Strategic Education, Inc. Q3 FY2024 earnings call

• SEI's revenue grew 6% to $304M, operating income 13% to $37M, operating margin 12.1%. Adjusted EPS $1.15, up 19%. - U.S. Higher Education: Growth driven by employer-affiliated enrollment (up 13%), corporate partnerships now 30% of enrollment, retention 87%. - Australia and New Zealand: Enrollment up 5%, revenue up 11% constant currency, studying international student caps. - Education Technology Services: Strong growth, Sophia Learning revenue up 35%, Workforce Edge signed 4 new partnerships. - Capital allocation: Paid down $60M debt from Australian assets, repurchased $5M of stock, $235M repurchase authorization remaining.

SEI's revenue grew 6% to $304 million in Q3 2024. U.S. Higher Education: Revenue grew 3%, operating income up 10%. Total enrollment grew 5%, employer-affiliated enrollment up 13%, corporate partnerships now 30% of enrollment. Australia and New Zealand: Total enrollment up 5% to over 19,000 students. Revenue grew 11% constant currency, operating income up 5% constant currency. Studying proposed international student caps in Australia. Education Technology Services: Revenue grew 26%, operating income 30%. Sophia Learning revenue up 35%, 49% operating margin. Workforce Edge signed 4 new partnerships, employees on platform over 3.7 million, enrollments up 27%.

• U.S. higher education seen as mid-single-digit growth. - Australia and New Zealand focused on domestic growth while studying caps. - Expense investments in ETS and Australia marketing, operating margin likely at higher end of 150-175 basis points. - Revenue per student in U.S. higher ed expected roughly stable, but mix shift to employer could slightly lower.

• Potential impact of proposed international student caps in Australia if legislated. - Uncertainty around cap allocation and transferability among Australian universities.

Q: Enrollment growth slowdown explanation?

A: U.S. higher ed is mid-single-digit growth, not abnormal.

Q: Australia international caps details?

A: Proposed limit to ~270k, pre-COVID half that, not legislated yet.

Q: Workforce Edge new client?

A: Large company switching from another vendor.

Q: Expense margin guidance?

A: Likely higher end of 150-175 basis points.

Q: Australia cap impact on Torrens?

A: Unclear, but domestic growth possible.

Q: Debt paydown and repurchase?

A: Board evaluates capital deployment, repurchase when shares undervalued.

Q: U.S. higher ed revenue per student decline?

A: Mix shift to employer, planning stable but possible slight downside.