Strategic Education(US:STRA)2023-11-02 20:20Enrollment and Student Persistence - In Q3 2023, USHE enrollment increased by 9.9% to 82,548 compared to 75,144 in Q3 2022[148] - Trailing 4-quarter student persistence within USHE remained stable at 87.3% for Q2 2023, unchanged from the same period in 2022[148] - Employer-affiliated enrollment as a percentage of USHE enrollment rose to 27.8% in Q3 2023, up from 25.3% in Q3 2022[149] - Total enrollment in the USHE segment increased by 9.9% to 82,548 in Q3 2023, up from 75,144 in Q3 2022[168] Revenue and Income - Revenue for Q3 2023 was $285.9 million, an increase of 8.8% from $263.1 million in Q3 2022, driven by enrollment growth in the USHE segment and growth in Sophia Learning subscriptions[166] - Net income for Q3 2023 rose to $18.5 million, compared to $6.1 million in Q3 2022, with diluted earnings per share increasing to $0.77 from $0.25[175] - For the nine months ended September 30, 2023, revenue increased to $830.2 million, up from $795.5 million in the same period in 2022, primarily due to USHE enrollment growth[176] - Net income increased to $30.7 million in the nine months ended September 30, 2023, compared to $28.3 million in the same period in 2022[186] - Diluted earnings per share increased to $2.03 for the nine months ended September 30, 2023, compared to $1.73 for the same period in 2022[192] Segment Performance - USHE segment revenue increased by 8.8% to $201.8 million in Q3 2023, compared to $185.5 million in Q3 2022, primarily due to increased enrollment[168] - Education Technology Services segment revenue grew by 26.7% to $20.8 million in Q3 2023, compared to $16.4 million in Q3 2022, driven by growth in Sophia Learning subscriptions[168] - USHE segment income from operations increased by 5.3% to $26.7 million in the nine months ended September 30, 2023, compared to $25.4 million in the same period in 2022[183] - Education Technology Services segment income from operations increased by 33.1% to $20.3 million in the nine months ended September 30, 2023, compared to $15.2 million in the same period in 2022[183] Costs and Expenses - Consolidated instructional and support costs as a percentage of revenues decreased to 54.5% in Q3 2023 from 58.2% in Q3 2022[169] - Consolidated general and administration expenses decreased to $97.6 million in Q3 2023 from $97.8 million in Q3 2022, with expenses as a percentage of revenues decreasing to 34.1% from 37.2%[170] - Restructuring costs increased to $15.2 million in the nine months ended September 30, 2023, compared to $6.1 million in the same period in 2022[182] - Consolidated income from operations decreased to $41.1 million in the nine months ended September 30, 2023, from $43.1 million in the same period in 2022, primarily due to higher restructuring costs[183] Cash Flow and Financial Position - Cash, cash equivalents, and marketable securities decreased to $198.6 million as of September 30, 2023, from $288.8 million a year earlier[200] - Net cash provided by operating activities decreased to $87.2 million for the nine months ended September 30, 2023, compared to $124.7 million for the same period in 2022[202] - Net cash used in investing activities increased to $30.5 million for the nine months ended September 30, 2023, primarily due to $16.9 million in purchases of marketable securities[203] - The company declared a quarterly cash dividend of $0.60 per share, totaling $44.1 million in cash dividends paid during the nine months ended September 30, 2023[206] Compliance and Strategic Initiatives - The company continues to invest in strategies to provide affordable education and support student success, aiming for long-term growth[151] - The acquisition of Torrens University and associated assets in Australia and New Zealand is part of the company's growth strategy, although risks remain regarding the realization of benefits[141] - The Education Technology Services segment is crucial for driving enrollment and revenue through employer partnerships[149] - The company emphasizes the importance of compliance with federal regulations and accreditation standards in its operations[141] Foreign Currency and Other Financial Impacts - A hypothetical 10% adverse change in foreign currency exchange rates would have decreased consolidated revenues by approximately $17.0 million for the nine months ended September 30, 2023[211] - Bad debt expense for Q3 2023 was 5.2% of revenue, up from 4.5% in Q3 2022[162] - Bad debt expense as a percentage of revenue increased to 5.2% for the third quarter of 2023, compared to 4.5% in the same quarter of 2022[207] - The company paid $5.4 million in interest and unused commitment fees related to its Revolving Credit Facility during the nine months ended September 30, 2023[201]