Online education Stride (NYSE: LRN) met Wall Street’s revenue expectations in Q1 CY2026, with sales up 2.7% year on year to $629.9 million. On the other hand, the company’s full-year revenue guidance of $2.51 billion at the midpoint came in 0.6% below analysts’ estimates. Its non-GAAP profit of $2.30 per share was 4.1% above analysts’ consensus estimates.

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Company Overview

Formerly known as K12, Stride (NYSE: LRN) is an education technology company providing education solutions through digital platforms.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $2.54 billion in revenue over the past 12 months, Stride is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, Stride’s sales grew at an excellent 12.5% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Stride’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Stride’s annualized revenue growth of 12.9% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, Stride grew its revenue by 2.7% year on year, and its $629.9 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Stride has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average adjusted operating margin of 15.2%.

Analyzing the trend in its profitability, Stride’s adjusted operating margin rose by 9.8 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Stride generated an adjusted operating margin profit margin of 22%, down 1.1 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Stride’s EPS grew at 40.2% compounded annual growth rate over the last five years, higher than its 12.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Stride’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Stride’s adjusted operating margin declined this quarter but expanded by 9.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Stride, its two-year annual EPS growth of 42.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, Stride reported adjusted EPS of $2.30, up from $2.02 in the same quarter last year. This print beat analysts’ estimates by 4.1%. Over the next 12 months, Wall Street expects Stride’s full-year EPS of $8.61 to shrink by 3.4%.

Key Takeaways from Stride’s Q1 Results

It was good to see Stride beat analysts’ EPS expectations this quarter. On the other hand, its full-year revenue guidance slightly missed. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 4.1% to $88.78 immediately after reporting.

So do we think Stride is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).