Stride (LRN) Q1 2026 Earnings Call Transcript

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Date

Tuesday, Oct. 28, 2025, at 5 p.m. ET

Call participants

• Chief Executive Officer — James J. Rhyu
• Chief Financial Officer — Donna M. Blackman
• Senior Vice President, General Counsel & Secretary — Timothy Casey

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Risks

• James J. Rhyu noted, "the implementations did not go as smoothly as we anticipated," resulting in higher withdrawals and lower conversion rates, which contributed to approximately 10,000-15,000 fewer enrollments than expected.
• Donna M. Blackman stated, "we now expect full-year gross margins will be down from fiscal 2025," and noted that added expenses will be incurred due to platform rollout challenges.
• The company does not expect in-year enrollment increases for fiscal 2026, with Rhyu saying, "we do not anticipate the same in-year enrollment increases that we have seen over the past few years."
• Free cash flow was negative $217.5 million, compared to the prior year period, driven by seasonality and onboarding expenses.

Takeaways

• Revenue -- $620.9 million, up 13% on a reported basis from the comparable prior-year quarter.
• Total enrollment -- 247,700 students, up 11.3%, which management attributed to ongoing demand for online education options.
• Adjusted operating income -- $81.1 million, increasing 39% year-over-year, with management linking improvement to enrollment and adjusted operating margin gains.
• Adjusted earnings per share -- $1.52, up 39.4% or $0.43 versus the prior-year period.
• Career learning revenue -- $241.5 million, up more than 21% on career learning enrollments of 110,000, a 20% increase.
• General education revenue -- $363.1 million, growing over 10% year-over-year on enrollment growth of 5.2% to 137,700 students.
• Revenue per enrollment -- $2,388, representing an increase of 3.7%, with management guiding for flat revenue per enrollment for fiscal 2026 compared to fiscal 2025.
• Gross margin -- 39%, a decline of 20 basis points, with increased platform investment noted as a factor.
• SG&A expense -- $173.1 million, up 3%, with expectations for SG&A as a percent of revenue to decline versus the prior year.
• Stock-based compensation -- $10 million, increasing $1.8 million, with full-year fiscal 2026 estimates guided to $41 million-$44 million due to long-term performance grants.
• Capital expenditures -- $21.7 million, up $6.9 million year-over-year.
• Adjusted EBITDA -- Adjusted EBITDA was $108.4 million, with an adjusted EBITDA margin of roughly 29%.
• Free cash flow -- Negative $217.5 million, compared to negative $156.8 million in the prior-year period, attributed to seasonality and school onboarding costs.
• Balance sheet liquidity -- $749.6 million in cash, equivalents, and marketable securities at period end.
• Fiscal 2026 revenue guidance -- $2.48 billion-$2.555 billion for fiscal 2026.
• Fiscal 2026 adjusted operating income guidance -- Adjusted operating income guidance of $475 million-$500 million for fiscal year 2026.
• Fiscal 2026 capital expenditure guidance -- $70 million-$80 million for fiscal 2026.
• Effective tax rate guidance -- Effective tax rate guidance of 24%-25% for fiscal year 2026.
• Platform implementation issues -- Management estimated 10,000-15,000 lower enrollments were primarily due to system disruptions and intentionally constrained growth to support program quality.
• Guidance on in-year enrollment trends -- Management communicated that "we should not anticipate growth" in enrollments from the beginning to the end of fiscal 2026, according to James J. Rhyu, which contrasts with trends of prior years.
• Long-term outlook -- Management reiterated comfort about achieving the fiscal 2028 financial goals despite short-term challenges.

Summary

Stride (NYSE:LRN) delivered double-digit year-over-year improvements in revenue and total enrollment but experienced operational headwinds from its new platform implementation, which management directly linked to increased student withdrawals and muted in-year enrollment expectations. Gross margin declined modestly due to higher platform-related expenses, and management says it now expects revenue per enrollment to be "flattish" for fiscal 2026 compared to fiscal 2025. While liquidity remains strong, negative free cash flow and additional costs related to technology investments were noted.

• Rhyu stated, "the majority was due to the system implementation issues," confirming most of the 10,000-15,000 missed enrollments were attributed to technology disruptions rather than structural demand shifts.
• Management clarified that disruptive platform rollouts affected both customer-facing and back-office systems, and that the largest issues are targeted for resolution within the fiscal year, with continued enhancements planned going forward.
• Blackman explained that the current positive funding environment is unchanged, but the enrollment mix and timing will prevent further revenue per enrollment gains in fiscal 2026.
• During the Q&A, Rhyu outlined that any return to in-year enrollment growth is conditional on successful remediation of the current platform challenges and continued demand momentum, without providing specific forward enrollment guidance.
• Investment in quality initiatives included new program rollouts, such as free ELA tutoring for second and third graders, as part of the company's long-term strategy.

Industry Glossary

• ELA: English Language Arts; refers to reading, writing, and communication instruction foundational to K-12 education.
• Career learning: Specialized programs aimed at preparing K-12 and adult students for specific professional fields, including IT, healthcare, and business, often through brands like Galvanize, Tech Elevator, and MedCerts.

Full Conference Call Transcript

Timothy Casey: Thank you, and good afternoon. Welcome to Stride's first quarter earnings call for fiscal year 2026. With me on today's call are James J. Rhyu, Chief Executive Officer, and Donna M. Blackman, Chief Financial Officer. As a reminder, today's conference call and webcast are accompanied by a presentation that can be found on the Stride Investor Relations website. Please be advised that today's discussion of our financial results may include certain non-GAAP financial measures. A reconciliation of these measures is provided in the earnings release issued this afternoon and can also be found on our Investor Relations website. In addition to historical information, this call will also involve forward-looking statements.

The company's actual results could differ materially from any forward-looking statements due to several important factors as described in the company's earnings release and latest SEC filings, including our most recent annual report on Form 10-K and subsequent filings. These statements are made on the basis of our views and assumptions regarding future events and business performance at the time we make them, and the company assumes no obligation to update any forward-looking statements. Following our prepared remarks, we will answer any questions you may have. I will now turn the call over to James. James?

James J. Rhyu: Thanks, Tim, and good afternoon, everyone. Demand for our products and services remained strong. In fact, we believe industry demand and trends around online education continue to grow. We indicated in August that we believe we will grow enrollment between 10% to 15%. And while we achieved enrollment growth in that range, we still fell short of our internal expectations. While demand, as indicated by application volumes, remains healthy, overall growth was tempered. But what happened? Well, we made a couple of strategic decisions that we believe will pay dividends over the longer term but limited our growth in the shorter term. First, we invested in upgrading our learning and technology platform to a third-party industry-leading platform.

We continue to believe the investment is the right long-term decision to ensure we are deploying industry-leading technologies and systems. However, the implementations did not go as smoothly as we anticipated. We are actively engaged with our vendors to improve the situation. We heard from our customers that their engagement with these platforms detracted from their overall experience. This poor customer experience has resulted in some higher withdrawal and lower conversion rates than we expected. Secondly, we wanted to focus on running high-quality programs, and in some instances, the best approach to achieve that is to limit enrollment growth while we improve our execution.

We estimate that the combination of these factors resulted in approximately 10,000 to 15,000 fewer enrollments we otherwise could have achieved. We also believe that these challenges will likely restrict our in-year enrollment growth. While demand continues to remain strong, we do not anticipate the same in-year enrollment increases that we have seen over the past few years. So our outlook for this year compared to last year is a bit muted. However, our outlook for this business over the longer term remains bullish, and these investments should help us achieve our longer-term goals. Our mission and our path are clearer to me than ever. Families want and deserve educational choice.

Meeting the demands of families in this country is an increasingly diverse task that is challenging to meet with a one-size-fits-all model. So for many families, we are providing the only real affordable alternative in meeting their needs. And the trends just continue to move in that direction. Whether it be safety issues like bullying or neighborhood violence, or health issues or special needs that cannot be met by local schools, we are providing a service that is both increasingly in demand and increasingly necessary. And we are investing in areas that will help enable us to meet the needs of the families we serve.

One simple example is the rollout this year offering every second and third grader free ELA tutoring. We know that in order for kids to continue learning, they need to be able to read, write, and communicate. Therefore, we are investing to ensure the youngest students in our programs can do just that. We are tomorrow's education today. We meet the diverse needs of families that want flexible, personalized, career-forward, and tech-enabled education at an affordable cost. This fall has proven challenging for us, and I want to thank our customer-facing employees, the teachers, administrators, and other staff who have worked tirelessly to help us overcome those challenges to serve the students.

I also want to thank all our corporate employees who never forget who our customers are and how impactful what we do is in the lives of so many families. Thank you. With that, I'll turn the call over to Donna.

Donna M. Blackman: Thanks, James, and good afternoon. As James mentioned, our results this quarter reflect the continued demand for our core offerings. Families are seeking alternative options for their students to solve ongoing challenges within the existing educational system. However, we also had some internal challenges this quarter as we implemented new platforms for our students. While this caused some disruption, I believe these changes are important for the long-term growth of the business. As always, I am incredibly grateful to all of the Stride employees for their commitment to the families we serve. It is an opportunity and a privilege to influence the lives of so many students each and every year.

Turning to a few highlights from our quarterly results, revenues for the quarter were $620.9 million, up 13% from the first quarter of last year. Adjusted operating income was $81.1 million, an increase of almost $23 million or 39%. Adjusted earnings per share were $1.52, up 43 cents from last year. And capital expenditures were $21.7 million, up $6.9 million. As I mentioned, our quarterly results reflect strong demand for our core offerings. Our total enrollments for the quarter were up 11.3% from last year, once again setting a record for the number of students we will serve as families continue to seek out educational alternatives.

Career learning at middle and high school revenue for the quarter was $241.5 million, up more than 21% from last year. Career learning enrollments grew 20% to 110,000. General education revenue grew over 10% to $363.1 million on enrollment growth of 5.2% to 137,700 students. Total revenue per enrollment across both lines of revenue was $2,388, up 3.7% from last year. As we mentioned in August, we are seeing a positive funding environment, but we do expect some impact from state mix and timing. And as such, we now believe we will finish the year flattish in revenue per enrollment compared to FY '25. Gross margin for the quarter was 39%, down 20 basis points from last year.

I mentioned last quarter that we are continuing to invest in the business, which will have some impact on gross margin. Additionally, given the challenges we had this quarter, we expect to incur some additional expenses related to the platform rollout. As a result, we now expect full-year gross margins will be down from FY '25, though still above what we saw in FY '24. Selling, general, and administrative expenses totaled $173.1 million, up 3% from last year. We still expect SG&A as a percent of revenue to decrease compared to last year. Stock-based compensation for the quarter was $10 million, an increase of $1.8 million compared to last year.

We expect to see an increase in stock-based compensation this year largely due to the impact of long-term performance grants. And therefore, full-year stock-based compensation will likely be in the range of $41 to $44 million. As I mentioned earlier, adjusted operating income for the quarter was $81.1 million, up 39% compared to FY '25. Adjusted EBITDA was $108.4 million or roughly 29%. Adjusted earnings per share, a new metric we introduced last quarter, was $1.52, up 39.4% from last year. Our profitability strength was driven by the enrollment growth in the quarter and improvements in operating margin. Capital expenditures in the quarter were $21.7 million, up $6.9 million from last year.

Free cash flow, defined as cash from operations less CapEx, was negative $217.5 million compared to negative $156.8 million in the prior year period. Cash flow follows our typical seasonality related to school launch and the onboarding of students in the first quarter. As in years past, we expect to see positive cash flow for the next three quarters. We finished the quarter with cash, equivalents, and marketable securities of $749.6 million. Turning to our guidance, as James mentioned, we do not expect enrollments to be nearly as strong as they have been for the past three years.

However, despite the short-term impacts we are seeing, our guidance this year keeps us firmly on track to achieve our FY '28 financial goals. For 2026, we expect to see revenue in the range of $620 to $640 million, adjusted operating income between $135 and $145 million, and capital expenditures between $15 and $18 million. For the full year, we expect revenue in the range of $2.48 billion to $2.555 billion, adjusted operating income between $475 and $500 million, capital expenditures between $70 and $80 million, and an effective tax rate between 24% and 25%. While any new technology can bring challenges, we are committed to delivering a quality experience for all of our families and our partners.

And we will make the investments needed this year to ensure we are set up for long-term success. Thank you for your time today. Now I'll turn the call back over to the operator for your questions. Operator?

Operator: At this time, if you would like to ask a question, press star. To withdraw your question, simply press 1 again. Your first question comes from Jeff Silber with BMO Capital Markets. Please go ahead.

Jeffrey Silber: Thank you so much. I obviously want to focus on the guidance for the year. And forgive me. Did you give enrollment guidance for the year? I think you had said 10% to 15% on the prior call. I'm just wondering where you're coming out now.

Donna M. Blackman: We did not give guidance for the full year. We gave the guidance that we gave for the count date with 10% to 15% for the count. We came in at 11.3%. But we do not anticipate that we will see the same level of in-year enrollment growth that we've seen over the past three years. So based upon that assumption, the 11.3% growth that we saw from October to October, we don't expect to see that same year-over-year increase by the end of the year.

Jeffrey Silber: Okay. Thank you for clarifying that. And then you did call out about 10,000 to 15,000 weaker enrollments. And you cited two items. One was, I guess, a bad systems implementation, and the other was limiting, you know, enrollment growth to focus on high-quality programs. Can we parse out what each one had that impact on that 10,000 to 15,000? And if you can give a little bit more color on each of those items, I think that would be helpful. Thanks.

James J. Rhyu: Yeah. I mean, I think, so it's difficult to say exactly. I'll first say that first. So, you know, anything I say is gonna be, you know, based on the data that we can see an estimate. But certainly, we believe that the majority was due to the system implementation issues. The overall customer experience. We had a higher level of withdrawals as a result. And, you know, we attribute the higher level withdrawals directly to the system issues that we're having. So I think that's definitely the predominance of them. It's also the area that we think is most resolvable. We're working very furiously with our partners to fix those issues.

And, you know, I think that the ability for us to run quality programs is tied intimately with the platform issues that we discussed because we want to do is to really exacerbate a problem by having more students come onto a platform that is not meeting our expectations.

Jeffrey Silber: Okay. Appreciate the color. Thank you.

Operator: Next question comes from the line of Jason Tilchen with Canaccord Genuity. Please go ahead.

Jason Ross Tilchen: Great. Good afternoon. Thanks for taking my question. A little bit of a follow-up on the last question. I'm wondering if you could just share a little bit more about the rationale and the timing for this tech implementation and then a little bit more about exactly what went wrong.

James J. Rhyu: Yeah. I think, so the first thing is the rationale for the implementation is it's actually pretty simple. As we have scaled, I mean, we have, you know, more than doubled in the past five years. And that level of scale requires platforms that are large enough and robust enough to meet the demands of our scale and our anticipated additional growth. And so we operated a number of platforms that were either in-house proprietary platforms or with third parties where we didn't have the confidence that they were gonna be at a scale to the extent we needed them to.

And so, you know, investing in a new set of platforms for the long term, we believe, and we still believe, execution issues aside is the right for our business long term. And so, you know, the idea of investing in upgrading our platforms continues to be, we think, the right approach. The timing, you know, there's one real window of timing that you have to fall into for most of these types of upgrades. Where you have in theory, the least disruption to your customers, and that is in the summer between the end of one school year and the beginning of the next school year.

So, you know, you we sort of have to execute in that sort of delicate window. And, clearly, what we thought we were going to achieve in terms of an execution in that window we did not achieve. Demand continues to be very strong. And so, so we're confident that we're gonna overcome this. But you know, but the timing for this implementation sort of has to occur really in that summer period. And, you know, you really only get that one window of chance, and we did not execute as well as we should have and our partners didn't execute as well as they should have. And we're gonna spend the year making sure that we get it fixed.

Jason Ross Tilchen: Great. And just a follow-up to that. Just want to make sure I understand. Was it essentially the implementation took longer than expected to complete and blended beginning of the school year or was there something else that went wrong and then the other sort of question, the dynamic between the two programs, gen ed and career learning, it seems like Career Learning, the enrollment remained very strong there, while we saw the sequential decline for Gen Ed. So wondering if this sort of tech upgrade had any sort of impact on one program more than the other?

James J. Rhyu: Yes. So not a material impact on one program versus the other. So I wouldn't sort of read too much into that split. The implementation again, there was a couple of platforms there. The main platform implementation took a little bit longer than we expected. Also, we encountered more problems on the rollout than we anticipated. So, even when it did roll out, for the new semester, the number of problems we experienced during the rollout that impacted direct to customers' abilities to log on the resiliency of the platform, the performance of the platform. All impacted the customer trajectory of the customer experience.

So I would say, it did take longer and it continues into the year to have issues that we're continuing to fix. So, I think that's sort of the thing that we're dealing with is that we're now in the year, and we have been now for, you know, a couple of months. And we're continuing to ensure that we're improving the platforms in year as well. Appreciate the color. Thanks a lot.

Operator: Your next question comes from the line of Greg Parrish with Morgan Stanley. Please go ahead.

Gregory Scott Parrish: So I'm going to get a little more color on the decision to limit in-year enrollment growth. Will the platform implementation issues, is that impacting in-year enrollment growth? Or is that not the case? Is this more of a permanent structural decision to improve the quality of your program?

James J. Rhyu: So I think it's a little bit of both. You know, we clearly we want to limit the exposure that the platform issues are having. So, you know, just sort of limiting the intake during a period when we want to make sure that the platform gets stabilized is important. So, you know, and that directly correlates to the quality of the program. You can't have a high-quality program if you're having customer experience issues. So I think they sort of go hand in glove.

Gregory Scott Parrish: Okay. So would you say then this is just a one-year sort of in-year impact and then next year it would probably and that has only been a couple of years this has been happening. Or is this it so next year, we're gonna kind of it could go back to the way it will the way it has been the last few years?

James J. Rhyu: Yeah. I think all things being equal, meaning that assuming we fix all the issues in this year, which we do anticipate, we have a clear road map that this year, the issues will, in fact, be fixed. Assuming that the demand continues to be strong as we have seen it, yes, we would believe that next year, we would be able to return to growth in year. Now, obviously, a lot of variables included there. Certainly not guidance of what next year is gonna be.

But, but if the demand were to maintain at the high levels that we've been seeing it and all other things being equal to, say, a last year type of performance, then, yeah, I mean, that's what the math would suggest. But, we're really focused on making sure we get it fixed this year. So, that is really the number one priority. And, again, I think we have a clear path of getting these resolved in this fiscal year.

Gregory Scott Parrish: Yep. Okay. Thanks. That's helpful color. And I know there's a lot of moving parts. And then maybe just one last question here. Just wanted to talk about the competitive landscape. I say that with, you know, you have double-digit enrollment growth here to start the year, so, you know, very, very healthy. But with your success over the last couple of years, there's, you know, other programs are gonna try to, you know, copy some of your very successful strategies. I think your biggest competitor had a great start to the year.

Think following your playbook, in many ways, and I know you're for lifting all boats in the industry, but maybe just help us with what you're seeing out there in the competitive environment, any changes, just anything you're seeing on that front? Thanks.

James J. Rhyu: Yeah. I mean, I have said, I think, pretty consistently that I want all players in the space to be successful. I want to make sure that this that the industry is healthy. And that the industry has, you know, high-quality players. I think a healthy industry promotes higher quality players in the industry. I think that's important. I mean, congratulations to our competitors who are doing well. I think that's great for them. I think if you just looked at the raw number forget percentages for a second. If you looked at raw numbers, I still think our growth year over year outpaced our largest competitors' raw growth numbers by a large margin.

You know, when you start at a lower base, percentages, obviously, you know, that's just math. But I think what we can see is demand remains strong. And we welcome healthy competition. And I think we're going to do everything we can to tee ourselves up for a strong next year.

Operator: Your next question comes from the line of Stephen Sheldon with William Blair. Please go ahead.

Matthew Filek: Hey team, you have Matt Filek on for Stephen Sheldon. Wanted to start with a clarification question. Are these platform issues solely related to the Class and learning experience? Or are these platforms also used for processing enrollments and other administrative functions?

James J. Rhyu: Yeah. It's a really good question. It's actually both. So they are the you would consider to be the more traditional customer-facing side of the equation. You know, the platform that, you know, serves up the courses and, you know, gets the people gets the students, you know, engaged with the program, if you will, as well as the more back-office administrative side that you just referenced.

Matthew Filek: Okay. That's helpful. And then what inning do you feel you are in for rectifying these platform issues? And then can you also tell us when exactly these issues started? And then one more thing as well. Would you kind of call this two separate platform issues? Or is it one thing? How should we think about all that, especially timing of fixing the issues?

James J. Rhyu: Yeah. So they are distinct platforms. So it is in this case, specific to your question, two distinct platforms that we're talking about in terms of back office, front office. We did not really have an indication of the impact of these issues until we got well into August. And, unfortunately, the timing wasn't great because it happened to be after our last earnings call, where, you know, it was more funnel activity of demand that we were seeing that was very strong. And then subsequent to that, we started seeing the, you know, the withdrawal issues as the platform issues became apparent. So the timing was, you know, unfortunate that it was after our last earnings call.

And, you know, and I think that when we think about sort of the road map to getting these issues fixed, we're working every day on them. We believe that over the course of the year, it's not a one-time fix that we're implementing. It's a series of fixes. We think that the, you know, the biggest ones happen here in the next few months, but they will persist throughout the entire year. And in fact, you know, we are engaged with our partners to ensure that their it doesn't end just when we think that we, quote, unquote, have the issues fixed.

But that we signed up with these partners to ensure that there was a robust ongoing of improvements to the platforms and innovation curve that we would ride with them, they would invest behind. And so while the immediate issues we expect to get fixed, you know, in the next few months with the biggest issues and then sort of throughout the year. We still expect to be investing in improving this platform and improving the experience for our customers, you know, well into the future. This is not just a one-year deal in terms of the expectation we have on improvement. But the most pressing issues we expect to be fixed in this year.

Matthew Filek: Okay. Thank you, James. Appreciate the added color there.

Operator: Your next question comes from Alex Paris with Barrington Research. Please go ahead.

Alexander Peter Paris: Thank you. I just have a couple of clarification type of questions. So at the count date, you had 247,700 students, up 11.3% year over year. You said that it could have been 10,000 to 15,000 higher. If we're not through these issues with the platform rollout. I guess the first question I have is did those withdrawals occur before the count date or after the count date? Because the Q2 guidance calls for revenue at the midpoint of up 7.3%. You know? So fall term enrollment was up 11.3%. And if it's flat revenue per enrollment, I don't know why revenue would be up only 7% unless these withdrawals continue to occur beyond the count date.

James J. Rhyu: Yeah. So, let me try to maybe clarify how you're looking at this first and then sort of circle back maybe on sort of how these withdrawals are manifesting themselves. The comp in each of our subsequent quarters from last year is on a rising set of enrollment and rising set of revenue. And so if what we did was we remain stable, i.e., flat, you still have a deterioration in the year-over-year growth mathematically because you're talking about last year when in the course of the year, you were rising and, and we do not expect sort of the same dynamic of growth that we saw last year.

And so I think that's the first point just mathematically I think you have to look at it from each quarter sequentially last year that was growing and, you know, and now we're not sort of indicating that. That same growth. The second piece of circling back I think is that, you know, largely speaking, the vast majority of the growth that we think we could have had, the indication of the 10 to 15,000 occurred in the first fiscal quarter. Meaning, everything in that estimate specifically is a calculation estimate through September 30.

So said a different way, if we did not have those problems, and our estimates were correct, we actually would have anticipated that our count date, our September 30 only number, would have likely exceeded the upper range of our guidance. Mathematically. Now a lot of assumptions built in there around, you know, how we're calculating higher withdrawal rates and things like that. But, I think to your question, the predominance of it that we're indicating in that number is falling between sort of August through September.

Alexander Peter Paris: Okay. And then when we talk about in-year enrollment, I guess I was sort of thinking about the January enrollment, but implicit in your guidance is rather than rise, you know, sequential rise in raw enrollment from quarter to quarter to quarter like we saw through Q1, Q2, and Q3 last year. It would be a decline in the second, you know, the second quarter raw number for enrollment will be less than the first quarter raw number enrollment. And third quarter will be less than the second quarter and presumably the fourth quarter will be less. And then next year, once all these traumas are fixed, we can presumably return to growth.

Is that the way to think about it?

James J. Rhyu: Yeah. So I think, we're not giving exact enrollment guidance per se exactly, but I think we should probably not presume growth beginning of the year to the end of the year in enrollments. We will handle some backfills. You know, we have some attrition during the course of the year. We likely have some backfills that we will do. But, yeah, I think beginning of the year to end of the year, we should not anticipate growth.

And we do, again, assuming the conditions remain strong as we've seen the demand conditions remain strong as we've seen and we can revert back to the prior retention characteristics that we had prior to this issue, we do think that we could resume to in-year growth in subsequent years.

Alexander Peter Paris: Got you. And then the last question and related is revenue per enrollment. You previously said positive funding environment. It probably up a bit. And now you're saying flat. Is that the delta?

Donna M. Blackman: Yeah. As I said in my prepared remarks, Alex, we are still seeing a positive funding environment. We will see some impact from the mix and from timing. And as you may recall, one of the things that we did last year was that we had some adjustments throughout the course of the year given the in-year enrollment growth that we had. Throughout the course of the year. We're not anticipating having that same level of in-year enrollment growth. We won't have that catch-up that we had last year. And then we also had that higher. So in the back half of the year, the comp's a little bit tougher. Funding catch-up in Q4 funding adjustment, I should say, Q4.

And then, again, to the point, we don't expect to have that level of in-year enrollment growth that we saw last year that we adjusted the revenue per enrollment throughout the course of the year.

Alexander Peter Paris: So has anything really changed on the funding environment outlook? You said, you know, you still view it as a positive funding environment. But has the mix changed relative to your expectations a few months ago, the expected mix?

Donna M. Blackman: I'm sorry. When I talk about mix, it's the mix is depending upon where we grow, where the withdrawal conforms during the course of the year. That's the mix we talk about. So the point, James, made that we won't have any in-year enrollment growth. Right? The reality will happen is we'll have some prior to the last three years. We would have had in-year enrollment growth. Our withdrawals exceeded that in-year enrollment growth. Right? And so we'll still continue to have that mix that will happen. And so it depends on where that mix happens. The variability that we might see in our revenue per enrollment whether it be a higher, general ed or a career learner.

But in terms of pure funding environment, the sentiment is the same today as it was in August.

Alexander Peter Paris: Gotcha. Alright. I appreciate the extra color, and I'll ask other questions as we follow-up.

Operator: Ladies and gentlemen, this concludes the Stride first quarter fiscal year 2026 earnings call. On behalf of Stride, I would like to thank you all for joining. You may now disconnect.

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