand running ahead of internal models [49][51]

Company Overview - Strategic Education Inc (SEI) is a global leader in digital education with a broad portfolio[4,10] - The company is headquartered in Herndon, VA, with a significant presence in Minneapolis, MN, Australia, and New Zealand[12] - Total enrollment is 108,685 students, with 88,860 in the USHE segment and 19,825 in the ANZ segment[12] - Annual revenue is $1.2 billion, broken down as USHE: $858 million, ANZ: $258 million, and ETS: $105 million[13] - The company has a strong balance sheet with $199 million in cash, cash equivalents, and marketable securities as of December 31, 2024, and distributable free cash flow of $129 million for the year[14] Q1 2025 Financial Highlights (Constant Currency) - Adjusted revenue increased by 5.3% to $305.7 million[17] - US Higher Education revenue increased by 0.8% to $221.0 million[17] - Education Technology Services revenue increased by 45.2% to $34.3 million[17] - Australia/New Zealand revenue increased by 6.4% to $50.4 million[17] - Adjusted operating income increased by 16.0% to $41.6 million[17] - US Higher Education operating income increased by 6.9% to $30.0 million[17] - Education Technology Services operating income increased by 37.3% to $13.8 million[17] - Adjusted net income increased by 16.6% to $31.1 million[17] - Adjusted diluted earnings per share increased by 16.2% to $1.29[17] Q1 2025 Financial Highlights (Current Currency) - Adjusted revenue increased by 4.6% to $303.6 million[18] - US Higher Education revenue increased by 0.8% to $221.0 million[18] - Education Technology Services revenue increased by 45.2% to $34.3 million[18] - Australia/New Zealand revenue increased by 1.9% to $48.3 million[18] - Adjusted operating income increased by 16.4% to $41.7 million[18] - US Higher Education operating income increased by 6.9% to $30.0 million[18] - Education Technology Services operating income increased by 37.3% to $13.8 million[18] - Adjusted net income increased by 16.9% to $31.2 million[18] - Adjusted diluted earnings per share increased by 17.1% to $1.30[18]

Financial Data and Key Metrics Changes - SEI's revenue grew by 5% in Q1 2025, with adjusted operating income increasing by 16% [4] - Operating margin increased to 13.6%, and adjusted earnings per share grew 16% to $1.29 compared to $1.11 in Q1 2024 [5] Business Line Data and Key Metrics Changes - Total enrollment in U.S. Higher Education slightly increased, driven by a 7% rise in employer-affiliated enrollment, offset by lower unaffiliated enrollment [5] - U.S. Higher Education revenue grew by 1%, and operating income increased by 7% from the previous year [6] - ANZ total enrollment decreased by 1%, primarily due to lower international enrollment related to regulatory changes [6] - ANZ revenue increased by 6% on a constant currency basis, driven by pricing, despite reporting an operating loss of $2.2 million [7][8] - Education Technology Services (ETS) segment revenue grew by 45%, with operating income increasing by 37% [9] Market Data and Key Metrics Changes - The percentage of total U.S. higher education enrollment from corporate partnerships reached 31%, an increase of 200 basis points from the prior year [6] - Enrollments in Workforce Edge increased nearly 50%, reaching approximately 2,300 students [10] Company Strategy and Development Direction - The company is focusing on expanding corporate partnerships and deepening relationships in Workforce Edge to drive future growth [15] - There is a strategic shift towards increasing domestic enrollment in Australia and New Zealand [25] Management Comments on Operating Environment and Future Outlook - Management noted that the enrollment slowdown is part of normal cyclicality, with expectations for mid-single-digit growth in the future [14] - Confidence was expressed regarding the performance in 2025 aligning with the notional model outlined at Investor Day [31] Other Important Information - The company repurchased approximately 390,000 shares for a total of $32 million during the quarter, with $197 million remaining in share repurchase authorization [10] Q&A Session Summary Question: U.S. Higher Education enrollment growth has slowed; any specific changes? - Management indicated no changes in marketing or advertising, attributing the slowdown to normal cyclicality [14] Question: What is driving the strong EPS numbers? - The strength in Sofia and increased marketing investments were highlighted as key drivers [17] Question: Comments on persistence rates? - Persistence rates were stable, with slight improvements noted [23] Question: Discussion on international enrollment and domestic growth in ANZ? - Management explained that regulatory changes impacted international enrollment, while domestic marketing efforts have been increased [25][27] Question: Adjusted operating expenses were up; any comments? - Management confirmed that spending plans remain on track, with some timing differences in headcount affecting the first quarter [29] Question: Confidence in revenue growth aligning with the notional model? - Management expressed confidence that revenue growth would align with the 4% to 6% target [39]

Strategic Education (STRA) came out with quarterly earnings of $1.30 per share, beating the Zacks Consensus Estimate of $1.01 per share. This compares to earnings of $1.11 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 28.71%. A quarter ago, it was expected that this for-profit education company would post earnings of $1.19 per share when it actually produced earnings of $1.27, delivering a surprise of 6.72%.Over the last fou ...

Exhibit 99.1 STRATEGIC EDUCATION, INC. REPORTS FIRST QUARTER 2025 RESULTS Three Months Ended March 31 U.S. Higher Education Segment Highlights Education Technology Services Segment Highlights • The Education Technology Services segment (ETS) is comprised primarily of Enterprise Partnerships, Sophia Learning, and Workforce Edge. 1 • Revenue increased 4.6% to $303.6 million compared to $290.3 million for the same period in 2024. Revenue on a constant currency basis, which is a non-GAAP financial measure, incr ...

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Strategic Education (STRA) . This company, which is in the Zacks Schools industry, shows potential for another earnings beat.This for-profit education company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 24.97%.For ...