HERNDON, Va.–(BUSINESS WIRE)–Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended March 31, 2023.
“As we complete the first quarter, we are pleased with our progress toward enrollment, revenue, and earnings growth in 2023,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “We are encouraged by the return to total enrollment growth within the U.S. Higher Education segment and strength within the Education Technology Services segment, and are optimistic about the Australia/New Zealand segment as conditions normalize.”
STRATEGIC EDUCATION CONSOLIDATED RESULTS
Three Months Ended March 31
- Revenue decreased 0.9% to $256.6 million compared to $258.9 million for the same period in 2022.
- Loss from operations was $1.3 million, compared to income from operations of $13.4 million or 5.2% of revenue for the same period in 2022. Adjusted income from operations, which is a non-GAAP financial measure, was $8.2 million compared to $19.4 million for the same period in 2022. The adjusted operating income margin, which is a non-GAAP financial measure, was 3.2% compared to 7.5% for the same period in 2022. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP Financial Measures section of this press release.
- Net loss was $2.0 million compared to net income of $7.0 million for the same period in 2022. Adjusted net income, which is a non-GAAP financial measure, was $5.8 million compared to $13.1 million for the same period in 2022.
- Adjusted EBITDA, which is a non-GAAP financial measure, was $27.2 million compared to $38.4 million for the same period in 2022.
- Diluted loss per share was $0.09 compared to diluted earnings per share of $0.29 for the same period in 2022. Adjusted diluted earnings per share, which is a non-GAAP financial measure, decreased to $0.24 from $0.54 for the same period in 2022. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, was $0.25. Adjusted diluted weighted average shares outstanding, which is a non-GAAP financial measure, decreased to 24,023,000 from 24,114,000 for the same period in 2022.
U.S. Higher Education Segment Highlights
- The U.S. Higher Education segment (USHE) is comprised of Strayer University and Capella University.
- For the first quarter, student enrollment within USHE increased 2.3% to 79,935 compared to 78,172 for the same period in 2022.
- For the first quarter, FlexPath enrollment was 21% of USHE enrollment compared to 20% for the same period in 2022.
- Revenue increased 0.6% to $196.9 million in the first quarter of 2023 compared to $195.8 million for the same period in 2022, driven by higher first quarter enrollment.
- Income from operations was $9.6 million in the first quarter of 2023 compared to $15.5 million for the same period in 2022. The operating income margin was 4.9%, compared to 7.9% for the same period in 2022.
Education Technology Services Segment Highlights
- The Education Technology Services segment (ETS) is comprised primarily of Employer Solutions, Sophia Learning, and Workforce Edge.
- For the first quarter, employer affiliated enrollment was 26.3% of USHE enrollment compared to 23.0% for the same period in 2022.
- For the first quarter, Sophia Learning had an increase in average total subscribers of approximately 24% from the same period in 2022.
- As of March 31, 2023, Workforce Edge had a total of 58 corporate agreements, collectively employing approximately 1,330,000 employees.
- Revenue increased 24.9% to $18.2 million in the first quarter of 2023 compared to $14.6 million for the same period in 2022, driven by growth in Sophia Learning subscriptions and employer affiliated enrollment.
- Income from operations was $5.8 million in the first quarter of 2023 compared to $4.7 million for the same period in 2022. The operating income margin was 31.8%, compared to 32.3% for the same period in 2022.
Australia/New Zealand Segment Highlights
- The Australia/New Zealand segment (ANZ) is comprised of Torrens University, Think Education, and Media Design School.
- For the first quarter, student enrollment within ANZ decreased 6.3% to 19,269 compared to 20,575 for the same period in 2022.
- Revenue decreased 14.4% to $41.5 million in the first quarter of 2023 compared to $48.5 million for the same period in 2022, primarily driven by the timing of the first academic term of the year. Revenue on a constant currency basis decreased 8.3% to $44.5 million in the first quarter of 2023 compared to $48.5 million for the same period in 2022.
- Loss from operations was $7.2 million in the first quarter of 2023 compared to loss from operations of $0.7 million for the same period in 2022. Loss from operations on a constant currency basis was $7.1 million in the first quarter of 2023, compared to loss from operations of $0.7 million for the same period in 2022.
BALANCE SHEET AND CASH FLOW
At March 31, 2023, Strategic Education had cash, cash equivalents, and marketable securities of $240.0 million, and $101.3 million outstanding under its revolving credit facility. For the first three months of 2023, cash provided by operations was $35.2 million compared to $56.6 million for the same period in 2022. Capital expenditures for the first three months of 2023 were $8.3 million compared to $9.7 million for the same period in 2022. Capital expenditures for 2023 are expected to be approximately $45 million.
For the first quarter of 2023, consolidated bad debt expense as a percentage of revenue was 3.8%, compared to 2.8% of revenue for the same period in 2022.
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 June 5, 2023 to shareholders of record as of May 26, 2023.
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 Strayer University and Capella 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, enabling education benefits programs through 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.
