Stride’s first quarter results reflected robust demand for online education, as the company delivered double-digit revenue growth and strong enrollment gains. Management credited the continued expansion of both career learning and general education programs for the positive momentum, with CEO James Rhyu highlighting that application volumes have nearly doubled over two years. Rhyu emphasized, “In-year application volumes have grown in each of the past four years, despite enrollment caps at some schools.” While gross margin improvements and operating efficiency contributed to higher profitability, non-GAAP earnings per share missed Wall Street’s consensus, a gap CFO Donna Blackman attributed to an increase in diluted shares related to convertible notes.
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Stride (LRN) Q1 CY2025 Highlights:
- Revenue: $613.4 million vs analyst estimates of $592.2 million (17.8% year-on-year growth, 3.6% beat)
- Adjusted EPS: $2.02 vs analyst expectations of $2.15 (5.9% miss)
- Adjusted EBITDA: $168.3 million vs analyst estimates of $159.7 million (27.4% margin, 5.4% beat)
- Operating Margin: 21.3%, up from 17% in the same quarter last year
- Enrollments: 240,200, up 41,800 year on year
- Market Capitalization: $6.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Stride’s Q1 Earnings Call
- Jason Tilchen (Canaccord Genuity) asked about progress in creating a dedicated application funnel for career learning programs. CEO James Rhyu acknowledged ongoing tests but said, “We haven’t cracked the code on it yet… incremental progress, but not as good as I would have hoped.”
- Tilchen (Canaccord Genuity) inquired how Stride is improving socialization for full-time online students. Rhyu detailed record usage of the virtual K-12 Zone and new geographic pods for in-person meet-ups, emphasizing continued investment in these areas.
- Greg Parrish (Morgan Stanley) questioned whether marketing strategy or spend would shift ahead of the summer. Rhyu and CFO Donna Blackman said spend will remain flat, with increased focus on message testing and optimization rather than higher outlays.
- Jeffrey Silber (BMO Capital Markets) asked what’s driving strong growth in career learning for middle/high school. Rhyu said these programs address parental needs at those levels, while also noting a need to boost awareness and growth in lower grades through targeted messaging and tutoring initiatives.
- Pat McIlwee (William Blair) probed whether macro uncertainty or Stride’s scale is driving demand. Rhyu said local school district volatility and safety concerns are factors, but that strong customer satisfaction and referrals are increasingly fueling organic growth.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) monitoring application volume trends for the upcoming school year, (2) tracking the impact of new tutoring and student support initiatives on lower-grade enrollment, and (3) evaluating the effectiveness of Stride’s marketing efficiency efforts. The evolving state funding environment and further enhancements to student socialization features will also be key to watch.
Stride currently trades at $143.51, in line with $142.43 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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