Strategic Education, Inc. (SEI) delivers a broad spectrum of educational services, encompassing both traditional campus-based and online post-secondary learning, alongside programs designed ...
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Operator : Welcome to Strategic Education's Second Quarter 2026 Results Conference Call. I will now turn the call over to Terese Wilke, Senior Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead. Terese Wilke : Thank you. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss second quarter 2026 results. With us today are Karl McDonnell, President and Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions. Please note that this call may include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements are based on current expectations and are subject to a number of assumptions, uncertainties and risks that Strategic Education has identified in today's press release that could cause actual results to differ materially. Further information about these and other relevant uncertainties may be found in Strategic Education's most recent annual report on Form 10-K, the 10-Q to be filed and other filings with the Securities and Exchange Commission as well as Strategic Education's future 8-Ks, 10-Qs and 10-Ks. Copies of these filings and the full press release are available for viewing on our website at strategiceducation.com. And now I'd like to turn the call over to Karl. Karl, please go ahead. Karl McDonnell : Thank you, Terese, and good morning, everyone. SEI's second quarter financial results, which we released this morning demonstrate continued significant strength in our ETS division, increased momentum in U.S. Higher Education and meaningful progress in returning our Australia business to growth in 2027. Before I go through the results themselves, I just want to remind everyone that I'm referring to our adjusted financial results and from a constant currency standpoint. SEI's second quarter revenue increased approximately 3% from the prior year to $330 million. Our operating expenses increased by approximately 1.5% from the prior year, but this is inclusive of a onetime charge related to a labor matter in Australia dating back to the close of the transaction in 2020 and which I will comment on when we discuss the Australia segment's results momentarily. Excluding this nonrecurring expense, our operating expenses would have been $265 million, or a reduction of 3% from the prior year. Operating income was $53 million for the quarter, a 9% increase from the prior year, and our operating margin for the quarter was 16%, a 90 basis point improvement from the prior year. Again, excluding the onetime Australian charge of $13 million, operating income would have increased by 35%, and our operating margin would have been 20%. Adjusted earnings per share were $1.76, a 16% increase from the prior year. Year-to-date cash flow from operations increased 18% from the prior year to $117 million. So …
| Metric | Latest | YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength. | QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes. |
|---|---|---|---|
| The total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three). |
| Name | Title | Compensation | Gender | Year Born | Status |
|---|---|---|---|---|---|
Karl McDonnell | President, Chief Executive Officer & Director | USD 2,422,067 | Male | 1966 | Active |
Daniel W. Jackson | Executive VP, CFO & Chief Administrative Officer |
| USD 1,303,210 |
| Male |
| 1975 |
| Active |
Lizette Benedi Herraiz | Senior Vice President, Chief Legal Officer, General Counsel & Secretary of the Board | USD 947,100 | Female | 1975 | Active |
Christa E. Hokenson | Senior Vice President & Chief Human Resources Officer | USD 946,915 | Female | 1971 | Active |
Andrew E. Watt | President of U.S. Higher Education | USD 781,078 | Male | 1978 | Active |
Sondra F. Stallard | President Emerita and Director of Accreditation & Regulatory Affairs - Strayer University | USD 539,800 | — | 1950 | Active |
Terese Wilke | Director of Investor Relations | — | Female | — | Active |
Tal Darmon | Senior Vice President, Controller & Chief Accounting Officer | — | Male | 1975 | Active |
Alwyn Louw | Vice-Chancellor of Torrens University Australia | — | — | — | Active |
Joe Schaefer | President of Education Technology Services | — | Male | — | Active |
$2.40 per share
Est. EPS $1.95 · Revenue $326.55M · 2 analysts
Est. EPS $2.08 · Revenue $330.20M · 2 analysts
| $1.3B |
| +4.0% |
| +10.2% |
| Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day. | $126.6M | +12.4% | +13.3% |
| Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials. | +49.0% | +4.9% | -4.3% |
| Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on). | +15.5% | +21.2% | +6.0% |
| Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales. | +10.0% | +8.1% | +2.7% |
| Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock. | $153.9M | +19.6% | -63.9% |
| FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine. | +12.1% | +15.0% | -67.3% |
| Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe. | 6.6% | -12.0% | -2.2% |
| Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking. | 1.27x | -9.5% | -5.2% |
| Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground. | $2.0B | -0.5% | -0.5% |
| Metric | Annual (A vs E) | Annual Surprise | Quarter (A vs E) | Quarter Surprise |
|---|---|---|---|---|
| EPS Surprise | 5.42 vs 5.87 | -7.6% | 1.71 vs 1.80 | -5.0% |
| Revenue Surprise | $1.3B vs $1.3B | +0.1% | $337.3M vs $327.5M | +3.0% |
| Date | Executive | Title | Security | Side | Shares | Price |
|---|---|---|---|---|---|---|
| Jun 4, 2026 | Hokenson Christa | officer: CHIEF HUMAN RESOURCES OFFICER | Common Stock | D | 2,000 | $80.00 |
| May 5, 2026 | WAITE G THOMAS III | director | Common Stock | D | 666 | $77.68 |
| Apr 24, 2026 | Thawley Michael | director | Common Stock | A | 665 | $72.71 |
| Apr 22, 2026 | Thawley Michael | director | Common Stock | A | 1,436 | — |
| Apr 22, 2026 | Slocum William J | director | Common Stock | A | 1,436 | — |
