What happened
Shares of Stride (LRN +0.09%) were popping Wednesday after the education management company delivered a better than expected fiscal third-quarter earnings report after the closing bell Tuesday, beating estimates on the top and bottom lines.
The online school operator and curriculum developer also raised its full-year guidance. As a result, the stock was up by 15.5% as of 12:36 p.m. ET.
NYSE: LRN
Key Data Points
So what
In the quarter, which ended March 31, Stride's revenue rose 11.5% to $470.3 million, which beat the consensus estimate of $456.4 million. Management credited growth in in-year enrollment, increases in revenue per enrollment, and growth in its adult learning segment.
The revenue increase had a direct impact on the bottom line as operating income rose 19% to $72.2 million, and earnings per share jumped from $1.02 to $1.30, well exceeding analysts' consensus forecast of $1.06.
While enrollment and revenue in its general education segment fell by 20.3% due to the return to school in the post-pandemic period, its career learning programs picked up the slack, growing by 60% year over year. Overall, average enrollment fell 2.2% in the quarter to 181,800.
Now what
The company raised its revenue guidance from a $1.775 billion to $1.815 billion range previously to a range of $1.805 billion to $1.825 billion, and it lifted its adjusted operating income range from $180 million to $200 million for the fiscal year to $193 million to $200 million.
Stride has been an erratic performer over its history as the for-profit education industry has undergone significant changes, but investors should be encouraged by the latest results, especially the growth in its career learning segment, which should support accelerated growth once the general education business stabilizes.
Trading at a price-to-earnings ratio of 17, the stock has room to grow if it continues to deliver bottom-line growth like it did in the fiscal third quarter.
