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Strategic Education (STRA) Q2 EPS Up 16%
The Motley Fool· 2025-07-31 04:29
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]
Is Stride Making a Long-Term Bet on Career-Driven High Schools?
ZACKS· 2025-06-18 13:35
Core Insights - Stride, Inc.'s career-learning programs are experiencing high demand due to a favorable market where parents prefer career-focused alternatives to traditional K-12 education [1][2] - The company is expanding its career learning and adult certification programs, targeting middle and high school students in high-demand industries such as information technology, healthcare, and general business [2][3] - The Career Learning segment contributed 39.8% to total revenues in the first nine months of fiscal 2025, with revenues growing 23.7% year over year to $697.1 million [3][9] - Enrollment in the Career Learning segment increased by 32% year over year, indicating strong market fundamentals and a positive long-term outlook [3][4] Industry Context - Other education firms like Adtalem Global Education Inc. and Strategic Education, Inc. are also benefiting from the increased demand for career professionals in various industries [5] - Adtalem has seen growth in its nursing programs, driven by strong demand for healthcare education [6] - Strategic Education offers innovative solutions to meet the evolving needs of students and employers, focusing on flexibility and career readiness [7] Financial Performance - Stride's stock has increased by 38.9% year-to-date, outperforming the Zacks Schools industry and the S&P 500 index [8][9] - The stock is currently trading at a forward P/E ratio of 18.68X, indicating a premium valuation compared to industry peers [11] - Earnings estimates for fiscal 2025 and 2026 have increased by 6.3% and 6.2%, respectively, suggesting strong growth potential [12]