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Strategic Education (STRA)

Participants
Terese Wilke Director of Investor Relations
Robert Silberman Executive Chairman
Karl McDonnell President & Chief Executive Officer
Daniel Jackson Executive Vice President and Chief Financial Officer
Jeff Silberman BMO Capital Markets
Tobey Sommer Truist Securities
Gary Bisbee Bank of America
Call transcript
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Operator

Welcome to Strategic Education's Third Quarter 2021 Results Conference Call. I will now turn the call over to Terese Wilke, Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead.

Terese Wilke

Thank you. welcome discuss Education's third and which call everyone, will we quarter morning, to conference Strategic in Good XXXX results. are Executive Jackson, today President Chief us Robert Chairman; Executive With Karl Financial and Officer. Chief Vice Officer; Executive Daniel and President and Silberman, McDonnell,

call expectations current we assumptions, the that Education press this safe on are Litigation of Private include Further today's subject X-Ks, harbor note be remarks, of these these for for Reform other and XX-Qs Please filings made please release Securities now XXXX. open provisions has will actual Following forward-looking are today's information based a number in XX-Q cause the with The materially. and viewing Act strategiceducation.com. call uncertainties Karl. to Strategic on future as in at be over uncertainties the and most statements on and available the to I'd press to full Education's questions. report recent could And and Strategic that may differ release call to Form the about results risks statements Strategic of ahead. that identified may Commission, pursuant website filings found other XX-Ks. Karl, are to XX-K, and relevant annual as Securities filed turn the the and to go Copies well Exchange like of Education's the

Karl McDonnell

our on instead released than towards actually This everyone. is since provide our we go release, the detail goals. morning, our in And the quarter them all good and in to strategic morning, owners Terese, our you, I'd through financial third updates Thank results. progress rather with like information

most quarter without perform notwithstanding SEI's these Zealand The to COVID-related the on they third Australia completed restricted integration world. infrastructure was segment any fact or world's of lockdown and with some continues First, impacts that New of anywhere and students the staff. measures exceptionally in the well, in to have operated assets the adverse our to

team team as of U.S. on potentially has inability with likely revenue of expand Australian U.S.-based such next three-plus are implement these with Australia The our negative worth programs to their to $XX see our their $XX the University a will projections program existing $XX million on we but beginning projection Our expense students into million. million that synergies Torrens such to being revenue EBITDA to revenue for this careful year, years. been our the foreign synergies, be original actively Currently, portfolio. that travel over working almost will into full impact will offset year line in have with management, be entirely slight exporting

beginning added into encouraged the we've strong meet be model year, to are or XXXX, than We in our in Learning. United third paid objectives and these starting subscription Sophia our that Sophia paid will Alternative month-to-month States, their are Learning optimistic ease, part Since relaunching XX,XXX early subscribers that and the quarter cautiously Australia more of for many are are restrictive all a growth subscriber with seeing in resume is we foreign to to of travel on XXXX. track to allowed of measures lockdown the unit In exceed base. of monthly last

revenue XXX,XXX agreements source marketplace traction XXX,XXX now who past launching. the management the platform, dramatically The months XX than courses credit XXX,XXX our its have Edge, Workforce learners expect two-pronged. we of the since Workforce thereby employees for is their to has Sophia transferred meaningful programs. gained offering for SEI And growth lowering to more XX,XXX earnings and We in to Over in a of more than Edge the institutions, as product its more year, fully completed six be collectively cost SaaS-based monetization Edge invest other have on for after corporate benefits we significant Workforce first and collectively than consumers. degree strategy platform. hours employ than educational continue more

be Higher attend First, is largest selects we the on next of we collect consists which continue when Strayer year. will on million And or platform in revenue of and source, second, next At dollars; where the dollars case platform Universities. University, the Strayer year, or segment, primarily third three in select see Higher Capella either students strong the the of an quarter which tuition Capella employees Capella, when believe new this finally, the partner expect what in of and annual Capella in Education now an to very we beginning the the these employee corporate school, we years enrollments. U.S. enrollment to generating several FlexPath, be Both or XX% revenue grew enrolling each within quite attend and collect U.S. we've a case to focused more sources platform our thousand ultimately and we been on platform. partners. for XX% Education building two administering small non-SEI-owned in University comprises than year fee all as to But several will Strayer the growth which be and to

and U.S. declined decline traction total to health most the contributing the strong University, Strayer segment. enrollment employer-affiliated We in in the And we our in in Higher continue that to particular, Education quarter, third enrollments care. Capella, had also in to turning of our where see at revenue

in of Strayer, encouraged by of as student within we're consecutive third some progress We quarter gains are, however, retention. as success, seeing our in student including the well improvements

get committed faculty total on to COVID. fully And of administrators, delivering representing education happy campuses Strayer And the ongoing to with answer as of XX campuses as high-quality have colleagues to said, questions. SEI today, reopened our thank my we'd a dedication post like behalf I'd that finally, work their also to and while hard for students. of working remain staff ever and reopened. And of XX% As be

Operator

Markets. question Silberman from [Operator Instructions] come Jeff The first BMO will with Capital

Jeff Silberman

you parse specific U.S. new we the give Can I and may not on enrollment Wanted out, Education. numbers. trends to University both possible, Strayer trends if us focus know between enrollment the total and Capella? first Higher

you do, kind least going what's that on, been would great. at If of be But great. directionally

Karl McDonnell

directionally, been has Jeff. year. students University total the growing Capella throughout new both Sure, and enrollment Well,

calls, has said on been prior we've Strayer's declining. enrollment As

I said, we're focused as As campuses right getting of our now Strayer on reopened. many

students, XX% amount that have about the just and Strayer's years, accepted that we enrollment particularly of to recover. wait today. over and in of see We there's them And the we've reopened when are undergrad-focused ultimately have some will fact, volatility,

Jeff Silberman

in over specifically worse undergrad, Have past quarter? got those the trends, Strayer

Karl McDonnell

not No. They have gotten worse.

Jeff Silberman

Have they gotten better?

Karl McDonnell

are they In some instances, better.

Jeff Silberman

then on our it if Higher U.S. into can Capella, exactly looks helpful. out declined. go And Strayer were? Okay. per student again, we like calculation, that Education revenue those That's And based All versus declines that right. we be in parse would helpful. Can where

Karl McDonnell

our tuition if Title amount a strategy little all that's Sure. transition line of growing completely down is completely IV more And in actually, decline than revenue, can, basis we've pay lower to Jeff, with Actually, employer-affiliated tend the some longer-term attributable a almost a to enrollments Capella revenue discount. the Strayer, sector the to per on year-over-year of from years, in is to been pay. over to who with private tuition ultimately, student we try at our which that fact

increase And student if as it per sector We all to lens. we through look progress a decline at our negative necessarily pay. of can, and into so don't revenue goal our look towards private corporate we a ultimately in at revenue,

Jeff Silberman

Okay. That's great. And back I'll one queue. jump then and more, in the

year. for quarter on call, the guidance gave I some you the us think first

update a on gave You update comfortable quarter. us if little with Are last get that. still you wondering I you've the us guidance can bit was an given of we previously?

Karl McDonnell

our any project to end call, we mentioned of be update to have we year. range earlier And guidance don't as in below the new still we the We that today. the provided last in low

Jeff Silberman

compared things to lower comments than talked Any it range quarter. same? about of of last the kind lower on, end pretty again, the much Okay. you Is if that directionally the or changed

Karl McDonnell

more said be that is say provided, really to range. we last than the other Jeff, in and our call to already we've of update, below the nothing end we expect this what which low to -- There's

Operator

Instructions] Sommer [Operator be will with Truist next Tobey Our from question Securities.

Tobey Sommer

I'm that folks is labor and updates market. Certainly, the go inflation the outward labor enrollments Wages for improving. tight for that the we are of rising. climate market curious see the new of may sort of wage outside a we quarterly it's get encourage intra-quarter need degree? to signs what outlook moderate a to are Do to kind

Karl McDonnell

large, economy. to Strayer conditions the we changes level. population that improvements We our students and impact Strayer segment the students. every market think think most the never is certainly that before. been the undergraduate are are to XX% we has in undergraduate new college cohort at Half of labor the sensitive of in That's of economic seeing adverse

than What mean the pools improve. are As those And reopened. year, We the quarter fill we quarters. months, We've XX% look improved. you've continue size to that to been get noted, progress. improved, as less updates focused had coming the inquiries just for We're percentage the remained that so weeks are as it we enrollment has application of in, out at that over worse in to at by internally Strayer on that provide prior end of elect hope last the an our XXX% be and inquiry today. several started the -- by I at locations to of we'll many and trying to of each make

Tobey Sommer

of perhaps, with sort size is about the that all less XXX%. footprint are you Or of going thinking of to described. maybe worse conversely, campuses footprint not mapped campus you way the and type that to the And are evaluating your that open? Has the respect that of openings, fiscal against improvement

Karl McDonnell

that's relatively these are assessment have to few a definitely cases, only because teams some weeks. to in And be campuses some we early XXX%, and of Well, -- like our it's reopened it's been at would working make on. what an

with is But set campuses. reopening positive we associated small. outcomes generally, the see So data quite operational

Tobey Sommer

of And do then to the does outlook the is travel rules in the what perspective? trends your does that change Zealand kind pending, from and Australia New business in that in

Karl McDonnell

through has far being being and had things XXXX with they've travel. strong so year, all not considered. closed And borders to operated a Well, foreign students able completely Torrens pretty

positive think would be into catalyst a would in and to XXXX, the that ease if foreign for would to students restrictions begin allowed Torrens. obviously those So be country, we that, travel

Operator

Gary question will Bisbee Bank America. of with from next come The

Gary Bisbee

Sorry. Can hear me? you

Karl McDonnell

Yes.

Gary Bisbee

guess, question, new I down lapping Strayer, first at students. you're first the step in So obviously

a less you metrics And decline bad earlier, go? the it just sense on us but -- saw is any decline recovery? decline any pace that as to a the ago? first Or big the I know of there are you the to again against said you against of Can deterioration? give is so you continuing some year is down year

Karl McDonnell

Strayer either I a which for Capella growth they're student improving University. by few new ago, Strayer can our minutes or providing trends not I at mean what reiterate enrollment less again, bad. the which, just I said we're Well, just are Gary, is

to want don't we numbers get into that, around specific segment. Beyond the new details within student

Gary Bisbee

by time I do might you remains a being you thought rate right. when to good couple participation force think I now? figure ago, turn. challenged how also what can of a at mean, at are new this quarters spent arguably factors you All mean, to that a least improve the point. or Strayer, the Okay. I as we a lot performance desire talking I guess I about students way at to the early about about a enrollment labor know and a of think guess about way see historically, That company said Rob macro you 'XX, the of best thinking enroll. you

the on factors control you that updated can about we thoughts outlook might see think you what when for and what any might help Just can't stabilization. us your

Karl McDonnell

participation that Well, see improving, up. are increase, the to we tick and to I broadly, and force we'd are mean rate encouraged beginning economy, like wages is labor

increases We've that's focus the job substantially of teaching that which things that are tens day. we encouraged as students our all actually onto of the their retention. at What foremost, seen of first on sure best Edge can, quarter a earning can who student we and improved has XXX-plus partnerships focused this our every students obviously and that of on student success, in corporate we're every of actually hours Workforce percentage also serve thousands So converting that platform. very that doing very Strayer, we year. on been year-over-year many making We're the the we basis is, is out are credit control. that We've

day Strayer can University employer-affiliated the right to is so be locations and return educating we're the now, every we open, better be that to that that, focused the grow predominantly normality, think ultimately, in macroeconomic there best job try faring continue our time serve get we that to over Strayer And do when which And is can and to time, that, just do we to campus enroll as able we we and we'll them. to to on begin enrollments. that students our serve that lens happens. in And forward student a that look of best just trying, a just to we level undergraduate our to when University again, they'll

Gary Bisbee

Okay. several the success today discussion Capella one focused. quarters, like you're last around feel And over just that more last one. corporate I of a has lot having the been

you. was the they're to the and in to some quite Strayer and been months is and meaningfully, FlexPath discussion other Strayer? I last going think huge and a Workforce Do give back there part yet, lot XX, that XX corporate an haven't you the of today? is time, XX I think story, from the years, that, last really on you've just discussing, of important us Edge months well. over on focus the XX the care going of say, When you How the heard what's And Can update? employer Given health help strategic of a over going things Strayer? increased XX, that

Karl McDonnell

Sure.

or with year, year, You're always years, the new largest earlier United it. Every over right. been of decades, States. activated part last corporations. in continues a it Strayer this part and remains Strayer big year second CVS, big tens It's of the we to relationships of develop retailer a new University

and maturity, platform. That's a we We partners at Workforce continue from students into we've more we new and to see at Workforce us, to and designed hopefully, accumulate very portal, was national year horizon, also growth one both the employees thousands largest Best Edge. And is Capella and with for for get which, that have ultimately students to our Capella. dollars more have Strayer, Buy, agreement be probably Strayer at a a of thousands large on We of what three-year generating strong employers more the be every why behind we retailers. corporate as Edge of invested

becoming important employer So as big part equally Strayer's cost very of education being an Capella still of is of but lower serve and to an the ability a people, part it's well. for

Operator

follow-up Truist a is from question with next The Tobey Sommer Securities.

Tobey Sommer

wanted follow on up just to guidance commentary. I the

going below commented the it targets, I how tracking we the actually did were be given guidance And to Or going be to if end, range? on relative you Am correctly? think performing we're So on trends now previously. were and the I remembering I that correctly, remember that last prior towards you the those low you to say below were call, below. time business we're

Karl McDonnell

closed knew Yes. the acquisition had year, just just in to of out owners Zealand in Well, put going we contribution it be it on me first, New that parse to was our that the that really when outcomes to earlier have let say which we in Australia not our company. practice, notional an was and was because try Australia, difficult and for the the would we range

be put and results last That this as based we what call, as in call out our balance the year, based in of guidance se see that now for think year contribution. that end look begin earlier the and on that we on we more this we so projections people didn't of we to the on in said, low range. earlier the Australia's business will So could that the model model as as said at being per that a and

Operator

I closing further turn to no for to back conference over questions. are like would there time, any this comments. the at Karl And

Karl McDonnell

time, with Thank everybody. chatting and quarter. you We you, next look appreciate your we forward to

Operator

today's Ladies gentlemen, participating and in thank you call. for conference

may You disconnect. now