Conferencia de resultados del 3T de 2026 de Strategic Education (STRA): Australia lastra las perspectivas para 2027

Puntos clave

• Los ingresos del tercer trimestre se situaron en 320 millones de dólares, prácticamente sin cambios en términos interanuales. El resultado operativo disminuyó un 2% hasta los 50 millones de dólares, mientras que el margen operativo se redujo 30 puntos básicos, hasta el 15,7%.
• El beneficio por acción aumentó un 4% hasta los 1,69 dólares, respaldado por un menor número de acciones en circulación tras las recompras realizadas. El flujo de caja libre de los primeros nueve meses creció un 8% hasta los 137 millones de dólares.
• Education Technology Services se mantuvo como el segmento más sólido, con unos ingresos que aumentaron un 12% hasta los 43 millones de dólares y un resultado operativo que creció un 14% hasta los 18 millones de dólares. Por su parte, los ingresos de Sophia Learning aumentaron un 20%.
• Las matriculaciones en Educación Superior en EE. UU. disminuyeron un 1%, pero las matriculaciones en el área sanitaria crecieron un 9% y representaron el 54% del total del segmento. La retención de estudiantes alcanzó un récord histórico del 89,2%.
• Las matriculaciones en Australia cayeron un 9% y los ingresos descendieron un 7%, debido a que el endurecimiento de los requisitos para los visados de estudiantes internacionales lastró la demanda. La empresa registró un deterioro contable no monetario de 134 millones de dólares en el fondo de comercio y los activos intangibles de Australia.
• La dirección prevé que los ingresos consolidados de 2027 se mantengan estables respecto a los de 2026 y planea destinar aproximadamente 50 millones de dólares a inversiones en crecimiento, principalmente en ETS, el sector sanitario de EE. UU. y el mercado nacional de Australia.

Datos financieros principales

Salvo que se indique lo contrario, la dirección analizó los resultados ajustados a tipo de cambio constante, excluyendo el deterioro contable de 134 millones de dólares en Australia.

Evolución comercial y operativa

Education Technology Services

Los ingresos de Sophia Learning crecieron un 20% hasta los 21 millones de dólares, mientras que el promedio de suscriptores totales aumentó un 22%. La dirección señaló que el crecimiento de las suscripciones directas al consumidor se mantuvo cerca del 20% al excluir el efecto comparativo anual de un gran cliente corporativo.

Workforce Edge cerró el trimestre con 83 acuerdos corporativos que cubren a aproximadamente 4 millones de empleados. Las matriculaciones procedentes de Workforce Edge hacia Strayer o Capella crecieron un 4%, situándose en unos 4.000 estudiantes.

La compañía tiene previsto acelerar la hoja de ruta de productos de ETS en 2027. La dirección espera que este desembolso respalde un mayor crecimiento de los ingresos en el marco de su plan quinquenal, defienda la posición de mercado de Sophia y refuerce la captación de clientes corporativos por parte de Workforce Edge.

Educación Superior en EE. UU.

El incremento de los ingresos por estudiante compensó la disminución del 1% en las matriculaciones, lo que mantuvo los ingresos del segmento prácticamente estables. Los gastos operativos crecieron menos del 1%, incluyendo la continua inversión en crecimiento.

El área de la salud se mantuvo como el principal motor de crecimiento. Las matriculaciones aumentaron un 9% y representaron el 54% del total de inscripciones de Educación Superior en EE. UU., por encima del 49% registrado un año antes. Aproximadamente el 38% de las matriculaciones sanitarias se originó a través de convenios con empresas.

Los estudiantes vinculados a través de empresas representaron el 35% del total de matriculaciones de Educación Superior en EE. UU., un aumento de 200 puntos básicos. Al mismo tiempo, la tasa de retención alcanzó un máximo histórico del 89,2%.

La demanda inicial para el Grado en Enfermería previo a la obtención de la licencia (Bachelor of Science in Nursing) de Capella y para el Grado Asociado en Ciencias Aplicadas en Tecnología Radiológica de Strayer superó las previsiones iniciales de la dirección. La empresa también destacó el diploma de Enfermería Práctica Titulada de Strayer y la ampliación de la oferta de Enfermería Especializada (Nurse Practitioner) de Capella.

Australia

La dirección atribuyó el retroceso de las matriculaciones exclusivamente a los estudiantes internacionales. La concesión de nuevos visados se desaceleró con fuerza, registrando caídas de hasta el 80% interanual en algunos meses. Además, un nuevo requisito de visado para los estudiantes internacionales que cambian de institución educativa paralizó de facto el mercado de traslados nacionales (onshore).

La demanda nacional mostró mayor resistencia. Las nuevas matriculaciones de estudiantes locales crecieron un 9% tanto en el segundo como en el tercer trimestre y concentraron cerca del 70% de las nuevas incorporaciones en Australia.

Strategic Education planea ampliar su campus de Adelaida, incorporar programas adicionales en ciencias de la salud e inaugurar un campus en Perth a finales de 2027. La dirección afirmó que el capital destinado al crecimiento en Australia está enfocado en el mercado nacional en lugar de supeditarse a una flexibilización de las restricciones internacionales.

Previsiones de la dirección

La dirección indicó que es poco probable que los resultados de todo el año 2026 se sitúen dentro de las estimaciones teóricas de la empresa, ya que el contexto de matriculación de estudiantes internacionales en Australia empeoró a partir del segundo semestre.

Para 2027, la dirección definió las siguientes expectativas:

• Es muy probable que los ingresos consolidados se mantengan estables con respecto a los de 2026.
• Se anticipa que ETS experimente crecimiento, mientras que Educación Superior en EE. UU. podría anotar un avance más moderado apuntalado por el dinamismo sanitario.
• Se prevé que la persistencia de las restricciones en Australia neutralice el crecimiento en otras regiones.
• Se estima que las inversiones destinadas al crecimiento totalicen aproximadamente 50 millones de dólares.
• Se proyecta que los ahorros por productividad conseguidos en 2026 compensen cerca de la mitad de ese desembolso, conteniendo el alza de los gastos operativos en el 2%.
• El margen del segmento ETS podría experimentar una contracción de entre 300 y 400 puntos básicos aproximadamente, esperándose efectos más moderados sobre los márgenes de Educación Superior en EE. UU. y Australia.
• El ritmo de incorporación de nuevos estudiantes en Australia podría volver a terreno positivo en la segunda mitad de 2027, y el crecimiento del conjunto de matriculaciones podría acompañar esa evolución a principios de 2028.

La dirección se mostró confiada en que estas inversiones consigan devolver a la compañía a sus tasas de crecimiento teóricas en 2028 y periodos posteriores. Esta proyección está supeditada a la solidez sostenida de ETS, la división sanitaria en EE. UU. y las inscripciones locales en Australia.

Riesgos y factores a seguir

• Las matriculaciones de estudiantes internacionales en Australia siguen condicionadas por la mayor lentitud en la tramitación de visados y exigencias más estrictas para los cambios de centro.
• El calendario y el alcance de cualquier posible relajación en las restricciones de Australia siguen siendo inciertos, y la dirección no fundamenta su estrategia de crecimiento nacional en tal desenlace.
• Se anticipa que las inversiones proyectadas para 2027 compriman los márgenes por segmento con anterioridad a que afloren los rendimientos esperados sobre el crecimiento.
• Las matriculaciones de estudiantes universitarios de grado no afiliados en EE. UU. continúan bajo presión, si bien la dirección confía en que el descenso se modere a lo largo de 2027 y alcance potencialmente el punto de equilibrio o experimente crecimiento al término del ejercicio.
• La dirección supervisa la evolución de los hábitos de búsqueda de los estudiantes en torno a modelos de lenguaje de gran tamaño y a la optimización de motores de respuesta, si bien asegura no haber constatado efectos adversos relevantes hasta la fecha.

Aspectos destacados del turno de preguntas y respuestas con analistas

La dirección prevé un crecimiento neto positivo en la matriculación de nuevos alumnos en Educación Superior en EE. UU. durante 2027. Del mismo modo, anticipa que el segmento avance hacia tasas de crecimiento de un dígito medio conforme avance el año, sustentado por los programas sanitarios y los conducentes a la habilitación profesional.

En lo referente a Australia, la dirección declaró que la compañía podría encontrarse más próxima a un entorno normalizado en las matriculaciones internacionales, pero su estrategia de inversión actual contempla el crecimiento nacional en detrimento de posibles alivios normativos.

En cuanto a la moderación en el ritmo de incorporación de suscriptores en Sophia Learning, la dirección atribuyó la variación casi íntegramente a la base comparativa frente al importante cliente corporativo incorporado en el ejercicio precedente. Al margen de dicho cliente, el avance de las suscripciones directas al consumidor se mantuvo cercano al 20%.

La dirección indicó asimismo que la tasa de conversión de solicitudes de admisión y el coste de captación en relación con el valor global del alumno se situaron cerca de máximos históricos, al margen de las transformaciones en las pautas seguidas por los aspirantes a la hora de buscar facultades y universidades.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Welcome to Strategic Education's Third Quarter 2026 Results Conference Call. I will now turn the call over to Terese Wilke, Senior Director of Investor Relations for Strategic Education. Mrs. Wilke, please go ahead.

Terese Wilke

Thank you. Hello, everyone, and welcome to Strategic Education's conference call in which we will discuss third 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.

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 third quarter results reflect continued strength in the parts of SEI where we have been investing for growth, Education Technology Service, our broad employer strategy and our U.S. health care portfolio. The strength in these areas, however, was mostly offset in the third quarter by our Australia segment, where the environment has proved more challenging than we expected.

This morning, I'll briefly review the quarter, and then I'll walk through each of our segments. As I do, I'll discuss the opportunities behind our intent to make 2027 a year of increased growth investments. As always, unless I note otherwise, my comments refer to adjusted results on a constant currency basis, and those results exclude the $134 million noncash impairment of goodwill and intangible assets in Australia that we recorded this quarter and which I will discuss with that segment.

Third quarter revenue was $320 million, essentially flat with the prior year. We did hold operating expense growth to less than 1%, resulting in operating income of $50 million, a 2% decrease, and an operating margin of 15.7%, 30 basis points below the prior year. Earnings per share increased 4% to $1.69, reflecting a lower share count from share repurchases. Through the first 9 months of this year, free cash flow increased 8% to $137 million.

Turning now to our segments. Education Technology Services continued its strong performance. Revenue grew 12% to $43 million. Operating income grew 14% to $18 million and operating margin expanded 80 basis points to 42.5%. Sophia Learning average total subscribers grew 22% and revenue grew 20% to $21 million. Workforce Edge ended the quarter with 83 corporate agreements covering approximately 4 million employees, and enrollments from Workforce Edge into Strayer or Capella grew 4% to roughly 4,000 students.

SEI was recently named to Business Insider's 2027 list of Most Innovative Companies, a recognition that reflects much of the work that is being done within ETS. Given the strong demand across ETS and given our desire to accelerate our product road map to serve that demand, our intent is to increase our growth investments in ETS in 2027. These investments will slightly reduce the ETS segment-level operating margin next year, but will also result in higher revenue growth in our current 5-year plan, defend Sophia's market leadership position and strengthen Workforce Edge's ability to sign new corporate clients.

Turning now to U.S. Higher Education. Total U.S. Higher Education enrollment declined 1% to approximately 84,700 students as growth in employer-affiliated enrollment was offset by lower unaffiliated enrollment. Revenue was essentially flat at $214 million as higher revenue per student offset the enrollment decline. Our productivity initiatives continue to hold operating expense growth to less than 1%, including continued investments in growth. Operating income was $22 million, a 4% decline, and an operating margin of approximately 10%. Student retention reached 89.2%, a new all-time high for U.S. Higher Education.

Our health care portfolio continues to be the strongest source of growth in U.S. Higher Education. Health care enrollment grew 9% in the quarter and now represents 54% of total U.S. Higher Education enrollment, up from 49% a year ago, an increase of 500 basis points over the last year. Health care is also central to our broad employer strategy. Roughly 38% of our health care enrollment comes from employer partners, and employer-affiliated enrollment overall reached 35% of U.S. Higher Education total enrollment, up 200 basis points from the prior year.

We are now extending that portfolio into licensure-track programs. Earlier this year, Capella enrolled the first cohort in its pre-licensure Bachelor of Science in Nursing program and Strayer enrolled its first students in the new Associate of Applied Science in Radiologic Technology. Early demand for both programs has exceeded our initial assumptions. These 2 programs join Strayer's Licensed Practical Nurse Diploma and Capella's expanded Nurse Practitioner portfolio, all aimed at the health care talent our employer partners increasingly need.

To support that demand, we intend to also increase our growth investments in U.S. health care in 2027 with funding for new programs, clinical faculty, expanded clinical and instructional capacity. This will allow programs like pre-licensure nursing and radiologic technology to grow at the pace their demand supports.

Turning to Australia. Total enrollment declined 9% to approximately 17,100 students and revenue declined 7% to $64 million. The Australian team continued to manage costs well with operating expenses down 4%, and operating income was $10 million compared with $12.5 million in the prior year and an operating margin of approximately 16%.

The decline is entirely a function of international enrollment. Over the course of this year, the Australian government restrictions on international students have become materially more severe than we anticipated. New visa approvals for prospective students have slowed sharply, and in some months, declining as much as 80% versus the prior year. And in addition, the government has effectively closed the onshore transfer market by requiring international students already in Australia to obtain a new visa in order to change institutions. Given this environment, we have lowered our near-term growth expectations for the ANZ segment, which resulted in this quarter's $134 million noncash impairment.

Notwithstanding the headwinds on international enrollment, our domestic enrollment continues to fare well. Domestic new enrollment has grown every quarter this year, including 9% in each of the second and third quarters, and domestic students now represent close to 70% of new enrollment in Australia.

The quality of Torrens' academic experience remains strong and has shown significant improvement over the past year. We were pleased to see Torrens University's performance in the 2025 Quality Indicators for Learning and Teaching Student Experience Survey, the most comprehensive national survey of current higher education students in Australia. Torrens achieved widespread momentum across all undergraduate indicators, including a rise to sixth nationally for undergraduate teaching quality, up significantly from 19th the year before. At the post-graduate level, Torrens continues to lead at the top tier of Australian higher education, ranking in the top 4 nationwide for both skills development and peer engagement alongside a seventh place ranking in post-graduate teaching quality.

This performance against national sector benchmarks reinforces Torrens' value proposition and supports student retention and long-term brand equity in industry-aligned education. The quality of Torrens' academic programs, combined with our own success in growing domestic enrollment gives us confidence to increase our growth investments in Australia's domestic market in 2027. We are expanding our existing Adelaide campus and will launch several new health science programs, and we also plan to open a new campus in Perth in late 2027.

Western Australia is the fastest-growing state in the country with population growth 50% higher than the national average. Greater Perth is projected to add more than 0.5 million residents over the next decade, and its economy is concentrated in the sectors where our new programs are focused, namely health care, engineering, construction and defense. Perth will also position Torrens well for international recruitment from Asia when those constraints ease.

Turning now to an update on our outlook versus our notional model. Given our current forecast for the balance of this year and the fact that the international enrollment environment in Australia deteriorated since the first half of the year, it appears unlikely our full year results will fall inside of our notional outlook. In terms of 2027, given that our forward revenue growth is mostly a product of current year enrollment, we think the most likely outcome for consolidated revenue next year is to be flat with this year.

We expect the cost of the growth investments that I have described this morning to be approximately $50 million in 2027. However, the productivity savings achieved this year will offset nearly half of that, such that year-over-year increase in operating expenses will be limited to just 2%. Given that these incremental investments are targeted to support areas of proven strength at SEI, that is our 2 high-growth, high-margin platform businesses, our U.S. health care portfolio and our domestic market growth in Australia, we have a high degree of confidence in their ability to return the company to its notional growth rates in 2028 and beyond.

Regarding capital allocation, in addition to our regular quarterly dividend, we repurchased approximately 347,000 shares during the quarter for a total of $28.5 million. We ended the quarter with $139 million of cash and marketable securities and no debt. And finally, as always, I'd like to take this opportunity to thank all of my colleagues here at SEI for their ongoing commitment and support to our students and our corporate partners.

And with that, Victor, we'd be happy to take questions.

Operator

[Operator Instructions] Our first question will come from the line of Jeff Silber from BMO Capital Markets.

Preguntas y respuestas

Jeffrey Silber

Karl, I really appreciate you giving us some insight into 2027. I was hoping I could just double-click on that a little bit. Is it possible to talk about the different segments? Like, say, overall, you think revenue most likely flat, but could we see growth in ETS offset by declines in the other two? And then from a margin perspective, where do you think you'd have the most impact in terms of declining margins potentially next year?

Karl McDonnell

I think we're going to have -- we're absolutely going to have growth in ETS, Jeff. I suspect we'll have lower growth in U.S. Higher Education, driven by the strength of the health care portfolio that I just described. Overall, that will be offset by the continuation of the restrictions in Australia, although we do expect that with the addition of the Perth campus, the expanded programs in Adelaide, launching several asynchronous online programs throughout Australia, we do expect that new student growth in Australia will be growing year-over-year in the back half of '27.

And just given the headwinds that we've had, it's going to take a few quarters for that to translate into total enrollment growth. So I would expect that probably in the first part of '28. And from a margin standpoint, I would estimate that it could be in the range of 300 to 400 basis points at ETS and a little less than that in U.S. Higher Education and Australia.

Jeffrey Silber

Okay. That's really helpful. I really appreciate that. Moving back to, I guess, the U.S. We had an election earlier this week. I'm not asking you for your crystal ball, but given guys where you're located, you're probably closer to most in terms of what's going on and what potentially could go on. Any changes you're expecting with the changeover in Congress towards Democratic control?

Karl McDonnell

Well, I'd say that in the U.S., we have a high degree of confidence in sort of the regulatory and quality posture of both Strayer and Capella. We try to work constructively with any regulators or members of Congress or the administration regardless of party affiliation, and we look forward to engaging with them once the new Congress is inaugurated in January.

Operator

And our next question will come from the line of Alex Paris from Barrington Research.

Alexander Paris

I too appreciate the granular detail by segment and the look at 2027. I just had a question on unaffiliated enrollment. Obviously, it was down 4%. It's actually an improvement from the second quarter by my math, which -- when it was down 5.5%. But it's been down for 8 consecutive quarters now. And you've consistently said you do anticipate returning to mid-single digits at some point, but it's not an area of focus, I get it. I'm wondering, has there been an impact on the funnel from LLM, AI search and so on? And could that be a contributing factor?

Karl McDonnell

Alex, first of all, on unaffiliated enrollment, that's predominantly undergraduate business. It's an area that's important to us, but it's not one of our main strategic priorities in the way that health care is. You're right that the rate of decline moderated in the third quarter. We expect it to continue to moderate throughout 2027, perhaps even reaching breakeven or growth by the end of 2027.

And then in terms of LLM, it's certainly something that we're watching. But we have -- we've been focused on a quality of demand over quantity of demand for going on 2 years now. So we don't peg rate of increase or decrease in any inquiry volume that we're getting as being most important. We're looking at admission yield and sort of the acquisition cost to lifetime value. And both of those are near all-time highs. Obviously, we want to be relevant and favorably represented in any search medium that people are using, including LLMs. So we have a lot of people that are focused on it. But I can't say that we've really seen any adverse impact from it yet.

Alexander Paris

What are you specifically doing to respond to the changes in the way students look at colleges and universities?

Karl McDonnell

It's a multifunction, multidisciplinary set of initiatives that we have. I don't really want to go into details on this call, but we do have a robust set of things that we're doing that we have a pretty high level of confidence will help position us well, not just in LLMs, but frankly, in any search medium that people may use.

Alexander Paris

Obviously, it's important. But again, just to be clear, you've not really seen any material impact from the AEO as opposed to SEO on unaffiliated enrollment?

Karl McDonnell

Yes. Because -- I mean, put yourself in our position, Alex, it would be next to impossible to ascribe any rate of change to LLM or any other single variable. We're happy with the demand that we're getting. In health care, in particular, it's much stronger than what we expected. The growth of those new programs is far ahead of where we expected them to be by as much as a year perhaps. But we're not ignoring it. We have people that are focused on it. We expect that over time, the evolution will become more apparent. I just would say it's very early, and we haven't been able to ascribe any changes to that specifically.

Alexander Paris

Got you. And then my last question quickly on ANZ. I appreciate you are controlling the controllables, campus expansions, new campuses, a focus on domestic. But is there any light at the end of the tunnel with regulatory? Obviously, this has been going on for a couple of years now. And we thought that there'd be an improvement this year because of the lifting of the caps. But by slow rolling the visas, it's had an even more dramatic effect on international enrollment. Any additional color there would be great.

Karl McDonnell

I was a little surprised, frankly, that the transfer requirement to get a new Visa was implemented. That was not something that we anticipated. It is what it is. Eventually, we're going to get to a new normal, a normalized rate of international enrollment. I think we're much closer to that as opposed to being further away from it. And if we continue to grow domestic growth in the high single digits as we're doing or frankly, even in the low double digits when we add the additional capacity in Adelaide and Perth, eventually, that's going to result in new student growth, which, as I said in my prepared remarks, I think could be in the latter half of next year, leading to total enrollment growth in the first part of '28.

And then if we get an easing of these restrictions, which some people in Australia think will happen over the coming several years, then that will just be added sort of enrollment that we'll get. We're not building a strategy around it. We're accepting it for what it is and building all of our growth capital around the domestic market. And given, as I said, the strong performance of Torrens academically in the federal QILT survey, we think we're well positioned to grow our domestic market share.

Operator

[Operator Instructions] Our next question will come from the line of Jasper Bibb from Truist Securities.

Jasper Bibb

Apologies if I missed it, but I guess I just wanted to understand how you're thinking about EBIT margin expansion in '26 at this point. I guess, for me, it would be helpful if you could kind of frame 4Q expectations so we have the right jumping off point for all the kind of helpful '27 color you gave on the call.

Karl McDonnell

Jasper, yes, it might be a bad connection. I'm not sure I got the full question. I think it was '26 EBIT margin. Was that your question?

Jasper Bibb

Yes, I apologize. I'm switching to speaker phone now. Hopefully, you can hear me better...

Karl McDonnell

That's much better.

Jasper Bibb

I just wanted to understand kind of 4Q expectations so we have the right jumping off point for kind of all the '27 comments you gave earlier on the call.

Daniel Jackson

Jasper, you talking about margin, right?

Jasper Bibb

Yes, margin or, I mean, revenue, if you have it?

Daniel Jackson

Yes. Well, we don't give revenue -- forward-looking revenue, and -- but we have commented on margin, as you know, relative to the notional model of 200 basis points of expansion. Karl just mentioned that we're well off of that at this point. However, as we said last quarter, when you adjust for the FWO reserve we took in the second quarter, we're actually not too far off of the 200 basis points.

Jasper Bibb

Okay. And then I just maybe wanted to -- if we could spend a little bit more time on just kind of what you're seeing in U.S. Higher Ed right now and kind of how that's informing your expectations for '27? Enrollment is down like a little bit, but I think retention is going up. So I would assume new starts in the U.S. might be down more than enrollment right now. I guess, could you just kind of frame what you're seeing in new starts in the U.S. and how that informs your expectations for next year?

Karl McDonnell

Sure. Well, as I said, health care is very strong, growing almost double digits, 9% in the last quarter. It's well over half of our enrollments now. So we're confident that, that's going to continue to grow. And I suspect the growth rate will increase given the strength of the new pre-licensure programs. The undergraduate unaffiliated has been declining. Part of that is just a function that we've been deploying more of our growth capital into health care and not into undergraduate business. As Alex noted, and I confirm that the decline is moderating. We think it will continue to moderate.

So net of everything that we're seeing, I suspect that we're going to have net positive new student enrollment growth in '27. And the division as a whole will sort of mean revert toward mid-single digits as we work our way through the year.

Jasper Bibb

Okay. That makes sense. Maybe last one for me. The subscriptions at Sophia just slowed a little bit from the second quarter. Is that kind of harder comps? Or have you seen any impact on subs growth or retention from kind of the recent changes you made to the platform over the summer?

Karl McDonnell

It's almost entirely a function of anniversarying that large corporate client that we have. If you excluded that corporate client, direct-to-consumer subscription growth is still close to 20% and growing, holding that growth rate. So it's really a function of the anniversarying of that one client that's quite large.

Operator

I'm not showing any further questions at this time. I'd like to turn it back over to Karl McDonnell, CEO, for closing remarks.

Karl McDonnell

Thank you, everybody. We look forward to discussing our fourth quarter results with you in February.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.