Welcome to Strategic Education's first quarter 2026 results conference call. I will now turn the call over to Terese Wilke, Senior Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead. Thank you. Hello, everyone, and welcome to Strategic Education's conference call, in which we will discuss first quarter 2026 results. With us today are 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 our 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. Our first quarter results reflect meaningful progress across three of our primary strategic objectives, the continued investment and growth of our Education Technology Services division, growing our employer-focused strategy, and further implementing our AI and other productivity-enabling systems. For the first quarter, SEI revenue declined 1% year-over-year, driven by a slight decrease in consolidated enrollment. Based on our current enrollment trends, we expect that the first quarter will be the low point of the year in both absolute revenue and revenue growth. Our productivity initiatives drove a 2% reduction in adjusted operating expenses, resulting in 3% operating income growth and slight margin expansion to 14.3%. Adjusted earnings per share came in at $1.41. Turning now to our segments. Education Technology Services grew revenue 21% to $42 million, driven by Sophia Learning subscriptions, higher employer-affiliated enrollment, and new Workforce Edge partnerships. Even with a 7% increase in expenses as we continue to invest in the ETS business, ETS operating income grew 42% to $20 million and a 47% margin. ETS now represents 46% of consolidated operating income. Within ETS, Sophia Learning grew average total subscribers by 40% and revenue by 32%, with strong growth in both consumer and employer-affiliated subscribers. Workforce Edge ended the quarter with 82 corporate agreements covering 4 million employees, and enrollments from Workforce Edge into either Strayer or Capella University grew 70%, reaching nearly 4,000 students. As you know, expanding this network of corporate partners continues to be among our most important strategic focus areas. Moving to U.S. Higher Education, employer-affiliated enrollment grew 10% and reached a new all-time high of 34.5% of total U.S. Higher Education enrollment, an increase of more than 300 basis points from the prior year. Healthcare, which is a key component of our employer strategy, also grew 10%, and healthcare enrollment now represents more than half of all U.S. Higher Education enrollment. U.S. Higher Education revenue declined 4% in the quarter, reflecting a slight decline in unaffiliated enrollment, along with somewhat higher discounts and scholarships, which together lowered revenue per student. Our productivity initiatives continue to enable effective cost control, with operating expenses down 2%. The segment delivered $26 million of operating income and a 12% margin. U.S. Higher Education also set a new record for average student retention at 89%. Turning now to Australia and New Zealand. Total enrollment declined 3% in the quarter. Regulatory constraints on international enrollment continue to be a headwind and only partially offset by continued domestic new student growth. We remain focused on maximizing international enrollment within the current caps and on our continued investment in the domestic market. On a constant currency basis, ANZ revenue was down 4%, reflecting the enrollment decline and a slight decrease in revenue per student. Here, too, our productivity initiatives drove a 3% reduction in operating expenses. We reported an operating loss of $2.4 million for the quarter, which, as we've noted before, reflects the normal seasonality of that business. On capital allocation, in addition to our regular quarterly dividend, we repurchased approximately 493,000 shares during the quarter for a total of $40 million. As of the end of the first quarter, we have approximately $200 million remaining on our share repurchase authorization through the end of the year. Finally, as always, I'd like to thank all of my colleagues here at SEI for their ongoing commitment to our students and our employer partners. With that, Kevin, we'd be happy to take questions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Jeff Silber with BMO Capital Markets. Your line is open. Thanks so much. Karl, I appreciate the comments about saying that the first quarter is hopefully the low point from a revenue and a growth perspective. I know you've always talked about getting back to your notional plan. Any idea in terms of the timing of that, when we might see that? Sure. Well, we have partial visibility into the next quarter, obviously. I'd say that enrollment trends in U.S. Higher Education have been improving. We expect that they will continue to improve, which was why we had the comment on Q1 being the low point on revenue growth for the year. As for the notional plan or model, I should clarify, Jeff, that when I'm talking about our performance against the notional plan, I'm predominantly referring to EBIT and EPS. From that lens, I have very high confidence that we're going to be on our notional plan this year. Could we get there with better expense management and maybe a little less revenue, just given how the first quarter played out? I think that's possible. As I say, I'm very confident that we're going to be there from an EBIT and EPS standpoint. Okay, that's great to hear. If I could just move on to a regulatory issue. Effective July 1st, we've got some new rules coming from the One Big Beautiful Bill Act, specifically the caps on graduate and professional loans. I know you don't have as much exposure there, especially on the professional side. I'm just curious if you've seen any impact. Are students maybe a little bit reluctant because they're unsure about the funding environment? Any color you can provide would be great. Yeah. I've not heard of any demand-related issues or pressures as a result of grad loan limits changing. We're still waiting on final language to see exactly how that's going to be shaped, but I don't expect that we're going to have a major impact from changes to the grad loan limits. All right. Great to hear. I'll get back in the queue. Thanks. Thanks, Jeff. Again, ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. One moment for our next question. Our next question comes from Alex Paris with Barrington Research. Your line is open. Hi, guys. Thanks for taking my question. I just had a follow-up on that last one. The notional plan, Karl, you said you had high confidence in EBIT and EPS. From the notional plan, can you just refresh my memory? It calls for 4%-6% revenue growth and 200 basis points of adjusted operating margin improvement. You said it might be a little less revenue, a little bit more cost reduction. What are you referring to? Are you referring to the 200 basis points of adjusted operating income improvement? Yes, specifically. The reason I say that is, obviously, we control our expenses. I'd say that the AI and other technological enablements of productivity are being implemented a little faster than even I expected. I think it's going to have a slightly bigger impact this year than I otherwise would have expected. I don't know where revenue is going to be ultimately, but if you just assume that our current enrollment trends are going to continue through the balance of the year, and you layer on accelerated productivity, that gives me high confidence that we're going to get to the 200 basis points of margin expansion, and that'll translate into whatever growth rate it is on EPS. Got you. Regarding enrollment in U.S. Higher Education. Obviously, big growth continues in employer-affiliated enrollment that accelerated sequentially from the fourth quarter. Unaffiliated was down 5.5% by my calculation. That, too, represents a sequential improvement when it was down 8.5% in the fourth quarter. What explains the sequential improvement? Are new students up in that channel? Specifically, we've had, I'd say, a little better than what we've expected in new student growth at Capella. In fact, I would describe Capella's new student enrollment as quite strong. We have seen ongoing weakness in predominantly Strayer's undergraduate unaffiliated enrollment, which frankly is not part of our strategy. We're not trying to grow unaffiliated enrollment, but it has been improving. I'd say, Alex, it's a mix of Capella doing better than what we expected and Strayer beginning to improve from lower levels that we had last year. Got you. Is there anything different you're doing in terms of marketing to the unaffiliated? Obviously, your focus is on employer-affiliated. Social media marketing, things like that, trying to drive enrollment in undergraduate unaffiliated at Strayer. Yeah. Well, it's a combination of a couple of things that have been really playing out over the last couple of years. The first is we've told our U.S. Higher Education management team that we want them to solve for the overall highest growth we can get across U.S. Higher Ed. To not necessarily solve for any particular growth at either Strayer or Capella, but to try to maximize the sum of both of those. What's happened as a result of that is Capella has just been a much stronger grower. As such, we've been supporting Capella's growth with increased investments in marketing. Because we haven't necessarily increased the aggregate amount in U.S. Higher Ed, that means that we've been marketing a lot less at Strayer, which is predominantly the channel for unaffiliated enrollment. In fact, Dan could give you maybe a more precise number, but if you go back two years ago and compare it to where we are today from a marketing investment standpoint, Strayer is probably down by 50% or more, and Capella is up by 50% or more. That's feeding the strategy that we're trying to execute, which is employer-focused, healthcare focused. In some quarters, Capella's mix of employer-affiliated enrollments is over 50%. It's a direct enablement of our strategy. We're happy to have unaffiliated enrollments. We're not trying to exclude them. It's just not where we're investing our growth capital. We're investing our growth capital in the employer channel, healthcare, and ETS in the States. That's how it's playing out, and that's how we plan for it to be executed for the rest of this year and moving forward in 2027. Got you. Given the improving trends in U.S. Higher Education enrollment, the sequential improvement, the slowing rate or the declining rate of decline, do you think we'll get to growth by the end of the year in U.S. Higher Education enrollment? I think it'll be very close. I think we have a good chance to do that. I can't predict, obviously, but I think that's entirely possible. Great. The last question, and kind of similarly, ANZ segment. Given the 3% increase in the international caps expected in 2026 and the strength that you're seeing on the domestic side of new student enrollment, do you still expect that segment to get to overall enrollment growth by the end of the year? It's going to be close. I'm hopeful, I should say, that we're going to have full-year new student growth, which will be the first in the post-cap era. Whether or not we get to total enrollment growth, it'll depend. I have to say that one of the things that we saw in the first quarter that we didn't foresee is that the Australian government has begun to slow down visa approvals, even when you're below your cap. That's not something we saw last year. The Australian government was very good about approving visas as long as you were under your international cap. This year, there's been more friction, and we suspect it may have something to do with just greater immigration scrutiny following the Bondi Beach incident that happened in Sydney last year. That was something that didn't happen last year. It happened in the first quarter. I don't know if it's going to happen in the second quarter moving on. That was more friction than what we were expecting, and that may impact our ability to generate total enrollment growth this year. You feel good about new student enrollment growth this year in ANZ? Yes. We continue to have pretty strong domestic enrollment growth. I'd have to go back and look, but I think three out of the four quarters last year, we had it, the last three. We also saw that in the first quarter. Great. That's helpful. I appreciate the additional color. I'll get back in the queue. Okay. Thanks, Alex. One moment for our next question. Our next question comes from Jasper Bibb with Truist. Your line is open. Hey, morning, everyone. Underneath the U.S. margin performance this quarter, can you compare where the operating margins for Capella and Strayer sit at this point? Is there a big difference there? With the shifting growth investments from Strayer to Capella that you talked about, do you think you've fully right-sized your fixed costs for what's become a smaller business on the Strayer side versus where you were pre-COVID, or is there more to do there potentially? Hey, Jasper, it's Dan. The Capella margin, probably not surprising, is much higher than Strayer and is driving most of the operating income for U.S. Higher Ed. Strayer has a positive margin. It's just a fraction right now of Capella. The expenses for Strayer, though we're pretty close to right-sizing them, there's still opportunities when it comes to some of the productivity work that Karl referenced and continued real estate rationalization. I think the Strayer margin will improve, but it's unlikely to get to where Capella is. Got it. A slight decline in revenue per student in the U.S. in the first quarter. I guess, in the context of revenue bottoming in the first quarter or the expectation there, how are you thinking about revenue per student in the U.S. over the balance of the year? Yeah. First off, we're expecting relatively stable revenue per student for the full year. The first quarter was lower due to higher scholarships and discounts and lower classes per student, both year over year and sequentially from the fourth quarter. That variability is driven by program and degree mix, the mix of corporate students, and the mix of some of our unaffiliated student groups that are eligible for scholarships. Again, it's hard to predict those, but with pricing that takes effect starting in the second quarter, we think the full-year revenue per student is still likely to be flat. It'll offset some of these other trends. Makes sense. One other note, Jasper, on that, because the sequential issue was also exacerbated by our fourth quarter 2025 revenue per student was significantly higher due to a significant decline in scholarships and discounts that quarter compared to the fourth quarter of 2024. That was a little bit of an anomaly. Makes sense. Thank you. For education technology, it seems like the growth rate for Sophia stayed pretty high, but the Workforce Edge growth rate has slowed a bit. I know you're starting to lap your large retail partner that you were ramping last year. Anything else we should consider for how each of those two businesses are going to perform in 2026 and the relative growth rates there? Well, you got to remember, Sophia is pretty big now. It would not surprise me if the growth rate moderated some, although our expectations is that we should be able to continue to support 20%+ growth at Sophia. You're right. We're anniversarying a big retail client in Workforce Edge. There could be slightly less growth there. Remember, one of the big benefits of Workforce Edge is enrollments into Strayer and Capella. As I said in my prepared remarks, we had over 4,000 of those students in the first quarter. We expect that number will continue to grow. We have a very robust pipeline of new clients coming into Workforce Edge. We continue to get unsolicited inbound RFPs every quarter. The way that we think about ETS is that we basically have two market-leading businesses there. Sophia is the market leader on alternative credit pathways. Workforce Edge is knocking on the door of being the market leader on education benefits management. They're both great businesses. We continue to invest heavily in them, and we expect that they'll continue to grow significantly, both in the near term and the long term. Got it. Thank you for taking the question. Sure. Thank you. I'm not showing any further questions at this time. I turn the call back to Karl for any further remarks. Thank you, ladies and gentlemen, and we look forward to discussing our second quarter results next quarter. Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect and have a wonderful day.