Key Points
It also narrowly beat on revenue.
It posted robust, double-digit growth in a key market segment.
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A well-received quarterly earnings report was the catalyst behind Stride (NYSE: LRN) stock's leap into positive territory on Wednesday. Shares of the educational services company rose by nearly 3%, contrasting well with the slight decline of the benchmark S&P 500 index.
Earning from learning
Stride released its fiscal third-quarter 2026 results after market close on Tuesday. These revealed that the company's revenue was $629.9 million for the period, bettering the same quarter of 2025 by almost 3%.
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Going in the opposite direction was attributable net income not under generally accepted accounting principles (GAAP). This sank by nearly 10% year-over-year but was still well in the black, at slightly below $99 million ($2.30 per share).
That crucial line item also came in well above the consensus analyst estimate of $1.92 per share on a non-GAAP (adjusted) basis. On the top line, Stride edged past the average pundit projection of $629.7 million.
The company divides its business into two broad categories, general education and career learning. Of the two, only the latter posted growth -- its revenue rose by 12%, thanks mainly to a 16% increase in the considerable middle-high school segment (to nearly $260 million). General education, meanwhile, slid by almost 4% to $357.5 million.
Striding into the future
Stride also narrowed its existing guidance for the entirety of the current fiscal year. It's now anticipating annual revenue of $2.49 billion to $2.52 billion, with adjusted operating income landing at $490 million to $500 million. It did not provide net income guidance. The average analyst estimate for revenue is slightly more than $2.52 billion.
It looks to me like management has identified a sweet spot in the middle-high school career-learning niche and is moving accordingly. While I like a proactive and opportunistic C-suite team, however, I'd be concerned about the slump in general education, which remains the company's largest revenue stream.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Stride. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
