Executive Summary

Q1 FY26 delivered double-digit top-line growth and strong profitability: revenue $620.9M (+12.7% YoY), GAAP diluted EPS $1.40 (+48.9% YoY), and adjusted EPS $1.52 (+39.4% YoY). Management cited strong demand but acknowledged execution challenges from platform upgrades that muted in‑year enrollment growth and pressured margins modestly.
Results beat S&P Global consensus: revenue $620.9M vs $615.9M estimate; Primary EPS $1.52 vs $1.26 estimate (beats on both). Guidance for Q2 revenue $620–$640M brackets the $627.9M consensus. Values retrieved from S&P Global. ; Revenue estimate and EPS estimate from S&P Global*
Guidance initiated for FY26: revenue $2.480–$2.555B, adjusted operating income $475–$500M, capex $70–$80M, tax rate 24–25%. Q2 FY26 guide: revenue $620–$640M, adjusted operating income $135–$145M, capex $15–$18M.
Strategic platform upgrades drove higher withdrawals and lower conversion than expected (estimated 10k–15k enrollments impact), prompting a tactical decision to limit in‑year intake to preserve program quality; remediation is underway with vendors, with the largest fixes expected over the next few months.
Capital allocation: Post-quarter, Stride authorized a share repurchase program of up to $500M through Oct 31, 2026, citing confidence in long‑term outlook and cash generation.

What Went Well and What Went Wrong

What Went Well
- Strong demand and record fall enrollments: total enrollments 247.7K (+11.3% YoY) with Career Learning enrollments 110.0K (+20.0% YoY). “Demand for our products and services remains strong.” — CEO James Rhyu.
- Broad-based revenue growth: General Education +10.2% YoY; Career Learning +16.3% YoY (Middle–High +21.4%). Revenue per enrollment rose 3.7%.
- Profitability expansion despite disruptions: Adjusted operating income +39% YoY to $81.1M; adjusted EBITDA +29% YoY; adjusted EPS +39.4% YoY to $1.52.
What Went Wrong
- Platform implementations “did not go as smoothly as we anticipated,” detracting from customer experience, increasing withdrawals, and reducing conversion.
- Management expects “muted” in‑year enrollment growth versus prior years and lower full‑year gross margin vs FY25 (still above FY24) due to investment and remediation costs.
- Adult learning softness continued (Adult revenue down 28.6% YoY in Q1).

Financial Results

Key financials – recent quarters (GAAP unless noted)

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($M)	$613.4	$653.6	$620.9
Diluted EPS ($)	$2.02	$1.03	$1.40
Gross Margin ($M)	$249.3	$238.9	$242.1

YoY comparison for Q1

Metric	Q1 2025	Q1 2026
Revenue ($M)	$551.1	$620.9
Income from Operations ($M)	$47.3	$69.0
Net Income ($M)	$40.9	$68.8
Diluted EPS ($)	$0.94	$1.40
Adjusted Operating Income ($M)	$58.4	$81.1
EBITDA ($M)	$75.5	$98.2
Adjusted EBITDA ($M)	$83.9	$108.4
Adjusted EPS ($)	$1.09	$1.52

Margins and profitability (context)

Gross margin rate: 39% in Q1 FY26, down ~20 bps YoY (management commentary).

Versus S&P Global consensus (Q1 actuals; Q2 outlook context)

Metric	Q1 2026 Consensus	Q1 2026 Actual	Q2 2026 Consensus	Company Q2 2026 Guide
Revenue ($M)	615.9*	620.9	627.9*	620–640
Primary EPS ($)	1.2625*	1.52	2.3125*	N/A

Values retrieved from S&P Global*

Segment revenue breakdown (Q1)

Segment ($M)	Q1 2025	Q1 2026	YoY
General Education	$329.4	$363.1	+10.2%
Career Learning – Middle/High	$198.9	$241.5	+21.4%
Career Learning – Adult	$22.8	$16.3	(28.6%)
Total Career Learning	$221.7	$257.8	+16.3%
Total Revenue	$551.1	$620.9	+12.7%

KPI trends (Q1)

KPI	Q1 2025	Q1 2026	YoY
Total Enrollments (K)	222.6	247.7	+11.3%
Career Learning Enrollments (K)	91.7	110.0	+20.0%
Revenue per Enrollment ($)	$2,303	$2,388	+3.7%
General Education Rev/Enrollment ($)	$2,399 approx. prior-year reference; current: $2,543 (+6.0%)	$2,543	+6.0%
Career Learning Rev/Enrollment ($)	$2,165 approx. prior-year reference; current: $2,196 (+1.4%)	$2,196	+1.4%

Cash and capex (Q1)

Metric	6/30/25	9/30/25
Cash, Cash Equivalents & Marketable Securities ($M)	$1,011.4	$749.6
Capex ($M, Q1 period)	N/A	$21.7

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY26	N/A	2.480–2.555	Initiated
Adjusted Operating Income ($M)	FY26	N/A	475–500	Initiated
Capex ($M)	FY26	N/A	70–80	Initiated
Effective Tax Rate	FY26	N/A	24–25%	Initiated
Revenue ($M)	Q2 FY26	N/A	620–640	Initiated
Adjusted Operating Income ($M)	Q2 FY26	N/A	135–145	Initiated
Capex ($M)	Q2 FY26	N/A	15–18	Initiated
Gross Margin %	FY26	Not quantified; investment impact noted in prior commentary	Down vs FY25; above FY24 (directional)	Lowered outlook (directional)
Stock-Based Compensation ($M)	FY26	N/A	41–44 (management expectation)	Initiated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25 and Q4 FY25)	Current Period (Q1 FY26)	Trend
Platform/Technology Upgrades	Q3: Demand strong; raised FY25 guide; continued investments implied . Q4: Record year; capex $60M FY25 .	Major rollout issues impacted customer experience; higher withdrawals; limiting in‑year intake to protect quality; remediation underway with vendors .	Deteriorated near term; remediation in progress
Enrollment/In‑Year Growth	Q3/Q4: Strong in‑year growth supported revenue per enrollment adjustments .	Fall count +11.3% YoY to 247.7K, but muted in‑year growth expected for FY26; 10–15k fewer enrollments due to issues .	Slower in‑year growth
Margins	Q3/Q4: Operating leverage; FY25 adjusted OI/EBITDA growth .	Gross margin 39%, down ~20 bps YoY; FY26 gross margin below FY25 (above FY24) due to investments and remediation costs .	Modest pressure FY26
Funding/Mix	Q3: Positive funding; revenue per enrollment slightly down on mix .	Funding backdrop still positive, but mix/timing drive flat revenue per enrollment outlook for FY26 .	Neutral; mix-sensitive
Capital Allocation	Q4: No buyback news.	New $500M repurchase authorization post-quarter (Nov 3) .	More shareholder-friendly

Management Commentary

CEO James Rhyu: “We invested in upgrading our learning and technology platforms... the implementations did not go as smoothly as we anticipated... This poor customer experience has resulted in some higher withdrawal rates and lower conversion rates than we expected.”
CEO on enrollment strategy: “In some instances, the best approach... is to limit enrollment growth while we improve our execution. We estimate... approximately 10,000 to 15,000 fewer enrollments than we otherwise could have achieved.”
CFO Donna Blackman: “Gross margins for the quarter was 39%, down 20 basis points from last year... we now expect full-year gross margins will be down from fiscal year 2025, though still above what we saw in fiscal year 2024.”
CFO on FY26 outlook: “For the full year, we expect revenue in the range of $2.480 to $2.555 billion... adjusted operating income between $475 and $500 million... tax rate between 24% and 25%.”
CEO on remediation timeline: “We think that the biggest [fixes] happen here in the next few months, but they will persist throughout the entire year.”

Q&A Highlights

Enrollment impact parsing: Majority of the 10–15k “missed” enrollments attributable to system implementation issues that increased withdrawals; limiting intake ties to quality while fixing platforms.
Implementation details: Two distinct platforms (customer-facing and back-office); rollout extended into the school year; issues affected login, resiliency, and performance; major fixes expected in coming months.
In‑year growth profile: Management does not expect in‑year enrollment growth in FY26; backfills will occur, but begin-to-end-of-year growth should not be assumed.
Revenue per enrollment: Funding environment remains positive; however, mix/timing and absence of prior-year catch-up adjustments lead to flat FY26 revenue per enrollment outlook.
Competitive landscape: Demand remains strong; management welcomes healthy competition and expects to position for stronger growth after resolving platform issues.

Estimates Context

Q1 FY26 vs S&P Global consensus: Revenue $620.9M vs $615.9M estimate (beat); Primary EPS $1.52 vs $1.26 estimate (beat). Values retrieved from S&P Global.*
Q2 FY26 outlook vs consensus: Company revenue guide $620–$640M brackets $627.9M consensus; Primary EPS consensus $2.31 with no company EPS guide. Values retrieved from S&P Global.*
Implications: Given muted in‑year enrollment growth and margin headwinds, Street models may reduce in‑year growth assumptions, trim gross margin for FY26 vs FY25, and adjust mix assumptions; however, top-line guide and Q2 bracket should anchor near-term revenue expectations.

Key Takeaways for Investors

Beat/raise context: Q1 beat on revenue and Primary EPS vs S&P consensus; FY26 and Q2 guidance provide visibility despite platform-related headwinds. Values retrieved from S&P Global.*
Near-term risk revolves around execution on platform remediation; the largest fixes are expected within months, but work continues throughout FY26.
Enrollment trajectory: Solid YoY count-date growth (+11.3%) but muted in‑year growth expected in FY26; focus shifts to stabilizing retention and conversion before re-accelerating in-year growth in subsequent years.
Mix and margin watch: Funding backdrop positive, but state mix/timing and remediation costs point to lower FY26 gross margin vs FY25 (still above FY24).
Career Learning remains a structural growth engine (Middle–High +21.4% YoY); Adult remains a drag (-28.6% YoY). Monitor segment mix and per-enrollment economics.
Balance sheet and capital returns: ~$750M in liquidity and a new $500M buyback authorization provide downside support and optionality.
Setup: If remediation progresses per plan and demand remains robust, narrative can pivot back to growth and margin expansion into FY27–FY28, consistent with management’s long-term goals.

Notes:

All company figures are GAAP unless otherwise noted. Non‑GAAP reconciliations are provided in company materials.
Values marked with an asterisk (*) are from S&P Global consensus and do not carry document citations. Values retrieved from S&P Global.

Additional References

Q1 FY26 earnings press release and 8‑K (Item 2.02/Ex-99.1):
Q1 FY26 earnings call transcript:
Prior quarters: Q3 FY25 8‑K (press) and Q4 FY25 8‑K (press)
Stock repurchase authorization (Nov 3, 2025):

Stride, Inc. (LRN)·Q1 2026 Earnings Summary