Stride Inc delivered a solid QQ1 2026 top-line with revenue of $620.9 million, up 13% year over year, driven by record enrollments in both Career Learning and General Education segments. Total enrollments rose 11.3% year over year to 137,700 General Education students and 110,000 Career Learning enrollments, with total revenue per enrollment of $2,388, up 3.7% from the prior year. Adjusted operating income rose to $81.1 million, up 39% year over year, and adjusted EBITDA reached $108.4 million, up approximately 29%. Despite these gains, the quarter reflected higher platform-related investments and execution challenges associated with a comprehensive platform upgrade, which contributed to a 20 bp decline in gross margin to 39% and a negative free cash flow of $217.5 million, largely reflecting ongoing capex and working-capital dynamics during a seasonally heavy onboarding period.
Management emphasizes that the platform upgrades are long-term value levers intended to support higher scale and a more resilient, tech-enabled learning experience. The near-term impact includes higher withdrawals and lower conversions as customers acclimate to new systems. In response, Stride is limiting near-term enrollment growth to protect program quality and platform stability, with a stated objective to fix issues within the current year. The company maintained FY2028 financial goals and provided a disciplined outlook for FY2026, signaling continued investment in technology, student outcomes, and geographic mix optimization. The earnings call conveyed a constructive longer-term growth story, supported by a favorable funding environment and a growing demand for educational alternatives, while acknowledging execution risk tied to platform modernization and state funding mix.
From a competitive standpoint, Stride positioned itself as a leader in raw enrollment growth versus peers and signaled a willingness to compete in a healthy, evolving market. The near-term action plan prioritizes platform stabilization, enrollment quality, and execution discipline while preserving strategic priorities such as expanding access to tutoring and career-forward programs. Investors should monitor platform stabilization progress, retention and withdrawal trends, enrollment cadence by term, and the trajectory of revenue per enrollment as the mix shifts post-upgrade.