Strategic Education, Inc. 10-Q

Item 1. Financial Statements STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2024 September 30, 2025 ASSETS Current assets: Cash and cash equivalents $ 137,074 $ 151,460 Marketable securities 46,949 21,189 Tuition receivable, net 76,127 114,882 Income taxes receivable — 2,433 Assets held for sale — 2,200 Other current assets 44,793 54,266 Total current assets 304,943 346,430 Property and equipment, net 111,247 107,774 Right-of-use lease assets 103,673 95,993 Marketable securities, non-current 14,981 9,989 Intangible assets 245,098 248,925 Goodwill 1,206,883 1,237,065 Other assets 62,910 65,787 Total assets $ 2,049,735 $ 2,111,963 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 101,749 $ 113,171 Income taxes payable 2,926 — Contract liabilities 89,563 151,899 Lease liabilities 22,222 18,412 Total current liabilities 216,460 283,482 Deferred income tax liabilities 27,586 30,919 Lease liabilities, non-current 103,004 99,239 Other long-term liabilities 40,186 42,220 Total liabilities 387,236 455,860 Commitments and contingencies Stockholders’ equity: Common stock, par value $ 0.01 ; 32,000,000 shares authorized; 24,502,385 and 23,504,950 shares issued and outstanding at December 31, 2024 and September 30, 2025, respectively 245 235 Additional paid-in capital 1,532,414 1,467,401 Accumulated other comprehensive loss ( 88,565 ) ( 52,631 ) Retained earnings 218,405 241,098 Total stockholders’ equity 1,662,499 1,656,103 Total liabilities and stockholders’ equity $ 2,049,735 $ 2,111,963 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Revenues $ 305,958 $ 319,949 $ 908,474 $ 945,010 Costs and expenses: Instructional and support costs 162,668 162,724 483,612 487,163 General and administration 106,206 105,932 308,013 316,303 Restructuring costs 758 14,251 ( 2,757 ) 18,948 Total costs and expenses 269,632 282,907 788,868 822,414 Income from operations 36,326 37,042 119,606 122,596 Other income (expense) 2,264 ( 273 ) 3,935 1,623 Income before income taxes 38,590 36,769 123,541 124,219 Provision for income taxes 10,842 10,139 36,193 35,514 Net income $ 27,748 $ 26,630 $ 87,348 $ 88,705 Earnings per share: Basic $ 1.18 $ 1.18 $ 3.73 $ 3.87 Diluted $ 1.15 $ 1.15 $ 3.62 $ 3.76 Weighted average shares outstanding: Basic 23,422 22,584 23,418 22,937 Diluted 24,173 23,209 24,137 23,597 STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Net income $ 27,748 $ 26,630 $ 87,348 $ 88,705 Other comprehensive income (loss): Foreign currency translation adjustments 23,828 6,457 10,770 36,153 Unrealized gains (losses) on marketable securities, net of tax 25 ( 219 ) 239 ( 219 ) Comprehensive income $ 51,601 $ 32,868 $ 98,357 $ 124,639 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) For the three months ended September 30, 2024 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Par Value Balance at June 30, 2024 24,622,994 $ 246 $ 1,526,037 $ 198,908 $ ( 47,091 ) $ 1,678,100 Stock-based compensation — — 6,887 — — 6,887 Repurchase of common stock ( 53,555 ) — ( 3,330 ) ( 1,670 ) — ( 5,000 ) Common stock dividends ($ 0.60 per share) — — — ( 14,792 ) — ( 14,792 ) Foreign currency translation adjustment — — — — 23,828 23,828 Unrealized gains on marketable securities, net of tax — — — — 25 25 Net income — — — 27,748 — 27,748 Balance at September 30, 2024 24,569,439 $ 246 $ 1,529,594 $ 210,194 $ ( 23,238 ) $ 1,716,796 For the three months ended September 30, 2025 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Par Value Balance at June 30, 2025 23,948,762 $ 239 $ 1,489,271 $ 236,076 $ ( 58,869 ) $ 1,666,717 Stock-based compensation — — 5,818 50 — 5,868 Exercise of stock options 740 — 39 — — 39 Issuance of restricted stock, net ( 15,715 ) — ( 576 ) — — ( 576 ) Repurchase of common stock ( 428,837 ) ( 4 ) ( 27,151 ) ( 7,460 ) — ( 34,615 ) Common stock dividends ($ 0.60 per share) — — — ( 14,198 ) — ( 14,198 ) Foreign currency translation adjustment — — — — 6,457 6,457 Unrealized losses on marketable securities, net of tax — — — — ( 219 ) ( 219 ) Net income — — — 26,630 — 26,630 Balance at September 30, 2025 23,504,950 $ 235 $ 1,467,401 $ 241,098 $ ( 52,631 ) $ 1,656,103 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) For the nine months ended September 30, 2024 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Par Value Balance at December 31, 2023 24,406,816 $ 244 $ 1,517,650 $ 168,871 $ ( 34,247 ) $ 1,652,518 Stock-based compensation — — 18,789 — — 18,789 Exercise of stock options 4,864 — 318 — — 318 Issuance of restricted stock, net 211,314 2 ( 3,833 ) — — ( 3,831 ) Repurchase of common stock ( 53,555 ) — ( 3,330 ) ( 1,670 ) — ( 5,000 ) Common stock dividends ($ 1.80 per share) — — — ( 44,355 ) — ( 44,355 ) Foreign currency translation adjustment — — — — 10,770 10,770 Unrealized gains on marketable securities, net of tax — — — — 239 239 Net income — — — 87,348 — 87,348 Balance at September 30, 2024 24,569,439 $ 246 $ 1,529,594 $ 210,194 $ ( 23,238 ) $ 1,716,796 For the nine months ended September 30, 2025 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Par Value Balance at December 31, 2024 24,502,385 $ 245 $ 1,532,414 $ 218,405 $ ( 88,565 ) $ 1,662,499 Stock-based compensation — — 17,145 50 — 17,195 Exercise of stock options 4,898 — 306 — — 306 Issuance of restricted stock, net 143,650 1 ( 10,027 ) — — ( 10,026 ) Repurchase of common stock ( 1,145,983 ) ( 11 ) ( 72,437 ) ( 22,633 ) — ( 95,081 ) Common stock dividends ($ 1.80 per share) — — — ( 43,429 ) — ( 43,429 ) Foreign currency translation adjustment — — — — 36,153 36,153 Unrealized losses on marketable securities, net of tax — — — — ( 219 ) ( 219 ) Net income — — — 88,705 — 88,705 Balance at September 30, 2025 23,504,950 $ 235 $ 1,467,401 $ 241,098 $ ( 52,631 ) $ 1,656,103 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the nine months ended September 30, 2024 2025 Cash flows from operating activities: Net income $ 87,348 $ 88,705 Adjustments to reconcile net income to net cash provided by operating activities: Gain on early termination of operating leases, net ( 6,166 ) — Amortization of deferred financing costs 421 318 Amortization of investment discount/premium ( 47 ) ( 413 ) Depreciation and amortization 33,033 35,160 Deferred income taxes ( 2,272 ) 2,917 Stock-based compensation 18,789 17,195 Impairment of right-of-use lease assets — 4,685 Changes in assets and liabilities: Tuition receivable, net ( 27,849 ) ( 36,940 ) Other assets ( 15,877 ) ( 12,678 ) Accounts payable and accrued expenses 12,878 9,167 Income taxes payable and income taxes receivable ( 646 ) ( 5,488 ) Contract liabilities 57,576 60,211 Other liabilities ( 3,762 ) ( 3,837 ) Net cash provided by operating activities 153,426 159,002 Cash flows from investing activities: Purchases of property and equipment ( 29,346 ) ( 32,009 ) Purchases of marketable securities ( 14,720 ) ( 25,804 ) Proceeds from marketable securities 29,525 57,575 Proceeds from other investments 20 — Other investments ( 490 ) ( 265 ) Cash paid for acquisition, net of cash acquired ( 163 ) ( 36 ) Net cash used in investing activities ( 15,174 ) ( 539 ) Cash flows from financing activities: Common dividends paid ( 44,262 ) ( 43,387 ) Payments on long-term debt ( 61,275 ) — Net payments for stock awards ( 3,514 ) ( 9,720 ) Repurchase of common stock ( 5,000 ) ( 94,316 ) Net cash used in financing activities ( 114,051 ) ( 147,423 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 1,495 2,815 Net increase in cash, cash equivalents, and restricted cash 25,696 13,855 Cash, cash equivalents, and restricted cash — beginning of period 181,925 146,656 Cash, cash equivalents, and restricted cash — end of period $ 207,621 $ 160,511 Non-cash transactions: Non-cash additions to property and equipment $ 2,834 $ 2,562 Right-of-use lease assets obtained in exchange for operating lease liabilities $ 10,205 $ 6,071 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents STRATEGIC EDUCATION, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Nature of Operations Strategic Education, Inc. (“Strategic Education” or the “Company”), a Maryland corporation, 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. Strategic Education’s portfolio of companies is dedicated to closing the skills gap by placing adults on the most direct path between learning and employment. The accompanying condensed consolidated financial statements and footnotes include the results of the Company’s three reportable segments: (1) U.S. Higher Education (“USHE”), which is primarily comprised of Capella University and Strayer University and is focused on providing flexible and affordable certificate and degree programs to working adults; (2) Education Technology Services (“ETS”), 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; and (3) Australia/New Zealand (“ANZ”), which through Torrens University and associated assets, provides certificate and degree programs in Australia and New Zealand. The Company’s reportable segments are discussed further in Note 15. 2. Significant Accounting Policies Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All information as of, and for the three and nine months ended, September 30, 2024 and 2025 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated statements of financial position, results of operations, and cash flows of the Company. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date. Certain amounts in the prior period have been reclassified to conform to the current period’s presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full fiscal year. Below is a description of the nature of the costs included in the Company’s operating expense categories. Instructional and support costs generally contain items of expense directly attributable to activities that support students. This expense category includes salaries and benefits of faculty and academic administrators, as well as admissions and administrative personnel who support and serve student interests. Instructional and support costs also include course development costs and costs associated with delivering course content, including educational supplies, facilities, and all other physical plant and occupancy costs, with the exception of costs attributable to the corporate offices. Bad debt expense incurred on delinquent student account balances is also included in instructional and support costs. General and administration expenses include salaries and benefits of management and employees engaged in finance, human resources, legal, regulatory compliance, marketing and other corporate functions. Also included are the costs of advertising and production of marketing materials. General and administration expense also includes the facilities occupancy and other related costs attributable to such functions. Restructuring costs include severance and other personnel-related expenses from voluntary and involuntary employee terminations, 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. See Note 4 for additional information. Foreign Currency Translation and Transaction Gains and Losses The United States Dollar (“USD”) is the functional currency of the Company and its subsidiaries operating in the United States. The financial statements of its foreign subsidiaries are maintained in their functional currencies. The functional currency of each 8 Table of Contents of the foreign subsidiaries is the currency of the economic environment in which the subsidiary primarily does business. Financial statements of foreign subsidiaries are translated into USD using the exchange rates applicable to the dates of the financial statements. Assets and liabilities are translated into USD using the period-end spot foreign exchange rates. Income and expenses are translated at the weighted-average exchange rates in effect during the period. Equity accounts are translated at historical exchange rates. The effects of these translation adjustments are reported as a component of accumulated other comprehensive income (loss) within stockholders’ equity. For any transaction that is in a currency different from the entity’s functional currency, the Company records a net gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled) in the unaudited condensed consolidated statements of income. Restricted Cash In the United States, a significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from a U.S. higher education institution during the academic term. The Company had approximately $ 1.8 million and $ 1.9 million of these unpaid obligations as of December 31, 2024 and September 30, 2025, respectively. In Australia and New Zealand, advance tuition payments from international students are required to be restricted until a student commences his or her course. In addition, a portion of tuition prepayments from students enrolled in a vocational education and training program are held in trust by a third-party law firm to adhere to tuition protection requirements. As of December 31, 2024 and September 30, 2025, the Company had approximately $ 7.3 million and $ 6.6 million, respectively, of restricted cash related to these requirements in Australia and New Zealand. These balances are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets. As part of conducting operations in Pennsylvania, the Company is required to maintain a “minimum protective endowment” of at least $ 0.5 million in an interest-bearing account as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account, which is included in other assets in the unaudited condensed consolidated balance sheets. The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of September 30, 2024 and 2025 (in thousands): As of September 30, 2024 2025 Cash and cash equivalents $ 195,889 $ 151,460 Restricted cash included in other current assets 11,232 8,551 Restricted cash included in other assets 500 500 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 207,621 $ 160,511 Marketable Securities Investments in marketable securities are carried at either amortized cost or fair value. Investments in marketable securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in marketable securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Management determines the appropriate designation of marketable securities at the time of purchase and re-evaluates such designation as of each balance sheet date. All of the Company’s marketable securities are designated as either held-to-maturity or available-for-sale. The Company’s held-to-maturity marketable securities consist of term deposits, U.S. treasury securities, and corporate debt securities, which are carried at amortized cost. The Company’s available-for-sale marketable securities consisted of corporate debt securities, which were carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Management reviews the fair value of the portfolio at least quarterly, and evaluates individual securities with fair value below amortized cost at the balance sheet date for impairment. In order to determine whether there is an impairment, management evaluates whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. 9 Table of Contents If management intends to sell an impaired debt security, or it is more likely than not the Company will be required to sell the security prior to recovering its amortized cost basis, an impairment is deemed to have occurred. The amount of an impairment related to a credit loss, or securities that management intends to sell before recovery, is recognized in earnings. The amount of an impairment on debt securities related to other factors is recorded consistent with changes in the fair value of all other available-for-sale securities as a component of accumulated other comprehensive income (loss) within stockholders’ equity. The cost of securities sold is based on the specific identification method. Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income. The contractual maturity date of available-for-sale securities is based on the days remaining to the effective maturity. The Company classifies marketable securities as either current or non-current assets based on management’s intent with regard to usage of those funds, which is dependent upon the security’s maturity date and liquidity considerations based on current market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. Tuition Receivable and Allowance for Credit Losses The Company records tuition receivable and contract liabilities for its students upon the start of the academic term or program. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the Company’s student bases and through the participation of the majority of the students in federally funded financial aid programs. An allowance for credit losses is established based upon historical collection rates by age of receivable and adjusted for reasonable expectations of future collection performance, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status, likelihood of future enrollment, degree mix trends and changes in the overall economic and regulatory environment. In the event that current collection trends differ from historical trends, an adjustment is made to the allowance for credit losses and bad debt expense. The Company’s current tuition receivable and allowance for credit losses were as follows as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Tuition receivable $ 127,012 $ 164,649 Allowance for credit losses ( 50,885 ) ( 49,767 ) Tuition receivable, net $ 76,127 $ 114,882 An additional $ 7.0 million and $ 6.4 million of tuition receivable, net, are included in other assets as of December 31, 2024 and September 30, 2025, respectively, because these amounts are expected to be collected after 12 months. The following table illustrates changes in the Company’s current and non-current allowance for credit losses for the three and nine months ended September 30, 2024 and 2025 (in thousands). For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Allowance for credit losses, beginning of period $ 46,787 $ 44,325 $ 47,605 $ 46,185 Additions charged to expense 13,793 14,967 39,418 40,547 Write-offs, net of recoveries ( 15,044 ) ( 13,595 ) ( 41,487 ) ( 41,035 ) Allowance for credit losses, end of period $ 45,536 $ 45,697 $ 45,536 $ 45,697 Assets Held for Sale The Company classifies assets and liabilities as held for sale (a “disposal group”) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable to be completed within one year, and the disposal group is available for immediate sale in its present condition. The Company also considers whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Gains are not recognized until the date of sale. Assets are not depreciated or amortized while they are classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group as assets held for sale and liabilities held for sale in its unaudited condensed consolidated balance sheets. 10 Table of Contents Over the last several years, the Company has been evaluating its owned and leased real estate portfolio to identify underutilized facilities to either downsize or exit. One facility identified is an owned U.S. Higher Education campus, which the Company has been marketing for sale and expects to close within the next twelve months. The long-lived assets being marketed for sale consist of land, buildings, and building improvements. The Company determined that it met all of the criteria to classify these assets as held for sale as of September 30, 2025. The Company recorded a $ 0.3 million loss related to the assets classified as held for sale in the third quarter of 2025 as the fair value of the assets, less the estimated costs to sell, was less than the carrying amount of the net assets. Fair value was determined based upon a third-party appraisal of the property. The loss is included in Restructuring costs on the unaudited condensed consolidated statements of income. 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 in a business combination. Indefinite-lived intangible assets, which include trade names, are recorded at fair value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets are assessed at least annually for impairment on the first day of the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible asset below its carrying amount. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available, and management regularly reviews the operating results of those components. Authorized Stock The Company has authorized 32,000,000 shares of common stock, par value $ 0.01 , of which 24,502,385 and 23,504,950 shares were issued and outstanding as of December 31, 2024 and September 30, 2025, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding. Before any preferred stock may be issued, the Board of Directors must establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. In July 2025, the Company’s Board of Directors declared a regular, quarterly cash dividend of $ 0.60 per share of common stock. The dividend was paid on September 15, 2025. Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units (“stock awards”). The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options and (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company. Stock awards are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2024 and 2025 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Weighted average shares outstanding used to compute basic earnings per share 23,422 22,584 23,418 22,937 Incremental shares issuable upon the assumed exercise of stock options 5 1 5 1 Unvested restricted stock and restricted stock units 746 624 714 659 Shares used to compute diluted earnings per share 24,173 23,209 24,137 23,597 Anti-dilutive shares excluded from the diluted earnings per share calculation — 250 — 200 11 Table of Contents Comprehensive Income Comprehensive income includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of foreign currency translation adjustments and unrealized gains and losses on available-for-sale marketable securities, net of tax. As of December 31, 2024 and September 30, 2025, the balance of accumulated other comprehensive loss was $ 88.6 million, net of tax of $ 0.1 million, and $ 52.6 million, respectively. During the three and nine months ended September 30, 2025, approximately $ 0.2 million, net of tax of $ 0.1 million, of unrealized gains (losses) on marketable securities was reclassified out of accumulated other comprehensive income (loss) to Other income (expense) on the unaudited consolidated statements of income. There were no reclassifications out of accumulated other comprehensive income (loss) to net income for the three and nine months ended September 30, 2024. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates include allowances for credit losses, useful lives of property and equipment, incremental borrowing rates, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill and intangible assets, and the provision for income taxes. Actual results could differ from those estimates. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosure of specific categories in the effective tax rate reconciliation. Further, the standard requires certain disclosures of state versus federal income tax expense and taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and will be adopted by the Company in its Form 10-K for the year ending December 31, 2025. ASU 2023-09 is expected to result in expanded tax rate reconciliations and income taxes paid disclosures but is not anticipated to otherwise impact the Company’s consolidated financial statements. The Company will apply the amendments retrospectively. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires the disclosure of amounts related to purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion within each income statement expense line item that contains any of these expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted, and the amendments can be applied prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statement disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 eliminates the existing guidance that categorizes software development into distinct project stages and replaces it with a recognition threshold based on management’s authorization and commitment to fund the project, along with the probability of completion and intended use. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual periods. Early adoption is permitted, and the amendments can be applied prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2025-06 will have on its consolidated financial statements and related disclosures. Other ASUs recently issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements. 3. Revenue Recognition The Company’s revenues primarily consist of tuition revenue arising from educational services provided in the form of classroom instruction and online courses. Tuition revenue is deferred and recognized ratably over the period of instruction, which varies depending on the course format and chosen program of study. Capella University’s GuidedPath classes and Strayer University’s educational programs typically are offered on a quarterly basis, and such periods coincide with the Company’s quarterly financial reporting periods, while Capella University’s FlexPath courses are delivered over a twelve-week subscription period. 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. 12 Table of Contents The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and nine months ended September 30, 2024 and 2025 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 U.S. Higher Education Segment Tuition, net of discounts, grants and scholarships $ 198,873 $ 203,315 $ 616,175 $ 621,775 Other (1) 8,836 9,752 27,383 27,935 Total U.S. Higher Education Segment 207,709 213,067 643,558 649,710 Australia/New Zealand Segment Tuition, net of discounts, grants and scholarships 69,973 67,002 184,611 181,297 Other (1) 1,975 1,587 5,842 4,696 Total Australia/New Zealand Segment 71,948 68,589 190,453 185,993 Education Technology Services Segment (2) 26,301 38,293 74,463 109,307 Consolidated revenue $ 305,958 $ 319,949 $ 908,474 $ 945,010 _________________________________________ (1) Other revenue is primarily comprised of academic fees, sales of course materials, placement fees and other non-tuition revenue streams. (2) Education Technology Services revenue is primarily derived from tuition revenue and administrative fees. Revenues are recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods and services. The Company applies the five-step revenue model under Accounting Standards Codification (“ASC”) 606, Revenue Recognition (“ASC 606”) to determine when revenue is earned and recognized. Arrangements with students may have multiple performance obligations. For such arrangements, the Company allocates net tuition revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers and observable market prices. The standalone selling price of material rights to receive free classes or scholarships in the future is estimated based on class tuition prices or amounts of scholarships, and likelihood of redemption based on historical student attendance and completion behavior. 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. Some students may be eligible for scholarship awards, the estimated value of which will be realized in the future and is deducted from revenue when earned, based on historical student attendance and completion behavior. Contract liabilities are recorded as a current or long-term liability in the unaudited condensed consolidated balance sheets based on when the benefits are expected to be realized. Course materials are available to enable students to access electronically all required materials for courses in which they enroll during the quarter. Revenue derived from course materials is recognized ratably over the duration of the course as the Company provides the student with continuous access to these materials during the term. For sales of certain other course materials, the Company is considered the agent in the transaction, and as such, the Company recognizes revenue net of amounts owed to the vendor at the time of sale. Revenues also include certain academic fees recognized within the quarter of instruction, and certificate revenue and licensing revenue, which are recognized as the services are provided. Contract Liabilities – Learn and Earn Scholarship Strayer University offers the Learn and Earn Scholarship (formerly known as the Graduation Fund), which allows undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program. Students registering in credit-bearing courses in any undergraduate degree program receive one free course for every three courses that the student successfully completes. To be eligible, students must meet all of Strayer University’s admission requirements and must be enrolled in a bachelor’s degree program. Students who have more than one consecutive term of non-attendance lose any Learn and Earn Scholarship credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by Strayer University in the future. Revenue from students participating in the Learn and Earn Scholarship is recorded in accordance with ASC 606. The Company defers the value of the related performance obligation associated with the 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 Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a 13 Table of Contents course of study within this program and similar programs. Each quarter, the Company assesses its assumptions underlying these estimates, and to date, any adjustments to the estimates have not been material. The amount estimated to be redeemed in the next 12 months is $ 15.9 million and is included as a current contract liability in the unaudited condensed consolidated balance sheets. The remainder is expected to be redeemed within two to four years . The table below presents activity in the contract liability related to the Learn and Earn Scholarship (in thousands): For the nine months ended September 30, 2024 2025 Balance at beginning of period $ 44,480 $ 37,118 Revenue deferred 16,358 15,084 Benefit redeemed ( 17,054 ) ( 14,482 ) Balance at end of period $ 43,784 $ 37,720 Contract Liabilities – Tuition Cap Students in certain programs at Capella University may be eligible for tuition cap pricing, wherein their tuition is waived once the student has reached the designated dollar cap threshold for their program. The Company defers the value of the related performance obligation associated with this tuition benefit estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student towards reaching the tuition cap. The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within these programs or similar programs. Each quarter, the Company assesses its assumptions underlying these estimates. As of December 31, 2024 and September 30, 2025, the Company had $ 14.7 million and $ 17.1 million, respectively, of contract liabilities in the unaudited condensed consolidated balance sheets related to tuition cap benefits that are estimated to be redeemed in the future. The amount estimated to be redeemed in the next 12 months is $ 6.8 million and is included as a current contract liability in the unaudited condensed consolidated balance sheets. Costs to Obtain a Contract Certain commissions earned by third-party international agents are considered incremental and recoverable costs of obtaining a contract with customers in the Australia/New Zealand segment. These costs are deferred and then amortized over the period of benefit which ranges from one year to two years . 4. Restructuring and Related Charges The Company incurs severance and other employee separation costs related to employee terminations that are not tied to a formal restructuring plan. The Company incurred $ 0.6 million and $ 1.9 million of severance and other employee separation charges during the three and nine months ended September 30, 2024, respectively, and $ 8.1 million and $ 10.9 million during the three and nine months ended September 30, 2025, respectively, related to the elimination of certain positions. These severance and other employee separation charges are included in Restructuring costs on the unaudited condensed consolidated statements of income. 14 Table of Contents The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities during the nine months ended September 30, 2024 and 2025 (in thousands): Severance Restructuring Liability Balance as of December 31, 2023 $ 795 Restructuring and other charges 1,896 Payments ( 2,593 ) Balance as of September 30, 2024 $ 98 Balance as of December 31, 2024 (1) $ 534 Restructuring and other charges 10,863 Payments ( 10,459 ) Balance as of September 30, 2025 (1) $ 938 ____________________________________ (1) Restructuring liabilities are included in accounts payable and accrued expenses in the unaudited condensed consolidated balance sheets. The Company evaluates its owned and leased real estate portfolio on an ongoing basis, which has resulted in the consolidation and sale of underutilized facilities. The Company recorded approximately $ 3.9 million and $ 4.7 million of right-of-use lease asset charges during the three and nine months ended September 30, 2025, respectively, related to facilities that were consolidated during the period. The Company also recorded fixed asset impairment charges of approximately $ 1.5 million and $ 2.3 million during the three and nine months ended September 30, 2025, respectively. As stated in Note 2, the Company also recorded a $ 0.3 million loss related to assets classified as held for sale during the third quarter of 2025. There were no right-of-use lease asset charges or fixed asset impairment charges during the three and nine months ended September 30, 2024. The Company recorded a net benefit related to the early termination and related extinguishment of lease liabilities of approximately $ 6.2 million during the nine months ended September 30, 2024. These right-of-use lease asset and fixed asset impairment charges, loss on assets classified as held for sale, and net benefits from early lease terminations are included in Restructuring costs on the unaudited condensed consolidated statements of income. 5. Marketable Securities The following is a summary of available-for-sale securities, which are carried at fair value, as of December 31, 2024 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Balance as of December 31, 2024 Corporate debt securities $ 500 $ — $ ( 1 ) $ 499 Total $ 500 $ — $ ( 1 ) $ 499 The Company did not have any marketable securities classified as available-for-sale as of September 30, 2025. 15 Table of Contents The following is a summary of held-to-maturity securities, which are carried at amortized cost, as of December 31, 2024 and September 30, 2025 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Balance as of December 31, 2024 Term deposits $ 21,653 $ — $ — $ 21,653 U.S. treasury securities 19,778 18 — 19,796 Corporate debt securities 20,000 — ( 26 ) 19,974 Total $ 61,431 $ 18 $ ( 26 ) $ 61,423 Balance as of September 30, 2025 Term deposits $ 16,206 $ — $ — $ 16,206 U.S. treasury securities 9,972 33 — 10,005 Corporate debt securities 5,000 42 — 5,042 Total $ 31,178 $ 75 $ — $ 31,253 The unrealized gains and losses on the Company’s investments in marketable securities as of December 31, 2024 and September 30, 2025 were caused by changes in market values primarily due to interest rate changes. As of September 30, 2025, there were no securities which were in an unrealized loss position for a period longer than twelve months. The Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell these securities prior to the recovery of their amortized cost basis, which may be at maturity. As such, no impairment charges were recorded during the three and nine months ended September 30, 2024 and 2025. The Company has no allowance for credit losses related to its marketable securities as all investments are in investment grade securities. The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Available-for-sale securities Held-to-maturity securities Available-for-sale securities Held-to-maturity securities Due within one year $ 499 $ 46,450 $ — $ 21,189 Due after one year through five years — 14,981 — 9,989 Total $ 499 $ 61,431 $ — $ 31,178 The following table summarizes the purchases of and proceeds from marketable securities for the nine months ended September 30, 2024 and 2025 (in thousands): For the nine months ended September 30, 2024 2025 Purchases of marketable securities Purchases of held-to-maturity securities $ 14,720 $ 25,804 Total purchases of marketable securities $ 14,720 $ 25,804 Proceeds from marketable securities Maturities of available-for-sale securities $ 11,305 $ 500 Maturities of held-to-maturity securities 18,220 57,075 Total proceeds from marketable securities $ 29,525 $ 57,575 The Company did not sell any available-for-sale or held-to-maturity securities during the three and nine months ended September 30, 2024 and 2025. The Company did not record any gross realized gains or losses in net income during the three and nine months ended September 30, 2024 and 2025. 16 Table of Contents 6. Fair Value Measurement Assets measured at fair value on a recurring basis consist of the following as of December 31, 2024 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2024 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 92,416 $ 92,416 $ — $ — Available-for-sale securities : Corporate debt securities 499 — 499 — Total assets at fair value on a recurring basis $ 92,915 $ 92,416 $ 499 $ — Assets measured at fair value on a recurring basis consist of the following as of September 30, 2025 (in thousands): Fair Value Measurements at Reporting Date Using September 30, 2025 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 86,633 $ 86,633 $ — $ — Total assets at fair value on a recurring basis $ 86,633 $ 86,633 $ — $ — The Company measures the above items on a recurring basis at fair value as follows: • Money market funds – Classified in Level 1 is excess cash the Company holds in money market funds, which are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. The Company’s other cash and cash equivalents as of December 31, 2024 and September 30, 2025 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments. • Available-for-sale securities – Classified in Level 2 and valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets. The Company does not hold securities in inactive markets. The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The Company’s held-to-maturity marketable securities, which consist of term deposits, U.S. treasury securities, and corporate debt securities, are not included in the tables above as they are carried at amortized cost and not measured at fair value on a recurring basis. The estimated fair value of the Company’s held-to-maturity marketable securities as of December 31, 2024 and September 30, 2025 was $ 61.4 million and $ 31.3 million, respectively. These securities are valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets and are classified in Level 2 of the fair value hierarchy. The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods and did not transfer assets or liabilities between levels of the fair value hierarchy during the nine months ended September 30, 2024 and 2025. 17 Table of Contents 7. Goodwill and Intangible Assets Goodwill The following table presents changes in the carrying value of goodwill by segment for the nine months ended September 30, 2024 (in thousands): U.S. Higher Education Australia / New Zealand Education Technology Services Total Balance as of December 31, 2023 $ 632,075 $ 519,813 $ 100,000 $ 1,251,888 Additions — — — — Impairments — — — — Currency translation adjustments — 8,711 — 8,711 Balance as of September 30, 2024 $ 632,075 $ 528,524 $ 100,000 $ 1,260,599 The following table presents changes in the carrying value of goodwill by segment for the nine months ended September 30, 2025 (in thousands): U.S. Higher Education Australia / New Zealand Education Technology Services Total Balance as of December 31, 2024 $ 632,075 $ 474,808 $ 100,000 $ 1,206,883 Additions — — — — Impairments — — — — Currency translation adjustments — 30,182 — 30,182 Balance as of September 30, 2025 $ 632,075 $ 504,990 $ 100,000 $ 1,237,065 The Company assesses goodwill at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount. No events or circumstances occurred in the three and nine months ended September 30, 2025 to indicate an impairment to goodwill at any of the Company’s segments. There were no impairment charges related to goodwill recorded during the three and nine months ended September 30, 2024 and 2025. Intangible Assets Indefinite-lived intangible assets not subject to amortization consist of trade names. The Company assigned an indefinite useful life to its trade name intangible assets, as it is believed these assets have the ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic, or other factors to limit the useful life of the trade name intangibles. The following table presents changes in the carrying value of indefinite-lived intangible assets (in thousands): For the nine months ended September 30, 2024 2025 Balance at beginning of period $ 251,623 $ 245,098 Impairments ( 800 ) — Currency translation adjustments 1,129 3,827 Balance at end of period $ 251,952 $ 248,925 The Company assesses indefinite-lived intangible assets at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective indefinite-lived intangible asset below its carrying amount. In the second quarter of 2024, the Company recorded a $ 0.8 million indefinite-lived intangible asset impairment charge, which is included in Restructuring costs on the unaudited condensed consolidated statements of income. No events or circumstances occurred in the three and nine months ended September 30, 2025 to indicate an impairment to indefinite-lived intangible assets. There were no impairment charges related to indefinite-lived intangible assets recorded during the three and nine months ended September 30, 2025. 18 Table of Contents 8. Other Current Assets Other current assets consist of the following as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Prepaid expenses $ 20,841 $ 25,939 Cloud computing arrangements 9,402 10,563 Restricted cash 9,082 8,551 Deferred contract costs 3,258 4,890 Other 2,210 4,323 Other current assets $ 44,793 $ 54,266 9. Other Assets Other assets consist of the following as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Cloud computing arrangements, net of current portion $ 18,328 $ 25,011 Prepaid expenses, net of current portion 15,678 15,231 Equity method investments 13,428 9,284 Tuition receivable, net, non-current 7,040 6,364 Other investments 2,786 2,786 Deferred contract costs, net of current portion 808 2,710 Other 4,842 4,401 Other assets $ 62,910 $ 65,787 Cloud Computing Arrangements The Company defers implementation costs incurred in cloud computing arrangements and amortizes these costs over the term of the arrangement. Prepaid Expenses Long-term prepaid expenses primarily relate to payments that have been made for future services to be provided after one year. In 2020, pursuant to the terms of the perpetual license agreement associated with the Jack Welch Management Institute, the Company made a final one-time cash payment of approximately $ 25.3 million for the right to continue to use the Jack Welch name and likeness. As of December 31, 2024 and September 30, 2025, $ 14.7 million and $ 13.5 million, respectively, of this payment is included in the prepaid expenses, net of current portion balance, as the payment is being amortized over an estimated useful life of 15 years. Equity Method Investments The Company holds investments in certain limited partnerships that invest in various innovative companies in the health care and education-related technology fields. The Company has commitments to invest up to an additional $ 1.8 million across these partnerships through 2031. The Company’s investments range from 3 % to 5 % of any partnership’s interest and are accounted for under the equity method. 19 Table of Contents The following table illustrates changes in the Company’s limited partnership investments for the three and nine months ended September 30, 2024 and 2025 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Limited partnership investments, beginning of period $ 13,963 $ 11,397 $ 16,068 $ 13,428 Capital contributions 394 34 490 265 Pro-rata share in the net income (loss) of limited partnerships ( 290 ) ( 2,147 ) ( 2,491 ) ( 4,409 ) Distributions ( 472 ) — ( 472 ) — Limited partnership investments, end of period $ 13,595 $ 9,284 $ 13,595 $ 9,284 Tuition Receivable Non-current tuition receivable, net, represents tuition that the Company expects to collect, but not within the next 12 months. Other Investments The Company holds investments in education technology start-ups focused on transformational technologies that improve student success. These investments are accounted for at cost less impairment as they do not have readily determinable fair value. Deferred Contract Costs The Company defers certain commissions paid in the Australia/New Zealand segment to third-party international recruitment agents and amortizes these costs over the period of benefit. Other Other is comprised primarily of deferred financing costs associated with the Company’s credit facility, deferred accreditation costs associated with the Australia/New Zealand segment, and refundable security deposits associated with the Company’s leased campus and office space. 10. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Trade payables $ 55,733 $ 61,939 Accrued compensation and benefits 38,843 42,976 Accrued student obligations and other 7,173 8,256 Accounts payable and accrued expenses $ 101,749 $ 113,171 11. Long-Term Debt On October 18, 2024, the Company entered into an amended 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 the Company 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 the future in an aggregate amount of 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. dollar equivalent of $ 150 million. The maturity date of the Amended Credit Facility is October 18, 2029. The Company paid approximately $ 1.7 million in debt financing costs associated with the Amended Credit Facility, and these costs are being amortized on a straight-line basis over the five-year term of the Amended Credit Facility. 20 Table of Contents Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to Term SOFR or a base rate, plus a margin ranging from 1.50 % to 2.00 % depending on the Company’s leverage ratio. The Company also is subject to a quarterly unused commitment fee ranging from 0.20 % to 0.30 % per annum depending on the Company’s leverage ratio, times the daily unused amount under the Revolving Credit Facility. The Amended Credit Facility is guaranteed by all domestic subsidiaries, subject to certain exceptions, and secured by substantially all of the assets of the Company and its subsidiary guarantors. The Amended Credit Facility contains customary affirmative and negative covenants, representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Amended Credit Facility. In addition, the Amended Credit Facility requires that the Company satisfy certain financial maintenance covenants, including: • A leverage ratio of not greater than 2.00 to 1.00. Leverage ratio is defined as the ratio of total debt (net of unrestricted cash in an amount not to exceed $ 150 million) to trailing four-quarter EBITDA. • A coverage ratio of not less than 1.75 to 1.00. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense. As of December 31, 2024 and September 30, 2025, the Company was in compliance with all covenants of the Amended Credit Facility and had no borrowings outstanding under the Revolving Credit Facility. During the nine months ended September 30, 2024 and 2025, the Company paid $ 3.1 million and $ 0.4 million, respectively, of interest and unused commitment fees related to its Revolving Credit Facility. 12. Other Long-Term Liabilities Other long-term liabilities consist of the following as of December 31, 2024 and September 30, 2025 (in thousands): December 31, 2024 September 30, 2025 Contract liabilities, net of current portion $ 34,505 $ 35,418 Asset retirement obligations 3,876 3,997 Other 1,805 2,805 Other long-term liabilities $ 40,186 $ 42,220 Contract Liabilities In connection with its student tuition contracts, the Company has an obligation to provide free tuition in the future should certain eligibility conditions be maintained. Long-term contract liabilities represent the amount of revenue under these arrangements that the Company expects will be realized after one year. Asset Retirement Obligations Certain of the Company’s lease agreements require the leased premises to be returned in a predetermined condition. 13. Equity Awards The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and nine months ended September 30, 2024 and 2025 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Instructional and support costs $ 2,005 $ 2,104 $ 5,060 $ 6,360 General and administration 4,813 3,724 13,455 10,647 Restructuring costs 69 40 274 188 Stock-based compensation expense included in operating expense 6,887 5,868 18,789 17,195 Tax benefit 1,835 1,544 5,002 4,518 Stock-based compensation expense, net of tax $ 5,052 $ 4,324 $ 13,787 $ 12,677 14. Income Taxes During the nine months ended September 30, 2024 and 2025, the Company recorded income tax expense of $ 36.2 million and 21 Table of Contents $ 35.5 million, respectively. Income tax expense for the nine months ended September 30, 2024 and 2025 include shortfall tax impacts of approximately $ 1.2 million and windfall tax impacts of approximately $ 0.4 million, respectively, related to share-based payment arrangements. The Company had no unrecognized tax benefits as of December 31, 2024 and September 30, 2025. Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the unaudited condensed consolidated statements of income. The Company paid $ 39.5 million and $ 38.1 million in income taxes during the nine months ended September 30, 2024 and 2025, respectively. The tax years since 2021 remain open for federal tax examination, the tax years since 2020 remain open to examination by certain states, and the tax years since 2019 remain open to examination by foreign taxing jurisdictions in which the Company is subject to taxation. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The Company has analyzed and accounted for the impacts of OBBBA within the quarter and determined there is no material impact on its annual effective tax rate in 2025. 15. Segment Reporting Strategic Education is an educational 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. Strategic Education’s portfolio of companies is dedicated to closing the skills gap by placing adults on the most direct path between learning and employment. The Company’s organizational structure includes three operating and reportable segments: U.S. Higher Education, Education Technology Services, and Australia/New Zealand. The USHE segment provides flexible and affordable certificate and degree programs to working adults primarily through Capella University and Strayer University, including the Jack Welch Management Institute MBA, which is a unit of Strayer University. USHE also operates non-degree web and mobile application development courses through Hackbright Academy and Devmountain, which are units of Strayer University. The 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. 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. The ANZ segment is comprised of Torrens University, Think Education, and Media Design School at Strayer (“MDS”) in Australia and New Zealand, which collectively offer certificate and degree programs in business, design, education, hospitality, healthcare, and technology through campuses in Australia, New Zealand, and online. 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. The New Zealand Qualifications Authority approved the transaction and MDS will continue to operate as a New Zealand private tertiary institution. This change does not affect the Company’s segment reporting. The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. Revenue and operating expenses are generally directly attributable to the segments. Inter-segment revenues are not presented separately, as these amounts are immaterial. The Company’s CODM does not evaluate operating segments using asset information. The Company’s CODM assesses the segments’ performance by using each segment’s income from operations, which includes certain enterprise shared services allocations attributable to each of the segments. The Company’s CODM uses income from operations for each segment in the annual budget and forecasting process. On a monthly basis, the CODM reviews budget-to-actual, latest forecast-to-actual, and year-over-year actual variances when reviewing segment performance and making decisions about the allocation of resources to each segment. 22 Table of Contents A summary of financial information by reportable segment for the three months ended September 30, 2024 is presented in the following table (in thousands): U.S. Higher Education Australia/New Zealand Education Technology Services Total Revenues $ 207,709 $ 71,948 $ 26,301 $ 305,958 Segment expenses Direct segment expenses 181,663 52,386 14,511 248,560 Enterprise shared services allocation 14,600 4,716 998 20,314 Segment income from operations $ 11,446 $ 14,846 $ 10,792 $ 37,084 Unallocated expenses Restructuring costs ( 758 ) Consolidated income from operations $ 36,326 Other income 2,264 Consolidated income before income taxes $ 38,590 A summary of financial information by reportable segment for the three months ended September 30, 2025 is presented in the following table (in thousands): U.S. Higher Education Australia/New Zealand Education Technology Services Total Revenues $ 213,067 $ 68,589 $ 38,293 $ 319,949 Segment expenses Direct segment expenses 176,811 50,639 20,873 248,323 Enterprise shared services allocation 13,403 5,465 1,465 20,333 Segment income from operations $ 22,853 $ 12,485 $ 15,955 $ 51,293 Unallocated expenses Restructuring costs ( 14,251 ) Consolidated income from operations $ 37,042 Other expense ( 273 ) Consolidated income before income taxes $ 36,769 23 Table of Contents A summary of financial information by reportable segment for the nine months ended September 30, 2024 is presented in the following table (in thousands): U.S. Higher Education Australia/New Zealand Education Technology Services Total Revenues $ 643,558 $ 190,453 $ 74,463 $ 908,474 Segment expenses Direct segment expenses 539,346 150,044 40,416 729,806 Enterprise shared services allocation 44,928 13,758 3,133 61,819 Segment income from operations $ 59,284 $ 26,651 $ 30,914 $ 116,849 Unallocated expenses Restructuring costs 2,757 Consolidated income from operations $ 119,606 Other income 3,935 Consolidated income before income taxes $ 123,541 A summary of financial information by reportable segment for the nine months ended September 30, 2025 is presented in the following table (in thousands): U.S. Higher Education Australia/New Zealand Education Technology Services Total Revenues $ 649,710 $ 185,993 $ 109,307 $ 945,010 Segment expenses Direct segment expenses 532,189 146,763 59,630 738,582 Enterprise shared services allocation 43,953 16,085 4,846 64,884 Segment income from operations $ 73,568 $ 23,145 $ 44,831 $ 141,544 Unallocated expenses Restructuring costs ( 18,948 ) Consolidated income from operations $ 122,596 Other income 1,623 Consolidated income before income taxes $ 124,219 24 Table of Contents The following table presents a schedule of significant non-cash items included in segment income from operations by reportable segment for the three and nine months ended September 30, 2024 and 2025 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2024 2025 2024 2025 Depreciation and amortization U.S. Higher Education $ 7,981 $ 6,442 $ 23,607 $ 21,692 Australia/New Zealand 1,937 2,394 6,946 7,218 Education Technology Services 888 1,340 2,480 3,693 Restructuring costs — 1,786 — 2,557 Consolidated depreciation and amortization $ 10,806 $ 11,962 $ 33,033 $ 35,160 Stock-based compensation U.S. Higher Education $ 5,259 $ 4,648 $ 14,278 $ 13,683 Australia/New Zealand 1,061 462 2,871 1,224 Education Technology Services 498 718 1,366 2,100 Restructuring costs 69 40 274 188 Consolidated stock-based compensation $ 6,887 $ 5,868 $ 18,789 $ 17,195 16. Litigation The Company is involved in litigation and other legal proceedings arising out of the ordinary course of its business. There have been no material developments in the litigation and other legal proceedings that are described in our Annual Report on Form 10-K for the year ended December 31, 2024. 17. Regulation The Company’s higher education institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition, and results of operations. Other than as set forth below, there have been no material changes to the laws and regulations affecting the Company’s higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2024. United States Regulation One Big Beautiful Bill Act On July 4, 2025, President Trump signed OBBBA, which includes, among other things, amendments to portions of the Higher Education Act of 1965 and the Internal Revenue Code of 1986, as amended. Various portions of the bill may go through negotiated rulemaking prior to implementation, and it is impossible to predict the outcome of those negotiations or the rulemaking process. OBBBA makes a variety of changes to federal student aid programs, including loan limits, accountability measures for programs based on low earning outcomes, loan repayment, Pell Grant eligibility, and regulatory changes. OBBBA eliminates, effective July 2026, Federal Direct PLUS loans for graduate and professional students, with some limited grandfathering for current graduate and professional student borrowers. The law also sets new annual and aggregate loan limits for such borrowers, with some limited grandfathering. For graduate students who are not and have not been professional students, the new aggregate graduate loan limit is $100,000, irrespective of any undergraduate borrowing. With respect to graduate students who are or have been professional students, the aggregate graduate loan limit is $200,000 minus the amounts borrowed for the professional degree program. OBBBA also created a lifetime maximum aggregate amount for Title IV loans that a student may borrow of $257,500 (other than a loan made to the student as a parent borrower on behalf of a dependent student). OBBBA provides institutions the opportunity to limit the amount of loans a student may borrow in an academic year as long as any such limit is applied consistently to all students enrolled in such program of study. Additionally, OBBBA requires that the amount of loan funds available under a student’s annual loan eligibility must be reduced in direct proportion to the degree to which that student is not enrolled on a full-time basis during an academic year; the Department plans to release a schedule of reductions for public comment later this year, which institutions will be required to use for students who enrolled less than full-time for academic years 2026-27 and beyond. 25 Table of Contents OBBBA creates an accountability framework, effective July 2026, that institutions must satisfy at the program level in order for students to continue to receive Federal Direct Loans for such programs. OBBBA requires that an undergraduate program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25-34 with only a high school diploma, either in the state where the institution is located or, if fewer than 50% of students at the institution reside in the institution’s state, the national average. OBBBA requires that a graduate or professional program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25–34 with only a bachelor’s degree. Comparator median earnings for graduate or professional programs will be calculated based on Bureau of the Census data for working adults aged 25-34 with only a bachelor’s degree, and will be the lesser of: (i) working adults in the same field of study in the state where the institution is located, (ii) working adults in the same field of study in the United States, or (iii) all working adults in the state where the institution is located. If fewer than 50% of students at the institution reside in the institution’s state, then the median earnings will be calculated based on the lesser of the national average for (i) all working adults or (ii) working adults in the same field of study. Both the undergraduate and graduate/professional accountability provisions apply to the cohort of students who completed the program four years prior, are working, are not enrolled at any institution, and who received Federal Direct Loan funds for enrollment in the program. If a cohort is less than 30 students, the Secretary of Education may aggregate additional years of programmatic data. If a program fails the earnings test for one year, institutions must notify students that the program is at risk of losing Federal Direct Loan eligibility. OBBBA requires that an institutional appeals process be established by the Secretary of Education, and a program’s Federal Direct Loan eligibility will continue during such appeal. Programs that lose eligibility under the accountability framework may reapply for eligibility after two years, consistent with requirements that will be established by the Secretary of Education. Among other things related to loan repayment plans, OBBBA requires that for new loans issued on or after July 2026, borrowers choose between two plans: a Standard Repayment Plan (with fixed monthly payments and fixed terms ranging from 10-25 years) or a new Income-Based Repayment Assistance Plan (RAP). Current borrowers repaying loans under existing repayment options may, depending on the loan repayment type: (i) continue to repay under the selected plan or choose a new plan within a prescribed period; or (ii) be required to select from a limited set of plans as of a date certain. For example, borrowers currently on an Income-Contingent Repayment (ICR) plan must transition to a different plan by July 1, 2028. OBBBA also eliminates unemployment and economic hardship deferments for loans issued on or after July 1, 2027, and reduces the permitted forbearance period to 9 months per 24-month period. Additionally, borrowers will be permitted to rehabilitate defaulted loans twice beginning July 2027, rather than only once under the current rule. Effective July 1, 2026, students with a Student Aid Index that equals or exceeds twice the maximum Pell Grant amount will be ineligible for Pell Grants. A student will also be ineligible for a Federal Pell Grant during any period for which the student receives grant aid from a non-federal source (including states, institutional aid, or private sources) in an amount that equals or exceeds the student’s cost of attendance. Additionally, OBBBA creates Workforce Pell Grants effective July 2026 for students enrolled in eligible workforce programs. Eligible workforce programs must meet a specific definition, including that they are accredited, short-term, career-focused programs (150 to 600 clock hours of instruction over 8 to 15 weeks), which prepare students to pursue one or more certificate or degree programs. In addition, they must be approved by the state governor, aligned with high-demand, high-skill or high-wage jobs, have at least 70% completion and job placement rates, and tuition must be less than the value-added earnings of graduates who received the Workforce Pell Grant. Workforce Pell Grants may not be combined with a regular Pell grant. OBBBA amends the Higher Education Act to delay the effective date of the 2022 borrower defense to repayment rules, including the closed school discharge provisions, until July 1, 2035. The 2019 version of those rules, which took effect July 1, 2020, is instead reinstated. The Department of Education has scheduled two negotiated rulemaking committees to meet to consider regulations to implement provisions of OBBBA and related Trump administration priorities, as detailed in the “Negotiated Rulemaking” section below. The Company is unable to predict the outcomes of those negotiations or what guidance the Department may issue regarding how schools are to implement the legislation. The 90/10 Rule A requirement of the Higher Education Act, commonly referred to as the 90/10 Rule, applies only to proprietary institutions of higher education, which include Capella University and Strayer University. Under this rule, a proprietary institution is prohibited from deriving more than 90% of its revenues (as revenues are computed under the Department of Education’s methodology) from federal funds on a cash accounting basis (except for certain institutional loans) for any fiscal year. Historically, by statute, only Title IV funds have been considered within the 90% metric; however, as described below, that changed for fiscal years beginning 26 Table of Contents on or after January 1, 2023. A proprietary institution of higher education that violates the 90/10 Rule for any fiscal year will be placed on provisional certification for up to two fiscal years. Proprietary institutions of higher education that violate the 90/10 Rule for two consecutive fiscal years will become ineligible to participate in Title IV programs for at least two fiscal years and will be required to demonstrate compliance with Title IV eligibility and certification requirements for at least two fiscal years prior to resuming Title IV program participation. In addition, the Department of Education discloses on its website any proprietary institution of higher education that fails to meet the 90/10 requirement and reports annually to Congress the relevant ratios for each proprietary institution of higher education. On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021, which included a change to the 90/10 methodology to include all federal funding. The Department of Education promulgated new regulations regarding, among other things, the 90/10 rule as part of the Institutional and Programmatic Eligibility negotiated rulemaking and the committee reached consensus on the topic in March 2022. The Department released final regulations on October 27, 2022. The regulatory changes require proprietary institutions to count all “federal education assistance funds” as federal revenue in the 90/10 calculation for fiscal years beginning on or after January 1, 2023. The preamble to the final rule and subsequent sub-regulatory guidance prohibited the inclusion of non-Title IV eligible programs offered in part or in full through distance education or at unapproved locations in the 10% calculation, but this language was effectively rescinded by new interpretive guidance published by the Department on July 7, 2025. On December 21, 2022, the Department released a list of federal agencies and federal education assistance programs that must be included as federal revenue in the 90/10 calculation. Such agencies include the U.S. Department of Defense (military tuition assistance) and the Department of Veterans Affairs (veterans education benefits). The Department indicated that it will publish periodic updates to the list as needed. In addition, certain members of Congress have proposed to revise the 90/10 Rule to reduce the limit on federal funding to 85% of total revenue. In the context of Higher Education Act reauthorization, defense bills and appropriations bills, other members of Congress have proposed legislation that would eliminate the 90/10 Rule. The Company cannot predict whether or how legislative or regulatory changes will affect the 90/10 Rule. State Authorization Reciprocity Agreement (SARA) Capella University and Strayer University participate in the State Authorization Reciprocity Agreement (“SARA”), which allows the universities to enroll students in distance education programs in each SARA member state, including 49 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Each of the universities applies separately to non-SARA member states (i.e., California) for authorization to enroll students, if such authorization is required by the state. On January 21, 2025, SARA’s coordinating entity, the National Council for State Authorization Reciprocity Agreements (“NC-SARA”), initiated its 2025 policy manual modification process with a call for proposals for SARA policy changes. In September 2025, NC-SARA announced that all four regional compacts had approved nine policy changes, which will be considered by the NC-SARA board on October 23, 2025. We cannot predict whether NC-SARA will adopt any of these proposals. The adoption of certain proposals, including any that affect the ability of institutions to participate in the agreements, could have a material adverse effect on Capella University, Strayer University, and the Company. Negotiated Rulemaking On April 4, 2025, the Department announced its intention to host public hearings and convene one or more negotiated rulemaking committees to prepare proposed Title IV regulations. The Department hosted public hearings on April 29, 2025 and May 1, 2025 and accepted written comments through May 5, 2025. The Department held negotiated rulemaking on proposed changes to the Public Service Loan Forgiveness (“PSLF”) program June 30 through July 2, 2025. The negotiating committee did not reach consensus on changes, and as a result the Department proposed its own regulatory language on August 18, 2025, with public comments due September 17, 2025. On July 24, 2025, the Department of Education announced its intention to establish two negotiated rulemaking committees to prepare proposed regulations implementing OBBBA and related Trump administration priorities. One committee will address federal student loan-related changes and is scheduled to meet for two multi-day sessions between September 2025 and November 2025. A second committee will address Workforce Pell, institutional and programmatic accountability, and other issues, and is scheduled to meet for two multi-day sessions between December 2025 and January 2026. The Company is unable to predict the outcomes of those negotiations or what guidance the Department may issue regarding how schools are to implement the legislation. 27 Table of Contents Title IX On April 19, 2024, the U.S. Department of Education released its final rule regarding the implementation of Title IX, which prohibits discrimination on the basis of sex in education programs that receive funding from the federal government (the “2024 Title IX Rule”). The 2024 Title IX Rule applies to all forms of sex-based harassment (not only sexual harassment); clarifies that Title IX’s prohibition against sex discrimination includes discrimination on the basis of sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, and gender identity; and eliminates the requirement for live hearings with an opportunity for cross-examination at the post-secondary level. Multiple states have joined lawsuits against the Department challenging the 2024 Title IX Rule, and federal district courts have granted preliminary injunctions enjoining the Department from enforcing the final rule in Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. Certain courts have issued orders expanding the injunction to named schools, irrespective of where those schools are located; Capella University and Strayer University were named among nearly 700 schools in one such order on July 15, 2024. Kansas v. U.S. Dep’t of Educ. , No. 5:24-cv-4041 (D. Kan. 2024). Except where enjoined, the 2024 Title IX Rule otherwise became effective on August 1, 2024. On January 9, 2025, in State of Tennessee et al v. Cardona , 2:24-cv-00072, the U.S. District Court for the Eastern District of Kentucky granted summary judgment against the U.S. Department of Education, vacating the 2024 Title IX Rule as unlawful nationwide. On February 4, 2025, the Department’s Office for Civil Rights issued a Dear Colleague Letter (“DCL”) confirming that it will enforce Title IX under the 2020 Title IX Rule, and that open investigations initiated under the 2024 Title IX Rule should be reevaluated for consistency with the 2020 Title IX Rule. On January 20, 2025, President Trump issued Executive Order 14168 “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” ordering, among other matters, all agencies to enforce laws governing sex-based rights, protections, opportunities, and accommodations consistent with definitions provided in the executive order. The executive order defines “sex” as a binary classification that does not include “gender identity” and requires agencies to take various actions consistent with that position. On April 4, 2025, the Department and the U.S. Department of Justice jointly announced a “Title IX Special Investigations Team” (the “Title IX SIT”) in response to what the agencies describe as a “staggering” volume of Title IX complaints. The Title IX SIT is intended to streamline Title IX investigations conducted by the federal government by leveraging teams with personnel from both agencies to coordinate on investigation and enforcement. Title VI Under Title VI of the Civil Rights Act of 1964, institutions receiving federal financial assistance are prohibited from discriminating on the basis of race, color, or national origin. On January 21, 2025, President Trump issued Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” ordering, among other matters, all agencies to enforce civil rights laws and combat illegal private sector Diversity, Equity, and Inclusion (“DEI”) preferences, mandates, policies, programs and activities. The executive order further directed the U.S. Attorney General and the Secretary of Education to issue guidance to all institutions of higher education that receive federal financial assistance regarding measures and practices required to comply with the U.S. Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College , 600 U.S. 181 (2023) (“ SFFA ”), in which the Court significantly altered the existing legal framework relevant to race-conscious admissions to achieve student body diversity. On February 5, 2025, the U.S. Attorney General issued a memorandum to all Department of Justice employees stating that the Department of Justice’s Civil Rights Division will investigate, eliminate, and penalize illegal DEI as well as diversity, equity, inclusion and accessibility (“DEIA”) preferences, mandates, policies, programs and activities in the private sector and educational institutions that receive federal funds. The Attorney General further stated that by March 1, 2025, the Civil Rights Division and Office of Legal Policy would jointly prepare a report containing recommendations for enforcement and address: key sectors of concern within the Department of Justice’s jurisdiction; the most egregious illegal DEI/DEIA practitioners in each sector of concern; plans to deter the use of illegal DEI/DEIA, including proposals for criminal investigations and up to nine potential civil compliance investigations of publicly traded corporations and certain other organizations; potential litigation activities, regulatory actions, and sub-regulatory guidance; and other strategies to end illegal DEI and DEIA discrimination and preferences and comply with federal civil rights laws. Litigation challenging Executive Order 14173 was brought in federal district court; after a preliminary injunction was granted enjoining portions of the executive order, an appeals court stayed the injunction pending appeal. On February 14, 2025, the Department of Education issued a DCL setting forth the anti-discrimination obligations of institutions that receive federal financial assistance. The DCL asserts that the SFFA decision applies more broadly to prohibit using race in decisions related to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life. The DCL further states that programs and activities that treat students differently on the basis of race to achieve “nebulous” diversity, racial balancing, 28 Table of Contents social justice, or equity goals are illegal. The Department informed institutions that the Department intended to take appropriate measures to assess compliance with the applicable statutes and regulations beginning February 28, 2025. The DCL further noted that institutions that fail to comply with federal civil rights law may, consistent with applicable law, face potential loss of federal funding. On February 28, 2025, the Department issued additional guidance in a Frequently Asked Questions (“FAQs”) document clarifying aspects of the DCL. Multiple lawsuits have been filed seeking to enjoin and vacate the DCL and FAQs alleging that they are unconstitutional, violate the Administrative Procedure Act, and are vague and disrupt educational practices, including by limiting academic freedom. Capella University and Strayer University are not parties to the lawsuits. In August 2025, the U.S. District Court for the District of Maryland vacated the DCL, FAQs, and a related certification requirement. The Department subsequently confirmed it would not take any enforcement action or otherwise implement the guidance until further notice. On October 15, 2025, the Department filed a notice of appeal to the U.S. Court of Appeals for the Fourth Circuit. The Company is unable to predict the ultimate outcome of the litigation. On March 14, 2025, the Department announced that its Office for Civil Rights has opened investigations into dozens of higher education institutions for alleged Title VI violations; the Department has continued to initiate additional Title VI investigations. Australian and New Zealand Regulation Torrens University of Australia (“Torrens”) is one of 44 universities in Australia. It is a private, for-profit entity and is registered with the Tertiary Education Quality and Standards Agency (“TEQSA”). As a self-accrediting university, it is not required to have its individual courses of study accredited by TEQSA. Torrens is also registered with the Australian Skills Quality Authority (“ASQA”) as a Registered Training Organisation (“RTO”) and is thus entitled to offer vocational and training courses. On September 3, 2025, Torrens completed its re-registration process with TEQSA and received a registration renewal from TEQSA for the maximum period of seven years , with two conditions. On December 19, 2024, the Australian Federal Government introduced Ministerial Direction 111, which seeks to limit the number of international students, and is expected to draw student allocations determined by the Government on a prioritization approach. On August 4, 2025, the Australian Federal Government announced that the National Planning Level for international students for 2026 would be increased over 2025, contingent upon institutions fulfilling certain conditions, and that Ministerial Direction 111 would be replaced with an updated ministerial direction to reflect 2026 arrangements. On October 9, 2025, the Education Legislation Amendment (Integrity and Other Measures) Bill 2025 was introduced into the House of Representatives of the Australian Parliament. The Bill, which does not address numerical limits on international students, contains several measures to reform key legislative frameworks for education providers and aims to strengthen the integrity and regulation of the international education sector within Australia as well as transnational education and offshore delivery. 29 Table of Contents