What happened
Shares of Stride (LRN 0.03%), which provides online education services to schools, individuals, and businesses, rose sharply Wednesday morning, gaining as much as 13% in early trading. The big story was the company's fiscal 2022 third-quarter earnings update, which it released after the close on Tuesday.
NYSE: LRN
Key Data Points
So what
Stride posted revenues of $421.7 million, up from $392.1 million in the fiscal third quarter of 2021. Management highlighted solid enrollment, growth in its adult learning division, and its ability to charge more per student. That said, there are two very different trends in progress here. In the company's core general education business, which accounts for roughly 75% of its top line, revenues were down by about 2% year over year. That weakness, however, was more than offset by the huge 51.6% increase in revenues from its career learnings segment. And while the company noted strong enrollment as a positive, general education enrollment fell by 7.7%, with higher pricing offsetting that drop to some degree. Enrollment in career education rose by 42.4%, and the company has raised its prices in this segment too.
Image source: Getty Images.
So the big picture here is that Stride's biggest operation is struggling a little, but the company is nonetheless seeing material success as it looks to grow its career education offerings. That's not a perfect story, but it is hardly bad news.
Growth on the bottom line, meanwhile, was robust, with fiscal third-quarter 2022 earnings up by nearly 80% from the prior-year period to $1.02 per share. That number was well above what Wall Street analysts had been expecting, which is the type of thing that investors tend to get excited about.
Now what
Adding to the list of positives, the company also increased its full-year revenue guidance, hinting it's in the midst of another good quarter to finish out its fiscal 2022. Although the weakness in the company's biggest division should be a worry for long-term investors, it is hard to deny that, on balance, investors' glass-half-full view of things on Wednesday looks justified.
