Q2 2024 Strategic Education Inc Earnings Call

Unknown Executive: And now I'd like to introduce your host for today's program, Terese Wilke, Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead.

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From the queue simply press Star one again as a reminder, today's program is being recorded.

Unknown Executive: As a reminder, today's program is being recorded.

Terese Wilke: And now I'd like to introduce your host for today's program, Terese Wilke, Director of Investor Relations for Strategic Education. This Wilke, please go ahead. Thank you.

Wilkie: Now I'd like to introduce your host for today's program treats Wilkie director of Investor Relations for strategic Education Ms. Wilkey. Please go ahead.

Terese Wilke: Thank you. Hello, everyone, and welcome to Strategic Education's conference call, in which we will discuss second quarter 2024 results. With us today are Robert Silberman, Chairman; Karl McDonnell, President and Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions. Please note that this call may include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Karl McDonnell: Hello everyone and welcome to Strategic Education's conference call in which we will discuss second quarter 2024 results.

Speaker Change: Thank you Hello, everyone and welcome to strategic Education's Conference call in which we will discuss second quarter 2024 results with US today are Robert Silberman, Chairman, Karl Mcdonnell President and Chief Executive Officer, and Daniel Jackson, Executive Vice President and Chief Financial Officer.

Karl McDonnell: With us today are Robert Silberman, Chairman; Karl McDonnell, President and Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following today's remarks, we will open the call for questions.

Speaker Change: Following today's remarks, we will open the call for questions. Please note that this call may include forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995. Those statements are based on current expectations and are subject to a number of assumptions.

Terese Wilke: The statements are based on current expectations and are subject to a number of assumptions, uncertainties, and risks that Strategic Education has identified in today's press release that could cause actual results to differ materially. Further information about these and other relevant uncertainties may be found in Strategic Education's most recent annual report on Form 10-K, the 10-Q to be filed, and other filings with the Securities and Exchange Commission, as well as Strategic Education's future 8-Ks, 10-Qs, and 10-Ks. Copies of these filings and the full press release are available for viewing on the website at strategiceducation.com. And now, I'd like to turn the call over to Karl. Karl, please go ahead.

Unknown Executive: Please note that this call may include four looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements were based on current expectations and are subject to a number of assumptions, uncertainties, and risks that Strategic Education has identified in today's press release. That could cause actual results to differ materially.

Speaker Change: Ts and risks that strategic education has identified in today's press release that could cause actual results to differ materially.

Unknown Executive: Further information about these and other relevant uncertainties may be found in Strategic Education's most recent annual report on Form 10-K, the 10-Q to be filed, and other filings with the Securities and Exchange Commission, as well as Strategic Education's future AKs, 10-Qs and 10-Ks.

Speaker Change: Further information about these and other relevant uncertainties, maybe found in strategic Education's. Most recent annual report on Form 10-K.

Carl: Q to be filed and other filings with the Securities and Exchange Commission as well as strategic Education's future eight Ks 10, Qs and 10-Ks copies of these filings and the full press release are available for viewing on the website at strategic education Dot Com and now I'd like to turn the call over to Carl.

Unknown Executive: Toppes of these filings and the full press release are available for viewing on the website at strategiceducation.com.

Karl McDonnell: And now I'd like to turn the call over to Karl. Karl, please go ahead.

Karl McDonnell: Thank you, Terese, and good morning, everyone. Our second quarter 2024 results reflect continued strength across all of our segments. But before we begin, and as is normally the case, I'd like to start by pointing out that all of my references to our financial results are to our adjusted results and that they assume constant currency for foreign exchange purposes. For the second quarter, SEI's revenue grew 9% to $313 million. Our operating expenses grew by 3%, which was in line with our expectations.

Karl: Karl Please go ahead.

Karl McDonnell: Thank you, Theresa, and good morning, everyone. Our second quarter 2024 results reflect continued strength across all of our segments. But before we begin, and as is normally the case, I'd like to start by pointing out that all of my references to our financial results are to our adjusted results and that they assume constant currency for foreign exchange purposes. For the second quarter, SEI's revenue grew 9% to $313 million. Our operating expenses grew 3%, which was in line with our expectations, and our operating income grew by more than 60% to $44 million. Our operating margin increased 460 basis points.

Karl: Thank you Theresa and good morning, everyone. Our second quarter 2024 results reflect continued strength across all of our segments, but before we begin and as is normally the case I'd like to start by pointing out that all of my references to our financial results are to our adjusted results and that they assume.

Karl: Constant currency for foreign exchange purposes.

Speaker Change: For the second quarter <unk> revenue grew 9% to $313 million, our operating expenses grew 3%, which was in line with our expectations and our operating income grew by more than 60% to $44 million, our operating margin increased 460 basis point.

Karl McDonnell: And our operating income grew by more than 60% to $44 million. Our operating margin increased 460 basis points. During the quarter, we generated $1.34 in earnings per share, which was more than a 60% increase from the prior year.

Karl McDonnell: During the quarter, we generated $1.34 earnings per share, which was more than a 60% increase from the prior year. Turning now to our segments, US higher education delivered another quarter of strong growth driven once again by employer-affiliated enrollment. Total enrollment in US higher education for the second quarter grew 8%, with total employer-affiliated enrollment growing more than double that at 17% from the prior year, again reflecting continued strength in our corporate partnerships. During the quarter, the percentage of total U.S. higher education enrollment coming from our corporate partnerships increased 200 basis points to 29%. Student retention at US higher education remained stable at 86.9%.

Karl: During the quarter, we generated $1.34 earnings per share, which was more than a 60% increase from the prior year.

Karl McDonnell: Turning now to our segment, U.S. higher education delivered another quarter of strong growth driven once again by employer-affiliated enrollment. Total enrollment in U.S. higher education for the second quarter grew 8%, with total employer-affiliated enrollment growing more than double that rate at 17% from the prior year, again reflecting continued strength in our corporate partnership. During the quarter, the percentage of total U.S. higher education enrollment coming from our corporate partnerships increased 200 basis points to 29 percent. However, student retention at U.S. higher education remains stable at 86.9%.

Speaker Change: Turning now to our segments U S higher education delivered another quarter of strong growth driven once again by employer affiliated enrollment.

Speaker Change: Total enrollment in U S higher education for the second quarter grew 8% with total employer affiliated enrollment growing more than double that rate at 17% from the prior year again, reflecting continued strength in our corporate partnerships.

Speaker Change: During the quarter the percentage of total U S higher education enrollment coming from our corporate partnerships increased 200 basis points to 29%.

Speaker Change: Student retention that U S higher education remains stable at 86, 9%.

Karl McDonnell: In the second quarter, US higher education revenue grew 7% and operating income grew 194% from the prior year. Our Education Technology Services segment also continue to see strength, with both Sophia and Workforce Edge continuing to gain market share. In the second quarter, ETS revenue grew 26% and operating income increased 63% from the prior year. Sophia Learning are direct to consumer portal of college level classes, which is also a key component of many of our strategic corporate partnerships, grew its revenue in the second quarter by 40% and generated a 49% operating margin, which is up from a 46% margin in the prior year.

Karl McDonnell: In the second quarter, U.S. higher education revenue grew 7%, and operating income grew 194% from the prior year. Our Education Technology Services segment also continued to see strength, with both SOFIA and Workforce Edge continuing to gain market share. In the second quarter, ETS revenue grew 26% and operating income increased 63% from the prior year. Sophia Learning, our direct-to-consumer portal of college-level classes, which is also a key component of many of our strategic corporate partnerships, grew its revenue in the second quarter by 40 percent and generated a 49 percent operating margin, which is up from a 46 percent margin in the prior year.

Speaker Change: In the second quarter U S higher education revenue grew 7% and operating income grew 194% from the prior year.

Speaker Change: Our education Technology services segment also continued to see strength with both Sofia and workforce edge continuing to gain market share in.

Speaker Change: In the second quarter ETS revenue grew 26% and operating income increased 63% from the prior year.

Speaker Change: Sophia learning, our direct to consumer portal of college level classes, which is also a key component of many of our strategic corporate partnerships grew its revenue in the second quarter by 40% and generated a 49% operating margin, which is up from 46% margin in the prior year.

Karl McDonnell: Average total paid subscribers grew 37% to more than 42,000 paid subscribers. During the quarter, ETS added 23 total new corporate partnerships, and Workforce Edge now has 71 corporate partners who collectively employ more than 1.5 million employees.

Karl McDonnell: Average total paid subscribers grew 37% to more to 42,000 paid subscribers. During the quarter, ETS added 23 total new corporate partnerships, and Workforce Edge now has 71 corporate partners who collectively employ more than 1.5 million employees. Workforce Edge enrollments into either Strayer or Capelli University grew 36% to approximately 1,500 students. Given the strong traction within our ETS division, we have decided to increase our investments in the second half of 2024 from our previous plans to support accelerated growth of both Sophia and Workforce Edge.

Speaker Change: <unk> total paid subscribers grew 37% to more than 42000 paid subscribers.

Speaker Change: During the quarter Etfs added 23, total new corporate partnerships and workforce edge now has 71 corporate partners, who collectively employ more than $1 5 million employees workforce edge enrollments into either strayer or Capella University grew 36% to approximately one.

Karl McDonnell: Workforce Edge enrollments into either Strayer or Capella University grew 36% to approximately 1,500 students. Given the strong traction within our ETS division, we have decided to increase our investments in the second half of 2024 from our previous plans to support accelerated growth of both SOFIA and Workforce Edge. These investments, combined with other previously planned investments in the rest of our segments, including increased marketing spend in Australia, mean that on a full-year basis, our operating expenses will be slightly higher than our notional model that we communicated last November.

Speaker Change: <unk> thousand 500 students.

Speaker Change: Given the strong traction within our Etfs Division, we have decided to increase our investments in the second half of 2024 from our previous plans to support accelerated growth of both Sofia and workforce edge.

Karl McDonnell: These investments combined with other previously planned investments in the rest of our segments, including increased marketing spend in Australia, means that on a full year basis, our operating expenses will be slightly higher than our national model that we communicated last November. Our Australian New Zealand segment posted another quarter of total enrollment growth, with enrollment increasing 6% from the prior year to just over 19,000 students. In the second quarter, revenue on a constant currency basis grew 10% from the prior year, driven by higher enrollment and revenue per student. The higher enrollment was driven prominently by strong continuing student enrollment.

Speaker Change: These investments combined with other previously planned investments in the rest of our segments, including increased marketing spend in Australia means that on a full year basis, our operating expenses will be slightly higher than our notional model that we communicated last November.

Karl McDonnell: Our Australia-New Zealand segment posted another quarter of total enrollment growth, with enrollment increasing 6% from the prior year to just over 19,000 students. In the second quarter, revenue on a constant currency basis grew 10% from the prior year, driven by higher enrollment and revenue per student. The higher enrollment was driven predominantly by strong continuing student enrollment. An increased course load contributed to a 4% increase in revenue per student as we lapped the resumption of the Australian requirement for international students to take more courses on campus.

Speaker Change: Our Australia, and New Zealand segment posted another quarter of total enrollment growth with enrollment increasing 6% from the prior year to just over 19000 students.

Speaker Change: In the second quarter revenue on a constant currency basis grew 10% from the prior year driven by higher enrollment and revenue per student the higher enrollment was driven predominantly by strong continuing student enrollment.

Karl McDonnell: Increased course load contributed to a 4% increase in revenue per student as we lap the resumption of the Australian requirement for international students to take more courses on campus. On a constant currency basis, ANZ operating income increased sequentially from an operating loss last quarter to $14 million in the second quarter, growth of 1% from the prior year. I should note that ANZ second quarter is generally the high point of the year for revenue and expenses, with a back to school quarter after the Australian summer.

Speaker Change: Increased course load contributed to a 4% increase in revenue per student as we lap the resumption of the Australia and requirement for international students to take more courses on campus.

Karl McDonnell: On a constant currency basis, ANZ operating income increased sequentially from an operating loss last quarter to $14 million in the second quarter, growth of 1% from the prior year. I should note that ANZ's second quarter is generally the high point of the year for revenue and expenses, with a back-to-school quarter after the Australian summer. In closing, we are very pleased with the strong results across our business and continue to work towards a successful full year, 2024, and once again, I'd like to thank all of my colleagues within SEI for their ongoing commitment to our students. And with that, Jonathan, we'd be happy to take questions.

Speaker Change: On a constant currency basis.

Speaker Change: <unk> operating income increased sequentially from an operating loss last quarter to $14 million in the second quarter growth of 1% from the prior year.

Speaker Change: I should note that a in the second quarter is generally the high point of the year for revenue and expenses with a back to school quarter. After the Australia in summer in closing we are very pleased with the strong results across our business and continue to work towards a successful full year 2024, and once again I'd like to thank all of my colleagues.

Karl McDonnell: In closing, we are very pleased with the strong results across our business and continue to work towards a successful full year, 2024. And once again, I'd like to thank all of my colleagues within SEI for their ongoing commitment to our students.

Speaker Change: Within Sci for their ongoing commitment to our students and with that Jonathan we'd be happy to take questions.

Unknown Executive: And with that, Jonathan, we'd be happy to take questions.

Unknown Executive: Certainly. And as a reminder, if you have a question, please press star 11 on your telephone. Our first question comes from the line of Jeff Silber from PMO Capital Markets. Your question, please.

Unknown Executive: Certainly. And, as a reminder, if you have any questions, please press star 11 on your telephone.

Jonathan: Certainly and as a reminder, if you have a question. Please press star one on your telephone. Our first question comes from the line of Jeff Silber from.

Jeff Silber: Our first question comes from the line of Jeff Silver from PMO Capital Markets. Your question, please. Thanks so much.

Speaker Change: BMO capital markets. Your question please.

Jeffrey Marc Silber: Thanks so much. Karl, you mentioned because of the increased investments, you think operating expenses will be slightly higher than what you put out in your notional model last year. Can you remind us what you told us last year? And can you help us quantify what we should expect?

Speaker Change: Thanks, so much.

Daniel Jackson: Harle, you mentioned that because of the increased investments, you think operating expenses will be slightly higher than what you put out in your notional model last year.

Jeffrey Marc Silber: You mentioned because of the increased investment distinct operating expenses will be slightly higher than what you put out in your notional model last year can you remind us what you told us last year and can you help us quantify what we should expect this year. Thanks.

Jeff Silber: Can you remind us what you told us last year, and can you help us quantify what we should expect this year? Thanks.

Daniel W. Jackson: Hey Jeff, it's Dan. What we said was that we thought operating margin would expand by a couple hundred basis points. And given this additional investment through the balance of the year, it's likely to be below that, probably between $150,000 and $175,000. For the year. Yeah, Jeff, just... And will most of that be in ETS or ANZ, or should we also expect more spending in U.S. higher education? It's going to be a cross-off three, but ETS and ANZ definitely have more expense growth in the latter half of the year relative to US higher ed.

Daniel Jackson: Hey Jeff, it's Dan. What we said was that we thought operating margin would expand by a couple hundred basis points. And given this additional investment through the balance of the year, it's likely to be below that, probably between 150 and 175.

Dan: Hey, Jeff It's Dan.

Speaker Change: He said was that we thought operating margin would expand by a couple of hundred basis points.

Speaker Change: And given this additional investment through the balance of the year, it's likely to be below that probably between 150 and 175.

Jeff Silber: Okay, for the rest of the health. Yeah, Jeff, just that I understand.

Speaker Change: Okay, Great that's helpful.

Jeffrey Marc Silber: Yes, Jeff just the IMF.

Daniel Jackson: And will most of that be in both ETS or ANZ, or should we also expect more spending in US higher education?

Speaker Change: Okay.

Speaker Change: Cost of that be in both Etfs or AMD or should we also expect more spending in U S higher education.

Daniel Jackson: It's going to be across all three, but you know, ETS and ANZ definitely more expense growth in the latter half of the year relative to US higher ed. Okay, great.

Speaker Change: Is going to be across all three but.

Speaker Change: Etfs in ANZ definitely.

Speaker Change: <unk> expense growth in the latter half of the year relative to the U S higher Ed.

Karl McDonnell: Okay, great. And then just looking at the results in the quarter, you had really strong operating margin leverage in U.S. higher education. I know when enrollment goes up, you see that, but it was pretty extreme. Was there anything specific going on? Any timing issues we should be aware of?

Jeff Silber: And then just looking at the results in the quarter, you're really strong operating margins, margin leverage in US higher education. I know when enrollment goes up, you see that, but it was pretty outside.

Speaker Change: Okay, Great and then just looking at the results in the quarter.

Speaker Change: You had really strong operating margin margin leverage in U S higher education, I know one enrollment goes up you see that but it.

Daniel Jackson: Was there anything specific going on, any timing issues we should be aware of? No, other than what you pointed out yourself, Jeff, that we've had quite high enrollment and revenue, we don't have that much variable expense in U.S. higher ed. So when we see the levels of revenue growth that we've had, you know, it obviously impacts the margin quite favorably. Okay, fair enough.

Speaker Change: It was pretty outsized was there anything specific going on any timing issues, we should be aware of.

Daniel W. Jackson: No, other than what you pointed out yourself, Jeff, that we've had quite high enrollment and revenue. We don't have that much variable expense in U.S. higher education, so when we see the levels of revenue growth that we've had, you know, it obviously impacts the margin quite favorably.

Speaker Change: No other than what you pointed out yourself, Jeff that we've had quite high enrollment and revenue.

Speaker Change: We don't have that much variable expense in U S higher Ed So when we see the levels of revenue growth that we've had.

Speaker Change: It obviously impacts the margin quite favorably.

Karl McDonnell: Okay, fair enough. If I could just sneak in one more. I'm going to have to ask the FAFSA question. Obviously, with some of the delays we saw this past enrollment cycle, I know it probably hasn't impacted you as of yet, but do you expect any impact maybe in the back half of the year from some of those delays?

Jeff Silber: If I could just sneak in one more.

Jeff: Okay fair enough if I could just sneak in one more.

Jeff Silber: I'm going to have to ask the fast question. You know, obviously, with some of the delays we saw this past enrollment cycle. I know probably has an impacted you as of yet. But do you expect any impact, maybe in the back half of the year, from some of those delays? Well, as you just said, we have not seen any impact from fast food delays as of yet. We are in the midst of our largest enrollment intake quarter. So it remains to be seen if we'll have any impact, but we haven't had any so far. Okay, great.

Speaker Change: To ask the SaaS the question.

Speaker Change: Obviously with some of the delays we saw this past enrollment cycle I know, probably hasnt impacted us yet, but do you expect any impact maybe in the back half of the year from some of those delays.

Karl McDonnell: Well, as you just said, we have not seen any impact from FAFSA delays as of yet. We are in the midst of our largest enrollment intake quarter, so it remains to be seen if we'll have any impact, but we haven't had any so far.

Speaker Change: Well as you just said we have not seen any impact from pass the delays as of yet we are in the midst of our largest enrollment intake quarter. So it remains to be seen if we will have any impact, but we haven't had any so far.

Unknown Executive: Okay, great. I'll jump back in the queue. Thanks so much. Thanks, Jeff.

Jeff Silber: I'll jump back in the queue. Thanks so much. Thanks, Jeff.

Speaker Change: Okay, great I'll jump back in the queue. Thanks, so much thanks, Jeff.

Unknown Executive: Thank you.

Jeff: Thank you.

Jasper Bibb: And our next question comes from the line of Jasper Bibb from Truist. Your question, please.

Unknown Executive: And our next question comes from the line of Jasper Bibb from Truist. Your question, please.

Speaker Change: And our next question comes from the line of Jasper Bibb from twist. Your question. Please.

Jasper James Bibb: Hey, good morning, guys. You talked about updating the notional model on margin, and all that makes sense, but the notional model also contemplated revenue growth. For the 6%, and seems like with the start of the year, that would imply flat revenue growth in the back half of the year. So, to be clear, are you also updating the revenue growth for 24 and the notion of the model, and any way to frame what second half revenue growth might look like? Sure.

Jasper Bibb: Hey, good morning, guys. You talked about updating the national model on margin, and all that makes sense. But then the national model also kind of played the revenue growth of 4 to 6% and seems like the start to the year that would imply Platte revenue growth in the back half of the year.

Jasper James Bibb: Hey, good morning, guys.

Jasper James Bibb: You talked about updating the notional model.

Speaker Change: On margin and all that makes sense.

Speaker Change: Negotiable model also contemplate the revenue growth of 4% to 6% and it seems like with the start to the year that would imply flat revenue growth in the back half of the year.

Jasper Bibb: So to be clear, are you also updating the revenue growth for 24 and the national model in any way to frame what second half revenue growth might look like?

Speaker Change: So to be clear are you also updating the revenue growth for 'twenty, four and the notional model in any way to frame.

Speaker Change: What second half revenue growth might look like.

Karl McDonnell: Sure. Well, we don't provide an outlook on revenue because, frankly, we don't know what our revenue is going to be in the second half of the year. We thought it was important to update our expenses since, obviously, that's something we control. We have plans to make those investments. I would just note, Jasper, that particularly in U.S. higher education, we've had revenue and enrollment growth that is substantially higher than what we would normally expect on a run rate basis.

Daniel Jackson: Sure.

Daniel Jackson: Well, we don't provide an outlook on revenue because, frankly, we don't know what our revenue is going to be in the back half of the year. We thought it was important to update our expenses since, obviously, that's something we control. We have plans to make those investments. I would just note, Jasper, that particularly in US higher ed, we've had revenue and enrollment growth that's substantially higher than what we would normally expect on a run rate basis. We always say notionally that we think these businesses can support roughly 5% to 10% revenue and enrollment growth. It would not be surprising if we saw our enrollment moderate down to that notional level that we expect over a long term.

Speaker Change: Sure well, we don't provide.

Jasper James Bibb: And outlook on revenue because frankly, we don't know what our revenue is going to be in the back half of the year. We thought it was important to update our expenses. Since obviously, that's something we control we have plans to make those investments I would just note jasper that.

Speaker Change: Particularly in U S higher Ed we've had revenue and enrollment growth that's substantially higher than what we would normally expect on a run rate basis.

Karl McDonnell: We always say notionally that we think these businesses can support roughly 5% to 10% revenue and enrollment growth. It would not be surprising to me if we saw our enrollment moderate down to that notional level that we expect over the long term.

Jasper James Bibb: We always say Notionally that we think these businesses can support roughly 5% to 10% revenue and enrollment growth. It would not be surprising if we saw our enrollment moderate down to that notional level that we expect over a long term.

Jasper Bibb: Thanks. That makes sense.

Karl McDonnell: Thanks, that makes sense. And then wanted to ask what you're seeing as far as immigration rules in Australia and the ability to get international students into the country. I did see the government there announced fees for these would, I think, more than double starting in July. Curious if that's having any impact on your new enrollment score at this point.

Daniel Jackson: And then one of the asks what you're seeing as far as immigration rules in Australia and the ability to get international students into the country. I did see the government there and that these of these would I think more than double starting in July. That's heavy. We have seen that the timing of approvals for visas in Australia has started to lengthen again. But I would remind our owners that there's actually two sources of growth for international students. There's the students who are offshore, who need to get a visa, immigrate into Australia. But then there's also students who are already in Australia on a visa, who are able to transfer to an international visa.

Speaker Change: Thanks that makes sense and then wanted to ask what youre seeing as far as immigration rules in Australia, and the ability to get international students into the country.

Speaker Change: I did see the government there about visa fees.

Speaker Change: I think more than double starting in July curious if that's having.

Speaker Change: Any impact on your new enrollments for Torrance at this point.

Karl McDonnell: We have seen that the timing of approvals for visas in Australia has started to lengthen again. But I would remind our owners that there are actually two sources of growth for international students. There are students who are offshore, who need to get a visa to immigrate into Australia. But then there are also students who are already in Australia on a visa, who are able to transfer to another institution after six months at their host university.

Speaker Change: We have seen that the timing of approvals for <unk> in Australia has starting to lengthen again, but I would remind our owners that there is actually two sources of growth for international students. There is the students who are offshore but need to get a visa immigrate into Australia, but then theres also students who are.

Speaker Change: Already in Australia on a visa who are able to transfer to another institution. After six months at their host University and frankly, that's an area, where we've seen significant market share gains by Torrance.

Daniel Jackson: There's another institution after six months at their host university. And frankly, that's an area where we've seen significant market share gains by Torrance. Because primarily we have a very high quality product and we have very favorable tuition, visa fee, what other institutions charge. So I would expect that part of international growth to continue the rest of this year and into next year.

Karl McDonnell: And frankly, that's an area where we've seen significant market share gains by Torrens because, primarily, we have a very high-quality product and we have very favorable tuition vis-à-vis what other institutions charge. So I would expect that part of international growth to continue the rest of this year and into next year.

Speaker Change: Because primarily we have a very high quality product and we have very favorable tuition vis vis what other institutions charge. So.

Speaker Change: I would expect that part of international growth to continue the rest of this year and into next year.

Jasper Bibb: Yeah, last question for me, another education department typically regulates this industry primarily through rulemaking. Maybe a broader question, curious if you see regulatory framework changing following the shovel decision.

Robert Silberman: Got it. Last question for me. I know the education department typically regulated this industry primarily through rulemaking. Maybe a broader question; curious if you see the regulatory framework changing following the Shumlin decision.

Speaker Change: Got it.

Speaker Change: Last question for me I know the Education Department.

Speaker Change: Typically regulated this industry primarily through rulemaking.

Speaker Change: Maybe a broader question curious if you see the regulatory framework changing following the shovel decision.

Robert Silberman: Jasper, this is Rob. I don't know if it will change, but it won't really change our operating parameters. We understand that we operate in a heavily regulated sector and, you know, frankly, appropriately so. Our universities are supported by very generous and favorable credit terms for our students that are borne by the taxpayer. And so the, you know, the federal government has regulations and types of regulations that protect the interest of the taxpayer.

Robert Silberman: Jasper, this is Rob. I don't know if it'll change, but it won't really change our operating parameters, and we understand that we operate in a heavily regulated sector. And frankly, appropriately so, our universities are supported by very generous and favorable credit terms to our students that are born by the taxpayer. And so the federal government has regulations and types of regulations that protect the interest of the taxpayer. The relative priority of regulation making between the legislative branch and the executive branch, which is addressed in the Chevron decision, doesn't really affect how we think about what those regulations will be or how we're going to operate.

Rob: Jasmine this is Rob.

Speaker Change: I don't know if it'll change but.

Jasmine: It won't really change our operating parameters I mean, we understand that.

Speaker Change: We operate in a heavily regulated sector.

Jasmine: And frankly appropriately so.

Speaker Change: Our universities are supported by very generous and favorable credit terms to our students that are borne by the taxpayer and so that the federal government.

Speaker Change: Has regulations and types of regulations that protect the interest of the taxpayer.

Robert Silberman: The relative priority of regulation making between the legislative branch and the executive branch, which is addressed in the Chevron decision, doesn't really affect how we think about what those regulations will be or how we're going to operate. We're going to run these universities to meet the intent of the people that are concerned about maintaining that balance. And frankly, it's important to us as well, regardless of what the source of the regulations or the overarching control mechanisms are.

Speaker Change: The relative priority of.

Speaker Change: Regulation, making between the Legislative branch and the executive branch.

Speaker Change: Which is addressing the chevron decision.

Speaker Change: It doesn't really affect how we think about what those regulations will be or how we're going to operate we're going to we're going to run. These universities to meet the intent of the people that are concerned about maintaining that balance.

Robert Silberman: We're going to run these universities to meet the intent of the people that are concerned about maintaining that balance. And frankly, it's important to us as well, regardless of what the source of the regulations or the overarching control mechanisms are.

Speaker Change: And frankly, it's important to us as well regardless of what the source of the regulations or the overarching.

Speaker Change: Control mechanisms are.

Unknown Executive: Thanks, everyone.

Jasper Bibb: Thanks.

Unknown Executive: Thanks everyone.

Speaker Change: Yes.

Speaker Change: Okay. Thanks, everyone.

Unknown Executive: Thank you. As a reminder, if you do have a question at this time, please press star 11 on your telephone. And our next question comes from the line of Heather Balsky from B of A. Your question, please.

Unknown Executive: Thank you.

Speaker Change: Yes.

Emily Marzo: As a reminder, if you do have a question at this time, please press star 11 on your telephone, and our next question comes from the line of Heather Balsky from B of A. Your question, please.

Speaker Change: Thank you as a reminder, if you do have a question at this time. Please press star one on your telephone and our next question comes from the line of Heather Belsky from Bofa. Your question. Please.

Emily Marzo: Hi, this is Emily Marzo on behalf of Heather Balsky. So starting with the U.S., you're starting to make tough comparisons in the second half. Could you share your thoughts on the growth rate from the first half to the second half and the momentum and the enrollment you're seeing in the second half so far?

Emily Marzo: Hi, this is Emily Marzoan for Heather Balsky. Starting with you as you're starting to laugh, tough comparisons in the second half, could you share your thoughts on the growth rate from the first half to the second half and the momentum and the enrollment you're seeing in the second half so far?

Martha: Hi, This is Martha line for <unk>.

Speaker Change: Starting so starting with the U S you're starting to lap tough comparison.

Speaker Change: And the second half could you share your thoughts on the growth rate first half to the second half and the momentum and the enrollment you are seeing in the second half so far.

Karl McDonnell: Well, I can't comment on the second half because we're still in that quarter, obviously still enrolling students. We were obviously pleased with the first half results.

Karl McDonnell: Well, I can't comment on the second half because we're still in that quarter, obviously, still enrolling students. We were obviously pleased with first half results. I'd say the demand environment remains healthy and robust. As I said in my prepared remarks, the corporate affiliated enrollment channel is quite strong. We continue to add new clients every quarter. I would note again that the enrollment that we've had in corresponding revenue growth and particularly the US higher ed segment has been significantly higher than what we expect, what we plan for.

Speaker Change: Well I can't comment on the second half because we're still in that.

Speaker Change: <unk>, obviously still enrolling students we were obviously pleased with first half results.

Karl McDonnell: I'd say the demand environment remains healthy and robust. As I said in my prepared remarks, the corporate-affiliated enrollment channel is quite strong. We continue to add new clients every quarter. However, I would note again that the enrollment that we've had and corresponding revenue growth in, particularly the U.S. higher ed segment, has been significantly higher than what we expect, or what we planned for. And so over some period of time, and I can't predict when that period of time would be, we would expect U.S. higher education to normalize down into sort of the 5 to 10% range on both enrollment and revenue growth.

Speaker Change: I'd say the demand environment remains healthy and robust as I said in my prepared remarks, the corporate affiliated enrollment channel is quite strong we continue to add new clients every quarter.

Karl McDonnell: Thank you. And as a follow-up, how much of the incremental enrollment is coming from corporate partnerships? And where do you think that could reach? I don't have the exact number in front of me.

Speaker Change: I would note again that the enrollment that we've had and corresponding revenue growth and particularly the U S. Higher Ed segment has been significantly higher than what we expect what we planned for.

Karl McDonnell: And so, over some period of time, and I can't predict when that period of time would be, we would expect US higher ed to normalize down into sort of the 5 to 10% range on both enrollment and revenue growth.

Speaker Change: And so over some period of time and I can't predict when that period of time would be we would expect U S higher Ed to normalize down into sort of the 5% to 10% range on both enrollment and revenue growth.

Emily Marzo: Thank you.

Karl McDonnell: And as a follow-up, how much of the incremental enrollment is coming from corporate partnerships?

Speaker Change: Thank you.

Speaker Change: The follow up how much of the incremental enrollment coming from corporate partnerships and where do you think that could range.

Karl McDonnell: And where do you think that could reach? I don't have the exact number in front of me, but I would just note that corporate affiliated enrollment grew more than 2x non-corporate affiliated enrollment. Basically, 1 in 3 students in U.S. Higher ed is now affiliated with one of our corporate partners. As we continue to add large partnerships, that mix percent will continue to grow. You know, over a multi-year period, I could see that number getting well above 50 percent.

Karl McDonnell: I don't have the exact number in front of me, but I would just note that corporate affiliated enrollment grew more than 2x non-corporate affiliated enrollment. Basically, one in three students in U.S. higher education is now affiliated with one of our corporate partners. As we continue to add large partnerships, that mixed percent will continue to grow. You know, over a multi-year period, I could see that number getting well above 50%.

Speaker Change: I don't have the exact number in front of me, but I would just note that corporate affiliated enrollment grew more than two X non corporate affiliate enrollment basically one and three students in U S. Higher Ed is now affiliated with one of our corporate partners.

Speaker Change: As we continue to add large partnerships that that mix percent will continue to grow.

Speaker Change: Over a multiyear period I could see that number getting well above 50%.

Unknown Executive: Thank you very much.

Speaker Change: Thank you very much.

Karl McDonnell: Thank you. This does conclude the question and answer session for today's program. I'd like to hand the program back to Karl McDonnell, President and CEO, for any further remarks. Thank you, Jonathan.

Speaker Change: <unk>.

Karl McDonnell: This does include the question and answer session of today's program.

Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Karl Mcdonnell President and CEO for any further remarks. Thank.

Karl McDonnell: I'd like to hand the program back to Karl McDonnell, President Seal, Freddie further remarks. Thank you, Jonathan. And thank you, everyone, for joining us. And we look forward to discussing our third quarter results in November. Thank you.

Karl McDonnell: Thank you, Jonathan, and thank you, everyone, for joining us, and we look forward to discussing our third quarter results with you in November. Thank you.

Karl McDonnell: Thank you Jonathan and thank you everyone for joining us and we look forward to discussing our third quarter results in November. Thank you.

Unknown Executive: Thank you, ladies and gentlemen, for your participation in today's conference.

Speaker Change: Sure.

Unknown Executive: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Unknown Executive: This does conclude the program. You may now disconnect. Good day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.