Strategic Education(US:STRA)2025-11-06 16:00Financial Data and Key Metrics Changes - On an adjusted constant currency basis, revenue rose 5% from the previous year, with adjusted earnings increasing by 41% to $1.64 compared to $1.16 from the prior year [5][6] - Operating income grew by 39%, and operating expenses increased by less than 1%, resulting in a 400 basis point margin expansion [5][6] Business Line Data and Key Metrics Changes - The Education Technology Services division saw revenue and operating income increase by 46% and 48% year-over-year, reaching $38 million and $16 million, respectively [6] - U.S. higher education revenue grew by 3% from the prior year, driven by higher revenue per student despite a slight decrease in total enrollment [7][9] - The Australia and New Zealand segment experienced a 2% decrease in revenue to $70 million, with operating income declining from $15 million to $13 million [10] Market Data and Key Metrics Changes - Employer-affiliated enrollment in U.S. higher education increased approximately 8% from the prior year, now representing 33% of all U.S. higher education enrollment [7] - The healthcare portfolio within U.S. higher education generated strong total enrollment growth of 7% from the prior year, representing half of all U.S. higher education enrollments [7][8] Company Strategy and Development Direction - The company is focused on leveraging technology to enhance productivity, with an expectation to save upwards of $100 million in operating expenses by the end of 2027 [15][16] - The strategy includes a strong emphasis on employer partnerships and direct-to-consumer offerings, particularly through the Sofia Learning platform [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about new student growth in Australia and New Zealand in 2026, anticipating a return to total enrollment growth by the end of that year [19][27] - The company remains confident in achieving its long-term financial targets, with no current indicators suggesting a deviation from the outlined notional model [20] Other Important Information - The company repurchased approximately 429,000 shares for a total of $34 million during the quarter, with $134 million remaining on its share repurchase authorization [10] Q&A Session Summary Question: What drove the healthy revenue per student gain in the quarter? - Management indicated that lower drop rates and higher course enrollments per student contributed to the revenue per student increase, with expectations for continued benefits [14] Question: Can you provide details on the expense reductions in the U.S.? - Management noted an aggressive productivity initiative aimed at reducing operating expenses, with a run rate of approximately $30 million in reductions already achieved [15][16] Question: How are Strayer and Capella performing relative to each other? - Capella has shown stronger growth, while Strayer has faced challenges primarily due to a reduction in non-affiliated students [18] Question: What is the outlook for the Australia and New Zealand segment? - Management expects new student growth in 2026, with hopes for total enrollment growth by the end of that year [19][27] Question: What is the exposure to military and veteran students amid the government shutdown? - Management stated that there has been no significant impact observed, as the company has very few direct military students [30][31]