Stride, Inc. ((LRN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Stride, Inc.’s recent earnings call painted a picture of robust financial health, underscored by record revenue and operating income growth. The company reported significant enrollment increases and a generally favorable funding environment, although challenges such as an impairment charge in the Galvanize business and issues within the Adult Learning segment slightly dampened the positive sentiment. Despite a significant contract loss in New Mexico, Stride adeptly managed to secure new district partners, maintaining its momentum.
Record-Breaking Revenue Growth
Stride, Inc. achieved a full-year revenue of $2.4 billion, marking an 18% increase from the previous year. This growth was driven by strong demand and continued momentum in the school choice market, showcasing the company’s ability to capitalize on market trends.
Significant Increase in Operating Income
The company reported an adjusted operating income of $466.2 million, up nearly 60% from last year. This impressive growth highlights the benefits of scale and improvements in marketing, contributing to Stride’s strong financial performance.
Strong Enrollment Growth
Stride saw a remarkable increase in enrollments, with Career Learning enrollments totaling 96,300, up 33%, and General Education enrollments reaching 137,700, up 13%. This growth reflects the company’s successful strategies in attracting and retaining students.
Awards and Recognitions
Stride received several prestigious awards, including ‘Company of the Year’ by BIG Awards for Business and ‘Best EdTech Company’ by the Global EdTech Awards, further solidifying its reputation in the industry.
Positive Funding Environment
Despite some states holding funding flat, others have increased their contributions, resulting in an overall favorable funding environment for fiscal year 2026. This positive trend is expected to support Stride’s continued growth.
Effective Tax Rate and Cash Flow
Stride reported an effective tax rate of 24.4% for fiscal year 2025, alongside a free cash flow of $372.8 million, up $155.6 million from the previous year, indicating strong financial management.
Galvanize Business Impairment Charge
The company faced a one-time noncash impairment charge of $59.5 million related to the Galvanize business, due to lease expenses and a trade name write-down, highlighting some of the challenges faced in this segment.
Challenges in Adult Learning Segment
While the Adult Learning business showed signs of stabilization, it was described as disappointing due to execution issues on the tech side, indicating areas for improvement.
Lost Contract in New Mexico
Stride experienced the termination of a contract with the Gallup-McKinley school district, affecting around 4,000 students. However, the company mitigated the impact by securing new district partners, demonstrating resilience.
Forward-Looking Guidance
Looking ahead, Stride anticipates double-digit enrollment growth between 10% and 15% for the first quarter of fiscal year 2026, driven by strong application volumes. The company expects revenue per enrollment to remain flat to slightly up compared to fiscal year 2025, with a favorable funding environment supporting this outlook. While gross margin expansion is expected to continue, it will be at a slower pace due to anticipated investments in new products and services.
In summary, Stride, Inc.’s earnings call conveyed a generally positive outlook, with record revenue and operating income growth, strong enrollment numbers, and a favorable funding environment. Despite some challenges, the company’s strategic management and forward-looking guidance suggest continued growth and resilience in the coming fiscal year.