Strategic Education (STRA) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 8.5% to $312.3 million, with operating income up over 60% to $43.9 million and EPS rising 62.2% to $1.33; net income more than doubled to $29.9 million.

• All segments—U.S. Higher Education, Education Technology Services, and Australia/New Zealand—reported enrollment and revenue growth, with Sophia Learning subscribers up 37%.

• U.S. Higher Education enrollment grew 8.4% to 87,077, with employer-affiliated enrollment rising to 29.3%.

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

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

Financial highlights

• Adjusted operating expense increased 3% year-over-year to $268.3 million.

• Adjusted operating margin improved by 460 basis points to 14.1% of revenue.

• Adjusted net income rose 64.1% year-over-year to $32.3 million.

• Adjusted EBITDA reached $63.3 million, up from $45.4 million year-over-year.

• Bad debt expense as a percentage of revenue was 4.3%, nearly flat year-over-year.

Outlook and guidance

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

• Operating margin expansion for the year is now projected at 150–175 basis points, below earlier expectations.

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

• No specific revenue outlook provided, but long-term enrollment and revenue growth in U.S. higher ed expected to normalize to 5–10%.

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