Strategic Education (STRA) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 9% year-over-year to $313 million, with adjusted revenue reported at $312.3 million and total enrollment up 8.4% to 106,190.

• Operating income increased over 60% to $44 million, with adjusted operating income at $43.9 million and net income more than doubling to $29.9 million.

• Adjusted diluted EPS rose over 60% to $1.34, with reported figures of $1.33 and $1.24; all segments contributed to growth.

• Corporate-affiliated enrollment in U.S. higher education grew 17% year-over-year, now representing about 29% of total enrollment.

• Quarterly cash dividend of $0.60 per share declared and paid during Q2 2024.

Financial highlights

• Operating expenses increased 3% year-over-year, with adjusted operating margin expanding by 460 basis points to 14.1%.

• U.S. higher education revenue grew 7% to $216.6 million, with operating income up 194% to $19.8 million.

• ETS revenue increased 26% to $24.5 million, with operating income up 63% to $10 million; Sophia Learning revenue grew 40% and subscribers rose 37%.

• Australia-New Zealand revenue grew 10% to $71.1 million, with enrollment up 6.4% and operating income at $14.1 million.

• Cash, cash equivalents, and marketable securities totaled $256.2 million as of June 30, 2024; cash provided by operations for the first six months was $101.9 million.

Outlook and guidance

• Full-year operating expenses will be slightly higher than previously modeled due to increased investments, especially in ETS and ANZ.

• Operating margin expansion for 2024 now expected to be 150–175 basis points, below the earlier forecast.

• Management expects continued growth driven by enrollment gains, Sophia Learning expansion, and ongoing investments in student success and marketing.

• Revenue and enrollment growth in U.S. higher education expected to normalize to 5–10% over the long term.

• Forward-looking statements highlight risks related to regulatory changes, integration of acquisitions, and market conditions.