On this page of StockholderLetter.com we present the latest annual shareholder letter from Strategic Education, Inc. — ticker symbol STRA. Reading current and past STRA letters to shareholders can bring important insights into the investment thesis.

is made up of Torrens University, Media Design School, and Think Education, educated roughly 20,000
students in 2024, a 5% increase over the previous year. This segment also delivered strong financial results in
2024, with revenue growing 10% to US $257 million, and operating income contribution growing to US $37
million.
One of the academic areas we are most excited about at Torrens University is the impact of technology on
design. Torrens and Media Design School both offer courses in various types of design: including computer,
industrial, media, and even fashion. In these academic programs we are pushing boundaries on how creators
can use artificial intelligence and machine learning techniques to improve the efficacy of their products. We
were very proud this year when one of Torrens University s sponsored research projects, a virtual reality film
Thin Ice VR opened as an exhibit at the Australia Museum. The film had already won awards as the year s
best virtual reality film at both the Cannes and Los Angeles Film Festivals. Using virtual reality technology,
the film takes viewers on an immersive experience of Ernest Shackleton and his crew s survival of the sinking
of their ship, Endurance, on its ill-fated Antarctic exploration mission in 1915. Bringing innovation to higher
education is a key part of how we add value to our students, our institutions, and our shareholders at SEI. Thin
Ice VR is a tangible example of that process, which we look forward to replicating across all of our academic
assets.
Finally, our Education Technology Services segment, the fastest growing and most profitable part of our
enterprise, had a very strong year in 2024. This segment contains all of our non-university operations, and
consists of two main assets: Workforce Edge, a business which structures and manages employer-university
partnerships; and Sophia, our self-paced online academic streaming service. In 2024 the segment grew revenue
30% to $105 million, while operating income increased 47% to $43 million.
Workforce Edge generates revenue and operating margin for SEI in three different ways. First, by earning a
fee from universities for helping those universities attract students whose tuition is paid by the employers of
those students; second, by earning fees from employer clients for managing their tuition reimbursement
programs; and third, Workforce Edge helps our own Universities (Capella, Strayer, and Torrens) attract
employer-sponsored students. In 2024, Workforce Edge signed 11 new clients, including one of the United
States largest employers, and now has over 2.5 million employees on its platform. It is poised for
significant growth.
Sophia consists of a catalog of over 65 self-paced online courses. Students can access all these courses for a
subscription price of $99 per month. The courses cover mostly 100-level general education topics and are
designed to replace the large first year survey courses offered at traditional universities. While Sophia courses
are not led by faculty, they are designed and graded by subject matter experts and university professors. All
Sophia courses have been recommended by the American Council on Education for transfer credit to accredited
universities. Indeed, Sophia has entered into articulation agreements with over 70 universities which have
agreed to accept Sophia credits for transfer. In just three years of operation, Sophia has grown from zero to
over 150,000 discrete paying users in 2024.
Sophia and Workforce Edge are similar in size, profitability, and growth rates. They also complement each
other, as some Workforce Edge corporate clients require their employees to take Sophia courses first, before
enrolling in any traditional university level courses. Doing so can both hold down the cost of the employee s
education, as well as improve the employee/student s academic success. Together, Workforce Edge and Sophia
make the Education Technology Services segment a very valuable addition to our university network, and we
look forward to the continued contributions from the segment in 2025.
The beauty of SEI s business model (and our good fortune as its shareholders) is its ability to produce
significant value for our students, while at the same time producing robust financial returns. As SEI is a
generator of financial capital, it is incumbent on our management team and board of directors to deploy that
generated capital wisely. To help you keep score, this is how we did it in 2024. SEI began 2024 with $209
million of cash and marketable securities, $61 million of debt drawn on our bank revolver (associated with the
2

purchase of our Australia/New Zealand assets in 2020) and 24 million shares outstanding. During 2024 SEI
generated $217 million of pretax operating cash flow, which was a 37% increase over the prior year. During
the year, we used that cash as follows. First, we paid $48 million in local, state, federal and international taxes.
Next, we invested $41 million in capital expenditures.
This left us with $128 million in owners distributable cash flow, which was a healthy 45% increase over the
prior year. We used that cash flow to return approximately $75 million to shareholders in 2024, both through
our $2.40 per share annual common dividend, as well as our repurchase of $15 million of our common stock
at an average price of $95.00 per share. In addition, in 2024 we fully paid down the remaining $61 million of
the outstanding debt on our bank revolver, and incurred roughly $2 million in fees to extend that now undrawn
$250 million availability for an additional 5 years. That capital deployment left us at year end 2024 with $199
million of cash and marketable securities on our balance sheet, 24 million shares outstanding, no debt, and a
US Department of Education financial composite score of 2.4.
We are very excited about our opportunities at SEI in 2025. With its strong inflow of new student enrollments
and its consistently high continuation rate of existing students, we expect Capella University to continue its
above trend line rates of growth in the coming year. We believe the opportunities for both Workforce Edge
and Sophia in 2025 are also very robust. The strong pipeline of new corporate partners signed by Workforce
Edge, combined with Sophia s increasing penetration of the direct-to-consumer market for its academic
streaming service, sets up our Education Technology Service segment for both strong and profitable growth
throughout the year.
Strayer University will continue to focus in 2025 on increasing its share of the employer-sponsored market.
This is an area in which Strayer has a long history of success. Finally, in 2025 we will have to deal with an
increasing political movement in Australia to limit the immigration of foreign students. In the Fall of 2024,
Australia s Labour government introduced legislation to reduce the number of foreign students in the country
in 2025 by up to 20%. The legislation did not pass, but we are mindful of the fact that as a political reality it
may reemerge. Our team at Torrens University is actively planning ways to grow the University to serve unmet
domestic student demand in Australia, as well as potentially serving international students who are unable to
secure a student visa into Australia, through a combination of online, hybrid, and foreign-based Torrens
University campuses.
As a board, our capital allocation priorities in 2025 will remain consistent with our history: first, fully funding
our academic institutions and their various growth opportunities; second, managing our balance sheet to attain
a US Department of Education financial composite score at or near the highest possible level of 3.0; and third,
prudently returning any excess distributable cash to our owners, both with our common dividend, and if
conditions are appropriate, with opportunistic share repurchases. As a Board, we always weigh all uses of
capital against the standard of what will create the highest long-term increase in the per share value of
our enterprise.
SEI s overall performance in 2024, as well as our opportunities and challenges in 2025, reinforce some basic
characteristics about our enterprise and business model. First, providing high quality post-secondary education
creates significant value for its recipients, and done efficiently, can also create significant value for its
providers, generating above average returns on the financial capital necessary to support its operations.
Second, high quality post-secondary academic institutions are, and more importantly, are perceived to be, a
public good. Additionally, our students benefit from very favorable credit terms to finance their education
through government supported or issued loans. For both of these reasons, our enterprise is highly regulated,
and it is important to manage our operations with that in mind. The regulatory structure may wax and wane
based on the ideological and philosophical bents of the powers that be, but it is always there.
Third, at SEI we benefit from a very strong portfolio of complimentary and mutually supporting educational
assets. That portfolio provides significant scale which allows us to take advantage of best academic practices
3

to improve student learning outcomes across all of our platforms. It also provides us with the financial strength
to constantly explore new opportunities for innovation, investment, and growth. Unlike a number of
undercapitalized educational institutions, we can take a very long view on both risks and opportunities,
knowing that when one of our assets is challenged for any number of reasons, others of our assets are
likely to be outperforming.
Fourth, based on our 2024 results, we remain on track for the notional economic model we put forth at our
investor day in November 2023. Specifically, that over the next four years, we can continue to grow our
revenue at a compounding rate of 4-6%, limit our expense growth to a compounding rate of 2-3%, and therefore
compound our cash flow and earnings metrics over that time frame by approximately 20% per annum.
Fifth, all of these observations pale in significance to the overwhelming reality of our enterprise, to-wit: nothing
matters unless we at the most basic level accomplish our mission in the classroom. Everything depends on our
students academic performance. That is how it has been, and how it always will be.
For the last 15 years our Board discussions on academic quality have been guided by Dr. John Casteen, one of
the nation s foremost scholars and academic leaders. Prior to his service on the SEI Board, John served as the
President of both the University of Virginia and the University of Connecticut, as well as spending time in the
public sector as the Secretary of Education of the Commonwealth of Virginia. John s wisdom, judgment, and
experience have been invaluable to our Board deliberations. However, after his long service, John has decided
to not stand for re-election to the SEI Board in 2025. His fellow Directors, SEI s shareholders, and our many
students have all benefited from John s tenure. We are deeply grateful for his contributions, and will miss his
wit and wry smiles in the board room.
To conclude, on behalf of your entire Board of Directors, I would like to once again thank you for the
opportunity to have been the stewards of your invested capital over the last year. As a board (and shareholders
ourselves) we are very fortunate to have our enterprise led by a seasoned management team with a long track
record of growing and nurturing educational assets. Led by our CEO, Karl McDonnell, who has been with us
since 2005, the average tenure at the company of our senior leaders is nearly 20 years. That collective
experience brings judgment, and a keen eye for both opportunities and risks. We are well served as shareholders
by their leadership.
Karl, Dan Jackson (our CFO), and I all look forward to speaking with you in the upcoming year. We are always
available, except during mandatory quiet periods, to answer any questions you may have about our enterprise.
In addition, if you have the time, I would urge you to further diligence the fruits of your invested capital by
attending one of our three university s commencement exercises in 2025. Information on these events can be
found on our website www.strategiceducation.com. The exhilaration and sense of accomplishment which our
graduates exhibit upon receiving their degrees is the most eloquent testimony to the value that your capital is
creating. It is worth seeing personally.
Sincerely yours,
Robert S. Silberman
Chairman of the Board
4

•

3/10/2025 Letter Continued (Full PDF)
•

3/13/2023 STRA Stockholder Letter
•

3/11/2024 STRA Stockholder Letter
•

More "Education & Training Services" Category Stockholder Letters
•

STRA Benford's Law Stock Score = 87

STRA Shareholder/Stockholder Letter Transcript:

2024 ANNUAL REPORT

Strategic Education, Inc.
Letter to Shareholders 2024
Dear Fellow Shareholders,
In 2024, Strategic Education, Inc. (SEI) generated $1.22 billion in revenue, $157 million in adjusted operating
income, $118 million in adjusted net income, and $4.87 in adjusted earnings per share. During the year our
revenue increased 8%, our expenses only increased 5%, our operating income increased by 26%, and our
earnings per share increased by 31%, all vs. 2023 s results. We educated over 107,000 students at our three
Universities in 2024, and served an additional 150,000 students through our Education Technology Services
segment. Additionally, during 2024 our three Universities graduated nearly 32,000 students with bachelor s,
master s, or doctoral degrees. As I have mentioned in previous letters, that last statistic is, in my view, the most
meaningful accomplishment of the year for SEI shareholders, as the academic successes of our students are
the only true generators of sustainable long-term returns on our invested capital.
In this letter I will discuss our academic, operational, and financial results from 2024, including the specific
performance of our three business units: US Higher Education, Australia/New Zealand, and Education
Technology Services. I will also share our company s objectives for 2025. Finally, as is our custom, I have
included in an appendix to this letter both an excerpt from Strayer University s 1912 student catalog, as well
as an excerpt from my first Letter to Shareholders written in 2001. These two excerpts have been printed in
each of our company annual reports since 2001. While our enterprise is now admittedly much larger than just
Strayer University, I believe both excerpts remain helpful in understanding SEI s culture, operating model,
and most importantly, our immutable priorities.
Our US Higher Education assets include both Strayer University, a 132-year-old institution serving mostly
undergraduate students, and Capella University, a 32-year-old institution serving mostly graduate students.
Strayer University operates through an extensive physical campus network as well as online, while Capella
University operates solely online. These two Universities educated a combined 87,500 students in 2024, up
from 82,000 in 2023. Capella University performed particularly well in 2024. Under the leadership of our
President of US Higher Education, Andy Watt, and Capella University s President, Constance St. Germain,
Capella reached an important milestone of 50,000 enrolled students during the year. Our US Higher Education
segment generated $858 million in revenue in 2024 (up from $819 million in 2023) and contributed $77 million
in adjusted operating earnings (up from $60 million in 2023).
Both Universities benefitted during the year from relatively benign macro economic conditions, with stable
labor force participation rates and relatively high employment confidence in the United States. Additionally,
Capella s robust enrollment growth was propelled by its academic focus on high demand healthcare
employment areas (including nursing); its innovative, self-paced, competency-based programs (FlexPath); and
the academic success of its students, which continued to bolster Capella University s strong academic brand.
Strayer University also performed very well academically in 2024, with increases in both student continuation
and graduation rates. In 2024 we were very proud when one of Strayer s employer partners, the US National
Security Agency (NSA), ranked Strayer University sixth out of 450 participating US Universities in a Cyber
Security and Computer Science review.
We are fortunate as shareholders of SEI to be the stewards of both these US Universities. Their combined
performance in 2024 was above our long-term financial planning model, they both continue to build their
academic reputations, and we are looking forward to their performance and financial contributions in 2025.
We recognize, however, that our financial returns as owners of these universities will never exceed the returns
received by our students on their investment to attend them. To paraphrase a well-known political commentator
it s all about the academics, stupid . Rest assured, we will always manage these assets accordingly.
In 2024 our Australia/New Zealand assets showed significant increases in both student enrollment and financial
results for the first time since the COVID pandemic lockdowns. The Australia/New Zealand segment, which
1

is made up of Torrens University, Media Design School, and Think Education, educated roughly 20,000
students in 2024, a 5% increase over the previous year. This segment also delivered strong financial results in
2024, with revenue growing 10% to US $257 million, and operating income contribution growing to US $37
million.
One of the academic areas we are most excited about at Torrens University is the impact of technology on
design. Torrens and Media Design School both offer courses in various types of design: including computer,
industrial, media, and even fashion. In these academic programs we are pushing boundaries on how creators
can use artificial intelligence and machine learning techniques to improve the efficacy of their products. We
were very proud this year when one of Torrens University s sponsored research projects, a virtual reality film
Thin Ice VR opened as an exhibit at the Australia Museum. The film had already won awards as the year s
best virtual reality film at both the Cannes and Los Angeles Film Festivals. Using virtual reality technology,
the film takes viewers on an immersive experience of Ernest Shackleton and his crew s survival of the sinking
of their ship, Endurance, on its ill-fated Antarctic exploration mission in 1915. Bringing innovation to higher
education is a key part of how we add value to our students, our institutions, and our shareholders at SEI. Thin
Ice VR is a tangible example of that process, which we look forward to replicating across all of our academic
assets.
Finally, our Education Technology Services segment, the fastest growing and most profitable part of our
enterprise, had a very strong year in 2024. This segment contains all of our non-university operations, and
consists of two main assets: Workforce Edge, a business which structures and manages employer-university
partnerships; and Sophia, our self-paced online academic streaming service. In 2024 the segment grew revenue
30% to $105 million, while operating income increased 47% to $43 million.
Workforce Edge generates revenue and operating margin for SEI in three different ways. First, by earning a
fee from universities for helping those universities attract students whose tuition is paid by the employers of
those students; second, by earning fees from employer clients for managing their tuition reimbursement
programs; and third, Workforce Edge helps our own Universities (Capella, Strayer, and Torrens) attract
employer-sponsored students. In 2024, Workforce Edge signed 11 new clients, including one of the United
States largest employers, and now has over 2.5 million employees on its platform. It is poised for
significant growth.
Sophia consists of a catalog of over 65 self-paced online courses. Students can access all these courses for a
subscription price of $99 per month. The courses cover mostly 100-level general education topics and are
designed to replace the large first year survey courses offered at traditional universities. While Sophia courses
are not led by faculty, they are designed and graded by subject matter experts and university professors. All
Sophia courses have been recommended by the American Council on Education for transfer credit to accredited
universities. Indeed, Sophia has entered into articulation agreements with over 70 universities which have
agreed to accept Sophia credits for transfer. In just three years of operation, Sophia has grown from zero to
over 150,000 discrete paying users in 2024.
Sophia and Workforce Edge are similar in size, profitability, and growth rates. They also complement each
other, as some Workforce Edge corporate clients require their employees to take Sophia courses first, before
enrolling in any traditional university level courses. Doing so can both hold down the cost of the employee s
education, as well as improve the employee/student s academic success. Together, Workforce Edge and Sophia
make the Education Technology Services segment a very valuable addition to our university network, and we
look forward to the continued contributions from the segment in 2025.
The beauty of SEI s business model (and our good fortune as its shareholders) is its ability to produce
significant value for our students, while at the same time producing robust financial returns. As SEI is a
generator of financial capital, it is incumbent on our management team and board of directors to deploy that
generated capital wisely. To help you keep score, this is how we did it in 2024. SEI began 2024 with $209
million of cash and marketable securities, $61 million of debt drawn on our bank revolver (associated with the
2

purchase of our Australia/New Zealand assets in 2020) and 24 million shares outstanding. During 2024 SEI
generated $217 million of pretax operating cash flow, which was a 37% increase over the prior year. During
the year, we used that cash as follows. First, we paid $48 million in local, state, federal and international taxes.
Next, we invested $41 million in capital expenditures.
This left us with $128 million in owners distributable cash flow, which was a healthy 45% increase over the
prior year. We used that cash flow to return approximately $75 million to shareholders in 2024, both through
our $2.40 per share annual common dividend, as well as our repurchase of $15 million of our common stock
at an average price of $95.00 per share. In addition, in 2024 we fully paid down the remaining $61 million of
the outstanding debt on our bank revolver, and incurred roughly $2 million in fees to extend that now undrawn
$250 million availability for an additional 5 years. That capital deployment left us at year end 2024 with $199
million of cash and marketable securities on our balance sheet, 24 million shares outstanding, no debt, and a
US Department of Education financial composite score of 2.4.
We are very excited about our opportunities at SEI in 2025. With its strong inflow of new student enrollments
and its consistently high continuation rate of existing students, we expect Capella University to continue its
above trend line rates of growth in the coming year. We believe the opportunities for both Workforce Edge
and Sophia in 2025 are also very robust. The strong pipeline of new corporate partners signed by Workforce
Edge, combined with Sophia s increasing penetration of the direct-to-consumer market for its academic
streaming service, sets up our Education Technology Service segment for both strong and profitable growth
throughout the year.
Strayer University will continue to focus in 2025 on increasing its share of the employer-sponsored market.
This is an area in which Strayer has a long history of success. Finally, in 2025 we will have to deal with an
increasing political movement in Australia to limit the immigration of foreign students. In the Fall of 2024,
Australia s Labour government introduced legislation to reduce the number of foreign students in the country
in 2025 by up to 20%. The legislation did not pass, but we are mindful of the fact that as a political reality it
may reemerge. Our team at Torrens University is actively planning ways to grow the University to serve unmet
domestic student demand in Australia, as well as potentially serving international students who are unable to
secure a student visa into Australia, through a combination of online, hybrid, and foreign-based Torrens
University campuses.
As a board, our capital allocation priorities in 2025 will remain consistent with our history: first, fully funding
our academic institutions and their various growth opportunities; second, managing our balance sheet to attain
a US Department of Education financial composite score at or near the highest possible level of 3.0; and third,
prudently returning any excess distributable cash to our owners, both with our common dividend, and if
conditions are appropriate, with opportunistic share repurchases. As a Board, we always weigh all uses of
capital against the standard of what will create the highest long-term increase in the per share value of
our enterprise.
SEI s overall performance in 2024, as well as our opportunities and challenges in 2025, reinforce some basic
characteristics about our enterprise and business model. First, providing high quality post-secondary education
creates significant value for its recipients, and done efficiently, can also create significant value for its
providers, generating above average returns on the financial capital necessary to support its operations.
Second, high quality post-secondary academic institutions are, and more importantly, are perceived to be, a
public good. Additionally, our students benefit from very favorable credit terms to finance their education
through government supported or issued loans. For both of these reasons, our enterprise is highly regulated,
and it is important to manage our operations with that in mind. The regulatory structure may wax and wane
based on the ideological and philosophical bents of the powers that be, but it is always there.
Third, at SEI we benefit from a very strong portfolio of complimentary and mutually supporting educational
assets. That portfolio provides significant scale which allows us to take advantage of best academic practices
3

to improve student learning outcomes across all of our platforms. It also provides us with the financial strength
to constantly explore new opportunities for innovation, investment, and growth. Unlike a number of
undercapitalized educational institutions, we can take a very long view on both risks and opportunities,
knowing that when one of our assets is challenged for any number of reasons, others of our assets are
likely to be outperforming.
Fourth, based on our 2024 results, we remain on track for the notional economic model we put forth at our
investor day in November 2023. Specifically, that over the next four years, we can continue to grow our
revenue at a compounding rate of 4-6%, limit our expense growth to a compounding rate of 2-3%, and therefore
compound our cash flow and earnings metrics over that time frame by approximately 20% per annum.
Fifth, all of these observations pale in significance to the overwhelming reality of our enterprise, to-wit: nothing
matters unless we at the most basic level accomplish our mission in the classroom. Everything depends on our
students academic performance. That is how it has been, and how it always will be.
For the last 15 years our Board discussions on academic quality have been guided by Dr. John Casteen, one of
the nation s foremost scholars and academic leaders. Prior to his service on the SEI Board, John served as the
President of both the University of Virginia and the University of Connecticut, as well as spending time in the
public sector as the Secretary of Education of the Commonwealth of Virginia. John s wisdom, judgment, and
experience have been invaluable to our Board deliberations. However, after his long service, John has decided
to not stand for re-election to the SEI Board in 2025. His fellow Directors, SEI s shareholders, and our many
students have all benefited from John s tenure. We are deeply grateful for his contributions, and will miss his
wit and wry smiles in the board room.
To conclude, on behalf of your entire Board of Directors, I would like to once again thank you for the
opportunity to have been the stewards of your invested capital over the last year. As a board (and shareholders
ourselves) we are very fortunate to have our enterprise led by a seasoned management team with a long track
record of growing and nurturing educational assets. Led by our CEO, Karl McDonnell, who has been with us
since 2005, the average tenure at the company of our senior leaders is nearly 20 years. That collective
experience brings judgment, and a keen eye for both opportunities and risks. We are well served as shareholders
by their leadership.
Karl, Dan Jackson (our CFO), and I all look forward to speaking with you in the upcoming year. We are always
available, except during mandatory quiet periods, to answer any questions you may have about our enterprise.
In addition, if you have the time, I would urge you to further diligence the fruits of your invested capital by
attending one of our three university s commencement exercises in 2025. Information on these events can be
found on our website www.strategiceducation.com. The exhilaration and sense of accomplishment which our
graduates exhibit upon receiving their degrees is the most eloquent testimony to the value that your capital is
creating. It is worth seeing personally.
Sincerely yours,
Robert S. Silberman
Chairman of the Board
4

3/10/2025 Letter Continued (Full PDF)

STRA Shareholder/Stockholder Letter Transcript:

STRA Stockholder/Shareholder Letter (Strategic Education, Inc.) | www.StockholderLetter.com Copyright © 2023 - 2025, All Rights Reserved

STRA Stockholder/Shareholder Letter (Strategic Education, Inc.) | www.StockholderLetter.com
Copyright © 2023 - 2025, All Rights Reserved