LRN - Earnings call transcript Q2 2025

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Operator

Good day, everyone, and welcome to the Stride, Inc. Q2 FY '25 Conference Call.

Just a reminder, today's call is being recorded. I would now like to hand things over to Mr. Tim Casey. Please go ahead, sir.

Timothy Casey

afternoon. good and you, Thank Welcome to XXXX. for Year Earnings Second 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 views forward-looking addition company's the forward-looking factors results materially to also historical business important and information, events this this regarding made our in are any statements. could obligation call. and assumes assumptions latest performance statements call may SEC from the them, statements involve make made several described actual due filings. update and on to the we company to during time The These company's no as differ statements future basis forward-looking at the any of

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

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

James Rhyu

Tim. Thanks,

posted once students. We again have topping enrollments, record XXX,XXX

continue against to of backdrop strong We the demand. ongoing execute

was in The effectively, ever. environment can macro execute demand. strength from we of for have demand for all is in-year continue increase continued long as were conditions. And Coming as for growth pandemic, in temporary. increasing X benefit see seen also or uncertain as the X as believe business we our And if the out consecutive for we years strong years, we programs structural we And consecutive I these to in now, business. our our can

how also are of we off, includes within providing we ourselves level long of significant us are business some most our vigilant core core that pay all of business ensure opportunities. remain We up in a improving to initiatives well, see we every signs with take I can challenges has our early continue control. success but have traditionally believe market Many need to initiatives. our While business, setting across for that just run. will executing I run just currently but over and the our not new most while ours are new challenges, to our to believe investments That our

very remain We're growing future I offerings, for continued support core options on our for and training. choice school bullish base prospects student growth. for our a real seeing career seeking demand

financial to and a company, team a strong incredible an As we're have our for position in customers. committed delivering

turn now over Donna. will I call the and to you, Thank

Donna Blackman

good and evening. James, Thanks,

in-year our confirms quarter we're full-time enrollment now This year third our programs. in of growth in

continued alternatives, both market this that detail full We've year, an which effective we're more talked of seek our these pushing our families students. solution education profitability of cover for our demonstrate In to I'll later. a lot light programs about and revenue can and are many that be in conditions for raising guidance results strength, the

operating adjusted capital year; to last 'XX; up XX.X%; second our $XXX.X of share $XX.X of of enrollments revenue fiscal XX% We year million, the of expenditures million, year; earnings increase from quarterly $XX.X and from from from XX% $XXX.X year. XX% up average XXX,XXX, income of of an quarter million, per $X.XX, last total Turning reported up results. million of last up

strength the growth programs Average XX% $XXX,XXX. year by XX.X% up million, Revenue in revenue was and year-over-year. $XXX.X continued to was of grew by Education XX% high from school last year, General in our growth were Learning Career up quarter. XX.X% This enrollment enrollments enrollment to also last driven middle from million. driven $XXX.X

these of enrollment revenue. in growth of lines accelerating During the quarter, we saw both

flat lines a third to of the last enrollment in-year in enrollments. $X,XXX, strength per now is row this earlier, that both Total essentially revenue seen mentioned I year. year across As in revenue we've was

we last we're largely a impact mix, we're positive seeing from state mentioned funding still environment. seeing As quarter, some but

X% revenue year we the to to X% finish in expect per dynamics, enrollment. these Given down

last Softness down in $XX.X our from revenue Adult million. to Learning business continues, year and quarter the we million $X.X finished with

quarter last to year. from points XX.X%, year. Gross for the still up margins XXX basis margins gross XXX basis were see the XXX for points expect to full improve We

Selling, administrative general $XXX.X expenses and to marginally decreased million.

year. While increase as in finish year see the first We quarter, to in up slightly in we've of spend expect compared seen the to FY the first 'XX. of declining back half some the I year, SG&A the mentioned half I the should

compensation million the Stock-based compensation the finish for $XX the $XX with range now stock-based in to expect million. year to was quarter of We $X.X million.

$XXX.X operating Adjusted expense $XXX.X year. was $X.X Interest was Adjusted million, for quarter up the from last XX% up was XX%. income million, for the million. quarter EBITDA

Our effective for XX.X%. rate the was tax quarter

earnings $X.XX. per share the Diluted quarter for were

are Our EPS incremental reporting share to GAAP not in issued. basis for shares our purposes. included convertible as-is includes converted on but calculation our diluted shares related yet notes an are count, These

share. now capped the as shares an dilution shows as from strike offset impacts call share at including these the be of will $XX.XX our potential issuance presentation a investor the the upper per completed of from quarterly to some of capped up convertible of time by we call. well note note various However, dilutive the price the transaction the prices We're table in our offset at that

million, flow. Free $XXX.X less up operations cash million, for Turning We with equivalents and from quarter CapEx, was from Capital finished defined million. up period. the the cash cash the last flow, and cash were of $XX.X from $XX million sheet million $XXX.X to year balance quarter $XX.X prior as our year. cash expenditures

raising in now are between effective $XXX and from of up $X.XXX up from and million and and from to in expenditures rate quarter; million, adjusted last unchanged unchanged revenue income growth $X.XXX $XXX billion between to tax $XX full $XXX XX% to guidance from million capital billion operating quarter; quarter; billion continued also billion, $XX expect profit between improvements, $X.X and quarter. XX%, the we year $XXX million margin million, revenue and last range last the $X.XXX last our million enrollments Given an and

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

you call so operator your over time to I'll evening. for turn this much Q&A. And the now the for Thank

Operator

[Operator Instructions] go We'll first to Canaccord Tilchen, Jason Genuity.

Jason Tilchen

have Congrats there's time. on results. the strong two I if

retention funnels The about how of Maybe first, for General on in I'm some are gross year. if seeing some the Learning last little enrollment and a how you're been differences compared to trending just some Education can a numbers unpack basis enrollment bit. wondering you and that the the talk Career of momentum has of versus

James Rhyu

James. it's Jason, Yes.

continue I board we funnel. think basic enrollment across see trend the the is our to strength in

to would And continues the think an year-over-year. strong longer thought. weak, incremental the I and weak term, third fairly We're which a said strong. board. that that least year-over-year see to I pretty as be career a opportunity repeatedly, it, would think, but We be that say, we not there's, we've think I'll materialized I been, of just have our growth. by probably well we think say the been I think has that if as that broad-based And across us, spot, funnel but in I lot continues would for have think year I little we how it. strong bit It's of surprised against underlying we're at really actually a be it been executing demand has

Jason Tilchen

follow-up. helpful. That's Great. really And just one

sort how You of recently of just contribution share the color if could sort early the there, additional of on go-to-market that of rollout wondering tutoring sort on rollout going material overall I'm learnings develop announced from K-XX that business. the more any you is to expect nationwide. you from any when and

James Rhyu

Yes.

mean, we us, the value net a merchandise way it, but kind of and -- something sort of of that, if the net with adjacent clearly a our we everything of where sort tutor other a gross or really then record think like gross have on revenue, or The I think we value, dynamic way sort a mechanic accounting works tutoring similar for basis. where like that that you business has it's about business. DoorDash businesses, just I on have

And of us, it But So be is in statements, our context long for think I leverage important to more. those of can can it's be high-dose that effective one a very have for going gives is It immaterial. some to for within period time, very because We know we learning. the terrific strategically I earn those financial for we think, the also opportunities pool just tutoring network. platform. of our educators teachers

getting tutoring a tremendous it's programs, cases, of good assist they're programs using within earn more in very think really teachers product within So seen numerous are and And we've our our where and satisfied are outside our already our to money. and platform outcomes. programs, both district we network,

significant, So some it product while We invest to out think, it different have the strategically the I I product. other most only be is short to tutoring continues in I think to this where cases, and I And their if think think continue tutoring know there, don't it'll We're is unlike do significant. term be out that in survive. AI invest we've around a make on they companies test going We product, product, for We rolled on. in the feature, to of summary terrific innovation in grow got I margin which platform. recently to out, can feedback We our don't. actually this product. sort can financially

happy. So we're pretty

Operator

Silber, BMO And Capital take next we'll Jeff Markets. question from the

Jeffrey Silber

to anything that to to outperforming from competitors maybe drill not out a But been question. that guys down There's of Is a dramatically there. are specific not we've wanted you're good been Just what see, there you prior of doing the industry on that really have bit outperformance? drive some industry. data your the lot able

James Rhyu

want of think, competitors to to industry data I I yes, I Jeff, say because but would, I we do to I it probably of sort I want performance. think grow. actually you. to that agree have I this of sort so that it I with way, the mean, to on all tend to say over-indexing would the we're industry hate well. -- our suggest see I hate

and I entire boats to you. all have would that our to I I think industry be will agree let But goal rise. think see primary with is the grow

I think, their execution. really -- team to I the think, I credit, has in honed really, on

was how to and hampering it that have. I same growth. think fix those where years accelerate on ago, You should can call had issues, just was able execution we of may to couple and a we about that got our remember, I grow And and ability if be issues we talked we this

happening. that the you some I opportunity of think when better. is to a of your is that in industry team think now -- got in and think I company, probably any you competitors, the from And little that's think bit have and any what's share I place we've executing well take execute much I

think, speak I are us, for have and I news lot I see while of -- good industry I here, won't perform the we opportunity is still that better, do The think that of to better. sort even for we a overall, executing

I here put laurels So think don't we're resting the and finished trajectory our with ourselves that on. we did sitting on

Jeffrey Silber

amount kind revenues from funding and wondering might of you there I'm federal don't or maybe Washington right. gears switch helpful. have. through Washington what been If dramatic noise talk of a of of you terms could pauses, is the anything about get to et a of That's cetera. comes out you All freezes the lot that government. I the We've directly know states? from seeing exposure indirectly But just in environment. I

James Rhyu

Yes.

limited. very So our is exposure limited, is pretty

think question I think, well getting said similar than X%. less previously without I numbers, it's specific around into that I've a

less saw to same continues it today, the maybe before you be, we for on X%. some of thing well validate than did saw this that we today, think year, that I getting

exposure think is our pretty I So limited.

And is everybody on don't is, is, to discussion I Listen, do are that debate are to I intent to think to to here. will positive, and And business. want the the political to think our I governments If that encourage believe, that help marching manage our what into it's trying I administration I of going of do. has want regardless help help take things try going to going whatever we'll impact can on and it's the believe, I say students. political all hopefully And the administration keep to it to think the That's we're to is the chin just intent or If negative, that it. it get what do a think faith to focus have students. that's want announces, to it and we're do. I forward. I what trying through I hopefully, what I us,

out is figure philosophy that think But or students. think is trying downstream I impact seeing to people I states. administration aren't just to that yet maybe an ways the empower And maybe ultimately do approach to help the

about. that's that support things I we of help going sort some administration the goals state talked think this are And has students. of to that

Operator

Alex the take question Paris, next We'll Barrington from Research.

Alexander Paris

like First off, The to been question, In strength James, you presuming how questions. be enrollment. has enrollment. a board about question the first across in retention ask talking the you couple would I'd student faring? of responded clarifying I'm new about you're

James Rhyu

Yes.

couple So retention, I pandemic. think how retention believe we in about post of think we ago, improvement saw was a years of what talked sort I a structural we

I speaking, that generally think, continues. trend

within plus we're sort year-over-year, are retention think I same or minus of seeing numbers that the ballpark.

we a like couple So ago. dramatic years of we're seeing not saw ongoing improvements

areas that that we're a we on areas program And game, is identifying virtual think interact K-XX an that that slightly I lack they can the see, investing playground, We're with they I can improve benefits they of people can in each That's a valid can what is But doing communication long-term very program we they for in would sometimes is the a think structural programs. other. true. in that they feedback have that play and also will game the is of the believe games, we're other That things we longer-term meet safely each feedback. we where have we socialization of call that zone can based all environment, it, meaning on virtual can go platforms to to People, us, with get, the there's in retention think in expect. structural that kids retention. most allow a

that of elements attack the so think may why And and students we're things thematic those types in attrit. investing we families of

term, mentioned right I plus sort like benefit one the to don't But next numbers. the of do over minus retention year-over-year, the difference. we're seeing to going longer major longer-term think now provide some I But I things X any years, X structural or think our in are

Alexander Paris

some question, enrollment, Great. strongly not final Or same expected But career the something or made XX% incremental more comment That's about I misunderstand helpful. look materialized Did offer then And has at then you as that as color? perhaps I hoped. you the your Learning said response? could up on we funnel was year-over-year. Career you

James Rhyu

response the No, I think you understood correctly.

strong graduate suggest, belief I kids programs that applied long-held career numbers I operated that of if think put in trajectory school. strong spite think be what well, are when our the well, it's very can they to my high and they on a career-ready

the I need. as think around trends education support increasingly, that macro a larger

I will, industry industry dialogue, education supports not if think dialogue, corporate but that. you the industry

for so what than we're And programs and think indicate seeing much those the that larger opportunity market I doing. something

a it don't we've if And effectively effectively opportunity lot there I I go market yet. just think that so done think with more to there's capture we it. that upside can and

more think even us. And upside so that for I presents

Alexander Paris

hate a I negative percentage bit that in last I the of realize I Adult revenues the But and that I thing maybe is, small the the helpful. little pick XX-month were give now? it's the million, this were on be but report. color makeup very curious. camps proportion. I assuming of as where question, soft, segment think there's boot I a was MedCerts, Last at hear. would X in to quarter. you X% they there MedCerts, a whatever guess know question it's first could and I'm just first $XX.X on Good to total, a what's largest. basis, only below Great. the

James Rhyu

Yes.

think exactly we're for don't for to the productive of that I think any percentages not that's out going break us. I

the softness sure. the for in in that's business, disappointed we're that think I

or and structured customers of as go an transition, excuse be type longer is It's is I we BXB term, business, in primarily because think if this historically we of business. MedCerts the to a shape no business structurally of been it's a better going the for business factors, our and us that business. this one for more think type BXC way, was through of a form didn't particularly for but it this as soft

we so business. that And more a pivoting of into sort much business are BXB-focused

that It BXB side don't a deal it. with you It's abandoning we're the when business, customer have daily much. doesn't to BXC have of you one is, mean that churn obviously, just the as

much contracts. You more recurring It's happens be stable have It to speaking. more generally margin, much revenue. actually higher

so And the very we're still about bullish business.

I be, period be time to think long going there's to there I some and how going is don't it's know of we as transition through. exactly -- but

our of impacts the our to you for ability As it in of spite continue decline company trajectory I materially continues If grow it time, said, to to period overall immaterial. think don't some or those declines. remain there's to And businesses. to But do and in going them. of value creation we we shareholders think long-term invested for those kinds businesses, we behind our are of invest those continue with it's

Alexander Paris

more just Great. talking than question revenue. there said other about we're of it's in answering X In federal Is into like less you've one Title about? and the before, this X% there my then well question And on? mind. funding, are so clarification came things Or ESSER

James Rhyu

Yes.

So I nothing. Like, at it's are question. there. it's things the a now good in clarifying this other basically point, mean, There ESSER

than streams than -- So dollars, again, should It's so historically about that it's other of don't not more I us even was talking through thing But so is sort a think it for yes, And just anymore. I flowed very what well be there from ESSER. X%. we is small that less revenue federal think ESSER.

Alexander Paris

strong quarter. on the Congratulations

Operator

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

Matthew Filek

schools new you're universal school changed President you Great quarter. about all, that. new choice? in Filek optimism curious Just the Donna, with how thinking your pushing Has results open this to for being especially Stephen. have and at able for on James about Matt states

James Rhyu

Yes.

focused way. keep So either try I to again, us

years it's X you X way, now. changes types this ago, do administration, of heard programs swayed heard in tenor given going tone predominantly, supports how too run think of to business the and we that a the anyway you're hear and school current to not it administration us. ago, this be state-level I for either You we that years the business general Trying run. this choice in

that speaking, business. halo think I can positive on be a broadly our is effect and

know that that the that for state. new or a have I us in specifically will advocate is I don't going states. of programs it, a I take see will given we tailwind. to to it right programs our there any in the tailwind know absolutely or tailwind don't To that don't is I try just opening from materializing now. extent advantage that administration see And that

state anybody in don't the -- if of of administration, we the people business. state's type hope a a and time administration that way, I the that And flip whatever commentary, And think believe that. to the it is also it's they and has supportive want respect these state-run we're and current historically manage been And by businesses. believe business. which this understand we the period I So does, and different of of is views mean predominantly I way that a I in this the future, side

looking me, beyond my again, think that's the I for ways to, understanding the and country. is administration also And is that way, students. that, for to help above current positive And the other by

in thing. this on If try government students from business almost conditions well We're is from to here if focused their or our a we're our not, that step whatever view it to given. good helps the is, to help at and that's running vantage So the business is my point. secondary it's point, me commentary

Matthew Filek

Career That's then on James. Got a explanation, wanted helpful And one ask Learning. I it. to

HVAC build I out trades think skilled talked like programs pilot about plumbers, repair. your have for to you desire

opportunity look you that more that like? a can could So bit little and about talk what

James Rhyu

Yes.

of So we actually. have a couple tests run already

there, the for trades you in I suggest this appears market think still skilled overall lot that be a growing. to have the tests comps early see learn. that indications demand Clearly, other and we out of public to can

thing. a that's good think I

needs country it. the think I

doing college I to having very think debt, trajectory a phenomenal trades. to very, incur there's people, that skilled for earn without career just of a living lucrative lot

opportunity continue us. think We for to there's

got in about effectively -- to materialize we big where We're us But explore something haven't going be we we it. that think because to because to on want it to I proceed don't space. bets we've can we how cautiously figure tested thing continue want the for make we out play that explore want last to properly. it is we to

And so that's it's going don't I a trend think away tomorrow.

time for of think in there's see we we testing begun yes, it, figure to we us But I think out I have learn. try lot what the to and already the explore can still and space. a have to that it

Matthew Filek

Okay.

light lastly, quarters? are the in quickly then I And enrollment schools of the that close any are confirm, good. strong to especially there to recent just getting wanted Sounds hitting currently caps, enrollment growth in

James Rhyu

The Well, are it's we're the that caps dealing a actually, enrollment with have of not fixed. that, is generally enrollment always not like news good thing. long-term programs, programs the new in caps most

i.e., conversation So say, a have, government-imposed partners, there to program. raise those state-imposed speaking, a cap certain they a in in over for state say, there's of be both time, One is of cap, of caps or cap. reason a two cap, is, to when good had is, one imposed sort the a for the And whatever other caps, And certain speaking. I'll generally flavors cases, partner-imposed enrollment our of generally necessary. enrollment I'll

another. amount stories, you reasonably that that it reason one for -- there's of families valid the meaning or demand if We and And that we data go excessive them raising when of suggests have demand, is very we is, alternatives the usually program, in it's it, alternatives need, or these sort a if will, whichever are successful don't historically go They have where And we we served serve the there caps whoever, -- want mechanism have only being served, to we in very where And states to alternatives. be they to aren't conversations other be and government to be do they're the want justified to to caps. that through to valid the can mechanism, sorry, history, may our students. which students we we for unmet another data usually reasons able are strong with be just in being not and meaning with it's to And other and an counterparty successful, think been there's state having warrants our in been need. with agencies partners benefit we of of for think can fairly we continue a students. the we've show with those raise successful the demand through or

Operator

our that you participation. today. does for for And also concludes thank conclude We question-and-answer conference like session. would our to your all That

disconnect. You may now

Stride (LRN) 28 Jan 252025 Q2 Earnings call transcript