Strategic Education's Q4 2024: Navigating Contradictions in International Caps, Revenue Trends, and Regulatory Challenges

These are the key contradictions discussed in Strategic Education, Inc.'s latest 2024Q4 earnings call, specifically including: International Student Caps, Revenue per Student Trends, Revenue Growth Expectations, and Regulatory Environment in Australia:



Revenue and Earnings Growth:
- Strategic Education, Inc. reported revenue increased by 8% and operating income increased by 26% for the full year 2024, generating almost 200 basis points of operating margin expansion.
- The growth was driven by strong performance across all three segments, including US Higher Education, Australia and New Zealand, and Education Technology Services.

Enrollment Trends and Corporate Partnerships:
- US Higher Education grew average total enrollment by 6% in 2024, with employer-affiliated enrollment growing faster at 16%.
- This growth was supported by strong corporate partnerships, with more than 70% of incremental total enrollment in US Higher Education coming through corporate partners.

Education Technology Services Performance:
- The Education Technology Services segment had a record year, with revenue growing by more than 30% to over $100 million and operating income growing by almost 50%.
- This was due to the success of Sophia Learning and the addition of 11 new corporate partners for Workforce Edge, collectively employing more than 3.8 million employees.

Capital Allocation and Shareholder Returns:
- SEI generated $217 million pretax cash from operations in 2024, using this to return about $75 million to shareholders through a $2.40 common dividend and approximately $15 million in share repurchases.
- The company also repaid a $61 million balance on its revolver and refinanced a $250 million revolver, ending the year with just under $200 million in cash and marketable securities.

Australia and New Zealand Regulatory Environment:
- The company is monitoring and adapting to changes in Australia's political and regulatory environment, particularly the new regulation that aims to govern international student immigration through visa processing speed.
- While the change is seen as more favorable than previously proposed enrollment caps, SEI is still studying the potential impact on its Australia and New Zealand (ANZ) enrollment moving forward.