Strategic Education Q1 2025 slides: revenue up 5.3%, EPS jumps 16.2% despite flat enrollment

Introduction & Market Context

Strategic Education Inc. (NASDAQ:STRA) presented its Q1 2025 financial results on April 24, 2025, showing significant year-over-year improvements across key metrics. The education provider’s stock jumped 11.04% in premarket trading to $89.00, continuing its recovery from a sharp decline following Q4 2024 results that had missed analyst expectations. The company’s Q1 performance represents a substantial rebound, with operating income growth exceeding 16% despite enrollment numbers remaining flat year-over-year.

As shown in the following overview slide, Strategic Education maintains a significant global presence with operations centered in the U.S., Australia, and New Zealand, serving over 108,000 students and generating $1.2 billion in annual revenue:

Quarterly Performance Highlights

Strategic Education reported Q1 2025 adjusted revenue of $305.7 million on a constant currency basis, representing a 5.3% increase compared to the same period last year. More impressively, adjusted operating income grew 16.0% to $41.6 million, with operating margins expanding by 120 basis points to 13.6%. This translated to adjusted diluted earnings per share of $1.29, a 16.2% year-over-year increase.

The detailed financial breakdown by segment reveals the company’s performance drivers:

On a current currency basis, results were similarly strong, with adjusted revenue of $303.6 million (+4.6%), adjusted operating income of $41.7 million (+16.4%), and adjusted diluted EPS of $1.30 (+17.1%). The company maintained a solid cash position of $197.6 million as of March 31, 2025, and generated $57.3 million in distributable free cash flow during the quarter. Strategic Education also continued its shareholder returns with a quarterly cash dividend of $0.60 per share.

Notably, these results mark a significant improvement from Q4 2024, when the company missed analyst expectations with EPS of $1.27 versus a forecast of $1.43, which had triggered a nearly 14% stock price decline.

Strategic Positioning

Strategic Education positions itself as a global leader in digital education with a diverse portfolio of educational brands and technologies. The company emphasizes four core attributes: being mission-driven, student-centric, quality-focused, and long-term oriented in its approach to education.

The company’s portfolio is structured as a pyramid, with technology solutions at the top (representing employer growth opportunities), skills-based learning products in the middle, and flagship educational brands forming the foundation as current revenue drivers. This structure illustrates how Strategic Education is positioning itself for future growth while maintaining stable revenue streams from established institutions.

Strategic Education operates through three distinct business segments:

The U.S. Higher Education segment, which includes Capella and Strayer universities, remains the largest revenue contributor. However, the Australia/New Zealand segment (featuring Torrens University) and the Education Technology Services segment (with enterprise partnerships and learning platforms) represent important diversification and growth opportunities.

Forward-Looking Statements

While the presentation didn’t provide explicit guidance for the remainder of 2025, the company’s strong Q1 performance positions it well to achieve the targets outlined in its previous earnings call, which included a 200 basis point expansion in operating margins for 2025 and mid-single-digit enrollment growth. The company’s ability to grow revenue and significantly expand margins despite flat enrollment suggests operational efficiencies and potentially improved pricing or student retention.

The company’s emphasis on corporate partnerships, which accounted for over 70% of incremental enrollment in U.S. Higher Education last year according to previous statements by CEO Carl McDonnell, appears to remain a key strategic focus. Strategic Education’s diverse portfolio and global presence provide multiple avenues for growth, even as the higher education landscape continues to evolve.

Analyst Perspectives

The market’s strongly positive reaction to Strategic Education’s Q1 results suggests investors are reassured after the previous quarter’s disappointment. With the stock trading at $80.15 before the earnings release and jumping to $89.00 in premarket trading, the company appears to be regaining investor confidence.

The significant improvements in operating margins and earnings per share, despite only modest revenue growth, indicate that Strategic Education’s focus on operational efficiency is yielding results. The company’s consistent dividend payments and strong cash position further reinforce its financial stability.

However, the flat year-over-year enrollment numbers could raise questions about long-term growth potential if this trend continues. Investors will likely watch closely to see if Strategic Education can translate its operational improvements and diverse portfolio into enrollment growth in future quarters, particularly given the competitive landscape in higher education and potential regulatory changes affecting international students.

Full presentation:

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