Stride Inc. reported robust first quarter results for the fiscal year 2024, marked by record revenue and a surge in enrollment. The company's total revenue grew by 13% to $480.2 million from the same period last year, while enrollments for the fall increased by 8% to nearly 188,000, fueled by growth in both the General Education and Career Learning programs.
Key takeaways from the earnings call:
- Stride's adjusted operating income at the midpoint of the range rose over 400% from fiscal year 2020, standing at $14.8 million compared to an adjusted operating loss of $19.9 million last year. This reflects the company's high earnings quality, with free cash flow exceeding net income, as per InvestingPro Tips.
- The company is poised to revolutionize the future of education by offering virtual learning as an option for families, addressing the skills gap for US employers. This is backed by the company's consistently increasing earnings per share, another key insight from InvestingPro Tips.
- Stride expects to maintain its strong momentum, forecasting record revenue and profitability performance for the year. This is in line with InvestingPro data, which shows a 3-month price total return of 17.88%.
- The company anticipates second-quarter revenue to be between $490 million and $510 million, and full-year revenue to be in the range of $1.96 billion to $2.03 billion. This aligns with the company's recent revenue growth of 8.93% as reported by InvestingPro.
- Stride ended the quarter with cash and cash equivalents of $254.6 million, despite a negative free cash flow of $151 million for the quarter due to seasonal effects. The company's liquid assets exceed its short-term obligations, reinforcing its financial stability, as highlighted by InvestingPro Tips.
In the earnings call, the company also reported improved academic outcomes and state scorecard outcomes, leading to higher year-over-year retention. Stride saw strong demand for new enrollments and an improvement in converting these enrollments. The company attributes this growth to the increased flexibility offered to families during the pandemic, allowing for higher enrollment throughout the year.
Stride has also made significant changes to its marketing strategy, moving away from traditional TV advertising towards search engine marketing. The company's CEO, James Rhyu, acknowledged the positive impact of their new Chief Marketing Officer, Deb Hannah, in driving this shift. Rhyu also mentioned improvements in their enrollment center to enhance conversion rates and the implementation of AI initiatives to streamline the enrollment process.
Despite these positive strides, Rhyu admitted that there's room for improvement in their social media and career demand efforts. He concluded by expressing confidence in the company's multi-year trajectory for improvement and an expectation of continued market demand. This is supported by InvestingPro's data, which shows a strong return over the last three months and analysts predicting the company will be profitable this year. For more insights and tips like these, check out InvestingPro's Pro Pricing page.
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