Stride Q4 2025 Earnings Report

Stride EPS Results

• Actual EPS: $2.29
• Consensus EPS: $1.83
• Beat/Miss: Beat by +$0.46
• One Year Ago EPS: $1.42

Stride Revenue Results

• Actual Revenue: $653.65 million
• Expected Revenue: $626.23 million
• Beat/Miss: Beat by +$27.42 million
• YoY Revenue Growth: +22.40%

Stride Announcement Details

• Quarter: Q4 2025
• Date: 8/5/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 5:00PM ET

Stride (NYSE:LRN), a technology-based education service company, engages in the provision of proprietary and third-party online curriculum, software systems, and educational services in the United States and internationally. Its technology-based products and services enable clients to attract, enroll, educate, track progress, support, and facilitate individualized learning for students. The company offers integrated package of systems, services, products, and professional expertise to support a virtual or blended public school; software and services to schools and school districts; individual online courses and supplemental educational products; and products and services for the general education market focused on subjects, including math, English, science, and history for kindergarten through twelfth grade students. It also provides career learning products and services that are focused on developing skills to enter in industries, including information technology, health care, and business; and operates tuition-based private schools. In addition, the company offers focused post-secondary career learning programs, which include skills training for software engineering, healthcare, and medical fields to adult learners under Galvanize, Tech Elevator, and MedCerts brand names, as well as provides staffing and talent development services to employers. It serves public and private schools, school districts, charter boards, consumers, employers, and government agencies. The company was formerly known as K12 Inc. and changed its name to Stride, Inc. in December 2020. Stride, Inc. was incorporated in 1999 and is headquartered in Reston, Virginia.

Stride Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong FY25 results with revenue up 18% to $2.4 billion, adjusted operating income up 60% to $466 million, and adjusted EPS up 48% to $8.10.
• Positive Sentiment: Early FY26 enrollment season shows double-digit growth potential, with Q1 enrollments expected to rise 10–15% year-over-year.
• Positive Sentiment: Market tailwinds remain strong as school choice demand grows and state funding is generally positive, with no material federal funding headwinds anticipated.
• Neutral Sentiment: Investments are underway in tutoring (100,000+ sessions and a new 2nd/3rd grade reading program), career platforms, and cautious but ambitious AI integration to enhance student outcomes.
• Negative Sentiment: A one-time noncash impairment charge of $59.5 million was booked for the co-working and IT software business, though it was excluded from adjusted profit metrics.

Presentation

[Operator]

Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stride Fourth Quarter Fiscal Year twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the conference over to Tim Casey, VP of Investor Relations. You may begin.

[Tim Casey, VP - IR at Stride]

Thank you, and good afternoon. Welcome to Stride's fourth quarter and year end earnings call for fiscal year twenty twenty five. With me on today's call are James Rue, 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.

[Tim Casey, VP - IR at Stride]

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 any questions you may have. Now I'll turn the call over to James. James?

[James Rhyu, CEO & Board Chair at Stride]

Thanks, Tim, and good afternoon, everyone. We recently celebrated our twenty fifth year anniversary and continue to see record demand for the products and services we pioneered a quarter century ago. In a rapidly evolving world, our focus is on how we can best serve customers and the market over the next twenty five years.

[James Rhyu, CEO & Board Chair at Stride]

First, some highlights from this year that reinforce our market leadership. We were named one of America's best mid sized companies by TIME. We were named 2024 company of the year by big awards for business hosted by the Business Intelligence Group and best EdTech company by the Global EdTech Awards. We received two Golden Stevie Awards, one for our game based curriculum and one for our virtual learning solution. We were awarded digital education awards, digital game based learning product of the year, and named the digital education institution of the year.

[James Rhyu, CEO & Board Chair at Stride]

We are one of the largest employers of teachers and education staff in the country, offering choice for teachers as well as families. And in a country where more teachers are leaving the profession than entering and where there is a persistent national teacher shortage, we have managed to grow and provide an outlet for teachers who are looking for something different than the traditional system can provide them. But all of this pales in comparison to the record numbers of families and students we're able to serve. So how can we build on this momentum and also prepare for the next twenty five years? The good news is that macro trends around our core business continue to be positive.

[James Rhyu, CEO & Board Chair at Stride]

Demand for school choice is growing, and our customers and potential customers continue to choose us in record numbers. Given where we are, less than 50% through our anticipated enrollment season, we can already see if current trends continue that we will once again achieve double digit enrollment growth this fall. And we are continuing to invest in new products and services. This will both benefit our core business, but also give us new market opportunities to pursue. For example, over the past year, our tutoring business hosted over 100,000 sessions.

[James Rhyu, CEO & Board Chair at Stride]

And this upcoming school year, we are going to offer dedicated tutoring for all second and third graders focused on the core skill of reading. We also continue to invest in our career platform and programs with an emphasis on building a community of resources that offer practical trajectories. And, of course, everybody's talking about AI. We are proceeding with our cautious but ambitious approach to enable the use of AI in our programs in a responsible and impactful manner. I said a couple years ago that we are not going to play into the hype around AI, but rather focus on foundational areas and technologies that we can leverage for better customer outcomes and experiences.

[James Rhyu, CEO & Board Chair at Stride]

And we are continuing down that path, both in partnership with other providers as well as through proprietary investments that we can leverage our core strengths. We're excited about what the next twenty five years hold for us and how we can deliver on tomorrow's education today. Thank you. Now over to Donna.

[Donna Blackman, CFO at Stride]

Thanks, James, and good afternoon. As James discussed, we had another strong year driven by strong demand and the continued momentum in the school choice market. Full year revenue of $2,400,000,000 was up 18% from last year. We continue to see the benefits of our scale coupled with improvements in marketing, which drove adjusted operating income of $466,200,000, up nearly 60% from last year. Our team served more than 240,000 students and families this year, and I am incredibly proud of what we have accomplished.

[Donna Blackman, CFO at Stride]

And if I look at the trends we're seeing for the upcoming school year, I see more opportunities ahead. I'll talk a little bit more about next year momentarily, but I wanna first provide more detail on our results for f y twenty twenty five. Career learning and middle and high school revenues were $876,300,000, up 35%. Full year enrollments totaled 96,300.0, up 33%. General education revenue was $1,450,000,000 up 12%.

[Donna Blackman, CFO at Stride]

Enrollment in general education for the year totaled 137,700, up 13%. Total revenue per enrollment was $9,677 up just slightly from last year. Throughout the year, state mix had an impact on our overall revenue per enrollment, but the strong fourth quarter results meant we finished the year relatively flat. For FY '26, we see some states holding funding flat while others are increasing funding. So overall, we see a fairly positive funding environment.

[Donna Blackman, CFO at Stride]

Additionally, we do not anticipate any material impact on our revenue per enrollment from changes at the federal level. As of any year, revenue per enrollment may be also impacted by state mix and yield. While it's still early in the year, given the current environment, we expect full year FY twenty six revenue per enrollment to be relatively flat to up slightly from FY twenty five. Gross margin for the year was 39.2%, up 180 basis points. As we mentioned last quarter, there's a balance between continuing to invest in the business and improving gross margin.

[Donna Blackman, CFO at Stride]

For f y twenty six, we anticipate making investments in our products and services as we seek to continuously improve the experiences for our students. Therefore, we expect gross margins to continue to grow but at a slower pace than we've seen in the past two years. Selling, general, and administrative expenses were $524,300,000, up 2% from last year. We will continue to keep our s g and a spending in check, and we expect to see strong operating leverage out of the business going forward. Stock based compensation for the year was $36,800,000, up $5,300,000 from last year.

[Donna Blackman, CFO at Stride]

As you saw in our press release, we booked a onetime noncash impairment charge of $59,500,000 related to our galvanized business. This chart is associated with two aspects of the business. First, $27,300,000 is a pull forward of lease expenses associated with our coworking business, which has never recovered from the COVID pandemic, And 32,200,000 is a trade name write down due to the continued IT software business decline, which we've previously discussed. Given the onetime nature of this charge, we have excluded this from our adjusted profit metrics. For the year, adjusted operating income was $466,200,000, up nearly 60% from last year, and adjusted EBITDA was $571,000,000, up 46% from the prior year.

[Donna Blackman, CFO at Stride]

Diluted net income per share totaled $5.95, up 27% from last year. As I mentioned last quarter, we're introducing a new metric this quarter, adjusted earnings per share. In order to give investors a better sense of the ongoing operational performance of the business. Similar to our other adjusted metrics, adjusted earnings per share excludes stock based compensation, amortization of intangible assets, and any onetime adjustments. Additionally, the metric nets out the tax impact of these adjustments and includes the impact of the shares we expect to receive from the cap call transaction associated with our convertible notes.

[Donna Blackman, CFO at Stride]

We believe this new metric will also help investors better understand the net impact of the convertible notes on our earnings per share. For the full year, our adjusted earnings per share was $8.1 up 48% compared to $5.49 in FY 'twenty four. A reconciliation of adjusted EPS is provided in the earnings release and the presentation accompanying our webcast. Our effective tax rate for FY '25 was 24.4%. Capital expenditures were $60,000,000 for the year.

[Donna Blackman, CFO at Stride]

Free cash flow, which we defined as cash from operations less CapEx, was $372,800,000, up $155,600,000 from last year. We finished the year with cash, cash equivalents, and marketable securities of just over $1,000,000,000. This year was another record year for STRIDE with continued strong revenue and profitability growth. And while it's still early in the enrollment season, given that historically, August and September are our busiest month, we are on track for another year of strong growth in f y twenty six. And as we've done in the past, we'll wait until the first quarter earnings to provide formal enrollment guidance.

[Donna Blackman, CFO at Stride]

However, I'd like to add a little color to the comments James made about our anticipated enrollment growth for the first quarter. Based on our latest data, we expect year over year enrollment growth to be in the range of 10 to 15% in the first quarter. It's still early in August, and we will need to continue to execute against what we believe is a strong market trend. A few additional notes for f y twenty six. Seasonality for next year should be in line with f y twenty five.

[Donna Blackman, CFO at Stride]

SG and A as a percent of revenue should continue to decrease marginally, while CapEx as a percent of revenue is anticipated to be relatively flat. Stock based compensation will increase slightly from this year, and interest expense and the tax rate should be in line with f y twenty five. Thanks so much for your time today, and I'll turn the call back over to the operator for your questions. Operator?

[Operator]

Thank you. The floor is now open for questions. Your first question comes from the line of Jeff Silber of BMO Capital Markets. Your line is open.

[Jeff Silber, Managing Director at BMO Capital Markets]

Thanks so much for that correction and congratulations on the quarter and the strong year. I was wondering if we can just talk about fiscal twenty six. Really appreciate you giving us at least some framework of what you're expecting. You talked about the 10% to 15% potential enrollment growth in the first quarter, and I think you've caveated that with saying if current trends continue. So can we just talk about what current trends you're talking about and where you are seeing that strength? What's driving that 10 to 15% expectations?

[James Rhyu, CEO & Board Chair at Stride]

Yeah. Hey, Jeff. Yeah. I mean, I think, we've been pretty consistent that, you know, we sort of view demand as, application volumes as a proxy for demand. And so when we see early funnel activity, I e, demand strong, we're really talking about applications.

[James Rhyu, CEO & Board Chair at Stride]

You know? And I think applications have been a a much more proven indicator of demand for us. It's much more reliable. You know, it does require some level of sort of increased effort than just clicking a button, you know, so families tend to convert higher. You know, we're not yet, I think, 50% through what we anticipate the season to be.

[James Rhyu, CEO & Board Chair at Stride]

So it is a little bit early, but I think those demand indicators, they look strong. Year over year, they look strong. And so, we're pretty bullish that these trends should hold up, and, you know, and we'll have a a strong fall.

[Jeff Silber, Managing Director at BMO Capital Markets]

Alright. That's really helpful. My follow-up was just regarding either new contracts or lost contracts. I know there was some noise out of New Mexico, but you issued a press release last night. So maybe we can get some specific color in terms of what's going on there.

[Jeff Silber, Managing Director at BMO Capital Markets]

And are there any other major changes that we should be aware of for the upcoming fiscal year, both positive and negative? Thanks.

[James Rhyu, CEO & Board Chair at Stride]

Yeah. No other major changes, for the fiscal year. You know, as, as we've said before, I just I'm not aware of a business that from time to time, you know, doesn't have some client turnover. Ours is no different. I think the what what I see at least is the strength of our franchise is such that, we did have an unfortunate, actually, you know, incident in New Mexico, you know, where the partner we had, didn't turn out to be kind of the partner, I think, that we expected.

[James Rhyu, CEO & Board Chair at Stride]

And, you know, we quickly were able to build a pipeline of new potential partners, and, you know, it all came together pretty quickly where we got a couple of new districts signed up with us. So I think it sort of speaks more to the strength of our franchise really than, you know, any disappointment we have because, again, I think just any in any business, you're just you it's impossible to to have a 100% client retention. And so, you know, we're gonna experience that from time to time, and I think the strength of our franchise will largely be able to overcome that, and and we'll be able to continue to build and grow. And, you know, New Mexico is an amazing state. It's got a a very, very unique population that I think our programs are uniquely beneficial in serving.

[James Rhyu, CEO & Board Chair at Stride]

And, and I think, again, going back to the strength of our franchise, what we found overwhelmingly is that the families who were with the program last year that we managed have migrated over to our new programs as opposed to staying with the legacy program that they are still trying to run. So, you know, I think the customers have really spoken that they prefer our program and our approach and our franchise than, you know, than what got left behind. And I think that really speaks to the strength of our programs.

[Jeff Silber, Managing Director at BMO Capital Markets]

Alright. Appreciate the color. Thanks so much.

[James Rhyu, CEO & Board Chair at Stride]

Yep.

[Operator]

Your next question comes from the line of Greg Parrish of Morgan Stanley. Your line is open.

[Greg Parrish, VP - Equity Research at Morgan Stanley]

Hey, thanks. Congrats on the results and thanks for all the color heading into next year. Really want to start with your long term framework, especially on operating income. You've outperformed your targets and essentially hit them already. But thinking about the 10%, 20% framework, now that you've exceeded your plan and you've rebased the margin higher, I guess the question is does that get harder from here to grow operating income at twice the rate of revenue?

[Greg Parrish, VP - Equity Research at Morgan Stanley]

And then thinking about next year more specifically, you know, as EBIT growth two x revenue growth, is that still the right target when thinking about next year? Thanks.

[James Rhyu, CEO & Board Chair at Stride]

Yeah. I think, you know, in any business, obviously, it gets harder the bigger scale you get. Just mathematically, I think, it gets harder to two x your revenue growth. I think that we've set pretty ambitious targets in the past over the past several years, and we've beaten those targets. I think we need to take a fresh look, though.

[James Rhyu, CEO & Board Chair at Stride]

As Donna said, the the expansion in our gross margin is likely to regulate a little bit here this year and going forward. So as she said, I don't think we're gonna continue to see the type of gross margin expansion, which I think disproportionately helps that ten and twenty model. So, sure, it's gonna get a little bit tougher. I also think that as long as we can continue to grow the what we have and the market continues to have the kind of demand that we see, our investors should be very pleased if we do something that's you know, if it's ten and eighteen, I think that's a pretty darn good outcome. And, you know, we're gonna take a fresh look this year at, you know, at our planning, and and we'll provide some updates, you know, either later later this fiscal year or soon thereafter.

[Greg Parrish, VP - Equity Research at Morgan Stanley]

Great. That's helpful. And then maybe I'll come back to funding. One question on the fourth quarter number. I think the clear learning, the 4Q number was pretty strong.

[Greg Parrish, VP - Equity Research at Morgan Stanley]

I think that's sort of a true up for the year. Maybe help us understand where that came in better than expected. I don't know if there's anything to call out. And then maybe bigger picture heading into '26, I mean, a lot of noise out there, all the federal funding and sort of districts facing uncertainty and state budgets, etcetera. Maybe kind of just flush out what you're seeing.

[Greg Parrish, VP - Equity Research at Morgan Stanley]

I know you called out your expect expectation for flat, but, maybe just kind of, anything to call out from your conversations with states. Thanks.

[Donna Blackman, CFO at Stride]

Yeah. With respect to q four, you know, you hear me talk more about overall revenue per enrollment as opposed to breaking it out from general ed versus career learning because it really sometimes depend on what the mix is like from, between general ed and career learning. So I don't typically focus so much on whether it's a general ed or or or career. What I would say is that kinda reiterate what I said in my prepared remarks that we sort of continue to see our strength throughout the course of the year. We thought we would have some softness as we did relative to mix.

[Donna Blackman, CFO at Stride]

But as as the year progressed, those numbers started to improve. And so we ended the year certainly higher as the year progressed. We did have some some favorable funding as it relates to some growth funding and some completion funding that happened in that happened in q four, as well. But it's overall strong performance in both general ed and career learning. And with respect to the funding environment, as I said in my prepared remarks, the funding environment looks, favorable.

[Donna Blackman, CFO at Stride]

We have some states that are planning to increase while some are remaining remaining flat. And so overall, we think it's going to be a positive funding environment for 2026. And as it relates to at the at the federal level, you know, we don't expect that to have any significant impact on our funding for for 2026.

[James Rhyu, CEO & Board Chair at Stride]

I think the good news for us on the funding side is in addition to everything Donna outlined, our partners, given the strength of the funding environment, their financial profiles also continue to improve. So, you know, I think just there's a lot of residual benefit of having the kind of environment that we're we're having because our partners have strong balance sheets, and and and that obviously accrues to the to the customers that they're serving. And so I think just it's a very healthy environment for the overall sector for us to be in. And as Donna said, the federal side of this stuff, you know, again, everything we've said this before. Everything that I think we can see is that there is not any negative repercussion of any of the actions that we can see so far that the federal government's taking, And we're supportive of what we see that they are doing in that they are focusing on school choice for families in this country, which we believe is the right thing.

[Greg Parrish, VP - Equity Research at Morgan Stanley]

Great. It's very helpful color. I'll pass it off. Thank you very much and congrats on the quarter.

[Operator]

Your next question comes from the line of Jason Tilton of Canaccord Genuity. Your line is open.

[Jason Tilchen, Director & Senior Equity Research Analyst at Canaccord Genuity Inc]

Good afternoon. Thanks for taking my questions. First thing, I just wanted a bit of a follow-up, on the comment that was made earlier regarding some of the maybe the slower pace of gross margin expansion next year. Maybe if there's anything you could share on where some of those investments and product and services will be focused on, how they could benefit the student or teacher experience, and then more broadly, of what are some of other notable opportunities for cost savings here over the near term?

[James Rhyu, CEO & Board Chair at Stride]

Yeah. You know, I think I don't know. Some of correct me on the exact numbers, but, you know, four or five years ago, when I took the job, our gross margins were hovering in the 33 and change percentile, and, you know, we're now pushing, you know, 40. And I think that's just a it's a very significant, improvement that we've made. All the while, you know, we've tried to balance that with ongoing investments in the programs themselves.

[James Rhyu, CEO & Board Chair at Stride]

This year specifically, we're doing something, I think I mentioned, that's gonna be a little bit unusual, which is we are offering tutoring services, high dosage tutoring services to all second and third graders, specifically targeting the one thing that you hear repeatedly within education, which is kids need to learn by the third grade. And if they can learn to read by the third grade, then they can learn other things. Right? And that's really what we're targeting is getting kids to learn to read by the third grade. And that's not an insignificant investment we're making to do that.

[James Rhyu, CEO & Board Chair at Stride]

You know, we're gonna see and monitor how effective it is. But as Donna said, that doesn't mean, by the way, we're indicating any contraction in margin. We're finding other ways to fund it, but it just does mean that the expansion is probably gonna abate a little bit. I think that the area where we have ongoing opportunity is the same area that the rest of corporate America is talking about is I think there's a lot of efficiency that can be gained in adopting technologies like AI. AI is not the only one, but there are a lot of different technologies that we can adopt that make our operations more efficient.

[James Rhyu, CEO & Board Chair at Stride]

And I think we're gonna continue to pursue those as well.

[Jason Tilchen, Director & Senior Equity Research Analyst at Canaccord Genuity Inc]

Great. That's really my call.

[Donna Blackman, CFO at Stride]

We grew a 180 basis points in gross margin this year, 220 basis points last year, and some of the additional, you know, investments that we're gonna be making to not only just improve the the help with the the the students in terms of their their outcomes with their tutoring, but also investing in some of the engagement work we're doing. You've heard us talk about our k 12 zone and investing and operating that as well.

[Jason Tilchen, Director & Senior Equity Research Analyst at Canaccord Genuity Inc]

Very helpful. One quick follow-up, if I may. The adult learning business showed a little bit of stabilization in q four. The decline there was much lower than in the first few quarters of the year. Just wondering if you could share anything about the transition that's ongoing there and anything else you're seeing from the demand demand environment, for those, platforms.

[James Rhyu, CEO & Board Chair at Stride]

Yeah. I like, listen. This has been just a miss on our part. It's been a disappointment. It I don't think there's really any way to sugarcoat it.

[James Rhyu, CEO & Board Chair at Stride]

The obviously, the market's turned against us a little bit specifically in the technology area. But, you know, I think overall in this, we've actually made some changes here in the past couple months. I think that the demand side of it, particularly on the health care, continues to be an opportunity for us. We need to execute better than we have, and I think there is an opportunity for us to execute better and and still get some value out of these things. But but certainly on the tech side, you know, we haven't executed well, and the demand side has has sort of turned against us.

[James Rhyu, CEO & Board Chair at Stride]

It's not a great story for us and we just have to do better there.

[Jason Tilchen, Director & Senior Equity Research Analyst at Canaccord Genuity Inc]

Great. Very helpful. Thank you.

[Operator]

Your next question comes from the line of Alex Paris of Barrington Research. Your line is open.

[Alex Paris, President & Senior MD at Barrington Research Associates]

Hi guys, thanks for taking my questions and congrats on the strong finish to the year. I just wanted to follow-up a little bit about the lost contracts, gained contracts that we started the q and a section with. It was late May that news broke that the Gallup McKinley School District terminated their contract. I think that was around 4,000 students, so it was not insignificant. And and again, you know, some years you lose them, some years you gain new contracts.

[Alex Paris, President & Senior MD at Barrington Research Associates]

And then, you know, roughly two months later, you announced this big multi district deal also in the state of New Mexico. I just wonder if I can get a little bit more color there. You said a few interesting things. Number one, you you parents that had students at Gallup McKinley have moved over to Destinations Career Academy of New Mexico, if I understood that correctly. I'm wondering, you know, what's the magnitude there?

[Alex Paris, President & Senior MD at Barrington Research Associates]

And then the second and related question is, was this Destinations Career Academy already up and running? Because I think you noted that there was 3,000 students there in the press release.

[James Rhyu, CEO & Board Chair at Stride]

Yeah. So it let me try to unpack this here a little bit. When when we encountered the difficulties with the Gallup McKinley School District, we were uncertain about how those families were gonna be able to continue in a program and period. Like, we just we didn't have enough information sort of broadly whether it was gonna be ours or theirs or or whatever. And so we made a decision to offer those families a spot in a comparable private academy in New Mexico, And our view of it was is that, we were gonna invest in those families irrespective of sort of whatever contractual outcome happened because it was important to us to make sure that we protected those families.

[James Rhyu, CEO & Board Chair at Stride]

Our team did an amazing job in securing these contracts, and and so, you know, those families now have, I'll say, a a more secure home, if you will, in a in a similar environment, if you will, that they were previously in. But we did make an offer, and that would have been an investment on our part for these families. It also, by the way, ensured teachers that we employed in New Mexico were able to retain their jobs, which was also important to us, which we also made that decision at potentially investment on our part. Now it's all worked out, but we made that decision before we knew it was gonna work out because it was the right thing to do for the families and for the teachers, in that state. And we stood by them, and I think they're they're now standing by us.

[James Rhyu, CEO & Board Chair at Stride]

You know? But it was it was dicey. It was difficult. We were not sure that we were gonna secure a new set of agreements. You know, shout out to the districts that signed up with us.

[James Rhyu, CEO & Board Chair at Stride]

I think, you know, they worked very quickly and diligently as well, so thank you to them. And, you know, I think we've all got the same the same goals in mind here, which is to ensure seamless educational opportunities for those families. And we've been able to come together and provide that, and we're very grateful for that opportunity to serve those families.

[Alex Paris, President & Senior MD at Barrington Research Associates]

So that's great. So the 3,000 students already enrolled for the upcoming fall term, did they come from Gallup McKinley, or were they already existing students that you were serving during They fiscal twenty

[James Rhyu, CEO & Board Chair at Stride]

largely came from the previous program. There are some new students in there as well. But, you know, if you think about it, you take you start with your 4,000 number that you started with. Well, you know, there's a a bunch of students that either will naturally attrit or graduate or whatever. And, you know, we go through every year a reregistration process with with the schools.

[James Rhyu, CEO & Board Chair at Stride]

And, you know, the vast, vast, vast majority of families who have reregistered have reregistered into this program.

[Alex Paris, President & Senior MD at Barrington Research Associates]

So who's left at Gallup McKinley, or is the Gallup McKinley program closing?

[James Rhyu, CEO & Board Chair at Stride]

We can't speak on their behalf. We have no idea. All we know is that the the families have spoken to us, and they overwhelmingly want to continue in our program. That I have no idea what's going on with them. That's their you know, that's for them to to decide.

[James Rhyu, CEO & Board Chair at Stride]

But, I know that the the the what we can control is that we want to continue to support the families in New Mexico. We made a commitment to do so. We made we wanted to continue to support the teachers in New Mexico. We made a commitment to do so. We backed up our commitment, and we were very fortunate and we're very grateful to have our new partners in New Mexico.

[Alex Paris, President & Senior MD at Barrington Research Associates]

So last point about that. Then, you know, and just to put it in perspective, if I'm I'm right on that 4,000 number, it's only 4,000 of 234,000 from a financial perspective, from a stock market perspective. So that was a 4,000 hole that we were gonna have to overcome, but it looks like that that that we don't need we're not gonna have to overcome that anymore given that the families have spoken and they've registered at the Destinations Career Academy of New Mexico, which is your operated site.

[James Rhyu, CEO & Board Chair at Stride]

Correct?

[James Rhyu, CEO & Board Chair at Stride]

We anticipate no hold to fill. And, yes, you have the numbers directionally right. You know, it would have been something probably less than 2% of the total, that we would have, you know, in theory, at at risk. But, you know, but we we feel pretty confident that, you know, New Mexico is a really strong demand state. We see a lot of demand in that state.

[James Rhyu, CEO & Board Chair at Stride]

We think we think we're gonna continue to perform very well in that state, and we think that the families have really recognized Dutch as the premier operator in that state.

[Alex Paris, President & Senior MD at Barrington Research Associates]

Well, that's great. That's really good news. And then I guess just the last question I'll ask you, I'll get back into the queue is, was there anything from the one big beautiful bill that applies to your business either positively or negatively?

[James Rhyu, CEO & Board Chair at Stride]

Well, I think I I I I have to be honest. I haven't dissected the one big beautiful bill probably in its entirety sufficiently. You know, I think that the, know, sort of the overall corporate tax regime is looks to be generally favorable to most companies. I suspect that that's also gonna be generally favorable to us. You know, I think, generally speaking, the the line, you know, not just from the the the tax bill, but the general line this administration is taking is a line of support for school choice.

[James Rhyu, CEO & Board Chair at Stride]

So I suspect that if there are things in that bill that impact us, it would be along the lines of school choice, it would be relatively favorable. You know? So I I just you know, again, putting politics aside, I just I think that an administration that favors school choice and favors parental choice and wants to put the the voice of the of the families first, that is very much aligned with our mission. And so, you know, I just I think I give give a lot of kudos to an administration that's willing to put families first, and and I think that aligns with this company's view as well to make sure that we're putting the families first.

[Alex Paris, President & Senior MD at Barrington Research Associates]

Thank you so much. Appreciate it.

[Operator]

Your next question comes from the line of Stephen Sheldon of William Blair. Your line is open.

[Patrick Mcilwee, Senior Equity Research Associate at William Blair]

Hi, team. You have Pat McAuley on for Stephen this evening. Congratulations on another great year. My first question, James, just to elaborate on your commentary surrounding enrollments. I wanted to ask how much of this persistently strong enrollment trend you've seen that you would attribute to greater shifts in demand for this type of offering versus more company specific changes you've made to your marketing strategy, word-of-mouth referral, or anything else we should be thinking about there?

[James Rhyu, CEO & Board Chair at Stride]

Yeah. It's a it's a really interesting question. And, you know, we've obviously, we've tried to to understand the market dynamics ourselves as well. And I think it's, fortunately, I think it's a combination. You know, one of the benefits, I think, of scale is, you know, you have increasing, word-of-mouth, increasing increasing awareness.

[James Rhyu, CEO & Board Chair at Stride]

We recently did some awareness studies, and, you know, I think our brand is really resonating, and the awareness of our brand is increasing. So I think those are all trending in a positive way. You know, I talk to families all the time. And, you know, almost to a t, almost every family I speak to tells me a story about how they referred other families to our programs. You know?

[James Rhyu, CEO & Board Chair at Stride]

So it's, certainly, that has had some given us some positive momentum. I think we also cannot deny the fact that the overall market demand seems to be growing and increasing. Every survey, our own our own data suggests that families are increasingly looking for alternatives and increasingly looking for options. And in, you know, in increasing numbers, that leads them to us or an an option like us. I do think that we have been executing pretty well.

[James Rhyu, CEO & Board Chair at Stride]

And so, therefore, maybe disproportionately, maybe we're picking up a little higher, you know, proportion of those, of that increase in demand. But but I think it's a combination of those things. And I think, you know, again, I talked about our franchise. I think, you know, as we continue to execute well and as we continue to make investments in our customers, I think we believe it'll pay long term dividends for the franchise.

[Patrick Mcilwee, Senior Equity Research Associate at William Blair]

Right. Okay. Thank you. That's helpful. And and then on the tutoring front, it it sounds like you've seen some really nice early acceptance of that offering.

[Patrick Mcilwee, Senior Equity Research Associate at William Blair]

And you mentioned that you plan to continue scaling that offering this year. So I just wanted to ask if you could provide an update on how you're thinking about the monetization potential you see for that business and and what the timing of that might look like.

[James Rhyu, CEO & Board Chair at Stride]

Yeah. So, so just to be clear, we offer that platform both, sort of, quote, unquote, internally, you know, to the programs that we're managing as well as externally. It's getting, you know, the in the external, if you will, market, you know, that's, sort of a market rate they're gonna pay, and it gets monetized in the normal way. You know, I think that our business, has a couple of unique characteristics that distinguish us in the marketplace that we know both districts and states are increasingly honing in on. One is, we're staffed with certified teachers.

[James Rhyu, CEO & Board Chair at Stride]

That's important. We also, it's all you know, it's, you know, certified teachers in the in The US, and, and it's a wholly US owned company. And I think in some states, that's becoming increasingly important. And so, that gives us some distinguishing characteristics. And so, we're seeing traction not just with the programs that we manage, but also with other districts.

[James Rhyu, CEO & Board Chair at Stride]

A number of states are supporting sort of tutoring and, you know, depending on the state. You know, some states are putting dollars behind it. Some states are sort of advocating for it. And we think that that trend's gonna continue because we do see, you know, tutoring does give measurable academic gains for kids. And, you know, we're also investing in the platform itself such that, you know, the tutors have access to better technology, more materials.

[James Rhyu, CEO & Board Chair at Stride]

Obviously, you know, we're looking at ways that we can infuse AI appropriately into, our academic models, including tutoring. And so, you know, all those things and all those investments over time, I think, will, provide more efficient means of tutoring, better teacher tools, better tutor, experiences, etcetera. So, I think there's good traction here that we're starting to see, and, I expect it would continue over the next few years.

[Patrick Mcilwee, Senior Equity Research Associate at William Blair]

Okay. Thanks for the color, James, and congratulate.

[James Rhyu, CEO & Board Chair at Stride]

Thank you.

[Operator]

Your next question comes from the line of Gaussi Sri of Singular Research. Your line is open.

[Gowshihan Sriharan, Equity Research Analyst at Singular Research]

Thank you. Can you hear me? Can you guys hear me? Hello?

[James Rhyu, CEO & Board Chair at Stride]

We can hear you.

[Gowshihan Sriharan, Equity Research Analyst at Singular Research]

First time caller. Congratulations on your results. First time caller, long time listener. What are the operational, regulatory or partner constraints currently that limits your ability to convert the demand into incremental enrollments? If you can talk about how much you had to quantify on how many applicants you might have to underway?

[Gowshihan Sriharan, Equity Research Analyst at Singular Research]

And is there any initiatives that'll increase your addressable seat capacity next year?

[James Rhyu, CEO & Board Chair at Stride]

Yeah. So, the so the constraints, they tend to be on, I'll say, sort of multiple levels. So I think right at the end there, you probably addressed one of the constraints. And, you know, there are programs that we manage that have some kind of, structural constraint, whether it's a cap or, you know, our partner doesn't wanna exceed a certain limit of enrollments for some reasons. You know, sometimes, we purposefully, regulate the, the enrollments because we wanna ensure, you know, there's we operate under certain state standards or state, you know, frameworks.

[James Rhyu, CEO & Board Chair at Stride]

And so, you know, we wanna make sure that we're getting the best outcome for the long longevity of the program and things like that. So, you know, there's a lot of there's a lot of, factors that will go into sort of an accountability standard in a state or something like that. You know? And then there's just this sort of the operational, I'll say, metric, if you will, of funnel conversion metrics that, you know, you know, improve the lead conversion rate to an application and the application conversion rate into enrollment. You know?

[James Rhyu, CEO & Board Chair at Stride]

And a lot of that has to do with just sort of the operational mechanics of, contacting families and and how easy you make the application process for them and ensuring that they're not overburdened with document requirements and things like that. And so, you know, we look to improve the customer experience experience at all levels while also focusing on the outcomes. And there's a little bit of a, you know, balance here that we're always striking. We've been able to really make those improvements over the last several years so that such that we see we should have line of sight into the fact that, you know, we know if we do certain things and pull certain levers, we're gonna improve our outcomes. And but, again, it's always a balance, and so we continue to try to optimize that balance.

[James Rhyu, CEO & Board Chair at Stride]

And I think we've been doing a pretty good job, and we're I think we we have, you know, room to continue improving, though.

[Gowshihan Sriharan, Equity Research Analyst at Singular Research]

Okay. Thank you. On the enrollment per enrollment per revenue per growth in the curious learning segment, it it kind of outpacing the general ed. Is this sustainable? What what are the kind of mixed pricing or state formula changes that might that'll allow it to persist?

[Donna Blackman, CFO at Stride]

One of the comments I made earlier is when I'm looking at the revenue per enrollment, I am looking at it combined, gen ed and career. It's not like it's a it's it's not as if the funding is different for gen ed versus career. It really is a matter of of mix. So when I talk about the funding environment for next year, looking looking favorable, I am speaking about it in general in total for career learning versus, at and general education, and so not looking at one versus the other. And so that difference really really depends on what the mix is, where we're growing from a career learning standpoint, where we're growing from a general gen ed standpoint.

[Gowshihan Sriharan, Equity Research Analyst at Singular Research]

Gotcha. And under the adult learning, given its size now, would you consider selling or winding it down or aggressively all overhauling it? I mean, what what are the KPIs are you using to measure b to b transition progress?

[James Rhyu, CEO & Board Chair at Stride]

Yeah. I think listen. I mean, it's overall, it's not a material part of our business. We do think it can generate incremental value. We're not a seller, right now of that business.

[James Rhyu, CEO & Board Chair at Stride]

We see some of the operational things that we haven't executed well against, and we think we can do better. And so we're focused on just operating that business better every day, and I think we will see improvement over time. You know? But I it's it's not a drag. You know what I mean?

[James Rhyu, CEO & Board Chair at Stride]

So it's and it's not it's not it has improvement to be a distraction. And so, you know, I think as long as it's not a drag and it's not a distraction, and we think there's value to be created there for our shareholders, we're gonna continue to try to operate it better.

[Operator]

Thank you. We've reached time for questions. This now concludes today's conference call. We thank you for your participation. You may now disconnect.

Participants

Executives

• Tim Casey, VP - IR
• James Rhyu, CEO & Board Chair
• Donna Blackman, CFO

Analysts

• Jeff Silber, Managing Director at BMO Capital Markets
• Greg Parrish, VP - Equity Research at Morgan Stanley
• Jason Tilchen, Director & Senior Equity Research Analyst at Canaccord Genuity Inc
• Alex Paris, President & Senior MD at Barrington Research Associates
• Patrick Mcilwee, Senior Equity Research Associate at William Blair
• Gowshihan Sriharan, Equity Research Analyst at Singular Research