Strategic Education, Inc.

third quarter 2025 results conference call. I will now turn the call over to Therese Wilke, Senior Director of Investor Relations for Strategic Education. Mrs. Wilke, please go ahead.

Thank you. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss third quarter 2025 results. With us today are Robert Silverman, Chairman, Carl McDonald, President and Chief Executive Officer, and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions. Please note that this call may include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements are based on current expectations and are subject to a number of assumptions, uncertainties, and risks that strategic education has identified in today's press release that could cause actual results to differ materially. Further information about these and other relevant uncertainties may be found in strategic education's most recent annual report on Form 10-K, the 10-Q to be filed, and other filings with the Securities and Exchange Commission, as well as strategic education's future A-Ks, 10-Qs, and 10-Ks. Copies of these filings and the full press release are available for viewing on the website at strategiceducation.com. And now I'd like to turn the call over to Carl. Carl, please go ahead.

Thank you, Therese, and good morning, everyone. We are pleased with our third quarter results, especially the sustained strength in our education, technology, and services segment, supported by strong growth at Sophia and Workforce Edge. On an adjusted constant currency basis, SEI's revenue rose 5% from the previous year. We continue to advance our efforts to leverage technology, resulting in operating expense growth of less than 1%, operating income growth of 39%, and a 400 basis point margin expansion. We did incur restructuring costs in the third quarter related to our ongoing productivity initiatives. which accounted for most of the difference between our GAAP and our adjusted results in the third quarter. Adjusted earnings were $1.64 compared to $1.16 from the prior year, an increase of 41%. Turning now to our segments. Our Education Technology Services Division generated continued strong growth during the quarter, with revenue and operating income increasing by 46% and 48% from the prior year, to $38 million and $16 million, respectively. And notwithstanding our continued strong investment in ETS, which included a 44% increase in expenses, ETS's operating margin increased slightly on a year-over-year basis to 41.7%. Sophia Learning, our direct-to-consumer portal that offers high-quality college-level courses and has increasingly become a key component of many of our strategic corporate partnerships, grew both average and total subscribers and revenue by 42%, driven by strong growth in both consumer and employer-affiliated subscribers. ETS's share of SEI's operating income continues to grow and now represents one-third of consolidated operating income, reflecting progress with our employer-focused strategy. U.S. higher education total enrollment decreased slightly from the prior year but was more than offset by higher revenue per student, driven by fewer drops, less discounting, and students taking more courses on average. This resulted in revenue growth of 3% from the prior year. Employer-affiliated enrollment once again remained strong, increasing approximately 8% from the prior year and now represents 33% of all U.S. higher education enrollment, an increase of 290 basis points from the prior year. In addition to the strength in our employer-affiliated enrollment, U.S. higher education's healthcare portfolio generated strong total enrollment growth of 7% from the prior year. Healthcare is a critical part of our portfolio, representing half of all U.S. higher education enrollments and almost 40% of enrollment from employer partners. Recently, we commissioned a survey in partnership with the Harris Poll, which highlights the ongoing burnout facing the healthcare workforce and the projected shortfall of clinical health care workers. This research emphasizes the importance of investing in employees' growth and making continuous education a key part of strategies to retain talent. Full survey results can be found on our website at strategiceducation.com. U.S. higher education operating expenses decreased by $6 million from the prior year, or a reduction of 3%. As a result, US higher education operating income almost doubled from the prior year to $23 million, and its operating margin increased 520 basis points. Turning now to our Australia and New Zealand segment, ANZ's third quarter total enrollment decreased 2% from the prior year, driven by the continued regulatory restrictions on international student enrollment. Using constant currency, revenue decreased 2% to $70 million, and operating income decreased from $15 million in the prior year to $13 million this year. Notwithstanding the decline in total international enrollment, we are encouraged by the continued progress with domestic enrollment growth and recent guidance from the Australian government that our international caps will increase 3% in 2026. Finally, regarding capital allocation, in addition to our regular quarterly dividend, We repurchased approximately 429,000 shares during the quarter for a total of $34 million. As of the end of the third quarter, we have repurchased over 1.1 million shares for $94 million, leaving us with 134 million remaining on our share repurchase authorization through the end of this year. And finally, as always, I'd like to take this opportunity to thank all of my colleagues here at SEI for their ongoing commitment and support to our students and our employer partners. And with that, Cherie, we'd be happy to take questions.