Q3 2020 Results November 5, 2020 Forward-Looking Statements - PowerPoint PPT Presentation

Q3 2020 Results November 5, 2020

Forward-Looking Statements Statements Under the Private Securities Litigation Reform Act of 1995 Statements in this presentation are “forward-looking statements” under the federal securities laws. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education, Inc. (Strategic Education); Strategic Education’s plans, strategies and prospects; the impact of the current COVID-19 pandemic on Strategic Education’s business and results; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to: Strategic Education’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements; rulemaking by the Department of Education and increased focus by the U.S. Congress on for-profit education institutions; the pace of student enrollment; competitive factors; risks associated with the further spread of COVID-19, including the ultimate impact of COVID-19 on people and economies; the impact of regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including restrictions on business operations or social distancing requirements; risks associated with the opening of new campuses; risks associated with the offering of new educational programs and adapting to other changes; risks associated with the acquisition of existing educational institutions, including in the case of Strategic Education’s acquisition of Laureate’s Australia and New Zealand business, the risk that the benefits of the acquisition may not be fully realized or may take longer to realize than expected, and the risk that the acquisition may not advance Strategic Education’s business strategy and growth strategy; risks relating to the timing of regulatory approvals; Strategic Education’s ability to implement its growth strategy; the risk that the combined company may experience difficulty integrating employees or operations; risks associated with the ability of Strategic Education’s students to finance their education in a timely manner; general economic and market conditions; and additional factors described in Strategic Education’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Many of these risks, uncertainties and assumptions are beyond Strategic Education’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements. All Strategic Education filings are available for viewing on our website at www.strategiceducation.com. November 5, 2020 2

2019 SEI Results • Educated 91,000 students • Received $997 million in revenue • Spent $803 million to educate those students • Generated $194 million in adjusted operating income and $6.67 of adjusted EPS November 5, 2020 3

November 2019 SEI Investor Day 2020 Business Model • Increase student enrollment by approximately 5% • Hold revenue-per-student roughly flat • Increase operating margin, and grow adjusted operating income (and adjusted EPS) by at least 10% November 5, 2020 4

First Half 2020 Results Were Well On Track 6% 6% 96 530 95 521 520 94 510 92 500 492 90 90 490 Enrollment Revenue 480 88 470 86 460 84 450 2019 2020 2019 2020 29% 28% 4.17 128 130 4.2 4.0 120 3.8 110 Adjusted EBT* 3.6 Adjusted EPS* 99 100 3.4 3.25 90 3.2 80 3.0 2019 2020 2019 2020 *Non-GAAP measures – see slide 17 for a description of SEI’s use of non-GAAP financial measures November 5, 2020 5

Impact of Pandemic on SEI’s Q3 Results • Strayer University enrollment declined 1%, driven by a 28% decrease in new students for the summer academic term, which we pre-announced in July • Capella University’s enrollment remained strong, with new and total enrollment growing 4%, which was significantly better than we expected in July • Results highlight differential economic impact on undergraduate vs graduate programs, and Capella University’s long history as a fully online institution • Generous discounting and scholarships to support our students leads to a 2% reduction in SEI’s revenue-per-student November 5, 2020 6

Q3 2020 Consolidated Results 1% 90 250 -1% 89 242 89 239 240 88 88 230 Enrollment Revenue 87 220 86 85 210 2019 2020 2019 2020 -3% -8% 40 1.30 39 1.28 39 1.25 38 38 Adjusted EBT* 1.20 Adjusted EPS* 1.18 37 1.15 36 35 1.10 2019 2020 2019 2020 *Non-GAAP measures – see slide 17 for a description of SEI’s use of non-GAAP financial measures November 5, 2020 7

Full Year 2020 Outlook if Q3 Enrollment Trends Continue (Excluding ANZ Acquisition) 2% 0% 92 1,000 997 92 1,000 91 91 980 90 960 89 Enrollment Revenue 88 940 87 920 86 85 900 2019 2020 2019 2020 3% 0% 210 6.67 210 6.7 6.65 204 205 6.6 200 6.5 195 6.4 Adjusted EBT* Adjusted EPS* 190 6.3 185 6.2 180 6.1 175 170 6.0 2019 2020 2019 2020 *Non-GAAP measures – see slide 17 for a description of SEI’s use of non-GAAP financial measures November 5, 2020 8

Response to Current Trends To address the possible continuation of Q3 demand trends, we are taking significant action to support students and maintain our financial strength as we close 2020 and begin 2021 • Most importantly, we are undertaking a reorganization and expense rationalization initiative that commenced in September • We are prioritizing investments in growth opportunities, including our B2B teams, Sophia, and our Digital Enablement Partnerships initiative • We have closed our acquisition of Torrens University and its other educational assets in Australia/New Zealand, which will provide significant earnings accretion in 2021 November 5, 2020 9

Reorganization and Expense Rationalization • Reorganizing around three divisions • U.S. Higher Education • Alternative Learning • Australia/New Zealand • Accelerating rationalization of on-ground infrastructure which will reduce run rate real estate operating expense by approximately $7.5 million starting 2021 • Rationalizing other spend to reduce overall operating expense by another approximate $25 million in 2021 • We expect a restructuring charge of approximately $30 million between Q3 2020 and Q1 2021 November 5, 2020 10

Planned Segment Reporting Starting Q4 2020 Segment Description US Higher Education Strayer University, including Jack Welch Management Institute, and Capella University Alternative Learning Sophia Learning, DevMountain, Hackbright Academy, Workforce Edge, Digital Enablement Partnerships Australia/New Torrens University, Media Design School, Think Education Zealand November 5, 2020 11

Investing In 2021 Opportunities • Continued focus on B2B • Demand from employer channel grew 10% in 2020 • 2021 employer growth should shift mix of employer funded students from 20% to 30% • Growing B2B team in 2021 by almost 30% • Cost per acquisition for employer enrollments approximately 30% of non-employer CPA • Employer enrollments persist about 200 basis points better than non-employer • Investing significantly in new Workforce Edge platform to support employer growth • New partnership with Noodle to leverage the Workforce Edge platform • Sophia • Investing in new disciplines, non-degree certificates, and courses • New subscription model driving rapid growth, from zero to 13,000 subscribers in three months • Key to new innovative employer education benefit offerings • Expecting subscription growth in 2021 of 50%+, and revenue growing to $12 million+ from $3 million • Digital Enablement Partnerships • Investing in commercializing capabilities in course development, online delivery, and student support • Launching new culinary short-course program with Sur La Table November 5, 2020 12

Update on Australia/New Zealand Acquisition Acquisition closed on November 3 rd • • On track to exceed original 2020 plan for both revenue and EBITDA • Assuming current trend continues, the Australia/New Zealand assets will contribute approximately: • USD$270 million in 2021 revenue, 10% annual growth • USD$60 million in 2021 EBITDA, 10% annual growth • Torrens University is the only investor funded University in Australia and is uniquely positioned to accelerate online innovation in Australia’s higher education sector November 5, 2020 13