Strategic Education(STRA)2023-04-27 20:54Financial Data and Key Metrics - Revenue in U.S. Higher Education increased by just over 0.5% to 197 million, with revenue per student decreasing slightly due to strong employer-affiliated enrollments [2] - Education, Technology & Services (ETS) division saw a 25% increase in revenue and a 23% increase in operating income, though operating margin contracted slightly to 31.8% from 32.3% [3] - Restructuring costs in the quarter were 5.6 million, primarily due to lease impairment charges [22] Business Line Data and Key Metrics - U.S. Higher Education division grew total enrollment by 2.3%, with employer-affiliated enrollments growing 13% at Capella, 25% at Strayer, and 17% across all U.S. higher education [2] - Sophia total paid subscribers grew 24%, and Sophia revenue increased 36% [3] - SEI enrollments from Workforce Edge increased 230% to 986 enrollments [3] Market Data and Key Metrics - Revenue in Australia and New Zealand decreased by 8% on a constant currency basis due to adjustments in the academic calendar at Torrens University [4] - Enrollment in Australia and New Zealand was down 6.3%, with revenues down 14% (8% on constant currency) [26] Company Strategy and Industry Competition - The company continues to invest in Sophia and Workforce Edge, which are driving growth in the ETS division [3] - The company expects the Australian government's decision to require students on active visas to attend classes full-time by June to be a positive catalyst for ANZ enrollment in the second half of the year [21] Management Commentary on Operating Environment and Future Outlook - The company expects revenue to grow mid-single digits for the full year, with expenses increasing no more than 3% [7] - The company is optimistic about the second half of the year in Australia, as it will be the first fully normalized period for international student immigration since the pandemic [4] Other Important Information - The company announced an Investor Day to be held on November 7 at the Palace Hotel in New York City [5] - The company does not expect to be impacted by regulatory changes related to online program management companies (OPMs) [33] Q&A Session Summary Question: Guidance for 2023 revenues and enrollments - The company expects revenue to grow mid-single digits, with expenses increasing no more than 3% [7] Question: U.S. higher education enrollment trends by program type - FlexPath at Capella continues to be a major source of growth, while Strayer's growth is predominantly at the undergraduate level [8] Question: Enrollment trends in Australia and New Zealand - The company expects the bulk of revenue from ANZ to hit in the back half of the year, particularly in the fourth quarter [20] Question: Impact of restructuring costs - The $5.6 million restructuring costs were in line with expectations, primarily due to lease impairment charges [22] Question: Exposure to VA and TA at Strayer and Capella - The company has more exposure to VA at Strayer than at Capella but does not expect any compliance-related issues on 90-10 [35] Question: Regulatory changes related to OPMs - The company does not work with OPMs and does not expect to be impacted by any regulatory changes [33]