Latest news with #JamesRhyu
Associated Press
23-05-2025
- Business
- Associated Press
Gallup-McKinley County Schools Terminates Contract with Stride/K12 Citing Severe Academic and Legal Violations
District Prioritizes Student Success Over Corporate Profits; Initiates Transition to New Online Learning Model GALLUP, N.M., May 23, 2025 /PRNewswire/ -- Gallup-McKinley County Schools (GMCS) announced the termination of its educational services contract with Stride Inc. (formerly K12 Inc.), effective June 30. This action, taken during a special School Board meeting, follows months of documented legal and academic violations, including failure to comply with New Mexico law on student-teacher ratios, high student turnover, declining graduation rates, and some of the lowest academic proficiency scores in the state. GMCS School Board President Chris Mortensen stated, 'Our students deserve educational providers that prioritize their academic success, not corporate profit margins. Putting profits above kids was damaging to our students, and we refuse to be complicit in that failure any longer.' Stride CEO James Rhyu has admitted to failing to meet New Mexico's legal requirements for teacher-student ratios, an issue that GMCS suspects was not isolated. 'We have reason to believe that Stride has raised student-teacher ratios not just in New Mexico but nationwide,' said Mortensen. 'If true, this could have inflated Stride's annual profit margins by hundreds of millions of dollars. That would mean corporate revenues and stock prices benefited at the expense of students and in some cases, in defiance of the law.' The harm inflicted was particularly egregious in Gallup-McKinley County, one of the most impoverished regions in the United States, where Stride's online learning model served a majority-minority, low-income student population. 'These are students who rely most on educational opportunity, and they were let down,' Mortensen said. The data reveals a troubling decline: Despite numerous warnings and efforts by the district to support corrective action, Stride/K12 repeatedly failed to improve. The School Board unanimously approved the contract termination and has authorized its attorneys to pursue arbitration for damages. Stride's legal attempt to block the termination through a Temporary Restraining Order was rejected in an early morning hearing by the New Mexico District Court in Aztec. These issues echo national patterns exposed by The New York Times, which revealed that Stride and similar companies have too often sacrificed educational quality in pursuit of investor returns. Internal audits cited in the Times article showed leadership ignored clear red flags in favor of aggressive enrollment and revenue growth. 'Gallup-McKinley County Schools students were used to prop up Stride's bottom line,' said Mortensen. 'This district, like many others, trusted Stride to deliver education. Instead, we got negligence cloaked in corporate branding.' GMCS is now focused on the transition to a new online learning model rooted in integrity, compliance, transparency, and student success. The district is working directly with families to ensure continued academic support during the transition. Expanded special education oversight and local accountability will be central to the district's new direction. For additional updates, visit View original content: SOURCE Gallup-McKinley County Schools
Yahoo
13-05-2025
- Business
- Yahoo
LRN Q1 Earnings Call: Enrollment Growth and Career Learning Fuel Guidance Upside
Online education Stride (NYSE:LRN) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 17.8% year on year to $613.4 million. The company's full-year revenue guidance of $2.38 billion at the midpoint came in 1.6% above analysts' estimates. Its non-GAAP profit of $2.15 per share was in line with analysts' consensus estimates. Is now the time to buy LRN? Find out in our full research report (it's free). Revenue: $613.4 million vs analyst estimates of $592.2 million (17.8% year-on-year growth, 3.6% beat) Adjusted EPS: $2.15 vs analyst estimates of $2.15 (in line) Adjusted EBITDA: $168.3 million vs analyst estimates of $159.7 million (27.4% margin, 5.4% beat) Operating Margin: 21.3%, up from 17% in the same quarter last year Free Cash Flow Margin: 6.1%, down from 10% in the same quarter last year Enrollments: 240,200, up 41,800 year on year Market Capitalization: $6.41 billion Stride's first quarter results were driven by robust demand for online education, particularly in its career learning programs. Management attributed the performance to macro trends favoring alternative education options, with CEO James Rhyu highlighting survey data showing increased parental interest in full-time online education and dissatisfaction with traditional public schools. The company also pointed to the success of new socialization initiatives and ongoing investments in technology and student support as contributors to its enrollment growth. Looking ahead, Stride's forward guidance reflects confidence in continued enrollment momentum and a generally favorable funding environment at the state level. CFO Donna Blackman noted that higher enrollments and improved retention rates set a strong base for the upcoming school year. While management acknowledged ongoing uncertainties in state and federal education policy, they reiterated that less than 5% of revenue depends on federal funding, limiting exposure to potential shifts. The company expects to maintain margin discipline while investing in core programs and student experience. Stride's management focused on several operational and market factors shaping Q1 performance and offered insight into near-term strategic priorities. Career Learning Enrollment Surge: The career learning middle and high school segment saw enrollment growth of 34%, reflecting rising demand for alternatives to traditional college pathways and skills-based education among families. Enrollment Constraints Identified: While application volumes have reached record levels, some schools closed enrollment windows earlier in the year, temporarily limiting the company's ability to capture all available demand. Technology and Socialization Investments: The company rolled out its K-12 Zone virtual campus and began organizing geographic in-person meetups, aiming to address socialization needs for online students and enhance program appeal. Efficiency and Operating Leverage: Management cited ongoing efficiency initiatives, such as optimizing marketing spend and streamlining administrative tasks for teachers, as key drivers of margin expansion. Gross margins improved by nearly 200 basis points year over year. State-Driven Opportunity: Management emphasized that most funding and regulatory changes affecting Stride occur at the state level, with a favorable outlook for state education budgets and policy support for school choice in coming quarters. Management's outlook centers on sustained enrollment growth, continued execution in career learning, and prudent reinvestment in student support and technology. Career Learning Expansion: The company sees further opportunity to grow its career learning programs, especially by targeting lower grade levels and expanding skills-based offerings, though management noted ongoing challenges in optimizing recruitment channels. Retention and Re-Enrollment: Higher year-end enrollment levels are expected to boost student retention and re-registration rates, creating a stronger starting point for the next academic year. Funding and Policy Environment: Management believes the generally favorable state funding landscape and continued bipartisan support for school choice initiatives will support revenue and margin stability, though they remain watchful for changes in state-level budget allocations. Jason Tilchen (Canaccord Genuity): Asked about progress in creating a dedicated application funnel for career learning. Management admitted incremental progress, but said they have not yet 'cracked the code' and continue to run tests. Greg Parrish (Morgan Stanley): Inquired about the marketing strategy and spending plans for the summer. Management responded that marketing spend will remain stable, focusing on efficiency and increased testing of new approaches. Jeffrey Silber (BMO Capital Markets): Sought details on drivers of middle and high school career learning growth. Management pointed to high parent demand and program alignment but noted underperformance in lower grades, which they aim to address with new tutoring investments. Pat McIlwee (William Blair): Asked if broader macro or geopolitical uncertainty is fueling demand. Management said local school-level volatility and safety concerns drive interest, but larger macro events like tariffs are not a direct factor. Alexander Paris (Barrington Research): Requested clarification on year-end enrollment trends and revenue per enrollment. Management confirmed the trend of ending the year with higher enrollments and expects revenue per enrollment to decline less than 1%, mainly due to state mix. In the coming quarters, the StockStory team will be tracking (1) the impact of new socialization and tutoring initiatives on lower-grade enrollment growth, (2) ongoing enrollment and application trends as state funding and policy settings evolve, and (3) the effectiveness of marketing and operational efficiency measures in supporting margin improvement. We will also monitor any developments in state or federal education policy that could alter the funding landscape for online schools. Stride currently trades at a forward P/E ratio of 20×. Should you double down or take your chips? Find out in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. 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