Strategic Education (STRA) 3 Nov 222022 Q3 Earnings call transcript

Welcome to Strategic Education's Third Quarter 2022 Results Conference Call.

I will now turn the call over to Terese Wilke, Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead.

Thank you. welcome discuss Education's third and which call, everyone, will we quarter morning, to conference Strategic in Good XXXX results.

are Executive Jackson, today President Chief us Robert Chairman; Executive With Karl Financial and Officer. Chief Vice Officer; Executive Daniel and President and Silberman, McDonnell,

we today's remarks, for open will Following call the questions.

are include current this The has to Litigation pursuant Reform that subject materially. of statements XXXX. to expectations the the assumptions, note that risks cause press differ forward-looking of results Securities Please safe actual are identified release Private on based statements and call may of to and number made harbor provisions today's a could in Act that uncertainties Education Strategic

recent these information XX-K, strategiceducation.com. for and these be and Education's the XX-Q filings and as Form other filed XX-Ks. available about to full Education's XX-Qs on the release Strategic as of found Commission filings future and at Further Exchange most X-Ks, website are Securities viewing report and press with annual well the other may on uncertainties be relevant in the Strategic Copies

I'd now to And to call go please turn Karl. Karl, over like ahead. the

and Terese, pleased our financial everyone. and growth. our improving quarter the to Overall, good we returning Company with as and reported were revenue results earnings continued academic, very operational this we in progress morning, third that morning, you, reflect Thank they results and

was our the less fluctuations Excluding quarter, the X% revenue down currency from impact of prior foreign than third the year. in

improvements prior The strength and remains Capella both than and segment, all inquiries environment increased at with Strayer see the very from Strayer to prior Education year. and significant posting Universities into key the continue year. our in XX% demand robust, Higher U.S. We more overall Capella metrics from

the it's strongest Our of employer in partnerships enrollment network been that years. from is corporate our affiliated

total significantly XX%, and than student nonaffiliatedenrollments respectively. rates are from partnerships higher growth corporate at New and student our XX%

strong levels with of growth to total Capella, student enrollment. in new see continue FlexPath and strong we student both program, At

an result, XXX now points of a XX% enrollments, from increase of comprises higher education a As basis ago. FlexPath approximately all U.S. year

to of remains grow Strayer's and had experience and success end on its basis the this continues core enrollment year-over-year rapid track increases recovery Strayer a year, student on run total by Capella and both retention. in to a rate enrollment and

Our to Education Technology resources grown as call having year, the to growth growth. perform and its flat additional third further the prior Services we revenue quarter revenue was segment, invest in continues in Operating XX%. or it, notwithstanding ETS by for this we support continue well ETS' ETS to as income to

These investments growth in of ETS to have existing customer next base much year. anticipated achieve to the scale our both for and helped us necessary serve the

expense we of our closer growth As plans expect margins in resulting notional will XXXX, in to much moderate a result, significantly XX%-plus.

of direct-to-consumer quarter, XX% the portal by by Sophia base During grew subscriber our general XX%. recommended high-quality and revenue ACE education average courses, Learning, its its

Workforce the SaaS-based Edge, the people. an six education increased during benefits by quarter and additional XXX,XXX platform, grew employee management clients base our

in enrolled XXX by We multiple employees have significant and Strayer from year-end in a enrolled clients to that Workforce have between to X,XXX Edge and XXXX. expect and Capella of

adversely Australia/New normal still processing Our enrollment to is experiencing continues return impacting to students. visa that but to international segment operations, delays Zealand application of is work our

throughout. continued operating constant the and pandemic. in our a returning retention X% the during its among been environment remarkably ANZ Australian currency remain to and X% the has basis. grew significant revenue academic quarter, outcomes segment enrollment grow grew to dollars, and Measured notwithstanding highest the total strong SEI, ANZ's a and headwinds, During in Its has on normal student stable

barriers year. And begin will rest to remain and University. as We those of this year immigration at higher growth we into -- that progress Torrens made throughout delays removed, the rates be be optimistic will next see continued and the of easing those

During we that Faculty enables proprietary Action SEI's and significantly Torrens, software Center more a at also student launched interaction. the quarter, robust faculty

that satisfaction, student retention. effectiveness ultimately, student impact teaching We expect have on and meaningful to a

year, So our we yet goals XXXX, again, I suggest now. our our expect would And behind that momentum, be growth make XXXX. on thus lag student fourth substantially we each and see on our higher that across on full can, considerable anything would and we've earnings quarter revenue the to year our that far continue based progress for year. earnings a trough basis are overall, will year revenue in new to will we where this universities. reiterate, not of performance in be enrollment and And this seen

my always, Finally, and colleagues of hard of SEI to at our work around like the as continued their I'd on world. all dedication students thank behalf for and

that, with take be And operator, happy to we'd questions.

of Our line Silber the Instructions] [Operator question from first Jeff comes with BMO.

grad I I if a know you I call, was gave higher either bit a to a terms enrollments. could further. or the questions on basis? relative on details lot get we with where little of wanted drill in wondering a down more U.S. undergrad program bit student-type strength I versus color more of type, Can education but little on you're start some seeing

Jeff. board, pretty strength it's Well, much across the

continues major Capella. continues strong. As to a the And care certainly I very prepared within in said FlexPath, of health to be driver be at remarks, growth FlexPath

corporate our most we at pretty across having in the for it's continue As the quarter. their said, seen enrollments, haven't to say that as reopened see frankly, I Strayer, board, very, many years. enrollment we continue full they very of much campuses recovery high also partnership had levels, I'd And just levels general of

across one it's over can't the board. that area another, any pretty it's I broad-based So say and

one -- additional add point that. to just Jeff,

say Karl, fair, at to nursing it's program is right? think the single I that strongest Capella,

all programs. Across true. our of That's

would color. application possible What have you been. if Okay. ANZ, know I visa the over some I been what hadn't impact If issues? enrollment shift to those could don't very if That's good has you actually mentioned issues. to it's quantify had

and who because on say speculate can interest been applications have have expressed what many have it's Well, into visas hundreds those days. would a attending XXX normally Torrens. XX who period we seen excess XX, entering country my of days. What understanding students in delays we Pre-COVID, hypothetical. of we is were We've and now of is we have somewhere processed between know the made enrollment can't in

very said, growth and it's there. hope getting normal better year of a As see year. continue I once confident to we'll rest processing will more we And it more that that and to see throughout time, those this that delays significant the improve return next I'm we

sneak could If Appreciate I more. Okay. that. just in one

where watching pending a different they're if, recession, segments ANZ and might bad. with us it's talking about U.S. lines and CNBC, Can of you how then think more global? all your business tell obviously but probably you recession I or think I'm think is we how a business what do not enter if too when or much into you

the fundamentally, Well, recession, in as we for United that obviously depends its believe that postsecondary well it very again, education, depth demand so strong certainly forth. on Australia. of But remains duration and the as States

happen And to wouldn't barring or activity, major that that us, to recessionary that could economy. the adversely it dramatically be range any given some of impacting expect not, shock we economic normalized

is headwinds the out I And as very, of robust. that macroeconomic the there, frankly, that said, environment Jeff, very all demand right we're are notwithstanding now seeing

band, impact crushes particularly normalized in any participation Jeff, labor participation much at enrollment recession, level, remain macroeconomic U.S., within seen I the the during see that Strayer, we've a that's on rates that rates shock its negative a weakness. rise in business past which but a operations. unemployment at But having might cycle simplest where slightly, our of don't

Instructions] next line of [Operator from Truist. with question Sommer Our the comes Tobey

Are inputs we there us? talked at refine Sort help that about XXXX level expectations? that improvements, of could any would with you detail any way us? as any of frame to for sort modeling substantial of you but share care You

Tobey, Dan. this is

line think with is likely early be total the we're year-over-year, For similarly. XXXX, still the think track student, to was which in the likely revenue that mid-single decline digits. in given will is expenses stable we year, we still at revenue track flattish that. cycle total mostly And recovery pretty And with to we're with we per on Strayer, we said think of enrollment, what in and

maybe tax would I tax It's be that think going to probably rate thing be would adjusted to I higher, of the that we've rate our -- indicated little our year. a is normally add closer one in this XX%. other the neighborhood XX%

be 'XX, in reflected asking don't He kind could was about forward we any is give of Dan. But that guidance actually modeling. the reality ever

what student growth. enrollment the quarters of Karl which said, new now several had beyond -- we've is So

eight And six average quarters, given that is one students duration that of our of to lags through. the

expense -- a 'XX. in said we on enrollment academic relatively we've when have shrinking revenue and we've which And when so given grows. advantageous us of is on got past, growth we both in quite hurts base, growth terms our a expect down fixed revenue is in And quality, margin and the as focus the way revenue

that's year think I we point. as as be So this can for at specific next

input. the appreciate key as that you you in a trends and referenced start since you've of competitors are that because metric it's momentum an terms changing can as to I But that And us What difficult seeing use retracted disclosed, anything from Sure. front? that. on that you for pricing

tuition SEI that its think But to in there be closely other value enormous we learners pricing at very graduates. FlexPath its recently. institutions. for next the modest I may followed at years over creates increases the several Capella, can't speak haven't very, I it of as terms institutions, given and

that to discounted Over plan a drive have over increases almost would years. come tuition. of But goal of at always bit be pricing Torrens, we I continue is the Australia, Strayer. we consider enterprise-level at you may thing one there for several to next corporate-related say these which this have a to pricing no level enrollments, little in increases

years. per decreasing the be pricing revenue the student last the it realized And could so over several realized done has or as

corporate And minimis, is as that can expense I planning de wouldn't high growth that we our to rates given we in offset very of to work student. be margin have actual channels productivity increases continue. in now, our right that's per but the that always any as for with likely much so large We the impact revenue

expect Okay. debt? there in with Because activity, the I least at -- the down some to pressure or bad of be some corporate offer bad Are -- a the of would sort downward quarter? on you decrease debt more towards sort shift in on there enrollments color and could

we're is at share is of just of growth that Tobey, the And enrollment. enrollment. a majority pay new bigger as normalize of become, deterioration a The lower time, typically a relative Dan. this rate. Over reflection students on getting a will students lot continuing a of new basis, in

Okay.

reflection referenced increase earlier? So it's that the a you of new starts Okay. in

Correct.

just of, mean that also in don't on And should regulatory I time line Anything on terms immigration terms domestic the the front? of may Zealand the education in be where we U.S. New be catalysts around aware and or but decision in industry, a a or change guess I regulations of front forthcoming? Australia

Well, starting in Australia.

education the country on During them not waiver they in Australian the country visas a maintain obviously, government enter studies people those that home place the to because did pandemic, students couldn't, their which of for residence. put to their enabled in require

announced Government waiver to of next that their year. has intention June rescind

will So returning to that I into will us. think students much for a Australia, help very be actual international catalyst certainly which immigration

discussions that any we've either significant any potential way that to be the Strayer States, of have of made And in published or of of, either and quality actually United that gives the being any or Capella seen, been concern problem with we've would or confident rule regulation. continue Capella. profile us Nothing we rules. rules, the nothing Strayer complying by both Within aware very

the would last double-click, are participation for the performance metrics impact to be in labor participation. key on business the to that on question the decline, impacted? And me If and were from the labor what business

it into be the inquiries universities. certainly would Well,

would So particular adviser. on these Capella, expect out reach are to information enrollment that either We people that impacted. be program, speak request Strayer would an or or a to to request

be But the for from itself enrollment new that. for indicators impacted. would all be the making additional likely actually leading inquiries would number follows universities. of people Enrollment adversely Applications the of information

a Tobey, which students to University to fair labor And bellwether Strayer demand. say have University percentage than -- for impact tends Capella we be of greater would I a its on it's higher it around that given would that participation of would think undergraduate rate more it anticipate

those labor -- they then Strayer, from business perspective, And lagging the a Okay. a are coincident at timing or participation? the impacts leading changes on are in

They're slightly or think three months, we mean, lagging, maybe six historically. just I if

call questions back to at hand I'd further closing currently Karl to no the for over this remarks. showing like And I'm time. McDonnell

everybody. with you and quarter. appreciate forward Thank today talking to next We you, your time look

you Thank call. conference today's for participating. concludes This

may disconnect. You now