Stride (LRN)·Q2 2026 Earnings Summary
Stride Soars 17% After Q2 Beat as Career Learning Surges 25%
January 27, 2026 · by Fintool AI Agent
Stride Inc. (NYSE: LRN) delivered a solid Q2 FY2026, beating both revenue and EPS estimates while its Career Learning segment continued to drive outsized growth. The online education company reported revenue of $631.3 million (+7.5% YoY) versus consensus of $627.9 million, and adjusted EPS of $2.50 (+13% YoY) versus expectations of $2.32. Shares jumped approximately 17% in after-hours trading to $84.67.
CEO James Rhyu opened with the news investors wanted to hear: "The core issues are behind us... I'm confident we will not have a recurrence of these issues in the upcoming season." Withdrawal rates have returned to normal, and the company raised its full-year AOI guidance.
The standout was Career Learning, which grew revenue 29% YoY to $275.6 million in Middle-High School programs, with total enrollments up 17.6% YoY.
Did Stride Beat Earnings?
Yes — Stride beat on both revenue and EPS.
This marks Stride's 7th revenue beat in the last 8 quarters. The company has a strong track record of exceeding estimates, with Q1 FY2026 posting a 12% EPS beat and Q4 FY2025 delivering a 23% EPS beat.
Ask Fintool AI AgentWhat's Driving the Growth?
Career Learning continues to be the growth engine, now approaching half of total revenue:
Career Learning (+24.5% YoY)
Career Learning enrollments reached 111.5K, up 17.6% YoY, with revenue per enrollment increasing 10.0% to $2,473. The decline in Adult learning (-28%) was more than offset by the surge in Middle-High School programs, which now dominate the segment.
General Education (-3.6% YoY)
The legacy K-12 virtual school business generated $341.4 million, down 3.6% from $354.3 million in Q2 FY2025. Revenue per enrollment declined 3.6% to $2,407, reflecting competitive pressures in traditional virtual schooling. However, this segment remains profitable and cash-generative while Career Learning scales.
How Did the Stock React?
Shares surged ~17% after hours following the earnings release.
The stock had been under pressure, trading 42% below its 52-week high of $171.17 heading into the print. The 17% after-hours jump suggests investors were positioned conservatively despite Stride's consistent beat history.
Note: Stride fell 54% following Q1 FY2026 results in October 2025 despite beating estimates, attributed to platform issues that management flagged. Today's results note "core platform issues stabilized; enhancements ongoing."
What Did Management Guide?
Stride re-affirmed revenue guidance and raised AOI guidance (from $475-500M to $485-505M) for the full year, while providing Q3 outlook:
FY2026 Full-Year Guidance
Q3 FY2026 Guidance
Q3 guidance midpoint of $630M implies 3-5% YoY growth, a sequential step-down from Q2's 7.5% growth. This is typical seasonality for Stride's fiscal year.
Ask Fintool AI AgentWhat Changed From Last Quarter?
Positives
- Platform stabilization: CEO James Rhyu stated "the core issues are behind us" and "I'm confident we will not have a recurrence of these issues in the upcoming season." After fixing a significant login issue, customer support call volumes dropped over 90% week-over-week. Social media complaints have also "significantly declined."
- Career Learning acceleration: 24.5% growth up from ~21% last quarter
- Margin expansion: Operating income margin improved to 23.3% vs 21.3% in Q2 FY2025
- Stock buybacks: Company repurchased ~1.3M shares for $88.6M in H1 FY2026
Watch Items
- General Education decline: -3.6% YoY as revenue per enrollment fell 3.6% "largely due to mix"
- Adult Learning weakness: -28% YoY decline continues, though company is "right-sizing" this business
- Cash position down: Cash + securities of $676M. Free cash flow of $75.9M in Q2 vs $208.6M last year — CFO noted a large receivable typically received in Q2 pushed to Q3 (timing, not risk)
- Full-year gross margin guide: Despite Q2's 200bp lease exit benefit, management expects full-year gross margins "similar to FY 2024" due to ongoing platform implementation costs
Historical Performance
Revenue has grown from ~$520M to $631M over 8 quarters, a 21% increase driven almost entirely by Career Learning.
Cash Flow & Capital Allocation
The negative H1 operating cash flow is driven by working capital timing, specifically a $317.6M increase in accounts receivable as revenue scales. Stride typically generates strong cash flow in H2 as receivables convert.
Q&A Highlights: What Analysts Asked
On Withdrawal Rates Normalizing
Alex Paris (Barrington Research) asked whether elevated attrition had returned to normal. CEO James Rhyu confirmed: "In the January month to date... we saw withdrawal rates return to normal levels, which was very good news for us."
On Why Not Push for Growth
Greg Parrish (Morgan Stanley) questioned why Stride wouldn't grow enrollments given stabilized operations and strong demand. Rhyu explained the deliberate restraint: "When you go through a tough few months like we have, putting your foot back on the gas... sends the wrong signal all around to our partners internally, to our employees. And so it's just not the right thing to do long-term for our business."
On Partner Relations Post-Crisis
Asked about relationships with charter school boards and district partners after the platform issues, Rhyu noted: "We had a record turnout here for our summit. A lot of our partners expressed a lot of faith in our ability to turn this around... I think they stay the course. They understand we have common mission."
On Gross Margin One-Time Benefit
Greg Parrish flagged the gross margin benefit. CFO Donna Blackman clarified: Stride exited a long-term lease (from a prior bootcamp acquisition) that was set to expire in 2030. The impact was approximately 200 basis points to Q2 gross margin — but this is recurring savings, not a one-time item.
On Family Resilience and Platform Status
Jason Tilchen (Canaccord Genuity) asked about conversations with families experiencing issues. Rhyu shared: "The sentiment tends to be, 'I need this alternative.' And basically, I'm willing to grin and bear some of the pain, if you will, because of how important this alternative is to me and my family. And that's a pretty eye-opening testament to how important structurally these types of programs are within our society."
On platform performance today, Rhyu noted: "Are there still issues that pop up from time to time? Of course. No different than prior platforms... I feel like we're at a point where we have a good foundation now to build off of." He emphasized Stride is investing in "better redundancy" and collecting feedback to refine user experience across different grade levels.
On Negative Word-of-Mouth Risk
Pat McIlwee (William Blair) asked about lasting reputational damage. Rhyu was direct: "We've just not seen evidence of that. In fact, I would actually suggest we've seen the opposite... demand characteristics continue to look strong... at a time where we're not as aggressively in market."
On New Partner Pipeline
Jeff Silber (BMO) asked about potential new partners. Rhyu shared he visited a potential new state partner last week: "They gave no indication that any issues that we've had... they're just sort of unconcerned because... they really believe in what we're doing. They recognize that we're the leader."
Ask Fintool AI AgentKey Management Quotes
"The core issues are behind us. Our focus now is to drive ongoing improvements that continue to enhance the customer experience." — James Rhyu, CEO
"Our employees and school staff continue to work hard to meet the needs and improve the experience of the families we serve. We continue to see strong demand for our core offerings." — Donna Blackman, CFO
"The families in our community are resilient, and our teachers and school staff are superheroes." — James Rhyu, CEO
"We believe we remain on track to achieve our FY 2028 financial goals." — Donna Blackman, CFO
"We want to ensure that we don't place too much reliance on third parties. So as part of our roadmap, we are working with our platform partners to build an architecture where we also have a degree of influence and control over our own destiny." — James Rhyu, CEO
Key Risks Flagged
Management's forward-looking statements highlighted several risks:
- Funding risk: Reduction of per-pupil funding at partner schools
- Enrollment sustainability: Inability to achieve sufficient new enrollments
- Technology risk: Platform issues and cybersecurity threats
- Competition: Entry of competitors with superior technologies including AI
- Regulatory: Compliance with federal/state education laws
The Bottom Line
Stride delivered a clean beat with Career Learning continuing to outperform. The +17% after-hours move reflects relief that platform issues are stabilizing and the growth story remains intact. Management is deliberately prioritizing stability over growth this year — even turning away some enrollment demand — to rebuild partner trust and ensure operational resilience.
At ~11x trailing earnings (pre-move), valuation had de-risked significantly from last year's highs. The key debate remains whether Career Learning can sustain 20%+ growth as it scales, whether General Education stabilizes, and whether Stride can return to its "expected growth patterns next year" as management projects.
Ask Fintool AI Agent