Name: Stride, Inc. Q2 2025 Earnings Call
Start: 2025-01-28T22:01:00.000Z

Executive Summary

Stride delivered a strong Q2 FY2025: revenue $587.2M (+16.3% YoY), diluted EPS $2.03 (+31.8% YoY), and gross margin 40.8% (+100 bps YoY), underpinned by record average enrollments of 230.6K (+19.4% YoY) .
Management raised full-year guidance: revenue to $2.320–$2.355B (from $2.225–$2.300B) and adjusted operating income (AOI) to $430–$450M (from $395–$425M); capex $60–$65M and tax rate 24–26% maintained .
Segment strength: Career Learning middle/high revenue $213.1M (+29% YoY) and General Education $354.3M (+12.9% YoY), while Adult Learning remained soft at $19.8M (–23.4% YoY) .
Potential stock reaction catalysts: raised FY revenue/AOI guidance, third straight year of in‑year enrollment growth, improving margins, and ongoing demand; offset by Adult Learning softness and expected 1–2% decline in revenue per enrollment for FY2025 due to state mix .

What Went Well and What Went Wrong

Record enrollments and strong demand: “topping 230,000 students” and broad-based strength in the funnel; third consecutive year of in-year enrollment growth .
Margin expansion: gross margin reached 40.8% (+100 bps YoY) and management still expects +100–200 bps improvement for FY2025 .
Guidance raised: FY revenue to $2.320–$2.355B and AOI to $430–$450M, reflecting enrollment growth and margin gains .

Adult Learning softness: revenue declined to $19.8M (–$6.1M YoY) amid a pivot at MedCerts from B2C to B2B; management expects transitional impact .
Revenue per enrollment pressure: total RPE flat YoY in Q2 ($2,395) with management guiding FY down 1–2%, reflecting state mix dynamics .
Incremental career funnel: despite strong CL enrollment growth (+30.9% YoY), management noted the separate career funnel has not materialized as strongly as expected and remains an execution opportunity .

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$504.9	$551.1	$587.2
Diluted EPS ($USD)	$1.54	$0.94	$2.03
Gross Margin (%)	39.8%	39.2%	40.8%
Adjusted Operating Income ($USD Millions)	$94.9	$58.4	$135.6
Adjusted EBITDA ($USD Millions)	$118.3	$83.9	$160.4

Segment revenue breakdown:

Segment Revenue ($USD Millions)	Q2 2024	Q2 2025
General Education	$313.9	$354.3
Career Learning – Middle/High	$165.1	$213.1
Adult Learning	$25.9	$19.8

Segment YoY change:

KPIs – Enrollments:

KPI	Q2 2024	Q2 2025
Total Average Enrollments (000s)	193.1	230.6
General Education Avg Enrollments (000s)	120.7	135.8
Career Learning Avg Enrollments (000s)	72.4	94.8

Revenue per enrollment:

Notes: AOI/Adjusted EBITDA are non-GAAP; see reconciliations in release/8‑K .

Metric	Period	Previous Guidance (Q1 FY2025)	Current Guidance (Q2 FY2025)	Change
Revenue	FY2025	$2.225B–$2.300B	$2.320B–$2.355B	Raised
Adjusted Operating Income	FY2025	$395M–$425M	$430M–$450M	Raised
Capital Expenditures	FY2025	$60M–$65M	$60M–$65M	Maintained
Effective Tax Rate	FY2025	24%–26%	24%–26%	Maintained
Revenue	Q3 FY2025	—	$585M–$600M	New
Adjusted Operating Income	Q3 FY2025	—	$130M–$140M	New
Capital Expenditures	Q3 FY2025	—	$15M–$17M	New

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
In‑year enrollment growth	FY2024 exceeded pandemic highs; early FY2025 indicators positive; strong demand/application volumes	Third consecutive year of in‑year growth; accelerating enrollments	Improving
Funding/ESSER	Expect FY2025 total RPE flattish; ESSER headwind offset by state funding; mix can vary	ESSER “basically nothing”; federal exposure well <5%; expect FY RPE down 1–2%	Mixed (manageable headwind)
Career Learning funnel	High school largely career; ongoing work to build separate funnel; CL revenue +30% YoY in Q1	Incremental career funnel weaker than hoped despite CL enrollment +31% YoY; remains opportunity	Execution need
Adult Learning/MedCerts	FY2024 Allied Health strong; IT soft; tutoring acceptance building	Adult Learning soft; pivot at MedCerts to B2B for stability/recurring/higher margin	Transition
Tutoring initiative	Early acceptance; potential long-term growth; near-term immaterial	Nationwide launch; net revenue model; AI summary feature; strategic importance	Building
School choice/policy	Bipartisan customer choice narrative; political pressure manageable	Positive tone from administration; state‑level focus; limited federal exposure	Supportive

CEO: “We have once again posted record enrollments, topping 230,000 students… The macro environment for our business is as strong as ever” .
CFO: “This quarter confirms we're now in our third year of in-year enrollment growth… we’re raising both our revenue and profitability guidance for the full year” .
On Adult Learning pivot: “MedCerts… pivoting… to a much more… B2B‑focused business… more stable contracts… more recurring revenue… higher margin” .
On federal exposure: “well less than 5%… ESSER… basically nothing” .
On convertible notes and dilution: EPS includes incremental shares from converts; capped call offsets dilution up to $86.17/share .

Demand/Enrollment funnel: Broad-based strength; third year of YoY growth; incremental career funnel weaker than expected, but long-term opportunity remains .
Tutoring rollout: Net-revenue accounting; near-term immaterial financially but strategically important; AI summary feature positive feedback .
Funding environment: Federal exposure well <5%; ESSER negligible; supportive school choice tone; state-level business focus .
Enrollment caps: Caps exist but are often raised with data-backed demand; history of success working with partners/states .

S&P Global Wall Street consensus for Q2 FY2025 was unavailable during lookup due to an API limit; as a result, we cannot provide beat/miss vs consensus for revenue or EPS at this time. Given raised FY revenue and AOI guidance, Street models likely need upward revisions to FY2025 revenue/EPS and Q3 AOI ranges .
Note: We attempted to fetch Primary EPS Consensus Mean and Revenue Consensus Mean for Q2 FY2025 but the SPGI request limit was exceeded during retrieval, so estimates were unavailable.

Enrollment momentum is the core driver: third straight year of in‑year growth with accelerating trends; supports raised FY revenue/AOI guidance .
Margin trajectory favorable: gross margin up 100 bps YoY; management still targets +100–200 bps for FY, implying operating leverage persistence .
Watch state mix/RPE: total RPE flat YoY in Q2; management expects FY RPE down 1–2% due to mix—model revenue via enrollments rather than RPE expansion .
Adult Learning is a near-term drag but strategic pivot to B2B (MedCerts) should improve stability/margins over time; monitor transition progress .
Policy risk contained: federal exposure well <5%; ESSER impact negligible; state-level dynamics and school choice support demand .
Convertible note mechanics: diluted EPS includes as‑converted shares; capped call offsets dilution to $86.17/share—consider share count sensitivity in valuation .
Near-term trading: raised FY guidance and Q3 outlook provide support; catalysts include sustained demand signals and margin expansion; offset risks from Adult Learning softness and RPE headwinds .