Hello, everyone. Thank you for joining us, and welcome to the Stride fourth quarter fiscal year 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Eliza Henson, Manager of Investor Relations. Eliza, please go ahead.

Thank you, and good afternoon. Welcome to Stride's fourth quarter and year-end earnings call for fiscal year 2026. With me on today's call are Bob Noling, Chief Executive Officer, and Donna 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 questions you may have. Now we'll turn the call over to Bob.

Thanks, Eliza, and good afternoon, everyone. Before we discuss our results, I would like to address the leadership transition that we announced last Thursday. The board executed this leadership change after careful evaluation and deliberation, and ultimately the board determined that for stride to reach its full potential a new leader was needed to take the reins having made that decision the board enacted our succession plan to appoint me as the new ceo we collectively believed that it was best to do this immediately so that i could hit the ground running i appreciate the board's confidence in making me stride ceo A strong consideration was putting in place a leader with strong tech and education experience and a track record of building strong teams. Those qualities align with my background. I've been an independent member of the Stride Board since 2018. On the education front, I served as the inaugural CEO of the New York City Leadership Academy, which was a nationally recognized nonprofit organization committed to improving outcome for students particularly the most vulnerable students through high-quality educational leadership I was a founding member of the organization which was crafted under mayor Michael Bloomberg and Chancellor Joel Klein it was during my tenure there that I grew to truly understand the importance of driving student outcomes I believe this is the ultimate measure of educational success. Investments in curriculum, technology, and support services must translate into meaningful academic achievement. Educators, institutions, and policymakers expect this from stride, and this will be one of my top priorities. On the tech side, I spent the early part of my career in the Bell System at Ameritech in US West. As Executive Vice President of Operations and Technology at US West, I oversaw every technical function in the company. Subsequently, I became CEO at Kovac Communications, which I took public, and have served as CEO of SimDesk Technologies and Telwares as well. I have also served on the board at a variety of Fortune 500 companies, bringing a lens of delivering long-term shareholder value through board oversight. I've been a leader on every board on which I have served, whether as chairman of the board or committee chair. Given my experience on Strides board, I have a strong understanding of our business. I've gotten an appreciation for our mission and our people who deliver on that mission every day. So if you were to summarize my experience in a few words, I have a proven track record as an operator. I'm known for building strong teams, and I get quite deep in the details, as that is my comfort zone. Second, I have a strong blend of tech and education experience. And then third, I bring a shareholder-driven mindset from my board experiences. There is a lot to continue to build on here at Stride, and I'm incredibly excited by the opportunity ahead of us. Shride is a market leader with several competitive advantages. We have a significant and scaled base of students across more than 30 geographies and the management team is committed to growing the business deeper where we already have students as well as planting flags in new geographies. The management team has exhibited disciplined fiscal management And as a result, we have a balance sheet that enables us to make prudent investments in the growth of our company. An example of this is the extension of our share repurchase authorization until October 31, 2027. Once our trading window opens at the end of October, I intend to actively consider opportunistic stock repurchases as part of our capital allocation strategy. Stride has a tremendous amount of talent throughout the organization, from the management team all the way to our front line. That's why I'm eager to roll up my sleeves alongside this group. And I do recognize there is room for improvement. While we have strong foundational elements, we also have many students that we could still be serving. To grow our market share, in large part, we must improve student outcomes. This includes better leveraging our suite of products and services, such as our live and AI tutoring platforms and our Talo career and digital curriculum platforms. We've done a nice job over the years of adding capabilities, but I believe that there's even more we can do to extend our suite of products and help students to reach their goals. Improving our go-to-market has huge potential. As we execute our strategy, I am confident that we will better meet the needs of our students, which will in turn create more value for our shareholders. Let me now pivot to talk about our performance. As you've heard the team talk about in the past, SRIIT has made significant investments in our technology platforms to improve the long-term scalability of the business. We have improved the customer experience, we've strengthened our operational foundation, and we've positioned the business for future growth. As a result of the steps we have taken today, we have delivered 4.2% enrollment growth and 4.7% revenue growth. Turning briefly to the previously announced decision by Roscoe Independent School District to not renew their contract for our Lone Star Online Academy, while we're disappointed by the District's decision, Texas remains an important state for us and our commitment to serving families across the state remains unchanged. We continue to operate multiple schools in Texas and we're actively placing Roscoe Independent School District impacted families in our other programs. As we look towards the upcoming school year, it is still early in the enrollment season. Families will continue to make enrollment decisions throughout the fall and increasingly throughout the school year. And with that caveat, we are encouraged by the indications we are seeing so far. Applications are tracking slightly behind this time last year, but we're seeing improved conversion metrics and re-registration activity continues to track slightly ahead of last year. While I'm just getting started in the CEO role, it's clear to me that there is much to be excited about. I have relocated to Virginia and I'm full steam ahead. I believe we can build upon what this leadership team has accomplished and reach even greater heights.

Thank you for your attention and i'll now turn the call over to dana thank you bob and good afternoon as bob discussed fy26 was a year of meaningful progress for stride we continue to see strong demand for our programs made progress on a number of strategic priorities and delivered solid financial results while the year was not without challenges we believe the progress we made positions us well for the future. I want to thank our employees, school partners, and our students and families for their continued commitment throughout the year. Now I'd like to provide some detail on our fiscal 2026 financial results. For the full year, revenue was $2.518 billion and increase of 4.7 percent over fiscal 2025 adjusted operating income was 498.4 million dollars up nearly seven percent adjusted EBITDA totaled 617.6 million dollars up 8.2 percent from last year and adjusted earnings per share with eight dollars and 33 cents overall these results reflect another year of resilient demand and disciplined financial management looking more closely at our business revenue from our career learning middle and high school programs was 1.04 billion dollars an increase of 19 from last year full year career learning enrollments total $109.7,000, up 14%. General education revenue totaled $1.42 billion, decreasing 2% from FY 2025. Enrollments in general education totaled $134.2,000, down 2.5% for the year. Taken together, we served approximately 243.9,000 students during the year, just over 4% more than last year, reflecting sustained demand for the educational choices we provide. Total revenue per enrollment across both lines of revenue was $9,914 compared to $9,677 last year. FY26 revenue per enrollment continued to reflect differences in state funding, program mix, and enrollment timing. Looking ahead to FY27, most of our partner states have now finalized their educational budgets. While funding decisions vary across states, the overall funding environment remains supportive. As with any year, revenue per enrollment may be impacted by state mix and yield. And while it's still early in the enrollment season, given the current environment, we expect full-year FY27 revenue per enrollment to be relatively flat to up slightly versus FY2026. As always, revenue per enrollment may continue to fluctuate mildly based on state and program mix, as well as enrollment yields throughout the year. now turning to profitability gross margins for the year was 37.8 percent down 140 basis points as we mentioned previously our investments affected our near-term margins but they also strengthened the business it had positioned us well for the years ahead while many of the one-time implementation costs associated with these initiatives are now behind us we will continue to incur some ongoing expenses associated with the new platforms as we focus on realizing the long-term operational benefits and we will continue to invest in our strategic priorities selling general and administrative expenses total 499.8 million dollars down 4.7% from last year stock-based compensation for the year was 40.3 million dollars and our effective tax rate for fy 26 was 23.3 percent now turning to our balance sheet capital expenditures for the year was 78.8 million dollars free cash flow which we define as cash from operations less capital expenditures totaled $355 million, down $17.8 million from last year. We finished the year with cash, cash equivalents, and marketable securities of approximately $1.034 billion. During FY2026, we continued executing against our share repurchase authorization, purchasing approximately $189 million of our common stock. These repurchases reflect our confidence in the long-term value of the business while maintaining the financial flexibility to continue investing in our strategic priorities. We ended the year with approximately $311 million remaining under the current repurchase authorization, which now extends to October 31st, 2027. Even as we continue executing against our share repurchase authorization, our capital allocation priorities remain unchanged. We will continue to invest first in opportunities that support organic growth, evaluate strategic acquisitions that strengthen our business, and return excess capital to shareholders when we believe it creates long-term value. Our balance sheet gives us the flexibility to pursue each of these priorities while maintaining a strong financial position. Now, before I wrap up, let me offer a few thoughts on FY 2027. As Bob mentioned, we're encouraged by what we're seeing early in the enrollment cycle. At the same time, I remind investors that the first quarter count date enrollment growth will face a more difficult comparison than it has for the last couple of years. Because we moderated in-year enrollment growth during FY2026, we won't have the same carryover benefit entering this school year. As a result, even with healthy demand and solid execution, year-over-year count-date growth may appear more modest than what we've seen over the past few years. keeping that in mind for fy 2027 seasonality should remain generally consistent with years prior capex and sgna as a percent of revenue are anticipated to be relatively flat we expect gross margins will be flattish to last year and we expect to see somewhat of an uptick in both stock-based compensation and tax rate from this year as we typically do we will provide formal enrollment and financial guidance when we report our first quarter results in October. It is still early in the enrollment season, and with August and September being our busiest month, there is still a lot of work ahead of us, and we remain confident in our ability to execute. FY26 was an important year for Stride. We believe the foundation we've built positions as well for the coming year. And we believe we are on track to achieve our FY 2028 financial targets. Thank you for your time today. Now I'll turn the call back over to the operator for your questions. Operator?

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand to withdraw your question press star one again we ask that you pick up your handset when asking a question to allow for optimum sound quality if you are muted locally please remember to unmute your device please stand by while we compile the q a roster your first question from the line of jeff silbert with bmo capital markets jeff your line is open please go ahead thank you so much.

I wanted to start with Lone Star Online Academy. I think this is the first opportunity you've had to discuss this publicly. Can you give us a little bit more color? What happened? I know the outcomes there were a little bit subpar. Is that the reason that Roscoe decided not to renew? And if that's the case, how do you make sure that things like this don't happen at other schools?

So, as we have talked about previously, we were in conversations with Roscoe about renewing the contract. And as you have indicated, we certainly had some performance issues with that school. And I think the district decided not to renew the contract. and as you also know that you know in any given year we could have schools that do not decide to renew their contract to get to the second part of your question about how do you ensure that this doesn't happen in the future we will never be doing sure we will have contracts leave us we will as part of the business we have contracts that leave us we have contract and we sign on new contracts but what i can say is bob is really focused on student outcomes and we are continuing to invest in our student outcomes. And so that will help us to enable us to ensure that we deliver to our students the outcomes that they come to expect.

Okay, I appreciate that. I know you're not providing guidance for fiscal 27. You mentioned a few times it's still early in the year, but based on what you know now, at least directionally, should we see enrollment, revenue and earnings growth in fiscal 27?

So, you know, Jeff, I'm not going to get ahead of myself. We did that a little bit last year. But here's what I will say. The funding environment looks favorable. And I said that in my prepared remarks. While our application volumes are strong, they're trailing like slightly behind last year, but still strong. What I'm encouraged by is the fact that our conversion rates are higher as well as our re-registration rates are higher. And so other than saying those things, I don't want to get too far ahead of saying what 2020 seven numbers will look like, but hopefully those data points are helpful for you. I just don't want to get ahead of ourselves because we are so early in the enrollment season and August and September is a really busy time for us.

And our team is working really hard to make sure that we enroll as many students as possible and have them have the best experience as possible okay i understand that i'll get back in the queue thanks so much your next question from the line of alex paris with barrington research alex your line is open please go ahead thank you i appreciate the opportunity to ask a question or two um uh first just to follow on the previous question by jeff Last year, from Q4 to Q1, you brought on 12,400 students to get us to where we were. This year, and you alluded to it in your prepared remarks, you're starting with fewer students because you held down in-year enrollments. And if you added the same number of students, 12,400, from Q4 to Q1 this year, you'd be pretty flat, down four-tenths of a percent on a year-over-year basis as of the count date. Are you expecting some growth in the fall? I know you don't want to commit to a number or what have you. If you were able to do 12-4 last year, can you do 12-4 this year, I guess is what I'm asking.

Yeah, look, I think the important thing to note is where we're ending the year, right? And so because we're ending the year lower than what we began the year, and in the past few years, that was not the case, right? We ended the year with enrollment higher than we began the year. So the starting point was much easier for us to be able to grow. So the comparison from a count date perspective will certainly be a tough comparison because of that. And I know you want me to give you an enrollment number, and I'm probably not going to give you an enrollment number that's going to make you happy. Last year was sort of a one-time thing. I've had conversations with investors that say we're not going to do that again. But I do think it's important for you to know where we're seeing things in terms of the conversion rates, where we're seeing things in terms of re-reg, and where we're seeing things in terms of, you know, for next year in terms of application volumes. And so while things are pointing in the right direction, August and September is when we're really, really busy. Parents are making decisions about the upcoming school year, even as late as August and September. And so I don't want to get ahead of ourselves for fall 2027. But the other thing I will point out to you is that, you know, we cut off our enrollments last year earlier than usual. And so, while it's still early to say what that will look like for FY 2027, what I can say is I would not expect for us to cut off in-year enrollment to the same capacity that we did on last year. And so, hopefully that information is helpful for you.

It is.

So, just a clarifying question on that last comment. would you would you expect in-year enrollment this year like we saw in the three years prior to fiscal 2026 regardless of where you start yeah yeah so I would look based on where I sit today I would expect us to have in-year enrollment growth and 2025 from you know from Q2 to Q3 we had pretty significant in-year enrollment growth and so I don't know if I'm going to commit that we're going to have that in-year Roman growth consistent in 2027. But what I will say is that we're not going to have all the windows closed to the same extent that we had them closed in 2026.

Gotcha. And then the last one still related is, you know, obviously investors were concerned by what seemed like the sudden CEO succession announcement last week, Thursday. A lot of investors voted with their feet, you know, with the sell-off in the shares, 15 or 18 percent, thinking that this had something to do with a disappointing fall enrollment season. Was that part of the decision, or is it more, Bob, like you said earlier, changing horses for the next phase of accelerated growth?

Thanks for the question. It is the latter. And there was no consideration about any forward-thinking, forward-looking performance, but a need and a desire to move to the next level of growth and development of this enterprise. And as you probably all know, leadership transitions are tough, but the decision was made and we made it to be an immediate in effect so that I'd really have a chance at the end of the fiscal year to hit the ground running relative to 2027.

Okay, because it sounds like all the comments, I appreciate that. It sounds like all the comments are the fall term expectations are not too different from the Q3 call or the Q2 call. okay great thanks for answering my questions there are no further questions at this time this concludes today's call thank you for attending you may now disconnect