Strategic Education, Inc. reported third‑quarter 2025 results that surpassed revenue expectations and delivered a strong adjusted earnings performance, while the reported diluted earnings per share fell short of consensus. Consolidated revenue reached $319.9 million, a 4.6% year‑over‑year increase that exceeded the consensus estimate of $315.67 million by roughly $4.2 million. The growth was driven primarily by a 45.6% jump in the Education Technology Services (ETS) segment, which generated $38.3 million in revenue, and a modest 2.6% rise in the U.S. Higher Education (USHE) segment, which posted $213.1 million. In contrast, the Australia/New Zealand (ANZ) segment saw a 4.7% decline, reporting $68.59 million as enrollment pressures and regulatory changes weighed on international student demand.
Operating income for the quarter was $37.0 million, up from $36.3 million in Q3 2024, but the operating margin contracted to 18.2% from 20.6% year‑over‑year. The margin compression reflects higher operating expenses relative to revenue growth and a shift toward lower‑margin offerings in the ANZ market. Diluted earnings per share were $1.15, missing the consensus estimate of $1.30 by $0.15, while adjusted diluted EPS reached $1.63, beating the estimate by $0.33. The adjusted figure removes one‑time items and highlights the underlying profitability of the company’s core operations.
Strategic Education declared a regular quarterly cash dividend of $0.60 per share, payable on December 8, 2025 to shareholders of record as of December 1, 2025. The dividend policy underscores the company’s commitment to returning value to investors while maintaining a strong balance sheet with ample cash and no debt.
Management emphasized the continued momentum in the ETS segment, noting that growth is driven by Sophia Learning subscriptions, increased employer‑affiliated enrollment, and new Workforce Edge partnerships. The company also highlighted modest growth in the USHE segment and acknowledged the headwinds in ANZ, attributing the decline to regulatory changes affecting international student enrollment. While no forward guidance was provided in the release, the strong adjusted earnings performance suggests confidence in sustaining profitability amid a challenging operating‑margin environment.
The results illustrate a mixed picture: revenue growth and adjusted earnings beat expectations, but reported EPS fell short, and operating margins contracted. The company’s focus on high‑growth technology services appears to be offsetting slower performance in traditional higher‑education markets, particularly in Australia/New Zealand. Investors will likely monitor how the company balances investment in its technology platform with cost discipline to preserve margins in the coming quarters.
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