Strategic Education, Inc. Reports Third Quarter 2025 Results

Education Technology Services revenue up 46% YOY and operating income up 48% YOY

Sophia Learning revenue and subscribers up 42% YOY

U.S. Higher Education's healthcare portfolio total enrollment increased 7% YOY

Strategic Education, Inc. (Strategic Education) (NASDAQ:STRA) today announced financial results for the period ended September 30, 2025.

STRATEGIC EDUCATION CONSOLIDATED RESULTS

Three Months Ended September 30

• Revenue increased 4.6% to $319.9 million compared to $306.0 million for the same period in 2024, driven by strength within the Education Technology Services segment. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 5.1% to $321.7 million in the third quarter of 2025 compared to $306.0 million for the same period in 2024. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
• Income from operations was $37.0 million or 11.6% of revenue, compared to $36.3 million or 11.9% of revenue for the same period in 2024. Adjusted income from operations on a constant currency basis, which is a non-GAAP financial measure, was $51.7 million compared to $37.1 million for the same period in 2024. Adjusted income from operations excludes one-time charges associated with restructuring activities conducted during the quarter. The adjusted operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 16.1% compared to 12.1% for the same period in 2024.
• Net income was $26.6 million compared to $27.7 million for the same period in 2024. Adjusted net income on a constant currency basis, which is a non-GAAP financial measure, was $38.0 million compared to $27.9 million for the same period in 2024.
• Adjusted EBITDA, which is a non-GAAP financial measure, was $69.6 million compared to $56.2 million for the same period in 2024.
• Diluted earnings per share was $1.15, unchanged from the same period in 2024. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, increased to $1.64 from $1.16 for the same period in 2024. Diluted weighted average shares outstanding decreased to 23,209,000 from 24,173,000 for the same period in 2024. During the three months ended September 30, 2025, the Company repurchased 428,837 shares of common stock for $34.3 million, and has repurchased 1,145,983 shares for $94.3 million through the first nine months of 2025.

Education Technology Services Segment Highlights

• For the third quarter, average total subscribers at Sophia Learning increased approximately 42% from the same period in 2024, and Sophia Learning revenue increased 42.2% to $17.8 million compared to $12.5 million for the same period in 2024.
• As of September 30, 2025, Workforce Edge had a total of 80 corporate agreements, collectively employing approximately 3,870,000 employees.
• ETS revenue increased 45.6% to $38.3 million in the third quarter of 2025 compared to $26.3 million for the same period in 2024, driven by growth in Sophia Learning subscriptions, higher employer affiliated enrollment, and revenue from new Workforce Edge employer partnerships.
• ETS income from operations was $16.0 million in the third quarter of 2025 compared to $10.8 million for the same period in 2024. The operating income margin was 41.7% compared to 41.0% for the same period in 2024.

U.S. Higher Education Segment Highlights

• For the third quarter, student enrollment within USHE decreased 1.0% to 85,640 compared to 86,533 for the same period in 2024. Our ongoing focus on employers is generating consistent growth in employer affiliated enrollment, but in the third quarter was again offset by a decline in unaffiliated enrollment. Employer affiliated enrollment in the third quarter hit a new all-time high of 32.7% of USHE enrollment, up from 29.8% during the same period in 2024.
• USHE's healthcare portfolio generated strong total enrollment growth during the third quarter, increasing 7% from the same period in 2024 and now comprises 49% of USHE total enrollment compared to 46% for the same period in 2024. Of USHE's total healthcare enrollment, approximately 37% is from employer partners.
• For the third quarter, FlexPath enrollment was 24% of USHE enrollment, consistent with the same period in 2024. Healthcare programs comprise 75% of FlexPath enrollment.
• Revenue increased 2.6% to $213.1 million in the third quarter of 2025 compared to $207.7 million for the same period in 2024, driven by higher third quarter revenue per student.
• Income from operations was $22.9 million in the third quarter of 2025 compared to $11.4 million for the same period in 2024. The operating income margin was 10.7% compared to 5.5% for the same period in 2024.

Australia/New Zealand Segment Highlights

• For the third quarter, student enrollment within ANZ decreased 2.1% to 18,808 compared to 19,205 for the same period in 2024. Lower international enrollment, resulting from regulatory changes in Australia, was partially offset by progress growing domestic enrollment, which is expected to be a bigger driver of future growth.
• Revenue decreased 4.7% to $68.6 million in the third quarter of 2025 compared to $71.9 million for the same period in 2024, driven by lower third quarter student enrollment and lower revenue per student due to foreign currency exchange. Revenue on a constant currency basis, which is a non-GAAP financial measure, decreased 2.3% to $70.3 million in the third quarter of 2025 compared to $71.9 million for the same period in 2024, driven by lower third quarter student enrollment.
• Income from operations was $12.5 million in the third quarter of 2025 compared to $14.8 million for the same period in 2024. The operating income margin was 18.2% compared to 20.6% for the same period in 2024. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $12.9 million in the third quarter of 2025 compared to $14.8 million for the same period in 2024. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 18.3% compared to 20.6% for the same period in 2024.

BALANCE SHEET AND CASH FLOW

At September 30, 2025, Strategic Education had cash, cash equivalents, and marketable securities of $182.6 million and no debt outstanding under its revolving credit facility. For the first nine months of 2025, cash provided by operations was $159.0 million compared to $153.4 million for the same period in 2024. Capital expenditures for the first nine months of 2025 were $32.0 million compared to $29.3 million for the same period in 2024. Capital expenditures including cloud computing investments, which flow through operating cash flow within other assets, for the first nine months of 2025 were $45.2 million compared to $41.6 million for the same period in 2024. Free cash flow for the first nine months of 2025, which is a non-GAAP financial measure, was $127.0 million compared to $124.1 million for the same period in 2024.

For the third quarter of 2025, consolidated bad debt expense as a percentage of revenue was 4.7% compared to 4.5% of revenue for the same period in 2024.

COMMON STOCK CASH DIVIDEND

Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on December 8, 2025 to shareholders of record as of December 1, 2025.

CONFERENCE CALL WITH MANAGEMENT

Strategic Education will host a conference call to discuss its third quarter 2025 results at 10:00 a.m. (ET) today. This call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section. To participate in the live call, investors should register here prior to the call to receive dial-in information and a PIN.

About Strategic Education, Inc.

Strategic Education, Inc. (NASDAQ:STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We primarily serve working adult students globally through our core focus areas: 1) Education Technology Services, developing and maintaining relationships with employers to build education benefits programs providing employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses that are ACE-recommended for college credit; 2) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offering flexible and affordable associate, bachelor's, master's, and doctoral programs; and 3) Australia/New Zealand, comprised primarily of Torrens University. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today's workforce and find a path to bettering their lives.

Forward-Looking Statements

This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "expect," "estimate," "assume," "believe," "anticipate," "may," "will," "forecast," "outlook," "plan," "project," "potential" and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education's plans, strategies and prospects; and future events and expectations. The statements are based on Strategic Education's current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:

• the pace of student enrollment;
• Strategic Education's continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements;
• legislation and other actions by the U.S. Congress, actions by the current administration, rulemaking and other action by the Department of Education or other governmental entities, including without limitation action related to Title IV programs, Department of Education staffing levels, borrower defense to repayment applications, gainful employment or similar measures, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand;
• competitive factors;
• risks associated with the opening of new campuses;
• risks associated with the offering of new educational programs and adapting to other changes;
• risks associated with the acquisition of existing educational institutions, including Strategic Education's acquisition of Torrens University and associated assets in Australia and New Zealand;
• the risk that the benefits of the acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected;
• the risk that the acquisition of Torrens University and associated assets in Australia and New Zealand may not advance Strategic Education's business strategy and growth strategy;
• risks relating to the timing of regulatory approvals;
• Strategic Education's ability to implement its growth strategy;
• the risk that the combined company may experience difficulty integrating employees or operations;
• risks associated with the ability of Strategic Education's students to finance their education in a timely manner;
• general economic and market conditions; and
• additional factors described in Strategic Education's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Many of these risks, uncertainties and assumptions are beyond Strategic Education's ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.

Non-GAAP Financial Measures

In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for total costs and expenses, income from operations, operating margin, income before income taxes, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company's ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company's results of operations period-over-period. These measures are Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, and Free Cash Flow. We define Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company's restructuring activities, (2) income/loss recognized from the Company's investments in partnership interests and other investments, and (3) discrete tax adjustments utilizing adjusted effective income tax rates of 29.5% and 29.0% for the three months ended September 30, 2024 and 2025, respectively. To illustrate currency impacts to operating results, Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS for the three months ended September 30, 2025 are also presented on a constant currency basis utilizing an exchange rate of 0.67 Australian Dollars to U.S. Dollars, which was the average exchange rate for the same period in 2024. We define EBITDA as net income before other income (expense), the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, and the amounts in (1) above. We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.

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Terese Wilke

Senior Director of Investor Relations

Strategic Education, Inc.

(612) 977-6331

[email protected]