Higher education company Strategic Education (NASDAQ: STRA) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 3.8% year on year to $323.2 million. Its non-GAAP profit of $1.75 per share was 23.8% above analysts’ consensus estimates.
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Strategic Education (STRA) Q4 CY2025 Highlights:
- Revenue: $323.2 million vs analyst estimates of $322.3 million (3.8% year-on-year growth, in line)
- Adjusted EPS: $1.75 vs analyst estimates of $1.41 (23.8% beat)
- Adjusted EBITDA: $75.34 million vs analyst estimates of $65.04 million (23.3% margin, 15.8% beat)
- Operating Margin: 16%, up from 11.6% in the same quarter last year
- Free Cash Flow Margin: 8.3%, up from 1.5% in the same quarter last year
- Domestic Students: 85,306, down 3,554 year on year
- Market Capitalization: $1.77 billion
Company Overview
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Strategic Education grew its sales at a weak 4.1% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Strategic Education’s annualized revenue growth of 5.8% over the last two years is above its five-year trend, which is encouraging. 
We can dig further into the company’s revenue dynamics by analyzing its number of domestic students and international students, which clocked in at 85,306 and 19,514 in the latest quarter. Over the last two years, both metrics have been flat. Because this performance is worse than its revenue during the same period, we can conclude the company’s monetization has risen. 
This quarter, Strategic Education grew its revenue by 3.8% year on year, and its $323.2 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.
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Operating Margin
Strategic Education’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 13.3% over the last two years. This profitability was inadequate for a consumer discretionary business and caused by its suboptimal cost structure.
This quarter, Strategic Education generated an operating margin profit margin of 16%, up 4.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Strategic Education, its EPS declined by 1.7% annually over the last five years while its revenue grew by 4.1%. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.
In Q4, Strategic Education reported adjusted EPS of $1.75, up from $1.27 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Strategic Education’s full-year EPS of $6.20 to grow 3.5%.
Key Takeaways from Strategic Education’s Q4 Results
It was good to see Strategic Education beat analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 1.9% to $79.88 immediately following the results.
Sure, Strategic Education had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
