STRA Strategic Education Inc

Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended December 31, 2024.

“During 2024, we delivered strong performance consistent with our notional operating model including enrollment, revenue, and earnings growth,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “We started 2025 positioned well to continue to deliver growth from the investments we've made across our diversified portfolio of education offerings.”

STRATEGIC EDUCATION CONSOLIDATED RESULTS

Year Ended December 31

• Revenue increased 7.7% to $1,219.9 million compared to $1,132.9 million in 2023. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 7.8% to $1,220.9 million in 2024 compared to $1,132.9 million in 2023. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
• Income from operations was $155.6 million or 12.8% of revenue, compared to $95.3 million or 8.4% of revenue in 2023. Adjusted income from operations, which is a non-GAAP financial measure, was $157.3 million in 2024 compared to $124.6 million in 2023. The adjusted operating income margin, which is a non-GAAP financial measure, was 12.9% compared to 11.0% in 2023.
• Net income was $112.7 million in 2024 compared to $69.8 million in 2023. Adjusted net income, which is a non-GAAP financial measure, was $117.7 million compared to $89.1 million in 2023.
• Adjusted EBITDA, which is a non-GAAP financial measure, was $233.8 million compared to $196.5 million in 2023.
• Diluted earnings per share was $4.67 compared to $2.91 in 2023. Adjusted diluted earnings per share, which is a non-GAAP financial measure, increased to $4.87 from $3.72 in 2023. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, was $4.87. Diluted weighted average shares outstanding increased to 24,140,000 from 23,956,000 in 2023.

Three Months Ended December 31

• Revenue increased 2.9% to $311.5 million compared to $302.7 million for the same period in 2023. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 2.7% to $310.8 million in the fourth quarter of 2024 compared to $302.7 million for the same period in 2023. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
• Income from operations was $36.0 million or 11.6% of revenue, compared to $54.2 million or 17.9% of revenue for the same period in 2023. Adjusted income from operations, which is a non-GAAP financial measure, was $40.4 million compared to $56.6 million for the same period in 2023. The adjusted operating income margin, which is a non-GAAP financial measure, was 13.0% compared to 18.7% for the same period in 2023.
• Net income was $25.3 million compared to $39.1 million for the same period in 2023. Adjusted net income, which is a non-GAAP financial measure, was $30.8 million compared to $40.4 million for the same period in 2023.
• Adjusted EBITDA, which is a non-GAAP financial measure, was $60.1 million compared to $74.4 million for the same period in 2023.
• Diluted earnings per share was $1.05 compared to $1.63 for the same period in 2023. Adjusted diluted earnings per share, which is a non-GAAP financial measure, decreased to $1.27 from $1.68 for the same period in 2023. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, was $1.26. Diluted weighted average shares outstanding increased to 24,149,000 from 23,968,000 for the same period in 2023.

U.S. Higher Education Segment Highlights

• The U.S. Higher Education segment (USHE) is comprised of Capella University and Strayer University.
• For the fourth quarter, student enrollment within USHE increased 3.0% to 88,860 compared to 86,233 for the same period in 2023. Full-year 2024 student enrollment within USHE increased 6.4% compared to 2023.
• For the fourth quarter, FlexPath enrollment was 24% of USHE enrollment compared to 21% for the same period in 2023.
• Revenue decreased 1.5% to $214.3 million in the fourth quarter of 2024 compared to $217.6 million for the same period in 2023, driven by lower revenue per student.
• Income from operations was $17.9 million in the fourth quarter of 2024 compared to $32.9 million for the same period in 2023. The operating income margin was 8.3% compared to 15.1% for the same period in 2023.

Education Technology Services Segment Highlights

• The Education Technology Services segment (ETS) is comprised primarily of Enterprise Partnerships, Sophia Learning, and Workforce Edge.
• For the fourth quarter, employer affiliated enrollment was 30.2% of USHE enrollment compared to 27.7% for the same period in 2023. Full-year 2024 employer affiliated enrollment was 29.6% of USHE enrollment compared to 27.2% in 2023.
• For the fourth quarter, average total subscribers at Sophia Learning increased approximately 29% from the same period in 2023.
• As of December 31, 2024, Workforce Edge had a total of 76 corporate agreements, collectively employing approximately 3,820,000 employees.
• Revenue increased 39.3% to $30.5 million in the fourth quarter of 2024 compared to $21.9 million for the same period in 2023, driven by growth in Sophia Learning subscriptions, employer affiliated enrollment, and revenue from a new Workforce Edge employer partnership.
• Income from operations was $11.8 million in the fourth quarter of 2024 compared to $8.8 million for the same period in 2023. The operating income margin was 38.8% compared to 40.3% for the same period in 2023.

Australia/New Zealand Segment Highlights

• The Australia/New Zealand segment (ANZ) is comprised of Torrens University, Think Education, and Media Design School.
• For the fourth quarter, student enrollment within ANZ increased 3.0% to 19,825 compared to 19,252 for the same period in 2023. Full-year 2024 student enrollment within ANZ increased 4.8% compared to 2023.
• Revenue increased 5.4% to $66.7 million in the fourth quarter of 2024 compared to $63.3 million for the same period in 2023, driven by higher fourth quarter enrollment and revenue per student. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 4.3% to $66.0 million in the fourth quarter of 2024 compared to $63.3 million for the same period in 2023, driven by higher fourth quarter enrollment and revenue per student.
• Income from operations was $10.7 million in the fourth quarter of 2024 compared to $14.9 million for the same period in 2023. The operating income margin was 16.1% compared to 23.5% for the same period in 2023. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $10.3 million in the fourth quarter of 2024 compared to $14.9 million for the same period in 2023. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 15.6% compared to 23.5% for the same period in 2023.

BALANCE SHEET AND CASH FLOW

At December 31, 2024, Strategic Education had cash, cash equivalents, and marketable securities of $199.0 million and no debt outstanding under its revolving credit facility. Cash provided by operations in 2024 was $169.3 million compared to $117.1 million in 2023. Capital expenditures for 2024 were $40.6 million compared to $36.9 million in 2023.

For the fourth quarter of 2024, consolidated bad debt expense as a percentage of revenue was 4.5% compared to 3.7% of revenue for the same period in 2023.

COMMON STOCK CASH DIVIDEND

Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on March 17, 2025 to shareholders of record as of March 10, 2025.

CONFERENCE CALL WITH MANAGEMENT

Strategic Education will host a conference call to discuss its fourth quarter 2024 results at 10:00 a.m. (ET) today. This call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section. To participate in the live call, investors should register here prior to the call to receive dial-in information and a PIN.

About Strategic Education, Inc.

Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We primarily serve working adult students globally through our core focus areas: 1) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs including the Jack Welch Management Institute at Strayer University, and non-degree web and mobile application development courses through Strayer University’s Hackbright Academy and Devmountain; 2) Education Technology Services, developing and maintaining relationships with employers to build education benefits programs providing employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses that are ACE-recommended for college credit; and 3) Australia/New Zealand, comprised of Torrens University, Think Education, and Media Design School that collectively offer certificate and degree programs in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce and find a path to bettering their lives.

Forward-Looking Statements

This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:

• the pace of student enrollment;
• Strategic Education’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements;
• legislation and other actions by the U.S. Congress, actions by the current administration, rulemaking and other action by the Department of Education or other governmental entities, including without limitation action related to borrower defense to repayment applications, gainful employment, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand;
• competitive factors;
• risks associated with the opening of new campuses;
• risks associated with the offering of new educational programs and adapting to other changes;
• risks associated with the acquisition of existing educational institutions, including Strategic Education’s acquisition of Torrens University and associated assets in Australia and New Zealand;
• the risk that the benefits of the acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected;
• the risk that the acquisition of Torrens University and associated assets in Australia and New Zealand may not advance Strategic Education’s business strategy and growth strategy;
• risks relating to the timing of regulatory approvals;
• Strategic Education’s ability to implement its growth strategy;
• the risk that the combined company may experience difficulty integrating employees or operations;
• risks associated with the ability of Strategic Education’s students to finance their education in a timely manner;
• general economic and market conditions; and
• additional factors described in Strategic Education’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Many of these risks, uncertainties and assumptions are beyond Strategic Education’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

2023

 

2024

 

2023

 

2024

Revenues

$

302,702

 

$

311,456

 

$

1,132,924

 

$

1,219,930

Costs and expenses:

 

 

 

 

 

 

 

Instructional and support costs

 

153,751

 

 

166,884

 

 

623,903

 

 

650,496

General and administration

 

92,377

 

 

104,145

 

 

384,443

 

 

412,158

Amortization of intangible assets

 

1,093

 

 

—

 

 

11,457

 

 

—

Merger and integration costs

 

209

 

 

—

 

 

1,544

 

 

—

Restructuring costs

 

1,048

 

 

4,405

 

 

16,256

 

 

1,648

Total costs and expenses

 

248,478

 

 

275,434

 

 

1,037,603

 

 

1,064,302

Income from operations

 

54,224

 

 

36,022

 

 

95,321

 

 

155,628

Other income

 

994

 

 

1,869

 

 

5,405

 

 

5,804

Income before income taxes

 

55,218

 

 

37,891

 

 

100,726

 

 

161,432

Provision for income taxes

 

16,089

 

 

12,555

 

 

30,935

 

 

48,748

Net income

$

39,129

 

$

25,336

 

$

69,791

 

$

112,684

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.67

 

$

1.08

 

$

2.98

 

$

4.81

Diluted

$

1.63

 

$

1.05

 

$

2.91

 

$

4.67

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

23,367

 

 

23,370

 

 

23,403

 

 

23,406

Diluted

 

23,968

 

 

24,149

 

 

23,956

 

 

24,140

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

December 31, 2023

 

December 31, 2024

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

168,481

 

 

$

137,074

 

Marketable securities

 

39,728

 

 

 

46,949

 

Tuition receivable, net

 

76,102

 

 

 

76,127

 

Other current assets

 

44,758

 

 

 

44,793

 

Total current assets

 

329,069

 

 

 

304,943

 

Property and equipment, net

 

118,529

 

 

 

111,247

 

Right-of-use lease assets

 

119,202

 

 

 

103,673

 

Marketable securities, non-current

 

483

 

 

 

14,981

 

Intangible assets, net

 

251,623

 

 

 

245,098

 

Goodwill

 

1,251,888

 

 

 

1,206,883

 

Other assets

 

54,419

 

 

 

62,910

 

Total assets

$

2,125,213

 

 

$

2,049,735

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

90,888

 

 

$

101,749

 

Income taxes payable

 

2,200

 

 

 

2,926

 

Contract liabilities

 

92,341

 

 

 

89,563

 

Lease liabilities

 

24,190

 

 

 

22,222

 

Total current liabilities

 

209,619

 

 

 

216,460

 

Long-term debt

 

61,400

 

 

 

—

 

Deferred income tax liabilities

 

28,338

 

 

 

27,586

 

Lease liabilities, non-current

 

127,735

 

 

 

103,004

 

Other long-term liabilities

 

45,603

 

 

 

40,186

 

Total liabilities

 

472,695

 

 

 

387,236

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock, par value $0.01; 32,000,000 shares authorized; 24,406,816 and 24,502,385 shares issued and outstanding at December 31, 2023 and December 31, 2024, respectively

 

244

 

 

 

245

 

Additional paid-in capital

 

1,517,650

 

 

 

1,532,414

 

Accumulated other comprehensive loss

 

(34,247

)

 

 

(88,565

)

Retained earnings

 

168,871

 

 

 

218,405

 

Total stockholders’ equity

 

1,652,518

 

 

 

1,662,499

 

Total liabilities and stockholders’ equity

$

2,125,213

 

 

$

2,049,735

 

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

For the year ended December 31,

 

 

2023

 

 

 

2024

 

Cash flows from operating activities:

 

 

 

Net income

$

69,791

 

 

$

112,684

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Gain on sale of property and equipment

 

(2,136

)

 

 

—

 

Gain on early termination of operating leases, net

 

(141

)

 

 

(6,166

)

Amortization of deferred financing costs

 

557

 

 

 

674

 

Amortization of investment discount/premium

 

(65

)

 

 

(290

)

Depreciation and amortization

 

57,313

 

 

 

44,378

 

Deferred income taxes

 

(6,322

)

 

 

(150

)

Stock-based compensation

 

19,772

 

 

 

25,571

 

Impairment of right-of-use lease assets

 

5,135

 

 

 

677

 

Changes in assets and liabilities:

 

 

 

Tuition receivable, net

 

(12,874

)

 

 

221

 

Other assets

 

(7,631

)

 

 

(11,622

)

Accounts payable and accrued expenses

 

552

 

 

 

11,577

 

Income taxes payable and income taxes receivable

 

(4,688

)

 

 

1,067

 

Contract liabilities

 

4,495

 

 

 

(2,948

)

Other liabilities

 

(6,639

)

 

 

(6,342

)

Net cash provided by operating activities

 

117,119

 

 

 

169,331

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(36,943

)

 

 

(40,580

)

Purchases of marketable securities

 

(26,905

)

 

 

(54,117

)

Proceeds from marketable securities

 

9,800

 

 

 

31,025

 

Proceeds from sale of property and equipment

 

5,890

 

 

 

—

 

Proceeds from other investments

 

457

 

 

 

20

 

Other investments

 

(314

)

 

 

(531

)

Cash paid for acquisition, net of cash acquired

 

(530

)

 

 

(177

)

Net cash used in investing activities

 

(48,545

)

 

 

(64,360

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Common dividends paid

 

(58,780

)

 

 

(58,971

)

Payments on long-term debt

 

(40,000

)

 

 

(61,275

)

Net payments for stock awards

 

(4,828

)

 

 

(3,318

)

Payments of deferred financing costs

 

—

 

 

 

(1,698

)

Repurchase of common stock

 

(9,999

)

 

 

(11,510

)

Net cash used in financing activities

 

(113,607

)

 

 

(136,772

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(496

)

 

 

(3,468

)

Net decrease in cash, cash equivalents, and restricted cash

 

(45,529

)

 

 

(35,269

)

Cash, cash equivalents, and restricted cash — beginning of period

 

227,454

 

 

 

181,925

 

Cash, cash equivalents, and restricted cash — end of period

$

181,925

 

 

$

146,656

 

STRATEGIC EDUCATION, INC.

UNAUDITED SEGMENT REPORTING

(in thousands)

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

Revenues:

 

 

 

 

 

 

 

U.S. Higher Education

$

217,551

 

 

$

214,332

 

 

$

818,953

 

 

$

857,890

 

Australia/New Zealand

 

63,279

 

 

 

66,666

 

 

 

233,518

 

 

 

257,119

 

Education Technology Services

 

21,872

 

 

 

30,458

 

 

 

80,453

 

 

 

104,921

 

Consolidated revenues

$

302,702

 

 

$

311,456

 

 

$

1,132,924

 

 

$

1,219,930

 

Income from operations:

 

 

 

 

 

 

 

U.S. Higher Education

$

32,886

 

 

$

17,881

 

 

$

59,628

 

 

$

77,165

 

Australia/New Zealand

 

14,878

 

 

 

10,743

 

 

 

35,862

 

 

 

37,394

 

Education Technology Services

 

8,810

 

 

 

11,803

 

 

 

29,088

 

 

 

42,717

 

Amortization of intangible assets

 

(1,093

)

 

 

—

 

 

 

(11,457

)

 

 

—

 

Merger and integration costs

 

(209

)

 

 

—

 

 

 

(1,544

)

 

 

—

 

Restructuring costs

 

(1,048

)

 

 

(4,405

)

 

 

(16,256

)

 

 

(1,648

)

Consolidated income from operations

$

54,224

 

 

$

36,022

 

 

$

95,321

 

 

$

155,628

 

Non-GAAP Financial Measures

In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, total costs and expenses, income from operations, operating margin, income before income taxes, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company’s ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company’s results of operations period-over-period. These measures are Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA and Adjusted Diluted Earnings Per Share (EPS). We define Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) amortization and depreciation expense related to intangible assets and software assets associated with the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (2) integration expenses associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (3) severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities, (4) income/loss recognized from the Company’s investments in partnership interests and other investments, and (5) discrete tax adjustments utilizing adjusted effective income tax rates of 30.0% and 27.5% for the three months ended December 31, 2023 and 2024, respectively, and adjusted effective income tax rates of 30.0% and 29.0% for the twelve months ended December 31, 2023 and 2024, respectively. To illustrate currency impacts to operating results, Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS for the three and twelve months ended December 31, 2024 are also presented on a constant currency basis utilizing an exchange rate of 0.65 and 0.66 Australian Dollars to U.S. Dollars, respectively, which were the average exchange rates for the same periods in 2023. We define EBITDA as net income before other income, the provision for income taxes, gains on sale of property and equipment, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, and the amounts in (2) and (3) above. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.

STRATEGIC EDUCATION, INC.

UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

ADJUSTED REVENUE, ADJUSTED TOTAL COSTS AND EXPENSES, ADJUSTED INCOME FROM OPERATIONS, ADJUSTED OPERATING MARGIN, ADJUSTED INCOME BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED EPS

(in thousands, except per share data)

 

 

 

 

For the three months ended December 31, 2023

Non-GAAP Adjustments

 

 

 

As Reported (GAAP)

 

Amortization of intangible assets(1)

 

Merger and integration costs(2)

 

Restructuring costs(3)

 

Loss from other investments(4)

 

Tax adjustments(5)

 

As Adjusted (Non-GAAP)

Revenues

$

302,702

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

302,702

 

Total costs and expenses

$

248,478

 

 

$

(1,093

)

 

$

(209

)

 

$

(1,048

)

 

$

—

 

 

$

—

 

 

$

246,128

 

Income from operations

$

54,224

 

 

$

1,093

 

 

$

209

 

 

$

1,048

 

 

$

—

 

 

$

—

 

 

$

56,574

 

Operating margin

 

17.9

%

 

 

 

 

 

 

 

 

 

 

 

 

18.7

%

Income before income taxes

$

55,218

 

 

$

1,093

 

 

$

209

 

 

$

1,048

 

 

$

108

 

 

$

—

 

 

$

57,676

 

Net income

$

39,129

 

 

$

1,093

 

 

$

209

 

 

$

1,048

 

 

$

108

 

 

$

(1,214

)

 

$

40,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

1.63

 

 

 

 

 

 

 

 

 

 

 

 

$

1.68

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Diluted

 

23,968

 

 

 

 

 

 

 

 

 

 

 

 

 

23,968

 

 

 

 

 

For the three months ended December 31, 2024

Non-GAAP Adjustments

 

 

 

As Reported (GAAP)

 

Amortization of intangible assets(1)

 

Merger and integration costs(2)

 

Restructuring costs(3)

 

Loss from other investments(4)

 

Tax adjustments(5)

 

As Adjusted (Non-GAAP)

Revenues

$

311,456

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

311,456

 

Total costs and expenses

$

275,434

 

 

$

—

 

 

$

—

 

 

$

(4,405

)

 

$

—

 

 

$

—

 

 

$

271,029

 

Income from operations

$

36,022

 

 

$

—

 

 

$

—

 

 

$

4,405

 

 

$

—

 

 

$

—

 

 

$

40,427

 

Operating margin

 

11.6

%

 

 

 

 

 

 

 

 

 

 

 

 

13.0

%

Income before income taxes

$

37,891

 

 

$

—

 

 

$

—

 

 

$

4,405

 

 

$

193

 

 

$

—

 

 

$

42,489

 

Net income

$

25,336

 

 

$

—

 

 

$

—

 

 

$

4,405

 

 

$

193

 

 

$

850

 

 

$

30,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

1.05

 

 

 

 

 

 

 

 

 

 

 

 

$

1.27

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Diluted

 

24,149

 

 

 

 

 

 

 

 

 

 

 

 

 

24,149

 

 

 

 

 

For the twelve months ended December 31, 2023

Non-GAAP Adjustments

 

 

 

As Reported (GAAP)

 

Amortization of intangible assets(1)

 

Merger and integration costs(2)

 

Restructuring costs(3)

 

Income from other investments(4)

 

Tax adjustments(5)

 

As Adjusted (Non-GAAP)

Revenues

$

1,132,924

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

1,132,924

 

Total costs and expenses

$

1,037,603

 

 

$

(11,457

)

 

$

(1,544

)

 

$

(16,256

)

 

$

—

 

 

$

—

 

 

$

1,008,346

 

Income from operations

$

95,321

 

 

$

11,457

 

 

$

1,544

 

 

$

16,256

 

 

$

—

 

 

$

—

 

 

$

124,578

 

Operating margin

 

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

11.0

%

Income before income taxes

$

100,726

 

 

$

11,457

 

 

$

1,544

 

 

$

16,256

 

 

$

(2,718

)

 

$

—

 

 

$

127,265

 

Net income

$

69,791

 

 

$

11,457

 

 

$

1,544

 

 

$

16,256

 

 

$

(2,718

)

 

$

(7,245

)

 

$

89,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

2.91

 

 

 

 

 

 

 

 

 

 

 

 

$

3.72

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Diluted

 

23,956

 

 

 

 

 

 

 

 

 

 

 

 

 

23,956

 

 

 

 

 

For the twelve months ended December 31, 2024

Non-GAAP Adjustments

 

 

 

As Reported (GAAP)

 

Amortization of intangible assets(1)

 

Merger and integration costs(2)

 

Restructuring costs(3)

 

Loss from other investments(4)

 

Tax adjustments(5)

 

As Adjusted (Non-GAAP)

Revenues

$

1,219,930

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

1,219,930

 

Total costs and expenses

$

1,064,302

 

 

$

—

 

 

$

—

 

 

$

(1,648

)

 

$

—

 

 

$

—

 

 

$

1,062,654

 

Income from operations

$

155,628

 

 

$

—

 

 

$

—

 

 

$

1,648

 

 

$

—

 

 

$

—

 

 

$

157,276

 

Operating margin

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

12.9

%

Income before income taxes

$

161,432

 

 

$

—

 

 

$

—

 

 

$

1,648

 

 

$

2,660

 

 

$

—

 

 

$

165,740

 

Net income

$

112,684

 

 

$

—

 

 

$

—

 

 

$

1,648

 

 

$

2,660

 

 

$

684

 

 

$

117,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

4.67

 

 

 

 

 

 

 

 

 

 

 

 

$

4.87

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Diluted

 

24,140

 

 

 

 

 

 

 

 

 

 

 

 

 

24,140

 

(1)

Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.

(2)

Reflects integration expenses associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.

(3)

Reflects severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities.

(4)

Reflects income/loss recognized from the Company’s investments in partnership interests and other investments.

(5)

Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective income tax rates of 30.0% and 27.5% for the three months ended December 31, 2023 and 2024, respectively, and adjusted effective income tax rates of 30.0% and 29.0% for the twelve months ended December 31, 2023 and 2024, respectively.

STRATEGIC EDUCATION, INC.

UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

2024 AS ADJUSTED WITH CONSTANT CURRENCY

(in thousands, except per share data)

 

 

For the three months ended December 31, 2024

 

For the twelve months ended December 31, 2024

 

As Adjusted (Non-GAAP)

 

Constant currency adjustment(1)

 

As Adjusted with Constant Currency (Non-GAAP)

 

As Adjusted (Non-GAAP)

 

Constant currency adjustment(1)

 

As Adjusted with Constant Currency (Non-GAAP)

Revenues

$

311,456

 

 

$

(672

)

 

$

310,784

 

 

$

1,219,930

 

 

$

977

 

 

$

1,220,907

 

Total costs and expenses

$

271,029

 

 

$

(246

)

 

$

270,783

 

 

$

1,062,654

 

 

$

1,292

 

 

$

1,063,946

 

Income from operations

$

40,427

 

 

$

(426

)

 

$

40,001

 

 

$

157,276

 

 

$

(315

)

 

$

156,961

 

Operating margin

 

13.0

%

 

 

 

 

12.9

%

 

 

12.9

%

 

 

 

 

12.9

%

Income before income taxes

$

42,489

 

 

$

(423

)

 

$

42,066

 

 

$

165,740

 

 

$

(297

)

 

$

165,443

 

Net income

$

30,784

 

 

$

(300

)

 

$

30,484

 

 

$

117,676

 

 

$

(212

)

 

$

117,464

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Diluted

$

1.27

 

 

 

 

$

1.26

 

 

$

4.87

 

 

 

 

$

4.87

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Diluted

 

24,149

 

 

 

 

 

24,149

 

 

 

24,140

 

 

 

 

 

24,140

 

(1)

Reflects an adjustment to translate foreign currency results for the three and twelve months ended December 31, 2024 at a constant exchange rate of 0.65 and 0.66 Australian Dollars to U.S. Dollars, respectively, which were the average exchange rates for the same periods in 2023.

STRATEGIC EDUCATION, INC.

UNAUDITED NON-GAAP SEGMENT REPORTING

(in thousands)

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

Revenues:

 

 

 

 

 

 

 

U.S. Higher Education

$

217,551

 

 

$

214,332

 

 

$

818,953

 

 

$

857,890

 

Australia/New Zealand

 

63,279

 

 

 

66,666

 

 

 

233,518

 

 

 

257,119

 

Education Technology Services

 

21,872

 

 

 

30,458

 

 

 

80,453

 

 

 

104,921

 

Consolidated revenues

 

302,702

 

 

 

311,456

 

 

 

1,132,924

 

 

 

1,219,930

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

U.S. Higher Education

$

32,886

 

 

$

17,881

 

 

$

59,628

 

 

$

77,165

 

Australia/New Zealand

 

14,878

 

 

 

10,743

 

 

 

35,862

 

 

 

37,394

 

Education Technology Services

 

8,810

 

 

 

11,803

 

 

 

29,088

 

 

 

42,717

 

Amortization of intangible assets

 

(1,093

)

 

 

—

 

 

 

(11,457

)

 

 

—

 

Merger and integration costs

 

(209

)

 

 

—

 

 

 

(1,544

)

 

 

—

 

Restructuring costs

 

(1,048

)

 

 

(4,405

)

 

 

(16,256

)

 

 

(1,648

)

Consolidated income from operations

 

54,224

 

 

 

36,022

 

 

 

95,321

 

 

 

155,628

 

 

 

 

 

 

 

 

 

Adjustments to consolidated income from operations:

 

 

 

 

 

 

 

Amortization of intangible assets

 

1,093

 

 

 

—

 

 

 

11,457

 

 

 

—

 

Merger and integration costs

 

209

 

 

 

—

 

 

 

1,544

 

 

 

—

 

Restructuring costs

 

1,048

 

 

 

4,405

 

 

 

16,256

 

 

 

1,648

 

Total adjustments to consolidated income from operations

 

2,350

 

 

 

4,405

 

 

 

29,257

 

 

 

1,648

 

 

 

 

 

 

 

 

 

Adjusted income from operations by segment:

 

 

 

 

 

 

 

U.S. Higher Education

 

32,886

 

 

 

17,881

 

 

 

59,628

 

 

 

77,165

 

Australia/New Zealand

 

14,878

 

 

 

10,743

 

 

 

35,862

 

 

 

37,394

 

Education Technology Services

 

8,810

 

 

 

11,803

 

 

 

29,088

 

 

 

42,717

 

Total adjusted income from operations

$

56,574

 

 

$

40,427

 

 

$

124,578

 

 

$

157,276

 

STRATEGIC EDUCATION, INC.

UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA

(in thousands)

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

Net income

$

39,129

 

 

$

25,336

 

 

$

69,791

 

 

$

112,684

 

Provision for income taxes

 

16,089

 

 

 

12,555

 

 

 

30,935

 

 

 

48,748

 

Other income

 

(994

)

 

 

(1,869

)

 

 

(5,405

)

 

 

(5,804

)

Gain on sale of property and equipment

 

—

 

 

 

—

 

 

 

(2,136

)

 

 

—

 

Depreciation and amortization

 

12,432

 

 

 

11,345

 

 

 

57,313

 

 

 

44,378

 

EBITDA (1)

 

66,656

 

 

 

47,367

 

 

 

150,498

 

 

 

200,006

 

Stock-based compensation

 

4,570

 

 

 

6,782

 

 

 

19,772

 

 

 

25,571

 

Merger and integration costs (2)

 

209

 

 

 

—

 

 

 

1,208

 

 

 

—

 

Restructuring costs (3)

 

907

 

 

 

4,154

 

 

 

17,500

 

 

 

1,123

 

Cloud computing amortization (4)

 

2,024

 

 

 

1,762

 

 

 

7,547

 

 

 

7,143

 

Adjusted EBITDA (1)

$

74,366

 

 

$

60,065

 

 

$

196,525

 

 

$

233,843

 

(1)

 

Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information.

(2)

 

Reflects integration charges associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand. Excludes $0.3 million of depreciation and amortization for the twelve months ended December 31, 2023.

(3)

 

Reflects severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities. Excludes $2.1 million of gain on the sale of property and equipment for the twelve months ended December 31, 2023. Excludes $0.4 million of depreciation and amortization expense for the twelve months ended December 31, 2023, and $0.2 million of depreciation and amortization expense for the three and twelve months ended December 31, 2024. Excludes $0.1 million and $0.5 million of stock-based compensation expense for the three and twelve months ended December 31, 2023, respectively, and $0.1 million and $0.3 million of stock-based compensation expense for the three and twelve months ended December 31, 2024, respectively.

(4)

 

Reflects amortization expense associated with deferred implementation costs incurred in cloud computing arrangements.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250227616272/en/

Terese Wilke Senior Director of Investor Relations Strategic Education, Inc. (612) 977-6331 terese.wilke@strategiced.com