Strategic Education (SQE) Q3 2026 Earnings Report

The call was mixed but cautiously constructive. The company reported strong growth in Education Technology Services, healthcare enrollment, retention, free cash flow, and domestic Australian enrollment, while emphasizing continued investment and long-term growth opportunities. These positives were offset by flat consolidated revenue, lower operating income and U.S. Higher Education enrollment, severe Australian international enrollment restrictions, a $134 million impairment, and expectations for flat consolidated revenue in 2027.

For 2027, the most likely outcome for consolidated revenue is to be flat with this year; growth investments are expected to cost approximately $50 million, with year-over-year increase in operating expenses limited to just 2%. The company expects growth in ETS, lower growth in U.S. Higher Education, and Australia’s restrictions to continue offsetting growth, with ETS margin impact estimated in the range of 300 to 400 basis points and a little less than that in U.S. Higher Education and Australia. Australia’s new student growth is expected to be growing year-over-year in the back half of 2027, with total enrollment growth probably in the first part of 2028; domestic growth is expected to remain in the high single digits or, with additional Adelaide and Perth capacity, even in the low double digits. Unaffiliated enrollment is expected to continue to moderate throughout 2027, perhaps even reaching break-even or growth by the end of 2027, while U.S. Higher Education is expected to have net positive new student enrollment growth in 2027 and mean revert toward mid-single digits as the year progresses. The investments are expected to return the company to its notional growth rates in 2028 and beyond.