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Stride, Inc. (LRN)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered a top-line beat with revenue of $653.6M (+22.4% YoY) versus S&P Global consensus of $625.1M; adjusted EPS was $2.29, materially above consensus $1.89, while GAAP diluted EPS was $1.03 due to a $59.5M one-time impairment related to Galvanize .*
  • Strength was broad-based: General Education revenue grew 13.6% YoY, and Career Learning (Middle–High) grew 43.8% YoY; average quarterly enrollments were 235.3K (+21.7% YoY), with Career Learning enrollments up 33.2% .
  • Management guided qualitatively for FY2026: expect Q1 enrollment growth of 10–15%, revenue per enrollment flat-to-up slightly, gross margin to continue improving but at a slower pace, SG&A as a % of revenue to decline marginally, and CapEx as a % of revenue to be relatively flat; tax rate and interest expense roughly in line with FY2025 .
  • Key catalysts: visible beat on revenue and adjusted EPS, strong K-12 demand/brand awareness, New Mexico multi-district partnership securing ~3,000 enrollments, and tutoring/product investments (including responsible AI) that could widen differentiation .

What Went Well and What Went Wrong

What Went Well

  • Sustained demand and enrollment growth: average Q4 enrollments rose to 235.3K (+21.7% YoY), with Career Learning enrollments up 33.2%; Q4 revenue per enrollment improved to $2,630 (+2.4% YoY) .
  • Segment momentum: Career Learning Middle–High revenue rose 43.8% YoY to $240.5M, and General Education rose 13.6% YoY to $394.1M, lifting total revenue to $653.6M (+22.4% YoY) .
  • Management confidence and execution: “we will once again achieve double digit enrollment growth this fall” and a “cautious but ambitious approach” to AI; tutoring rollouts targeted to 2nd–3rd grade reading and engagement initiatives like K-12 Zone sustained brand advantages .

What Went Wrong

  • GAAP profitability impacted by impairment: recorded $59.5M in one-time noncash charges (Galvanize) pulling GAAP diluted EPS down to $1.03 vs $1.42 prior year, despite strong adjusted EPS of $2.29 .
  • Adult Learning softness: Adult revenue declined 4.3% YoY in Q4 (and throughout FY2025), with management acknowledging execution challenges and continued tech demand headwinds; pivoting MedCerts from B2C to B2B is underway .
  • Gross margin expansion to moderate: after +180 bps YoY in FY2025 (to ~39.2%), management expects slower improvement given reinvestments (tutoring, engagement, teacher tools) even as efficiencies continue .

Financial Results

Quarterly Performance vs Prior Quarters (oldest → newest)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$587.2 $613.4 $653.6
Income from Operations ($USD Millions)$125.1 $130.8 $56.9
Net Income ($USD Millions)$96.4 $99.3 $51.3
Diluted EPS ($)$2.03 $2.02 $1.03
Adjusted Operating Income ($USD Millions)$135.6 $141.7 $130.6
EBITDA ($USD Millions)$152.5 $159.7 $87.1
Adjusted EBITDA ($USD Millions)$160.4 $168.3 $158.4
Adjusted EPS ($)N/AN/A$2.29

Q4 Year-over-Year Comparison (Q4 FY2025 vs Q4 FY2024)

MetricQ4 2024Q4 2025YoY Change
Revenue ($USD Millions)$534.2 $653.6 +22.4%
Income from Operations ($USD Millions)$73.7 $56.9 (22.8%)
Net Income ($USD Millions)$62.8 $51.3 (18.3%)
GAAP Diluted EPS ($)$1.42 $1.03 (27.5%)
Adjusted Operating Income ($USD Millions)$87.9 $130.6 +48.5%
EBITDA ($USD Millions)$101.9 $87.1 (14.6%)
Adjusted EBITDA ($USD Millions)$112.1 $158.4 +41.3%
Adjusted EPS ($)$1.68 $2.29 +36.3%

Segment Breakdown (Revenue)

Segment ($USD Millions)Q3 2025Q4 2024Q4 2025
General Education$370.8 $347.1 $394.1
Career Learning – Middle/High$223.9 $167.2 $240.5
Adult$18.7 $19.9 $19.1
Total Career Learning$242.6 $187.1 $259.5
Total Revenues$613.4 $534.2 $653.6

KPIs

KPIQ2 2025Q3 2025Q4 2025
Avg Enrollments (K)230.6 240.2 235.3
Career Learning Enrollments (K)94.8 98.7 97.0
Revenue per Enrollment ($)$2,395 $2,415 $2,630
General Education RPE ($)$2,497 $2,516 $2,736
Career Learning RPE ($)$2,248 $2,269 $2,479
Cash + Marketable Securities ($USD Millions)$738.1 $754.6 $1,011.4
CapEx ($USD Millions, quarter)$14.8 $15.8 N/A
Free Cash Flow ($USD Millions, FY)N/AN/A$372.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY2025$2.320–$2.355 (Q2) $2.370–$2.385 (Q3) Raised
Adjusted Operating Income ($M)FY2025$430–$450 (Q2) $455–$465 (Q3) Raised
Effective Tax Rate (%)FY202524–26% (Q2) 24–26% (Q3) Maintained
CapEx ($M)FY2025$60–$65 (Q2) $60–$65 (Q3) Maintained
Enrollment Growth (%)Q1 FY2026N/A10–15% expected YoY (qualitative) Initiated commentary
Revenue per EnrollmentFY2026N/AFlat to up slightly vs FY2025 (qualitative) Initiated commentary
Gross Margin TrajectoryFY2026N/AContinue to grow but slower vs past 2 years Qualitative
SG&A as % of RevenueFY2026N/ADecrease marginally Qualitative
CapEx as % of RevenueFY2026N/ARelatively flat Qualitative
Tax Rate, Interest ExpenseFY2026N/AIn line with FY2025 Qualitative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Demand/Enrollments“Record enrollments” and in-year strength; raising FY guides Expect Q1 FY26 enrollments +10–15% YoY; application funnel strong Strengthening
AI/TechnologyResponsible AI adoption; tutoring platform AI summary feature “Cautious but ambitious” approach; partnerships + proprietary AI for outcomes Continued investment
Tutoring/Product InvestmentsNational tutoring rollout; strategic but immaterial near term High-dosage tutoring for 2nd–3rd grade; engagement (K-12 Zone) Scaling
Funding/MacroLow direct federal exposure (<~5%); supportive school choice narrative FY26 state funding broadly favorable; federal changes not material Positive
Adult LearningSoftness; pivot MedCerts to B2B Acknowledged miss; continue to operate better; not material Stabilizing effort
Regional/ContractsDesire to open schools; enrollment caps managed New Mexico: replaced lost partner with multi-district deal; ~3,000 enrolled Franchise resilience
Margins/LeverageGross margin >40% in Q3; AOI/EBITDA records Gross margin to grow at slower pace; SG&A leverage continues Moderating expansion

Management Commentary

  • CEO: “we will once again achieve double digit enrollment growth this fall” and “proceeding with our cautious but ambitious approach to enable the use of AI…in a responsible and impactful manner” .
  • CFO: “adjusted earnings per share was $8.1 up 48%… we booked a onetime noncash impairment charge of $59.5M related to…Galvanize” and “free cash flow…was $372.8M” .
  • On New Mexico: customers migrated to new programs; “we anticipate no hole to fill” from the ~4,000 terminated contract, with ~3,000 enrolled in Destinations Career Academy via new district partners .

Q&A Highlights

  • Funding/State Mix: FY2026 funding environment favorable across states; federal changes not expected to materially impact revenue per enrollment .
  • Gross Margin: expansion will continue but at a slower pace given reinvestments (tutoring, engagement, teacher tools) .
  • Adult Learning: candid acknowledgment of execution miss on tech side; pivoting MedCerts to B2B; focus to avoid distraction while creating incremental value .
  • Enrollment Caps/Operational Constraints: caps exist but typically negotiable; robust demand indicators (applications) support growth .
  • Marketing Efficiency: testing velocity increasing; intent to optimize spend rather than scale significantly .

Estimates Context

MetricQ2 2025 ConsensusQ2 ActualBeat/MissQ3 2025 ConsensusQ3 ActualBeat/MissQ4 2025 ConsensusQ4 ActualBeat/Miss
Revenue ($USD Millions)569.7587.2 +590.1613.4 +625.1653.6 +
Primary EPS ($)2.032.03 =2.1472.02 −1.8872.29 +

Values retrieved from S&P Global.*
Notes: Primary EPS in Q4 appears aligned to adjusted EPS (company introduced adjusted EPS in Q4 materials), while Q2–Q3 reflect GAAP diluted EPS reporting .

Key Takeaways for Investors

  • Strong beat and accelerating revenue trajectory: sequential revenue growth Q2→Q3→Q4 with broad-based segment strength; adjusted EPS outperformance in Q4 despite GAAP impairment headwind .
  • Demand durability: application funnels and brand awareness point to continued double-digit enrollment growth early in FY2026; segment mix remains favorable to Career Learning .
  • Margin path: expect continued improvement but at a moderated pace as Stride invests behind tutoring, engagement, teacher tools and responsible AI; SG&A leverage persists .
  • Franchise resilience: swift New Mexico remediation with multi-district partnerships (~3,000 enrollments) mitigates contract loss risk; indicates operating/partner strength .
  • Adult Learning execution is a watch item: pivot to B2B underway; not material to group but could provide incremental value if stabilized .
  • Cash generation and balance sheet: FY2025 free cash flow ~$372.8M and cash + securities ~$1.0B provide flexibility for continued investment and shareholder-friendly actions .
  • Near-term trading lens: stock may respond to the magnitude of the Q4 adjusted EPS beat and enrollment commentary; monitor FY2026 formal guidance at Q1 call and margin cadence updates .

Citations:

  • Q4 FY2025 8-K press release and financials: .
  • Q4 FY2025 earnings call transcript: .
  • New Mexico press release: .
  • Q3 FY2025 press release and 8-K: .
  • Q3 FY2025 call: .
  • Q2 FY2025 press release and 8-K: .

*Estimates disclaimer: Values retrieved from S&P Global.