Higher education company Strategic Education (NASDAQ:STRA) announced better-than-expected results in Q4 FY2023, with revenue up 12.1% year on year to $302.7 million. It made a non-GAAP profit of $1.68 per share, improving from its profit of $0.78 per share in the same quarter last year.

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Strategic Education (STRA) Q4 FY2023 Highlights:

• Revenue: $302.7 million vs analyst estimates of $297.5 million (1.8% beat)

• EPS (non-GAAP): $1.68 vs analyst estimates of $1.34 (25.6% beat)

• Free Cash Flow of $20.32 million, down 50.2% from the previous quarter

• Gross Margin (GAAP): 49.2%, up from 43.6% in the same quarter last year

• Enrolled Students: 86,233

• Market Capitalization: $2.30 billion

“During 2023, we delivered strong enrollment, revenue, and earnings growth and are proud of the organization’s ongoing commitment to the success of our students,” said Karl McDonnell, Chief Executive Officer of Strategic Education.

Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ:STRA) is a career-focused higher education provider.

Education Services

A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.

Sales Growth

Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Strategic Education's annualized revenue growth rate of 12.3% over the last five years was mediocre for a consumer discretionary business.

Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Strategic Education's recent history shines a dimmer light on the company as its revenue was flat over the last two years.

We can better understand the company's revenue dynamics by analyzing its number of enrolled students, which reached 86,233 in the latest quarter. Over the last two years, Strategic Education's enrolled students averaged 2.6% year-on-year declines. Because this number is lower than its revenue growth during the same period, we can see the company's monetization has risen.