Strategic Education Reports First Quarter 2026 Results: Progress Across Key Strategic Objectives

Strategic Education Inc. (SEI) recently reported its first quarter 2026 results, highlighting meaningful progress across three primary strategic objectives. The company's President and Chief Executive Officer, Karl McDonnell, emphasized the continued investment and growth of SEI's Education Technology Services division, growing employer-focused strategy, and implementing AI and other productivity-enabling systems.

In terms of financial performance, SEI revenue declined 1% year-over-year in Q1 2026, driven by a slight decrease in consolidated enrollment. However, based on current enrollment trends, the company expects this quarter to be the low point of the year in both absolute revenue and revenue growth.

SEI's productivity initiatives drove a 2% reduction in adjusted operating expenses, resulting in 3% operating income growth and a slight margin expansion to 14.3%. Adjusted earnings per share came in at $1.41.

Within SEI's Education Technology Services (ETS) division, revenue grew 21% to $42 million, driven by Sophia Learning subscriptions, higher employer-affiliated enrollment, and new Workforce Edge partnerships. ETS operating income grew 42% to $20 million and a 47% margin, representing 46% of consolidated operating income.

Sophia Learning, a key component of SEI's ETS division, saw average total subscribers grow by 40% and revenue increase by 32%, with strong growth in both consumer and employer-affiliated subscribers. Workforce Edge ended the quarter with 82 corporate agreements covering 4 million employees and enrollments from Workforce Edge into either Strayer or Capella University grew 70%, reaching nearly 4,000 students.

In the U.S. Higher Education segment, employer-affiliated enrollment grew 10% and reached a new all-time high of 34.5% of total U.S. Higher Education enrollment, an increase of more than 300 basis points from the prior year. Healthcare enrollment also grew 10%, representing more than half of all U.S. Higher Education enrollment.

Despite a slight decline in unaffiliated enrollment and higher discounts and scholarships, which lowered revenue per student, the U.S. Higher Education segment delivered $26 million of operating income and a 12% margin. The segment set a new record for average student retention at 89%.

In Australia and New Zealand (ANZ), total enrollment declined 3% in Q1 2026, with regulatory constraints on international enrollment continuing to be a headwind. On a constant currency basis, ANZ revenue was down 4%, reflecting the enrollment decline and a slight decrease in revenue per student. However, SEI's productivity initiatives drove a 3% reduction in operating expenses.

On capital allocation, SEI repurchased approximately 493,000 shares during Q1 2026 for a total of $40 million, leaving around $200 million remaining on its share repurchase authorization through the end of the year.