Press-Releases

Stride Posts Another Record Quarter

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RESTON, Va., April 23, 2024 (GLOBE NEWSWIRE) — Stride, Inc. (NYSE: LRN), one of the nation’s leading technology-based education companies, today announced its results for the third fiscal quarter ended March 31, 2024.

Third Quarter Fiscal 2024 Highlights Compared to 2023

  • Revenue of $520.8 million, compared with $470.3 million, driven by continued strong enrollment trends.
  • Income from operations of $88.3 million, compared with $72.2 million.
  • Net income of $69.7 million, compared with $55.5 million.
  • Diluted net income per share of $1.60 compared with $1.30.
  • Adjusted operating income of $96.4 million, compared with $80.2 million. (1)
  • Adjusted EBITDA of $120.5 million, compared with $103.9 million. (1)

Third Quarter Fiscal 2024 Summary Financial Metrics

  Three Months Ended March 31,   Change 2024/2023  
  2024      2023     $   %  
  (In thousands, except percentages and per share data)  
Revenues $ 520,837   $ 470,284   $ 50,553   10.7 %  
                       
Income from operations   88,313     72,199     16,114   22.3 %  
Adjusted operating income (1)   96,410     80,224     16,186   20.2 %  
                       
Net income   69,687     55,462     14,225   25.6 %  
Net income per share, diluted   1.60     1.30     0.30   23.1 %  
                       
EBITDA (1)   115,297     99,141     16,156   16.3 %  
Adjusted EBITDA (1)   120,547     103,886     16,661   16.0 %  
                       

(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.

Nine Month Fiscal 2024 Highlights Compared to 2023

  • Revenue of $1,505.9 million, compared with $1,353.9 million.
  • Income from operations of $175.9 million, compared with $111.6 million.
  • Net income of $141.4 million, compared with $83.5 million.
  • Diluted net income per share of $3.26, compared with $1.96.
  • Adjusted operating income of $206.0 million, compared with $136.6 million. (1)
  • Adjusted EBITDA of $278.7 million, compared with $207.4 million. (1)

Nine Month Fiscal 2024 Summary Financial Metrics

  Nine Months Ended March 31,   Change 2024/2023  
  2024      2023     $   %  
  (In thousands, except percentages and per share data)  
Revenues $ 1,505,886     1,353,869     152,017   11.2 %  
                       
Income from operations   175,922     111,553     64,369   57.7 %  
Adjusted operating income (1)   206,044     136,597     69,447   50.8 %  
                       
Net income   141,401     83,495     57,906   69.4 %  
Net income per share, diluted   3.26     1.96     1.30   66.3 %  
                       
EBITDA (1)   257,386     192,209     65,177   33.9 %  
Adjusted EBITDA (1)   278,658     207,405     71,253   34.4 %  
                       

(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 and Enrollment Data

Revenue

The following table sets forth the Company’s revenues for the periods indicated:

    Three Months Ended             Nine Months Ended          
    March 31,    Change 2024 / 2023   March 31,   Change 2024 / 2023
     2024    2023    $    %   2024    2023    $    %
    (In thousands, except percentages)
                                             
General Education   $ 328,894   $ 289,566   $ 39,328     13.6 %   $ 942,135   $ 835,989   $ 106,146     12.7 %
Career Learning                                            
Middle – High School     167,919     150,772     17,147     11.4 %     483,972     430,101     53,871     12.5 %
Adult     24,024     29,946     (5,922 )   (19.8 %)     79,779     87,779     (8,000 )   (9.1 %)
Total Career Learning     191,943     180,718     11,225     6.2 %     563,751     517,880     45,871     8.9 %
Total Revenues   $ 520,837   $ 470,284   $ 50,553     10.7 %   $ 1,505,886   $ 1,353,869   $ 152,017     11.2 %
                                             


Enrollment Data
1

The following table sets forth enrollment data for students in our General Education and Career Learning lines of revenue. Enrollments for General Education and Career Learning only include those students in full service public or private programs where Stride provides a combination of curriculum, technology, instructional and support services inclusive of administrative support.

    Three Months Ended   Change   Nine Months Ended   Change  
    March 31,   2024 / 2023   March 31,   2024 / 2023  
     2024    2023    #    %    2024    2023    #    %  
    (In thousands, except percentages)  
                                               
General Education (2)     124.6     114.6     10.0   8.7 %     121.9     112.8     9.1   8.1 %  
Career Learning (2)(3)     73.8     67.2     6.6   9.8 %     72.7     66.0     6.7   10.2 %  
Average Enrollment     198.4     181.8     16.6   9.1 %     194.6     178.8     15.8   8.8 %  
                                               

(1)   Enrollments are presented as the average monthly enrollments during the third quarter fiscal year 2024.
(2)   This data includes enrollments for which Stride receives no public funding or revenue.
(3)   No enrollments are included in Career Learning for the Adult Learning offerings.

Revenue per Enrollment Data

The following table sets forth revenue per average enrollment data for students for the period indicated. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.

    Three Months Ended   Change   Nine Months Ended   Change
    March 31,   2024 / 2023   March 31,   2024 / 2023
     2024    2023    $    %    2024    2023    $    %
                                             
General Education   $ 2,507   $ 2,332   $ 175   7.5 %   $ 7,298   $ 6,823   $ 475   7.0 %
Career Learning     2,272     2,237     35   1.6 %     6,652     6,500     152   2.3 %
                                             


Cash Flow and Capital Allocation

As of March 31, 2024, the Company’s cash and cash equivalents and marketable securities totaled $570.7 million, compared with $545.5 million reported at June 30, 2023.

Capital expenditures for three months ended March 31, 2024 were $16.3 million, compared to $15.2 million in the third quarter of fiscal year 2023, and were comprised of ($0.2) million of property and equipment, $11.7 million of capitalized software development and $4.8 million of capitalized curriculum development.

Fiscal Year 2024 Outlook

The Company is raising its adjusted operating and tightening its revenue forecast for the full year fiscal 2024:

  • Revenue in the range of $2.025 billion to $2.040 billion.
  • Capital expenditures in the range of $60 million to $65 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software, and curriculum development costs as defined on our Statement of Cash Flows.
  • Effective tax rate of 24% to 26%.
  • Adjusted operating income in the range of $280 million to $290 million. (1)

Conference Call

The Company will discuss its third quarter fiscal year 2024 financial results during a conference call scheduled for Tuesday, April 23, 2024 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/945956563. 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/945956563 as soon as it is available.

About Stride Inc.

At Stride, Inc. (NYSE: LRN), we are reimagining learning—where learning is lifelong, deeply personal, and prepares learners for tomorrow. The company has transformed millions of people’s teaching and learning experiences by providing innovative, high-quality, tech-enabled education solutions, curriculum, and programs directly to students, schools, the military, and enterprises in primary, secondary, and postsecondary settings. Through K12, Stride is a premier provider of K-12 education for students, schools, and districts, including career learning services through middle and high school curriculum. For adult learners, Stride delivers professional skills training in healthcare and technology, as well as staffing and talent development for Fortune 500 companies. Stride has delivered millions of courses over the past decade and serves learners in all 50 states and more than 100 countries. More information can be found at stridelearning.com.

Investor Contact
Timothy Casey
Vice President, Investor Relations
Stride, Inc.
[email protected]

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 facilities, resulting from cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; and failure to prevent or mitigate a cybersecurity incident that affects our systems; 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 and nine months ended March 31, 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 quarter ended March 31, 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   Nine Months Ended
    March 31,   March 31,
       2024      2023      2024      2023
    (In thousands except share and per share data)
Revenues   $ 520,837     $ 470,284     $ 1,505,886     $ 1,353,869  
Instructional costs and services     319,508       295,032       930,495       878,880  
Gross margin     201,329       175,252       575,391       474,989  
Selling, general, and administrative expenses     113,016       103,053       399,469       363,436  
Income from operations     88,313       72,199       175,922       111,553  
Interest expense, net     (2,404 )     (2,206 )     (6,494 )     (6,334 )
Other income, net     7,678       4,587       19,381       9,594  
Income before income taxes and income (loss) from equity method investments     93,587       74,580       188,809       114,813  
Income tax expense     (24,657 )     (19,525 )     (48,383 )     (30,878 )
Income (loss) from equity method investments     757       407       975       (440 )
Net income attributable to common stockholders   $ 69,687     $ 55,462     $ 141,401     $ 83,495  
Net income attributable to common stockholders per share:                        
Basic   $ 1.63     $ 1.31     $ 3.32     $ 1.98  
Diluted   $ 1.60     $ 1.30     $ 3.26     $ 1.96  
Weighted average shares used in computing per share amounts:                        
Basic     42,684,561       42,375,480       42,581,869       42,237,056  
Diluted     43,655,841       42,714,090       43,389,903       42,652,223  
                         
STRIDE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    March 31,    June 30,
       2024      2023
          (audited)
    (In thousands except share and per share data)
ASSETS            
Current assets            
Cash and cash equivalents   $ 376,577     $ 410,807  
Accounts receivable, net of allowance of $34,852 and $30,031     577,792       463,722  
Inventories, net     21,038       36,716  
Prepaid expenses     40,127       24,817  
Other current assets     193,547       129,137  
Total current assets     1,209,081       1,065,199  
Operating lease right-of-use assets, net     57,725       69,508  
Property and equipment, net     57,213       52,332  
Capitalized software, net     83,320       83,465  
Capitalized curriculum development costs, net     51,451       50,787  
Intangible assets, net     64,668       74,771  
Goodwill     246,676       246,676  
Deferred tax asset     14,773       8,776  
Deposits and other assets     107,306       109,152  
Total assets   $ 1,892,213     $ 1,760,666  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable   $ 37,156     $ 48,854  
Accrued liabilities     67,671       76,626  
Accrued compensation and benefits     62,383       57,426  
Deferred revenue     70,907       76,159  
Current portion of finance lease liability     30,991       35,621  
Current portion of operating lease liability     12,853       14,449  
Total current liabilities     281,961       309,135  
Long-term finance lease liability     29,920       21,278  
Long-term operating lease liability     48,418       59,425  
Long-term debt     414,271       413,035  
Other long-term liabilities     14,436       10,497  
Total liabilities     789,006       813,370  
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; 48,586,413 and 48,339,048 shares issued; and 43,251,670 and 43,004,305 shares outstanding, respectively     4       4  
Additional paid-in capital     709,997       695,480  
Accumulated other comprehensive loss     (42 )     (35 )
Retained earnings     495,730       354,329  
Treasury stock of 5,334,743 shares at cost     (102,482 )     (102,482 )
Total stockholders’ equity     1,103,207       947,296  
Total liabilities and stockholders’ equity   $ 1,892,213     $ 1,760,666  
             
STRIDE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    Nine Months Ended
    March 31,
       2024      2023
    (In thousands)
Cash flows from operating activities            
Net income   $ 141,401     $ 83,495  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization expense     81,464       80,656  
Stock-based compensation expense     21,272       15,196  
Deferred income taxes     (4,629 )     2,982  
Provision for credit losses     18,895       5,939  
Amortization of fees on debt     1,236       1,200  
Noncash operating lease expense     11,055       11,039  
Other     1,444       (2,015 )
Changes in assets and liabilities:            
Accounts receivable     (133,144 )     (61,949 )
Inventories, prepaid expenses, deposits and other current and long-term assets     (2,763 )     (9,966 )
Accounts payable     (11,585 )     (26,101 )
Accrued liabilities     (9,875 )     (6,455 )
Accrued compensation and benefits     4,834       (19,130 )
Operating lease liability     (11,695 )     (8,602 )
Deferred revenue and other liabilities     (1,315 )     39,931  
Net cash provided by operating activities     106,595       106,220  
Cash flows from investing activities            
Purchase of property and equipment     (1,500 )     (3,579 )
Capitalized software development costs     (30,130 )     (32,574 )
Capitalized curriculum development costs     (13,534 )     (12,798 )
Sale of other investments           60  
Acquisition of assets           (1,409 )
Other acquisitions, loans and investments, net of distributions     (693 )     (1,377 )
Proceeds from the maturity of marketable securities     107,020       66,204  
Purchases of marketable securities     (162,179 )     (85,289 )
Net cash used in investing activities     (101,016 )     (70,762 )
Cash flows from financing activities            
Repayments on finance lease obligations     (32,212 )     (31,238 )
Payments of contingent consideration           (7,024 )
Proceeds from exercise of stock options           20  
Repurchase of restricted stock for income tax withholding     (7,597 )     (12,936 )
Net cash used in financing activities     (39,809 )     (51,178 )
Net change in cash, cash equivalents and restricted cash     (34,230 )     (15,720 )
Cash, cash equivalents and restricted cash, beginning of period     410,807       389,398  
Cash, cash equivalents and restricted cash, end of period   $ 376,577     $ 373,678  
             


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.

  • Adjusted operating income (loss) is defined as income (loss) from operations as adjusted for stock-based compensation and the amortization of intangible assets.
  • EBITDA is defined as income (loss) from operations as adjusted for depreciation and amortization.
  • Adjusted EBITDA is defined as income (loss) from operations as adjusted for stock-based compensation and depreciation and amortization.
  • Adjusted EBITDA and adjusted operating income (loss) exclude stock-based compensation, which consists of expenses for stock options, restricted stock, restricted stock units, and performance stock units.

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:

  • as additional measures of operating performance because they assist us in comparing our performance on a consistent basis; and
  • in presentations to the members of our Board of Directors to enable our Board to review the same measures used by management to compare our current operating results with corresponding prior periods.

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.

Third Quarter and Nine Months Fiscal Year 2024

Reconciliation of Income from Operations to Adjusted Operating Income

  Three Months Ended   Nine Months Ended
  March 31,   March 31,
  2024   2023   2024   2023
  (In thousands)
Income from operations $ 88,313   $ 72,199   $ 175,922   $ 111,553
Amortization of intangible assets   2,847     3,280     8,850     9,848
Stock-based compensation expense   5,250     4,745     21,272     15,196
Adjusted operating income   96,410     80,224     206,044     136,597
               


Reconciliation of Net Income to EBITDA and Adjusted EBITDA

                 
  Three Months Ended March 31,    Nine Months Ended March 31,   
    2024       2023       2024       2023    
  (In thousands)  
Net income $ 69,687     $ 55,462     $ 141,401     $ 83,495    
Interest expense, net   2,404       2,206       6,494       6,334    
Other income, net   (7,678 )     (4,587 )     (19,381 )     (9,594 )  
Income tax expense   24,657       19,525       48,383       30,878    
(Income) loss from equity method investments   (757 )     (407 )     (975 )     440    
Depreciation and amortization   26,984       26,942       81,464       80,656    
EBITDA   115,297       99,141       257,386       192,209    
Stock-based compensation expense   5,250       4,745       21,272       15,196    
Adjusted EBITDA $ 120,547     $ 103,886     $ 278,658     $ 207,405    
                 


Fiscal Year 2024 Outlook

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

  Year Ended June 30, 2024
  Low   High
  (In millions)
Income from operations $ 240.5   $ 247.0
Stock-based compensation expense   28.0     31.0
Amortization of intangible assets   11.5     12.0
Adjusted operating income $ 280.0   $ 290.0
       

 

Stride Inc

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