Strategic Education Reports Higher Enrollment Amidst Modest Revenue Growth

Student retention efforts and cost-cutting measures helped Strategic Education improve earnings despite flat revenue.

May 06, 2025

Enrollment Growth Driving the Core Business

Strategic Education is leaning into growth—and showing results. The company saw improved profitability in Q1 2025, thanks to a steady uptick in student enrollment and a tight handle on costs across its operations. While revenue stayed mostly flat year-over-year, better margins and stronger retention helped push earnings up.

Capella University continued its streak of enrollment gains, with new student starts up again for the sixth quarter in a row. Strayer University held its ground, maintaining the recovery it’s been building on. These gains didn’t happen by accident—management pointed to sharper marketing, refined admissions tactics, and smarter engagement tools that are keeping students enrolled and on track.

In the company’s Alternative Learning segment, momentum held strong. Sophia Learning pulled in more learners, supported by institutional partnerships and growing demand for affordable credit pathways. Other employer-focused platforms also saw usage climb, keeping this part of the business firmly in growth mode.

But more students didn’t translate into higher revenue—at least not yet. A shift toward lower-cost programs and expanded scholarships held average revenue per student in check. As a result, topline growth remained subdued, even as headcount ticked up.

Expense Discipline Pays Off

Where Strategic Education gained ground was on the cost side. Operating expenses dropped as a percentage of revenue, and that efficiency showed up in improved margins. Lower marketing and administrative spend, combined with tighter operational execution, helped offset other inflationary pressures.

Technology played a role too. As the company continues moving more of its learning infrastructure online, it’s trimming delivery costs and cutting back on physical campus overhead. That shift helped drive year-over-year gains in gross margin, with adjusted EBITDA also up for the quarter.

Strategic isn’t chasing growth at any cost—it’s focused on scale and sustainability. That approach is creating space for better profitability, even in a flat revenue environment.

Strong Balance Sheet, Steady Payouts

The company wrapped the quarter with solid cash reserves and no long-term debt, putting it in a strong position to stay flexible. Cash flow from operations was up year-over-year, and capex remained aligned with expectations, primarily supporting platform upgrades and curriculum development.

Dividends continued on schedule, and while the company didn’t buy back shares in Q1, it’s keeping the door open with an active repurchase authorization. The message from management: expect a balanced capital strategy that leaves room for reinvestment while also rewarding shareholders.

Regulatory Watch and 2025 Priorities

Strategic is closely tracking regulatory developments, especially new gainful employment rules and Title IV funding changes. It’s already making the adjustments needed to stay in compliance, both on the program and disclosure front.

Looking ahead, the company’s focus is on expanding career-relevant offerings, deepening its relationships with employers, and building out competency-based learning models. Management also flagged potential growth opportunities through new partnerships or acquisitions—particularly in workforce development and adult learning.

Eyes on the Risk

The company acknowledged that risk factors remain. Enrollment shifts, policy changes, competitive pressure, and broader macroeconomic volatility are all in play. Any of these could impact student demand, funding availability, or overall outcomes.

While forward-looking plans are in motion, management emphasized the importance of staying responsive. The education space continues to evolve—and Strategic Education is positioning itself to move with it.

Bottom Line

Q1 results show a company navigating a changing market with discipline and focus. Enrollment trends are heading in the right direction. Cost structures are tightening. And the business remains financially sound. As Strategic Education executes on its roadmap for the year, it’s keeping students, partners, and shareholders at the center of that strategy—moving with purpose and staying ready for what’s next.