LRN

Stride just posted Q1 FY2027 results and the market did not cheer. The stock slid about 3% to US$76.39 in the first full session after the release, on top of weaker returns over the past three months. Yet the core story hinges on a margin squeeze, not a collapse in demand. Revenue reached US$639.4m while adjusted operating income and gross margin both softened as the online education specialist spent more on instruction and school launches. Traders are reacting to that pressure. The question is whether this short term profitability hit reflects a deeper reset or a fixable enrollment and platform problem. Like the online learning story but uneasy about margin pressure when Stride spends heavily on new programs? Filter for companies that combine strong revenue growth with more consistent profitability in our list of solid balance sheet and fundamentals stocks (25 results) - Revenue (Q1 2027 vs. Q1 2026): US$639.4m vs. US$620.9m (up about 3%) - Net Income (Excl. Extra Items, Q1 2027 vs. Q1 2026): US$64.9m vs. US$68.8m (down about 6%) - Basic EPS (Q1 2027 vs. Q1 2026): US$1.57 vs. US$1.59 (slightly lower) - Gross Margin (Q1 2027 vs. Q1 2026): 37.7% vs. 39.0% (compressed due to higher instruction and launch costs) Ask Charlie what Stride's new CEO is really prioritizing. Optimists argue Stride can turn its Career Learning tilt and tech refresh into a cleaner growth engine. "The main thing that has to go right is for Stride to convert the structural shift toward Career Learning and its new technology platforms into sustained enrollment and margin gains, while managing contract, compliance, and funding risks such as the Texas contract loss and New Mexico litigation." Q1 shows mixed progress. Revenue rose 3% and revenue per enrollment climbed 7%, yet total students fell from 247,700 to 241,400 and gross margin compressed to 37.7%. Guidance for lower full year margins suggests the platform shift is still in the investment phase, not yet in the payoff phase. Skeptics focus on whether funding exposure and platform friction keep eroding the enrollment base. "Segments tied to public funding remain exposed to shifts in state budgets and policy support for virtual schooling. Issues such as the contract loss in Texas and litigation in New Mexico show how localized decisions can quickly affect enrollment, which could lead to uneven revenue and margin pressure if similar actions spread or if school choice support weakens." Texas contract loss and capacity limits already reduced General Education by about 3,000 students. Count date enrollment declined and shares fell roughly 3% after results. Revenue still grew and management added five programs, yet the combination of softer volumes and lower gross margin keeps this risk very visible. That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for. Stride shows how headline results and share moves can diverge for investors. The real opportunity is finding stocks that could be undervalued before the market revalues their earnings power. - Company 1 - 26% below our estimate - targets patients using injectable treatments that reshape obesity and diabetes care as approvals expand use. - Company 2 - 40% below our estimate - supplies tracking, control and storage gear that project owners adopt as utility scale solar pipelines advance. - Company 3 - 23% below our estimate - sells grid testing, aerospace components and RF systems as customers upgrade equipment for electrification and complex power diagnostics. Three companies from the same screener. Open every one of the 33 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LRN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management attributed the disappointing first-quarter enrollment results to technical friction in the user experience, specifically regarding the new Launchpad platform overlay. - CEO Bob Knowling identified three strategic priorities: improving academic outcomes through data-driven interventions, enhancing the parent experience by reducing platform friction, and optimizing the existing product portfolio. - The company is halting initiatives that lack a clear path to improving student outcomes or creating meaningful value to sharpen focus on high-impact areas. - A strategic reassessment is underway to simplify the organization, clarify accountability, and align related teams to improve execution consistency. - Management remains confident in the demand backdrop, citing low national satisfaction with K-12 education as a significant opportunity for personalized, virtual learning options. - The appointment of a new Chief Information Officer is intended to centralize IT development and modernize the technology roadmap to prevent future service disruptions. - Full-year guidance assumes that in-year enrollment growth in the second and third quarters will be largely offset by typical seasonal declines in the fourth quarter. - Revenue per enrollment is projected to increase by 1.5% to 2.5% for the full year, driven by state funding yields and mix, despite a 7% jump in the first quarter. - Management expects full-year gross margins to decline by 100 to 200 basis points due to elevated school launch costs and ongoing investments in student experience improvements. - The company reaffirmed its commitment to fiscal 2028 targets, focusing on execution and resource allocation to the most effective capabilities like career exploration and tutoring. - A newly formed capital allocation committee will review the capital structure and shareholder return priorities, with a framework expected in the coming months. - The loss of the Lone Star program resulted in a net impact of approximately 3,000 students, though the company added five new programs to support long-term growth. - Stock-based compensation for the quarter was a benefit of $7.4 million due to award forfeitures, leading to a projected full-year SG&A decrease of 10% to 15%. - The $420 million convertible note maturing in September 2027 is now classified as a current liability, with the principal required to be settled in cash. - Technical friction in the Launchpad platform affected family retention and enrollment decisions, prompting an urgent simplification of the user interface. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management noted that while career learning still outpaces general education, growth slowed because the company has already reached most available program locations. - Future acceleration depends on creating a dedicated marketing funnel specifically for career-focused students rather than general virtual school seekers. - Donna Blackman confirmed that in-year enrollment activity has been positive since the September count date, unlike the previous year. - The midpoint of the guidance assumes the year will end with enrollment levels roughly in line with the initial count day. - Application volumes were down partly due to a difficult year-over-year comparison and technical disruptions that impacted word-of-mouth and retention. - Management acknowledged that broader changes in Google search algorithms and AI search trends have impacted application traffic across the industry.

Image source: The Motley Fool. Tuesday, Oct. 20, 2026 - Director of Investor Relations - Eliza Henson - Chief Executive Officer - Robert E. Knowling Jr. - chief financial officer - Donna Blackman Operator: Your question, press 1 again. I will now hand the conference over to Eliza Henson, Director of Investor Relations. Eliza, please go ahead. Eliza Henson: Thank you, and good afternoon. Welcome to Stride's first quarter earnings call for fiscal year 27. With me on today's call are Bob Knowling, Chief Executive Officer and Donna Blackman, chief financial officer. As a reminder, today's conference call and webcast are accompanied by a presentation that can be found on the Stride Investor Relations website. Please be advised that today's discussion of our financial results may include certain non GAAP financial measures. A reconciliation of these measures is provided in the earnings release issued this afternoon and can also be found on our Investor Relations website. In addition to historical information, this call will also involve forward looking statements. The company's actual results could differ materially from any forward looking statements due to several important factors as described in the company's earnings release and latest SEC filings including our most recent annual report on Form 10 ks and subsequent filings. These statements are made on the basis of our views and assumptions regarding future events and business performance at the time we make them and the company assumes no obligation to update any forward looking statements. Following our prepared remarks, we will answer questions you may have. Now I will turn the call over to Bob. Robert E. Knowling Jr.: Thank you, Eliza, and good afternoon, everyone, and thank you for joining us. It has truly been energizing to be a part of Stride's school year launch. School opening is always a flurry regardless if it is a traditional brick and mortar school, or a virtual school. All of the excitement, the anxiety, and the positive energy, it is still the same. So our students are back. Teaching and learning is in full swing. And I am fully focused on operational execution and our business results. We delivered first quarter revenue of 639 million. Which is up 3% from last year. Our first quarter enrollment results were lower than we anticipated. The results are disappointing to me, and, obviously, this has my full attention. Experience that parents, students, and teachers had with our technology contributed to the headwinds in applications and the retention of new students during this period. While retention of returning students remain stable, and our conversion metrics remain strong, was not enough to overcome the decline in net new enrollments. And Donna will provide additional detail on enrollment trends, our financial results, and our outlook. Taking a step back, let me talk about my first 2 months as CEO. What I have learned which factors into my plans going forward. Since becoming CEO at the end of July, I have met with district partners. I have met with school leaders. To learn from those closest to our students and parents. And those conversations have reinforced my view that the demand backdrop remains substantial. Families continue to look for more flexibility for their children. They want personalization and career focused options for their kids. there is a recent Gallup report that showed satisfaction with K-12 education. Has reached a new low with only 32% of Americans satisfied with the quality of K-12 education in The United States. The survey underscores the continuing opportunity for education options that better meet the needs of students and families. Our opportunity is right in front of us. And we have to go earn that demand by delivering stronger student outcomes and the better experience. I am convinced that Stride is well positioned to meet this demand. We have a strong foundation, And our focus now is on executing more consistently across the business and building on that foundation to create long term value for students, for families, for our school partners, and for our shareholders. I have identified 3 key areas that I am working to improve. The first priority is student outcomes. Student outcomes are the ultimate measure of our success. Our investments in curriculum, our technology platform, and overall support services has to translate into meaningful academic achievement for students. Better outcomes leads to stronger retention. Stronger relationships with school partners, and it provides sustainable growth. On average, nearly 60% of our students enter our schools below grade level. Yet that is no excuse for falling short on outcomes. I will have a relentless focus on student and school success. In order to do that, we have to analyze the data available across our schools to better understand which interventions are making the greatest difference for students. And where we should focus our time and resources. For example, we know from our data that timely targeted support can make a meaningful difference for students. Knowing when a student is falling behind is key as well as then applying the appropriate interventions to help the student. We have to use data more effectively across our schools in pursuit of student progress. Second, I will spend more time listening directly to parents and incorporating what we hear into the improvements we make to the experience we provide. We have to help parents understand what their kids need to do each day with their schoolwork. We need to teach parents how to access support. And how to stay connected in a virtual learning environment. The parent engagement with the child at a virtual environment is 1 major difference from a brick and mortar school experience. When introducing our new platform changes last year, we added friction to the user experience instead of making it more seamless. We did not sufficiently anticipate the end to end experience for families, or move quickly enough to address the friction they encounter. And in hindsight, we should have taken a more deliberate approach to implementation and testing with greater focus on the experience of the families using the platform every day. Sounds simple. And it should have been. But we did not get it right. We made meaningful progress in preparing for this year's school year. And we did not see a repeat of the broad based technical disruption we experienced last fall. But that does not mean the experience is where it needs to be for our students and families. In response to last year's technical problems, the leadership team decided to develop a new platform overlay called Launchpad. That sits in front of the learning management system that caused last year's challenges. That was the right decision. and 1 which I support. Launchpad organizes information and connects with the learning management system to help guide students through their day. As you may recall, Launchpad's initial rollout in the beginning of this calendar year was successful and it improved the customer experience. However, as we continue to make enhancements leading into the fall enrollment season, Those enhancements led to a poor user experience during the school year launch. We have heard those concerns, and we take that feedback seriously. It is not acceptable for families to have difficulty navigating schedules. Retrieving assignments, or accessing classes. While we cannot isolate the impact on enrollment, we recognize that this friction affected some families decisions during the enrollment period. And we are moving with urgency to make LaunchPad simpler more reliable, and easier to use. I have strengthened our technology leadership with the hiring of Darlene Williams as our chief information officer. Darlene joined Stride from Rocket Software, where she served as the CIO there, and led technology modernization, enterprise systems, and complex integrations across a large growing business. And she brings more than 20 years of experience building technology organizations and delivering scalable secure solutions. With Darlene's appointment, all IT development and operational functions will come together under her leadership. She will help advance a technology road map, with a particular focus on improving the experience for students and families and ensuring our investment supports better outcomes. Third priority is getting more from the portfolio we already have. We have built capabilities that can add real value for students, at different points in their educational journey, tutoring, career exploration, and connections to future opportunities through Tallow. Historically, we have not always been deliberate enough about how these capabilities fit together. Which students would benefit most, or how we measure their impact. We are addressing that by bringing a more integrated approach to our product portfolio. Using data to identify where these offerings can have the greatest effect, and scaling those that improve outcomes. That improve engagement, and the overall K-12 experience. We will also be more selective about the initiatives we support shifting resources away from less effective capabilities and towards the areas we see the clearest opportunity to create value for students and families. That translates into concrete choices. We are halting further work on initiatives where we do not see a clear path to improving outcomes. Or creating meaningful value for students and families. In my first months as CEO, we have begun a strategic reassessment of how we organize and operate the business. As part of that work, we have already moved to simplify the organization, breeding related teams together and clarifying accountability around our highest priorities. These actions are intended to sharpen our focus and direct both financial and leadership resources towards the areas with the greatest potential impact in return. That work is ongoing, but we have not waited to begin making the changes needed to improve execution and strengthen the business. We also recently announced the formation of a new capital allocation committee. Which is tasked with reviewing our capital structure, our capital allocation priorities, including input from shareholders. We expect to share more about this committee's initial framework in the coming months. The strategic reassessment supports our commitment to the fiscal 28 targets that we have already communicated. The core work is execution. Improving the experience for students and families focusing our resources on the areas of greatest impact, and holding ourselves accountable for the progress. Our strategic reassessment remains ongoing. And we will share more as that work develops. To summarize, I am excited about the market opportunity in front of us. I have full confidence in my team, And while change makes people uncomfortable, everything we are doing is in service to the kids and parents who chose us. I intend to lead Stride by staying close to what students, families, and school partners are experiencing. Focusing our resources on the areas of greatest impact, and being very clear about where we need to improve and holding myself and my team accountable for making progress. I want to thank our employees, the educators, and the school partners for their commitment to students and families during this important time of the year. With that, I will turn the call over to Donna for a more detailed discussion of our financial results and outlook. Donna Blackman: Thank you, Bob, and good afternoon. As Bob discussed, we remain focused on improving the experience for our student, families, and school partners while also delivering against our financial objectives. With that context, let me turn to our financial results for the first quarter. Revenue was $639.4 million for the quarter. Compared with $620.9 million in the prior year. An increase of 3%. Adjusted operating income was $78.6 million, compared with $81.1 million in the prior year. Adjusted EBITDA was $111.8 million, compared with $108.4 million in the prior year. Adjusted EPS was $1.37, compared with $1.52 last year. Total enrollment as of September 30th was 241 thousand compared with 248 thousand in the prior year. As we discussed last quarter, we expected the year over year comparison on count date to be more difficult. We moderated in year enrollment growth during fiscal 26, reducing the carryover benefit as we entered this school year. Against that backdrop, reregistration remained essentially in line with last year. The trends we saw and communicated in early August with lower application volumes, partially offset by higher conversion rates continue throughout the fall season. Which resulted in a year over year decline in net new enrollments. Now we are seeing families continue to make enrollment decisions and since the September count date, we have seen positive in year enrollment activity. While it is still early, we are encouraged by the continued demand and remain focused on execution for the balance of the school year. Revenue per enrollment for the quarter was $2.56 thousand up 7% from the first quarter of 26. As we have discussed in the past, revenue per enrollment can vary based upon state mix, funding yield, and the timing of adjustments. For the full year, we expect revenue per enrollment to be up 1.5% to 2.5% from fiscal 2026. Turning to profitability. Gross margin was 37.7% for the quarter. Compared with 39% in the first quarter of fiscal 2026. The first quarter gross margin result reflects elevated costs associated with launching the school year. Including higher instruction costs as well as the operational work underway to improve the experience for students and families. As we move through the year, we will continue to align our instructional costs with enrollment levels. While maintaining our investments in initiatives intended to support stronger student outcomes. As a result, we expect full year gross margin to be down 100 to 200 basis points compared with fiscal 2026. Stock based compensation for the quarter was a benefit of $7.4 million driven by the forfeiture of certain awards. For the full year, we expect stock based compensation to be in the range of $15 to $19 million. Reflecting the impact of those forfeitures. Selling, general, and administrative expenses were $156.8 million. Compared with $173.1 million in the prior year. Primarily driven by lower stock based compensation. For the full year, we expect selling, general, and administrative expenses to be down 10% to 15% year over year. Now turning to our balance sheet and cash flow. Capital expenditures were $24.5 million for the quarter. We continue to invest in technology, curriculum, and improving the experience for students and parents. While remaining focused on the returns from those investments. Free cash flow, which we define as cash flow from operations less capital expenditures, for the quarter was negative $149.3 million compared with negative $217.5 million in the prior year. First quarter cash flow follows the normal seasonal patterns of our business and we expect to generate positive cash flow over the remainder of the year. We ended the quarter with $884.2 million of cash, cash equivalents, and marketable securities. Our $420 million convertible note matures September 2027. And is now reflected on the current liabilities on our balance sheet. And as a reminder, the principal must be settled in cash. While the conversion value above the principal can be settled in cash or shares. During the first quarter, we were constrained by our blackout period from repurchasing shares. With $311 million still available under our current authorization, which was extended through October 2027, we expect to return to the market opportunistically. Subject to the market conditions and other considerations. Bob mentioned the capital allocation committee and the plan to share the committee's initial framework in the coming months. In the meantime, our priorities remain funding the investments needed to grow the business maintaining balance sheet flexibility, and returning capital to shareholders. Turning now to guidance. For the second quarter of fiscal 27, we expect revenue in the range of $625 million to $645 million adjusted operating income between $135 million and $145 million, and capital expenditures between $19 million and $21 million. For the full year, we expect revenue in the range of $2.53 billion to $2.61 billion adjusted operating income between $505 million to $513 million capital expenditures between $70 million and $80 million, and an effective tax rate between 24% to 26%. Our guidance reflects the enrollment outlook we see today, our expectations for revenue per enrollment, and our planned investments to support students and families. We will continue to monitor enrollment trends as the year progresses. Finally, we remain committed to our fiscal 28 targets. The core work is execution. Improving the experience for students and families, directing our resources towards the areas of greatest impact, and holding ourselves accountable for progress. We believe the strength of our core business supports our ability to create long term value. Thank you for your time today. I will turn the call back to the operator for questions. Operator? Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press Star 1 to raise your hand. To withdraw your question, press Star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jeff Silber with Bank of Montreal Capital Markets. Jeff, your line is open. Please go ahead. Jeff Silber: Thank you so much. Wanted to focus first on the enrollment trends in the quarter. Maybe we will start with career learning. Growth slowed pretty dramatically from what you have been seeing over the past few years. Can you give us any color on that? And do you expect that to reaccelerate over the time? Robert E. Knowling Jr.: And so, Jeff, as you know, part of what we saw with respect to initially on career learning growth was attributable to the fact that we wanted to be every place we had to generate program, we wanted to have a career learning program. And so that reflected sort of higher enrollment growth over the couple. Past couple of years respect to career learning. What we have seen overall with the decline year over year in our enrollment numbers that the career learning outpaced the general ed or the general ed enrollment. And that is driven by an increase in number of high school students that we have seen. We have we have talked previously about the fact that the number of students who come to Stride looking for a career learning program versus looking for a virtual program is not where we had expected it to be when we first launched Career Learning. And so we do think there is additional opportunity to further accelerate career learning where we create a separate funnel for career learning which we have not yet created. And so part of that is driven by making sure we have delivered the results for getting jobs, etcetera, for those students who come through our career learning program. Jeff Silber: Alright. Let me let me shift gears then to gen ed. You saw a decline a little over 6% I am assuming Lone Star is in there. Can you first unpack the impact of Lone Star on GenEd? Were there any other schools or programs that were lost? And just general comments about how that is trending. Thanks. Robert E. Knowling Jr.: Yeah. So, certainly, there is an impact on GenEd from the loss of Lone Star. While we were able to offer any family who wanted to stay a program, 1 of our existing managed programs, or in our private programs, the net impact relative to the last year was about loss of about 3 thousand students, including the 2,000 that are sitting in our private school. The other part of that is, you know, we were limited in terms of capacity just because of the capacity limitations given the Alt Ed programs that we have. And so we did not see the growth in Texas that we might otherwise have seen. And any other programs lost? We lost the a small program, but the. I think the important thing to note is we had a net increase of 5 additional programs this year. And while that important, it is, you know, it is it is less about the impact in the current year. it is really more about setting ourselves up for a longer term growth. I think it speaks to the strengths of the brand and that partners wanna continue, to partner with us. And so while it does not have a significant impact in the current year, again, it does set us up for long term success and I think it speaks to the long term pro. Prospects for business. Jeff Silber: Alright. Thanks so much. Appreciate the call. Operator: Your next question comes from the line of Stephen Sheldon with William Blair. Stephen, your line is open. Please go ahead. Stephen Sheldon: Hey. Thanks for taking my questions. First, for the guidance for the full year, I think I heard you say, Donna, that since the count date, I think enrollments have moved up. I guess would love to just get any detail on what you have kind of baked into the guidance for the full year. In terms of sequential enrollment trends? I know last year was different. The prior 2 years, you saw Q1 to Q2 up. Q2 to Q3 up, and you have always been down in Q4. But just would love any commentary on kind of what you baked into the guide. Donna Blackman: Sure. Look, what I want to start by saying given where we are today, and it is still very early into Q2, we are encouraged by what we are seeing. We are encouraged by the fact that we are seeing in year enrollment growth, and we were not in that situation last year. So, again, early, but we are encouraged by that. Our guidance assumes in year enrollment growth. So we look at the midpoint of our guidance, it assumes in-year enrollment growth for Q2 and Q3. And then you know, from Q3 to Q4, we typically see a decline. And so our midpoint guidance assumes that decline will offset the gains that we see in Q2 and Q3. So we will end the year. With enrollment in line with where we were on count day, a much better position than we were in last year. On the high end, it is assuming we have had the in year enrollment growth that we have in Q2 and Q3, that the decline that we see again, historically, we see that decline. From Q3 to Q4 would not be enough to offset, so we would see a net growth in the year versus count day. And that is, again, that is what we baked into our guidance. Stephen Sheldon: Yep. Perfect. that is helpful. And then I guess wanted to dig in on both the trend and new applications and marketing plans. On applications being down, you know, I guess, any qualitative commentary you can provide on why you think it was down. You know, is that flow through the tech platform issues last year and maybe negative word-of-mouth activity around that. I know there is been a lot of concern about Google search algorithm changes in AI. Consumer AI search. So I am curious why applications were down. And then maybe also on marketing plans for the year, maybe just high level. Are you tapering marketing spend some? How are you planning on managing the marketing budget, over the rest of the year? Donna Blackman: Yeah. So 1 of the things I talked about, in August, we were trending down with applications. And part of the reason we thought we were trending down on applications back in August is we had a really strong early enrollment, early applications last year. And so we thought it was a tougher comp. And so if you look at overall, we ended from an application standpoint. While we were down, we were about 2% higher than we were 2 years ago. So part of it is related to tougher comp. But the reality is our technology issues did have some impact on our application volumes, on our net new enrollments. And that is 1 of the things that Bob is talking about in really taking a deep dive into not just understanding the issues, but making sure we fix them and do not repeat them and make sure our families have the experience that we want them to have, that they have been accustomed to having. With respect to our marketing spend, we talked about returning to marketing spend. We cut back on our marketing spend last year. We have returned to spending on marketing. And yes, the impact not just on us, but across not just our industry, all industries in terms of the Google search, and that impact is down across the board for not just our industry, but again, across the board. And so, yeah, that is certainly having some impact as well. But the reality is we do think there is demand out there, that we have got to be able to go out and capture that demand And so we have got to improve the experience. We have got to execute And I am encouraged by what I have seen to date in terms of net new in year enrollment growth. Stephen Sheldon: Very helpful. Thank you. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Stride. The Motley Fool has a disclosure policy. Stride (LRN) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. - Revenue: $639.4 million, up 3% year over year from $620.9 million. - Adjusted Operating Income: $78.6 million, down from $81.1 million in the prior year. - Adjusted EBITDA: $111.8 million, up from $108.4 million in the prior year. - Adjusted EPS: $1.37, compared with $1.52 last year. - Total Enrollment: 241,400 as of September 30, down from 247,700 in the prior year. - Revenue per Enrollment: $2,556, up 7% from Q1 fiscal 2026; full-year expected up 1.5% to 2.5%. - Gross Margin: 37.7%, down from 39% in Q1 fiscal 2026; full-year expected down 100 to 200 basis points. - SG&A Expenses: $156.8 million, down from $173.1 million; full-year expected down 10% to 15% year over year. - Stock-Based Compensation: $7.4 million benefit for the quarter; full-year expected $15 million to $19 million. - Capital Expenditures: $24.5 million for the quarter. - Free Cash Flow: Negative $149.3 million, compared with negative $217.5 million in the prior year. - Cash and Marketable Securities: $884.2 million at quarter end. - Share Repurchase Authorization: $311 million remaining, extended through October 2027. - Q2 Fiscal 2027 Guidance: Revenue of $625 million to $645 million; adjusted operating income of $135 million to $145 million; capex of $19 million to $21 million. - Full-Year Fiscal 2027 Guidance: Revenue of $2.53 billion to $2.61 billion; adjusted operating income of $500 million to $530 million; capex of $70 million to $80 million; effective tax rate of 24% to 26%. - Is LRN fairly valued? Test your thesis with our free DCF calculator. Release Date: October 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Stride Inc (NYSE:LRN) reported first quarter revenue of $639.4 million, up 3% year-over-year. - Revenue per enrollment increased 7% to $2,556, reflecting strong pricing and state mix. - Re-registration of returning students remained stable, indicating core customer loyalty. - The company added five net new programs, expanding its partner base for future growth. - Stride Inc (NYSE:LRN) is taking decisive actions to improve the user experience, including hiring a new CIO and simplifying the technology platform. - Total enrollment declined to 241,400 from 247,700 last year, with net new enrollments falling short of expectations. - Technology platform issues, including friction from the Launchpad overlay, negatively impacted applications and retention. - Gross margin decreased to 37.7% from 39%, due to higher instruction costs and operational challenges. - Adjusted EPS fell to $1.37 from $1.52, and free cash flow was negative $149.3 million for the quarter. - Full-year gross margin is expected to decline 100-200 basis points, and enrollment guidance implies flat to modest growth, reflecting ongoing headwinds. Q: With Career Learning growth slowing dramatically, can you give color on the trend and whether you expect it to re-accelerate? A: CFO Donna Blackman explained that past Career Learning growth was driven by adding a Career Learning program everywhere a gen ed program existed. This year, Career Learning still outpaced gen ed enrollment, helped by more high school students, but the number of students specifically seeking a Career Learning program is below original expectations. She sees additional opportunity to accelerate growth by creating a separate Career Learning funnel, partly contingent on demonstrating strong job-placement outcomes for those students. Q: Gen ed enrollment declined over 6%. Can you unpack the Lone Star impact and whether any other schools or programs were lost? A: CFO Donna Blackman said the loss of Lone Star drove part of the gen ed decline. Although families were offered spots in existing managed or private programs, the net impact versus last year was a loss of about 3,000 students, including 2,000 now in the private school. Capacity limitations in alt ed programs also prevented growth in Texas that might otherwise have occurred. She noted one small program was lost, but the company added a net five new programs this year, which supports long-term growth even if the current-year impact is limited. Q: What sequential enrollment trends are baked into full-year guidance, given that enrollments have moved up since the count date? A: CFO Donna Blackman said guidance assumes in-year enrollment growth in Q2 and Q3. At the midpoint, the typical Q3-to-Q4 decline is expected to offset those gains, leaving full-year enrollment roughly in line with the count datea much better position than last year. At the high end, the Q3-to-Q4 decline would not fully offset in-year growth, resulting in net growth versus the count date. She noted it is still early in Q2 but the company is encouraged to be seeing in-year growth, unlike last year. Q: Why were new applications down, and how are you managing marketing spend for the rest of the year? A: CFO Donna Blackman said part of the application decline reflects a tougher comparison against very strong early applications last year; overall applications ended about 2% higher than two years ago. However, the technology issues did impact application volumes and net new enrollments. She also cited broad industry-wide pressure from Google Search changes and consumer AI search. On marketing, the company has returned to spending after cutting back last year, and management believes demand exists but must be captured through better experience and execution. Q: What drove the first quarter revenue growth and profitability results? A: CFO Donna Blackman reported Q1 revenue of $639.4 million, up 3% from $620.9 million a year ago. Adjusted operating income was $78.6 million versus $81.1 million, adjusted EBITDA was $111.8 million versus $108.4 million, and adjusted EPS was $1.37 versus $1.52. Revenue per enrollment rose 7% to $2,556, though full-year revenue per enrollment is expected to grow only 1.5% to 2.5%. Gross margin fell to 37.7% from 39%, reflecting elevated school-year launch costs, including higher instruction costs and operational work to improve the student and family experience. Q: What caused the enrollment shortfall this quarter, and what is management doing about it? A: CEO Bob Knowling said first quarter enrollment was lower than anticipated and called the results disappointing. Retention of returning students remained stable and conversion metrics stayed strong, but these were not enough to offset the decline in net new enrollments. He attributed headwinds in applications and new-student retention partly to the experience parents, students, and teachers had with the technology platforms. He outlined three priorities: improving student outcomes, listening directly to parents to improve the experience, and getting more from the existing portfolio. Q: What happened with the Launchpad platform, and how are you fixing the user experience? A: CEO Bob Knowling said the initial Launchpad rollout earlier in the calendar year was successful, but enhancements made ahead of the fall enrollment season created a poor user experience during the school-year launch. He acknowledged it is unacceptable for families to have difficulty navigating schedules, retrieving assignments, or accessing classes, and said the friction affected some families' enrollment decisions. The company is moving with urgency to make Launchpad simpler and more reliable, and has hired Darlene Williams as Chief Information Officer to consolidate IT development and operations under her leadership. Q: What is the outlook for gross margin and operating expenses for the full year? A: CFO Donna Blackman guided full-year gross margin down 100 to 200 basis points versus fiscal 2026, as the company aligns instructional costs with enrollment while maintaining investments in student outcomes. SG&A is expected to be down 10% to 15% year over year, helped by lower stock-based compensation. Full-year stock-based compensation is expected in the range of $15 million to $19 million, reflecting forfeitures of certain awards. Q: What is the full-year and second quarter guidance? A: CFO Donna Blackman guided Q2 revenue of $625 million to $645 million, adjusted operating income of $135 million to $145 million, and capital expenditures of $19 million to $21 million. For the full year, guidance is revenue of $2.53 billion to $2.61 billion, adjusted operating income of $500 million to $530 million, capital expenditures of $70 million to $80 million, and an effective tax rate of 24% to 26%. She said the guidance reflects the current enrollment outlook, revenue per enrollment expectations, and planned investments, and the company remains committed to its fiscal 2028 targets. Q: How is the balance sheet and capital allocation positioned, including the convertible note and buyback? A: CFO Donna Blackman said the company ended the quarter with $884.2 million in cash, equivalents, and marketable securities. The $420 million convertible note matures in September 2027 and is now a current liability; principal must be settled in cash, while conversion value above principal can be settled in cash or shares. Q1 free cash flow was negative $149.3 million versus negative $217.5 million a year ago, consistent with normal seasonality, and positive cash flow is expected over the remainder of the year. With $311 million available under the buyback authorization extended through October 2027, the company expects to return to the market opportunistically after the blackout period. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Interested in Stride, Inc.? Here are five stocks we like better. - Enrollment declined 3% year over year to 241,400 students, as technology-platform changes created friction for families and reduced applications and new-student retention. Returning-student retention and conversion rates remained stable. - First-quarter revenue rose 3% to $639.4 million and adjusted EBITDA increased to $111.8 million, but adjusted EPS fell to $1.37 from $1.52 as gross margins narrowed and launch-related costs increased. - Stride maintained its full-year outlook of $2.53 billion to $2.61 billion in revenue and $500 million to $530 million in adjusted operating income, while prioritizing technology improvements, enrollment recovery and a broader strategic review. - 4 Stocks That Crushed Analyst Estimates by More Than Double Stride (NYSE:LRN) reported fiscal first-quarter revenue growth of 3% but said enrollment fell year over year as technology-platform issues affected applications and retention among new students. Revenue for the quarter totaled $639.4 million, compared with $620.9 million a year earlier. Adjusted operating income declined to $78.6 million from $81.1 million, while adjusted EBITDA increased to $111.8 million from $108.4 million. Adjusted earnings per share were $1.37, down from $1.52 in the prior-year quarter. → The AI Sell-Off Continues—These 3 Stocks Keep Raising Guidance Anyway - 2 Stocks That Crushed Short Sellers With Impressive Gains Total enrollment as of Sept. 30 was 241,400, compared with 247,700 a year earlier. Chief Executive Officer Bob Knowling, who became CEO at the end of July, said the company's enrollment performance was below expectations and had his "full attention." Knowling said parents, students and teachers encountered challenges with Stride's technology platforms, contributing to lower application activity and lower retention of new students. Retention among returning students was stable and conversion metrics remained strong, he said, but those factors did not offset the decline in net new enrollment. → Tesla's Roadster Reveal Hints at 2 Much Bigger Moves - Chegg Chokes on AI Attempt, CEO Talks it Up as He Passes Torch "When introducing our new platform changes last year, we added friction to the user experience instead of making it more seamless," Knowling said. "We did not sufficiently anticipate the end-to-end experience for families or move quickly enough to address the friction they encountered." The company said it did not experience a repeat of the broad technical disruptions reported during the prior fall school launch. However, enhancements to its Launchpad platform ahead of the current enrollment season created a poor user experience during the school-year launch, according to Knowling. → Luxury's Middle Market Is Cracking—These 3 Stocks Could Win Launchpad serves as an overlay in front of the learning-management system, organizing information and guiding students through their daily work. Knowling said families should not have difficulty navigating schedules, retrieving assignments or accessing classes. While the company cannot isolate the platform's precise enrollment effect, he said the friction influenced some families' decisions during the enrollment period. Stride has hired Darlene Williams as chief information officer. Williams previously served as CIO at Rocket Software, and Knowling said all IT development and operational functions will report under her leadership. Her priorities will include improving the experience for students and families and aligning technology investments with student outcomes. Chief Financial Officer Donna Blackman said lower application volumes, partially offset by higher conversion rates, continued through the fall enrollment season. Applications were lower year over year but approximately 2% above the level from two years ago, she said. Blackman cited a difficult comparison with strong early applications in the prior year, technology issues and broader changes affecting Google Search as factors influencing results. The company said it has resumed marketing spending after reducing such spending last year. Blackman said Stride believes demand remains available but that it needs to improve the customer experience and execution to capture it. Career Learning enrollment continued to outpace general education enrollment, aided by a higher number of high school students. Blackman said the company had previously expanded Career Learning offerings wherever it had general education programs. She added that Stride sees an opportunity to accelerate Career Learning growth by establishing a separate enrollment funnel for those programs, though it has not yet done so. General education enrollment was affected by the loss of Lone Star, which resulted in a net reduction of approximately 3,000 students compared with last year, including 2,000 students in Stride's private school. Capacity limitations in alternative education programs also constrained potential growth in Texas, Blackman said. Stride lost another small program but added a net five programs during the year. Blackman said the additions are more meaningful for the company's longer-term growth prospects than for the current fiscal year. First-quarter revenue per enrollment rose 7% to $2,556. Stride expects revenue per enrollment for the full fiscal year to increase 1.5% to 2.5% from fiscal 2026. Gross margin fell to 37.7% from 39% a year earlier, reflecting higher costs associated with launching the school year, including instruction costs and operational work to improve student and family experiences. The company expects full-year gross margin to decline by 100 to 200 basis points from fiscal 2026. Selling, general and administrative expenses declined to $156.8 million from $173.1 million, primarily due to lower stock-based compensation. First-quarter stock-based compensation included a $7.4 million benefit related to forfeited awards. Stride expects full-year SG&A expenses to decline 10% to 15% year over year and anticipates stock-based compensation of $15 million to $19 million. Capital expenditures were $24.5 million, while free cash flow was negative $149.3 million, compared with negative $217.5 million a year ago. Blackman said first-quarter cash flow reflects the business's normal seasonal pattern and that the company expects positive cash flow during the remainder of the year. Stride ended the quarter with $884.2 million in cash equivalents and marketable securities. Its $420 million convertible note matures in September 2027 and is now classified as a current liability. The company has $311 million remaining under its share-repurchase authorization, which runs through October 2027. - Second-quarter revenue guidance: $625 million to $645 million - Second-quarter adjusted operating income guidance: $135 million to $145 million - Full-year revenue guidance: $2.53 billion to $2.61 billion - Full-year adjusted operating income guidance: $500 million to $530 million - Full-year capital expenditure guidance: $70 million to $80 million Blackman said Stride has seen positive in-year enrollment activity since the September count date. The midpoint of its full-year outlook assumes enrollment growth in the second and third quarters, followed by the company's typical decline from the third to fourth quarter, resulting in year-end enrollment roughly in line with the September count date. Knowling said the company has begun a broader strategic reassessment focused on student outcomes, parent experience and more integrated use of its portfolio of tutoring, career exploration and Tallo offerings. Stride is also halting work on initiatives where it does not see a clear path to improving outcomes or creating meaningful value, he said. The company remains committed to its previously communicated fiscal 2028 targets. Stride, Inc is an education technology company that provides online and blended learning programs for K-12 students. The company partners with public school districts, charter schools and other education organizations to deliver digital curricula, instructional software, teaching support and student services. Its offerings are designed to support full-time virtual schools, supplemental courses and traditional schools incorporating online learning. Stride also provides career-focused education through programs that combine academic instruction with career exploration, technical training and industry-aligned learning opportunities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Stride (LRN) Said on Its Q1 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

K12 (LRN) came out with quarterly earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.3 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +5.39%. A quarter ago, it was expected that this online education company would post earnings of $1.89 per share when it actually produced earnings of $2.12, delivering a surprise of +12.17%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. K12, which belongs to the Zacks Schools industry, posted revenues of $639.38 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 4.61%. This compares to year-ago revenues of $620.88 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. K12 shares have added about 24.7% since the beginning of the year versus the S&P 500's gain of 12.4%. While K12 has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for K12 was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.73 on $632.7 million in revenues for the coming quarter and $8.62 on $2.53 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Schools is currently in the bottom 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Laureate Education (LAUR), is yet to report results for the quarter ended September 2026. The results are expected to be released on October 29. This for-profit higher education purveyor is expected to post quarterly earnings of $0.47 per share in its upcoming report, which represents a year-over-year change of +88%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Laureate Education's revenues are expected to be $477.11 million, up 19.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stride, Inc. (LRN) : Free Stock Analysis Report Laureate Education (LAUR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

RESTON, Va., Oct. 20, 2026 (GLOBE NEWSWIRE) -- Stride, Inc. (NYSE: LRN), one of the nation's most successful technology-based education companies, today announced its results for the first quarter of fiscal year 2027 ended September 30, 2026. First Quarter Fiscal 2027 Highlights Compared to 2026 - Revenue of $639.4 million, compared with $620.9 million - Income from operations of $84.3 million, compared with $69.0 million - Net income of $64.9 million, compared with $68.8 million - Diluted net income per share of $1.45, compared with $1.40 - Adjusted operating income of $78.6 million, compared with $81.1 million (1) - Adjusted EBITDA of $111.8 million, compared with $108.4 million (1) - Adjusted earnings per share of $1.37, compared with $1.52 (1) First Quarter Fiscal 2027 Summary Financial Metrics | Three Months Ended September 30, | | Change 2026/2025 | 2026 | | 2025 | | $ | | % | (In thousands, except percentages and per share data) Revenues | $ | 639,378 | | $ | 620,884 | | $ | 18,494 | | 3.0% | | | | | | | | | | Income from operations | | 84,268 | | | 68,983 | | | 15,285 | | 22.2% Adjusted operating income (1) | | 78,646 | | | 81,138 | | | (2,492) | | (3.1)% | | | | | | | | | | Net income | | 64,919 | | | 68,800 | | | (3,881) | | (5.6)% Net income per share, diluted | | 1.45 | | | 1.40 | | | 0.05 | | 3.6% Adjusted earnings per share (1) | | 1.37 | | | 1.52 | | | (0.15) | | (9.9)% | | | | | | | | | | EBITDA (1) | | 119,202 | | | 98,217 | | | 20,985 | | 21.4% Adjusted EBITDA (1) | | 111,810 | | | 108,439 | | | 3,371 | | 3.1% | | | | | | | | | | (1) To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA, adjusted EBITDA, and adjusted earnings per share. Management believes that these additional measures provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Revenue Data | Three Months Ended September 30, | | Change 2026/2025 | 2026 | | 2025 | | $ | | % | (In thousands, except percentages) General Education | $ | 356,606 | | $ | 363,116 | | $ | (6,510) | | (1.8)% Career Learning | | | | | | | | | | Middle - High School | | 272,098 | | | 241,500 | | | 30,598 | | 12.7% Adult | | 10,674 | | | 16,268 | | | (5,594) | | (34.4)% Total Career Learning | | 282,772 | | | 257,768 | | | 25,004 | | 9.7% Total Revenues | | 639,378 | | | 620,884 | | | 18,494 | | 3.0% | | | | | | | | | | Enrollment and Revenue Per Enrollment Data First quarter enrollments averaged 241.4K, down (2.5)% compared to 247.7K enrollments in the first quarter of fiscal year 2026. Of the total enrollments, 112.2K were Career Learning enrollments, up 2.0% compared to 110.0K Career Learning enrollments in the first quarter of fiscal 2026. Enrollments include those students in full service public or private programs where Stride provides a combination of curriculum, technology, and instructional and support services, inclusive of administrative support and may include enrollments for which Stride receives no public funding or revenue. Stride does not report enrollments for our Adult Learning business. Revenue per enrollment for the first quarter was $2,556, up 7.0% compared to $2,388 in the first quarter of fiscal year 2026. General Education revenue per enrollment was $2,670, up 5.0%, and Career Learning revenue per enrollment was $2,425, up 10.4%, compared to fiscal year 2026. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollment are significantly different. Cash Flow and Capital Allocation As of September 30, 2026, the Company's cash and cash equivalents and marketable securities totaled $884.2 million, compared with $1,034.1 million reported at June 30, 2026. Capital expenditures for the three months ended September 30, 2026 were $24.5 million, compared to $21.7 million in the three months ended September 30, 2025, and were comprised of $17.9 million of capitalized software development and $6.6 million of capitalized curriculum development. Fiscal Year 2027 Outlook The Company is forecasting the following for the full fiscal year 2027: - Revenue in the range of $2.530 billion to $2.610 billion - Capital expenditures in the range of $70 million to $80 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software and curriculum development costs as defined on our Statement of Cash Flows - Effective tax rate of 24% to 26% - Adjusted operating income in the range of $500 million to $530 million (2) The Company is forecasting the following for the second quarter of fiscal year 2027: - Revenue in the range of $625 million to $645 million - Capital expenditures in the range of $19 million to $21 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software and curriculum development costs as defined on our Statement of Cash Flows - Adjusted operating income in the range of $135 million to $145 million (2) (2) In addition to providing an outlook for revenue and capital expenditures, adjusted operating income is provided as a supplemental non-GAAP financial measure as management believes that it provides useful information to our investors. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Please also see Special Note on Forward-Looking Statements below. Conference Call The Company will discuss its first quarter fiscal year 2027 financial results during a conference call scheduled for Tuesday, October 20, 2026 at 5:00 p.m. Eastern Time (ET). A live webcast of the call will be available at investors.stridelearning.com/events-and-presentations. To participate in the live call, investors and analysts should dial (833) 461-5787 (domestic) or +1 (585) 542-9983 (international) and provide the conference ID number 305 592 627. Please access the website at least 15 minutes prior to the start of the call. A replay of the call will be posted at investors.stridelearning.com/events-and-presentations. About Stride Inc. Stride Inc. (NYSE: LRN) is redefining lifelong learning with innovative, high-quality education solutions. Serving learners in primary, secondary, and postsecondary settings, Stride provides a wide range of services including K-12 education, career learning, professional skills training, and talent development. Stride reaches learners in all 50 states and over 100 countries. Learn more at stridelearning.com. Investor Contact [email protected] | Media Contact [email protected] | Special Note on Forward-Looking Statements This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements, such as any statements that look to future events and include, among other things, our expectations regarding: mix of enrollment, revenue per enrollment, future financial and other trends, forecasts, assumptions and guidance, and future share repurchases. We have tried, whenever possible, to identify these forward-looking statements using words such as "outlook," "forecasts," "anticipates," "trends," "believes," "estimates," "continues," "likely," "may," "opportunity," "potential," "projects," "will," "will be," "expects," "plans," "intends," "should," "would" and similar expressions to identify forward-looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve a sufficient level of new enrollments to sustain our business model or to meet financial or operational guidance; limitations of the enrollment data we present, which may not fully capture trends in the performance of our business; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; failure of the schools we serve, our vendors, or us to comply with our contracts, or federal, state and local laws and regulations, resulting in a loss of funding, an obligation to repay funds previously received, contractual remedies, or actions or proceedings against us; governmental investigations that could result in fines, penalties, settlements, or injunctive relief; declines or variations in academic performance outcomes of the students and schools we serve, including due to the evolution of curriculum standards, testing programs and state accountability metrics; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and/or in any school which we operate; legal and regulatory challenges from opponents of virtual public education or for-profit education companies; potential violation of laws and regulations relating to privacy and data protection, including such laws and regulations as may apply to children's data; changes in national and local economic and business conditions and other factors, such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts, or a reduction or termination in the scope of services, with schools; failure to develop the Career Learning business; entry of new competitors with superior technologies (including artificial intelligence ("AI")) and lower prices; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement of our intellectual property; disruptions to our Internet-based learning and delivery systems, including, but not limited to, our data storage systems and third-party cloud infrastructure, systems and facilities, including as a result of cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; failure to prevent or mitigate a cybersecurity incident that affects our systems or our data; problems in the implementation of new information technology systems and technology; failure by us or third parties to maintain and support information technology systems, including addressing quality issues and timely delivering new products and enhancements; risks related to the use, implementation and regulation of AI and other emerging technologies, including in the education of children, and their use by third-party vendors; risks related to our stock repurchase program; the extent to which we acquire businesses or change our capital allocation strategy or the implementation thereof; changes in our effective tax rate and additional liabilities; and other risks and uncertainties associated with our business described in the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended June 30, 2026 and any subsequently filed Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or the Company's other filings with the Securities and Exchange Commission. Forward-looking statements reflect our management's expectations or predictions of future conditions, events or results based on various assumptions and estimates. They are not guarantees of future performance. Our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements in this press release or that we make from time to time, and to consider carefully the factors discussed above. All information in this press release is as of today's date, and the Company undertakes no obligation to update any forward-looking statement as a result of new information, future events or otherwise, except where we are expressly required to do so by law. Financial Statements The financial statements set forth below are not the complete set of Stride, Inc.'s financial statements for the three months ended September 30, 2026 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.'s Quarterly Report on Form 10-Q for the three months ended September 30, 2026, including all financial statements contained therein and the footnotes thereto, filed with the SEC, which may be retrieved from the SEC's website at www.sec.gov or from Stride Inc.'s Investor Relations website at investors.stridelearning.com. STRIDE, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | | Three Months Ended | September 30, | 2026 | | 2025 | (In thousands except share and per share data) Revenues | $ | 639,378 | | | $ | 620,884 | Instructional costs and services | | 398,261 | | | | 378,761 | Gross margin | | 241,117 | | | | 242,123 | Selling, general, and administrative expenses | | 156,849 | | | | 173,140 | Income from operations | | 84,268 | | | | 68,983 | Interest expense, net | | (2,906 | ) | | | (3,075 | ) Other income, net | | 1,477 | | | | 16,914 | Income before income taxes and income (loss) from equity method investments | | 82,839 | | | | 82,822 | Income tax expense | | (17,840 | ) | | | (14,423 | ) Income (loss) from equity method investments | | (80 | ) | | | 401 | Net income attributable to common stockholders | $ | 64,919 | | | $ | 68,800 | Net income attributable to common stockholders per share: | | | | | Basic | $ | 1.57 | | | $ | 1.59 | Diluted | $ | 1.45 | | | $ | 1.40 | Weighted average shares used in computing per share amounts: | | | | | Basic | | 41,479,826 | | | | 43,371,952 | Diluted | | 44,828,092 | | | | 49,222,851 | | | | | | | | STRIDE, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | | | | September 30, | | June 30, | 2026 | | 2026 | | | (audited) ASSETS | (In thousands except share and per share data) | | | | | Current assets | | | | | Cash and cash equivalents | $ | 547,750 | | | $ | 754,501 | Accounts receivable, net of allowance of $31,751 and $31,302 | | 854,808 | | | | 664,788 | Inventories, net | | 22,665 | | | | 38,250 | Prepaid expenses | | 75,345 | | | | 43,052 | Marketable securities | | 241,425 | | | | 203,499 | Other current assets | | 12,414 | | | | 12,033 | Total current assets | | 1,754,407 | | | | 1,716,123 | Property and equipment, net | | 172,974 | | | | 102,042 | Capitalized software, net | | 101,916 | | | | 95,002 | Capitalized curriculum development costs, net | | 59,963 | | | | 56,895 | Intangible assets, net | | 9,106 | | | | 10,876 | Goodwill | | 246,676 | | | | 246,676 | Deposits and other assets | | 185,914 | | | | 207,938 | Total assets | $ | 2,530,956 | | | $ | 2,435,552 | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Current liabilities | | | | | Accounts payable | $ | 75,884 | | | $ | 46,742 | Accrued liabilities | | 68,400 | | | | 95,446 | Accrued compensation and benefits | | 28,220 | | | | 62,896 | Deferred revenue | | 6,817 | | | | 20,553 | Current portion of finance lease liability | | 85,463 | | | | 60,477 | Current portion of operating lease liability | | 2,374 | | | | 2,737 | Current portion of debt | | 418,431 | | | | - | Total current liabilities | | 685,589 | | | | 288,851 | Long-term finance lease liability | | 104,661 | | | | 56,455 | Long-term operating lease liability | | 8,106 | | | | 8,316 | Long-term debt | | — | | | | 417,995 | Deferred tax liability | | 41,137 | | | | 13,033 | Other long-term liabilities | | 19,698 | | | | 18,573 | Total liabilities | | 859,191 | | | | 803,223 | Commitments and contingencies | | | | | Stockholders' equity | | | | | Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding | | — | | | | — | Common stock, par value $0.0001; 100,000,000 shares authorized; 49,681,525 and 49,126,917 shares issued; and 42,031,838 and 41,477,230 shares outstanding, respectively | | 4 | | | | 4 | Additional paid-in capital | | 714,347 | | | | 739,829 | Accumulated other comprehensive loss | | (60 | ) | | | (59 | ) Retained earnings | | 1,249,564 | | | | 1,184,645 | Treasury stock of 7,649,687 shares at cost | | (292,090 | ) | | | (292,090 | ) Total stockholders' equity | | 1,671,765 | | | | 1,632,329 | Total liabilities and stockholders' equity | $ | 2,530,956 | | | $ | 2,435,552 | | | | | | | | STRIDE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | Three Months Ended | | September 30, | | 2026 | | 2025 | | (In thousands) Cash flows from operating activities | | | | | | Net income | | $ | 64,919 | | | $ | 68,800 | Adjustments to reconcile net income to net cash used in operating activities: | | | | | | Depreciation and amortization expense | | | 34,934 | | | | 29,234 | Stock-based compensation expense | | | (7,392 | ) | | | 10,222 | Deferred income taxes | | | 29,425 | | | | 49,472 | Provision for credit losses | | | 2,143 | | | | 3,377 | Amortization of fees on debt | | | 435 | | | | 429 | Noncash operating lease expense | | | 352 | | | | 2,661 | Other | | | 8,092 | | | | (3,989 | ) Changes in assets and liabilities: | | | | | | Accounts receivable | | | (191,894 | ) | | | (253,026 | ) Inventories, prepaid expenses, deposits and other current and long-term assets | | | (18,356 | ) | | | (36,322 | ) Accounts payable | | | 27,881 | | | | 15,716 | Accrued liabilities | | | (28,566 | ) | | | (45,356 | ) Accrued compensation and benefits | | | (33,257 | ) | | | (30,882 | ) Operating lease liability | | | (899 | ) | | | (879 | ) Deferred revenue and other liabilities | | | (12,604 | ) | | | (5,237 | ) Net cash used in operating activities | | | (124,787 | ) | | | (195,780 | ) Cash flows from investing activities | | | | | | Purchase of property and equipment | | | (4 | ) | | | (306 | ) Capitalized software development costs | | | (17,911 | ) | | | (13,713 | ) Capitalized curriculum development costs | | | (6,567 | ) | | | (7,677 | ) Sale of other investments | | | 35,110 | | | | - | Other acquisitions, loans and investments, net of distributions | | | (886 | ) | | | (2,574 | ) Proceeds from the maturity of marketable securities | | | 61,638 | | | | 61,767 | Purchases of marketable securities | | | (117,295 | ) | | | (62,220 | ) Net cash used in investing activities | | | (45,915 | ) | | | (24,723 | ) Cash flows from financing activities | | | | | | Repayments on finance lease obligations | | | (16,540 | ) | | | (11,961 | ) Repurchase of restricted stock for income tax withholding | | | (19,509 | ) | | | (31,594 | ) Net cash used in financing activities | | | (36,049 | ) | | | (43,555 | ) Net change in cash, cash equivalents and restricted cash | | | (206,751 | ) | | | (264,058 | ) Cash, cash equivalents and restricted cash, beginning of period | | | 754,501 | | | | 782,497 | Cash, cash equivalents and restricted cash, end of period | | $ | 547,750 | | | $ | 518,439 | | | | | | | | | Non-GAAP Financial Measures To supplement our financial statements presented in accordance with GAAP, we have presented adjusted operating income (loss), EBITDA, adjusted EBITDA, and adjusted earnings per share, which are not presented in accordance with GAAP. - Adjusted operating income (loss) is defined as income (loss) from operations as adjusted for amortization of intangible assets, stock-based compensation, and other one-time charges or gains. - EBITDA is defined as income (loss) from operations as adjusted for depreciation and amortization. - Adjusted EBITDA is defined as income (loss) from operations as adjusted for depreciation and amortization, stock-based compensation, and other one-time charges or gains. - Adjusted earnings per share (adjusted EPS) is defined as net income (loss) attributable to common stockholders as adjusted for the amortization of intangible assets, stock-based compensation, and other one-time charges or gains net of tax impact divided by the diluted weighted average number of common shares outstanding less the shares expected to be received for the capped call transaction related to Stride's convertible senior notes. Adjusted operating income (loss), adjusted EBITDA, and adjusted EPS exclude stock-based compensation, which consists of expenses for restricted stock, restricted stock units, and performance stock units. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors relating to our financial performance. Adjusted operating income (loss), adjusted EBITDA and adjusted EPS remove stock-based compensation, which is a non-cash charge that varies based on market volatility and the terms and conditions of the awards. EBITDA and adjusted EBITDA remove depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. Adjusted operating income (loss), adjusted EBITDA and adjusted earnings per share remove one-time charges or gains which are not related to core operating activities and are not indicative of our ongoing operating performance. Additionally, adjusted EPS includes the impact from shares expected to be received by the Company to offset potential dilution from the convertible senior notes. EBITDA and adjusted EBITDA provide a measure of corporate performance exclusive of capital structure and the method by which assets were acquired. Management uses these non-GAAP financial measures: - as additional measures of operating performance because they assist in comparing the Company's performance on a consistent basis; and - in presentations to the members of the Company's Board of Directors to enable the Board to review the same measures used by management to compare the Company's current operating results with corresponding prior periods. Other companies may define these non-GAAP financial measures differently and, as a result, these non-GAAP financial measures may not be directly comparable to similar non-GAAP financial measures used by other companies. Although these non-GAAP financial measures are used to assess the performance of the business, the use of non-GAAP financial measures is limited as they include and/or do not include certain items included and/or not included in the most directly comparable GAAP financial measure. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, revenues, income (loss) from operations, net income (loss) and diluted net income (loss) per share or other related financial information prepared in accordance with GAAP. Adjusted EBITDA is not intended to be a measure of liquidity. You are cautioned not to place undue reliance on these non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below. First Quarter Fiscal Year 2027 Reconciliation of Income from Operations to Adjusted Operating Income | Three Months Ended | September 30, | 2026 | | 2025 | (In thousands) | Income from operations | $ | 84,268 | | | $ | 68,983 | Amortization of intangible assets | | 1,770 | | | | 1,933 | Stock-based compensation expense | | (7,392 | ) | | | 10,222 | Adjusted operating income | $ | 78,646 | | | $ | 81,138 | | | | | Reconciliation of Net Income to EBITDA and Adjusted EBITDA | Three Months Ended September 30, | 2026 | | 2025 | (In thousands) Net income | $ | 64,919 | | | $ | 68,800 | Interest expense, net | | 2,906 | | | | 3,075 | Other income, net | | (1,477 | ) | | | (16,914 | ) Income tax expense | | 17,840 | | | | 14,423 | (Income) loss from equity method investments | | 80 | | | | (401 | ) Depreciation and amortization | | 34,934 | | | | 29,234 | EBITDA | | 119,202 | | | | 98,217 | Stock-based compensation expense | | (7,392 | ) | | | 10,222 | Adjusted EBITDA | $ | 111,810 | | | $ | 108,439 | | | | | | | | Reconciliation of Net Income Attributable to Common Stockholders and Diluted Net Income Per Share to Adjusted Earnings Per Share | Three Months Ended | September 30, | 2026 | | 2025 | (In thousands) Net income attributable to common stockholders | $ | 64,919 | | | $ | 68,800 | Amortization of intangible assets | | 1,770 | | | | 1,933 | Stock-based compensation expense | | (7,392 | ) | | | 10,222 | Income tax effect from adjustments above | | (2,038 | ) | | | (8,969 | ) Adjusted net income attributable to common stockholders | $ | 57,259 | | | $ | 71,986 | | | | Share computation: | | | Weighted average common shares — diluted | | 44,828,092 | | | | 49,222,851 | Effect of capped call transactions | | (2,958,006 | ) | | | (1,803,506 | ) Adjusted weighted average common shares — diluted | | 41,870,086 | | | | 47,419,345 | Adjusted earnings per share | $ | 1.37 | | | $ | 1.52 | | | | | Three Months Ended | September 30, | 2026 | | 2025 | (per share) Diluted net income per share | $ | 1.45 | | | $ | 1.40 | Amortization of intangible assets | | 0.04 | | | | 0.04 | Stock-based compensation expense | | (0.16 | ) | | | 0.20 | Income tax effect from adjustments above | | (0.05 | ) | | | (0.18 | ) Effect of capped call transactions | | 0.09 | | | | 0.06 | Adjusted earnings per share | $ | 1.37 | | | $ | 1.52 | | | | Fiscal Year 2027 Outlook Reconciliation of Income from Operations to Adjusted Operating Income (unaudited) | Three Months Ended | | Year Ended | December 31, 2026 | | June 30, 2027 | Low | | High | | Low | | High | (In millions) | Income from operations | $ | 126.0 | | | $ | 134.5 | | | $ | 479.5 | | | $ | 503.5 | Amortization of intangible assets | | 1.5 | | | | 2.0 | | | | 5.5 | | | | 7.5 | Stock-based compensation expense | | 7.5 | | | | 8.5 | | | | 15.0 | | | | 19.0 | Adjusted operating income | $ | 135.0 | | | $ | 145.0 | | | $ | 500.0 | | | $ | 530.0 | | | | | | | | | | | | | | | |