Stride Q1 Revenue Rises 3% as Career Learning Offsets Enrollment Decline

Stride (LRN) reported higher fiscal first-quarter revenue as growth in its middle- and high-school Career Learning business outweighed declines in General Education and adult Career Learning. Total enrollment fell 2.5%, however, while adjusted operating income and adjusted earnings per share declined, highlighting an uneven start to fiscal 2027.

Revenue for the three months ended September 30, 2026, increased 3.0% year over year to $639.4 million from $620.9 million. Adjusted EBITDA rose 3.1% to $111.8 million, while adjusted operating income decreased 3.1% to $78.6 million. Adjusted earnings per share fell 9.9% to $1.37 from $1.52.

On a GAAP basis, income from operations increased to $84.3 million from $69.0 million. Net income declined to $64.9 million from $68.8 million, though diluted net income per share rose to $1.45 from $1.40 as the weighted-average diluted share count decreased. The quarter included negative stock-based compensation expense of $7.4 million, compared with an expense of $10.2 million a year earlier, affecting the company’s non-GAAP reconciliations.

Free cash flow remained negative due to the seasonal use of cash but improved to negative $149.3 million from negative $217.5 million. Net cash used in operating activities narrowed to $124.8 million from $195.8 million.

Career Learning offsets lower General Education enrollment

Average enrollment across Stride’s General Education and middle- and high-school Career Learning programs declined 2.5% to 241,400 students. General Education enrollment fell 6.2% to 129,200, reducing segment revenue by 1.8% to $356.6 million.

Middle- and high-school Career Learning enrollment increased 2.0% to 112,200. Revenue from that business grew 12.7% to $272.1 million, substantially outpacing enrollment growth. Adult Career Learning revenue dropped 34.4% to $10.7 million, leaving total Career Learning revenue up 9.7% at $282.8 million.

Stride said demand for education alternatives remains strong and identified academic quality, student outcomes, customer experience and retention as investment priorities. Its capital-allocation plans also include technology intended to improve personalization, new products and potential acquisitions that provide strategic synergies.

Fiscal 2027 outlook

For fiscal 2027, Stride expects revenue of $2.53 billion to $2.61 billion and adjusted operating income of $500 million to $530 million. The midpoints represent approximately 2% revenue growth and 3% adjusted operating income growth from fiscal 2026. Planned capital expenditures are $70 million to $80 million, and the expected effective tax rate is 24% to 26%.

For the second quarter, management projects revenue of $625 million to $645 million and adjusted operating income of $135 million to $145 million. The company said the outlook incorporates actions underway to improve execution and strengthen the business, while reiterating its commitment to the fiscal 2028 targets presented at its November 2023 investor day.

Stride ended the quarter with $884.2 million in cash, cash equivalents and marketable securities and $608.6 million in total debt obligations. Its leverage ratio was 0.10 times, based on net debt and $621.0 million of adjusted EBITDA for the 12 months ended September 30. The board has extended the company’s $500 million share-repurchase authorization through October 31, 2027; approximately $189 million had been completed and $311 million remained as of September 30, 2026.

The outlook remains subject to enrollment and per-pupil funding levels, contract renewals, regulatory and legal requirements, academic outcomes, technology and cybersecurity risks, competition and Stride’s ability to develop Career Learning. The company also cited risks associated with artificial intelligence, acquisitions, teacher recruitment and retention, data privacy, tax rates and execution of its capital-allocation strategy.