Stride Inc (LRN)

Interest coverage

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	260,033	407,095	357,262	315,659	267,822	246,429	234,902	216,118	179,914	158,189	146,466	135,222	156,875	140,736	114,712	86,446	106,005	91,697	67,157	64,929
Interest expense (ttm)	US$ in thousands	23,337	10,128	9,745	9,097	8,812	8,564	8,366	8,426	8,404	8,370	8,537	8,330	8,277	11,718	14,716	17,865	17,979	13,079	7,784	3,201
Interest coverage		11.14	40.20	36.66	34.70	30.39	28.77	28.08	25.65	21.41	18.90	17.16	16.23	18.95	12.01	7.80	4.84	5.90	7.01	8.63	20.28

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $260,033K ÷ $23,337K
= 11.14

The interest coverage ratio for Stride Inc. demonstrates a generally strong capacity to meet its interest obligations throughout the observed periods, with fluctuations reflecting changes in earnings and interest expenses. At the beginning of the timeframe, on September 30, 2020, the ratio was notably high at 20.28, indicating that the company's earnings before interest and taxes (EBIT) comfortably covered its interest expenses multiple times over. This elevated level persisted into the following quarter, although it declined substantially by December 31, 2020, to 8.63, suggesting a reduction in earnings or an increase in interest expenses.

Throughout 2021, the ratio showed a declining trend, reaching a low of 4.84 on September 30, 2021. This decline suggests a narrowing margin of safety in meeting interest obligations, possibly due to decreased earnings or increased interest costs. However, by December 31, 2021, the ratio rebounded to 7.80, and continued its upward trajectory into 2022, reaching 12.01 on March 31, and further improving to 18.95 by June 30, 2022, indicating a strengthening ability to cover interest expenses.

From mid-2022 onwards, the ratio exhibited a consistent upward trend, with values reaching as high as 25.65 on September 30, 2023, and further increasing to 28.08 by the end of 2023. The ratios remained strong into the first half of 2024, surpassing 30 on June 30, 2024, and gradually rising toward the second half of that year. These figures depict a significant enhancement in Stride Inc.’s earnings capacity to cover interest obligations comfortably.

However, a notable decline is observed in June 2025, where the ratio drops sharply to 11.14 from a peak exceeding 40 in the previous quarters. This suggests a deterioration in the company's interest coverage, potentially due to decreased earnings, increased interest expenses, or a combination of both.

Overall, the trend indicates that Stride Inc. maintained a robust interest coverage ratio over the majority of the period, reflecting strong operational performance and prudent leverage management. The recent decline in the ratio in June 2025 warrants further analysis to understand potential underlying factors such as earnings volatility or increased debt servicing costs, which could impact the company's financial flexibility and risk profile.