Stride (LRN) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue rose 14.8% year-over-year to $551.1 million, driven by record enrollments of 222,600, up 18.5%, with Career Learning enrollments up 30.4%.

• Net income increased to $40.9 million from $4.9 million, with diluted EPS up to $0.94 from $0.11 year-over-year.

• Adjusted operating income reached $58.4 million, a 295% increase from last year; adjusted EBITDA was $83.9 million, up 111%.

• The company maintains a strong balance sheet and is confident in achieving FY28 targets, with robust organic demand and disciplined capital allocation.

• Operating income rose to $47.3 million from $3.3 million, reflecting improved gross margin and revenue growth.

Financial highlights

• Gross margin improved to 39.2%, up 320 basis points year-over-year, with gross profit at $215.9 million.

• Free cash flow was -$156.8 million in Q1, reflecting typical seasonality; positive cash flow expected in the next three quarters.

• Cash, cash equivalents, and marketable securities totaled $539.4 million at quarter end.

• Net income attributable to common stockholders was $40.9 million, up from $4.9 million year-over-year.

• Diluted EPS was $0.94, up $0.83 year-over-year.

Outlook and guidance

• FY25 guidance: revenue of $2.225B–$2.3B, adjusted operating income of $395M–$425M, CapEx of $60M–$65M, effective tax rate of 24%–26%.

• Q2 FY25 guidance: revenue of $560M–$580M, adjusted operating income of $115M–$125M, CapEx of $13M–$15M.

• Gross margins expected to improve by 100–200 basis points for the full year.

• Revenue per enrollment expected to be flat to slightly down for the year due to ESSER funding roll-off, offset by positive state funding.

• The company believes its liquidity is sufficient for both short- and long-term operational needs.