Strategic Education, Inc. · NASDAQ:STRA
Strategic Education — Investor Day (November 2023)
113 slides from Strategic Education's investor day presentation, Nov 7, 2023
Slide 1: Investor and Analyst Day 2023
I N V E S T O R A N D A N A LY S T D AY 2 0 2 3 T U E S D A Y, N O V E M B E R 7 NEW YORK, NEW YORK
Slide 2: Forward-looking statements
Forward-looking statements Statements Under the Private Securities Litigation Reform Act of 1995 Statements in this presentation are “forward-looking statements” under the federal securities laws. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,
Slide 3: Strategic Education
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Slide 4: Welcome: Robert S. Silberman
Welcome Robert S. Silberman Chairman • Previously Chief Executive Officer, Strayer Education, Inc., from 2001 to 2013 • Prior roles include President and Chief Operating Officer of CalEnergy Company, a subsidiary of Berkshire Hathaway, and U.S. Assistant Secretary of the Army (presidential appointme
Slide 5: Agenda
Agenda 8:00AM – 12:30PM • Welcome – Robert Silberman, Chairman • SEI Strategy & Market Opportunity – Karl McDonnell, President and Chief Executive Officer • Business Unit Review: U.S. Higher Education (USHE) – Andy Watt, President, U.S. Higher Education • Capella University – Constance St. Germain,
Slide 6: Strategic Education
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Slide 7: Welcome: Karl McDonnell
Welcome Karl McDonnell President and Chief Executive Officer • Previously Chief Operating Officer, Strayer Education, Inc., from 2006 to 2013 • Prior roles include Chief Operating Officer of InteliStaf Healthcare, Vice President of the Investment Banking Division at Goldman, Sachs & Co., and held se
Slide 8: SEI is a global leader in digital education
SEI is a global leader in digital education We own the best education assets in the markets we serve Mission driven We exist to create substantive returns on our students’ education investments. Student centric Our students’ best interests are at the center of everything we do. ANZ Quality focused D
Slide 9: Segment overview: U.S. Higher Education
Segment overview: U.S. Higher Education U.S. HIGHER EDUCATION (USHE) CURRENT POSITION Capella University • One of fastest growing institutions in the U.S. • Historic highs with both learner success and enrollment • Strong employer enrollment mix fueled by FlexPath differentiation • Offer non-degree,
Slide 10: Segment overview: Australia New Zealand
Segment overview: Australia New Zealand AUSTRALIA NEW ZEALAND (ANZ) CURRENT POSITION Torrens University • The fastest growing University in Australia • #7 for quality of education in Australia • Online MBA ranked #18 globally • Blue Mountains #1 Hospitality school in Oceania • Offer non-degree, BS,
Slide 11: Segment overview: Education Technology Services
Segment overview: Education Technology Services EDUCATION TECHNOLOGY CURRENT POSITION SERVICES (ETS) Enterprise Partnerships • Delivered all-time highs in enrollment to USHE • Now over 1,300 employer partners Workforce Edge • Recently launched as platform to add Tuition Assistance services solutions
Slide 12: We operate in very attractive markets
We operate in very attractive markets U N I T E D S TAT E S AUSTRALIA NEW ZEALAND $173 Billion ~$A50 Billion • Shifting toward digital delivery • International destination for education in AsiaPac • Increasingly supported as employee benefit • Only 43 universities – no other proprietary • Pressure t
Slide 13: The gaps and challenges are consistent across markets
The gaps and challenges are consistent across markets FOR STUDENTS FOR EMPLOYERS NOT AFFORDABLE TA L E N T S H O RTA G E S TOO SLOW HIGH TURNOVER U N C E RTA I N O U T C O M E S RISING SKILLS REQUIREMENTS INFLEXIBLE M I S A L I G N E D E D U C AT I O N PROGRAMS S T R A T E G I C E D U C A T I O N I
Slide 14: SEI is the solution
SEI is the solution Students want… Employers want to… • Affordability • Upskill, reskill, and retain • Economic mobility existing talent • Skills to make them • Attract new talent with relevant competitive in an evolving job skills market • Optimize their educational • Flexibility in learning delive
Slide 15: Market needs play to our strengths
Market needs play to our strengths Digital learning expertise Create unique value Technology, scale and enablement Accessible Professionally Focus on employer For For Relevant and industry employers students Flexible and Personalized Unique talent Affordable mix for higher ed Diverse portfolio of so
Slide 16: We've expanded our portfolio
We’ve expanded our portfolio to gain greater reach with this unique value proposition Domestic ANZ Benefits • Economies of scale through shared services • Cross-sharing innovative capabilities and learnings • Diversified offerings • Global market reach S T R A T E G I C E D U C A T I O N I N C | 1 6
Slide 17: New platform and channel capabilities
We are also investing in new platform and channel capabilities to create improved access and value for students and employers Benefits • More accelerated, affordable pathways to learning • New market reach • Solutions packages and network effect for SEI • Diversification away from Title IV S T R A T
Slide 18: Unique capabilities not common in higher education
All of this is enabled by our unique capabilities not common in higher education These enablers allow our organization to create new, disruptive value where others haven’t TA L E N T C U LT U R E Diverse, experienced Innovative and adaptable • Credible educators • Experimentation, agility • Technolo
Slide 19: Latest technology innovations
While utilizing and adapting to the latest technology innovations available – inside and outside higher ed Cloud AI/Automation Infrastructure Opportunities Best-in-Class 3rd Party Enterprise Ed Tech Platforms Innovations S T R A T E G I C E D U C A T I O N I N C | 1 9
Slide 20: Navigating a robust U.S. regulatory environment
We leverage these advantages to navigate a robust U.S. regulatory environment Financial Cohort Default / Borrower Regulation Responsibility 90/10 Defense to Repayment / Gainful Employment Maintaining a fortress Continued focus on Leading on program balance sheet employer and affordability and SEI ap
Slide 21: In 2023, we made substantial progress
In 2023, we made substantial progress towards our goals C O N T I N U E D S T R AY E R R E C O V E R Y A C C E L E R AT E D C A P E L L A G R O W T H M O M E N T U M S I G N I F I C A N T LY G R E W C O R P O R AT E PA R T N E R S H I P S IGNITED SOPHIA AND WORKFORCE EDGE GROWTH RETURNED TORRENS UNI
Slide 22: Reversing the Covid setback at Strayer
Reversing the Covid setback at Strayer was significant Strayer University Turnaround 60,000 51,000 52,000 +6% 5% 50,000 41,000 0% 40,000 +2% 37,000 35,000 -5% 30,000 -10% 20,000 -15% 10,000 - FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 (fcst) Total enrollment Total enrollment growth -20% S T R A T E G I
Slide 23: Long-term objectives
We remain focused on our long-term objectives • Focus on the student MAINTAIN STRICT • Lead on affordability and student ROI REGULATORY COMPLIANCE • Regulators as partners not opponents • USHE institutions focused on sustainable mid-single digit growth GENERATE SUSTAINED • Low double-digit growth fr
Slide 24: Notional Model for the next five years
Notional Model for the next five years Revenue growth of 4-6% Expense growth of 2-3% 200 basis points of annual margin expansion Compounded net income / cash growth of 20% S T R A T E G I C E D U C A T I O N I N C | 2 4
Slide 25: We expect strong financial results
We expect strong financial results 2028 U.S. HIGHER Revenue EBIT Margin E D U C AT I O N ( U S H E ) $1,000M 17% E D U C AT I O N Revenue EBIT Margin TECHNOLOGY SERVICES (ETS) $150M 50% Revenue EBIT Margin AUSTRALIA NEW ZEALAND (ANZ) $350M 25% Revenue EBIT Margin Strategic Education (SEI) $1,500M 22
Slide 26: Strategic Education
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Slide 27: U.S. Higher Education: Andy Watt
U.S. Higher Education Andy Watt President, U.S. Higher Education • Previously Senior Vice President of Post-Secondary Education for Capella Education Company • Prior roles include transaction advisory services at Deloitte & Touche and Arthur Andersen • BS, University of St. Thomas S T R A T E G I C
Slide 28: U.S. Higher Education overview
U.S. Higher Education overview • Founded in 1993 • Founded in 1892 • Approximately 46,000 students (as of 9/30/23) • Approximately 36,000 students (as of 9/30/23) • 100% online (except residencies) • Hybrid: primarily online; approximately 60 campuses • 60% graduate and 40% undergraduate • 15% gradu
Slide 29: U.S. market trends play to our strengths
U.S. market trends play to our strengths Demand for skills Digital learning is Employers are has never been the future invested in leveraging greater education COMPETITION S T R A T E G I C E D U C A T I O N I N C | 2 9
Slide 30: Each institution has a distinct market focus
Each institution has a distinct market focus STUDENT FOCUS “Career Amplifier” “Career Builder” GEOGRAPHIC FOCUS National Regional c Mental and Behavioral Health PROFESSION c Business c and IT FOCUS Nursing and Health Sciences S T R A T E G I C E D U C A T I O N I N C | 3 0
Slide 31: Capella delivers unique value
Capella delivers unique value to Career Amplifiers Professional who has achieved success in their FOR EXAMPLE CAREER AMPLIFIER field and wants to expand their knowledge and make a bigger impact in their career Designed for a Bachelor in Nursing candidate • Specialized accreditation Professional cred
Slide 32: Capella's strategy is working: a nursing case study
Capella’s strategy is working: a nursing case study $39M Revenue in 2017 REVENUE SGTRUODW ETNH T FOCUS $112M Revenue in 2023 Extend position into new horizon Nurse Practitioner LEARNER ~60% Graduation Rate OUTCOMES (a UnitedHealth Group business) Potential for 4,000+ total DIFFERENTIATED ~60% Enroll
Slide 33: Capella brand is gaining momentum
Capella brand is gaining momentum Built robust Invested both Double-digit Enabled by the data and more and growth every high-quality analytics significantly quarter since we reputation we’ve around media higher mix started, delivering built with mix modeling toward our brand higher C O M P E T effic
Slide 34: Strayer delivers unique value
Strayer delivers unique value to Career Builders Individuals looking to transition from a FOR EXAMPLE CAREER BUILDER job into a career, often with limited higher education experience Designed for a Bachelor in Business candidate • 10 Employability Skills Aligned to in-demand job skills • Online and
Slide 35: Campuses provide unique value
Campuses provide unique value to Career Builders • Marketing based around campus regions • Two-thirds of students live within 50 miles • Higher conversion and student success rates • Visibility and credibility for students • Partnerships, connections and trust in communities S T R A T E G I C E D U
Slide 36: Driving affordability: a Strayer case study
Driving affordability: a Strayer case study Strayer continues to be a leader in driving degree affordability through combination of levers Sophia Graduation Fund Employer tuition • Since launching in 2020, • Scholarship fund structured to • Tuition assistance aligned 23,000 Strayer students have bui
Slide 37: Reducing Title IV per credit earned
Reducing Title IV per credit earned Title IV per credit earned has declined from $520 to $390 over the last three years as employer-affiliated enrollment has grown, and as more students earn credit through Sophia Learning and other affordable alternative pathways % CHANGE IN USHE TITLE IV PER CREDIT
Slide 38: Student experience and outcomes focus guide USHE
Student experience and outcomes focus guide USHE At Capella and Strayer, every action we take is intended to position our students for academic and professional success Access & Personalized High-quality Innovative Career readiness support learning experience support Total Time to Graduation Career
Slide 39: Capella University: Constance St. Germain
Capella University Constance St. Germain, EdD Capella University President • Previously Provost and Chief Academic Officer, Capella University • Prior roles include senior leadership positions at University of Phoenix and American Public University System, and U.S. Army Judge Advocate General’s Corp
Slide 40: Capella University profile
Capella University profile University enrollment by school 25% Social and Behavioral Sciences 38% Nursing and Health Sciences 13% Public Service and Education Business, Technology, and Health Care PROFESSION 24% Administration MIX as of December 31, 2022 S T R A T E G I C E D U C A T I O N I N C | 4
Slide 41: How we deliver on our promise to the Career Amplifier
How we deliver on our promise to the Career Amplifier W O R K - I N T E G R AT E D I N N O VAT I O N A N D ACADEMICS LEARNING TECHNOLOGY Competency-based Practical, applied learning Long history of using education (CBE) offered in that integrates with technology to deliver two modalities taught by s
Slide 42: Educational philosophy: competency-based education
Educational philosophy: competency-based education INNOVATIVE A combination of CURRICULUM RELEVANT FLEXIBLE ENGAGING theory + practical application delivered through three elements AUTHENTIC ASSESSMENTS FA C U LT Y S T R A T E G I C E D U C A T I O N I N C | 4 2
Slide 43: Capella's FlexPath model
Capella’s FlexPath model Direct assessment • Competency-based education offered by Capella via FlexPath • First university approved by U.S. Department of Education to offer bachelor’s and master’s degree programs via direct assessment Measures learning, not time Self-paced format where students move
Slide 44: Capella FlexPath learner outcomes
Capella FlexPath learner outcomes Tuition expense Financial aid borrowed Time to completion Bachelor’s Master’s Bachelor’s Master’s Bachelor’s Master’s 65%less 45% less 58% less 39% less 50% faster 36% faster Compared to similar learners in equivalent Capella credit-hour programs S T R A T E G I C E
Slide 45: Work Integrated Learning (WIL)
Work Integrated Learning (WIL) Provides students CREDIT FOR PRIOR with practical and CREDIT LEARNING (CPL) relevant experiences FOR PRIOR LEARNING Evaluation of college-level knowledge in the workplace and skills an individual has gained outside of the classroom for college credit WORK INTEGRATED LE
Slide 46: Continued areas of focus as we innovate
Continued areas of focus as we innovate the next education horizon Peer-to-Peer Artificial Data Analytics Hyflex Multimedia Learning Intelligence Enables personalized, Growing interest in Rising demand for Ensuring advancements responsive instruction by synchronous engagement integration of multimed
Slide 47: Capella marks of quality
Capella marks of quality Professional accreditations, recognitions, and designations signify the high-quality experiences and outcomes standards we deliver S T R A T E G I C E D U C A T I O N I N C | 4 7
Slide 48: Strayer University: Andréa Backman
Strayer University Andréa Backman, PhD Strayer University President • Previously Chief Academic Officer and Provost of Strayer University, Dean of the Jack Welch Management Institute • Prior roles include leadership positions at the University of Virginia and DePaul University • PhD, University of V
Slide 49: Strayer University profile
Strayer University profile University enrollment by program area 13% Criminal Justice 14% Information Systems and Technology Education 1% 1% Public Administration 71% Business as of Fall 2022 S T R A T E G I C E D U C A T I O N I N C | 4 9
Slide 50: We are driving student academic success
We are driving student academic success Student course success First year success • Course success rates • More new students persist through improving with student their first year of enrollment population growth (1st – 4th term) • Maintaining academic rigor • Students who complete their first year
Slide 51: Technology is enabling learning
Technology is enabling learning Irving chatbot Proprietary AI chatbot provides supplemental instruction, courseroom reminders, and support for students Faculty Action Center Uses advanced analytics to help faculty deliver targeted, personalized, just-in-time interventions to students 10X instruction
Slide 52: Strayer Studios
Strayer Studios Our team of award-winning documentary filmmakers, creative writers and learning designers creates a media-rich, engaging, effective learning experience Documentaries. Podcasts. Interactive Experiences. S T R A T E G I C E D U C A T I O N I N C | 5 2
Slide 53: Faculty are delivering world-class instruction
Strayer University faculty are delivering world-class instruction Overall instructional Net Promoter Scores at Strayer University 74.6 75.3 75.2 75.3 77.6 73.3 72.7 73.1 71.8 71.1 69.9 69.8 69.9 69.1 Q2, 2020 Q3, 2020 Q4, 2020 Q2, 2021 Q3, 2021 Q4, 2021 Q2, 2022 Q3, 2022 Q4, 2022 Q2, 2023 Q3, 2023 Q
Slide 54: Students receive holistic support
Students receive holistic support Center for Well-Being Personal challenges are the #1 reason students submit assignments late and one of the top three reasons they leave or pause their education S T R A T E G I C E D U C A T I O N I N C | 5 4
Slide 55: Students receive career currency along their pathway
Students receive career currency along their pathway 10 essential employability skills within general education At most undergraduate institutions, 37% of the undergraduate degree is disconnected from the world of work...we changed that. Microcredentials, badges and certificates We made it possible
Slide 56: The Jack Welch Management Institute is delivering value
The Jack Welch Management Institute is delivering value 1,743 Current JWMI students 3,700+ Current JWMI alumni 15 Students’ average years of professional experience 80+ Countries represented in the student/alumni population Of students received a raise 68% or promotion during the program S T R A T E
Slide 57: We have helped more than 150,000 students graduate
We have helped more than 150,000 students graduate Alumni are 83% 80% 77% satisfied and prepared for success Agree their Strayer Agree Strayer equipped Agree their Strayer education degree was a worthwhile them with skills prepared them for the investment employers value demands of their profession
Slide 58: Strategic Education
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Slide 59: Australia New Zealand: Linda Brown
Australia New Zealand Linda Brown President, Australia New Zealand • Previously CEO Laureate ANZ • Prior roles include senior executive with Queensland Government (HE/VET/Regulator), DVC Swinburne University and Futures Stockbroker and Area Director Fidelity / Abbey National • EY Australia Entrepren
Slide 60: ANZ portfolio
ANZ portfolio FOUNDED 2013 2006 1998 ENROLLMENT ~16,600 students ~700 students ~1,000 students DELIVERY Hybrid – on campus and online Self accrediting FUNDING AND Applied higher ed and vocational Government funds 50% of National and International scope ACCREDITATION education and training (VET) dome
Slide 61: ANZ Campuses
ANZ Campuses 8 state-of-the-art campuses across 5 cities in Australia and New Zealand: Adelaide, Brisbane, Melbourne, Sydney and Auckland S T R A T E G I C E D U C A T I O N I N C | 6 1
Slide 62: ANZ provides SEI a significant growth opportunity
ANZ provides SEI a significant growth opportunity Australia New Zealand market is very large and attractive v SEI/ANZ is still less than 1% share Australian education market ~$A50B v Uniquely positioned within the competitive set v Opportunity to extend to broader global market $A14B $A36B v Fastest
Slide 63: Two distinct markets to drive growth
Two distinct markets to drive growth I N T E R N AT I O N A L DOMESTIC Stabilizing results following pandemic border Stable market, growth in line with lockdowns with rich future potential marketing investment • Maximize relationships with robust global • Flexibility/hybridity a key differentiator a
Slide 64: International enrollment
International enrollment Regulatory Price Ultimate Employability Measured approval competitive flexibility outcomes growth Approved for 17,000 On average our Customizable courses Ranked #2 in Ensuring growth comes students, currently international post- and study online, overall employment with qual
Slide 65: ANZ differentiates in the domestic adult student market
ANZ differentiates in the domestic adult student market FOR EXAMPLE EARN Underserved population whose priority AND is to continue to earn while they learn LEARN Designed for a working adult • Hybrid delivery Learn around work and life commitments • Co-designed with industry and facilitated by Pracad
Slide 66: Brand endorsements of ANZ curriculum
Brand endorsements of ANZ curriculum Key industry brands involved in co-designing and developing curriculum, promotion and student work experiences S T R A T E G I C E D U C A T I O N I N C | 6 6
Slide 67: Building share: case studies in program differentiation
Building share: case studies in program differentiation Master of Business Information Systems Bachelor of Branded Fashion • Designed in collaboration with industry partners • Created to align with job market demand in the fashion industry • Launched in 2019 with three months to develop INTERNATIONA
Slide 68: We have the platform to reach 50K+ students
We have the platform to reach 50K+ students CONTINUE BUILD • Optimize and refine brand and • Potential to become • Leverage ANZ international • Become Asia Pacific’s core markets momentum University College (Think recruitment for USA preferred university to earn Education) and learn • Leverage techn
Slide 69: Torrens University: Professor Alwyn Louw
Australia New Zealand Professor Alwyn Louw Vice Chancellor, Torrens University Australia • Prior roles include President and Academic President at Monash University, South Africa, as well as other senior leadership roles in higher education across Africa • Ph.D. Sociology, Vista University, South Af
Slide 70: Academic research and quality
Academic research and quality World-class Industry Open access Hybrid delivery Inclusive research co-design; building optimizes student personalized centers build competency for persistence learning support credibility and the future world through choice environment new knowledge of work impact S T
Slide 71: Student and qualification mix
Student and qualification mix Sub-bachelor’s level (diploma) 20% International 80% Domestic 24% of total students Bachelor’s level 40% International 60% Domestic 47% of total students Postgraduate and doctoral 80% International 20% Domestic 29% of total students Learning modality Traditional Synchro
Slide 72: Torrens University Australia research mandate
Torrens University Australia research mandate 44% increase in higher Australian University status 3x increase in research degree research numbers in publications from 2020-23 the past 3 years requires world-class research in at least 3 fields of research 65% of research output via AUD $4.8M research
Slide 73: Student satisfaction
Student satisfaction Student satisfaction Student satisfaction with quality of subject* with lecturers * 82% 82% 84% 85% 86% 86% 2021 2022 2023 2021 2022 2023 Student retention Student success rate 88% 92% 80% Domestic International *Internal ANZ Survey Student Evaluation of Subjects and Lecturers S
Slide 74: Quality in learning and teaching (QILT)
Quality in learning and teaching (QILT) The Australian Government conducts and publishes an annual survey on the quality of institutional learning and teaching. In 2022: Top 10 #7 #3 86.7% Overall employer Student support and Quality of entire Skills development for satisfaction with teaching qualit
Slide 75: Torrens ranks 7th among universities
Torrens ranks 7th among universities in Australia for quality in education experience QILT scores for quality of entire educational experience for undergraduate university students in 2022 S T R A T E G I C E D U C A T I O N I N C | 7 5
Slide 76: Strategic Education
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Slide 77: Education Technology Services: Joe Schaefer
Education Technology Services Joe Schaefer President, Education Technology Services • Previously Chief Technology Officer and Chief Transformation Officer for Strategic Education, Inc. • Prior roles include consulting and outsourcing leadership positions with Accenture • MBA, University of Virginia,
Slide 78: ETS Mission
Education Technology Services’ mission is to make SEI the leading educational ETS Mission partner to the nation’s largest employers and to make higher education more affordable. S T R A T E G I C E D U C A T I O N I N C | 7 8
Slide 79: A long history of partnerships
A long history of partnerships made stronger together Today: 1,300 Partners 2015 SU 2020 Hackbright WFE 60 Partners 2001 CU launches launches 2019 23,000 Employer launches Employer Corporate Alliance Degrees@ Workforce Model for Talent affiliated students Program Work Edge Launches Acquisition 2001
Slide 80: ETS Go-to-Market
ETS Go-to-Market D I R E C T C O R P O R AT E R E L AT I O N S H I P S • Employer sales, • Tuition assistance • Self-paced courses activation and management SaaS • Low-cost subscription support platform model • Strayer and Capella • Free to employers • Recommended for • Flexible pricing • Debt-free
Slide 81: ETS Revenue Breakdown
ETS Revenue Breakdown $250M Sophia B2B $1M $200M Sophia B2C Unaffiliated $6.5M Sophia B2C Partner $27M Workforce Edge $8M $150M $100M Sophia B2B $1M Sophia B2C Unaffiliated $6.5M Direct Corporate $172M Sophia B2C Partner $27M $50M Workforce Edge $2.5M Direct Corporate $42M $0 ETS Revenue $80M ETS Im
Slide 82: Employer affiliated enrollment is growing
Employer affiliated enrollment is growing Employer Affiliated Enrollment Employer Affiliated Enrollment YoY growth rate % of SEI USHE Division 50.0% 35.0% 40.0% 30.0% 20.0% 25.0% 10.0% 0.0% -10.0% -20.0% 15.0% FY 2020 FY 2021 FY 2022 FY 2023 FY 2020 FY 2021 FY 2022 Q3 2023 New enrollment Total enrol
Slide 83: We have the right solutions
We have the right solutions Desired Outcomes Needs Educational portfolio alignment Educational investment efficiency Employee upskilling and re-skilling Educational partner administration and tuition reimbursement management Employee retention New talent acquisition Ability to modify and/or source c
Slide 84: Employer partnership lifecycle
Employer partnership lifecycle Consult and Sign contract Implement Employee Employee Employee design solution program communication chooses to use chooses SEI benefit school S T R A T E G I C E D U C A T I O N I N C | 8 4
Slide 85: SEI-created tuition assistance aligned pricing
SEI-created tuition assistance aligned pricing Matching cost to employer benefit amounts results in no out-of-pocket costs for students Annual cost of eligible program Annual education benefit dollar amount Upfront tuition payment $5,250 - $5,250 = $0.00 S T R A T E G I C E D U C A T I O N I N C | 8
Slide 86: A CVS Health case study
PARTNERS WITH PURPOSE A CVS Health case study For over 12 years, we have provided comprehensive education solutions to CVS. 2 0 11 2018 2019 2020 2021 Launch of Merger of Strayer and CVS acquires Aetna Strayer & Capella join to Launch of custom Capella/Aetna Capella Universities to to create CVS Hea
Slide 87: A Quest case study
PARTNERS WITH PURPOSE A Quest case study For almost 20 years, we have partnered with Quest to help solve key retention challenges and to help develop and promote employees through custom career pathways. 2004 2016 2022 2023 Launch of Capella One of the first tuition-aligned, $5,250 Capella Added SU
Slide 88: A case study with a large national discount retailer
PARTNERS WITH PURPOSE A case study with a large national discount retailer For nearly 12 years, we have partnered with a large national discount retailer to help remove barriers to education by providing affordable access to learning pathways. 2012 2020 2021 2022 Launch of Strayer Launch of SU “Free
Slide 89: A Stellantis case study
PARTNERS WITH PURPOSE A Stellantis case study No-cost, no-debt college degree program® 2015 2019 2023 Launched Added 100 dealers 200 dealers Added Articulated 300 dealers Articulated Technical family participating participating Technical Training participating Training expanded option for Strayer cr
Slide 90: ETS broad, deep, innovative and flexible portfolio
ETS broad, deep, innovative and flexible portfolio Employer growth Technology that opportunities disseminates Skills-based learning methods International partners Current Flagship brands revenue drivers S T R A T E G I C E D U C A T I O N I N C | 9 0
Slide 91: Workforce Edge enables new client expansion
Workforce Edge enables new client expansion and a new source of USHE enrollment • 60 employer partners with over 1.4M employees • Over 1,250 Strayer and Capella enrollments • ~30% of employees who use Workforce Edge choose Strayer or Capella • Opportunity to enter new markets S T R A T E G I C E D U
Slide 92: Workforce Edge advantages
Workforce Edge advantages FOR EMPLOYEES FOR EMPLOYERS • Explore and manage education • Free – no software license fees benefits • Debt-free degree pathways maximize • Access to an exclusive curated benefit of offering employer tuition network of fully funded pathways assistance and discounts • Curat
Slide 93: Sophia has grown rapidly since the pandemic
Sophia has grown rapidly since the pandemic Free period Revenue has grown from less than during 2020 B2C Founded in $5M pre pandemic 2010 to help students and B2U2C institutions move to to approximately B2B online learning during the pandemic $34M in 2023 S T R A T E G I C E D U C A T I O N I N C |
Slide 94: Sophia direct-to-consumer business
Sophia direct-to-consumer business Proven success marketing directly to students, focusing on key messages of affordability, flexibility and credibility Total B2C Active Users Per Month 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Slide 95: Sophia delivers exceptional value to subscribers
Sophia delivers exceptional value to subscribers More than More than More than $500M 500K 1.5M in tuition dollars saved courses completed transfer credits awarded Savings based on average annual tuition at in-state, 4-year institutions, as reported by IPEDS, 2020. S T R A T E G I C E D U C A T I O N
Slide 96: Sophia higher ed partnerships
Sophia higher ed partnerships Signed articulation agreements benefit higher ed partners while also building consumer credibility and awareness by securing transferability of credits • 60+ partners with articulation agreements • Transcripts sent to over 1,000 institutions • Increase retention, expand
Slide 97: Student outcomes: a Sophia case study
Student outcomes: a Sophia case study If a student has completed at least one Sophia course, then they are… +22% …more likely to complete their first term + +47% …more likely to enroll in their second term Large Public University +86% …more likely to enroll in their fourth term S T R A T E G I C E D
Slide 98: Sophia corporate partnerships
Sophia corporate partnerships Low-cost way to offer frontline employees an education benefit without the financial commitment of traditional tuition assistance • Extend education benefits to employees who were not eligible for tuition assistance • Leverage Sophia pathways with tuition benefits to ex
Slide 99: Strategic Education
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Slide 100: Financial update: Daniel Jackson
Financial update Daniel Jackson Executive Vice President and Chief Financial Officer • Previously Treasurer and Senior Vice President of Finance, Strayer Education, Inc. • Prior roles include financial and operational positions with Legg Mason Wood Walker and Fairmont Schools • MBA, Georgetown Unive
Slide 101: 2023 Outlook
2023 Outlook (as previously communicated) • Revenue growth in the mid-single digits • Expenses increase 3%, or slightly higher if revenue growth more than mid-single digits • Revenue growth strengthening in second half • Expense growth moderating in second half • Significant earnings growth in secon
Slide 102: Strong Q3 2023 results consistent with Outlook
Strong Q3 2023 results consistent with Outlook SEGMENTS USHE yr/yr ∆ ETS yr/yr ∆ ANZ yr/yr ∆ CONSOLIDATED yr/yr ∆ Total Enrollment 82,548 10% N/A N/A 18,279 -1% 100,827 8% Adjusted Revenue 202 9% 21 27% 66 7% $288M 10% Adjusted Expense 191 2% 13 12% 51 -2% $255M 2% Adjusted EBIT 10 N/A* 8 59% 14 60%
Slide 103: Full-year 2023 forecast
Full-year 2023 forecast also consistent with Outlook SEGMENTS USHE yr/yr ∆ ETS yr/yr ∆ ANZ yr/yr ∆ CONSOLIDATED yr/yr ∆ Total Enrollment 82,000 6% N/A N/A 18,500 -4% 100,500 4% Adjusted Revenue 815-818 6% 78-80 24% 238-240 4% $1,133M – 1,138M 7% Adjusted EBIT Margin 6% 130 bps 35% 500 bps 15% 160 bp
Slide 104: Cash Generative Model, Supporting Investment and Capital Deployment
Cash Generative Model, Supporting Investment and Capital Deployment • Strong cash flow • Return capital to owners • Reinvestment into the business • Support dividend • Debt reduction • Opportunistic share repurchases 115 (50) $236M (40) $191M (60) (10) Distributable Free Cash Flow of $65M 2 2022 End
Slide 105: 2024 Preliminary Outlook
2024 Preliminary Outlook 2024 Outlook USHE enrollment growth 4-6% ANZ enrollment growth 3-4% Sophia subscription growth 15-20% Consolidated revenue growth 4-6% Adjusted operating margin +200bps Adjusted effective tax rate 30% Capex % of revenue* 4-5% *Includes “Cloud computing” investments which flo
Slide 106: Investing for Quality, Growth and Margin Expansion
Investing for Quality, Growth and Margin Expansion • Capital expenditures* 4-5% of revenue to invest in: • Technology platform investments • Cross-pollinate technology and digital first investments across divisions • Investment in campuses to support employer and on-ground students • Infrastructure
Slide 107: Accelerated investments in Automation/AI
Accelerated investments in Automation/AI • Investing $4-5M per year over next three years to generate $30-$40M in run-rate productivity savings • Leveraging new capabilities from current strategic IT partners • Expanding use of Robotic Process Automation (RPA) tools to automate simple transactional
Slide 108: Five-year plan notional model
Five-year plan notional model Five-year model USHE enrollment growth 4-6%** ANZ enrollment growth 6-8%** Sophia subscription growth 16-18%** Consolidated revenue growth 5-6%** Adjusted EBIT margin +200bps annually Adjusted effective tax rate 30% Capex % of revenue* 4-5% *Includes “Cloud computing” i
Slide 109: Consolidated 5-year notional model
Consolidated 5-year notional model ~$1,500M 12-14% 5yr CAGR 5-6% 5yr CAGR 7-8% 5yr CAGR REVENUE +4-5% CAGR ~$1,133 – 1,138M 2023 Outlook USHE ANZ ETS 2028 Target Target Margin: 10% 17% 25% 50% 22% EBIT 2020 Pro-forma Margin: 20% 17% 52% 20% S T R A T E G I C E D U C A T I O N I N C | 1 0 9
Slide 110: Financial governance
Financial governance • Board of Directors / Audit Committee • Boards of Trustees / Directors at Capella, Strayer, and Torrens Universities • Internal audit • Outside advisors • Tone at the top S T R A T E G I C E D U C A T I O N I N C | 1 1 0
Slide 111: Non-GAAP financial measures
Non-GAAP financial measures These materials report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and
Slide 112: Q&A
Show downturn and start to rebound at consolidated level Q1 2019 to 2023 Highlight lag between enroll momentum and Q&A financial impact Productivity lever Growth lever Non-title IV
Slide 113: Strategic Education
STRATEGIC uw EDUCATION WD inc