STRA earnings analysis
What we found in STRA's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Strategic Education delivered a solid Q2: revenue increased 4.9% to $337.3 million, GAAP operating margin expanded 0.8 percentage points to 15.0%, and GAAP diluted EPS rose to $1.71 from $1.37. ETS growth and USHE cost leverage offset modest USHE enrollment pressure, while ANZ profitability was heavily affected by a $13.9 million back-pay reserve and international-enrollment constraints. Cash generation improved, although cash, equivalents, and marketable securities declined to $133.8 million after $72.7 million of first-half share repurchases.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and profitability improved
- Q2 revenue rose 4.9% year over year to $337.3 million from $321.5 million and increased from $305.9 million in Q1 2026. GAAP operating income rose to $50.5 million from $45.8 million, lifting operating margin to 15.0% from 14.2%; GAAP diluted EPS increased to $1.71 from $1.37.
- ETS growth accelerated
- ETS was the primary growth engine: revenue increased 15.4% to $42.4 million, while segment operating income grew 30.2% to $19.6 million. Management cited Sophia Learning subscription growth, higher Workforce Edge employer-partnership revenue, and higher employer-affiliated enrollment, which reached 34.7% of USHE enrollment versus 31.8%.
- USHE monetization offset enrollment softness
- USHE revenue increased 2.3% to $220.5 million despite a 0.5% enrollment decline to 85,894. Higher revenue per student and lower personnel, bad-debt, and facility costs helped USHE operating income rise 56.0% to $32.4 million.
- Operating cash flow strengthened
- Six-month operating cash flow increased to $116.6 million from $98.9 million, supported by higher earnings and favorable working-capital changes. Capital expenditures rose to $24.2 million from $21.2 million, primarily for technology investments; this implies cash generation after capex of $92.4 million based on the disclosed figures.
- Debt-free balance sheet supports returns
- Liquidity remained substantial, with $133.8 million of cash, cash equivalents, and marketable securities and no outstanding revolver borrowings at June 30, 2026. The company repurchased $72.7 million of shares in the first half and retained $140.7 million of authorization through December 31, 2026.
- Underlying adjusted earnings rose
- Adjusted diluted EPS was $1.76, up from $1.52, and adjusted operating margin was 15.7% versus 15.1%. These results exclude $2.5 million of restructuring costs, while reported results absorbed the ANZ back-pay reserve.
- ANZ revenue growth masked a profit setback
- ANZ revenue increased 7.6% to $74.4 million, aided by foreign exchange and revenue per student, but enrollment declined 5.2% to 17,555. A $13.9 million reserve for historical casual-academic back pay reduced ANZ operating income to $1.0 million from $12.8 million.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- ANZ employment litigation created $13.9M reserve
- The company recorded a $13.9 million reserve in Q2 for estimated 2020-2025 casual academic staff back pay, payroll taxes, benefits, and interest after an adverse Australian Full Court decision. The ultimate loss may differ materially from the reserve because the High Court appeal and potential retrospective remediation remain uncertain.
- International-visa constraints threaten ANZ assets
- ANZ enrollment declined 5.2% to 17,555 as a more stringent Australian visa process increased refusals for applicants from certain countries. Continued constraints could pressure the carrying value of ANZ's $526.5 million goodwill and $66.2 million indefinite-lived intangible assets.
- Title IV accountability and funding exposure
- Updated U.S. regulatory risks include new program-level accountability requirements: programs can lose Federal Direct Loan eligibility after failing applicable earnings measures in 2 of 3 consecutive years, with most provisions effective July 1, 2027. Strayer derived 87.98% of fiscal-2025 cash-basis revenue from federal education assistance, close to the 90% 90/10 threshold, versus Capella at 68.30%.
- Potential SARA changes could disrupt online reach
- NC-SARA's 2026 policy process produced 33 proposed changes, some of which could limit participation following academic-quality, financial-stability, or consumer-protection actions. The regional committees and board are scheduled to vote by September 2, 2026 and October 28, 2026, respectively; exclusion could require state-by-state online authorization.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.71
- Gross margin
- 100.0%
- Operating margin
- 15.0%
- Segment
- USHE revenue: $220.5 million, up 2.3% year over year
- Segment
- ANZ revenue: $74.4 million, up 7.6% year over year
- Segment
- ETS revenue: $42.4 million, up 15.4% year over year
What they said about what is next.
The 10-Q contains no explicit quantitative revenue or EPS outlook. Management states it will continue to invest in its strategy and believes existing liquidity, operating cash flow, and its credit facility will meet cash requirements for the next 12 months and beyond.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 23, 2026
- Strategic Education reported Q1 2026 revenue of $305.9 million (up from $303.6 million in Q1 2025) and income from operations of $41.1 million (up from $39.8 million). Operating margin ticked up modestly to ~13.4% from…
- 10-K · February 27, 2026
- Strategic Education reported full-year revenue of $1.3 billion in 2025 and continues to operate through three reportable segments: U.S. Higher Education, Australia/New Zealand, and Education Technology Services.…
- 10-Q · November 6, 2025
- Strategic Education reported third-quarter revenue of $319,949,000, up $13,991,000 (+4.6%) versus Q3 2024, while operating income was $37,042,000 (11.6% of revenue) and diluted EPS was $1.15 (flat YoY). Operating cash…
- 10-Q · July 30, 2025
- Strategic Education reported quarter revenue of $321,471,000 (up from $312,266,000 a year ago) and net income of $32,331,000 (versus $29,898,000). Diluted EPS rose to $1.37 from $1.24 in Q2 2024 and operating income…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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