LRN - Earnings call transcript Q1 2025

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Operator

Good day, everyone, and welcome to the Stride, Inc. Q1 FY '25 Conference Call. At this time, I would like to hand the call over to Mr. Tim Casey. Please go ahead, sir.

Timothy Casey

afternoon. good and you, Thank Welcome to XXXX. for Year Earnings First Quarter Call Fiscal Stride's With Rhyu, are and call me today's on James Chief Officer. Donna Financial Chief Blackman, Officer; Executive

by call As today's Investor Relations found and a Stride presentation webcast on a the that conference are reminder, website. be can accompanied

be results and earnings reconciliation on be measures of found Please financial is that can release non-GAAP website. certain provided discussion today's include advised the issued these afternoon this financial also our in Relations Investor of may measures. our A

In forward-looking addition company's the forward-looking factors results materially to also historical important information, this in any statements. could latest call may SEC from statements involve several described actual due filings. to The company's as differ

and time future at this obligation made These business performance call. make and we to assumptions statements regarding company statements on update our are made assumes the events during And the them. the basis forward-looking no any views of

Following our we'll questions answer any prepared may remarks, have. you

James. call the turn James? over I'll Now to

James Rhyu

Tim. those XX the Thanks, reach reach million us on providing technologies customers third. just In million taken grown has our have focus years has constant years over served took remained, over to preeminent we families XX over advanced, and XXth K-XX, X evolved, Stride's X first us This to anniversary choice that country has students. education. years, time, our the brand. In It for the the marks and have it and has footprint but year one in

should and choice education. entertainment shopping financial have in so facets from too to have choice as our health in of most customers we care lives services, to Just

one. should customer choice. I research political irrespective of all customer-focused should political leaning, Education supports a surveys preference the And be a It issue. seen, be the have for not and

range students next hundreds delivering that we extends lead in thousands years, of of And can and are prepare we each initiatives of continue believe education we services our for tomorrow's of We year. each vision beyond the deliver K-XX to products positioning by the millions currently customers we we and with to students serve currently meaningful As are today. development. XX to year that

focused key is program. And Well, to caters have A of broad come Why? the to from customers. That's we offer see we rigidity embraced of stay evolution to our range that choice. our cater of families needs our to we on them forcing of ensure because element programs of the the families instead a what the backgrounds.

career-forward we new Our programs never are being and in embrace into technologies are and leaning innovation affordable like investing and We accessible. before.

Now can safety and we remains to mobility, in span which, that mental accelerating. more on promise you years. application and and to families to flexibility wide address range health, in from see, The for academics, issues and offer a we as be by between. that for XX our demand business, to our as core everything families It cornerstone is next our indicated a will can on of volumes range is that robust that

release, and of we over since year, pandemic from seen for quarter, year-over-year is press in this ago. XX.X% announced an it an highest this in our years as Now traded recorded the growth Apart has enrollment the became record this our from you saw year. last demand year XX company growth enrollments time acceleration first gross publicly

for support continual provide this rising we seen and for demand services and the students We enables. have the

families the XXth bar we continue I educational tomorrow's for to remain feel as committed saying to raise In our confident offering as opportunities. today. for looking We that ever year, education

we more are families suggests that have for on record demonstrate embracing and are quarter first offer, we another the pace our year. for results to and what Our more guidance

call over the turn now I'll Donna. to Donna?

Donna Blackman

Thanks, James, evening, good everyone. and

us another set has quarter strong this saw year. we demand up the for mentioned, James As

an year, thousands for the to grateful of programs. with families who As It's lives us the every come to support our to all who employees opportunity so students. incredible incredibly Stride of the many I'm impact

this remain fiscal XXXX our gives on me enrollments The achieve strength our to we that confidence track year targets. of

guidance I for that think our offerings. we continued compelling the and on fiscal pace year well underlying further 'XX demonstrates confirms demand are our

from to an Turning quarter Diluted year $XX.X last up $XXX.X for up from per increase share were earnings Revenue million or quarterly expenditures from $X.X $X.XX, our down of the was million, $XX.X $X.XX was Adjusted from quarter year. were last results. the $XX.X first income in year. million, XX% 'XX. fiscal million, operating million quarter of XXX% last Capital year.

As we discussed demand last offerings. core our for quarter, continued these results reflect the

prior enrollments total had for XXX,XXX more we 'XX. in pandemic to than almost FY the Our quarter the XXX,XXX, exceeded

seek and a educational to filling in market need for opportunities the options. continue Stride Families virtual out is

quarter Our from was XX% than for execution sustainably Career $XXX.X long Learning more middle enrollments around up school enrollments demonstrates to ability operations the the for million, marketing, XX,XXX. last and revenue grew Career enrollment, our grow to high school and XX.X% year. term. Learning

XXX,XXX revenue XX.X% General slightly for Education $X,XXX, revenue students. growth was on million grew XX% enrollment up to from year. last across revenue to Total both enrollment $XXX.X of lines of

As we this mentioned loss the in is of a headwind enrollment our the year. to fourth revenue funding ESSER quarter, per

being this funding However, environment. is positive a offset by

and this impacts year and flattish the timing finish quarter, were therefore, enrollment. from down we up in to we some will expect the see per revenue state believe to mix While we slightly

for products, by we've slowdown $XX.X at our Adult year. which down software continues last impacted from was the be million Learning previously. in to Revenue outlined revenue the quarter development

a in good what the quarter upcoming margin Learning Gross for Looking from points at year. for last quarters. the for was XXX the basis full XX.X%, up this Adult revenue year, we proxy expect we is think quarter's revenue

like we in see our to strong fees improvements quarter. margins continue Total We contributed hiring margins in teacher well. our as scales, gross and business gross managed our last year, the to

FY year, to to by For improve full gross points 'XX. the expect basis XXX to compared we margins XXX

million, totaled with $XXX.X expenses administrative and in year. last general line Selling,

of costs even administrative our before, good continue holding as done mentioned to down As we I've I think a grow. job we've

While slight leverage still this increase, year. these expect for to out significant see of will we've operating SG&A costs the increase business. the we Even we managed with well, do some full generate

compensation the year. line Stock-based was quarter with million, last for $X.X in

FY operating see and income per $X.XX Diluted of the increase long-term in compensation was million. up to expect from quarter share Adjusted up million, full of We last earnings $XX year stock-based EBITDA impact to range were million, therefore, almost $X.XX, in grants a compared performance to will some Adjusted be XXX%. the year. for to modest $XX stock-based due was compensation $XX.X the million XXX% likely $XX.X 'XX. up

was and operating as scale of improvements by we growth margin see to we as continue strength Our driven profitability benefits grow.

For depreciation year. increase we to expect amortization the full from last and year, marginally

million, to million million year from the down as flow, Free launch million seasonality negative flow Capital cash the quarter expenditures students. to of in quarter in $XX.X $XXX.X typical defined and last from prior operations related period. less $XXX.X onboarding cash first negative the compared $X.X year. the our in CapEx, were school Cash was followed

of X year, flow quarter to cash last cash, with As We marketable next we and cash equivalents, with expect million. quarters. $XXX.X securities see for the finished positive the

Turning to guidance. our

adjusted the million and quarter second between year million forecasting $XXX $XXX and range million. fiscal operating and million, million, XXXX, For $XX income to in $XXX $XX of of revenue between are capital $XXX million the we expenditures

billion, operating million, the and in between and million expenditures million, year, expect For range adjusted revenue and to we million $X.XXX XX%. of full income billion between rate $XXX and capital an XX% effective the $XX tax $XX $X.X $XXX between

support. your for continued your for today and time you Thank

the pass back I'll operator your call Now questions. for to Operator? the

Operator

Canaccord Tilchen, [Operator take from We'll Instructions] the question Jason Genuity. today first

Jason Tilchen

curious in the I'm strong really of quarter. record demand the enrollment that drove terms the in

If of or momentum. marketing you saw there certain little of you more really states that use growth? some some cases would this could greatly certain more of driven light on the could maybe share spend? the appreciated. color Any shed drivers effective be strong Was Were a by of this some you

James Rhyu

Yes, see being lot organic of her lower pretty equal, so in acquisition pretty our from think sort I I We year-over-year, of growth which SG&A to a sort can at a least everything I remarks, increased -- flat cost think demand. demand Donna we of was would it's imply, points in the broad-based. and think all things mentioned of as profile, actually

of word-of-mouth type word-of-mouth think virality our for organic programs seeing the we're the general has that of I demand, strong. sort pretty been

of product keep that And we I the seeing a couple past of and years, to voice indicator And it's for continues -- so think that the good just grow. is strong over growing. it's sort customer our

Jason Tilchen

there curious, the are either in curious, then a or, the is weeks, And potential a helpful. recent be how years. follow-up. the perspective? -- more at really on That's perspective, one of as remarks terms in bit we anything up in look talked election or from a company a a terms becoming few over coming perspective in should school or benefits the states even choice funding any I'm little around to I'm you from choice we a just issue prepared risks school any bipartisan focusing from Great. of national

James Rhyu

what's Listen, in going here of want don't to I happen certainly to weeks couple with project election. a the

say be a probably double comment to education down that's What don't a should I my would on political think that do. is dangerous I I thing think issue.

country backgrounds. people have the kinds of a the with a focus And on of of lot everybody, I educating an type who it choice this part system. govern important think customers product. We see that just that our pretty different providing is from think bipartisan kind demand and people politicians this I educational need that of is really spoken of should all and for the

all on things. of get irrespective can of our politicians, focus party, we hopefully, So to those

Operator

Silber, is next Markets. The Capital question BMO Jeff from

Jeffrey Silber

terms on from impacting of of last to Can year? impact if per revenue questioning your funding ESSER you and, roll-off perspective? that's about the profit what the guidance possible, about I wanted from some in was impact company on been And student. year your talk know focus of revenue perspective I a funding. how this of the ESSER there's the a comments

James Rhyu

impact profit a range than I than think don't it's year, previously So we've I of discussed was X%. the impact more in that, exact of I our disclosed revenue we're it -- completely believe giving. year have we've that although think less it's was last this even seen profitability, anything not I significantly If previously normal profile the the different it's immaterial. that, you think would if than

not it's clearly, out year. the profit that we company overall margin for of saw sort of the range last So of

are get forward tremendous company. this year. we've so customers set for up a And our demand profile, a think ourselves We've products for I'd And got we rather I looking really services. gravitating to everybody really strong and

Jeffrey Silber

at schools about ] nuked going schools terms [ that Okay. the should or And fiscal of? current are can of there that any forward, we're forward, major in lost? impact the in talk schools long risk And looking as we as were we aware be year

James Rhyu

we've here school see Yes. there. speaking, before mean, there's generally an be I or I talked going add or think opportunity X that to we a long to term,

for We lost year. have years. currently any programs any programs use or not would significant this year unaware for next significant we that future We're of

I programs. Not customer add those add states. think to helps us all would gives meet in in different we would of new consider same greater us flexibility those demand multiple that states the would the customer We sometimes continuing and of diversity be serving So constituents like in state we programs having programs necessarily.

set future for we're for meeting demand. future we up think -- pretty So well customer

Operator

from has next the question. Gregory Stanley Parrish Morgan

Gregory Parrish

maybe result congrats the enrollment than incredible pretty here. about talk Yes, Maybe year. differently the little a drivers this on bit

a retention, and of maybe kind this drivers about you finding kind with, new messaging doing going the that maybe were really students, out to the improved think market have, where biggest conversion you you're you're combination, really I last what rates -- year? the reaching what versus that there, it's but success If year. flesh of imagine what's what you're

James Rhyu

reiterate, biggest things I those in Customer demand the driver I is -- everything sure, has our you we're think to the were of equation side. that performance else, piece business Yes. -- well, I of always this mean, to single of things mentioned, one this don't stuff, better. by been the all demand is sort of helping drive those retention, that I way, think and the think things, that the they all our make year. any other were looking strong, conversion,

look the have think was been equation clearly it of It and want strong. that this to side I continues has product, this customers they strong. very demand very said

But year this to continue we by the This as driven obviously drive was by those metrics. retention, conversion demand as good can, the driven wasn't side We those of all things. year equation.

Gregory Parrish

points helpful. And don't That's XXX the Okay. is midpoint. here basis nearly on I up at think margin, the guidance

to You're revenue XX% guiding growth.

But is leverage. the is operating sort could kind leverage, is of could? how this of you much from X, efficiencies, you of could I lot Donna, operating a guess, think I you So if much out if help flesh maybe if how contrast

Donna Blackman

Yes.

headcount. XXX point the about that showing more to saw to So disciplined, adding sure heard without demand the -- have over to the making marketing on leverage. And side, on we grow talked able we've without we're in this the expecting that right? of about spend, strong gross And are continue business. And discipline by see to around business we talk how that the strong maintain past the adding driven additional enrollment margins. We years see SG&A basis expect adding being XXX margins, talked certainly to that then spend, and we increase that couple the look, more me about year that's some without leverage strong in that. we And to continue you've we that

combination flow-through on but the on driving perspective the which end we that AOI a it's see the from we're gross So seeing. of the a is SG&A, margin also top that

Gregory Parrish

specifically, can why could maybe that's one, why that why here. the those I think a to be helpful nonprofit And public don't I talk investors. you schools there more the helpful about could funding you, and this to Okay, with for, my necessarily financials of that for up what go of be nonprofits some then those And Maybe used last take manage, then could wouldn't could that differences? of think lot be those you great. flows ESSER line and of necessarily follow-up, why a why what be some

James Rhyu

Yes. of our on behalf speak I'm not clients. going to all of

speak means respect let to they whatever the our I'd do clients we and what what supporting manage we want think indirectly, that to speak irresponsible goals, them I'll that I students and in do, for for how for think that's themselves. thing that supportive their great But these and our their that very and for to have I of want be doing. mission a how we participating it. And us do be be do clients we're I programs.

of over the first that what doing, I And clients mean, rest all, like are providence have our so of that. we stuff, no

and Those rather And like not proprietary so into to have they to are always how even describe. it them it's those leave have to ability we insight an all them decisions. make I'd to

Operator

Barrington Research. And next up is Alex Paris,

Alexander Paris

Congratulations on guidance, I'm caps strong have that Donna, you lifted in quarter. states your wondering, raised? for or in be the terms states be you XXXX, of have that any fiscal super or in embedded expectations will for may which or new

Donna Blackman

not new states. have in factored any We

have that some QX have that factored the as in demand already results as some well for into the our we're increases caps driving in, factor year. the full overriding seeing. We we said, in is that's the revenue But James is, that as

really to marketplace. is capture the meet to it but that's via are the marketing, enrollment, the via being we demand us in able ability demand so our our And to our execute with able

Alexander Paris

the then GE up Career you Learning, and anticipate X Career Career last 'XX? fall, in existing looking states Learning opening XX had programs, General Education in at XX Great. programs I additional and fiscal Do Learning. And think you

Donna Blackman

We have in the programs did total. of programs year number of that last this Learning terms same our in we Career year

Alexander Paris

next this idea year? additional Learning The opening up Career or you and programs Okay. year do envision

James Rhyu

might for Not year. that a do this I next chance fiscal there open a think we is year. couple

Alexander Paris

Stride? your funds that used some questions understanding that Learning you. school the districts ESSER that's business. they've Solutions Is ESSER. come follow-up do largely regarding my question been Got other a accurate? by within then last And and How on It's to the of

James Rhyu

for who provided running, of to partner at decision -- sort that's tough answer to clients place, would year, we of it's for point fiscal ESSER are funds us know, it's that ESSER made is go time say this the and for to demand that with Like tremendous because that the of beside I of that sort funds. But we said, business time some our for. that's be something mirror. responsible support during was rearview What our in for ESSER in I how the that clients they're able certainly, the don't to they all I that rearview know because and really is manage, that eligible we've the ESSER got the mirror we're this those programs it's in were there

that So I up all with rearview to think of grow. mirror. we've in well set ourselves that's from And here the

company it to on forward I from So want this doesn't in there. have benefit focused this I moving really ESSER year, the stay and think which

Alexander Paris

a have headwind ESSER a only Got basis. has it year-over-year bit not benefit, you. the Not it of a little on does

said the previously X.X% good than Is impact in a had be less that would of 'XX. still You revenue thought? fiscal

James Rhyu

Yes.

correct. so And it you're yes, as a would headwind, be, defining it, year-over-year,

Alexander Paris

Got in you. slightly expecting by clarify? for down we're state increases year, will But revenue offset be that to largely funding mix, full so per just flat enrollment to

James Rhyu

That is correct.

Alexander Paris

Congratulations Great. again.

Operator

you'll Tom Singlehurst, hear Citi. Next, from

Thomas Singlehurst

results. I'm reduced are ESSER appreciated. might first views on I'm school That's Congrats any positive but internally programs be this much interested from would I to funding. Apologies is -- well, on order about in by outsourced? very been districts there my side. schools ask question. impact mean the there on as Actually, thinking about handled the other second that that have Any now would be that or ESSER

James Rhyu

pertains having this -- to second significant I year. I to use or know have Yes. impact ESSER using to any either us. intend for want of don't again, are or it our material district or I And that there order I don't on nature funds just out clients that impact how see any business as any guess remaining

lot comment really So I have there. don't a

Thomas Singlehurst

sort is growth? -- intra-year sort I of the expect we've happens continue new last the or think might continued second couple a watermark, it's seen normal okay high that mean not happen of question you've had XQ on interested I'm enrollment And whether in of later enrollment in in number's, where to you it XXXX. if year. to the Perfect. see years, whether in the again

James Rhyu

a great Yes, it's question.

through. I you we As can strong demand. of haven't yesterday, of I running, know said. as that to it strong continue normal see come it's today, been see as new years looked yesterday, yet has don't said, I tell we but I as you to X if demand yet but continue that a

we yes, we're we guiding are, we than think expect trend don't of yet. just if So that and I in-year that I XX. would this this that. But think period continues, not weeks to right indicating to higher yesterday, in-year the mature only as And for of comfortable. feel X September as want were period. to of We we're more into We're some us

that it's set be But us of strong. know remains to don't those said, making demand yet. like I So I days for a information in, XX statements complete

Thomas Singlehurst

that on Perfect. the [indiscernible]. is based guidance But not

Donna Blackman

happened reflects X with account account certainly in into but of guidance taking we only taking years happened The past what's it's years into the years, upside. so balance XX also us, what's behind past over what's right? balance So a that more the X have right? what the point, we've And not over to years past seen ignoring but today, the there's X happened of James' it. But

account. it taken still -- But may And the change. in not benefit we're that full month could October, number into again, and only we're of so the of be

upside. for trend like the rest what could will year. again, that so know don't But be look the some more And we there of

a quite it's in, not with trend. So years yet X

Thomas Singlehurst

Perfect. very XXXX the I one, And promise. of back the and on Any today? guidance change final one to outlook

James Rhyu

XXXX any to We're update the not providing today.

Donna Blackman

our prepared in XXXX and are our in XXXX confidence feel say my than in numbers, guidance. that we we our Other said remarks, I reiterating as confident

Operator

Stephen to Instructions] [Operator Blair. next Sheldon, William We'll go

Patrick McIlwee

on got today. for McIlwee You've team Sheldon's Pat

ones quick here. of couple a Just

funnel you talk talked times that the a supported in can out us growth the you and just if So about you've Learning in progress side kind past demand now, few through you've what this talked Career of quarter any building the made there? separate outsized about marketing but in

James Rhyu

Yes, really good question.

out part made that I I progress second back and circle think separate don't I'll funnel. of first we've a Unfortunately, take a think So lot the -- on part. the first building in then

we work to So on. it's continue something

think at still first to to look I much past cracked a career think has great of for marketing area the we remember over school continue this year that ways the the to that's the high one where haven't of is most work have I we team or all nut and done basically you point, the that your program. our at that. But part do question, pretty so, now

in growth levels. Career the respects, some in Learning And proxy so in growth is, grade certain for the a

And period Learning. been that's strong And so Career we're support levels grade of trend a demand of some I seen those a in lot seeing that time. think we've that for that,

levels really we to going continue the demand we we're are that have. little but Learning programs to the so to all certain that grades, bit a support Career And cater stronger seeing in grade

Patrick McIlwee

thoughts Okay, program handful provide to point on well, time? you've targets updated you makes 'XX. questions this And then in the elections as on in expansion just opening hopefully of schools expansion new Can Learning in and tandem and states sense. any the at Career state about talked a previously 'XX,

James Rhyu

-- Yes, currently is we're sense to multiyear plant as And of business, that of state has a in listen, it probably the the any we there it's efforts for as where makes of to to right? and it. it lot cases in states in, a that flags every states. have want sense long into most not uncertainty environment, that regulatory look whatever. But for a state the course, just are large, of effort We, because make we're actually not of whatever underway those demand characteristics, that by couple doesn't least expand at expansion

to opportunities some program. include not diversify those we plant our things, core may as think other states see portfolio, or tutoring that that just the of we it's in potentially pure flags things whether I there's like managed

products in and to but may looking provide. core that just program a managed can that types we're of around lot be so the we things services of not And include states other may do some

as get into report year. have no online these don't down this But full-time extent we're trying sort like the well. said, that Of news of to do course, the for new states can I and we that to programs, that the break to fiscal

the next of able new We cautiously few couple some be optimistic that to make some progress states. we years, are will on over

Operator

further there does And conference time, your participation. no are for our That at questions. today. you this for Thank conclude all

now disconnect. may You

Stride (LRN) 22 Oct 242025 Q1 Earnings call transcript