What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-07-30 · 124 added, 107 removed, 252 unchanged (48% of the section changed)

6 unchanged sentences

In accordance with the Safe Harbor provisions of the Reform Act, the Company has identified important factors that could cause the actual results to differ materially from those expressed in or implied by such statements.

The assumptions, risks and uncertainties include the pace of student enrollment, our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements, legislation and other actions by the U.S.

The assumptions, risks and uncertainties include the pace of student enrollment;

our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements, legislation and other actions by the U.S.

Congress, actions by the current administration, rulemaking and other action by the U.S.

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 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.

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.

12 unchanged sentences

Segments Overview

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

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

Higher Education (“USHE”) Segment

4 unchanged sentences

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 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.

• In the third quarter of 2025, USHE enrollment decreased 1.0% to 85,640 compared to 86,533 for the same period in 2024.

• Trailing 4-quarter student persistence within USHE was 87.8% in the second quarter of 2025 compared to 87.0% 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.

3 unchanged sentences

87.4 % 87.0 % 86.9 % 87.0 % 86.9 % 87.2 % 87.4 % 87.8 %

• 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.

• Trailing 4-quarter government provided grants and loans per credit earned within USHE decreased 7.1% as of the end of the second 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.

8 unchanged sentences

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.

• In the third quarter of 2025, employer affiliated enrollment as a percentage of USHE enrollment was 32.7% compared to 29.8% 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.

9 unchanged sentences

Think Education and its colleges are accredited in Australia by the TEQSA and the Australian Skills Quality Authority, the regulator for vocational education and training organizations that operate in Australia.

• Media Design School is a private tertiary institution for creative and technology qualifications in New Zealand.

Media Design School offers industry-endorsed courses in 3D animation and visual effects, game art, game programming, graphic and motion design, digital media, artificial intelligence, and creative advertising.

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

• Media Design School at Strayer (“MDS”) is a private tertiary institution for creative and technology qualifications in New Zealand.

MDS offers industry-endorsed courses in 3D animation and visual effects, game art, game programming, graphic and motion design, digital media, artificial intelligence, and creative advertising.

MDS is accredited in New Zealand by the New Zealand Qualifications Authority (“NZQA”), the organization responsible for the quality assurance of non-university tertiary training providers.

On September 8, 2025, MDS became a wholly owned subsidiary and international additional location of Strayer University included within Strayer’s Middle States Commission on Higher Education accreditation.

NZQA approved the transaction and MDS will continue to operate as a New Zealand private tertiary institution.

This change does not affect our segment reporting.

• In the third quarter of 2025, Australia/New Zealand enrollment decreased 2.1% to 18,808 compared to 19,205 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.

21 unchanged sentences

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 six months ended June 30, 2025 consisted of tuition revenue.

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

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

4 unchanged sentences

In accordance with Accounting Standards Codification 606, Revenue Recognition , materials provided to students in connection with their enrollment in a course are recognized as revenue when control of those materials transfers to the student.

At the start of each academic term or program, a contract liability is recorded for academic services to be provided, and a tuition receivable is recorded for the portion of the tuition not paid in advance.

At the start of each academic term or program, a contract liability is recorded for academic

services to be provided, and a tuition receivable is recorded for the portion of the tuition not paid in advance.

Any cash received prior to the start of an academic term or program is recorded as a contract liability.

34 unchanged sentences

In their final academic year, qualifying students will receive one free course for every three courses that the student successfully completed in prior years.

Strayer University’s performance obligation associated with free courses that may be redeemed in the future is valued based on a systematic and rational allocation of the cost of honoring the benefit earned to each of the underlying revenue transactions that result in progress by the student toward earning the benefit.

The estimated value of awards under the Learn and Earn Scholarship that will be recognized in the future is based on historical experience of students’ persistence in completing their course of study and earning a degree and the tuition rate in effect at the time it was associated with the transaction.

The Company defers the value of the related performance obligation associated with the free credits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit.

The estimated value of awards under the Learn and Earn Scholarship that will be recognized in the future is based on historical experience of students’ persistence in completing their

course of study and earning a degree and the tuition rate in effect at the time it was associated with the transaction.

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

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.

As of September 30, 2025, we had deferred $37.7 million for estimated redemptions earned under the Learn and Earn Scholarship, as compared to $37.1 million at December 31, 2024.

Each quarter, we assess our assumptions underlying our estimates for persistence and estimated redemptions based on actual experience.

6 unchanged sentences

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.

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.

For the third quarter of 2025, our bad debt expense was 4.7% of revenue compared to 4.5% for the same period in 2024.

A change in our allowance for credit losses of 1% of gross tuition receivable as of September 30, 2025 would have changed our income from operations by approximately $1.6 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.

3 unchanged sentences

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

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.

No events or circumstances occurred in the three and nine months ended September 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 nine months ended September 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.

2 unchanged sentences

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.

For the third quarter of 2025, student enrollment within ANZ decreased 2.1% to 18,808 compared to 19,205 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.

As of September 30, 2025, the ANZ reporting unit had $505.0 million of goodwill and $64.3 million of indefinite-lived intangible assets.

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

3 unchanged sentences

Results of Operations

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.

In the third quarter of 2025, we generated $319.9 million in revenue compared to $306.0 million for the same period in 2024.

Our income from operations was $37.0 million in the third quarter of 2025 compared to $36.3 million for the same period in 2024, primarily driven by higher revenue in our USHE and ETS segments, partially offset by higher restructuring costs.

Net income in

the third quarter of 2025 was $26.6 million compared to $27.7 million for the same period in 2024, and diluted earnings per share was $1.15 in the third quarter of 2025 compared to $1.15 for the same period in 2024.

For the nine months ended September 30, 2025, we generated $945.0 million in revenue compared to $908.5 million for the same period in 2024.

Our income from operations was $122.6 million for the nine months ended September 30, 2025 compared to $119.6 million for the same period in 2024, primarily driven by higher revenue in our USHE and ETS segments, partially offset by higher operating expenses and restructuring costs.

Net income was $88.7 million for the nine months ended September 30, 2025 compared to $87.3 million for the same period in 2024, and diluted earnings per share was $3.76 for the nine months ended September 30, 2025 compared to $3.62 for the same period in 2024.

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

Consolidated revenue increased 4.6% to $319.9 million in the third quarter of 2025 compared to $306.0 million in the third 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, and higher revenue in our USHE segment due to higher revenue per student, partially offset by lower revenue in our ANZ segment primarily due to unfavorable foreign currency exchange impacts and a decrease in enrollment.

In the USHE segment for the three months ended September 30, 2025, total enrollment decreased 1.0% to 85,640 from 86,533 for the same period in 2024.

USHE segment revenue increased 2.6% to $213.1 million in the third quarter of 2025 compared to $207.7 million in the third quarter of 2024, primarily due to higher revenue per student.

In the Australia/New Zealand segment for the three months ended September 30, 2025, total enrollment decreased 2.1% to 18,808 from 19,205 for the same period in 2024.

Australia/New Zealand segment revenue decreased 4.7% to $68.6 million in the third quarter of 2025 compared to $71.9 million in the third quarter of 2024, primarily due to unfavorable foreign currency exchange impacts and a decrease in enrollment.

ETS segment revenue increased 45.6% to $38.3 million in the third quarter of 2025 compared to $26.3 million in the third 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 $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.

Consolidated instructional and support costs were $162.7 million in the third quarter of 2025 compared to $162.7 million in the third quarter of 2024.

Higher technology-related costs and bad debt expense in the third quarter of 2025 compared to the third quarter of 2024 were offset by lower personnel-related costs and facility expenses and favorable foreign currency exchange impacts.

Consolidated instructional and support costs as a percentage of revenues decreased to 50.9% in the third quarter of 2025 from 53.2% in the third quarter of 2024.

General and administration expenses .

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.

Consolidated general and administration expenses decreased to $105.9 million in the third quarter of 2025 compared to $106.2 million in the third quarter of 2024, principally due to lower stock-based compensation expense and depreciation expense and favorable foreign currency exchange impacts, partially offset by increased investments in branding initiatives and higher personnel-related costs.

Consolidated general and administration expenses as a percentage of revenues decreased to 33.1% in the third quarter of 2025 from 34.7% in the third quarter of 2024.

Restructuring costs .

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.

Restructuring costs increased to $14.3 million in the third quarter of 2025 compared to $0.8 million in the third quarter of 2024, primarily due to a $7.7 million increase in severance and other personnel-related expenses related to employee terminations, a $5.4 million increase in asset impairment charges, and a $0.3 million loss related to assets classified as held for sale in the third quarter of 2025.

Income from operations .

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.

Consolidated income from operations increased to $37.0 million in the third quarter of 2025 compared to $36.3 million in the third quarter of 2024, primarily due to higher revenue in our USHE and ETS segments, partially offset by higher restructuring costs.

USHE segment income from operations increased 99.7% to $22.9 million in the third quarter of 2025 compared to $11.4 million in the third quarter of 2024, primarily driven by lower personnel-related costs, depreciation expense, facility expenses, and stock-based compensation expense, partially offset by higher bad debt expense and technology-related costs.

Australia/New Zealand segment income from operations decreased 15.9% to $12.5 million in the third quarter of 2025 compared to $14.8 million in the third quarter of 2024, primarily driven by lower revenue and higher technology-related costs, partially offset by decreased investments in branding initiatives and lower stock-based compensation expense.

ETS segment income from operations increased 47.8% to $16.0 million in the third quarter of 2025 compared to $10.8 million in the third 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 income (expense).

Other income (expense) decreased to $0.3 million of expense in the third quarter of 2025 compared to $2.3 million of income in the third quarter of 2024, primarily due to a $1.5 million decrease in investment income primarily related to our limited partnership investments and a $1.4 million decrease in interest income, partially offset by a $0.4 million decrease in interest expense.

We incurred $0.3 million of interest expense in the three months ended September 30, 2025 compared to $0.7 million in the three months ended September 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.

Income tax expense was $10.1 million in the third quarter of 2025 compared to $10.8 million in the third quarter of 2024.

Our effective tax rate for the third quarter of 2025 was 27.6% compared to 28.1% in the third quarter of 2024.

Net income decreased to $26.6 million in the third quarter of 2025 compared to $27.7 million in 2024 due to the factors discussed above.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Consolidated revenue increased to $945.0 million in the nine months ended September 30, 2025 compared to $908.5 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 1.0% to $649.7 million in the nine months ended September 30, 2025 compared to $643.6 million in the same period in 2024, primarily due to higher revenue per student.

Australia/New Zealand segment revenue decreased 2.3% to $186.0 million in the nine months ended September 30, 2025 compared to $190.5 million in the same period in 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 46.8% to $109.3 million in the nine months ended September 30, 2025 compared to $74.5 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.

Consolidated instructional and support costs increased to $487.2 million in the nine months ended September 30, 2025 compared to $483.6 million in the same period in 2024, principally due to higher technology-related costs, personnel-related costs, bad debt expense, depreciation expense, and stock-based compensation 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 51.6% in the nine months ended September 30, 2025 from 53.2% in the nine months ended September 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.

Consolidated general and administration expenses increased to $316.3 million in the nine months ended September 30, 2025 compared to $308.0 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 decreased to 33.5% in the nine months ended September 30, 2025 from 33.9% in the nine months ended September 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.

Restructuring costs increased to $18.9 million in the nine months ended September 30, 2025 compared to a $2.8 million net benefit in the nine months ended September 30, 2024, primarily due to a $9.0 million increase in severance and other personnel-related expenses related to employee terminations, a $6.2 million increase in asset impairment charges, a $6.2 million gain related to the early termination of operating leases in 2024, and a $0.3 million loss related to assets classified as held for sale in the third quarter of 2025.

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.

Consolidated income from operations increased to $122.6 million in the nine months ended September 30, 2025 compared to $119.6 million in the same period in 2024, primarily driven by higher revenue in our USHE and ETS segments, partially offset by higher operating expenses and restructuring costs.

USHE segment income from operations increased 24.1% to $73.6 million in the nine months ended September 30, 2025 compared to $59.3 million in the same period in 2024, primarily driven by higher revenue and lower personnel-related costs, student material costs, depreciation expense, and facility expenses, partially offset by higher technology-related costs, bad debt expense, and investments in branding initiatives.

Australia/New Zealand segment income from operations decreased 13.2% to $23.1 million in the nine months ended September 30, 2025 compared to $26.7 million in the same period in 2024, primarily driven by lower revenue and higher personnel-related costs and technology-related costs, partially offset by lower stock-based compensation expense.

ETS segment income from operations increased 45.0% to $44.8 million in the nine months ended September 30, 2025 compared to $30.9 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 $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.

Other income decreased to $1.6 million in the nine months ended September 30, 2025 compared to $3.9 million in the same period in 2024, primarily due to a $3.2 million decrease in interest income and a $1.6 million decrease in investment income primarily related to our limited partnership investments, partially offset by a $2.6 million decrease in interest expense.

We incurred $0.8 million of interest expense in the nine months ended September 30, 2025 compared to $3.4 million in the same period in 2024.

Provision for income taxes.

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.

Income tax expense was $35.5 million and $36.2 million in the nine months ended September 30, 2025 and 2024, respectively.

Income tax expense for the nine months ended September 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 $88.7 million in the nine months ended September 30, 2025 compared to $87.3 million in the same period in 2024 due to the factors discussed above.

Non-GAAP Financial Measures

1 unchanged sentence

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

• severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with our restructuring activities;

• severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with our restructuring activities;

• income/loss from partnership and other investments that are not part of our core operations;

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

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.

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 nine months ended September 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.

2 unchanged sentences

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

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.

Adjusted income from operations was $51.3 million in the third quarter of 2025 compared to $37.1 million for the same period in 2024.

Adjusted net income was $37.7 million in the third quarter of 2025 compared to $27.9 million for the same period in 2024, and adjusted diluted earnings per share was $1.63 in the third quarter of 2025 compared to $1.16 for the same period in 2024.

Adjusted income from operations was $141.5 million for the nine months ended September 30, 2025 compared to $116.8 million for the same period in 2024.

Adjusted net income was $104.8 million for the nine months ended September 30, 2025 compared to $86.9 million for the same period in 2024, and adjusted diluted earnings per share was $4.44 for the nine months ended September 30, 2025 compared to $3.60 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 June 30, 2025 (in thousands, except per share data)

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

Non-GAAP Adjustments

9 unchanged sentences

Weighted average diluted shares outstanding 23,209 23,209

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

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

Non-GAAP Adjustments

9 unchanged sentences

Weighted average diluted shares outstanding 24,173 24,173

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

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

Non-GAAP Adjustments

9 unchanged sentences

Weighted average diluted shares outstanding 23,597 23,597

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

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

Non-GAAP Adjustments

10 unchanged sentences

_________________________________________________________________________________________

(1) Reflects severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities.

(1) Reflects severance costs, asset impairment charges, gains/losses on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities.

(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 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.

(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 nine months ended September 30, 2025 and 29.5% for the three and nine months ended September 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):

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

(GAAP) Non-GAAP adjustments (1)

11 unchanged sentences

Diluted 23,209 23,209

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):

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

(GAAP) Non-GAAP adjustments (1)

12 unchanged sentences

_________________________________________________________________________________________

(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.

(2) Reflects an adjustment to translate foreign currency after the non-GAAP adjustments for the three and nine months ended September 30, 2025 at a constant exchange rate of 0.67 and 0.66 Australian Dollars to U.S.

Dollars, which were the average exchange rates for the same periods in 2024.

Liquidity and Capital Resources

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 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 June 30, 2025 and 2024.

At September 30, 2025, we had cash, cash equivalents, and marketable securities of $182.6 million compared to $199.0 million at December 31, 2024 and $222.1 million at September 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 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.

During the nine months ended September 30, 2025 and 2024, we earned interest income of $6.5 million and $9.7 million, respectively.

We are party to a credit facility (the “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

4 unchanged sentences

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 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 six months ended June 30, 2025 decreased to $4.6 million, compared to $6.2 million for the same period in 2024.

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

We had no borrowings outstanding under the Revolving Credit Facility as of September 30, 2025 and September 30, 2024.

During the nine months ended September 30, 2025 and 2024, we paid $0.4 million and $3.1 million, respectively, of interest and unused commitment fees related to our Revolving Credit Facility.

Our net cash provided by operating activities for the nine months ended September 30, 2025 increased to $159.0 million, compared to $153.4 million for the same period in 2024.

The increase in net cash from operating activities was primarily driven by higher earnings and non-cash adjustments, partially offset by unfavorable changes in working capital.

Our net cash used in investing activities for the nine months ended September 30, 2025 decreased to $0.5 million, compared to $15.2 million for the same period in 2024.

The decrease in net cash used in investing activities was primarily driven by a $28.0 million increase in cash proceeds from marketable securities and other investments, partially offset by a $11.1 million increase in purchases of marketable securities and a $2.7 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.

Capital expenditures increased to $32.0 million for the nine months ended September 30, 2025, compared to $29.3 million for the same period in 2024, primarily due to the timing of capital projects.

Our net cash used in financing activities for the nine months ended September 30, 2025 increased to $147.4 million, compared to $114.1 million for the same period in 2024.

The increase in net cash used in financing activities was primarily driven by a $89.3 million increase in share repurchases and a $6.2 million increase in net payments for employee stock awards, partially offset by a $61.3 million long-term debt payment during the nine months ended September 30, 2024 and a $0.9 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 three quarters of 2025.

During the nine months ended September 30, 2025, we paid a total of $43.4 million in cash dividends on our common stock, compared to $44.3 million for the same period in 2024.

During the nine months ended September 30, 2025, we paid $94.3 million to repurchase shares of common stock in the open market under our repurchase program, compared to $5.0 million for the same period in 2024.

As of September 30, 2025, we had $134.2 million remaining in share repurchase authorization to use through December 31, 2025.

For the third quarter of 2025 and 2024, bad debt expense as a percentage of revenue was 4.7% and 4.5%, 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.

1 unchanged sentence

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