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01/10 16:41
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with record enrollments and increased revenue, supported by a raised guidance. Despite some regulatory and enrollment constraints, the company shows growth in career learning and maintains a low dependency on federal funding. The Q&A session does highlight some uncertainties, but overall, the sentiment is positive. With a market cap of around $3 billion, the stock is likely to react positively, with a predicted movement of 2% to 8% over the next two weeks.
Total Revenue $630.4 million, up 17.8% year-over-year, driven by strong enrollment growth.
Career Learning Revenue $223.9 million, up 33% year-over-year, driven by enrollment growth of 34%.
General Education Revenue $370.8 million, up 13% year-over-year, also driven by continued enrollment growth.
Average Enrollments 141,500, up 14% year-over-year.
Total Revenue per Enrollment $2,415, down slightly from $2,420 last year, impacted by state mix from end year enrollment.
Gross Margins 40.6%, up 190 basis points year-over-year, with expectations to improve around 200 basis points for the full year.
Selling, General and Administrative Expenses $118.5 million, up 5% year-over-year.
Stock-based Compensation $8.5 million, expected to finish the year between $34 million and $37 million.
Adjusted Operating Income $141.7 million, up 47% year-over-year.
Adjusted EBITDA $168.3 million, up 40% year-over-year.
Diluted Earnings per Share $2.02, includes incremental shares related to convertible notes.
Capital Expenditures $15.8 million, down slightly from $16.3 million.
Free Cash Flow $37.3 million, down from $52.2 million year-over-year, due to timing of cash received.
Enrollment Growth: Enrollment up over 21% from last year, with expectations to finish the fiscal year with more enrollments than started for the third consecutive year.
Revenue Growth: Total revenue was $630.4 million, up 17.8%, with career learning programs growing to $223.9 million, up 33%.
Application Volumes: Application volumes have grown almost twice what they were 2 years ago and 4x what they were 4 years ago.
Gross Margins: Gross margins were 40.6%, up 190 basis points from last year, with expectations to improve around 200 basis points for the full year.
Adjusted Operating Income: Adjusted operating income was $141.7 million, up 47%, setting a record for the company.
Free Cash Flow: Free cash flow was $37.3 million, down from $52.2 million due to timing of cash received.
Future Growth Strategy: Focus on building an enduring business for the next 25 years by leveraging core capabilities to deliver innovative education solutions.
Market Positioning: Positioned to capitalize on dissatisfaction with public education and increasing demand for online programs.
Competitive Pressures: The company faces competitive pressures as demand for full-time online programs increases, with 27% of parents considering such options. This indicates a growing market but also highlights the need for Stride to maintain its competitive edge.
Regulatory Issues: There are potential regulatory challenges as the company navigates the funding environment for FY '26, which is still in the early stages of state budget finalization.
Supply Chain Challenges: The company mentioned constraints on new enrollments due to some schools closing enrollment for the school year, which could impact growth.
Economic Factors: The overall macroeconomic environment is favorable, but the company must remain vigilant as economic conditions can change, affecting enrollment and funding.
Federal Funding Dependency: Less than 5% of Stride's overall revenues come from federal resources, indicating a low dependency but also a potential risk if federal funding dynamics change.
Enrollment Growth: Enrollment up over 21% from last year, with expectations to finish the fiscal year with more enrollments than started for the third consecutive year.
Market Demand: Demand for full-time online programs continues to grow, with application volumes almost twice what they were 2 years ago and 4x what they were 4 years ago.
Long-term Vision: Focus on building an enduring business for the next 25 years by leveraging core capabilities to deliver innovative education solutions.
Revenue Guidance: Expecting revenue in the range of $2.370 billion to $2.385 billion, up from previous guidance of $2.320 billion to $2.355 billion.
Adjusted Operating Income Guidance: Adjusted operating income expected between $455 million and $465 million, increased from $430 million to $450 million.
Capital Expenditures Guidance: Capital expenditures expected to remain between $60 million and $65 million, unchanged from last quarter.
Effective Tax Rate Guidance: Effective tax rate guidance remains between 24% and 26%, unchanged from last quarter.
Gross Margin Improvement: Expect gross margin to improve around 200 basis points for the full year.
Share Repurchase Program: The company has not mentioned any share repurchase program during the call.
The earnings call highlights strong enrollment growth and increased revenue, yet issues with platform implementation led to higher withdrawals and no in-year enrollment growth. Positive cash reserves and adjusted EBITDA are offset by negative free cash flow and declining gross margins. The Q&A reveals management's vague responses on guidance and platform fixes. Given the company's market cap, these mixed signals suggest a neutral stock price movement in the short term.
The earnings call presents strong financial performance with impressive growth in adjusted operating income and revenues across segments. Despite some concerns in Adult Learning, the overall outlook is optimistic with strategic investments in tutoring and AI. The Q&A reveals no major risks, and the management's positive guidance, along with a well-maintained financial health, supports a positive sentiment. With a market cap of around $3 billion, the stock is likely to react positively, leading to a 2% to 8% increase in the stock price over the next two weeks.
The earnings call reveals strong financial performance with record enrollments and increased revenue, supported by a raised guidance. Despite some regulatory and enrollment constraints, the company shows growth in career learning and maintains a low dependency on federal funding. The Q&A session does highlight some uncertainties, but overall, the sentiment is positive. With a market cap of around $3 billion, the stock is likely to react positively, with a predicted movement of 2% to 8% over the next two weeks.
The company's financial performance is strong, with significant revenue and earnings growth, improved margins, and increased guidance. Despite some concerns about enrollment funnel challenges and adult learning revenue, overall sentiment is positive. The market cap suggests a moderate reaction, likely in the 2% to 8% range, supported by strong financial metrics and optimistic guidance.
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