Strategic Education (STRA) investor relations material

Executive summary

• Revenue grew 0.8% year-over-year to $305.9 million in Q1 2026, driven by Education Technology Services (ETS) and Australia/New Zealand (ANZ), partially offset by a decline in U.S. Higher Education (USHE) revenue due to lower enrollment and revenue per student.

• Net income increased to $32.8 million from $29.7 million year-over-year, with diluted EPS rising to $1.48 from $1.24; adjusted diluted EPS was $1.42, up 9.2%.

• Free cash flow for Q1 2026 was $77.3 million, and adjusted operating income rose 3.5% to $43.2 million.

• 493,105 shares were repurchased for $40 million during the quarter; $173.5 million remains authorized for repurchases.

• A cybersecurity incident in February 2026 was contained quickly, with no material adverse effect on operations.

Financial highlights

• ETS revenue grew 21% to $41.5 million, with operating income up 42% to $19.7 million and a 47% margin.

• U.S. Higher Education revenue declined 3.8% to $212.6 million, with operating income of $25.5 million and a 12% margin.

• ANZ revenue increased 7.4% to $51.8 million, but declined 4% on a constant currency basis; operating loss was $2.0 million.

• Adjusted EBITDA was $62.2 million, up from $60.0 million year-over-year.

• Adjusted net income increased 1.3% to $31.6 million.

Outlook and guidance

• Management expects Q1 to be the low point for both absolute revenue and revenue growth in 2026, with improving enrollment trends in USHE and confidence in achieving EBIT and EPS targets.

• Full-year revenue per student in the U.S. is expected to remain flat, offsetting first quarter declines.

• Management is optimistic about reaching 200 basis points of adjusted operating margin improvement, even if revenue growth is slightly below plan.

• USHE and ANZ segments may reach enrollment growth by year-end, though this is not guaranteed.

• The company believes its liquidity and cash flow are sufficient to meet needs for the next 12 months and beyond.