Stride, Inc. Q4 FY2025 earnings call

• Celebrated 25th anniversary and received multiple awards including being named one of America's best midsize companies by TIME, 2024 Company of the Year by BIG Awards for Business, etc. • Record demand for products and services, with anticipation of double-digit enrollment growth this fall. • Invested in tutoring for second and third graders in reading, career platform, and cautious but ambitious approach to AI. • Full year revenue of $2.4 billion, adjusted operating income of $466.2 million, up nearly 60%, and adjusted EBITDA of $571 million, up 46% from prior year.

Full year revenue was $2.4 billion, up 18% from the previous year. Career Learning and middle and high school revenues were $876.3 million, up 35%, with full year enrollments of 96,300, up 33%. General Education revenue was $1.45 billion, up 12%, with enrollment of 137,700, up 13%. Total revenue per enrollment was $9,677, with full year adjusted operating income of $466.2 million, up nearly 60% from the prior year.

• Anticipated enrollment growth in the first quarter to be in the range of 10% to 15% if current trends continue. • Gross margin expected to continue growing but at a slower pace than in the past 2 years. • SG&A as a percent of revenue to continue decreasing marginally, while CapEx as a percent of revenue to be relatively flat. • Stock-based compensation to increase slightly, interest expense and tax rate to be in line with FY '25.

• Client turnover is normal in the business, as seen with issues in New Mexico but ability to secure new partners. • Operational challenges in the Adult Learning segment due to market changes and execution issues. • External factors like state budget uncertainties and federal funding noise could impact the business.

Q: Congrats on the quarter and the strong year. Wondering about fiscal '26 enrollment growth and current trends driving it.

A: James Rhyu mentioned demand is seen through application volumes, which are strong and a reliable indicator, with early funnel activity showing year-over-year strength.

Q: Regarding new contracts or lost contracts, specifically New Mexico.

A: James Rhyu said there was an issue with a partner in New Mexico, but quickly built a pipeline of new partners and secured new districts, showing strength of the franchise.

Q: Follow-up on Career Learning 4Q performance and funding outlook for '26.

A: Donna Blackman said Q4 had strong performance with favorable funding, and funding environment for '26 is favorable with some states increasing and others flat, no significant impact from federal level.

Q: Follow-up on Adult Learning business transition and demand environment.

A: James Rhyu said Adult Learning has been a disappointment, with execution issues and market changes, but they are focused on operating it better.

Q: Follow-up on lost and gained contracts in New Mexico, including student numbers.

A: James Rhyu said most students from the lost contract in New Mexico moved to the new program, with new districts securing contracts and supporting families and teachers.