Strategic Education, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Consolidated revenue increased 1.6% year-over-year (YOY) to $325.1 million for the three months ended September 30, 2026, compared to $319.9 million in 2025; revenue on a constant currency basis increased 0.1% to $320.1 million.
• GAAP loss from operations was $87.6 million, compared to income from operations of $37.0 million (11.6% margin) in 2025, primarily due to a $134.1 million non-cash impairment charge for goodwill and intangibles related to the Torrens University acquisition.
• Adjusted income from operations on a constant currency basis was $50.2 million, compared to $51.3 million in 2025, with an adjusted operating margin of 15.7% versus 16.0%.
• Net loss was $98.3 million compared to net income of $26.6 million in 2025; adjusted net income on a constant currency basis was $36.4 million compared to $37.7 million in 2025.
• Adjusted EBITDA was $71.0 million, up from $69.6 million in 2025.
• Diluted loss per share was $4.68 compared to diluted earnings per share of $1.15 in 2025; adjusted diluted EPS on a constant currency basis increased to $1.69 from $1.63.
• Consolidated bad debt expense as a percentage of revenue was 4.6% in Q3 2026, compared to 4.7% in 2025.
• For the first nine months of 2026, cash provided by operations was $173.5 million compared to $159.0 million in 2025.
• Free cash flow for the first nine months of 2026 was $136.7 million, compared to $127.0 million in 2025.

Guidance and Future Outlook

• Management reassessed near-term growth expectations for the Australia/New Zealand (ANZ) segment due to persistent international student immigration constraints.
• The company anticipates ongoing regulatory challenges in Australia and New Zealand affecting enrollment.

Business Segments and Product Lines

• Education Technology Services (ETS): Revenue increased 11.9% YOY to $42.8 million, driven by Sophia Learning subscription growth and higher employer-affiliated enrollment. ETS operating income was $18.2 million (42.5% margin) compared to $16.0 million (41.7% margin) in 2025. Sophia Learning revenue increased 19.8% to $21.3 million, with average total subscribers up 22%. Workforce Edge holds 83 corporate agreements employing approximately 4,030,000 employees.
• U.S. Higher Education (USHE): Revenue increased 0.3% to $213.7 million, driven by higher revenue per student. Operating income was $22.0 million (10.3% margin) compared to $22.9 million (10.7% margin) in 2025. Total enrollment decreased 1.1% to 84,725, while employer-affiliated enrollment rose to 34.7% of total enrollment (from 32.7% in 2025). The healthcare portfolio enrollment increased 9% YOY, now comprising 54% of USHE total enrollment. Strayer University launched an Associate of Applied Science in Radiologic Technology program in October 2026, joining other new licensure-track healthcare offerings. FlexPath enrollment represented 26% of USHE enrollment, with healthcare programs comprising 73% of FlexPath.
• Australia/New Zealand (ANZ): Enrollment decreased 9.1% to 17,101 due to regulatory changes impacting international enrollment, partially offset by domestic growth. Revenue was $68.6 million, relatively unchanged, but revenue on a constant currency basis decreased 7.2% to $63.6 million. Operating income was $10.8 million (15.8% margin) compared to $12.5 million (18.2% margin) in 2025; on a constant currency basis, operating income was $10.0 million with a 15.7% margin.

Market and Competitive Landscape

• The healthcare portfolio within USHE continues to show strong growth, with 38% of healthcare enrollment coming from employer partners.
• The company faces competitive factors and regulatory actions in the U.S. and Australia/New Zealand, including potential impacts from Title IV regulations, gainful employment measures, and 90/10 rules.

Risks and Challenges

• Persistent international student immigration constraints and regulatory changes in Australia have negatively impacted ANZ enrollment and growth expectations.
• A $134.1 million impairment charge was recorded for goodwill and intangibles associated with the Torrens University acquisition.
• Forward-looking statements highlight risks related to student enrollment pace, compliance with Title IV and other federal/state regulations, legislative actions by the U.S. Congress and Department of Education, and potential future impairments in ANZ.
• Additional risks include cybersecurity incidents, the use of artificial intelligence, the ability of students to finance education, and general economic conditions.

Management Commentary and Tone

• Management cited strength in the Education Technology Services segment and higher revenue per student in U.S. Higher Education as drivers for consolidated revenue growth despite enrollment declines in ANZ.
• The tone reflects a focus on ongoing employer-focused growth strategies in the U.S. while acknowledging significant headwinds in the international market due to regulatory environments.

Other Key Points

• The company repurchased 347,472 shares of common stock for $28.5 million during the third quarter of 2026; year-to-date repurchases totaled 1,261,201 shares for $101.3 million.
• The company declared a regular quarterly cash dividend of $0.60 per share, payable on December 7, 2026, to shareholders of record as of November 30, 2026.
• At September 30, 2026, the company held $138.6 million in cash, cash equivalents, and marketable securities with no debt outstanding under its revolving credit facility.
• Capital expenditures for the first nine months of 2026 were $36.8 million, and including cloud computing investments, totalized $44.8 million.
• Contract liabilities increased to $143.1 million at September 30, 2026, from $96.2 million at December 31, 2025.