Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss first-quarter 2025 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 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. We are pleased with our first quarter 2025 results reported this morning, which demonstrate the strength of our ETS division and our employer strategy in U.S. higher education. SEI's revenue grew by 5% in the first quarter, and our adjusted operating income increased 16%. Our operating margin increased to 13.6%, while adjusted earnings per share grew 16% to $1.29, compared to $1.11 for the same period in Q1 2024. Turning now to our segments. During the first quarter, total enrollment in U.S. higher education slightly increased, driven by continued strong employer-affiliated enrollment, which rose 7% from the previous year, offset by lower unaffiliated enrollment. As of the first quarter, the percentage of total U.S. higher education enrollment from our corporate partnership is now 31%, an increase of 200 basis points from the prior year, marking an all-time high. U.S. higher education revenue grew by 1%, and operating income increased by 7% from the previous year. Turning now to Australia and New Zealand. We continue to navigate the shifting regulatory environment in Australia. ANZ total enrollment decreased 1% during the quarter, driven by lower international enrollment related to the regulatory changes impacting international students. That enrollment decline was partially offset by growth in our domestic market, consistent with our strategy to shift the bulk of our enrollment growth in the coming years to the domestic market. ANZ's revenue increased 6% for the quarter on a constant currency basis, primarily driven by pricing. ANZ reported an operating loss of $2.2 million in the first quarter, reflecting a slight improvement from the previous year. As we've noted before, ANZ revenue in the first quarter represents a low point for the year attributed to fewer instructional days during the Australian summer. Conversely, ANZ expenses are incurred more consistently throughout the four quarters of the year. The education technology services segment continued its strong performance in the first quarter, with revenue growing by 45% and operating income increasing 37%. Sofia Learning subscriptions, higher employer-affiliated enrollment, and revenue from new Workforce Edge employer partnerships drove this growth. ETS' operating margin in the first quarter was 40.3%, a decline of 240 basis points as we continue to invest in increased marketing and staffing to drive both near-term and future growth. Sofia Learning, our direct-to-consumer portal that offers college-level classes and serves as a key component of many of our strategic corporate partnerships, grew its average total subscribers by 37% and revenue by 36% as employer relationships increasingly become a larger part of Sofia. During the quarter, Workforce Edge added two additional corporate partners, bringing the total to 78, collectively employing about 3.9 million employees. Enrollments in Workforce Edge to either Strayer or Capella University increased nearly 50%, reaching roughly 2,300 students. In February of this year, we announced that our decade-long relationship with Best Buy, the nation's sixteenth largest retailer, has expanded into an all-inclusive partnership with Strayer University's Degrees at Work program, enabling all full- and part-time employees at Best Buy to earn a degree at no cost to the employee. In addition to expanding the scope of its education benefits, Best Buy will also become a Workforce Edge client, further strengthening our relationship with Best Buy as they continue to prioritize the well-being of their employees. Finally, concerning capital allocation, in addition to our regular quarterly dividend, we repurchased approximately 390,000 shares of our common stock for a total of $32 million during the quarter, leaving us with $197 million remaining in our share repurchase authorization through the end of this year. And finally, as always, I'd like to take this opportunity to thank all of my colleagues here at SEI for their ongoing commitment and support to our students, learners, and employer partners. And with that, Towanda, we'd be happy to take questions.

Thank you. Then wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.

Thank you so much. I want to focus first on U.S. higher education enrollment. We've seen growth slow. This past quarter was relatively flat on a year-over-year basis. The other companies in the state seem to be seeing growth slowing, but not nearly as dramatically as what you've been posting. Is there anything specific going on changing your marketing matches? Any color would be helpful.

Hey. Good morning, Jeff. No, nothing's really changed from a marketing or advertising standpoint. I'd say that what we're seeing is part of just the normal cyclicality that at least we've seen over the years with our enrollment. You'll recall that when we were growing, you know, 10% or even above, we thought that that was probably not sustainable over the long term. And you're right. We were relatively flat in the first quarter, but we expect our enrollment to normalize in kind of the mid-single digits consistent with the notional plan that we outlined in our investor day.

And is there anything that you can do maybe to get to that mid-single digit level a little bit quicker?

Well, our corporate partnerships remain very strong, and we suspect that they'll continue to be a source of strength for us as we add partnerships and deepen our relationships in Workforce Edge. And, ultimately, we remain confident that the unaffiliated students will return to mid-single digit growth as well.

Alright. Great. I'll let somebody else ask about Australia and New Zealand, but just had a question on EPS. The numbers have been really solid. You know, much better than we had thought. What do you think is driving that? Is it something you're doing? Is it the end market demand? Again, any color would be great.

Well, the strength at Sofia is both reflected in the strength of its product. It has a very high net promoter score, so we know that the subscribers there really value the product. We have added, I'd say, pretty sizable incremental marketing investments since Sofia that have a very near-term ROI for us. Workforce Edge, we just have clients that are beginning to mature. So as you heard, we have now 2,300 students in either Strayer or Capella. And then our non-Workforce Edge corporate partnerships, they're doing well also. So it's a combination of all three of those levers in ETF.

Alright. That's really helpful. Thanks so much.

Thanks, Jeff.

Please standby for our next question. Next question comes from the line of Alex Paris with Barrington Research.

Thank you, and thank you for taking my questions. And I will focus my questions on ANZ. But one last question on U.S. higher education. Any comment about persistence? That's the number you typically give.

Persistence is stable. I'd say it was probably up slightly in the first quarter. We've seen multiyear gains, particularly at Strayer over the last several years. As core success, the percentage of students who successfully complete their courses and earn credit has been near all-time highs. But by and large, our persistence rates are pretty stable, Alex.

Great. Thank you. So moving on to Australia, New Zealand. I was a little surprised to see international enrollment down this early in the year. I understand regulatory changes, I think, going on in Australia. And I didn't think that would really be a factor until the second half as you approach these caps. I realize they're not caps. It's all having to do with visa approval speeds and that sort of thing, but effective caps, I guess. So I guess it's two parts. Please discuss international enrollment. And then maybe a little additional color on the increase in domestic enrollment.

Well, taking the latter part of your question first, we have increased our domestic marketing. It's been part of our strategy now for the last, really, couple of years to focus more on the domestic Australia market. So that's something that we intend to continue this year and beyond. I'd say one change, Alex, with regard to international enrollment that certainly we experienced is that historically, one of the biggest drivers of growth for us is not necessarily offshore students coming into Australia on visas for the first time, although we do do that. It's students who transfer. So foreign students who have a visa, they're at another institution. After six months, they're able to transfer. And Torrance, historically, was a destination that many of these transfer students would select. The Australian Ministry of Education put into place a new regulation this year in the first quarter that requires all institutions to go through the same verification for transfer students that we do for offshore students. And there's a list of anywhere from half a dozen to a dozen items that we have to verify on the part of the student. And aside from just the administrative burden of that, the net effect is fewer students are transferring as a result, and I'd say that was the primary driver of our decline in the first quarter.

Gotcha. Okay. That makes sense. Thank you for that. And then, lastly, I'll ask you a question about adjusted OpEx. Adjusted operating expenses were up 2.9% versus revenue growth of 4.6%. So you got some leverage there. That adjusted operating expense number was better than our estimate. And I just wanted to ask about the incremental spending that we kind of had factored into our model for the first half at EPS and others. Is that behind us now? Like behind us ahead of schedule, or did you just kind of pull back on the spending level, spending lever?

Hey, Alex. It's Dan. We're still on track for what we said in the recent past on expense growth for the year. The first quarter was a little bit better primarily because of some headcount timing, some of it at ETS. But we're still planning to spend and invest the same amount at ETS. It's just going to be a little pushed to the last three quarters of the year.

Gotcha. And then the long-term model calls for 200 basis points of adjusted operating income improvement. And I realize you don't give guidance for one year at a time, but I think you had kind of alluded to the fact that it'd be a good proxy for 2025. We still feel good about adjusted operating margin expansion in 2025, given the slightly lower enrollment numbers than I had previously expected?

Yes, Alex. We do. We feel like, albeit it's early, it's the first quarter. But yes, we feel confident that our 2025 performance would be in line with our notional model that we outlined at Investor Day.

Good to hear. Thank you very much. That's all for me today.

Thanks, Alex.

Thank you. Please stand by for our next question. Our next question comes from the line of Jasper Bibb with Truist Securities. Your line is open.

Hey. Good morning, everyone. I'll start with another ANZ enrollment question. Can you just frame for us the, I guess, domestic Australian citizen or permanent Australian resident enrollment as a percentage of ANZ today versus, I guess, what part of the enrollment base is international offshore, transfer students?

Yeah. So Jasper, historically, an average new cohort of students would have been roughly 50/50, 50% domestic enrollment, 50% international. Of the half that's international, at least in the recent trends, I'd say at least two-thirds of that would be onshore transfer. Maybe even slightly more, actually. In the first quarter, given that we had growth in the domestic market, a decline in international, the mix percent shifted obviously more to domestic. That's something that we're working towards. We want more of our enrollment to be from the domestic Australia market. We're working through the verification process for both offshore and onshore transfers, and that remains to be seen what will happen this year based on whatever demand there is.

And then the ETS revenue growth accelerated nicely this quarter. I think on the 4Q call, you talked about the launch of a large employer partner at the end of last year. To the extent you can, can you just update us on how that launch is going and how that might maybe impact your EPS expectations for the year?

Yeah. The launch has been received well by our clients. I would say we're essentially fully staffed now to serve that higher touch model. One important nuance of that relationship, which frankly we hope is replicated in future relationships with other clients, is that this particular client has a new requirement for their employees who lack 12 college credits, which frankly, we think will be the bulk of new enrollment. The requirement is that they have to go through Sofia first and complete six classes on Sofia before they can matriculate into a degree program. And again, it's early first quarter, servicing this client, but I'd say the demand from that we see through Sofia is running ahead of what we had modeled or planned internally.

Last one for me. You know, you already addressed kind of margins versus the notional model. But on revenue, I think the notional model called for 2 to 6% revenue growth. You still, I guess, feel confident that 2025 revenue would align with that nationwide framework?

Yep. Yep. We are.

That's it for me. Thanks, guys.

Thanks, Jasper.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Karl for closing remarks.

Thank you, everybody. We look forward to discussing our second quarter results with you in three months' time.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.