STRA's Q1 Earnings & Revenues Beat Estimates, Enrollment Up Y/Y

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.

Inside STRA’s Headlines

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 and EPS Surprise

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.

Strategic Education’s Segment Details

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.

STRA’s Operating Highlights

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.

STRA’s Financial Details

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.

STRA’s Zacks Rank & Stocks to Consider

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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