STRA - Earnings call transcript Q4 2024 | Strategic Education, Inc.

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Operator

Welcome to Strategic Education's Fourth Quarter 2024 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. to fourth conference XXXX quarter welcome we in results. and discuss will and everyone, Strategic call, Education's which Hello, full year and Chief Financial With Karl Daniel Robert are Officer. Executive Chief President Jackson, and us and Executive President Silberman, Vice Officer; today McDonnell, Chairman;

remarks, will we today's the call Following questions. for open

are XXXX. include current that of differ Litigation Securities press materially. the may made to actual The are cause to on forward-looking subject of based statements note results and of that release Education Please and call the number pursuant expectations Private that Reform statements to could risks today's this has assumptions, safe provisions a Act harbor in identified uncertainties Strategic

Education's XX-Qs filed, most to and annual are Education's Form about XX-K most the filings viewing and over well release on the the to press as XX-Ks. recent information and X-Ks, these call website uncertainties these may Strategic Further Karl. the report be like XX-Q, relevant full of Commission as Copies Securities with at to now other and strategiceducation.com. recent Exchange other available please be ahead. in found turn Strategic I'd future And go filings for Karl, the on and

Karl McDonnell

notional Day. We XXXX model, Thank reported Fall year our with results performance which Terese, this strong our were that we during Investor morning, good you, operating morning, SEI's and with everyone. consistent we pleased highlighted very XXXX full which reflect

For increased margin points of operating increased the and basis full XXX XXXX, almost XX%, year our revenue generating income X% expansion. operating

per for to earnings year XX% $X.XX. grew share adjusted Our the

employer-affiliated and Education for X% grew all faster, across the slightly strong by segments. year, employer-affiliated corporate average students. XXXX, at due the of and the stable Higher higher to retention but down reflecting strength full scholarships enrollment revenue was in enrollment XX%. total XX% remained U.S. U.S. ongoing of grew Education Higher partnership. mix was the Higher Education U.S. increasing in in fourth performance operating increased our Our Student X% approximately shift X XXXX in quarter

productivity expense growth well cost focus year. enabled enabled XX% the for Ed full ongoing at disciplined income and us on almost management operating Our and growth below growth Higher in U.S. revenue to keep

grew was enrollment as as segment The on basis, a predominantly continued for student by income in basis, currency Zealand X% XXXX higher Australia/New currency the revenue in ANZ Australia/New year. taking tuition student, total by higher average constant grew term enrollment XXXX. driven X% revenue driven growth Our a enrollment. Zealand and per segment enrollment On XX% constant was students increased operating per a aided well by which courses primarily small more increase. strong

that and and through processing potential still proposed moving monitor the the than Though previously to immigration previously believe attempt regulation its international of on enrollment proposed regulatory replaced international we're the and use student is in we favorable with Australia. will recently forward. caps, the a visa issue speed. studying ANZ more this our enrollment impact change to adapt continue new student govern environment to The evolving were caps We political

to Our segment million Services than Education more by operating and record revenue a by XX%. XX% over Technology had almost growing year, income $XXX

Workforce the largest-ever than higher model. corporate our touch team partners more X.X expectations Workforce employees. classes fourth employer direct-to-consumer launched XX a total both a another million of XX, had quarter, year, and our employer Edge which college-level newer, includes adding Sophia Edge year, last by partner, In revenue the Learning, great portal our subscribers growing a XX%. for exceeded support collectively also employing

onetime implementation-related this costs During result new the higher fourth a quarter, with partnership. our operating as were several expenses associated of

employees the University's cost the Strayer with more program Strayer to bachelor's, employee. Degrees@Work more a offers University earn from no to from certificate, tuition standard our expanded We also an to opportunity decade-old eligible Buy, at a it degree all-inclusive Best partnership or discount than program, associate, converting master's which

remains partners major corporate SEI's of network one competitive of Our strengths.

more Education last corporate major X-plus we will came fact, And our incremental partners. of over In than driver the income year XX% Higher partnerships in we revenue U.S. of expect these through that total growth and be the enrollment a years. ETS next had

distributable Lastly, expenditures, regarding roughly paid million under flow. in in free cash through million We $XXX our used leaving $X.XX revolver then this cash We in end XXXX. million capital about operations. $XXX and XXXX. us dividend We our and million refinanced us million existing repaid repurchases. securities share $XXX and and balance cash $XX common allocation generated with We $XX to capital $XX from leaving taxes million pretax invested just million $XXX about $XX our cash of balance return a the of $XX of at million million owners marketable in with our revolver, cash and to on

opportunity across this our we take of take thank ongoing our the to colleagues And with their like and support of and at with for Overall, behalf to board, Cherie, questions. on very my that, happy I'd XXXX were be performance SEI to commitment here students. all in pleased we'd

Operator

Capital One compile while the Markets. we will moment from the Instructions] line of Silber Q&A that Jeff [Operator with And roster. come BMO

Jeffrey Silber

a year in first, a you of new growth the focus enrollment enrollment extent to got know on little in than half was don't slow but guide to anything bit XQ. going did some there specific just thought specifically weaker or tougher? retention to, on a and because the comps from back Is Was perspective? Want we either number, enrollment I the it had trends.

Karl McDonnell

you No, remarks, I'd partnership in corporate strong. heard enrollment certainly, our remains that my prepared as say

there demand be continues environment nonaffiliated the strong. enrollment, to Our

our we in some enrollment I to of middle of think normalize average You the single when at was would beginning trend may year last the notional it point, recall, our operating that really, in about digits, long-term in high model thought X%.

around to going quarter. move X it's So in any

Day. enrollment term, be over below. last might which would is in long range, model presented quarters, that. Investor reflected in be we Other that single-digit it that But mid our Some will slightly the it our at notional quarters, that expect be above our we

Jeffrey Silber

Australia/New that. from shift appreciate might Zealand? you regulatory gears little to us a we I more be? give changes a the Can Okay, what perspective color exactly bit Can

Karl McDonnell

So the proposed had liberal government these...

Robert Silberman

Labor.

Karl McDonnell

Labor government, enough which did to not pass these caps, to student proposed international parliament, have had sorry, necessary support implemented. be was

use government of issued ministerial So going effect level which processing instead direction, called instead, they indicated just what's cap that to through same a a effectively to they're legislation, has enrollment. has get to hard time the the visa having international of the

said But may going be would we're quarter own out X government So the any place seen throughout what look into the of our they're modeling, for at as purposes though in foreign be it the like. to level those has or those Australia year modeling internal in the to migration the remains timing levels. because actually caps

Jeffrey Silber

you the from has already? happen Is And something few that expect timing over to started that months? next perspective, a

Karl McDonnell

that in the yet hit has enrollment not be wouldn't at of that starts very cap, kind that's the said It that until those normal all to up cap directive, we're we up at down. see against we're number when later visa to visas until because be It the they start happened year would but that's our that you may the slow and since beginning issued as enrollment ministerial year. buttress at this where they approved speed of

Robert Silberman

enrollment. student international The

Karl McDonnell

Yes.

Jeffrey Silber

Do from U.S. Obviously, D.C. of think And lot are in on you to you if these I you gears great. Any could go? doing? guys be being physically days Okay, government. a folks business DOGE going is there. students to the on get what terms potential let impact might shift be able your and Washington, some might that potential in

Karl McDonnell

Well, had XX-plus the particularly employees, government always Strayer a federal University of we've over years. large presence last at

is and continue. could before seen that something we've certainly that So

new terms the are the of political still of in new confirmed. administration, process In appointees impact from being the obviously,

we'll that have just what's So as to takes more we're continue to continuing any update monitor comments we happening, shape. policy and

Operator

[Operator Instructions] come Paris line from Barrington Alex for Research. And moment will of next our the with One question. that

Alexander Paris

new a heard your on about [ ] ANZ. read response. Ministerial quick XXX I I Directive follow-up XXX have (sic) Direction I the Ministerial

roughly Torrens international. recall, domestic, I As XX-XX is

of First to then cap? your notional gets will correct? this that year second, do when And all, what later that is enrollment you closer

Karl McDonnell

marketing really over domestic Alex, enrollment. advertising we've pivot to with last dollars our student and emphasize year, to our Well, the worked

But visa lag right. with since been the it's years times couple reopened honestly, Historically, country used about XX-XX. now are a dealing for something of ago, we've we You're a that's years couple of so to.

have notwithstanding continue whatever Torrens academic in we're enrollment to the over the has Australia, able more to market. the We be grow we'll great we in delays than to past domestic intend time. may And that a exist, to Australian confident high-quality Australian market the programs. reputation

Alexander Paris

in the much looked operating $XXX U.S. ANZ, expense wondering, what did one, this to operating and, ANZ. Education for then adjusted then Higher I'm year? up year-over-year, and And And came U.S. those a To growth Higher ETS helpful. extent, from with there. about million, at investments income at pretty XX% see and number generally incremental incremental in in and adjusted I impact expectations. extent some expenditures operating impact the income Education, lesser Great, line ETS

is year. And had foreseeable margin in on that to XXX adjusted of the 'XX expansion notional bps, where forecast AOI based pretty the the over I do XXX operating up close should model expect the the margin you which of was at realize future? beginning bps we income 'XX,

Daniel Jackson

precisely operating how of it. on times had Alex, their as we talked is portion The big several increase an about this year happened And we've expected expense the fourth quarter a in and was definitely ETS-related Dan. impact income. yes, this

base about I some typically year. there'll in think X good million even marketing expense it with shape is now we in seasonality the the But investment with right additional of base is in this ETS continue need through is Obviously, which investment, the quarters. middle to think the pretty where we concentrated expense $XXX in XXXX. be

Alexander Paris

Okay.

on the in where ought in be So in be need XXXX is expense just clear, to it based adjusted requirement? approximately $XXX to XXXX operating and million

Daniel Jackson

quarters, where those Yes. are we periods have are for more the uniform expense But X are the quarters. QX, X bigger be in the typically again, The throughout given quarters. QX middle also higher and X marketing that ANZ, investment won't it

Karl McDonnell

model. sorry, what XXX expect in our over next address other years. of the on part just we to Alex, That your points basis notional is question several the that's

Alexander Paris

be high I enrollment model, expect in Higher I long-term little And ANZ for XXXX U.S. then the forecast at Education the we end. we about generous. should guidance growth about enrollment ANZ line And thing, with up Great. in roughly I revenue while this then feeling were Higher and in Higher on XXXX? digits in the digits and Education enrollment Education acceleration lower U.S. think is growth versus thinking for mid-single ANZ. a at you're single X%, notional perhaps think and How U.S. and think low we're Should XXXX?

Karl McDonnell

direction of enrollment I operating the pretty beyond Well, the we of in be on mid-single margin other we the in It with out grow about just expenses, Investor basis XXXX. XXX given that the we're obviously, years, than gave that good going feel Dan can plan don't laid Day at our in X-year a if to revenue. just the and were our obviously, personally at points long seen, notional 'XX roughly that our roughly be happen know you digits many But remains I good what over model reiterated and going is what's business we surprise to expansion. case confident wouldn't me XXXX. over It term. to history

Operator

of will that Jasper One moment And for question. come Bibb line with from Truist our the Securities. next

Jasper Bibb

my cutting hear in me I hope so clearly. line can been I you apologize out and as has

Just this, a discussing questions just know the been can but clarify. on framework 'XX. there's I wanted set level couple to for you

consistent guess, what expansion. on is points 'XX, like growth this you're other, revenue prepared XXX for to we expect call operating I the sounds any and Do basis it I that framework adjusted there right? notional on should 'XX the margin with have that's provide model So the of today? And detail

Karl McDonnell

fall a plan you as guidance. Well, of X-year back in We know, we the don't Yes. did introduce 'XX. specific provide any

needed we of the a pretty a good ETS for to of the lot have We handle in made We back 'XX. half of -- expenses.

just earlier current on disciplined going for volume see. that points the margin do don't good we [indiscernible] that X or about basis Dan's of the But the revenue year. of are than to the kind actual in over the can based rate point, managers years? XXX up and expansion yes, feel revenue notional expenses that not are. down cost model seems such that enrollment what We be We're trying know other we because We is we pretty on So to of we're expenses coy. confident to good run be we

Jasper Bibb

half comment in wanted guess maybe we growth cadence normal we some hoping expect X the assume then made. the operating the this and for as a second plan. in you've maybe to off the expansion planned been what margin you split should could first bit a And of half, seasonality years little would growth past Okay. has ask 'XX about with I of on investments investments

Daniel Jackson

a peg. we've of our points. Dan. The What is model anchored bit It's notional quarterly harder margin XXX on is to little basis

fair I detailed think and enrollment. a to quarterly that will But -- throughout requires try and give it's on beyond little probably that view more the margin bit assume the revenue year. would you improve be to

Jasper Bibb

maybe Could Ed I Ed guess a decline, X U.S. then drive Last student per than channel 'XX the if about expected drivers how revenue employer decline the continues you should that of the to we we and quarter. U.S. at there? Higher per little in me. growth was for Higher steeper revenue think Okay. for the the explain student in

Daniel Jackson

It Jasper, driven is at at to we Yes. employer The typically what 'XX U.S. to scholarships shift be about student mostly would slightly maybe expect. Ed Higher per stable. but pretty than was Ed likely the up Higher higher we pretty also revenue were expected, U.S. stable, by but continued

Robert Silberman

Rob. I big we the U.S. level Higher don't this Ed, see is as At ourselves mean, price Jeff, in takers. broadest

of on down for may on The when the some objective tuition, general, the down. students. cost our drive tuition. to programs some we it's it But think Our is opportunity to variability of and in drive opportunity have individual education

Operator

I showing time. no over now back like would I'm McDonnell the call Mr. Karl questions at to any for this further remarks. turn to closing

Karl McDonnell

on updating X results in Thank quarter's you, everybody. you about forward to We look next months.

Operator

program. concludes participating. This today's you Thank all for

now may You disconnect.

Strategic Education (STRA) 27 Feb 252024 Q4 Earnings call transcript