8-K
Strategic Education, Inc. (STRA)
View as plain text
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 26, 2026
Strategic Education, Inc.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 0-21039 | 52-1975978 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
2303 Dulles Station Boulevard
Herndon, VA 20171 (Address of Principal Executive Offices) (Zip Code)
(703) 561-1600 (Registrant’s telephone number, including area code)
N/A (Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities Registered Pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | STRA | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 26, 2026, Strategic Education, Inc. (“Strategic Education”) issued a press release announcing its financial results for the period ended December 31, 2025. A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 2.02.
The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Strategic Education under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | Press Release dated February 26, 2026 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STRATEGIC EDUCATION, INC. | ||
|---|---|---|
| Date: February 26, 2026 | ||
| By: | /s/ Daniel W. Jackson | |
| Daniel W. Jackson | ||
| Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
STRATEGIC EDUCATION, INC. REPORTS FOURTH QUARTER 2025 RESULTS
Education Technology Services revenue up 28% YOY and operating income up 18% YOY
Sophia Learning subscribers up 47% YOY and revenue up 41% YOY
Technology and AI-enabled productivity initiatives contributed to 35% operating income growth
HERNDON, Va., February 26, 2026 ― Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended December 31, 2025.
STRATEGIC EDUCATION CONSOLIDATED RESULTS
Year Ended December 31
•Revenue increased 4.0% to $1,268.2 million compared to $1,219.9 million in 2024, driven by strength within the Education Technology Services segment. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 4.4% to $1,274.0 million in 2025 compared to $1,219.9 million in 2024. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
•Income from operations was $174.2 million or 13.7% of revenue, compared to $155.6 million or 12.8% of revenue in 2024. Adjusted income from operations on a constant currency basis, which is a non-GAAP financial measure, was $197.0 million in 2025 compared to $157.3 million in 2024. Adjusted income from operations excludes one-time charges associated with restructuring activities conducted during the year. Technology and AI-enabled productivity initiatives contributed to margin performance in 2025. The adjusted operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 15.5% compared to 12.9% in 2024.
•Net income was $126.6 million in 2025 compared to $112.7 million in 2024. Adjusted net income on a constant currency basis, which is a non-GAAP financial measure, was $145.3 million compared to $117.7 million in 2024.
•Adjusted EBITDA, which is a non-GAAP financial measure, was $273.2 million compared to $233.8 million in 2024.
•Diluted earnings per share was $5.41 compared to $4.67 in 2024. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, increased to $6.21 from $4.87 in 2024. Diluted weighted average shares outstanding decreased to 23,402,000 from 24,140,000 in 2024. During the year ended December 31, 2025, the Company repurchased 1,708,368 shares of common stock for $138.9 million.
Three Months Ended December 31
•Revenue increased 3.8% to $323.2 million compared to $311.5 million for the same period in 2024, driven by strength within the Education Technology Services segment. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 3.7% to $323.1 million in the fourth quarter of 2025 compared to $311.5 million for the same period in 2024. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release.
•Income from operations was $51.6 million or 16.0% of revenue, compared to $36.0 million or 11.6% of revenue for the same period in 2024. Adjusted income from operations on a constant currency basis, which is a non-GAAP financial measure, was $54.7 million compared to $40.4 million for the same period in 2024. Technology and AI-enabled productivity initiatives contributed to margin performance in the fourth quarter of 2025. The adjusted operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 16.9% compared to 13.0% for the same period in 2024.
•Net income was $37.9 million compared to $25.3 million for the same period in 2024. Adjusted net income on a constant currency basis, which is a non-GAAP financial measure, was $39.9 million compared to $30.8 million for the same period in 2024.
•Adjusted EBITDA, which is a non-GAAP financial measure, was $75.3 million compared to $60.1 million for the same period in 2024.
•Diluted earnings per share was $1.66 compared to $1.05 for the same period in 2024. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, increased to $1.75 from $1.27 for the same period in 2024. Diluted weighted average shares outstanding decreased to 22,819,000 from 24,149,000 for the same period in 2024. During the three months ended December 31, 2025, the Company repurchased 562,385 shares of common stock for $44.6 million.
Education Technology Services Segment Highlights
•For the fourth quarter, average total subscribers at Sophia Learning increased approximately 47% from the same period in 2024, and Sophia Learning revenue increased 40.8% to $18.0 million compared to $12.8 million for the same period in 2024.
•As of December 31, 2025, Workforce Edge had a total of 80 corporate agreements, collectively employing approximately 3,970,000 employees.
•ETS revenue increased 28.3% to $39.1 million in the fourth quarter of 2025 compared to $30.5 million for the same period in 2024, driven by growth in Sophia Learning subscriptions, higher employer affiliated enrollment, and revenue from new Workforce Edge employer partnerships.
•ETS income from operations was $14.0 million in the fourth quarter of 2025 compared to $11.8 million for the same period in 2024. The operating income margin was 35.8% compared to 38.8% for the same period in 2024 with continued investments in ETS.
U.S. Higher Education Segment Highlights
•For the fourth quarter, student enrollment within USHE decreased 4.0% to 85,306 compared to 88,860 for the same period in 2024. Full-year 2025 student enrollment within USHE decreased 1.4% compared to 2024. Our ongoing focus on employers is generating consistent growth in employer affiliated enrollment, but in the fourth quarter was again offset by a decline in unaffiliated enrollment. Employer affiliated enrollment in the fourth quarter hit a new all-time high of 33.5% of USHE enrollment, up from 30.2% during the same period in 2024. Full-year 2025 employer affiliated enrollment was 32.3% of USHE enrollment compared to 29.6% in 2024.
•USHE’s healthcare portfolio generated total enrollment growth during the fourth quarter, increasing 2% from the same period in 2024 and comprises 49% of USHE total enrollment compared to 46% for the same period in 2024. Of USHE’s total healthcare enrollment, approximately 37% is from employer partners.
•For the fourth quarter, FlexPath enrollment was 23% of USHE enrollment compared to 24% for the same period in 2024. Healthcare programs comprise 74% of FlexPath enrollment.
•Revenue increased 2.0% to $218.5 million in the fourth quarter of 2025 compared to $214.3 million for the same period in 2024, driven by higher fourth quarter revenue per student.
•Income from operations was $28.3 million in the fourth quarter of 2025 compared to $17.9 million for the same period in 2024. The operating income margin was 13.0% compared to 8.3% for the same period in 2024.
Australia/New Zealand Segment Highlights
•For the fourth quarter, student enrollment within ANZ decreased 1.6% to 19,514 compared to 19,825 for the same period in 2024. Full-year 2025 student enrollment within ANZ decreased 1.8% compared to 2024. Lower international enrollment, resulting from regulatory changes in Australia, was partially offset by progress growing domestic enrollment, which is expected to be a bigger driver of future growth.
•Revenue decreased 1.6% to $65.6 million in the fourth quarter of 2025 compared to $66.7 million for the same period in 2024, driven by lower fourth quarter student enrollment. Revenue on a constant currency basis, which is a non-GAAP financial measure, decreased 1.8% to $65.5 million in the fourth quarter of 2025 compared to $66.7 million for the same period in 2024, driven by lower fourth quarter student enrollment and revenue per student.
•Income from operations was $12.3 million in the fourth quarter of 2025 compared to $10.7 million for the same period in 2024. The operating income margin was 18.8% compared to 16.1% for the same period in 2024. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $12.4 million in the fourth quarter of 2025 compared to $10.7 million for the same period in 2024. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 19.0% compared to 16.1% for the same period in 2024.
BALANCE SHEET AND CASH FLOW
At December 31, 2025, Strategic Education had cash, cash equivalents, and marketable securities of $153.1 million and no debt outstanding under its revolving credit facility. Cash provided by operations in 2025 was $198.2 million compared to $169.3 million in 2024. Capital expenditures for 2025 were $44.3 million compared to $40.6 million in 2024. Capital expenditures including cloud computing investments, which flow through operating cash flow within other assets, for 2025 were $61.0 million compared to $56.8 million in 2024. Free cash flow for 2025, which is a non-GAAP financial measure, was $153.9 million compared to $128.8 million in 2024.
For the fourth quarter of 2025, consolidated bad debt expense as a percentage of revenue was 3.8% compared to 4.5% of revenue for the same period in 2024.
COMMON STOCK CASH DIVIDEND
Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on March 16, 2026 to shareholders of record as of March 9, 2026.
CONFERENCE CALL WITH MANAGEMENT
Strategic Education will host a conference call to discuss its fourth quarter 2025 results at 5:00 p.m. (ET) today. This call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section. To participate in the live call, investors should register here prior to the call to receive dial-in information and a PIN.
About Strategic Education, Inc.
Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We primarily serve working adult students globally through our core focus areas: 1) Education Technology Services, developing and maintaining relationships with employers to build education benefits programs providing employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses that are ACE-recommended for college credit; 2) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offering flexible and affordable associate, bachelor’s, master’s, and doctoral programs; and 3) Australia/New Zealand, comprised primarily of Torrens University. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce and find a path to bettering their lives.
Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:
•the pace of student enrollment;
•Strategic Education’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements;
•legislation and other actions by the U.S. Congress, actions by the current administration, rulemaking and other action by the Department of Education or other governmental entities, including without limitation action related to Title IV programs, Department of Education staffing levels, borrower defense to repayment applications, gainful employment or similar measures, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand;
•competitive factors;
•risks associated with the opening of new campuses;
•risks associated with the offering of new educational programs and adapting to other changes;
•risks associated with the acquisition of other businesses, including existing educational institutions;
•risks relating to the timing of regulatory approvals;
•Strategic Education’s ability to implement its growth strategy;
•risks associated with the ability of Strategic Education’s students to finance their education in a timely manner;
•general economic and market conditions; and
•additional factors described in Strategic Education’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Many of these risks, uncertainties and assumptions are beyond Strategic Education’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.
For more information contact:
Terese Wilke
Senior Director of Investor Relations
Strategic Education, Inc.
(612) 977-6331
terese.wilke@strategiced.com
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
| For the three months ended December 31, | For the twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | |||||
| Revenues | $ | 311,456 | $ | 323,210 | $ | 1,219,930 | $ | 1,268,220 |
| Costs and expenses: | ||||||||
| Instructional and support costs | 166,884 | 159,948 | 650,496 | 647,111 | ||||
| General and administration | 104,145 | 108,666 | 412,158 | 424,969 | ||||
| Restructuring costs | 4,405 | 2,961 | 1,648 | 21,909 | ||||
| Total costs and expenses | 275,434 | 271,575 | 1,064,302 | 1,093,989 | ||||
| Income from operations | 36,022 | 51,635 | 155,628 | 174,231 | ||||
| Other income | 1,869 | 1,539 | 5,804 | 3,162 | ||||
| Income before income taxes | 37,891 | 53,174 | 161,432 | 177,393 | ||||
| Provision for income taxes | 12,555 | 15,265 | 48,748 | 50,779 | ||||
| Net income | $ | 25,336 | $ | 37,909 | $ | 112,684 | $ | 126,614 |
| Earnings per share: | ||||||||
| Basic | $ | 1.08 | $ | 1.71 | $ | 4.81 | $ | 5.57 |
| Diluted | $ | 1.05 | $ | 1.66 | $ | 4.67 | $ | 5.41 |
| Weighted average shares outstanding: | ||||||||
| Basic | 23,370 | 22,184 | 23,406 | 22,749 | ||||
| Diluted | 24,149 | 22,819 | 24,140 | 23,402 |
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| December 31, 2024 | December 31, 2025 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 137,074 | $ | 140,757 |
| Marketable securities | 46,949 | 7,297 | ||
| Tuition receivable, net | 76,127 | 78,202 | ||
| Income taxes receivable | — | 2,511 | ||
| Other current assets | 44,793 | 49,090 | ||
| Total current assets | 304,943 | 277,857 | ||
| Property and equipment, net | 111,247 | 107,373 | ||
| Right-of-use lease assets | 103,673 | 91,140 | ||
| Marketable securities, non-current | 14,981 | 5,000 | ||
| Intangible assets | 245,098 | 249,243 | ||
| Goodwill | 1,206,883 | 1,242,413 | ||
| Other assets | 62,910 | 65,514 | ||
| Total assets | $ | 2,049,735 | $ | 2,038,540 |
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable and accrued expenses | $ | 101,749 | $ | 105,791 |
| Income taxes payable | 2,926 | — | ||
| Contract liabilities | 89,563 | 96,247 | ||
| Lease liabilities | 22,222 | 15,905 | ||
| Total current liabilities | 216,460 | 217,943 | ||
| Deferred income tax liabilities | 27,586 | 35,835 | ||
| Lease liabilities, non-current | 103,004 | 93,216 | ||
| Other long-term liabilities | 40,186 | 45,140 | ||
| Total liabilities | 387,236 | 392,134 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Common stock, par value $0.01; 32,000,000 shares authorized; 24,502,385 and 22,968,860 shares issued and outstanding at December 31, 2024 and December 31, 2025, respectively | 245 | 230 | ||
| Additional paid-in capital | 1,532,414 | 1,436,795 | ||
| Accumulated other comprehensive loss | (88,565) | (46,115) | ||
| Retained earnings | 218,405 | 255,496 | ||
| Total stockholders’ equity | 1,662,499 | 1,646,406 | ||
| Total liabilities and stockholders’ equity | $ | 2,049,735 | $ | 2,038,540 |
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| For the year ended December 31, | ||||
|---|---|---|---|---|
| 2024 | 2025 | |||
| Cash flows from operating activities: | ||||
| Net income | $ | 112,684 | $ | 126,614 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Gain on early termination of operating leases | (6,166) | (2,196) | ||
| Amortization of deferred financing costs | 674 | 425 | ||
| Amortization of investment discount/premium | (290) | (432) | ||
| Depreciation and amortization | 44,378 | 48,410 | ||
| Deferred income taxes | (150) | 7,733 | ||
| Stock-based compensation | 25,571 | 22,954 | ||
| Impairment of right-of-use lease assets | 677 | 4,685 | ||
| Changes in assets and liabilities: | ||||
| Tuition receivable, net | 221 | (1,086) | ||
| Other assets | (11,622) | (7,593) | ||
| Accounts payable and accrued expenses | 11,577 | 4,222 | ||
| Income taxes payable and income taxes receivable | 1,067 | (5,563) | ||
| Contract liabilities | (2,948) | 6,062 | ||
| Other liabilities | (6,342) | (6,037) | ||
| Net cash provided by operating activities | 169,331 | 198,198 | ||
| Cash flows from investing activities: | ||||
| Purchases of property and equipment | (40,580) | (44,252) | ||
| Purchases of marketable securities | (54,117) | (28,094) | ||
| Proceeds from marketable securities | 31,025 | 79,078 | ||
| Proceeds from sale of property and equipment | — | 2,200 | ||
| Proceeds from other investments | 20 | — | ||
| Other investments | (531) | (390) | ||
| Cash paid for acquisition, net of cash acquired | (177) | (36) | ||
| Net cash provided by (used in) investing activities | (64,360) | 8,506 | ||
| Cash flows from financing activities: | ||||
| Common dividends paid | (58,971) | (57,543) | ||
| Payments on long-term debt | (61,275) | — | ||
| Net payments for stock awards | (3,318) | (9,720) | ||
| Payments of deferred financing costs | (1,698) | — | ||
| Repurchase of common stock | (11,510) | (138,892) | ||
| Net cash used in financing activities | (136,772) | (206,155) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (3,468) | 2,306 | ||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (35,269) | 2,855 | ||
| Cash, cash equivalents, and restricted cash — beginning of period | 181,925 | 146,656 | ||
| Cash, cash equivalents, and restricted cash — end of period | $ | 146,656 | $ | 149,511 |
STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT REPORTING
(in thousands)
| For the three months ended December 31, | For the twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | |||||
| Revenues: | ||||||||
| U.S. Higher Education | $ | 214,332 | $ | 218,529 | $ | 857,890 | $ | 868,239 |
| Australia/New Zealand | 66,666 | 65,591 | 257,119 | 251,584 | ||||
| Education Technology Services | 30,458 | 39,090 | 104,921 | 148,397 | ||||
| Consolidated revenues | $ | 311,456 | $ | 323,210 | $ | 1,219,930 | $ | 1,268,220 |
| Income from operations: | ||||||||
| U.S. Higher Education | $ | 17,881 | $ | 28,304 | $ | 77,165 | $ | 101,872 |
| Australia/New Zealand | 10,743 | 12,309 | 37,394 | 35,454 | ||||
| Education Technology Services | 11,803 | 13,983 | 42,717 | 58,814 | ||||
| Restructuring costs | (4,405) | (2,961) | (1,648) | (21,909) | ||||
| Consolidated income from operations | $ | 36,022 | $ | 51,635 | $ | 155,628 | $ | 174,231 |
Non-GAAP Financial Measures
In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for total costs and expenses, income from operations, operating margin, income before income taxes, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.
Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company’s ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company’s results of operations period-over-period. These measures are Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, and Free Cash Flow. We define Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities, (2) income/loss recognized from the Company’s investments in partnership interests and other investments, and (3) discrete tax adjustments utilizing adjusted effective income tax rates of 27.5% and 29.0% for the three months ended December 31, 2024 and 2025, respectively, and an adjusted effective income tax rate of 29.0% for both the twelve months ended December 31, 2024 and 2025. To illustrate currency impacts to operating results, Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS for the three and twelve months ended December 31, 2025 are also presented on a constant currency basis utilizing an exchange rate of 0.65 and 0.66 Australian Dollars to U.S. Dollars, respectively, which were the average exchange rates for the same periods in 2024. We define EBITDA as net income before other income, the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, and the amounts in (1) above. We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED TOTAL COSTS AND EXPENSES, ADJUSTED INCOME FROM OPERATIONS, ADJUSTED OPERATING MARGIN, ADJUSTED INCOME BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED EPS
(in thousands, except per share data)
| For the three months ended December 31, 2024<br>Non-GAAP Adjustments | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As Reported<br>(GAAP) | Restructuring costs(1) | Loss from other investments(2) | Tax<br><br>adjustments(3) | As Adjusted<br>(Non-GAAP) | ||||||||||||||||||||||||
| Total costs and expenses | $ | 275,434 | $ | (4,405) | $ | — | $ | — | $ | 271,029 | ||||||||||||||||||
| Income from operations | $ | 36,022 | $ | 4,405 | $ | — | $ | — | $ | 40,427 | ||||||||||||||||||
| Operating margin | 11.6 | % | 13.0 | % | ||||||||||||||||||||||||
| Income before income taxes | $ | 37,891 | $ | 4,405 | $ | 193 | $ | — | $ | 42,489 | ||||||||||||||||||
| Net income | $ | 25,336 | $ | 4,405 | $ | 193 | $ | 850 | $ | 30,784 | ||||||||||||||||||
| Diluted earnings per share | $ | 1.05 | $ | 1.27 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 24,149 | 24,149 | For the three months ended December 31, 2025 <br>Non-GAAP Adjustments | |||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||
| As Reported<br>(GAAP) | Restructuring costs(1) | Income from other investments(2) | Tax<br><br>adjustments(3) | As Adjusted<br>(Non-GAAP) | ||||||||||||||||||||||||
| Total costs and expenses | $ | 271,575 | $ | (2,961) | $ | — | $ | — | $ | 268,614 | ||||||||||||||||||
| Income from operations | $ | 51,635 | $ | 2,961 | $ | — | $ | — | $ | 54,596 | ||||||||||||||||||
| Operating margin | 16.0 | % | 16.9 | % | ||||||||||||||||||||||||
| Income before income taxes | $ | 53,174 | $ | 2,961 | $ | (63) | $ | — | $ | 56,072 | ||||||||||||||||||
| Net income | $ | 37,909 | $ | 2,961 | $ | (63) | $ | (996) | $ | 39,811 | ||||||||||||||||||
| Diluted earnings per share | $ | 1.66 | $ | 1.74 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 22,819 | 22,819 | ||||||||||||||||||||||||||
| For the twelve months ended December 31, 2024<br>Non-GAAP Adjustments | ||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||
| As Reported<br>(GAAP) | Restructuring costs(1) | Loss from other investments(2) | Tax<br><br>adjustments(3) | As Adjusted<br>(Non-GAAP) | ||||||||||||||||||||||||
| Total costs and expenses | $ | 1,064,302 | $ | (1,648) | $ | — | $ | — | $ | 1,062,654 | ||||||||||||||||||
| Income from operations | $ | 155,628 | $ | 1,648 | $ | — | $ | — | $ | 157,276 | ||||||||||||||||||
| Operating margin | 12.8 | % | 12.9 | % | ||||||||||||||||||||||||
| Income before income taxes | $ | 161,432 | $ | 1,648 | $ | 2,660 | $ | — | $ | 165,740 | ||||||||||||||||||
| Net income | $ | 112,684 | $ | 1,648 | $ | 2,660 | $ | 684 | $ | 117,676 | ||||||||||||||||||
| Diluted earnings per share | $ | 4.67 | $ | 4.87 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 24,140 | 24,140 | For the twelve months ended December 31, 2025 <br>Non-GAAP Adjustments | |||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||
| As Reported<br>(GAAP) | Restructuring costs(1) | Loss from other investments(2) | Tax<br><br>adjustments(3) | As Adjusted<br>(Non-GAAP) | ||||||||||||||||||||||||
| Total costs and expenses | $ | 1,093,989 | $ | (21,909) | $ | — | $ | — | $ | 1,072,080 | ||||||||||||||||||
| Income from operations | $ | 174,231 | $ | 21,909 | $ | — | $ | — | $ | 196,140 | ||||||||||||||||||
| Operating margin | 13.7 | % | 15.5 | % | ||||||||||||||||||||||||
| Income before income taxes | $ | 177,393 | $ | 21,909 | $ | 4,347 | $ | — | $ | 203,649 | ||||||||||||||||||
| Net income | $ | 126,614 | $ | 21,909 | $ | 4,347 | $ | (8,279) | $ | 144,591 | ||||||||||||||||||
| Diluted earnings per share | $ | 5.41 | $ | 6.18 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 23,402 | 23,402 |
(1)Reflects severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities.
(2)Reflects income/loss recognized from the Company’s investments in partnership interests and other investments.
(3)Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective income tax rates of 27.5% and 29.0% for the three months ended December 31, 2024 and 2025, respectively, and an adjusted effective income tax rate of 29.0% for both the twelve months ended December 31, 2024 and 2025.
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
2025 AS ADJUSTED WITH CONSTANT CURRENCY
(in thousands, except per share data)
| For the three months ended December 31, 2025 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As Reported<br>(GAAP) | Non-GAAP adjustments(1) | Constant currency adjustment(2) | As Adjusted with Constant Currency<br>(Non-GAAP) | ||||||||||||||
| Revenues | $ | 323,210 | $ | — | $ | (140) | $ | 323,070 | |||||||||
| Total costs and expenses | $ | 271,575 | $ | (2,961) | $ | (240) | $ | 268,374 | |||||||||
| Income from operations | $ | 51,635 | $ | 2,961 | $ | 100 | $ | 54,696 | |||||||||
| Operating margin | 16.0 | % | 16.9% | ||||||||||||||
| Income before income taxes | $ | 53,174 | $ | 2,898 | $ | 99 | $ | 56,171 | |||||||||
| Net income | $ | 37,909 | $ | 1,902 | $ | 70 | $ | 39,881 | |||||||||
| Diluted earnings per share | $ | 1.66 | $ | 1.75 | |||||||||||||
| Weighted average diluted shares outstanding | 22,819 | 22,819 | For the twelve months ended December 31, 2025 | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||||
| As Reported<br>(GAAP) | Non-GAAP adjustments(1) | Constant currency adjustment(2) | As Adjusted with Constant Currency<br>(Non-GAAP) | ||||||||||||||
| Revenues | $ | 1,268,220 | $ | — | $ | 5,808 | $ | 1,274,028 | |||||||||
| Total costs and expenses | $ | 1,093,989 | $ | (21,909) | $ | 4,910 | $ | 1,076,990 | |||||||||
| Income from operations | $ | 174,231 | $ | 21,909 | $ | 898 | $ | 197,038 | |||||||||
| Operating margin | 13.7% | 15.5% | |||||||||||||||
| Income before income taxes | $ | 177,393 | $ | 26,256 | $ | 955 | $ | 204,604 | |||||||||
| Net income | $ | 126,614 | $ | 17,977 | $ | 677 | $ | 145,268 | |||||||||
| Diluted earnings per share | $ | 5.41 | $ | 6.21 | |||||||||||||
| Weighted average diluted shares outstanding | 23,402 | 23,402 |
(1)Reflects non-GAAP adjustments related to restructuring costs, income/loss from other investments, and tax adjustments as described further in the Unaudited Reconciliation of Non-GAAP Financial Measures table above.
(2)Reflects an adjustment to translate foreign currency results after the non-GAAP adjustments for the three and twelve months ended December 31, 2025 at a constant exchange rate of 0.65 and 0.66 Australian Dollars to U.S. Dollars, respectively, which were the average exchange rates for the same periods in 2024.
STRATEGIC EDUCATION, INC.
UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
| For the three months ended December 31, | For the twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | |||||
| Revenues: | ||||||||
| U.S. Higher Education | $ | 214,332 | $ | 218,529 | $ | 857,890 | $ | 868,239 |
| Australia/New Zealand | 66,666 | 65,591 | 257,119 | 251,584 | ||||
| Education Technology Services | 30,458 | 39,090 | 104,921 | 148,397 | ||||
| Consolidated revenues | 311,456 | 323,210 | 1,219,930 | 1,268,220 | ||||
| Income from operations: | ||||||||
| U.S. Higher Education | $ | 17,881 | $ | 28,304 | $ | 77,165 | $ | 101,872 |
| Australia/New Zealand | 10,743 | 12,309 | 37,394 | 35,454 | ||||
| Education Technology Services | 11,803 | 13,983 | 42,717 | 58,814 | ||||
| Restructuring costs | (4,405) | (2,961) | (1,648) | (21,909) | ||||
| Consolidated income from operations | 36,022 | 51,635 | 155,628 | 174,231 | ||||
| Adjustments to consolidated income from operations: | ||||||||
| Restructuring costs | 4,405 | 2,961 | 1,648 | 21,909 | ||||
| Total adjustments to consolidated income from operations | 4,405 | 2,961 | 1,648 | 21,909 | ||||
| Adjusted income from operations by segment: | ||||||||
| U.S. Higher Education | 17,881 | 28,304 | 77,165 | 101,872 | ||||
| Australia/New Zealand | 10,743 | 12,309 | 37,394 | 35,454 | ||||
| Education Technology Services | 11,803 | 13,983 | 42,717 | 58,814 | ||||
| Total adjusted income from operations | $ | 40,427 | $ | 54,596 | $ | 157,276 | $ | 196,140 |
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDA AND ADJUSTED EBITDA
(in thousands)
| For the three months ended December 31, | For the twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2025 | 2024 | 2025 | |||||
| Net income | $ | 25,336 | $ | 37,909 | $ | 112,684 | $ | 126,614 |
| Provision for income taxes | 12,555 | 15,265 | 48,748 | 50,779 | ||||
| Other income | (1,869) | (1,539) | (5,804) | (3,162) | ||||
| Depreciation and amortization | 11,345 | 13,250 | 44,378 | 48,410 | ||||
| EBITDA (1) | 47,367 | 64,885 | 200,006 | 222,641 | ||||
| Stock-based compensation | 6,782 | 5,759 | 25,571 | 22,954 | ||||
| Restructuring costs (2) | 4,154 | 2,238 | 1,123 | 18,441 | ||||
| Cloud computing amortization (3) | 1,762 | 2,456 | 7,143 | 9,150 | ||||
| Adjusted EBITDA (1) | $ | 60,065 | $ | 75,338 | $ | 233,843 | $ | 273,186 |
(1)Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information.
(2)Reflects severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities. Excludes $0.2 million of depreciation and amortization expense for the three and twelve months ended December 31, 2024 and $0.7 million and $3.2 million of depreciation and amortization expense for the three and twelve months ended December 31, 2025, respectively. Excludes $0.1 million and $0.3 million of stock-based compensation expense for the three and twelve months ended December 31, 2024, respectively, and $0.2 million of stock-based compensation expense for the twelve months ended December 31, 2025.
(3)Reflects amortization expense associated with deferred implementation costs incurred in cloud computing arrangements.
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FREE CASH FLOW
(in thousands)
| For the twelve months ended December 31, | ||||
|---|---|---|---|---|
| 2024 | 2025 | |||
| Net cash provided by operating activities | $ | 169,331 | $ | 198,198 |
| Purchases of property and equipment | (40,580) | (44,252) | ||
| Free cash flow (1) | $ | 128,751 | $ | 153,946 |
(1)Denotes a non-GAAP financial measure. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information.
15