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Strategic Education, Inc. or SEI (STRA - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate.
Despite a year-over-year fall in earnings, revenues increased due to strong growth in the Education Technology Services segment and improved enrolment trends in the U.S. Higher Education segment.
Shares of STRA rose 5.4% during the trading session, but dropped 2% in the after-hour trading session on Jul 27.
Inside The Headlines
SEI reported adjusted earnings of 82 cents per share, which topped the Zacks Consensus Estimate of 66 cents by 24.2% but declined 3.5% from the year-ago quarter’s reported level of 85 cents.
Strategic Education Inc. Price, Consensus and EPS Surprise
Total revenues of $287.7 million surpassed the consensus estimate of $282 million by 2% and increased 5.2% 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 increased 6.7% year over year to $202.7 million, backed by strong enrolment and revenue-per-student. Student enrolment increased 4.7% from the year-ago quarter’s level to 80,353 students. FlexPath enrolment was 21% of USHE enrolment compared with 19% in the year-ago quarter. During the quarter, the adjusted operating margin declined 290 basis points (bps) to 3.3% 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 $19.5 million, up 22.1% year over year, backed by growth in Sophia Learning subscriptions and employer-affiliated enrolment. Sophia Learning’s average total subscribers increased approximately 30% from the prior-year period’s levels. Employer-affiliated enrolment was 27.1% of USHE enrolment compared with 24.6% in the year-ago period. Its adjusted operating margin came in at 31.6% in the reported quarter, down 150 bps from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. The segment's revenues were $65.5 million, down 3.1% year over year due to the impact from foreign currency translation. On a constant-currency basis, revenues rose 8.3% year over year, driven by higher revenue-per-student. Student enrolment within ANZ declined 4.6% to 17,966 during the reported quarter compared with the prior-year quarter. The adjusted income from operations was $14.3 million in the quarter, up from $12.3 million a year ago. Its adjusted operating margin came in at 21.8%, up 360 bps from a year ago.
Operating Highlights
The adjusted income from operations was $27.2 million, down from $29.5 million a year ago. Adjusted operating margin of 9.5% declined 130 bps year over year. Adjusted EBITDA in the quarter was $45.4 million, down 5.2% year over year.
Financial Details
As of Jun 30, 2023, STRA recorded cash and cash equivalents of $215.1 million compared with $213.7 million at the 2022-end. Cash provided by operating activities was $40.7 million in the first half of 2023 compared with $80.7 million in the comparable year-ago period.
Capital expenditures were $17.8 million in the first half of 2023 compared with $22.7 million a year ago.
Capital expenditures for 2023 are still expected to be approximately $40 million.
Zacks Rank
Strategic Education currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggests increases of 101.6% and 531%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 65.8%, on average. The stock has increased 70.5% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates rises of 34% and 89.3%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) holds a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 28.5%, on average. The stock has surged 183.4% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS implies gains of 48.8% and 163.1%, respectively, from the year-ago period’s levels.
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Strategic Education (STRA) Q2 Earnings & Revenues Beat Estimates
Strategic Education, Inc. or SEI (STRA - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate.
Despite a year-over-year fall in earnings, revenues increased due to strong growth in the Education Technology Services segment and improved enrolment trends in the U.S. Higher Education segment.
Shares of STRA rose 5.4% during the trading session, but dropped 2% in the after-hour trading session on Jul 27.
Inside The Headlines
SEI reported adjusted earnings of 82 cents per share, which topped the Zacks Consensus Estimate of 66 cents by 24.2% but declined 3.5% from the year-ago quarter’s reported level of 85 cents.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Total revenues of $287.7 million surpassed the consensus estimate of $282 million by 2% and increased 5.2% 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 increased 6.7% year over year to $202.7 million, backed by strong enrolment and revenue-per-student. Student enrolment increased 4.7% from the year-ago quarter’s level to 80,353 students. FlexPath enrolment was 21% of USHE enrolment compared with 19% in the year-ago quarter. During the quarter, the adjusted operating margin declined 290 basis points (bps) to 3.3% 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 $19.5 million, up 22.1% year over year, backed by growth in Sophia Learning subscriptions and employer-affiliated enrolment. Sophia Learning’s average total subscribers increased approximately 30% from the prior-year period’s levels. Employer-affiliated enrolment was 27.1% of USHE enrolment compared with 24.6% in the year-ago period. Its adjusted operating margin came in at 31.6% in the reported quarter, down 150 bps from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. The segment's revenues were $65.5 million, down 3.1% year over year due to the impact from foreign currency translation. On a constant-currency basis, revenues rose 8.3% year over year, driven by higher revenue-per-student. Student enrolment within ANZ declined 4.6% to 17,966 during the reported quarter compared with the prior-year quarter. The adjusted income from operations was $14.3 million in the quarter, up from $12.3 million a year ago. Its adjusted operating margin came in at 21.8%, up 360 bps from a year ago.
Operating Highlights
The adjusted income from operations was $27.2 million, down from $29.5 million a year ago. Adjusted operating margin of 9.5% declined 130 bps year over year. Adjusted EBITDA in the quarter was $45.4 million, down 5.2% year over year.
Financial Details
As of Jun 30, 2023, STRA recorded cash and cash equivalents of $215.1 million compared with $213.7 million at the 2022-end. Cash provided by operating activities was $40.7 million in the first half of 2023 compared with $80.7 million in the comparable year-ago period.
Capital expenditures were $17.8 million in the first half of 2023 compared with $22.7 million a year ago.
Capital expenditures for 2023 are still expected to be approximately $40 million.
Zacks Rank
Strategic Education currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks from the Zacks Consumer Discretionary sector are:
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 147.9%, on average. The stock has increased 45.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggests increases of 101.6% and 531%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 65.8%, on average. The stock has increased 70.5% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates rises of 34% and 89.3%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) holds a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 28.5%, on average. The stock has surged 183.4% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS implies gains of 48.8% and 163.1%, respectively, from the year-ago period’s levels.