Stride, Inc. Q2 FY2025 earnings call

• Recorded 230,000 student enrollments, continuing strong demand with three consecutive years of growth. - Macro environment for the business remains strong; most challenges are within control and focus on improving execution across all initiatives. - Early signs of investments paying off, but vigilance is needed for long-term success. - Strong financial position and committed team.

Revenue for the second quarter was $587.2 million, a 16% increase from Q2 FY 2024. Career learning, middle and high school programs saw revenue grow 29% to $213.1 million, with enrollment growth of 30.9% year-over-year. General education revenue was $354.3 million, up 13% from the prior year, with average enrollments up 12.5% to 135,800. Adult Learning business had revenue of $19.8 million, down $6.1 million from the previous year. Total average enrollments were 230,600, a 19.4% increase. Adjusted operating income was $135.6 million, up 43% from the prior year.

• Raised full-year revenue guidance to $2.320 billion to $2.355 billion, up from the prior range of $2.225 billion to $2.3 billion. - Adjusted operating income guidance increased to $430 million to $450 million, up from $395 million to $425 million. - Third-quarter revenue forecasted to be in the range of $585 million to $600 million, adjusted operating income between $130 million and $140 million, and capital expenditures between $15 million and $17 million.

• Softness in the Adult Learning business. - Challenges in continuing to improve and executing well across all initiatives to sustain growth.

Q: Could you unpack some of that enrollment momentum and differences in funnels for career learning and general education?

A: James Rhyu noted broad-based strength in the enrollment funnel, with a weak spot in the incremental career funnel but strong numbers overall.

Q: Any early learnings from the K-12 tutoring rollout?

A: Strategically significant, investing in the product with AI features, but not yet financially material.

Q: What's specific about outperforming competitors?

A: James Rhyu credits team execution improvement, noting better execution than a few years ago.

Q: Exposure to federal funding?

A: Well less than 5% of revenue, with limited indirect exposure.

Q: Retention and career funnel color?

A: Retention has structural improvements planned for the long term, and the career funnel has more upside opportunity as market trends support it.

Q: Adult revenues being soft?

A: Transitioning to a B2B focus, still bullish but immaterial in the short term.

Q: Opening new schools with universal school choice?

A: State-level business, general tone supports school choice but no immediate material tailwind.

Q: Career learning pilot programs for skilled trades?

A: Already tested, early indications show a need to learn more about the space.

Q: Schools close to enrollment caps?

A: Historically successful in raising caps when demand warrants, using data to make the case for raising caps