- Strategic Education, the parent company of for-profit universities Strayer and Capella, saw major growth last year in its education technology services business, which includes a tuition benefits platform and partnerships with companies to educate their workers.
- Revenue for education technology services, Strategic Education's fastest-growing segment, reached $52.3 million in 2021, up 38.7% from the year before, according to its latest earnings report. Overall, Strategic Education's revenue grew to $1.1 billion in 2021, a 10.1% year-over-year increase.
- Net income was $55.1 million in 2021, up from $86.3 million the year before. However, enrollment in the company's U.S. universities dropped to 78,721 students in the fourth quarter, down 14.3% from the same period in 2020.
Revenue increases in Strategic Education's education technology services business reflect a broader trend of higher education companies benefiting from growth in their corporate education offerings. Others — including big names like 2U and Coursera — have similarly been building out their services to provide companies' workers with training.
In 2020, Strategic Education teamed up with Noodle, a company that helps colleges launch and run online programs, to create a platform for employers to administer tuition assistance benefits.
Called Workforce Edge, the platform is free to employers. Strategic Education earns tuition money when employees choose to attend either Strayer or Capella, CEO Karl McDonnell said during a call with analysts Friday to discuss the company's yearly earnings results. The company also receives annual fees from other colleges hosted on the platform.
For employees, the platform offers discounts for institutions that are within Workforce Edge's network, though they can select any accredited university.
"Think of that as being the healthcare equivalent of in-network," McDonnell said. "If they go to one of the in-network schools, they get a much more substantial set of benefits, just as you do if you go to a preferred provider in your health insurance."
At the end of 2021, Workforce Edge had 32 corporate agreements with companies that collectively employed around 640,000 workers, according to Strategic Education.
The company also has direct agreements with employers to offer educational programs to their workers. Altogether, Strategic Education has more than 800 such partnerships, with 80 added in the last year.
But company officials are hopeful Workforce Edge will drive more students to Strayer and Capella in the future.
"We want to really begin to dramatically increase the number of students that we have from our employer-affiliated accounts and reduce the number of students who are coming to us via access from Title IV loans," McDonnell said. He said acquisition costs for corporate-affiliated students are low.
Employer-affiliated enrollment made up 21.7% of Strategic Education's U.S. higher education enrollment in the fourth quarter, up from 18.8% for the same period in 2020.