What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-24 · 161 added, 81 removed, 198 unchanged (55% of the section changed)

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Department of Education or other governmental entities, including without limitation action related to Title IV programs, U.S.

Department of Education staffing levels, borrower defense to repayment applications, gainful employment, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks associated with the acquisition of existing educational institutions including our acquisition of Torrens University and associated assets in Australia and New Zealand, the risk that the benefits of our acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected, the risk that our acquisition of Torrens University and associated assets in Australia and New Zealand may not advance our business strategy and growth strategy, risks related to the timing of regulatory approvals, our ability to implement our growth strategy, the risk that the combined company may experience difficulty integrating employees or operations, risks associated with the ability of our students to finance their education in a timely manner, and general economic and market conditions.

Department of Education staffing levels, borrower defense to repayment applications, gainful employment or similar measures, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks associated with the acquisition of existing educational institutions including our acquisition of Torrens University and associated assets in Australia and New Zealand, the risk that the benefits of our acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected, the risk that our acquisition of Torrens University and associated assets in Australia and New Zealand may not advance our business strategy and growth strategy, risks related to the timing of regulatory approvals, our ability to implement our growth strategy, the risk that the combined company may experience difficulty integrating employees or operations, risks associated with the ability of our students to finance their education in a timely manner, and general economic and market conditions.

You should not put undue reliance on any forward-looking statements.

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(“SEI,” “we,” “us,” “our,” or “the Company”) is an education services company that provides access to high-quality education through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets.

We operate primarily through our wholly-owned subsidiaries Capella University and Strayer University, both accredited post-secondary institutions of higher education located in the United States, and Torrens University, an accredited post-secondary institution of higher education located in Australia.

Our operations also include the Education Technology Services segment, which primarily develops and maintains relationships with employers to build employee education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs.

We operate through our wholly-owned subsidiaries Capella University and Strayer University, both accredited post-secondary institutions of higher education located in the United States, and Torrens University, an accredited post-secondary institution of higher education located in Australia.

Our operations also include the Education Technology Services segment, which primarily develops and maintains relationships with employers to build education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses.

Segments Overview

As of March 31, 2025, we had the following reportable segments:

As of June 30, 2025, we had the following reportable segments:

Higher Education (“USHE”) Segment

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The USHE segment provides academic offerings both online and in physical classrooms, helping working adult students develop specific competencies they can apply in their workplace.

• In the first quarter of 2025, USHE enrollment increased to 87,854 compared to 87,731 for the same period in 2024.

• Trailing 4-quarter student persistence within USHE was 87.2% in the fourth quarter of 2024 compared to 87.0% for the same period in 2023.

• In the second quarter of 2025, USHE enrollment decreased 0.8% to 86,339 compared to 87,077 for the same period in 2024.

• Trailing 4-quarter student persistence within USHE was 87.4% in the first quarter of 2025 compared to 86.9% for the same period in 2024.

Student persistence is calculated as the rate of students continuing from one quarter to the next, adjusted for graduates, on a trailing 4-quarter basis.

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87.3 % 87.4 % 87.0 % 86.9 % 87.0 % 86.9 % 87.2 % 87.4 %

• Trailing 4-quarter government provided grants and loans per credit earned within USHE decreased 4.7% as of the end of the fourth quarter of 2024.

• Trailing 4-quarter government provided grants and loans per credit earned within USHE decreased 6.2% as of the end of the first quarter of 2025.

Government provided grants and loans per credit earned includes all federal loans and grants for students (Title IV hereafter) in our USHE institutions, and is calculated on a trailing 4-quarter basis and reported one quarter in arrears.

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(7.4) % (8.3) % (7.4) % (5.0) % (3.8) % (2.5) % (4.7) % (6.2) %

Education Technology Services Segment

• Our Education Technology Services segment primarily develops and maintains relationships with employers to build employee education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs.

The employer relationships developed by the Education Technology Services segment are an important source of student enrollment for Capella University and Strayer University, and a significant portion of the revenue attributed to the Education Technology Services segment is driven by the volume of enrollment derived from these employer relationships.

Enrollments attributed to the Education Technology Services segment are determined based on a student’s employment status and the existence of a corporate partnership arrangement with SEI.

All enrollments attributed to the Education Technology Services segment continue to be attributed to the segment until the student graduates or withdraws, even if his or her employment status changes or if the partnership contract expires.

• In the first quarter of 2025, employer affiliated enrollment as a percentage of USHE enrollment was 31.2% compared to 29.2% for the same period in 2024.

• Education Technology Services also supports employer partners through Workforce Edge, a platform which provides employers a full-service education benefits administration solution, and Sophia Learning, which offers low-cost online general education-level courses recommended by the American Council on Education for credit at other colleges and universities.

Education Technology Services (“ETS”) Segment

• Our ETS segment primarily develops and maintains relationships with employers to build education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs.

The employer relationships developed by the ETS segment are an important source of student enrollment for Capella University and Strayer University, and a significant portion of the revenue attributed to the ETS segment is driven by the volume of enrollment derived from these employer relationships.

Enrollments attributed to the ETS segment are determined based on a student’s employment status and the existence of a corporate partnership arrangement with SEI.

All enrollments attributed to the ETS segment continue to be attributed to the segment until the student graduates or withdraws, even if his or her employment status changes or if the partnership contract expires.

• In the second quarter of 2025, employer affiliated enrollment as a percentage of USHE enrollment was 31.8% compared to 29.3% for the same period in 2024.

• ETS also supports employer partners through Workforce Edge, a platform which provides employers a full-service education benefits administration solution, and Sophia Learning, which offers low-cost online general education-level courses recommended by the American Council on Education for credit at other colleges and universities.

Australia/New Zealand (“ANZ”) Segment

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Media Design School is accredited in New Zealand by the New Zealand Qualifications Authority, the organization responsible for the quality assurance of non-university tertiary training providers.

• In the first quarter of 2025, Australia/New Zealand enrollment decreased 0.6% to 20,082 compared to 20,197 for the same period in 2024.

• In the second quarter of 2025, Australia/New Zealand enrollment decreased 3.1% to 18,524 compared to 19,113 for the same period in 2024.

We believe we have the right operating strategies in place to provide the most direct path between learning and employment for our students.

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Torrens University offers the majority of its education programs on a trimester system having three primary academic terms, which all occur within the calendar year.

Approximately 94% of our revenues during the three months ended March 31, 2025 consisted of tuition revenue.

Approximately 94% of our revenues during the six months ended June 30, 2025 consisted of tuition revenue.

Capella University offers monthly start options for new students, who then transition to a quarterly schedule.

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Estimated redemption rates of eligible students vary based on their term of enrollment.

As of March 31, 2025, we had deferred $37.7 million for estimated redemptions earned under the Learn and Earn

As of June 30, 2025, we had deferred $38.4 million for estimated redemptions earned under the Learn and Earn

Scholarship, as compared to $37.1 million at December 31, 2024.

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If the financial condition of our students were to deteriorate based on current or expected future events resulting in evidence of impairment of their ability to make required payments for tuition payable to us, additional allowances or write-offs may be required.

Our bad debt expense was 4.2% of revenue in the first quarter of 2025 and 2024.

A change in our allowance for credit losses of 1% of gross tuition receivable as of March 31, 2025 would have changed our income from operations by approximately $1.4 million.

For the second quarter of 2025, our bad debt expense was 4.0% of revenue compared to 4.3% for the same period in 2024.

A change in our allowance for credit losses of 1% of gross tuition receivable as of June 30, 2025 would have changed our income from operations by approximately $1.5 million.

Goodwill and intangible assets — Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed.

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Goodwill and indefinite-lived intangible assets are assessed at least annually for impairment.

No events or circumstances occurred in the three months ended March 31, 2025 to indicate an impairment to goodwill or indefinite-lived intangible assets.

Accordingly, no impairment charges related to goodwill or indefinite-lived intangible assets were recorded during the three months ended March 31, 2025.

No events or circumstances occurred in the three and six months ended June 30, 2025 to indicate an impairment to goodwill or indefinite-lived intangible assets.

Accordingly, no impairment charges related to goodwill or indefinite-lived intangible assets were recorded during the three and six months ended June 30, 2025.

In the second quarter of 2024, the Australian government introduced proposed legislation seeking to limit the number of international students enrolled at Australian institutions.

Due to the potential adverse financial impacts of the proposed regulations, in 2024 we performed a quantitative impairment assessment for goodwill assigned to the ANZ reporting unit and for the ANZ indefinite-lived intangible assets as of October 1, 2024.

We determined the fair value of the ANZ reporting unit and the ANZ trade name using an income-based approach, which consisted of a discounted cash flow model that included projections of future revenues and cash flows.

Based on the results of our quantitative impairment assessment, we concluded that the fair value of the ANZ reporting unit exceeded carrying value by approximately 17% and the fair value of the ANZ indefinite-lived intangible assets exceeded carrying value by approximately 14%.

For the second quarter of 2025, student enrollment within ANZ decreased 3.1% to 18,524 compared to 19,113 for the same period in 2024, largely due to constraints on international enrollment.

Lower international enrollment was partially offset by growth in domestic enrollment, which is expected to be a bigger driver of future growth.

If the regulatory constraints on international students continue permanently and are not offset by growth in domestic enrollment, the goodwill and indefinite-lived intangible assets associated with the ANZ reporting unit could become impaired in the future.

As of June 30, 2025, the ANZ reporting unit had $499.0 million of goodwill and $63.6 million of indefinite-lived intangible assets.

We believe the fair value of the ANZ reporting unit remains in excess of carrying value and that the fair value of indefinite-lived intangible assets remains in excess of carrying value as of June 30, 2025.

Management will continue to assess goodwill and indefinite-lived intangible assets for impairment in future quarters.

Other estimates — We record estimates for income tax liabilities and estimate the useful lives of our property and equipment.

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Results of Operations

In the first quarter of 2025, we generated $303.6 million in revenue compared to $290.3 million for the same period in 2024.

Our income from operations was $39.8 million in the first quarter of 2025 compared to $41.4 million for the same period in 2024, due to higher restructuring costs and operating expenses, partially offset by higher revenue in our Education Technology Services segment, which was primarily driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions.

Net income in the first quarter of 2025 and 2024 was $29.7 million, and diluted earnings per share was $1.24 in the first quarter of 2025 compared to $1.23 for the same period in 2024.

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Consolidated revenue increased to $303.6 million in the first quarter of 2025 compared to $290.3 million in the first quarter of 2024, primarily due to higher revenue in our Education Technology Services segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions.

In the USHE segment for the three months ended March 31, 2025, total enrollment increased to 87,854 from 87,731 for the same period in 2024.

USHE segment revenue increased 0.8% to $221.0 million in the first quarter of 2025 compared to $219.2 million in the first quarter of 2024, primarily due to higher revenue per student.

In the Australia/New Zealand segment for the three months ended March 31, 2025, total enrollment decreased 0.6% to 20,082 from 20,197 for the same period in 2024.

Australia/New Zealand segment revenue increased 1.9% to $48.3 million in the first quarter of 2025 compared to $47.4 million in the first quarter of 2024, primarily due to higher revenue per student, partially offset by unfavorable foreign currency exchange impacts.

Education Technology Services segment revenue increased 45.2% to $34.3 million in the first quarter of 2025 compared to $23.6 million in the first quarter of 2024, primarily due to an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment.

In the second quarter of 2025, we generated $321.5 million in revenue compared to $312.3 million for the same period in 2024.

Our income from operations was $45.8 million in the second quarter of 2025 compared to $41.9 million for the same period in 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions, partially offset by higher operating expenses and restructuring costs.

Net income in the second quarter of 2025 was $32.3 million compared to $29.9 million for the same period in

2024, and diluted earnings per share was $1.37 in the second quarter of 2025 compared to $1.24 for the same period in 2024.

For the six months ended June 30, 2025, we generated $625.1 million in revenue compared to $602.5 million for the same period in 2024.

Our income from operations was $85.6 million for the six months ended June 30, 2025 compared to $83.3 million for the same period in 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions, partially offset by higher operating expenses and restructuring costs.

Net income was $62.1 million for the six months ended June 30, 2025 compared to $59.6 million for the same period in 2024, and diluted earnings per share was $2.61 for the six months ended June 30, 2025 compared to $2.47 for the same period in 2024.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Consolidated revenue increased 2.9% to $321.5 million in the second quarter of 2025 compared to $312.3 million in the second quarter of 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions, partially offset by unfavorable foreign currency exchange impacts.

In the USHE segment for the three months ended June 30, 2025, total enrollment decreased 0.8% to 86,339 from 87,077 for the same period in 2024.

USHE segment revenue decreased 0.5% to $215.6 million in the second quarter of 2025 compared to $216.6 million in the second quarter of 2024, primarily due to a decrease in enrollment.

In the Australia/New Zealand segment for the three months ended June 30, 2025, total enrollment decreased 3.1% to 18,524 from 19,113 for the same period in 2024.

Australia/New Zealand segment revenue decreased 2.8% to $69.1 million in the second quarter of 2025 compared to $71.1 million in the second quarter of 2024, primarily due to unfavorable foreign currency exchange impacts and a decrease in enrollment, partially offset by higher revenue per student.

ETS segment revenue increased 49.6% to $36.7 million in the second quarter of 2025 compared to $24.5 million in the second quarter of 2024, primarily due to an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment.

Instructional and support costs.

Consolidated instructional and support costs increased to $158.3 million in the first quarter of 2025 compared to $157.7 million in the first quarter of 2024, principally due to increases in stock-based compensation expense, technology-related costs, depreciation expense, and bad debt expense, partially offset by lower student material and facility expenses, and favorable foreign currency exchange impacts.

Consolidated instructional and support costs as a percentage of

revenues decreased to 52.1% in the first quarter of 2025 from 54.3% in the first quarter of 2024.

Consolidated instructional and support costs increased to $166.2 million in the second quarter of 2025 compared to $163.2 million in the second quarter of 2024, principally due to higher personnel-related costs, technology-related costs, and depreciation expense, partially offset by lower student material costs, facility expenses, bad debt expense, and favorable foreign currency exchange impacts.

Consolidated instructional and support costs as a percentage of revenues decreased to 51.7% in the second quarter of 2025 from 52.3% in the second quarter of 2024.

General and administration expenses .

Consolidated general and administration expenses increased to $103.6 million in the first quarter of 2025 compared to $96.7 million in the first quarter of 2024, principally due to increased investments in branding initiatives and partnerships with brand ambassadors and higher personnel-related costs, partially offset by lower stock-based compensation expense and favorable foreign currency exchange impacts.

Consolidated general and administration expenses as a percentage of revenues increased to 34.1% in the first quarter of 2025 from 33.3% in the first quarter of 2024.

Consolidated general and administration expenses increased to $106.8 million in the second quarter of 2025 compared to $105.1 million in the second quarter of 2024, principally due to higher personnel-related costs and facility expenses, partially offset by lower stock-based compensation expense and favorable foreign currency exchange impacts.

Consolidated general and administration expenses as a percentage of revenues decreased to 33.2% in the second quarter of 2025 from 33.7% in the second quarter of 2024.

Restructuring costs .

Restructuring costs increased to $1.9 million in the first quarter of 2025 compared to a $5.5 million net benefit in the first quarter of 2024, primarily due to a $6.2 million gain related to the early termination of operating leases in the first quarter of 2024, a $1.1 million increase in severance and other personnel-related expenses from employee terminations and a $0.2 million increase in asset impairment charges.

Restructuring costs increased to $2.8 million in the second quarter of 2025 compared to $2.0 million in the second quarter of 2024, primarily due to a $0.6 million increase in asset impairment charges and a $0.2 million increase in severance and other personnel-related expenses from employee terminations.

Income from operations .

Consolidated income from operations decreased to $39.8 million in the first quarter of 2025 compared to $41.4 million in the first quarter of 2024, due to higher restructuring costs and operating expenses, partially offset by higher revenue in our Education Technology Services segment, which was primarily driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions.

USHE segment income from operations increased 6.9% to $30.0 million in the first quarter of 2025 compared to $28.0 million in the first quarter of 2024, primarily driven by higher revenue due to an increase in revenue per student, lower student material costs and lower personnel-related costs, partially offset by increased investments in branding initiatives, higher bad debt expense, and higher stock-based compensation expense.

Australia/New Zealand segment loss from operations decreased to $2.1 million in the first quarter of 2025 compared to a loss from operations of $2.3 million in the first quarter of 2024, primarily driven by higher revenue due to an increase in revenue per student and lower stock-based compensation expense, partially offset by higher personnel-related costs and increased investments in branding initiatives.

Education Technology Services segment income from operations increased 37.3% to $13.8 million in the first quarter of 2025 compared to $10.1 million in the first quarter of 2024, primarily due to higher revenue as a result of an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment, partially offset by higher personnel-related costs and increased investments in branding initiatives.

Consolidated income from operations increased to $45.8 million in the second quarter of 2025 compared to $41.9 million in the second quarter of 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions, partially offset by higher operating expenses and restructuring costs.

USHE segment income from operations increased 4.7% to $20.8 million in the second quarter of 2025 compared to $19.8 million in the second quarter of 2024, primarily driven by lower student material costs, facility expenses, stock-based compensation expense, and bad debt expense, partially offset by lower revenue due to a decrease in enrollment and higher technology-related costs.

Australia/New Zealand segment income from operations decreased 9.3% to $12.8 million in the second quarter of 2025 compared to $14.1 million in the second quarter of 2024, primarily driven by lower revenue and higher personnel-related costs, partially offset by lower stock-based compensation expense.

ETS segment income from operations increased 49.8% to $15.0 million in the second quarter of 2025 compared to $10.0 million in the second quarter of 2024, primarily due to higher revenue as a result of an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment, partially offset by higher personnel-related costs and increased investments in branding initiatives.

Other expense.

Other expense increased to $0.3 million in the second quarter of 2025 compared to $0.1 million of expense in the second quarter of 2024, primarily due to a $1.2 million decrease in interest income, partially offset by a $1.0 million decrease in interest expense.

We incurred $0.3 million of interest expense in the three months ended June 30, 2025 compared to $1.3 million in the three months ended June 30, 2024.

Provision for income taxes.

Income tax expense was $13.1 million in the second quarter of 2025 compared to $11.9 million in the second quarter of 2024.

Our effective tax rate for the second quarter of 2025 was 28.9% compared to 28.5% in the second quarter of 2024.

Net income increased to $32.3 million in the second quarter of 2025 compared to $29.9 million in 2024 due to the factors discussed above.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Consolidated revenue increased to $625.1 million in the six months ended June 30, 2025 compared to $602.5 million in the same period in 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions.

USHE segment revenue increased 0.2% to $436.6 million in the six months ended June 30, 2025 compared to $435.8 million in the same period in 2024, primarily due to higher revenue per student.

Australia/New Zealand segment revenue decreased 0.9% to $117.4 million in the six months ended June 30, 2025 compared to $118.5 million in the same period in 2024, primarily due to unfavorable foreign currency exchange impacts, partially offset by higher revenue per student.

ETS segment revenue increased 47.4% to $71.0 million in the six months ended June 30, 2025 compared to $48.2 million in the same period in 2024, primarily due to an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment.

Instructional and support costs.

Consolidated instructional and support costs increased to $324.4 million in the six months ended June 30, 2025 compared to $320.9 million in the same period in 2024, principally due to higher personnel-related costs, technology-related costs, stock-based compensation expense, and depreciation expense, partially offset by lower student material costs and facility expenses, and favorable foreign currency exchange impacts.

Consolidated instructional and support costs as a percentage of revenues decreased to 51.9% in the six months ended June 30, 2025 from 53.3% in the six months ended June 30, 2024.

General and administration expenses .

Consolidated general and administration expenses increased to $210.4 million in the six months ended June 30, 2025 compared to $201.8 million in the same period in 2024, principally due to increased investments in branding initiatives and partnerships with brand ambassadors, higher personnel-related costs, and higher facility expenses, partially offset by lower stock-based compensation expense and depreciation expense, and favorable foreign currency exchange impacts.

Consolidated general and administration expenses as a percentage of revenues increased to 33.7% in the six months ended June 30, 2025 from 33.5% in the six months ended June 30, 2024.

Restructuring costs .

Restructuring costs increased to $4.7 million in the six months ended June 30, 2025 compared to a $3.5 million net benefit in the six months ended June 30, 2024, primarily due to a $6.2 million gain related to the early termination of operating leases in 2024, a $1.3 million increase in severance and other personnel-related expenses from employee terminations and a $0.8 million increase in asset impairment charges.

Income from operations .

Consolidated income from operations increased to $85.6 million in the six months ended June 30, 2025 compared to $83.3 million in the same period in 2024, primarily due to higher revenue in our ETS segment, which was driven by an increase in Workforce Edge revenue from new employer partnerships and growth in Sophia Learning subscriptions, partially offset by higher operating expenses and restructuring costs.

USHE segment income from operations increased 6.0% to $50.7 million in the six months ended June 30, 2025 compared to $47.8 million in the same period in 2024, primarily driven by lower student material costs, personnel-related costs, and facility expenses, partially offset by higher technology-related costs and increased investments in branding initiatives.

Australia/New Zealand segment income from operations decreased 9.7% to $10.7 million in the six months ended June 30, 2025 compared to $11.8 million in the same period in 2024, primarily driven by higher personnel-related costs and increased investments in branding initiatives, partially offset by lower stock-based compensation expense.

ETS segment income from operations increased 43.5% to $28.9 million in the six months ended June 30, 2025 compared to $20.1 million in the same period in 2024, primarily due to higher revenue as a result of an increase in Workforce Edge revenue from new employer partnerships, growth in Sophia Learning subscriptions, and higher employer affiliated enrollment, partially offset by higher personnel-related costs and increased investments in branding initiatives.

Other income.

Other income increased to $2.2 million in the first quarter of 2025 compared to $1.8 million in the first quarter of 2024, primarily due to a $1.1 million decrease in interest expense, partially offset by a $0.6 million decrease in interest income.

We incurred $0.3 million of interest expense in the three months ended March 31, 2025 compared to $1.4 million in the three months ended March 31, 2024.

Other income increased to $1.9 million in the six months ended June 30, 2025 compared to $1.7 million in the same period in 2024, primarily due to a $2.2 million decrease in interest expense, partially offset by a $1.9 million decrease in interest income.

We incurred $0.5 million of interest expense in the six months ended June 30, 2025 compared to $2.7 million in the same period in 2024.

Provision for income taxes.

Income tax expense was $12.3 million in the first quarter of 2025, compared to $13.4 million in the first quarter of 2024.

Income tax expense for the three months ended March 31, 2024 and 2025 include shortfall tax impacts of approximately $1.3 million and windfall tax impacts of approximately $0.5 million, respectively, related to share-based payment arrangements.

Our effective tax rate for the first quarter of 2025 was 29.2% compared to 31.2% in the first quarter of 2024.

Net income was $29.7 million in the first quarter of 2025 and 2024 due to the factors discussed above.

Income tax expense was $25.4 million and $25.4 million in the six months ended June 30, 2025 and 2024, respectively.

Income tax expense for the six months ended June 30, 2025 and 2024 include windfall tax impacts of approximately $0.4 million and shortfall tax impacts of approximately $1.2 million, respectively, related to share-based payment arrangements.

Net income increased to $62.1 million in the six months ended June 30, 2025 compared to $59.6 million in the same period in 2024 due to the factors discussed above.

Non-GAAP Financial Measures

We use certain financial measures including Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted Earnings per Share that are not required by or prepared in accordance with GAAP.

We use certain financial measures including Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted Earnings per Share that are not required by or prepared in accordance with GAAP.

These measures, which are considered “non-GAAP financial measures” under SEC rules, are defined by us to exclude the following:

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• discrete tax adjustments related to stock-based compensation and other adjustments.

To illustrate currency impacts to operating results, Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted Earnings per Share for the three months ended March 31, 2025 are also presented on a constant currency basis.

To illustrate currency impacts to operating results, Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted Earnings per Share for the three and six months ended June 30, 2025 are also presented on a constant currency basis.

When considered together with GAAP financial results, we believe these measures provide management and investors with an additional understanding of our business and operating results, including underlying trends associated with our ongoing operations.

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A reconciliation of these measures to the most directly comparable GAAP measures is provided below.

Adjusted income from operations was $41.7 million in the first quarter of 2025 compared to $35.8 million for the same period in 2024.

Adjusted net income was $31.2 million in the first quarter of 2025 compared to $26.7 million for the same period in 2024, and adjusted diluted earnings per share was $1.30 in the first quarter of 2025 compared to $1.11 for the same period in 2024.

Adjusted income from operations was $48.5 million in the second quarter of 2025 compared to $43.9 million for the same period in 2024.

Adjusted net income was $35.8 million in the second quarter of 2025 compared to $32.3 million for the same period in 2024, and adjusted diluted earnings per share was $1.52 in the second quarter of 2025 compared to $1.33 for the same period in 2024.

Adjusted income from operations was $90.3 million for the six months ended June 30, 2025 compared to $79.8 million for the same period in 2024.

Adjusted net income was $67.0 million for the six months ended June 30, 2025 compared to $58.9 million for the same period in 2024, and adjusted diluted earnings per share was $2.82 for the six months ended June 30, 2025 compared to $2.44 for the same period in 2024.

The tables below reconcile our reported results of operations to adjusted results:

Reconciliation of Reported to Adjusted Results of Operations for the three months ended March 31, 2025 (in thousands, except per share data)

Reconciliation of Reported to Adjusted Results of Operations for the three months ended June 30, 2025 (in thousands, except per share data)

Non-GAAP Adjustments

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adjustments (3)

Revenues $ 303,590 $ — $ — $ — $ 303,590

Total costs and expenses $ 275,711 $ (2,783) $ — $ — $ 272,928

5 unchanged sentences

Weighted average diluted shares outstanding 23,516 23,516

Reconciliation of Reported to Adjusted Results of Operations for the three months ended March 31, 2024 (in thousands, except per share data)

Reconciliation of Reported to Adjusted Results of Operations for the three months ended June 30, 2024 (in thousands, except per share data)

Non-GAAP Adjustments

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adjustments (3)

Revenues $ 290,250 $ — $ — $ — $ 290,250

Total costs and expenses $ 270,342 $ (1,995) $ — $ — $ 268,347

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Weighted average diluted shares outstanding 24,179 24,179

Reconciliation of Reported to Adjusted Results of Operations for the six months ended June 30, 2025 (in thousands, except per share data)

Non-GAAP Adjustments

(GAAP) Restructuring costs (1)

Loss from other investments (2)

adjustments (3)

Total costs and expenses $ 539,507 $ (4,697) $ — $ — $ 534,810

Income from operations $ 85,554 $ 4,697 $ — $ — $ 90,251

Operating margin 13.7% 14.4%

Income before income taxes $ 87,450 $ 4,697 $ 2,263 $ — $ 94,410

Net income $ 62,075 $ 4,697 $ 2,263 $ (2,004) $ 67,031

Diluted earnings per share $ 2.61 $ 2.82

Weighted average diluted shares outstanding 23,790 23,790

Reconciliation of Reported to Adjusted Results of Operations for the six months ended June 30, 2024 (in thousands, except per share data)

Non-GAAP Adjustments

(GAAP) Restructuring costs (1)

Loss from other investments (2)

adjustments (3)

Total costs and expenses $ 519,236 $ 3,515 $ — $ — $ 522,751

Income from operations $ 83,280 $ (3,515) $ — $ — $ 79,765

Operating margin 13.8% 13.2%

Income before income taxes $ 84,951 $ (3,515) $ 2,177 $ — $ 83,613

Net income $ 59,600 $ (3,515) $ 2,177 $ 685 $ 58,947

Diluted earnings per share $ 2.47 $ 2.44

Weighted average diluted shares outstanding 24,119 24,119

_________________________________________________________________________________________

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(2) Reflects income/loss recognized from the Company’s investments in partnership interests and other investments.

(3) Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective tax rates of 29.0% and 29.5% for the three months ended March 31, 2025 and 2024, respectively.

The table below presents our adjusted results of operations on a constant currency basis for the three months ended March 31, 2025 (in thousands, except per share data):

For the three months ended March 31, 2025

(Non-GAAP) Constant currency adjustment (1)

(3) Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing an adjusted effective tax rate of 29.0% for the three and six months ended June 30, 2025 and 29.5% for the three and six months ended June 30, 2024.

The tables below reconcile our reported results of operations to adjusted results of operations on a constant currency basis:

Reconciliation of Reported to Adjusted Results of Operations on a Constant Currency Basis for the three months ended June 30, 2025 (in thousands, except per share data):

(GAAP) Non-GAAP adjustments (1)

Constant currency adjustment (2)

As Adjusted with Constant Currency

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Net income $ 32,331 $ 3,515 $ 382 $ 36,228

Diluted earnings per share $ 1.30 $ 1.29

Weighted average diluted shares outstanding 24,065 24,065

Earnings per share:

Diluted $ 1.37 $ 1.54

Weighted average shares outstanding:

Diluted 23,516 23,516

Reconciliation of Reported to Adjusted Results of Operations on a Constant Currency Basis for the six months ended June 30, 2025 (in thousands, except per share data):

(GAAP) Non-GAAP adjustments (1)

Constant currency adjustment (2)

As Adjusted with Constant Currency

Revenues $ 625,061 $ — $ 4,226 $ 629,287

Total costs and expenses $ 539,507 $ (4,697) $ 3,827 $ 538,637

Income from operations $ 85,554 $ 4,697 $ 399 $ 90,650

Operating margin 13.7% 14.4%

Income before income taxes $ 87,450 $ 6,960 $ 445 $ 94,855

Net income $ 62,075 $ 4,956 $ 316 $ 67,347

Earnings per share:

Diluted $ 2.61 $ 2.83

Weighted average shares outstanding:

Diluted 23,790 23,790

_________________________________________________________________________________________

(1) Reflects an adjustment to translate foreign currency results for the three months ended March 31, 2025 at a constant exchange rate of 0.66 Australian Dollars to U.S.

Dollars, which was the average exchange rate for the same period in 2024.

(1) Reflects non-GAAP adjustments related to restructuring costs, income/loss from other investments, and tax adjustments as described further in the Reconciliation of Reporting to Adjusted Results of Operations table above.

(2) Reflects an adjustment to translate foreign currency after the non-GAAP adjustments for the three and six months ended June 30, 2025 at a constant exchange rate of 0.66 Australian Dollars to U.S.

Dollars, which was the average exchange rate for the same periods in 2024.

Liquidity and Capital Resources

At March 31, 2025, we had cash, cash equivalents, and marketable securities of $197.6 million compared to $199.0 million at December 31, 2024 and $253.6 million at March 31, 2024.

We maintain our cash and cash equivalents primarily in money market funds and demand deposit bank accounts at high credit quality financial institutions, which are included in cash and cash equivalents at March 31, 2025 and 2024.

At June 30, 2025, we had cash, cash equivalents, and marketable securities of $179.9 million compared to $199.0 million at December 31, 2024 and $256.2 million at June 30, 2024.

We also hold marketable securities, which primarily include corporate debt securities, U.S.

treasury securities with maturities greater than three months, and term deposits.

During the three months ended March 31, 2025 and 2024, we earned interest income of $2.5 million and $3.1 million, respectively.

During the six months ended June 30, 2025 and 2024, we earned interest income of $4.6 million and $6.5 million, respectively.

We are party to a credit facility (“Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $250 million.

The Amended Credit Facility provides us with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in an amount up to the sum of (x) the greater of (A) $300 million and (B) 100% of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00.

The Amended Credit Facility provides us with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the

commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in an amount up to the sum of (x) the greater of (A) $300 million and (B) 100% of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00.

In addition, the Amended Credit Facility provides for a subfacility for borrowings in certain foreign currencies in an amount equal to the U.S.

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An unused commitment fee ranging from 0.20% to 0.30% per annum, depending on our leverage ratio, accrues on unused amounts.

We were in compliance with all applicable covenants related to the Amended Credit Facility as of March 31, 2025.

We had no borrowings outstanding under the Revolving Credit Facility as of March 31, 2025 and $61.3 million outstanding under our Revolving Credit Facility as of March 31, 2024.

During the three months ended March 31, 2025 and 2024, we paid $0.1 million and $1.2 million, respectively, of interest and unused commitment fees related to our Revolving Credit Facility.

Our net cash provided by operating activities for the three months ended March 31, 2025 decreased to $67.7 million, compared to $77.6 million for the same period in 2024.

We were in compliance with all applicable covenants related to the Amended Credit Facility as of June 30, 2025.

We had no borrowings outstanding under the Revolving Credit Facility as of June 30, 2025 and $61.3 million outstanding under our Revolving Credit Facility as of June 30, 2024.

During the six months ended June 30, 2025 and 2024, we paid $0.3 million and $2.4 million, respectively, of interest and unused commitment fees related to our Revolving Credit Facility.

Our net cash provided by operating activities for the six months ended June 30, 2025 decreased to $98.9 million, compared to $101.9 million for the same period in 2024.

The decrease in net cash from operating activities was primarily driven by unfavorable changes in working capital.

Our net cash used in investing activities for the three months ended March 31, 2025 increased to $1.7 million, compared to $1.0 million for the same period in 2024.

The increase in net cash used in investing activities was primarily driven by a $25.6 million increase in purchases of marketable securities and a $1.1 million increase in capital expenditures, partially offset by a $26.1 million increase in cash proceeds from marketable securities and other investments.

Capital expenditures increased to $10.3 million for the three months ended March 31, 2025, compared to $9.2 million for the same period in 2024, primarily due to the timing of capital projects.

Our net cash used in financing activities for the three months ended March 31, 2025 increased to $56.1 million, compared to $18.4 million for the same period in 2024.

The increase in net cash used in financing activities was primarily driven by $32.0 million of share repurchases during the three months ended March 31, 2025 and a $5.6 million increase in net payments for employee stock awards.

The Board of Directors declared a regular, quarterly cash dividend of $0.60 per share of common stock in the first quarter of 2025.

During the three months ended March 31, 2025, we paid a total of $14.8 million in cash dividends on our common stock, compared to $14.7 million for the same period in 2024.

During the three months ended March 31, 2025, we paid $32.0 million to repurchase shares of common stock in the open market under our repurchase program.

As of March 31, 2025, we had $196.5 million remaining in share repurchase authorization to use through December 31, 2025.

For the first quarter of 2025 and 2024, bad debt expense as a percentage of revenue was 4.2%.

Our net cash used in investing activities for the six months ended June 30, 2025 decreased to $4.6 million, compared to $6.2 million for the same period in 2024.

The decrease in net cash used in investing activities was primarily driven by a $20.0 million increase in cash proceeds from marketable securities and other investments, partially offset by a $17.2 million increase in purchases of marketable securities and a $1.2 million increase in capital expenditures.

Capital expenditures increased to $21.2 million for the six months ended June 30, 2025, compared to $19.9 million for the same period in 2024, primarily due to the timing of capital projects.

Our net cash used in financing activities for the six months ended June 30, 2025 increased to $98.4 million, compared to $33.0 million for the same period in 2024.

The increase in net cash used in financing activities was primarily driven by $60.0 million of share repurchases during the six months ended June 30, 2025 and a $5.7 million increase in net payments for employee stock awards, partially offset by a $0.3 million decrease in cash dividend payments.

The Board of Directors declared a regular, quarterly cash dividend of $0.60 per share of common stock in the first two quarters of 2025.

During the six months ended June 30, 2025, we paid a total of $29.2 million in cash dividends on our common stock, compared to $29.5 million for the same period in 2024.

During the six months ended June 30, 2025, we paid $60.0 million to repurchase shares of common stock in the open market under our repurchase program.

As of June 30, 2025, we had $168.5 million remaining in share repurchase authorization to use through December 31, 2025.

For the second quarter of 2025 and 2024, bad debt expense as a percentage of revenue was 4.0% and 4.3%, respectively.

Our recurring cash requirements consist primarily of general operating expenses, capital expenditures, discretionary dividend payments, income tax payments, and contractual obligations related to our lease agreements, limited partnership investments, and Revolving Credit Facility.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis