Strategic Education Inc (STRA) 2024 Q2 法說會逐字稿

Welcome to Strategic Education's Second Quarter 2024 Results Conference Call. (Operator Instructions) As a reminder, today's program is being recorded.

歡迎參加 Strategy Education 2024 年第二季業績電話會議。（操作員指示）提醒一下，今天的節目正在錄製中。

And now I'd like to introduce your host for today's program, Terese Wilke, Director of Investor Relations for Strategic Education. Miss Wilke, please go ahead.

現在我想介紹一下今天節目的主持人，策略教育投資者關係總監 Terese Wilke。威爾克小姐，請繼續。

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.

謝謝。大家好，歡迎參加 Strategy Education 的電話會議，我們將在會議中討論 2024 年第二季的表現。今天與我們在一起的有主席羅伯特·西爾伯曼 (Robert Silberman)；卡爾麥克唐納，總裁兼執行長；執行副總裁兼財務長丹尼爾傑克森 (Daniel Jackson)。

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.

在今天的發言之後，我們將開始提問。請注意，本次電話會議可能包括根據 1995 年《私人證券訴訟改革法案》安全港條款所做的前瞻性陳述。這些陳述是基於當前的預期，並受到戰略教育在今天的新聞稿中確定的許多假設、不確定性和風險的影響，這些假設、不確定性和風險可能導致實際結果存在重大差異。有關這些和其他相關不確定性的更多信息，請參閱Strategy Education 最新的10-K 表格年度報告、將要提交的10-Q 表格和向美國證券交易委員會提交的其他文件，以及Strategy Education 未來的8 -K 表格。這些文件的副本和完整的新聞稿可在網站strategiceducation.com上查看。現在我想把電話轉給卡爾。卡爾，請繼續。

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.

謝謝你，特雷西，大家早安。我們 2024 年第二季的業績反映了我們所有細分市場的持續強勁勢頭。但在我們開始之前，就像通常的情況一樣，我想首先指出，我對我們財務業績的所有提及都是我們的調整後業績，並且出於外匯目的，它們假設貨幣不變。

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.

第二季度，SEI 的營收成長了 9%，達到 3.13 億美元。我們的營運費用成長了 3%，符合我們的預期。我們的營業收入成長了 60% 以上，達到 4,400 萬美元。我們的營業利益率增加了 460 個基點。本季度，我們每股收益 1.34 美元，比上年增長 60% 以上。

Turning now to our segments. U.S. higher education delivered another quarter of strong growth, driven once again by employer affiliated enrollments. 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.

現在轉向我們的部分。在雇主附屬招生的推動下，美國高等教育又實現了一個季度的強勁成長。第二季美國高等教育總入學人數成長了 8%，其中雇主附屬入學總人數比前一年增長了一倍多，達到 17%，這反映出我們與企業合作夥伴關係的持續強勁。

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.

本季度，來自我們企業合作夥伴的美國高等教育入學總人數的百分比增加了 200 個基點，達到 29%。美國高等教育的學生留任率穩定在 86.9%。第二季度，美國高等教育收入年增7%，營業收入較去年同期成長194%。

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.

我們的教育科技服務部門也持續表現強勁，Sophia 和 Workforce Edge 持續獲得市場份額。第二季度，ETS 營收年增 26%，營業收入較去年同期成長 63%。Sophia Learning 是我們直接面向消費者的大學課程入口網站，也是我們許多策略企業合作夥伴關係的關鍵組成部分，第二季的營收成長了40%，營業利潤率達到49%，高於去年同期的49 %。

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.

平均付費訂戶總數增加了 37%，達到超過 42,000 名付費訂戶。本季度，ETS 總共新增了 23 個企業合作夥伴，Workforce Edge 目前擁有 71 個企業合作夥伴，總共僱用了超過 150 萬名員工。Strayer 大學或卡佩拉大學的 Workforce Edge 入學人數增加了 36%，達到約 1,500 名學生。鑑於 ETS 部門的強大吸引力，我們決定在 2024 年下半年增加先前規劃的投資，以支持 Sophia 和 Workforce Edge 的加速成長。

These investments, combined with other previously planned investments in the rest of our segments, including increased marketing spend in Australia, means that on a full year basis, our operating expenses will be slightly higher than our notional model that we communicated last November. Our Australia and 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.

這些投資，加上我們其他部門先前計劃的投資，包括在澳洲增加的行銷支出，意味著我們全年的營運支出將略高於我們去年 11 月公佈的名義模型。我們的澳洲和紐西蘭部門的總入學人數又增加了四分之一，入學人數比前一年增加了 6%，達到略高於 19,000 名學生。第二季度，由於入學率和學生人均收入增加，以固定匯率計算的收入較上年增長 10%。入學率的提高主要是由強勁的持續學生入學率所推動的。

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.

由於澳洲恢復了國際學生在校園修讀更多課程的要求，課程負荷的增加使每位學生的收入增加了 4%。以固定匯率計算，澳新銀行第二季營業收入較上季成長，從上季的營業虧損增至 1,400 萬美元，較上年同期成長 1%。我應該指出的是，澳新銀行的第二季通常是一年中收入和支出的最高點，澳洲夏季之後是返校季。

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.

最後，我們對整個業務取得的強勁業績感到非常滿意，並將繼續努力，爭取 2024 年全年取得成功。我要再次感謝 SEI 的所有同事對我們學生的持續承諾。喬納森，我們很樂意回答問題。

Certainly. (Operator Instructions) Our first question comes from the line of Jeff Silber from BMO Capital Markets. Your question, please.

當然。（操作員說明）我們的第一個問題來自 BMO 資本市場的 Jeff Silber。請提出你的問題。

Thanks so much. Karl you mentioned because of the increased investments, you think operating expenses will be slightly higher that what you put out 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

非常感謝。Karl，你提到，由於投資增加，你認為營運費用會比你去年提出的概念模型略高。您能否提醒我們去年告訴我們的內容？謝謝

Hey, Jeff, it's Dan. What we said was that we thought operating margin would expand by a couple of 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 for the year.

嘿，傑夫，我是丹。我們所說的是，我們認為營業利潤率將擴大數百個基點。考慮到今年剩餘時間的額外投資，今年的投資金額可能會低於這個數字，可能在 150 到 175 之間。

Okay.

好的。

And will most of that be in both ETS or ANZ? Or should we also expect more spending in U.S. higher education?

其中大部分會在 ETS 或 ANZ 嗎？或者我們還應該期待美國高等教育的支出增加嗎？

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

這將涵蓋所有三個領域，但相對於美國高等教育，ETS 和 ANZ 在今年下半年的支出成長肯定會更多。

Okay, great.

好的，太好了。

And then just looking at the results in the quarter, you had really strong operating margins of margin leverage in U.S. higher education. I know when enrollment goes up, you see that, but it was pretty outsized.

然後只要看看本季的結果，美國高等教育的利潤槓桿營運利潤率就非常高。我知道當入學人數增加時，你會看到這一點，但規模相當大。

Was there anything specific going on? Any timing issues we should be aware of?

有什麼具體的事情發生嗎？我們應該注意哪些時間問題？

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, it obviously impacts the margin quite favorably.

不。傑夫，除了你自己指出的以外，我們的入學率和收入都相當高。我們在美國高等教育中沒有那麼多可變費用。因此，當我們看到我們的收入成長水準時，它顯然對利潤率產生了相當有利的影響。

Okay. Fair enough.

好的。很公平。

If I could just sneak in one more. I have to ask the FAFSA question. Obviously with some of the delays we saw this past enrollment cycle, I know 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.

如果我能再偷偷溜進去就好了。我得問 FAFSA 問題。顯然，由於我們在過去的註冊週期中看到了一些延遲，我知道到目前為止可能還沒有影響到您，但是您預計這些延遲可能會在今年下半年產生任何影響嗎？

Well, as you just said, we have not seen any impact from past 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.

嗯，正如你剛才所說，到目前為止，我們還沒有看到過去的延誤造成的任何影響。我們正處於招生人數最多的季度。因此，我們是否會產生任何影響還有待觀察。但到目前為止我們還沒有。

Okay. Great.

好的。偉大的。

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

我會跳回到隊列中。非常感謝。

Thanks, Jeff.

謝謝，傑夫。

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

謝謝。我們的下一個問題來自 Truist 的 Jasper Bibb。請提出你的問題。

Hey, good morning, guys. You talked about updating the notional model on margin and all that makes sense. But then additional models contemplate the revenue growth for the 6% and it seems like with the start to the year, and that would imply flat revenue growth in the back half of the year.

嘿，早上好，夥計們。您談到了更新邊際名義模型以及所有有意義的事情。但其他模型考慮了 6% 的收入成長，似乎是在今年年初，這意味著下半年收入成長持平。

And so to be clear, are you also updating with revenue growth for 24 and in notional model and any way to frame what second-half revenue growth might look like?

因此，需要明確的是，您是否也在更新 24 小時的收入成長和名目模型，以及是否有任何方式來框架下半年收入成長的情況？

Sure. Well, we don't provide an outlook on revenue because, frankly, we don't know what our revenue's 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 and we have plans to make those investments.

當然。好吧，我們不提供收入前景，因為坦白說，我們不知道下半年的收入會是多少。我們認為更新我們的支出很重要，因為顯然這是我們控制的事情，我們有計劃進行這些投資。

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 if we saw our enrollment moderate down to that notional level that we expect over a long term.

賈斯珀，我只想指出，特別是在美國高等教育領域，我們的收入和入學人數成長遠高於我們通常預期的運作率。我們總是理論上說，我們認為這些企業可以支持約 5% 到 10% 的收入和入學人數成長。如果我們看到我們的入學率下降到我們長期預期的名義水平，也就不足為奇了。

Okay. 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. If I did see the government there and that these that these would be, I think, more than double starting in July.

好的。這是有道理的。然後我想問一下您對澳洲的移民規則以及吸引國際學生進入該國的能力有何看法。如果我確實看到那裡的政府，我想，從 7 月開始，這些數字將增加一倍以上。

Curious if that's having any impact on your new enrollments for tuck-ins at this point, we have seen that the timing of approvals for visas in Australia has started to lengthen again. But I would remind our owners that there's actually two sources of growth for international students. There's the students who are offshore, but 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 hosted 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 vis a vis what other institutions charge. So I would expect that part of international growth to continue the rest of this year and into next year.

好奇這是否會對您目前的新註冊人數產生任何影響，我們發現澳洲簽證批准的時間已開始再次延長。但我要提醒我們的老闆，國際學生其實有兩個成長來源。有些學生在海外，但需要獲得簽證才能移民到澳洲。但也有一些已經持簽證來到澳洲的學生，他們可以在所在大學學習六個月後轉學到另一所院校，坦白說，在這個領域，我們看到托倫斯的市場份額大幅增長，因為主要是我們有非常高品質的產品，與其他機構相比，我們的學費非常優惠。因此，我預計國際成長的一部分將持續到今年剩餘時間和明年。

Got us. On last question for me. I know the Education Department typically regulators of this industry primarily through rulemaking.

抓住了我們。關於我的最後一個問題。我知道教育部通常主要透過制定規則來監管這個行業。

Maybe a broader question.

也許是一個更廣泛的問題。

Curious if you see the regulatory framework changing following the Chevron decision?

好奇您是否看到雪佛龍決定後監管框架發生變化？

Jasper, this is Rob. I don't know if it'll change, but it won't really change our operating parameters. And 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 interest 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 are being will be or how we're going to operate. We're going to 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.

賈斯帕，這是羅布。我不知道它是否會改變，但它不會真正改變我們的操作參數。我們知道，我們在一個受到嚴格監管的行業中運營，坦率地說，這是適當的，因此我們的大學得到了由納稅人承擔的非常慷慨和優惠的信貸條件的支持。因此，聯邦政府制定了保護納稅人利益的法規和法規類型。雪佛龍決定中提到的立法部門和行政部門之間制定法規的相對優先順序，並沒有真正影響我們如何思考這些法規將是什麼或我們將如何運作。我們將經營這些大學來滿足那些關心維持這種平衡的人們的意圖。坦白說，這對我們也很重要，無論法規的來源或整體控制機制是什麼。

It makes sense for everyone.

這對每個人來說都是有意義的。

Thank you. (Operator Instructions) And our next question comes from the line of Heather Balsky from BofA. Your question, please.

謝謝。（操作員說明）我們的下一個問題來自美國銀行的 Heather Balsky。請提出你的問題。

Hi. This is Emily Marzo on for Heather Balsky. So starting with new as you're starting to lap tough comparisons and in the second half could you share your thoughts on the growth rate from first half to the second half and the momentum in the enrollment you're seeing in the second half so far?

你好。我是艾米莉·馬佐 (Emily Marzo)，為希瑟·巴爾斯基 (Heather Balsky) 配音。因此，從新開始，當您開始進行艱難的比較時，在下半年，您能否分享一下您對上半年到下半年的增長率以及下半年迄今為止所看到的入學勢頭的看法？

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. And 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 normalize down into sort of the 5% to 10% range on both enrollment and revenue growth.

好吧，我無法評論下半年，因為我們仍處於該季度，顯然仍在招收學生。我們顯然對上半年的結果感到滿意。我想說需求環境仍然健康強勁。正如我在準備好的發言中所說，企業附屬招生管道非常強大。我們每季都會持續增加新客戶。我想再次指出，我們的入學人數和相應的收入成長，特別是美國高等教育領域，明顯高於我們的預期和計劃。如此過了一段時間。我無法預測我們預期美國高等教育的入學率和收入成長在什麼時候會正常化到 5% 到 10% 的範圍內。

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

謝謝。作為後續的增量註冊有多少來自企業合作夥伴關係，您認為這會帶來什麼？

And 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 that mix percent will continue to grow and over a multiyear period I could see that number getting well above 50%.

我面前沒有確切的數字，但我只想指出，企業附屬入學人數的增長是非企業附屬入學人數的兩倍多，基本上是美國三分之一學生的增長。Ed 現在隸屬於我們的企業合作夥伴，因為我們不斷增加大型合作夥伴，這一比例將繼續增長，在多年的時間內，我可以看到這個數字遠高於 50%。

Thank you very much.

非常感謝。

Thank you.

謝謝。

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.

今天節目的問答環節到此結束。我想將該計劃交還給總裁兼執行長卡爾麥克唐納 (Karl McDonnell)，以徵求進一步意見。

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

謝謝喬納森，也感謝大家加入我們，我們期待在 11 月討論我們的第三季業績。謝謝。

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

女士們、先生們，感謝你們參加今天的會議。這確實結束了該程式。您現在可以斷開連線。再會。