Thank you. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss second quarter 2024 results. With us today are Robert Silberman, Chairman, Karl McDonnell, President and Chief Executive Officer, and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions. Please note that this call may include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements are based on current expectations and are subject to a number of assumptions, uncertainties, and risks that Strategic Education has identified in today's press release that could cause actual results to differ materially. Further information about these and other relevant uncertainties may be found in Strategic Education's most recent annual report on Form 10-K, the 10-Q to be filed, and other filings with the Securities and Exchange Commission, as well as Strategic Education's future 8-Ks, 10-Qs, and 10-Ks. Copies of these filings and the full press release are available for viewing on the website at strategiceducation.com. And now, I'd like to turn the call over to Karl. Karl, please go ahead.

Thank you, Terese, and good morning, everyone. Our second quarter 2024 results reflect continued strength across all of our segments. But before we begin, and as is normally the case, I'd like to start by pointing out that all of my references to our financial results are to our adjusted results and that they assume constant currency for foreign exchange purposes. For the second quarter, SEI's revenue grew 9% to $313 million. Our operating expenses grew 3%, which was in line with our expectations, and our operating income grew by more than 60% to $44 million. Our operating margin increased 460 basis points. During the quarter, we generated $1.34 earnings per share, which was more than a 60% increase from the prior year. Turning now to our segments, U.S. higher education delivered another quarter of strong growth driven once again by employer-affiliated enrollment. Total enrollment in U.S. higher education for the second quarter grew 8%, with total employer-affiliated enrollment growing more than double that rate at 17% from the prior year, again reflecting continued strength in our corporate partnerships. During the quarter, the percentage of total U.S. higher education enrollment coming from our corporate partnerships increased 200 basis points to 29%. Student retention at U.S. higher education remained stable at 86.9%. In the second quarter, U.S. higher education revenue grew 7%, and operating income grew 194% from the prior year. Our education technology services segment also continued to see strength with both Sophia and Workforce Edge continuing to gain market share. In the second quarter, ETS revenue grew 26%, and operating income increased 63% from the prior year. Sophia Learning, our direct-to-consumer portal of college-level classes, which is also a key component of many of our strategic corporate partnerships, grew its revenue in the second quarter by 40% and generated a 49% operating margin, which is up from a 46% margin in the prior year. Average total paid subscribers grew 37% to more than 42,000 paid subscribers. During the quarter, ETS added 23 total new corporate partnerships, and Workforce Edge now has 71 corporate partners who collectively employ more than 1.5 million employees. Workforce Edge enrollments into either Strayer or Capella University grew 36% to approximately 1,500 students. Given the strong traction within our ETS division, we have decided to increase our investments in the second half of 2024 from our previous plans to support accelerated growth of both Sophia and Workforce Edge. These investments, combined with other previously planned investments in the rest of our segments, including increased marketing spend in Australia, mean that on a full-year basis, our operating expenses will be slightly higher than our notional model that we communicated last November. Our Australia-New Zealand segment posted another quarter of total enrollment growth, with enrollment increasing 6% from the prior year to just over 19,000 students. In the second quarter, revenue on a constant currency basis grew 10% from the prior year, driven by higher enrollment and revenue per student. The higher enrollment was driven predominantly by strong continuing student enrollment. Increased course load contributed to a 4% increase in revenue per student as we lapped the resumption of the Australian requirement for international students to take more courses on campus. On a constant currency basis, ANZ operating income increased sequentially from an operating loss last quarter to $14 million in the second quarter, growth of 1% from the prior year. I should note that ANZ's second quarter is generally the high point of the year for revenue and expenses with a back-to-school quarter after the Australian summer. In closing, we are very pleased with the strong results across our business and continue to work towards a successful full year, 2024. And once again, I'd like to thank all of my colleagues within SEI for their ongoing commitment to our students. And with that, Jonathan, we'd be happy to take questions.

Certainly. Our first question comes from Jeff Silber at BMO Capital Markets. Please go ahead with your question.

Thanks so much. Karl, you mentioned because of the increased investments, you think operating expenses will be slightly higher than what you put out in your notional model last year. Can you remind us what you told us last year, and can you help us quantify what we should expect this year?

Thanks. Hey, Jeff. It's Dan. What we said was that we thought operating margin would expand by a couple hundred basis points. And given this additional investment through the balance of the year, it's likely to be below that, probably between $150 and $175.

Okay.

I agree. That helps. Yeah, and Jeff, just to clarify.

No, I understand. And will most of that be in both ETS or ANZ, or should we also expect more spending in U.S. higher education?

It's going to be across all three, but, you know, ETS and ANZ, definitely more expense growth in the latter half of the year relative to U.S. higher ed.

Okay, great. And then just looking at the results in the quarter, you had really strong operating margin leverage in U.S. higher education. I know when enrollment goes up, you see that, but it was pretty outside. Was there anything specific going on, any timing issues we should be aware of?

No, other than what you pointed out yourself, Jeff, that we've had quite high enrollment and revenue. We don't have that much variable expense in U.S. higher ed, so when we see the levels of revenue growth that we've had, you know, it obviously impacts the margin quite favorably.

Okay, fair enough. If I could just sneak in one more. I'm going to have to ask the FAFSA question. You know, obviously, with some of the delays we saw this past enrollment cycle, I know it probably hasn't impacted you as of yet, but do you expect any impact maybe in the back half of the year from some of those delays?

Well, as you just said, we have not seen any impact from FAFSA delays as of yet. We are in the midst of our largest enrollment intake quarter, so it remains to be seen if we'll have any impact, but we haven't had any so far.

Okay, great. I'll jump back in the queue. Thanks so much.

Thanks, Jeff.

Thank you. And our next question comes from the line of Jasper Bibb from Truist. Your question, please.

Hey, good morning, guys. You talked about updating the notional model on margin and all that makes sense, but the notional model also contemplated revenue growth of 4% to 6%, and it seems like with the start to the year that would imply a flat revenue growth in the back half of the year. So, to be clear, are you also updating the revenue growth for '24 in the notional model in any way to frame what second half revenue growth might look like?

Sure. Well, we don't provide an outlook on revenue because, frankly, we don't know what our revenue is going to be in the back half of the year. We thought it was important to update our expenses since, obviously, that's something we control. We have plans to make those investments. I would just note, Jasper, that particularly in U.S. higher ed, we've had revenue and enrollment growth that's substantially higher than what we would normally expect on a run rate basis. We always say notionally that we think these businesses can support roughly 5% to 10% revenue and enrollment growth. It would not be surprising to me if we saw our enrollment moderate down to that notional level that we expect over a long term.

Thanks. That makes sense. And then I wanted to ask what you're seeing as far as immigration rules in Australia and the ability to get international students into the country. I did see the government there announced visa fees would, I think, more than double starting in July. I'm curious if that's having any impact on your new enrollment score towards this point?

We have seen that the timing of approvals for visas in Australia has started to lengthen again. But I would remind our callers that there's actually two sources of growth for international students. There's the students who are offshore who need to get a visa, immigrate into Australia. But then there's also students who are already in Australia on a visa who are able to transfer to another institution after six months at their host university. And frankly, that's an area where we've seen significant market share gains by Torrens because primarily we have a very high quality product and we have very favorable tuition versus what other institutions charge. So I would expect that part of international growth to continue the rest of this year and into next year.

Got it. Last question for me. I know the Education Department has typically regulated this industry primarily through rulemaking. Maybe a broader question. I'm curious if you see the regulatory framework changing following the Chevron decision.

Jasper, this is Rob. I don't know if it'll change, but it won't really change our operating parameters. We understand that we operate in a heavily regulated sector, and frankly, appropriately so. Our universities are supported by very generous and favorable credit terms to our students that are borne by the taxpayer. And so the federal government has regulations and types of regulations that protect the interests of the taxpayer. The relative priority of regulation-making between the legislative branch and the executive branch, which is addressed in the Chevron decision, doesn't really affect how we think about what those regulations will be or how we're going to operate. We're going to run these universities to meet the intent of the people that are concerned about maintaining that balance. And frankly, it's important to us as well, regardless of what the source of the regulations or the overarching control mechanisms are.

Thanks, guys. Thanks, everyone.

Thank you. And our next question comes from Heather Balski from BofA. Please go ahead with your question.

Hi, this is Emily Marzo for Heather Balski. Starting with the U.S., you're starting to look at tough comparisons in the second half. Could you share your thoughts on the growth rate from the first half to the second half and the momentum and the enrollment you're seeing in the second half so far?

Well, I can't comment on the second half because we're still in that quarter, obviously, still enrolling students. We were obviously pleased with first half results. I'd say the demand environment remains healthy and robust. As I said in my prepared remarks, the corporate affiliated enrollment channel is quite strong. We continue to add new clients every quarter. I would note again that the enrollment that we've had and corresponding revenue growth in particularly the U.S. higher ed segment has been significantly higher than what we expect, what we plan for. And so over some period of time, and I can't predict when that period of time would be, we would expect U.S. higher ed to normalize down into sort of the 5% to 10% range on both enrollment and revenue growth.

Thank you. And as a follow-up, how much of the incremental enrollment is coming from corporate partnerships and where do you think that could reach?

I don't have the exact number in front of me, but I would just note that corporate affiliated enrollment grew more than two times non-corporate affiliated enrollment. Basically, one in three students in U.S. higher ed is now affiliated with one of our corporate partners. As we continue to add large partnerships that mixed percent will continue to grow. You know, over a multi-year period, I could see that number getting well above 50%.

Thank you very much.

Thank you.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Karl McDonnell, President and CEO, for any further remarks.

Thank you, Jonathan, and thank you everyone for joining us and we look forward to discussing our third quarter results in November. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.