Strategic Education (STRA -0.14%), an operator of accredited universities and technology-enabled education services, reported earnings on July 30, 2025. The main headlines: its adjusted non-GAAP earnings per share reached $1.54—above the analyst estimate of $1.43 (non-GAAP)—while revenue landed at $323.5 million, slightly exceeding consensus by $0.5 million (non-GAAP). Both earnings (non-GAAP) and revenue (non-GAAP) reflected year-over-year growth, bolstered by robust performance in the Education Technology Services segment and gains from employer partnerships. Operating margin improved compared to the same period in 2024, but ongoing declines in traditional student enrollment tempered overall growth.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.54 | $1.43 | $1.33 | 15.8% |
| Revenue (Non-GAAP) | $323.5 million | $323.0 million | $312.3 million | 3.6% |
| Adjusted EBITDA (Non-GAAP) | $68.3 million | $63.3 million | 7.9% | |
| Adjusted Income from Operations (Non-GAAP) | $49.1 million | $43.9 million | 11.8% (rounded to one decimal place, but calculation shows 11.8% is correct) | |
| Operating Margin (Non-GAAP) | 15.2% | 14.1% | 1.1 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Recent Strategic Focus
The company operates through three main university brands: Capella University, Strayer University, and Torrens University. Both offer undergraduate and graduate degrees, with a growing emphasis on online delivery and employer-driven programs. The company also provides education technology products through its Education Technology Services segment, including Sophia Learning and Workforce Edge.
In recent years, Strategic Education's strategy has increasingly prioritized partnerships with employers to drive enrollment, particularly in high-demand fields like healthcare. Innovation has been central, with offerings like FlexPath, a competency-based learning program that allows self-paced progress. Maintaining regulatory compliance and financial discipline are core to its continued access to federal student aid and ability to support ongoing investment in technology and curriculum development.
Quarter in Detail: Financial and Operational Highlights
Adjusted earnings and revenue (non-GAAP) both outpaced Wall Street estimates. Operating income (GAAP) improved, supported by higher-margin Education Technology Services.
The Education Technology Services segment delivered the most dramatic results, as revenue surged nearly 50% to $36.7 million. Sophia Learning, an online learning platform, reported a 39.8% jump in revenue and saw the average number of subscribers climb approximately 40%. Workforce Edge, the education benefits software platform, served 80 employer partners—up from 78 last quarter—representing approximately 3.87 million employees as potential learners. Notably, the company highlighted its "Best Buy" partnership as a key template for future employer-focused relationships.
In contrast, U.S. Higher Education segment revenue edged down 0.5% (GAAP). Total enrollment slipped 0.8% to 86,339 students. However, the proportion of students enrolled through employer partnerships reached a record 31.8%, up from 29.3% in Q2 2024. The healthcare portfolio continued to outperform, with enrollment up 8% year over year to represent 47% of the U.S. Higher Education total. FlexPath, described as a self-paced, competency-based educational model, accounted for 23% of the U.S. Higher Education segment’s enrollment, and is even more prominent in healthcare fields.
The Australia/New Zealand division faced ongoing regulatory headwinds that impacted international student recruitment, resulting in a 2.8% revenue decline and a 3.1% drop in total enrollment. However, revenue increased slightly on a local-currency basis thanks to domestic student growth—a strategic focus as international regulatory restrictions remain in place.
From a cash flow perspective, The company generated $77.7 million in free cash flow, a non-GAAP financial measure, over the first six months of 2025, slightly down from $82.0 million in the prior year. Capital expenditures for the first six months of 2025 were $21.2 million compared to $19.9 million for the same period in 2024. Capital expenditures including cloud computing investments were $29.7 million compared to $25.9 million for the same period in 2024. Bad debt expense remained modest, decreasing to 4.0% of revenue. The company continued to return cash to shareholders, repurchasing 325,844 shares for $28.0 million and maintaining its quarterly dividend at $0.60 per share.
Additionally, adjusted operating income and margin (non-GAAP, constant currency) both saw meaningful improvement. Management previously outlined a notional model of 2–6% revenue growth with 200 basis points of margin improvement as a proxy for 2025. Year-to-date performance for the first six months of 2025 showed revenue growth of 3.7% and adjusted operating margin improvement of 120 basis points compared to the same period in 2024. However, there was no new or revised specific financial guidance included in the latest quarterly release.
Looking Ahead: Management Outlook and Areas to Watch
Strategic Education did not provide updated financial guidance for the remainder of fiscal 2025. Management indicated continued confidence in the overarching plan for moderate revenue growth and margin expansion for 2025, supported by innovation and employer partnerships, but did not share new quantitative forecasts.
In the quarters ahead, key markers for progress will include trends in employer-affiliated enrollment, the performance of education technology offerings like Sophia Learning, and the company’s success in growing domestic student numbers—particularly in Australia. Persistent declines in unaffiliated student enrollment and the impact of regulatory changes abroad will be important risks to monitor. The quarterly dividend was maintained at $0.60 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
