Overview of Strategic Education Inc.

Strategic Education Inc. is a leading provider of flexible and affordable higher education programs, primarily through its Capella University and Strayer University brands. The company also operates the Education Technology Services segment, which develops relationships with employers to provide employee education benefits programs. Additionally, Strategic Education has a presence in Australia and New Zealand through its Torrens University, Think Education, and Media Design School brands.

Financial Performance

In 2024, Strategic Education generated $1.22 billion in revenue, up from $1.13 billion in 2023. This increase was driven by enrollment growth in the U.S. Higher Education (USHE) and Australia/New Zealand (ANZ) segments, as well as growth in the company’s Sophia Learning subscription business within the Education Technology Services segment.

The company’s income from operations increased to $155.6 million in 2024, up from $95.3 million in 2023. This was primarily due to the higher revenue, lower restructuring costs, and lower amortization expense of intangible assets, partially offset by higher operating expenses. Net income increased to $112.7 million in 2024, compared to $69.8 million in 2023.

Segment Performance

The USHE segment, which includes Capella University and Strayer University, saw average total student enrollment increase 6.4% to 87,550 in 2024, up from 82,267 in 2023. Segment revenues increased 4.8% to $857.9 million, while income from operations increased 29.4% to $77.2 million.

The ANZ segment, which includes Torrens University, Think Education, and Media Design School, had a 4.8% increase in average total student enrollment to 19,585 in 2024, up from 18,692 in 2023. Segment revenues increased 10.1% to $257.1 million, and income from operations increased 4.3% to $37.4 million.

The Education Technology Services segment saw a 30.4% increase in revenues to $104.9 million, driven by growth in Sophia Learning subscriptions, higher employer-affiliated enrollment, and increased Workforce Edge revenue from new employer partnerships. Segment income from operations increased 46.9% to $42.7 million.

Strengths and Weaknesses

One of Strategic Education’s key strengths is its diversified portfolio of higher education brands, which allows it to serve a wide range of students and employers. The company’s focus on flexible, affordable, and industry-relevant programs has helped drive enrollment growth, particularly in the USHE and ANZ segments.

However, the company faces some challenges, including increased competition in the online education market and potential regulatory changes, such as the proposed international student enrollment cap in Australia. The company’s reliance on government financial aid programs and employer-affiliated enrollment also exposes it to risks if those funding sources were to be disrupted.

Outlook and Future Strategies

Strategic Education believes it has the right strategies in place to continue driving growth and supporting student success. The company plans to further differentiate itself through innovation, optimizing its marketing efforts, and expanding its services to meet a broader set of student and employer needs.

The company also intends to invest in its technology and faculty to strengthen the foundation of its business. Strategic Education is confident that its focus on quality, affordable education will allow it to deliver long-term growth and value for shareholders.

Conclusion

Strategic Education has demonstrated solid financial performance in 2024, with strong enrollment growth, increased profitability, and diversified revenue streams. The company’s focus on flexible, industry-relevant programs and its partnerships with employers have been key drivers of its success. While it faces some challenges, Strategic Education appears well-positioned to continue executing on its strategic initiatives and delivering value for students and shareholders alike.