Stride Shares Rise 4% as Q2 Revenue and Income Beat Estimates

Stride, Inc. (NYSE: LRN), a leading technology-based education service company, saw its shares rise by 4% on Tuesday, January 28, 2025, following the release of its second fiscal quarter (Q2) results. The company reported strong financial performance, with revenue and income exceeding analyst estimates. Here's a closer look at Stride's Q2 results and the factors driving its share price increase.



Stride reported revenue of $587.2 million for the Q2, up 16.3% year-over-year (YoY), and net income of $96.4 million, up 44.2% YoY. Diluted earnings per share (EPS) reached $2.03, compared to $1.54 in the same period last year. The company's enrollment averaged 230.6K students, a 19.4% increase YoY, with Career Learning enrollments up 30.9% to 94.8K students.



Stride's strong Q2 performance was driven by several key factors:

1. Robust Enrollment Growth: Stride's average enrollments increased by 19.4% to 230.6K students, driven by a 30.9% increase in Career Learning enrollments to 94.8K students. This growth reflects the company's ability to attract and retain students, particularly in high-demand career-oriented programs.
2. Stable Revenue per Enrollment: Despite the rapid expansion, revenue per enrollment remained stable at $2,395, indicating pricing power and successful value proposition messaging.
3. Operational Leverage: Stride's profitability metrics reveal exceptional operational leverage, with operating income jumping 48.4% to $125.1 million, operating margins expanding from 16.7% to 21.3%, and adjusted EBITDA increasing 35.5% to $160.4 million.
4. Strong Cash Position: Stride's robust cash position of $738.1 million provides ample flexibility for strategic investments and market expansion, although capital expenditures remain modest at $14.8 million this quarter.



Stride raised its full-year guidance, projecting revenue between $2.320-2.355 billion and adjusted operating income of $430-450 million. For Q3 FY2025, the company expects revenue of $585-600 million.



Stride's Q2 results showcase remarkable operational execution and market share gains in the education technology sector. The 16.3% revenue growth to $587.2 million was driven by robust enrollment growth of 19.4%, reaching 230.6K students. The standout performer was the Career Learning segment, which saw enrollments surge 30.9% to 94.8K students.

The company's profitability metrics reveal exceptional operational leverage, with operating income jumping 48.4% to $125.1 million, operating margins expanding from 16.7% to 21.3%, and adjusted EBITDA increasing 35.5% to $160.4 million. The raised full-year guidance of $2.32-2.355 billion in revenue and $430-450 million in adjusted operating income reflects management's confidence in sustained growth.



In conclusion, Stride's strong Q2 financial performance, driven by robust enrollment growth, stable revenue per enrollment, operational leverage, and a strong cash position, has contributed to a 4% increase in its share price. The company's focus on career learning and professional skills training positions it well in the current and future job market landscape, addressing the growing demand for skilled workers in high-growth and in-demand industries. With a strong market position and a robust financial outlook, Stride is well-positioned to continue its growth trajectory.