STRA Q1 2026 Earnings Transcript

Motley Fool Transcribing, The Motley Fool

Thu, April 23, 2026 astatine 9:59 AM CDT 16 min read

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Thursday, April 23, 2026 astatine 10 a.m. ET

• Chief Executive Officer — Karl McDonnell

• Chief Financial Officer — Daniel Jackson

Karl McDonnell: Thank you, Terese, and bully morning, everyone. Our archetypal 4th results bespeak meaningful advancement crossed 3 of our superior strategical objectives: the continued concern and maturation of our Education Technology Services division, increasing our employer-focused strategy, and further implementing our AI and different productivity-enabling systems. For the archetypal quarter, Strategic Education, Inc. gross declined 1% year-over-year driven by a flimsy alteration successful consolidated enrollment. Based connected our existent enrollment trends, we expect that the archetypal 4th volition beryllium the debased constituent of the twelvemonth successful some implicit gross and gross growth. Our productivity initiatives drove a 2% simplification successful adjusted operating expenses, resulting successful 3% operating income maturation and flimsy borderline enlargement to 14.3%.

Adjusted net per stock came successful astatine $1.41. Turning present to our segments. Education Technology Services grew gross 21% to $42 cardinal driven by Sophia Learning subscriptions, higher employer-affiliated enrollment, and caller Workforce Edge partnerships. Even with a 7% summation successful expenses arsenic we proceed to put successful the ETS business, ETS operating income grew 42% to $20 cardinal and a 47% margin. ETS present represents 46% of consolidated operating income. Within ETS, Sophia Learning grew mean full subscribers by 40% and gross by 32% with beardown maturation successful some user and employer-affiliated subscribers.

Workforce Edge ended the 4th with 82 firm agreements covering 4 cardinal employees, and enrollments from Workforce Edge into either Strayer oregon Capella grew 70% reaching astir 4 1000 students. As you know, expanding this web of firm partners continues to beryllium among our astir important strategical absorption areas. Moving to U.S. Higher Education, employer-affiliated enrollment grew 10% and reached a caller all-time precocious of 34.5% of full U.S. Higher Education enrollment, an summation of much than 300 ground points from the anterior year. Healthcare, which is simply a cardinal constituent of our leader strategy, besides grew 10%, and healthcare enrollment present represents much than fractional of each U.S. Higher Education enrollment. U.S.

Higher Education gross declined 4% successful the quarter, reflecting a flimsy diminution successful unaffiliated enrollment on with somewhat higher discounts and scholarships, which unneurotic lowered gross per student. Our productivity initiatives proceed to alteration effectual outgo power with operating expenses down 2%. The conception delivered $26 cardinal of operating income and a 12% margin. U.S. Higher Education besides acceptable a caller grounds for mean pupil retention astatine 89%. Turning present to Australia and New Zealand. Total enrollment declined 3% successful the quarter. Regulatory constraints connected planetary enrollment proceed to beryllium a headwind and are lone partially offset by continued home caller pupil growth.