Welcome to Strategic Education's Third Quarter 2022 Results Conference Call. I will now turn the call over to Terese Wilke, Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead. Thank you. Good morning, everyone, and welcome to Strategic Education's conference call, in which we will discuss third quarter 2022 results. With us today are Robert Silberman, Executive 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. 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. Now I'd like to turn the call over to Karl. Karl, please go ahead. Thank you, Terese, and good morning, everyone. Overall, we were very pleased with our third quarter academic, operational, and financial results that we reported this morning, as they reflect continued progress in improving our results and returning the company to revenue and earnings growth. Excluding the impact of foreign currency fluctuations in the third quarter, our revenue was down less than 1% from the prior year. We continue to see significant strength in our U.S. higher education segment, with all key metrics at both Strayer and Capella Universities posting improvements from the prior year. The overall demand environment remains very robust and inquiries into Strayer and Capella increased more than 30% from the prior year. Our employer-affiliated enrollment from our network of corporate partnerships is the strongest that it's been in years. New student and total student growth rates from corporate partnerships are significantly higher than our non-affiliated enrollments at 40% and 60% respectively. At Capella, we continue to see strong growth in FlexPath programs with both strong levels of new student and total student enrollment. As a result, FlexPath now comprises approximately 21% of all U.S. higher education enrollments, an increase of 200 basis points from a year ago. Strayer's enrollment continues to experience a rapid recovery and remains on track to grow its total enrollment on a run rate basis by the end of this year. Both Strayer and Capella had year-over-year increases in course success and student retention. Our education technology and services segment, or ETS as we call it, continues to perform well in having grown its revenue in the third quarter by 27%. Operating income for ETS was flat to the prior year, notwithstanding this revenue growth, as we continue to invest in additional resources to further support ETS's growth. These investments in ETS have helped us to achieve the necessary scale to serve both our existing customer base and much of the anticipated growth for next year. As a result, we expect expense growth will moderate significantly in 2023, resulting in margins much closer to our notional plans of 50%+. During the quarter, Sophia Learning, our direct consumer portal of high-quality, ACE-recommended general education courses, grew its average subscriber base by 33% and its revenue by 45%. Workforce Edge, our SaaS-based education benefits management platform, grew an additional six clients during the quarter and increased the employee base by 200,000 people. We expect to have between 800 and 1,000 employees from Workforce Edge clients enrolled in Strayer and Capella by year-end, and to have a significant multiple of that enrolled in 2023. Our Australia and New Zealand segment continues to work to return to normal operations, but is still experiencing visa application processing delays that is adversely impacting our enrollment of international students. During the quarter, ANZ's total enrollment grew 2% and its revenue grew 1% on a constant currency basis. Measured in Australian dollars, our ANZ segment has been remarkably stable during the pandemic. Its academic outcomes and student retention remain strong and among the highest in SEI. Notwithstanding the significant headwinds, returning to a normal operating environment has continued to grow throughout. We remain optimistic that continued progress will be made easing the immigration delays throughout the rest of this year and into next year. As those barriers begin to be removed, we will see higher rates of growth at Torrens University. During the quarter, we also launched SEI's Faculty Action Center at Torrens, a proprietary software that enables significantly more robust faculty and student interaction. We expect that to have a meaningful impact on student satisfaction, teaching effectiveness, and ultimately student retention. Overall, we continue to make considerable progress on our goals thus far this year. I can again reiterate, we expect to see new student growth on a full year basis across each of our universities. We've not yet seen anything that would suggest our performance in the fourth quarter would lag behind where we are now. Based on that momentum this year, 2022 will be our trough year for revenue and earnings, and that our enrollment revenue and earnings will be substantially higher in 2023. Finally, and as always, I'd like to thank all of my colleagues at SEI for their continued hard work and dedication on behalf of our students around the world. With that operator, we'd be happy to take questions. Thank you. As a reminder, to ask a question at this time, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Silber with BMO. Your line is now open. Thanks so much. I was wondering if I could start with some questions on U.S. higher education enrollment. I know you gave a lot of details in the call, but I wanted to drill down a little bit further. Can we get a little bit more color or, you know, in terms of either student type grad versus undergrad or program type, where you're seeing more strength at, on a relative basis? Well, it's pretty much strength across the board, Jeff. As I said in the prepared remarks, FlexPath certainly continues to be a major driver of growth at Capella. Within FlexPath, healthcare continues to be very strong. As I also said, we continue to see very, very high levels of corporate partnership enrollments, levels, frankly, that we haven't seen in many years. At Strayer, I'd say it's pretty much across the board as they just continue their general enrollment recovery, having had most of our campuses reopen for the full quarter. I can't say that it's any one area over another. It's pretty broad-based and across the board. Okay, great. Hey, Jeff. Jeff, one additional point to that. I think it's fair, Karl, to say that the single strongest program is nursing at Capella, right? Across all of our programs. Yeah, that's true. Okay. That's actually a very good call. Thank you, Rob. If I could shift over to ANZ, you mentioned some visa application issues. I don't know if it's possible to quantify what the impact has been, what would enrollment been, if you hadn't had those issues. Well, we can't speculate on what enrollment would have been because, you know, it's a hypothetical. What we can say is we know we have many hundreds of students who have made applications and who have expressed interest into entering the country and attending Torrens. Pre-COVID, my understanding is those visas were processed normally in a period of somewhere between 30, 45 days. We've seen delays now in excess of 200 days. As I said, we see that it's getting better, and we hope that it will continue to improve throughout the rest of this year, next year. I'm very confident that once those delays return to a more normal processing time, we'll see more significant growth there. Okay. Appreciate that. If I could just sneak in one more. I think I'm probably watching too much CNBC, where all they're talking about is a pending recession, not if, but when and how bad. Can you tell us what you think or how you think your different business segments or lines of business might do if we enter into a U.S. recession? Obviously with ANZ, it's more global. Thanks. Well, again, it you know obviously depends on the depth of that recession, its duration and so forth. Fundamentally, we believe that demand remains very strong for post-secondary education, certainly in the United States as well as Australia. That given any normalized range of economic activity, be that recessionary or not, we wouldn't expect it to dramatically adversely impacting us, barring some major shock that could happen to the economy. Frankly, Jeff, notwithstanding all the macroeconomic headwinds that are out there, as I said, the demand environment that we're seeing right now is very, very robust. Yeah, Jeff, at its simplest levels, any macroeconomic shock that crushes labor participation rates in the past in the U.S., strictly at Strayer, that's where we've seen enrollment weakness. You know, a business cycle recession during which unemployment might rise slightly, but participation rates remain within a normalized band, I don't see that having much of a negative impact on our operations. All right. Really appreciate the call from you both. Thanks so much. Yeah, sure. Thank you. As a reminder, to ask the question at this time, please press star one one on your touch tone telephone. Our next question comes from the line of Tobey Sommer with Truist. Your line is now open. Thanks. Are there any modeling inputs that you would care to share with us, sort of at any level of detail as we refine 2023 expectations? You talked about, you know, sort of substantial improvements, but any way you could help frame that for us? Tobey, this is Dan. For 2022, we're still pretty in line with what we said early in the year, which was, we think total enrollment, given the cycle of recovery mostly, at Strayer, is likely to decline in the mid-single digits. We think with stable revenue per student, revenue is likely to track similarly. We think that total expenses will be flattish year- over- year, and we're still on track with that. I think the one other thing I would add maybe is that we've normally indicated that our tax rate, our adjusted tax rate would be in the neighborhood of 30%. It's probably gonna be a little higher, closer to 31%, this year. He was actually asking about 2023, Dan. The reality is we don't ever give any kind of forward guidance that could be reflected in modeling. Beyond what Karl said, which is we've had several quarters now of new student enrollment growth. You know, given that the average duration of one of our students is, you know, six to eight quarters, that lags through. We expect both enrollment growth and revenue growth in 2023. As we said in the past, given our focus on academic quality, we have a relatively fixed expense base, which hurts us on the way down when revenue is shrinking and is, you know, quite advantageous in terms of margin when revenue grows. I think that's as specific as we can be for next year at this point. Sure. I can appreciate the start momentum because you've referenced that. But since you've retracted that as a metric that you disclosed, it's difficult for us to use that as an input. What are you seeing in terms of pricing trends from key competitors? Anything changing on that front? I can't speak to pricing at other institutions. I haven't followed it as closely recently. In terms of SEI institutions, we think there may be very very modest tuition increases over the next several years at Capella, given the enormous value that FlexPath creates for its learners and its graduates. I would say that we plan for no pricing increases at Strayer. Over in Australia, Torrens, there may be a little bit of pricing increases over the next several years. One thing you have to consider is we have this enterprise level goal to continue to drive these corporate related enrollments, which almost always come at a discounted level of tuition. The realized pricing or the realized revenue per student could be decreasing, as it has done over the last several years. Given the very high rates of growth that we have in our corporate channels right now, that's likely to continue. We always work to offset that with as much expense productivity as we can so that the margin impact is de minimis. I wouldn't be planning for any large increases in our actual revenue per student. Okay. Thank you. Could you offer some color on the bad debt in the quarter? Because with enrollments down and the shift towards more sort of corporate activity, I would expect there to be sort of a decrease in or at least some downward pressure on bad debt. Hey, Tobey, this is Dan. The majority of the deterioration is just a reflection of we're getting a lot of growth in new enrollment, and new students typically pay at a lower rate. Over time, that'll normalize as continuing students become, on a relative basis, a bigger share of enrollment. Okay. It's a reflection of the increase in new starts that you referenced earlier. Okay. Correct. Anything on the regulatory front, and I guess I don't mean just in terms of U.S. domestic regulations around the education industry, but also on the immigration front in Australia, New Zealand, in terms of timeline or catalysts that we should be aware of, where a decision or a change may be forthcoming? Well, starting in Australia, during the pandemic, the Australian government put a waiver in place for people on education visas that did not require them to enter the country because they couldn't, obviously, which enabled those students to maintain their studies in their home country of residence. Government has announced their intention to rescind that waiver June of next year. That certainly will be a catalyst for international students returning to actual immigration into Australia, which I think will very much help us. Within the United States, we continue to be very confident in the quality profile of both Strayer and Capella, and nothing that we've seen, either by the way of rules actually being published or discussions that we've been made aware of potential rules, nothing gives us any concern that either Strayer or Capella would have any significant problem complying with any rule or regulation. To double-click, last question for me on the performance and impact on the business from labor participation. If the labor participation were to decline, what are the key metrics in the business that would be impacted? It would be certainly inquiries into the university. These are people that reach out to either Strayer or Capella, request information on a particular program or request to speak to an enrollment advisor. We would expect that would be impacted. Applications for new enrollment would likely be adversely impacted. Enrollment itself follows all of that. The leading indicators would be the number of people actually making inquiries for additional information from the universities. Tobey, I think it's fair to say that we would anticipate it would have a greater impact on Strayer University than Capella University, given its higher percentage of undergraduate students for which that labor participation rate tends to be more of a bellwether around demand. From a timing perspective, are those impacts on the business at Strayer, are they coincident, lagging or leading the changes in labor participation? They're slightly lagging, you know, maybe three or six months, you know, if we just think historically. Thank you very much. You bet. Thanks. Thank you. I'm currently showing no further questions at this time. I'd like to hand the call back over to Karl McDonnell for closing remarks. Thank you, everybody. We appreciate your time today and look forward to talking with you next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect.