Strategic Education's (STRA) Q2 Earnings & Revenues Beat

Strategic Education, Inc. or SEI (NASDAQ:STRA) reported second-quarter 2019 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. The positive performance was mainly backed by strong top-line numbers across its segments, given higher enrollment.

The company reported adjusted earnings of $1.59 per share, surpassing the Zacks Consensus Estimate of $1.47 by 8.2%. Also, the reported figure increased 82.8% from the year-ago quarter.

Total revenues of $245.1 million surpassed the consensus estimate of $241 million by 1.7%. Notably, the reported figure also jumped 113.8% from the prior-year level.

Segment Details

SEI currently operates in three reportable segments: Strayer (accounting for 52.6% of the total revenues), Capella (45.8%) and Non-Degree Programs (1.6%).

Strayer Segment: The Strayer segment consists of Strayer University, which includes programs offered through the Jack Welch Management Institute.

Strayer University’s revenues grew 13.2% year over year to $128.9 million. Total enrollment also grew 11.5% from the year-ago level to 52,253 students. Enrollment of new students rose 8.5% and that of continuing students increased 12.2% from the year-ago quarter. The segment’s adjusted operating margin also increased 650 basis points (bps) to 19.1% during the quarter.

Capella Segment: The Capella segment consists solely of Capella University.

The segment’s second-quarter revenues came in at $112.2 million, backed by higher enrollment and increasing revenue-per-learner.

Total enrollment at the University grew 1.6% from the year-ago quarter to 38,392 students. New student enrollment also increased 7.8%, with continuing student enrollment growth of 0.5% year over year. The upside was mainly driven by improved performance of FlexPath, which comprises 30% of Capella University’s Bachelors and Master’s degrees total enrollment.

Its adjusted operating margin came in at 18.8% in the reported quarter.

Non-Degree Programs Segment: The Non-Degree Programs segment comprises Hackbright Academy, DevMountain, the New York Code + Design Academy and Sophia.

Revenues from the segment increased to $4 million from the year-ago figure of $0.8 million. Income from operations was $0.3 million (with operating margin of 7.5%) in second-quarter 2019 against a loss from operations of $1.1 million in the year-ago period.

Operating Highlights

Adjusted operating margin in the reported quarter was 18.8%, up 730 bps year over year. Adjusted EBITDA also increased a notable 177.7% from a year ago to $60.3 million.

Financial Details

As of Jun 30, 2019, it recorded cash and cash equivalents of $375.5 million compared with $311.7 million at 2018-end.

During the first six months of 2019, the company's cash provided by operating activities was $103.1 million versus $30 million in the comparable year-ago period.

Zacks Rank

SEI, which shares space with Laureate Education Inc. (NASDAQ:LAUR) , Adtalem Global Education Inc. (NYSE:ATGE) and American Public Education, Inc. (NASDAQ:APEI) in the Zacks Schools industry, currently carries a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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