STRA

A month has gone by since the last earnings report for Strategic Education (STRA). Shares have added about 0.6% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Strategic Education due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Strategic Education Inc. before we dive into how investors and analysts have reacted as of late. Strategic Education reported mixed second-quarter 2026 results. Adjusted earnings of $1.76 per share missed the Zacks Consensus Estimate of $1.79 by 1.7% but increased 15.8% year over year.Revenues of $337.3 million topped the consensus mark of $327 million by 3.1% and rose 4.9% year over year, driven by Education Technology Services strength, higher U.S. Higher Education revenue per student and favorable currency. Employer-affiliated enrollment reached an all-time high of 34.7% of USHE enrollment. U.S. Higher Education revenues increased 2.3% year over year to $220.5 million, driven by higher revenue per student. Enrollment slipped 0.5% to 85,894 students from 86,339 in the prior-year quarter.USHE's healthcare portfolio enrollment increased 11% and accounted for 52% of segment enrollment, up from 47%. FlexPath enrollment was 25% of USHE enrollment compared with 23% a year earlier, while segment operating income increased to $32.4 million from $20.8 million. Healthcare programs accounted for 73% of FlexPath enrollment. During the quarter, Capella University launched a Bachelor of Science in Nursing (Prelicensure) program for July 2026 enrollment. Education Technology Services revenues climbed 15.4% to $42.4 million, supported by growth in Sophia Learning subscriptions, higher employer-affiliated enrollment and increased Workforce Edge revenues from employer partnerships. Sophia Learning revenues jumped 26.7% to $20.7 million.ETS operating income increased 30.2% to $19.6 million, while the operating margin improved to 46.2% from 41%. Workforce Edge ended the quarter with 81 corporate agreements covering approximately 4.02 million employees. Australia/New Zealand revenues increased 7.6% to $74.4 million, aided by favorable foreign exchange and higher revenue per student. On a constant-currency basis, revenues declined 2.6% to $67.4 million as enrollment fell 5.2% to 17,555 amid lower international enrollment, partly offset by growing domestic enrollment.ANZ operating income dropped to $1 million from $12.8 million, and the operating margin contracted to 1.3% from 18.4%. Results included a $13.9 million reserve tied to the Australian Fair Work Ombudsman compliance matter and higher instructional and technology-related costs. Instructional and support costs increased to $177.9 million from $166.2 million and represented 52.7% of revenues, up from 51.7%. General and administration (G&A) expenses edged down to $106.4 million from $106.8 million and improved to 31.6% of revenues from 33.2%. The G&A decline reflected lower international agent commissions, personnel-related costs and facility expenses, partly offset by unfavorable currency and higher branding investments.Adjusted income from operations increased 9.1% year over year to $52.9 million. The adjusted operating margin expanded 60 basis points to 15.7%, reflecting stronger consolidated profitability despite pressure in the Australia/New Zealand business. As of June 30, 2026, Strategic Education had $133.8 million in cash, cash equivalents and marketable securities, compared with $153.1 million at 2025-end, and no debt outstanding under its revolving credit facility. Cash provided by operating activities for the first six months increased to $116.6 million from $98.9 million.Capital expenditures were $24.2 million compared with $21.2 million a year earlier, while free cash flow increased to $92.4 million from $77.7 million. During the quarter, STRA repurchased 420,624 shares for $32.8 million. The company had $140.7 million remaining under its repurchase authorization through Dec. 31, 2026, and declared a quarterly cash dividend of 60 cents per share. The dividend is payable Sept. 14 to shareholders of record as of Sept. 4. In the past month, investors have witnessed a upward trend in fresh estimates. Currently, Strategic Education has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top quintile for value investors. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Strategic Education has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Strategic Education Inc. (STRA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 10:00 a.m. ET Senior Director of Investor Relations - Terese Wilke President and Chief Executive Officer - Karl McDonnell Executive Vice President and Chief Financial Officer - Daniel Jackson Operator: Welcome to Strategic Education's Second Quarter 2026 Results Conference Call. I will now turn the call over to Terese Wilke, Senior Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead. Terese Wilke: Thank you. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss second quarter 2026 results. With us today are Karl McDonnell, President and Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions. Please note that this call may include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements are based on current expectations and are subject to a number of assumptions, uncertainties and risks that Strategic Education has identified in today's press release that could cause actual results to differ materially. Further information about these and other relevant uncertainties may be found in Strategic Education's most recent annual report on Form 10-K, the 10-Q to be filed and other filings with the Securities and Exchange Commission as well as Strategic Education's future 8-Ks, 10-Qs and 10-Ks. Copies of these filings and the full press release are available for viewing on our website at strategiceducation.com. And now I'd like to turn the call over to Karl. Karl, please go ahead. Karl McDonnell: Thank you, Terese, and good morning, everyone. SEI's second quarter financial results, which we released this morning demonstrate continued significant strength in our ETS division, increased momentum in U.S. Higher Education and meaningful progress in returning our Australia business to growth in 2027. Before I go through the results themselves, I just want to remind everyone that I'm referring to our adjusted financial results and from a constant currency standpoint. SEI's second quarter revenue increased approximately 3% from the prior year to $330 million. Our operating expenses increased by approximately 1.5% from the prior year, but this is inclusive of a onetime charge related to a labor matter in Australia dating back to the close of the transaction in 2020 and which I will comment on when we discuss the Australia segment's results momentarily. Excluding this nonrecurring expense, our operating expenses would have been $265 million, or a reduction of 3% from the prior year. Operating income was $53 million for the quarter, a 9% increase from the prior year, and our operating margin for the quarter was 16%, a 90 basis point improvement from the prior year. Again, excluding the onetime Australian charge of $13 million, operating income would have increased by 35%, and our operating margin would have been 20%. Adjusted earnings per share were $1.76, a 16% increase from the prior year. Year-to-date cash flow from operations increased 18% from the prior year to $117 million. So overall, it was a very solid quarter financially. And now turning to our segments. Our Education Technology Services division grew revenue 15% to $42 million and operating income by 30% to $20 million, while operating margin increased to 46.2%, an increase of 520 basis points. Sophia Learning total average subscribers grew 32% and revenue increased by 27% to $21 million. Workforce Edge ended the quarter with 81 corporate agreements covering 4 million employees and enrollments from Workforce Edge into either Strayer or Capella University grew 21% to roughly 4,000 students. We were proud to recently announce that Workforce Edge was selected as winner of the Professional Development Solution Provider of the Year Award in the eighth annual EdTech Breakthrough Awards program that recognizes top companies and solutions in the global education technology market. ETS now represents nearly 40% of SEI's consolidated income from operations. Turning now to U.S. Higher Education. Employer-affiliated enrollment grew 8% and reached a new all-time high of 35% of total U.S. Higher Education enrollment, an increase of nearly 300 basis points from the prior year. Health care enrollment, which again is a key component of our employer strategy, grew 11% and now represents 52% of all U.S. Higher Education enrollment. As part of our health care expansion strategy, I'm pleased to announce that during the second quarter, Capella University launched a BSN Prelicensure program, which enrolled its first cohort this month. U.S. Higher Education revenue increased 2% in the quarter, driven by higher revenue per student and lower scholarships and discounts. Our productivity initiatives continue to enable very effective cost control with operating expenses down 3% from the prior year. U.S. Higher Education operating income increased 56% from the year to $32 million, and the operating margin increased by 500 basis points to 10% from -- I'm sorry, up from 10% last year to 15% this year. U.S. Higher Education student retention increased last quarter to 89%, representing an all-time high for this metric. Turning now to Australia and New Zealand. Total enrollment declined 5% in the second quarter and revenue decreased just under 3% to $67 million. Operating income was $1 million in the quarter, but this is net of the $13 million charge we took to create a reserve related to an ongoing labor matter dating back to the close of the transaction in 2020. At issue is whether grading time should be included in our casual faculty contracts or should that portion of the work be compensated separately. Our view, which is the view that has been in place at Torrens since its inception and, therefore, was in place when we closed the transaction, is that grading is part of teaching the course and therefore, should be included in our casual faculty contracts. Casual faculty is the equivalent to adjunct faculty here in the U.S. The Australian Fair Work Ombudsman, assisting a former Torrens instructor, challenged this view in court, and the court sided with us, ruling in favor of our interpretation. Later, the Australian Appeals Court overturned this ruling, making a determination that grading time should be compensated separately. We have appealed this ruling to the Australian High Court and have created a reserve to compensate faculty members affected by this ruling should our appeal not be heard by the High Court or should the High Court affirm the appellate court's ruling. Independent of the High Court's ruling, we have already made modifications to our instructional model such that we do not anticipate any increases in our instructional expense as a result of this change. We continue to be encouraged by domestic student growth in Australia and are making investments in new programs and potential campus additions to further grow the domestic student population. And just a note on capital allocation. In addition to our regular quarterly dividend, we repurchased approximately 421,000 shares during the quarter for a total of $33 million. As of the end of the second quarter, we have approximately $141 million remaining on our share repurchase authorization through the end of this year. And as always, I'd like to thank all of my colleagues here at SEI for their ongoing commitment to our students and our employer partners. And with that, Kevin, we'd be happy to take questions. Operator: Our first question comes from Jeff Silber with BMO Capital Markets. Jeffrey Silber: I wanted to first start with the U.S. Higher Education division. You pointed out your health care enrollment, which has been really strong. But I guess if we back out the non-health care enrollment, that has been shrinking for a while. I know there's been others in the industry that have talked about students searching using LLMs that may have some inherent bias against the for-profit sector. I'm wondering, are you seeing any of that? Is that the reason for those declines? And if so, are you doing anything about that? Karl McDonnell: Jeff, first of all, I would describe our overall demand environment as being stable to pretty good. Our student acquisition rates are flat and in some cases, down. So we're pretty pleased with that. We do have marketing teams that are working through various strategies to ensure that both Strayer and Capella Universities are favorably returned through LLM searches, which, of course, is an ongoing and longer-term issue. But to answer your specific questions about search being impacted or inquiries being impacted by LLM, that's not something that we've identified as being an issue. Jeffrey Silber: So is there any specific reason why you're seeing those declines? Karl McDonnell: It's not so much declines as it is for us that we're leaning heavily into our strategy of employer health care. And from a marketing standpoint, on the Strayer side, unaffiliated enrollment hasn't been a priority for us. And non-health care, we're happy to have those programs grow, but it's not really a part of our marketing strategy at this point. Jeffrey Silber: Okay. I understand. Let me switch over to ETS. And again, I'll focus on Sophia. We've seen some negative press regarding how students have been using AI to complete some of those courses. And I think you've added what I saw quoted as quality-enhancing initiatives to offset this. Can you tell us a little bit about what you're doing? Is that why we've seen growth slow a bit in Sophia? Karl McDonnell: We're really pleased with Sophia's growth. You're getting into the law of large numbers now. It's one thing to grow 30-plus percent when you're a $20 million business to be able to maintain that at an $80 million business, I think, is pretty strong. And we take academic integrity and quality of assessments very seriously across the entire portfolio, not just at Sophia. And in fact, independent of the article that you're referencing, the Sophia management team was already working to put enhancements into our academic integrity controls. That's something that we will continue to focus on. And it will be a priority for the investments that we make in the Sophia platform through the balance of this year into next year. Operator: Our next question comes from Alex Paris with Barrington Research. Alexander Paris: Congrats on the strong quarter versus expectations, which was really a lot stronger considering you didn't add back the Australia charge to adjusted results, which I would have thought that you would have. But on an apples-to-apples basis, it was -- not only it was revenue better than expected, but so were earnings. Just a couple of follow-up questions on U.S. Higher Ed and then ANZ. First off, on U.S. Higher Ed, the enrollment was in line or better than expected. Employer affiliated was up 8.6%. Unaffiliated was still down, but there was a sequential improvement. My question is really about revenue per student, which was up 2.8% by my math year-over-year despite growth in employer affiliated. And I think, Karl, you noted that you had lower scholarships and discounts. Any color you can provide us there? Daniel Jackson: Alex, it's Dan. You nailed it. It was primarily related to lower scholarships, but also higher classes per student. And as we've said in the past, and that's both at U.S. Higher Ed and Australia and New Zealand. And as we've said in the past, both those metrics can be variable from quarter-to-quarter. So for the full year, we continue to expect roughly flat revenue per student. Karl McDonnell: You want to talk about the charge not being adjusted? Daniel Jackson: Yes. And Alex, on your comment on the charge, our practice when we adjust out expenses is to only adjust out expenses that we believe are both onetime and will not be part of the cost base moving forward. Assuming an unfavorable outcome from this appeal process, which is what the accounting is based on, we will technically have grading costs in our cost base moving forward. But to Karl's earlier point, we've already got a plan to mitigate any incremental -- significant incremental expense related to it. So -- but it's still technically part of our cost base. Alexander Paris: I know it's difficult to predict, but when would you expect to hear back from the Australia High Court on your appeal? Karl McDonnell: We expect we will hear whether or not they intend to take the case probably in September, early October. Alexander Paris: Okay. So we should have an update on the next call. And then regarding Australia/New Zealand, enrollment was a little bit below expectations, my estimate, in fact, at consensus, I know you don't guide on that number. Revenue per student was up sharply and then up 8.4% by my math. Why is that? Is that a domestic versus international trade-off? Karl McDonnell: Yes, it is. The mix shift -- shifting more towards domestic from international. We continue to have, I would describe as very healthy domestic new student growth approaching double digits. That's been the case for the past year plus. The international, particularly the onshore transfer market internationally is just much more challenged, combined with the fact that for whatever reason, the Australian government has slowed visa approvals even below what would be required to get an institution to their cap. That could change between now and the end of the year, but we'll have to wait and see. So the strong growth in domestic so far hasn't been enough to offset the declines that we have in international. But as long as that domestic market continues to grow as healthy as it is, we expect to be growing in the first part of next year. Alexander Paris: That's great. So despite raising the cap, the Australian -- on higher education in Australia, including Torrens, they're slow-rolling the visa approvals? Karl McDonnell: Yes. Yes. So we were -- we reached our cap last year. The cap was raised by 3% roughly. At the current rate, we'd be under our cap. Last year, in the second half of the year, we saw an acceleration of visa approvals. So that pattern could repeat this year, in which case we do a little bit better. But so far, for whatever reason, the processing time of visas, even in countries where you have high density of genuine students, and that's an Australian government term, it's just much slower for some reason. Alexander Paris: Great. That's helpful. Last quick question. On the last call, you were asked about the notional model as it applies to 2026. And you said, while revenue could or will be below that notional model this year, that you're very committed to 200 bps of adjusted operating income margin improvement. Did you foresee the $13.7 million charge? Or is that included in that optimism of hitting that 200 bps for the year? Or would the 200 bps be -- the 200 bps plus the haircut by the $13.7 million charge? Karl McDonnell: Yes. Well, just remember that when we describe our notional model, it's a notional model over a 5-year period, and it could be up and down in any one given year. But to my comments in the first quarter, just given what we're seeing in Australia primarily, I think it's possible, if not probable, that for the full year, we'd be a little bit under that notional model on revenue. I'm very confident that we will outperform the notional model's, 200 basis points of EBIT margin expansion, potentially even including the $13 million FWO charge. And if you exclude it, most definitely, we would -- and to answer your question, no, it's not something that we saw coming. We've been following the court cases, obviously. And when we won the initial ruling, we were confident that, that was going to prevail through the appellate process, and, for whatever reason, it didn't. And so now we're just waiting for the High Court to make their ruling, and we'll adjust our instructional strategy once we hear from them. Operator: Our next question comes from Jasper Bibb with Truist Securities. Jasper Bibb: I wanted to maybe follow up on the customer acquisition topic Jeff raised earlier. I'm not sure how much detail you can give here, but could you share, I guess, the mix of how you're reaching students in the U.S. today, maybe kind of general breakdown between employer channel, paid search, referrals, brand marketing, things like that? Karl McDonnell: I mean, I don't have that level of granularity, Jasper, with me. But just big picture, we said that about 4,000 students are coming to us through Workforce Edge. That's a completely proprietary channel of new students for us. There's almost no acquisition cost for those. That's more than 1/3 of our total student population in the U.S. and growing. So we expect to continue to be advantaged there. Just broadly speaking, and you could follow up with Dan after the call, if he can give specifics. But broadly speaking, roughly half of our advertising, our marketing budget is spent on brand-building activities. And we want both Capella and Strayer to be top of mind for prospective students who might be searching for whatever degree that they might be interested in. And then the other half is a mixture of traditional paid search, could be out-of-home, just kind of the traditional advertising channels. And that, as far as I know, for the last at least 2 years, it has been relatively stable as a mix of dollars. And I think, generally speaking, the mix of students follows closely to the mix of dollars. Jasper Bibb: Right. That all makes sense. I know you don't guide formally, but I was just wondering maybe if you have any more detail on the cadence of revenue in the next 2 quarters. Last call, I think you mentioned 1Q would be the bottom for year-over-year revenue growth through the year. On a constant currency basis, do you think revenue growth continues to improve into the back half of the year? And I guess, what would be the drivers of any expectations for the back half of '26? Karl McDonnell: I mean, obviously, we'll have to wait and see. I feel good about the comment you're referencing that last quarter would be the low point in terms of revenue growth. There's some seasonality in the back half of the year. As I just said, when answering Alex's questions, the Australian government is slower than what they have been. So I can't predict visa approvals and so forth. But over -- between now and a year from now, I'm very confident that revenue growth will revert to the mean of roughly 5%, which is the anchor of our notional model. And as I also just said, I'm more than confident in the 200 basis point EBIT margin expansion over this year and next year. And so that's how I think about the notional model relative to both '26 and '27. Operator: And I'm not showing any further questions at this time. I'd like to turn the call back over to Karl for any further remarks. Karl McDonnell: Great. Thank you, everybody, for participating today, and we look forward to talking with you again next quarter. Operator: Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day. Before you buy stock in Strategic Education, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Strategic Education wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Strategic Education (STRA) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Strategic Education (STRA) drew investor attention after completing a long running share repurchase program originally announced in 2003, alongside its latest dividend declaration and detailed second quarter 2026 earnings release. See our latest analysis for Strategic Education. At a share price of $81.93, Strategic Education has seen a 7 day share price return of 8.32% and a 1 year total shareholder return of 12.74%, suggesting recent momentum has picked up compared with more modest year to date moves. If this buyback and dividend news has you thinking about where else capital might work hard, it could be a good moment to broaden your search with the 18 top founder-led companies For Strategic Education, the recent 7 day jump and solid 1 year return sit alongside fresh buyback, dividend and earnings news. Is the market now re rating the underlying business, or just swinging with sentiment as we look at valuation next? The most followed narrative on Simply Wall St places Strategic Education's fair value at about $98.33 versus the last close of $81.93. This frames the current share price as meaningfully below that modelled estimate and puts the focus squarely on whether the business can deliver on the growth assumptions behind that gap. Read the complete narrative. Want to see what really sits behind that $98.33 fair value for Strategic Education? The growth engine, the margin story, and the future earnings multiple are all baked into this narrative, but the exact mix may surprise you. Result: Fair Value of $98.33 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the story around Strategic Education also depends on managing risks, such as tighter student visa settings in Australia and lower revenue per student from heavier scholarship use. Find out about the key risks to this Strategic Education narrative. With the current mix of buybacks, dividends and valuation narratives around Strategic Education, it helps to check the underlying data yourself and decide quickly where you stand. To see what optimism in the market is currently tied to this story, take a closer look at the 5 key rewards. If you stop with just one stock, you risk missing stronger fits for your goals. Put Simply Wall St's screener to work and let the data do the heavy lifting. Target stable compounding potential by reviewing companies screened for resilience and consistency through the 81 resilient stocks with low risk scores Spot potential value gaps by checking stocks that combine quality fundamentals with attractive pricing via the 55 high quality undervalued stocks Build a watchlist of overlooked opportunities by scanning the screener containing 19 high quality undiscovered gems This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include STRA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Revenue: $330 million, up approximately 3% year-over-year. Operating Expenses: Increased 1.5% year-over-year, including a $13 million one-time charge; excluding this, expenses were $265 million, down 3%. Operating Income: $53 million, up 9% year-over-year; excluding the one-time charge, up 35%. Operating Margin: 16%, up 90 basis points year-over-year; 20% excluding the one-time charge. Adjusted EPS: $1.76, up 16% year-over-year. Cash Flow from Operations: $117 million year-to-date, up 18% year-over-year. Education Technology Services (ETS) Revenue: $42 million, up 15% year-over-year. ETS Operating Income: $20 million, up 30% year-over-year. ETS Operating Margin: 46.2%, up 520 basis points. Sophia Learning Revenue: $21 million, up 27% year-over-year. US Higher Education Revenue: Up 2% year-over-year. US Higher Education Operating Income: $32 million, up 56% year-over-year. US Higher Education Operating Margin: 15%, up 500 basis points from 10% last year. Australia and New Zealand Revenue: $67 million, down just under 3% year-over-year. Australia and New Zealand Operating Income: $1 million, net of a $13 million charge. Warning! GuruFocus has detected 4 Warning Signs with LFDJF. Is STRA fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strategic Education Inc (NASDAQ:STRA) reported a solid second quarter with revenue up 3% to $330 million and adjusted EPS up 16% to $1.76. The ETS division showed strong growth, with revenue up 15% and operating income up 30%, driven by a 32% increase in Sophia Learning subscribers and a 21% rise in Workforce Edge enrollments. US Higher Education saw improved profitability, with operating income up 56% and operating margin expanding by 500 basis points to 15%, aided by a 3% reduction in operating expenses. Employer-affiliated enrollment reached a new all-time high of 35% of total US Higher Education enrollment, with healthcare enrollment growing 11% to represent 52% of the total. Student retention in US Higher Education hit an all-time high of 89%, and the company repurchased $33 million in shares during the quarter. Management expressed confidence in achieving 200 basis points of EBIT margin expansion for the year, even including the one-time Australian charge. Strategic Education Inc (NASDAQ:STRA) took a $13 million one-time charge related to a labor matter in Australia, which negatively impacted operating income and margins. Australia and New Zealand enrollment declined 5% and revenue decreased nearly 3% to $67 million, with operating income of only $1 million after the charge. The Australian Appeals Court overturned a favorable ruling on grading time compensation, and the company is awaiting a High Court decision, creating uncertainty. International student enrollment in Australia is challenged due to slower visa approvals from the Australian government, which could impact future growth. Non-healthcare and unaffiliated enrollment in US Higher Education continues to decline, as the company focuses its marketing strategy on employer and healthcare programs. Sophia Learning's growth slowed due to the law of large numbers, and the company is investing in academic integrity controls to address negative press about AI use. Q: Can you provide more detail on the cadence of revenue in the next two quarters, and do you think revenue growth continues to improve into the back half of the year? A: Karl McDonnell, President and CEO, stated that he feels good about the previous comment that the first quarter would be the low point in terms of revenue growth. He noted that while there is seasonality in the back half of the year and visa approvals in Australia remain unpredictable, he is very confident that revenue growth will revert to the mean of roughly 5% within the next year. He also reiterated his confidence in achieving the 200 basis point EBIT margin expansion over this year and next year. Q: Regarding the $13.7 million charge in Australia, did you foresee this, and is it included in your optimism for hitting the 200 bps of adjusted operating income margin improvement for the year? A: Karl McDonnell, President and CEO, explained that the charge was not anticipated. He noted that while the company won the initial ruling, the appellate court overturned it, leading to the reserve. He expressed confidence that the company will outperform the notional model's 200 basis points of EBIT margin expansion, potentially even including the $13 million charge. Excluding it, the performance would be even stronger. Q: Can you share the mix of how you're reaching students in the US today, such as the breakdown between employer channel, paid search, referrals, and brand marketing? A: Karl McDonnell, President and CEO, stated that roughly half of the marketing budget is spent on brand-building activities to keep Capella and Strayer top of mind. The other half is a mixture of traditional paid search and other advertising channels. He highlighted that the Workforce Edge channel brings in about 4,000 students with almost no acquisition cost, representing more than a third of the total US student population and growing. Q: Regarding US Higher Education, revenue per student was up 2.8% year over year despite growth in employer-affiliated enrollment. Can you provide color on that? A: Daniel Jackson, CFO, explained that the increase was primarily related to lower scholarships and discounts, as well as higher classes per student. He noted that both metrics can be variable from quarter to quarter, and for the full year, the company continues to expect roughly flat revenue per student. Q: In the US Higher Education division, non-healthcare enrollment has been shrinking. Are you seeing any inherent bias against the for-profit sector in LLM searches, and is that the reason for the declines? A: Karl McDonnell, President and CEO, described the overall demand environment as stable to pretty good, with student acquisition rates flat or down. He noted that the company has marketing teams working on strategies to ensure favorable representation in LLM searches, but they have not identified LLM search bias as an issue. The declines are more attributable to the strategic focus on employer healthcare, with unaffiliated enrollment not being a priority for marketing. Q: Can you tell us about the quality-enhancing initiatives at Sophia Learning to offset the negative press regarding AI use, and is that why growth has slowed? A: Karl McDonnell, President and CEO, stated that the company is pleased with Sophia's growth, noting that maintaining 30%-plus growth at an $80 million business is strong. He emphasized that academic integrity is taken seriously across the portfolio, and the Sophia management team was already working on enhancements to academic integrity controls before the article was published. These enhancements will be a priority for investments through the balance of this year and into next year. Q: Regarding Australia/New Zealand, enrollment was below expectations, but revenue per student was up sharply. Is that a domestic versus international trade-off? A: Karl McDonnell, President and CEO, confirmed that the mix shift towards domestic from international is driving the revenue per student increase. He noted very healthy domestic new student growth approaching double digits, while the international onshore transfer market is challenged due to the Australian government slowing visa approvals. He expects the company to be growing in the first part of next year if domestic growth continues. Q: Despite raising the cap on higher education in Australia, are they slow-rolling the visa approvals? A: Karl McDonnell, President and CEO, confirmed that while the cap was raised by roughly 3%, the current rate of visa approvals would put the company under its cap. He noted that last year, there was an acceleration of visa approvals in the second half, which could repeat this year, but the processing time for visas is currently much slower for reasons that are unclear. Q: When would you expect to hear back from the Australia High Court on your appeal regarding the labor matter? A: Karl McDonnell, President and CEO, stated that the company expects to hear whether the High Court intends to take the case probably in September or early October, which would provide an update on the next earnings call. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by significant strength in the Education Technology Services (ETS) division and increased momentum in U.S. Higher Education, offsetting challenges in Australia. U.S. Higher Education growth is increasingly anchored by employer-affiliated enrollment, which reached an all-time high of 35% of total segment enrollment. The Education Technology Services division now represents nearly 40% of consolidated operating income, driven by a 32% increase in Sophia Learning subscribers. Management attributes U.S. Higher Education margin expansion to productivity initiatives and a strategic shift toward lower-cost proprietary acquisition channels like Workforce Edge. The Australia and New Zealand segment faced headwinds from slower-than-expected government visa approvals and a legal ruling regarding casual faculty compensation. Operating margins improved by 90 basis points despite a one-time $13 million labor-related charge in Australia; excluding this, margins would have expanded by 490 basis points. Management expects to outperform the notional model's target of 200 basis points of EBIT margin expansion for the full year, potentially even including the Australian labor charge. Revenue growth is expected to revert to the long-term mean of approximately 5% over the next year as Australian operations are projected to return to growth in 2027. The company assumes the first quarter of 2026 represented the low point for year-over-year revenue growth for the current fiscal year. Future investments will prioritize academic integrity enhancements for the Sophia platform and the expansion of health care programs, such as the newly launched BSN Prelicensure program. Guidance for the Australian segment remains contingent on the pace of government visa processing, which management notes is currently slower than required to meet institutional caps. A $13 million reserve was established following an Australian Appeals Court ruling that grading time for casual faculty must be compensated separately from teaching time. Management has already modified the instructional model in Australia to mitigate future incremental expenses regardless of the final legal outcome. The company has appealed the labor ruling to the Australian High Court, with a decision on whether the case will be heard expected in September or early October. Shareholder returns continued with $33 million in share repurchases during the quarter, leaving $141 million remaining on the current authorization. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated they have not identified LLM search bias as a current issue impacting inquiries or demand. The company is proactively working to ensure its universities are favorably returned in LLM searches as a long-term strategy. Management dismissed concerns that growth is slowing due to integrity issues, attributing the rate change to the 'law of large numbers' as the business scales. The team was already implementing quality-enhancing initiatives and academic integrity controls prior to recent external reports. The 2.8% increase in U.S. Higher Education revenue per student was driven by lower scholarships and higher class loads per student. Management expects revenue per student to remain roughly flat for the full year due to quarterly variability in these metrics. International enrollment is challenged by the Australian government 'slow-rolling' visa approvals even for 'genuine students' below the established caps. Strong domestic student growth, approaching double digits, is currently insufficient to fully offset the international decline.

Education Technology Services revenue up 15% YOY and operating income up 30% YOY Sophia Learning subscribers up 32% YOY and revenue up 27% YOY U.S. Higher Education's healthcare portfolio total enrollment increased 11% YOY HERNDON, Va., July 29, 2026--(BUSINESS WIRE)--Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended June 30, 2026. STRATEGIC EDUCATION CONSOLIDATED RESULTS Three Months Ended June 30 Revenue increased 4.9% to $337.3 million compared to $321.5 million for the same period in 2025, driven by strength within the Education Technology Services segment, an increase in U.S. Higher Education segment revenue per student, and favorable foreign currency impacts. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 2.7% to $330.2 million in the second quarter of 2026 compared to $321.5 million for the same period in 2025. 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 $50.5 million or 15.0% of revenue, compared to $45.8 million or 14.2% of revenue for the same period in 2025. Adjusted income from operations on a constant currency basis, which is a non-GAAP financial measure, was $52.7 million compared to $48.5 million for the same period in 2025. The adjusted operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 16.0% compared to 15.1% for the same period in 2025. During the second quarter of 2026, Strategic Education recorded a $13.9 million reserve ($12.7 million on a constant currency basis) associated with the Australian Fair Work Ombudsman compliance matter initially disclosed in the Company's 10-Q dated April 23, 2026. Net income was $37.2 million compared to $32.3 million for the same period in 2025. Adjusted net income on a constant currency basis, which is a non-GAAP financial measure, was $38.2 million compared to $35.8 million for the same period in 2025. Adjusted EBITDA, which is a non-GAAP financial measure, was $71.7 million compared to $68.3 million for the same period in 2025. Diluted earnings per share was $1.71 compared to $1.37 for the same period in 2025. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, increased to $1.76 from $1.52 for the same period in 2025. Diluted weighted average shares outstanding decreased to 21,736,000 from 23,516,000 for the same period in 2025. During the three months ended June 30, 2026, the Company repurchased 420,624 shares of common stock for $32.8 million, and during the six months ended June 30, 2026, the Company repurchased 913,729 shares of common stock for $72.7 million. Education Technology Services Segment Highlights For the second quarter, average total subscribers at Sophia Learning increased approximately 32% from the same period in 2025, and Sophia Learning revenue increased 26.7% to $20.7 million compared to $16.4 million for the same period in 2025. As of June 30, 2026, Workforce Edge had a total of 81 corporate agreements, collectively employing approximately 4,020,000 employees. ETS revenue increased 15.4% to $42.4 million in the second quarter of 2026 compared to $36.7 million for the same period in 2025, driven by growth in Sophia Learning subscriptions, higher employer affiliated enrollment, and growth in Workforce Edge employer partnerships. ETS income from operations was $19.6 million in the second quarter of 2026 compared to $15.0 million for the same period in 2025. The operating income margin was 46.2% compared to 41.0% for the same period in 2025. U.S. Higher Education Segment Highlights For the second quarter, student enrollment within USHE decreased 0.5% to 85,894 compared to 86,339 for the same period in 2025. Our ongoing focus on employers is generating consistent growth in employer affiliated enrollment, but in the second quarter was again offset by a decline in unaffiliated enrollment. Employer affiliated enrollment in the second quarter hit a new all-time high of 34.7% of USHE enrollment, up from 31.8% during the same period in 2025. USHE’s healthcare portfolio generated strong total enrollment growth during the second quarter, increasing 11% from the same period in 2025 and now comprises 52% of USHE total enrollment compared to 47% for the same period in 2025. Of USHE’s total healthcare enrollment, approximately 38% is from employer partners. During the second quarter, Capella University launched a Bachelor of Science in Nursing (Prelicensure) program for enrollment in July 2026. For the second quarter, FlexPath enrollment was 25% of USHE enrollment compared to 23% for the same period in 2025. Healthcare programs comprise 73% of FlexPath enrollment. Revenue increased 2.3% to $220.5 million in the second quarter of 2026 compared to $215.6 million for the same period in 2025, driven by higher second quarter revenue per student. Income from operations was $32.4 million in the second quarter of 2026 compared to $20.8 million for the same period in 2025. The operating income margin was 14.7% compared to 9.6% for the same period in 2025. Australia/New Zealand Segment Highlights For the second quarter, student enrollment within ANZ decreased 5.2% to 17,555 compared to 18,524 for the same period in 2025. Lower international enrollment, resulting from regulatory changes in Australia, was partially offset by growing domestic enrollment. Revenue increased 7.6% to $74.4 million in the second quarter of 2026 compared to $69.1 million for the same period in 2025, driven by favorable foreign currency impacts and higher revenue per student, offset by lower enrollment. Revenue on a constant currency basis, which is a non-GAAP financial measure, decreased 2.6% to $67.4 million in the second quarter of 2026 compared to $69.1 million for the same period in 2025, driven by lower second quarter student enrollment. Income from operations was $1.0 million in the second quarter of 2026 compared to $12.8 million for the same period in 2025. The operating income margin was 1.3% compared to 18.4% for the same period in 2025. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $0.8 million in the second quarter of 2026 compared to $12.8 million for the same period in 2025. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 1.2% compared to 18.4% for the same period in 2025. During the second quarter of 2026, Strategic Education recorded a $13.9 million reserve ($12.7 million on a constant currency basis) associated with the Australian Fair Work Ombudsman compliance matter initially disclosed in the Company's 10-Q dated April 23, 2026. BALANCE SHEET AND CASH FLOW At June 30, 2026, Strategic Education had cash, cash equivalents, and marketable securities of $133.8 million and no debt outstanding under its revolving credit facility. For the first six months of 2026, cash provided by operations was $116.6 million compared to $98.9 million for the same period in 2025. Capital expenditures for the first six months of 2026 were $24.2 million compared to $21.2 million for the same period in 2025. Capital expenditures including cloud computing investments, which flow through operating cash flow within other assets, for the first six months of 2026 were $28.6 million compared to $29.7 million for the same period in 2025. Free cash flow for the first six months of 2026, which is a non-GAAP financial measure, was $92.4 million compared to $77.7 million for the same period in 2025. For the second quarter of 2026, consolidated bad debt expense as a percentage of revenue was 3.3% compared to 4.0% of revenue for the same period in 2025. 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 September 14, 2026 to shareholders of record as of September 4, 2026. CONFERENCE CALL WITH MANAGEMENT Strategic Education will host a conference call to discuss its second quarter 2026 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) 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; 2) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offering flexible and affordable associate, bachelor’s, master’s, and doctoral programs; and 3) Australia/New Zealand, comprised primarily of Torrens University. 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 Title IV programs, Department of Education staffing levels, borrower defense to repayment applications, gainful employment or similar measures, 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 other businesses, including existing educational institutions; risks relating to the timing of regulatory approvals; Strategic Education’s ability to implement its growth strategy; risks associated with the ability of Strategic Education’s students to finance their education in a timely manner; risks associated with cybersecurity incidents, including but not limited to reputational risks and possible liability under U.S. state and federal privacy statutes and legal actions; risks associated with the use of artificial intelligence and related tools; 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. 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 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 Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, and Free Cash Flow. We define 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) severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities, (2) income/loss recognized from the Company’s investments in partnership interests and other investments, and (3) discrete tax adjustments utilizing an adjusted effective income tax rate of 29.0% for both the three months ended June 30, 2025 and 2026. To illustrate currency impacts to operating results, 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 months ended June 30, 2026 are also presented on a constant currency basis utilizing an exchange rate of 0.64 Australian Dollars to U.S. Dollars, which was the average exchange rate for the same period in 2025. We define EBITDA as net income before other income (expense), the provision for income taxes, 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 (1) above. We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729002131/en/ Contacts For more information contact: Terese WilkeSenior Director of Investor RelationsStrategic Education, Inc.(612) [email protected]

Interested in Strategic Education Inc.? Here are five stocks we like better. Second-quarter performance improved: Revenue rose 3% to $330 million, operating income increased 9% to $53 million, and adjusted EPS climbed 16% to $1.76. Excluding a $13 million Australia labor-related charge, operating income would have risen 35%. Education Technology Services led growth: ETS revenue increased 15% and operating income rose 30%, driven by Sophia Learning’s 32% subscriber growth and Workforce Edge enrollment gains. The segment now contributes nearly 40% of consolidated operating income. Australia remains a headwind: Australia and New Zealand enrollment fell 5% amid international enrollment and visa-processing challenges, while the labor matter resulted in a $13 million reserve. Management expects the business to return to growth in early 2027, while still forecasting stronger-than-targeted EBIT margin expansion. 3 Education Stocks to Enroll in This Summer Strategic Education (NASDAQ:STRA) reported second-quarter results marked by growth in its Education Technology Services business, improved profitability in U.S. higher education and continued efforts to return its Australia and New Zealand operations to growth, executives said during the company’s earnings call. President and Chief Executive Officer Karl McDonnell said second-quarter revenue increased approximately 3% from the prior year to $330 million on a constant-currency basis. Operating expenses rose about 1.5%, including a $13 million one-time charge tied to a labor matter in Australia. Excluding that charge, operating expenses would have declined 3% year over year to $265 million, according to McDonnell. → This Tiny AI Supplier Could Be More Important Than the Chipmakers 3 Education Stocks To Stuff Your Stocking With Operating income was $53 million, up 9% from the prior-year period, while operating margin improved 90 basis points to 16%. Excluding the Australia-related charge, operating income would have increased 35% and operating margin would have been 20%, McDonnell said. Adjusted earnings per share rose 16% to $1.76, while year-to-date cash flow from operations increased 18% to $117 million. The company’s Education Technology Services, or ETS, division reported revenue growth of 15% to $42 million and a 30% increase in operating income to $20 million. The segment’s operating margin expanded 520 basis points to 46.2%. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Sophia Learning’s average subscriber base grew 32%, while revenue increased 27% to $21 million. McDonnell said the business is continuing to grow strongly despite reaching a larger revenue base. During the question-and-answer session, McDonnell addressed concerns about the use of artificial intelligence in online coursework. He said Strategic Education takes academic integrity and assessment quality seriously across its portfolio and that Sophia’s management team had already been developing enhancements to its academic-integrity controls before recent media coverage on the subject. → Innovative ETF Strategies That Are Paying Off This Summer “That’s something that we will continue to focus on,” McDonnell said, adding that academic-integrity enhancements would remain an investment priority for Sophia through the balance of 2026 and into 2027. Workforce Edge ended the quarter with 81 corporate agreements covering 4 million employees. Enrollments from Workforce Edge into Strayer University or Capella University increased 21% to roughly 4,000 students. McDonnell said ETS now accounts for nearly 40% of Strategic Education’s consolidated income from operations. In U.S. higher education, employer-affiliated enrollment rose 8% and reached an all-time high of 35% of total enrollment, an increase of nearly 300 basis points from the previous year. Healthcare enrollment increased 11% and represented 52% of U.S. higher education enrollment. Capella University launched a pre-licensure Bachelor of Science in Nursing program during the second quarter, enrolling its first cohort in July, McDonnell said. U.S. higher education revenue increased 2%, supported by higher revenue per student as well as lower scholarships and discounts. Executive Vice President and Chief Financial Officer Daniel Jackson said revenue per student also benefited from students taking more classes, though he noted that both course load and scholarship levels can vary by quarter. For the full year, the company continues to expect approximately flat revenue per student. Operating expenses in the segment declined 3%, which management attributed to productivity initiatives. Operating income rose 56% to $32 million, and the segment’s operating margin increased to 15% from 10% in the prior-year quarter. Student retention reached an all-time high of 89%. McDonnell said the company’s overall demand environment was “stable to pretty good,” with student acquisition rates flat to down. He said Strategic Education has not identified large language model searches as a material issue affecting student inquiries, though its marketing teams are working to ensure Strayer and Capella are favorably represented in such searches. The company’s marketing emphasis remains focused on employer partnerships and healthcare. McDonnell said unaffiliated enrollment on the Strayer side has not been a marketing priority, while non-healthcare enrollment growth is not currently a central part of the company’s marketing strategy. In Australia and New Zealand, total enrollment declined 5% and revenue fell just under 3% to $67 million. The segment reported operating income of $1 million after the $13 million reserve related to an ongoing labor matter involving casual faculty at Torrens University Australia. The matter concerns whether grading time should be included within casual faculty teaching contracts or paid separately. McDonnell said an Australian court initially ruled in the company’s favor, but an appeals court later determined that grading time should be separately compensated. Strategic Education has appealed to the High Court of Australia and established the reserve in the event the appeal is not heard or the appellate ruling is upheld. McDonnell said the company has already modified its instructional model and does not expect the change to increase instructional expense. Management expects to learn whether the High Court will take the case in September or early October. Domestic new-student growth in Australia has approached double digits, McDonnell said, but has not yet offset international enrollment declines. He cited challenges in the onshore transfer market and slower Australian visa processing, even in markets the government considers to have a high concentration of genuine students. The company reached its enrollment cap in Australia last year, and the cap was subsequently raised by about 3%, McDonnell said. He added that Strategic Education could benefit if visa approvals accelerate during the second half, as they did last year. Management expects the Australia business to return to growth in the first part of 2027 if domestic enrollment momentum continues. Strategic Education repurchased approximately 421,000 shares for $33 million during the quarter in addition to paying its regular quarterly dividend. The company had about $141 million remaining under its share repurchase authorization through year-end. McDonnell said the company may fall somewhat below its longer-term notional revenue-growth model for 2026, primarily because of Australia. However, he said he was “more than confident” that the company would exceed the model’s target of 200 basis points of EBIT margin expansion, potentially even including the Australia labor charge. Looking further ahead, McDonnell said he expects revenue growth to revert toward the company’s approximately 5% long-term model over the period between the second half of 2026 and the following year. Strategic Education, Inc is a publicly traded higher education services holding company headquartered in Herndon, Virginia. Through its primary operating subsidiaries, Strayer University and Capella University, the company delivers degree programs and professional development opportunities to working adults. Its offerings span undergraduate and graduate degrees, certificates, continuing education, and workforce training in fields such as business, technology, health services, education, and public administration. Strayer University, with a network of physical campuses across the United States complemented by an online platform, provides associate’s through doctoral degrees designed to accommodate non-traditional students. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Strategic Education Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Strategic Education (STRA) came out with quarterly earnings of $1.76 per share, missing the Zacks Consensus Estimate of $1.79 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.68%. A quarter ago, it was expected that this for-profit education company would post earnings of $1.51 per share when it actually produced earnings of $1.42, delivering a surprise of -5.96%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Strategic Education, which belongs to the Zacks Schools industry, posted revenues of $337.26 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.14%. This compares to year-ago revenues of $321.47 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Strategic Education shares have added about 1.5% since the beginning of the year versus the S&P 500's gain of 8.5%. While Strategic Education has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Strategic Education was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.89 on $325.77 million in revenues for the coming quarter and $7.20 on $1.29 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Schools is currently in the top 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Laureate Education (LAUR), has yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This for-profit higher education purveyor is expected to post quarterly earnings of $0.96 per share in its upcoming report, which represents a year-over-year change of +21.5%. The consensus EPS estimate for the quarter has been revised 1.1% higher over the last 30 days to the current level. Laureate Education's revenues are expected to be $605.46 million, up 15.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Strategic Education Inc. (STRA) : Free Stock Analysis Report Laureate Education (LAUR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Higher education company Strategic Education (NASDAQ:STRA) will be announcing earnings results this Wednesday before market hours. Here’s what to expect. Strategic Education missed analysts’ revenue expectations last quarter, reporting revenues of $305.9 million, flat year on year. It was a slower quarter for the company, with a significant miss of analysts’ EPS estimates and a miss of analysts’ EBITDA estimates. It reported 87,165 domestic students, flat year on year. Is Strategic Education a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting Strategic Education’s revenue to grow 1.9% year on year, slowing from the 2.9% increase it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Strategic Education has missed Wall Street’s revenue estimates multiple times over the last two years. Looking at Strategic Education’s peers in the consumer discretionary segment, some have already reported their Q2 results, giving us a hint as to what we can expect. AMC Entertainment delivered year-on-year revenue growth of 14.2%, beating analysts’ expectations by 8.7%, and Delta reported revenues up 18.7%, topping estimates by 3.9%. AMC Entertainment traded up 13.4% following the results while Delta was down 3.2%. Read our full analysis of AMC Entertainment’s results here and Delta’s results here. In the last twelve months or so, the market has shifted its attention from one area of macro importance to the next (AI disintermediation and AI capex spending to geopolitical conflict, rates, and whether the economy is on solid footing or not). While some of the consumer discretionary stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 2% on average over the last month. Strategic Education is up 1.9% during the same time and is heading into earnings with an average analyst price target of $88.67 (compared to the current share price of $78.60). ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE.