Stride shares closed down 2.7% following Q3 results, as investors reacted to a combination of gross margin compression and a narrower full-year revenue outlook, which now implies a year-over-year decline in fourth quarter revenue.

• Total enrollments grew 1.8% year-over-year to 244,500, with overall revenue up 2.7% to $629.9 million.
• Gross margin fell 380 basis points to 36.8%, attributed to increased investment in platform improvements; full-year gross margin is now expected to finish between 37% and 37.4%.
• General Education segment revenue declined 3.6% due to a 5% enrollment drop, partially offset by 11.6% growth in Career Learning enrollments.
• Full-year revenue guidance was narrowed to $2.490–$2.520 billion, which implies Q4 revenue will be below last year, citing higher attrition and unfavorable timing of funding adjustments.
• Free cash flow improved to $202.4 million, and the company ended the quarter with $856 million in cash and equivalents; full-year free cash flow is expected to be roughly flat year-over-year.