Strategic Education Co., Ltd. (STRA – Free Report) (SEI) reported impressive fourth quarter 2023 results. Its quarterly earnings and revenue exceeded the Zacks Consensus Estimate and grew year-over-year.
Driven by continued enrollment growth in United States Higher Education (“USHE”), significant enrollment growth through employer partnerships, and significant enrollment growth in educational technology services (formerly known as alternative learning) Growth across the three segments was driven by strong growth and improved performance in Educational Technology Services (previously known as Alternative Learning). Australia/New Zealand (“ANZ”) led the results.
STRA stock soared 16.6% on February 29th following strong financial results.
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SEI reported adjusted earnings per share of $1.68, which beat the Zacks Consensus Estimate of $1.37 by 22.6% and was an impressive increase from the year-ago quarter's level of 78 cents.
Total revenue was $302.7 million, 1.6% above the consensus estimate of $298 million and up 12.1% from the year-ago level. Excluding the impact of currency fluctuations, revenue for the quarter increased 12.5% to $303.6 million.
Total enrollment increased 8% to 105,485 students.
Segment details
Uche: This segment consists of Strayer University and Capella University. The division's revenue increased 8.9% year-over-year to $217.6 million, driven by strong enrollment and per-student revenue.
The number of students increased by 10.5% compared to the same period last year to 86,233. FlexPath enrollment was 21% of his USHE enrollment, compared to 19% a year ago.
Adjusted operating margin for the quarter was 15.1%, an increase of 850 basis points (bps) compared to the same period last year.
educational technology services: This segment includes Employer Solutions, Workforce Edge, and Sophia Learning. The division's quarterly revenue increased 30.7% year-over-year to $21.9 million, supported by growth in Sophia Learning subscriptions and employer-related registrations.
Sophia Learning's average total subscriber count increased approximately 44% from the year-ago level. Employer-related registration was 27.7% of USHE registration, while in the same period last year it was 24.7%.
Adjusted operating margin for the reported quarter was 40.3%, an increase of 1,620 bps year over year.
new zealand: This segment includes Torrence University, Think Education, and Media Design School. The division's revenue increased 18.2% year over year to his $63.3 million due to increased revenue per student. On a constant currency basis, revenue increased 20% compared to the same period last year.
Student enrollment within ANZ during the reported quarter decreased by 2% compared to the same period last year to 19,252.
Adjusted operating profit margin was 23.5%, an increase of 490 bps year-on-year.
Operational highlights
Adjusted operating income increased 109.2% to $56.6 million from $27.2 million in the prior-year period. Adjusted operating margin was 18.7%, expanding 860 bps from the same period last year.
Adjusted EBITDA for the reported quarter was $74.4 million, up from $45.2 million in the year-ago period.
Highlights of 2023
Total revenue was $1.13 billion, an increase of 6.3% compared to $1.03 billion in 2022. Excluding currency fluctuations, revenue in 2023 increased by 7.4% to $1.14 billion. Total enrollment increased 4.7% to 100,959 students.
Adjusted earnings per share were $3.72, compared with $2.51 a year ago. Adjusted operating margin improved from 8.3% in 2022 to 11%. Adjusted EBITDA also increased to $196.5 million from $163.1 million in the prior year period.
Financial details
As of December 31, 2023, STRA's cash and cash equivalents were $168.5 million, compared to $213.7 million at year-end 2022.
Cash provided by operating activities was $117.1 million in 2023, compared to $126.1 million in the prior year period. Capital expenditures in 2023 were $36.9 million, compared to $43.2 million a year ago.
Zacks Rank and Top Picks
SEI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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