Strategic Education's Q1 2025: Navigating Contradictions in Enrollment Growth, Cost Management, and Regulatory Challenges

Enrollment growth and strategic focus, cost management and expense growth, international enrollment trends and strategies, enrollment growth expectations, and regulatory impact on ANZ enrollment are the key contradictions discussed in Strategic Education's latest 2025Q1 earnings call.



U.S. Higher Education Enrollment Trends:
- U.S. Higher Education enrollment slightly increased, with a 7% rise in employer-affiliated enrollment, offset by lower unaffiliated enrollment.
- The growth is driven by the company's strong corporate partnerships, which now account for 31% of total enrollment.

ETS Segment Performance:
- The Education Technology Services segment reported 45% revenue growth and a 37% increase in operating income.
- This growth is attributed to increased demand for Sophia Learning subscriptions, Workforce Edge employer partnerships, and high Net Promoter Scores.

Australia/New Zealand Enrollment Dynamics:
- ANZ total enrollment decreased 1%, driven by a decline in international enrollment due to regulatory changes impacting international students.
- The decrease in international enrollment is primarily due to a new verification process for transfer students, and the company is focusing on domestic marketing to shift enrollment growth.

Capital Allocation and Share Repurchase:
- Approximately 390,000 shares of common stock were repurchased for $32 million during the quarter.
- This capital allocation aligns with the company's strategy to return capital to shareholders while maintaining financial flexibility.

Sophia Learning and Workforce Edge Growth:
- Sophia Learning average total subscribers grew by 37% and revenue by 36%, with Workforce Edge enrollments nearly 50%.
- Growth is attributed to expanding employer relationships, reaching about 3.9 million employees across 78 corporate partners.