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Strong Demand Drives Record Enrollment

RESTON, Va., Oct. 22, 2024 (GLOBE NEWSWIRE) — Stride, Inc. (NYSE: LRN), one of the nation’s most successful technology-based education companies, today announced its results for the first fiscal quarter ended September 30, 2024.

First Quarter Fiscal 2025 Highlights Compared to 2024

First Quarter Fiscal 2025 Summary Financial Metrics

  Three Months Ended September 30,   Change 2024/2023  
  2024   2023   $   %  
  (In thousands, except percentages and per share data)  
Revenues $ 551,084   $ 480,181   $ 70,903   14.8 %  
                       
Income from operations   47,344     3,320     44,024   1326.0 %  
Adjusted operating income (1)   58,360     14,761     43,599   295.4 %  
                       
Net income   40,882     4,878     36,004   738.1 %  
Net income per share, diluted   0.94     0.11     0.83   754.5 %  
                       
EBITDA (1)   75,478     31,337     44,141   140.9 %  
Adjusted EBITDA (1)   83,927     39,763     44,164   111.1 %  
                       

(1) To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

Revenue Data

                         
    Three Months Ended            
    September 30,   Change 2024 / 2023  
    2024   2023   $   %  
    (In thousands, except percentages)
                         
General Education   $ 329,407   $ 299,338   $ 30,069     10.0 %  
Career Learning                        
Middle – High School     198,885     150,974     47,911     31.7 %  
Adult     22,792     29,869     (7,077 )   (23.7 %)  
Total Career Learning     221,677     180,843     40,834     22.6 %  
Total Revenues   $ 551,084   $ 480,181   $ 70,903     14.8 %  
                         

Enrollment and Revenue Per Enrollment Data

First quarter enrollments were 222.6K, up 18.5% compared to 187.9K enrollments in the first quarter of fiscal year 2024. Of the total enrollments, 91.7K were Career Learning enrollments, up 30.4% compared to 70.3K Career Learning enrollments in the first quarter of fiscal 2024.

Enrollments only include those students in full service public or private programs where Stride provides a combination of curriculum, technology, and instructional and support services, inclusive of administrative support and may include enrollments for which Stride receives no public funding or revenue. Stride does not report enrollments for our Adult Learning business.

Revenue per enrollment for the first quarter was $2,303, up 0.5% compared to $2,292 in the first quarter of fiscal year 2024. General Education revenue per enrollment was $2,400, up 0.8%, and Career Learning revenue per enrollment was $2,166, up 1.0%, compared to the first quarter of fiscal year 2024, respectively. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.

Cash Flow and Capital Allocation

As of September 30, 2024, the Company’s cash and cash equivalents and marketable securities totaled $539.4 million, compared with $714.2 million reported at June 30, 2024.

Capital expenditures for the three months ended September 30, 2024 were $14.8 million, compared to $16.1 million in the three months ended September 30, 2023, and were comprised of $0.7 million of property and equipment, $8.8 million of capitalized software development and $5.3 million of capitalized curriculum development.

Fiscal Year 2025 Outlook

The Company is forecasting the following for the full fiscal year 2025:

The Company is forecasting the following for the second quarter of fiscal year 2025:

(1) In addition to providing an outlook for revenue and capital expenditures, adjusted operating income is provided as a supplemental non-GAAP financial measure as management believes that it provides useful information to our investors. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Please also see Special Note on Forward-Looking Statements below.

Conference Call

The Company will discuss its first quarter of fiscal year 2025 financial results during a conference call scheduled for Tuesday, October 22, 2024 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/118785460. To participate in the live call, investors and analysts should dial (800) 715-9871 (domestic) or +1 (646) 307-1963 (international) and provide the conference ID number 8901384. Please access the website at least 15 minutes prior to the start of the call.

A replay of the call will be posted at https://events.q4inc.com/attendee/118785460 as soon as it is available.

About Stride Inc.

Stride Inc. (NYSE: LRN) is redefining lifelong learning with innovative, high-quality education solutions. Serving learners in primary, secondary, and postsecondary settings, Stride provides a wide range of services including K-12 education, career learning, professional skills training, and talent development. Stride reaches learners in all 50 states and over 100 countries. Learn more at stridelearning.com.

Investor Contact

Timothy Casey
Vice President, Investor Relations
Stride, Inc.
tcasey@k12.com

Special Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,” “likely,” “may,” “opportunity,” “potential,” “projects,” “will,” “will be,” expects,” “plans,” “intends” and similar expressions to identify forward-looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve a sufficient level of new enrollments to sustain our business model; limitations of the enrollment data we present, which may not fully capture trends in the performance of our business; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; failure of the schools we serve or us to comply with federal, state and local regulations, resulting in a loss of funding, an obligation to repay funds previously received, or contractual remedies; governmental investigations that could result in fines, penalties, settlements, or injunctive relief; declines or variations in academic performance outcomes of the students and schools we serve as curriculum standards, testing programs and state accountability metrics evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and/or in any school in which we operate; legal and regulatory challenges from opponents of virtual public education or for-profit education companies; changes in national and local economic and business conditions and other factors, such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts, or a reduction in the scope of services, with schools; failure to develop the Career Learning business; entry of new competitors with superior technologies and lower prices; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement of our intellectual property; disruptions to our Internet-based learning and delivery systems, including, but not limited to, our data storage systems and third-party cloud systems and facilities, resulting from cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; failure to prevent or mitigate a cybersecurity incident that affects our systems; and risks related to artificial intelligence; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this press release is as of today’s date, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Financial Statements

The financial statements set forth below are not the complete set of Stride, Inc.’s financial statements for the three months ended September 30, 2024 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.’s Quarterly Report on Form 10-Q for the three months ended September 30, 2024, including all financial statements contained therein and the footnotes thereto, filed with the SEC, which may be retrieved from the SEC’s website at www.sec.gov or from Stride Inc.’s website at www.stridelearning.com.

STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
    Three Months Ended  
    September 30,  
    2024     2023    
    (In thousands except share and per share data)  
Revenues   $ 551,084     $ 480,181    
Instructional costs and services     335,231       307,293    
Gross margin     215,853       172,888    
Selling, general, and administrative expenses     168,509       169,568    
Income from operations     47,344       3,320    
Interest expense, net     (2,353 )     (2,068 )  
Other income, net     8,778       5,165    
Income before income taxes and loss from equity method investments     53,769       6,417    
Income tax expense     (11,277 )     (1,536 )  
Loss from equity method investments     (1,610 )     (3 )  
Net income attributable to common stockholders   $ 40,882     $ 4,878    
Net income attributable to common stockholders per share:              
Basic   $ 0.95     $ 0.11    
Diluted   $ 0.94     $ 0.11    
Weighted average shares used in computing per share amounts:              
Basic     42,868,310       42,500,011    
Diluted     43,708,967       42,982,385    
               
STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
               
    September 30,   June 30,  
    2024   2024  
          (audited)  
    (In thousands except share and per share data)  
ASSETS              
Current assets              
Cash and cash equivalents   $ 317,765     $ 500,614    
Accounts receivable, net of allowance of $38,223 and $31,298     675,709       472,754    
Inventories, net     22,319       36,748    
Prepaid expenses     53,902       29,164    
Marketable securities     204,473       191,672    
Other current assets     17,158       14,494    
Total current assets     1,291,326       1,245,446    
Operating lease right-of-use assets, net     51,609       54,503    
Property and equipment, net     84,801       50,856    
Capitalized software, net     77,181       81,952    
Capitalized curriculum development costs, net     52,754       53,232    
Intangible assets, net     57,714       60,282    
Goodwill     246,676       246,676    
Deferred tax asset           7,200    
Deposits and other assets     109,900       120,318    
Total assets   $ 1,971,961     $ 1,920,465    
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities              
Accounts payable   $ 50,057     $ 40,970    
Accrued liabilities     56,030       60,796    
Accrued compensation and benefits     40,469       64,878    
Deferred revenue     32,330       35,742    
Current portion of finance lease liability     39,133       29,146    
Current portion of operating lease liability     12,636       12,748    
Total current liabilities     230,655       244,280    
Long-term finance lease liability     50,994       26,452    
Long-term operating lease liability     42,326       45,192    
Long-term debt     415,098       414,675    
Deferred tax liability     2,300          
Other long-term liabilities     16,242       13,841    
Total liabilities     757,615       744,440    
Commitments and contingencies              
Stockholders’ equity              
Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding              
Common stock, par value $0.0001; 100,000,000 shares authorized; 48,921,937 and 48,576,164 shares issued; and 43,587,194 and 43,241,421 shares outstanding, respectively     4       4    
Additional paid-in capital     717,488       720,033    
Accumulated other comprehensive loss     (58 )     (42 )  
Retained earnings     599,394       558,512    
Treasury stock of 5,334,743 shares at cost     (102,482 )     (102,482 )  
Total stockholders’ equity     1,214,346       1,176,025    
Total liabilities and stockholders’ equity   $ 1,971,961     $ 1,920,465    
               
STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
    Three Months Ended  
    September 30,  
    2024     2023    
    (In thousands)  
Cash flows from operating activities              
Net income   $ 40,882     $ 4,878    
Adjustments to reconcile net income to net cash used in operating activities:              
Depreciation and amortization expense     28,134       28,017    
Stock-based compensation expense     8,449       8,426    
Deferred income taxes     10,851       7,901    
Provision for credit losses     7,053       9,350    
Amortization of fees on debt     423       416    
Noncash operating lease expense     3,176       4,372    
Other     2,328       853    
Changes in assets and liabilities:              
Accounts receivable     (210,028 )     (175,215 )  
Inventories, prepaid expenses, deposits and other current and long-term assets     (9,310 )     (14,330 )  
Accounts payable     10,792       28,747    
Accrued liabilities     (6,142 )     (26,895 )  
Accrued compensation and benefits     (24,341 )     (17,402 )  
Operating lease liability     (3,259 )     (3,619 )  
Deferred revenue and other liabilities     (1,012 )     9,196    
Net cash used in operating activities     (142,004 )     (135,305 )  
Cash flows from investing activities              
Purchase of property and equipment     (669 )     (1,694 )  
Capitalized software development costs     (8,793 )     (10,041 )  
Capitalized curriculum development costs     (5,323 )     (4,414 )  
Other acquisitions, loans and investments, net of distributions     (347 )     (166 )  
Proceeds from the maturity of marketable securities     54,400       40,734    
Purchases of marketable securities     (60,162 )     (31,484 )  
Net cash used in investing activities     (20,894 )     (7,065 )  
Cash flows from financing activities              
Repayments on finance lease obligations     (8,747 )     (11,721 )  
Repurchase of restricted stock for income tax withholding     (11,204 )     (2,090 )  
Net cash used in financing activities     (19,951 )     (13,811 )  
Net change in cash, cash equivalents and restricted cash     (182,849 )     (156,181 )  
Cash, cash equivalents and restricted cash, beginning of period     500,614       410,807    
Cash, cash equivalents and restricted cash, end of period   $ 317,765     $ 254,626    
               

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP, we have presented adjusted operating income (loss), EBITDA, and adjusted EBITDA, which are not presented in accordance with GAAP.

Management believes that the presentation of these non-GAAP financial measures provides useful information to investors relating to our financial performance. Adjusted operating income (loss) and Adjusted EBITDA remove stock-based compensation, which is a non-cash charge that varies based on market volatility and the terms and conditions of the awards. EBITDA and Adjusted EBITDA remove depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. EBITDA and Adjusted EBITDA provide a measure of corporate performance exclusive of capital structure and the method by which assets were acquired.

Our management uses these non-GAAP financial measures:

Other companies may define these non-GAAP financial measures differently and, as a result, our use of these non-GAAP financial measures may not be directly comparable to similar non-GAAP financial measures used by other companies. Although we use these non-GAAP financial measures to assess the performance of our business, the use of non-GAAP financial measures is limited as they include and/or do not include certain items not included and/or included in the most directly comparable GAAP financial measure.

These non-GAAP financial measures should be considered in addition to, and not as a substitute for, revenues, income (loss) from operations, net income (loss) and net income (loss) per share or other related financial information prepared in accordance with GAAP. Adjusted EBITDA is not intended to be a measure of liquidity. You are cautioned not to place undue reliance on these non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

First Quarter Fiscal Year 2025

Reconciliation of Income from Operations to Adjusted Operating Income

  Three Months Ended  
  September 30,  
    2024     2023  
  (In thousands)  
Income from operations $ 47,344   $ 3,320  
Amortization of intangible assets   2,567     3,015  
Stock-based compensation expense   8,449     8,426  
Adjusted operating income   58,360     14,761  
         

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

  Three Months Ended
September 30,
    2024       2023  
  (In thousands)
Net income $ 40,882     $ 4,878  
Interest expense, net   2,353       2,068  
Other income, net   (8,778 )     (5,165 )
Income tax expense   11,277       1,536  
Loss from equity method investments   1,610       3  
Depreciation and amortization   28,134       28,017  
EBITDA   75,478       31,337  
Stock-based compensation expense   8,449       8,426  
Adjusted EBITDA $ 83,927     $ 39,763  
       

Fiscal Year 2025 Outlook

Reconciliation of Income from Operations to Adjusted Operating Income (unaudited)

  Three Months Ended
December 31, 2024
  Year Ended
June 30, 2025
  Low   High   Low   High
  (In millions)
Income from operations $ 104.3   $ 112.3   $ 351.5   $ 375.5
Stock-based compensation expense   8.5     10.0     34.0     39.0
Amortization of intangible assets   2.2     2.7     9.5     10.5
Adjusted operating income $ 115.0   $ 125.0   $ 395.0   $ 425.0
               


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