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Strategic Education, Inc. STRA, or SEI, reported impressive results for the first quarter of 2025. Its adjusted earnings and revenues topped the Zacks Consensus Estimate. On a year-over-year basis, both the top and bottom lines increased.
The quarter witnessed robust employer-affiliated enrollment, strong growth from Sophia Learning subscriptions and continued enrollment growth in the U.S. Higher Education (“USHE”) segment.
The company reported adjusted earnings per share (EPS) of $1.30, which topped the Zacks Consensus Estimate of $1.01 by 28.7%. In the year-ago quarter, it reported an adjusted EPS of $1.11. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Total revenues of $303.6 million surpassed the consensus mark of $301.3 million by 0.8% and increased 4.6% from the year-ago period's level. On a constant-currency basis, revenues increased 5.3% to $305.7 million in the quarter.
U.S. Higher Education (USHE): This segment comprises Strayer and Capella Universities. Its revenues increased 0.8% year over year to $221 million, driven by higher revenue per student. We expected segment sales to increased 1.2% year over year to $222 million in the quarter.
Student enrollment increased slightly to 87,854 from the year-ago quarter’s level of 87,731. FlexPath enrollment was 24% of USHE enrollment compared with 23% a year ago.
During the quarter, the operating margin increased to 13.6% from 12.8%, up 80 basis points (bps) from the year-ago quarter.
Education Technology Services (ETS): This segment includes Enterprise Partnerships, Sophia Learning and Workforce Edge. Its quarterly revenues increased year over year by 45.2% to $34.3 million, backed by solid growth in Sophia Learning subscriptions, employer-affiliated enrollment and gains from a new Workforce Edge employer partnership. We expected segment sales to increase 21.6% year over year to $28.7 million in the quarter.
Sophia Learning’s average total subscribers increased approximately 37% from the year-ago period’s level. Employer-affiliated enrollment reached a record high of 31.2% of USHE enrollment, up from 29.2% in the year-ago period. As of March 31, 2025, Workforce Edge had a total of 78 corporate agreements, collectively employing about 3,890,000 employees.
ETS’ operating margin was 40.3% in the reported quarter, down 240 bps from a year ago.
Australia/New Zealand (ANZ): This segment includes Torrens University, Think Education and Media Design School. Its revenues were $48.3 million, up 1.9% year over year, driven by higher revenue per student. On a constant-currency basis, revenues rose 6.4% year over year to $50.4 million. We expected segment sales to grow 9.4% year over year to $51.8 million in the quarter.
Student enrollment within ANZ decreased 0.6% to 20,082 during the quarter compared with 20,197 in the year-ago quarter.
In the reported quarter, the segment reported an operating loss of $2.1 million compared with a loss of $2.3 million in the year-ago quarter.
Adjusted operating income was $41.7 million, up from $35.8 million in the year-ago quarter. The adjusted operating margin of 13.7% expanded 130 bps from the year-ago quarter.
Adjusted EBITDA was $60 million, up from $54.3 million in the year-ago quarter.
As of March 31, 2025, SEI had cash and cash equivalents of $144.2 million, up from $137.1 million in 2024-end. There was no long-term debt at the first-quarter end.
Cash provided by operating activities was $67.7 million in the first quarter of 2025, down from $77.6 million in the year-ago period. In the first quarter, capital expenditures were $10.3 million compared with $9.2 million a year ago.
Strategic Education currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Consumer Discretionary sector are TEGNA Inc. TGNA, Life Time Group Holdings, Inc. LTH and American Outdoor Brands, Inc. AOUT.
TEGNA presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company delivered a trailing four-quarter earnings surprise of 6.3%, on average. The stock has gained 18.6% in the past year. The consensus estimate for TGNA 2026 sales and EPS implies growth of 11.3% and 93.8%, respectively, from the year-ago levels.
Life Time Group carries a Zacks Rank #2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 21.6%, on average. The stock has surged 117.3% in the past year.
The consensus estimate for Life Time Group’s 2025 sales and EPS implies growth of 12.9% and 37.9%, respectively, from the year-ago levels.
American Outdoor carries a Zacks Rank #2 at present. The company delivered a trailing four-quarter earnings surprise of 79.6%, on average. The stock has gained 40.1% in the past year.
The Zacks Consensus Estimate for American Outdoor’s fiscal 2025 sales and EPS indicates growth of 3.7% and 93.8%, respectively, from the year-ago levels.
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This article originally published on Zacks Investment Research (zacks.com).
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