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Strategic Education (STRA) Q1 Earnings Beat, Revenues Fall Y/Y
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Strategic Education, Inc. or SEI (STRA - Free Report) reported mixed first-quarter 2023 results. Quarterly earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Also, both the top and the bottom lines declined year over year. The downside was caused by lower contributions from the ANZ segment.
Shares of STRA declined 2.62% during the trading session on Apr 27.
Karl McDonnell, chief executive officer of SEI, stated, “As we complete the first quarter, we are pleased with our progress toward enrollment, revenue, and earnings growth in 2023. We are encouraged by the return to total enrollment growth within the U.S. Higher Education segment and strength within the Education Technology Services segment, and are optimistic about the Australia/New Zealand segment as conditions normalize.”
Inside The Headlines
SEI reported adjusted earnings of 24 cents per share, which topped the Zacks Consensus Estimate of 22 cents by 9.1% but declined 55.6% from the year-ago quarter’s reported level of 54 cents.
Strategic Education Inc. Price, Consensus and EPS Surprise
Total revenues of $256.6 million missed the consensus estimate of $260 million by 1.3% and declined 0.9% from the prior-year quarter’s level.
Segment Details
SEI currently operates in three reportable segments — U.S. Higher Education or USHE, Education Technology Services (earlier known as Alternative Learning) and Australia/New Zealand or ANZ.
USHE: This segment comprises Strayer and Capella Universities. Segment revenues grew 0.6% year over year to $196.9 million, backed by strong enrollment. Student enrollment increased 2.3% from the year-ago quarter’s level to 79,935 students. FlexPath enrollment was 21% of USHE enrollment, compared with 20% in the year-ago quarter. During the quarter, the adjusted operating margin declined 300 basis points (bps) to 4.9% from the prior-year quarter.
Education Technology Services: This segment includes Employer Solutions, Workforce Edge and Sophia Learning. The segment’s quarterly revenues came in at $18.2 million, up 24.9% year over year, backed by growth in Sophia Learning subscriptions and employer-affiliated enrollment. Sophia Learning’s average total subscribers increased approximately 24% from the prior-year period’s levels. Employer-affiliated enrollment was 26.3% of USHE enrollment compared with 23% in the year-ago period. Its adjusted operating margin came in at 31.8% in the reported quarter, down 50 bps from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. Revenues in the segment totaled $41.5 million, down 14.4% year over year and 8.3% on a constant-currency (cc) basis. This downtrend was due to the timing of the first academic term of the year. Student enrollment within ANZ declined 6.3% to 19,269 during the reported quarter compared with the prior-year quarter. The adjusted loss from operations was $7.2 million in the reported quarter compared with $0.7 million in the prior year quarter.
Operating Highlights
The adjusted operating margin of 3.2% declined 430 bps from the year-ago quarter’s figure. Adjusted EBITDA in the reported quarter was $27.2 million, down 29.2% from $38.4 million in the prior-year quarter.
Financial Details
As of Mar 31, 2023, STRA recorded cash and cash equivalents of $202.8 million compared with $213.7 million at the 2022-end.
Cash provided by operating activities was $35.2 million in first-quarter 2023 compared with $56.6 million in the comparable year-ago period. Capital expenditures for first-quarter 2023 were $8.3 million compared with $9.7 million a year ago.
Capital expenditures for 2023 are still expected to be approximately $45 million.
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The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.3% and 3.4%, respectively, from the year-ago period’s levels.
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The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.1% and 2.8%, respectively, from the year-ago period’s levels.
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The Zacks Consensus Estimate for AGS’ 2024 sales and EPS indicates a rise of 3% and 1,873.3%, respectively, from the year-ago period’s levels.
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Strategic Education (STRA) Q1 Earnings Beat, Revenues Fall Y/Y
Strategic Education, Inc. or SEI (STRA - Free Report) reported mixed first-quarter 2023 results. Quarterly earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Also, both the top and the bottom lines declined year over year. The downside was caused by lower contributions from the ANZ segment.
Shares of STRA declined 2.62% during the trading session on Apr 27.
Karl McDonnell, chief executive officer of SEI, stated, “As we complete the first quarter, we are pleased with our progress toward enrollment, revenue, and earnings growth in 2023. We are encouraged by the return to total enrollment growth within the U.S. Higher Education segment and strength within the Education Technology Services segment, and are optimistic about the Australia/New Zealand segment as conditions normalize.”
Inside The Headlines
SEI reported adjusted earnings of 24 cents per share, which topped the Zacks Consensus Estimate of 22 cents by 9.1% but declined 55.6% from the year-ago quarter’s reported level of 54 cents.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Total revenues of $256.6 million missed the consensus estimate of $260 million by 1.3% and declined 0.9% from the prior-year quarter’s level.
Segment Details
SEI currently operates in three reportable segments — U.S. Higher Education or USHE, Education Technology Services (earlier known as Alternative Learning) and Australia/New Zealand or ANZ.
USHE: This segment comprises Strayer and Capella Universities. Segment revenues grew 0.6% year over year to $196.9 million, backed by strong enrollment. Student enrollment increased 2.3% from the year-ago quarter’s level to 79,935 students. FlexPath enrollment was 21% of USHE enrollment, compared with 20% in the year-ago quarter. During the quarter, the adjusted operating margin declined 300 basis points (bps) to 4.9% from the prior-year quarter.
Education Technology Services: This segment includes Employer Solutions, Workforce Edge and Sophia Learning. The segment’s quarterly revenues came in at $18.2 million, up 24.9% year over year, backed by growth in Sophia Learning subscriptions and employer-affiliated enrollment. Sophia Learning’s average total subscribers increased approximately 24% from the prior-year period’s levels. Employer-affiliated enrollment was 26.3% of USHE enrollment compared with 23% in the year-ago period. Its adjusted operating margin came in at 31.8% in the reported quarter, down 50 bps from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. Revenues in the segment totaled $41.5 million, down 14.4% year over year and 8.3% on a constant-currency (cc) basis. This downtrend was due to the timing of the first academic term of the year. Student enrollment within ANZ declined 6.3% to 19,269 during the reported quarter compared with the prior-year quarter. The adjusted loss from operations was $7.2 million in the reported quarter compared with $0.7 million in the prior year quarter.
Operating Highlights
The adjusted operating margin of 3.2% declined 430 bps from the year-ago quarter’s figure. Adjusted EBITDA in the reported quarter was $27.2 million, down 29.2% from $38.4 million in the prior-year quarter.
Financial Details
As of Mar 31, 2023, STRA recorded cash and cash equivalents of $202.8 million compared with $213.7 million at the 2022-end.
Cash provided by operating activities was $35.2 million in first-quarter 2023 compared with $56.6 million in the comparable year-ago period. Capital expenditures for first-quarter 2023 were $8.3 million compared with $9.7 million a year ago.
Capital expenditures for 2023 are still expected to be approximately $45 million.
Zacks Rank & Other Key Picks
STRA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are some other top-ranked stocks from the Zacks Consumer Discretionary sector.
Hilton Grand Vacations Inc. (HGV - Free Report) currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 27.9%, on average. Shares of the company have increased 8.9% in the past six months.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.3% and 3.4%, respectively, from the year-ago period’s levels.
Crocs, Inc. (CROX - Free Report) carries a Zacks Rank #2. CROX has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of the company have increased 71.8% in the past six months.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.1% and 2.8%, respectively, from the year-ago period’s levels.
PlayAGS, Inc. (AGS - Free Report) carries a Zacks Rank #2. AGS has a trailing four-quarter earnings surprise of 133.3%, on average. The stock of the company has declined 24.7% in the past six months.
The Zacks Consensus Estimate for AGS’ 2024 sales and EPS indicates a rise of 3% and 1,873.3%, respectively, from the year-ago period’s levels.