Strategic Education, Inc. reported fourth‑quarter 2025 results that surpassed expectations, with total revenue of $323.21 million, up 3.8% from the same period a year earlier, and adjusted diluted earnings per share of $1.74, beating the consensus estimate of $1.47 by $0.27 or 18.4%.
Operating income rose to $51.6 million, a 35% increase from $36.0 million in Q4 2024, and the company’s operating margin expanded to 16.9% from 11.6% a year earlier. The margin lift was driven by a 390‑basis‑point improvement in the fourth quarter, largely attributable to $30 million in AI‑driven productivity savings that reduced operating expenses while revenue grew.
The Education Technology Services segment led the revenue growth, posting a 28.3% increase in Q4 and contributing significantly to the overall revenue rise. The U.S. Higher Education segment, while still a significant contributor, faced enrollment headwinds that tempered its growth. The company’s constant‑currency operating income margin for the full year 2025 reached 15.5%, up from 12.9% in 2024, reflecting the broader mix shift toward higher‑margin technology services.
President and CEO Karl McDonnell said, "We are very pleased with our fourth quarter and 2025 full year results that we released earlier today. At the outset, as is normally the case, let me say that the results that I reference today are adjusted and reflect a constant currency comparison. For the fourth quarter, our revenue increased 4% from the prior year, and our operating expenses declined 1%, resulting in operating income growth of 35% and a 390 basis point expansion in our operating margin to 16.9%." He added, "Our ongoing AI‑driven productivity improvements across the portfolio resulted in approximately $30 million of expense reductions, which was used to both fund new growth opportunities and expand our operating margin. We remain on track to generate at least an additional $70 million of expense savings through the end of 2027."
Strategic Education’s balance sheet remains strong, with no debt and $153.1 million in cash at year‑end 2025, giving the company flexibility to invest in AI initiatives and return capital to shareholders. The earnings beat and margin expansion signal that the company’s focus on high‑margin technology solutions is translating into tangible financial performance, while the enrollment challenges in certain higher‑education markets highlight areas where the company may need to adjust its growth strategy.
Although the company did not provide new forward guidance, the results reinforce confidence in its ability to sustain margin growth and generate additional cost savings, positioning it well for continued expansion of its Workforce Edge and Sophia Learning platforms.
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