Stride (LRN) Q2 2025 earnings summary

Executive summary

• Achieved record Q2 FY25 enrollments of 230.6K, up 19.4% year-over-year, and reported the most profitable quarter in company history, with strong demand persisting for three consecutive years.

• Q2 FY25 revenue reached $587.2M, up 16.3% year-over-year, and net income rose 44.2% to $96.4M; diluted EPS increased 31.8% to $2.03.

• Six-month revenue totaled $1,138.3M, up 15.6% year-over-year, with adjusted operating income up 76.9% and adjusted EBITDA up 54.5%.

• Strategic investments in new initiatives and platforms are showing early positive signs, supporting long-term growth and FY2028 targets.

• Company maintains a strong balance sheet and disciplined capital allocation, with liquidity sufficient to fund operations and strategic initiatives.

Financial highlights

• Q2 FY25 revenue: $587.2M (+16.3% y-o-y); adjusted operating income: $135.6M (+43% y-o-y); adjusted EBITDA: $160.4M (+36% y-o-y); net income: $96.4M (+44.2% y-o-y); diluted EPS: $2.03 (+31.8% y-o-y).

• H1 FY25 revenue: $1,138.3M (+15.6% y-o-y); adjusted operating income: $193.9M (+76.9% y-o-y); adjusted EBITDA: $244.3M (+54.5% y-o-y).

• Free cash flow for Q2: $208.6M, up from $160.6M in the prior year.

• Gross margin for Q2 FY25 was 40.8%, up from 39.8% in the prior year; operating margin improved to 21.3% from 16.7%.

• Cash, cash equivalents, and marketable securities totaled $738.1M as of December 31, 2024.

Outlook and guidance

• FY25 revenue guidance raised to $2.32B–$2.355B; adjusted operating income $430M–$450M.

• Q3 FY25 revenue expected at $585M–$600M; adjusted operating income $130M–$140M.

• Effective tax rate projected at 24%–26%.

• FY25 capital expenditures forecast at $60M–$65M.

• Management expects continued growth in both revenue and enrollments, supported by expansion in both General Education and Career Learning markets.