Strategic Education, Inc. (NASDAQ:STRA) Q1 2023 Earnings Conference Call April 27, 2023 10:00 AM ET

Company Participants

Terese Wilke - Director-Investor Relations

Karl McDonnell - President & Chief Executive Officer

Daniel Jackson - Executive Vice President & Chief Financial Officer

Robert Silberman - Executive Chairman

Conference Call Participants

Jeffrey Silber - BMO Capital Markets

Alexander Paris - Barrington Research

Heather Balsky - BofA Securities

Operator

Welcome to Strategic Education First Quarter 2023 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. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss first quarter 2023 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. 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.

Karl McDonnell

Thank you, Terese, and good morning, everyone. Our first quarter financial results that we reported this morning were basically right in line with our expectations. You may recall that during our last earnings call, we said that a couple of timing-related issues would impact our first quarter results and that we expected our revenue to be roughly flat on a year-over-year basis and our expenses to be up approximately 5%, and that's exactly where we landed. Our U.S. Higher Education division grew its total enrollment in the first quarter by 2.3% from the prior year. This is the first enrollment growth since the third quarter of 2020 and is the result of continued strong new student growth at both Capella and Strayer as well as continued growth in our employer affiliated enrollments. Total employer affiliated enrollment grew 13% at Capella, 25% at Strayer and 17% across all of U.S. higher education, substantially outpacing the growth in our nonemployer affiliated enrollments. These employer enrollments now comprise 26.3% of all U.S. higher education enrollments, which is a 330 basis point gain from 2022. Revenue in U.S. Higher Education increased just over half of 1% to $197 million. Revenue per student decreased slightly from the prior year, primarily as a result of the ongoing strength in our employer affiliated enrollments, as I just noted. The overall demand environment in the U.S. continues to be quite strong. And like last year, we are forecasting full year new student growth at both Strayer and Capella Universities.