Financial News

Stride Posts Another Record Year

RESTON, Va., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Stride, Inc. (NYSE: LRN), one of the nation’s most successful technology-based education companies, today announced its results for the fourth quarter and full fiscal year ended June 30, 2024.

Fiscal 2024 Highlights Compared to 2023

  • Revenue of $2,040.1 million, compared with $1,837.4 million.
  • Income from operations of $249.6 million, compared with $165.5 million.
  • Net income of $204.2 million, compared with $126.9 million.
  • Diluted net income per share of $4.69, compared with $2.97.
  • Adjusted operating income of $293.9 million, compared with $201.0 million. (1)
  • Adjusted EBITDA of $390.7 million, compared with $296.2 million. (1)

Fiscal 2024 Summary Financial Metrics

 Year Ended June 30, Change 2024/2023 
 2024 2023  $ % 
 (In thousands, except percentages and per share data) 
Revenues$2,040,069  1,837,358  202,711 11.0% 
            
Income from operations 249,600  165,499  84,101 50.8% 
Adjusted operating income (1) 293,940  201,027  92,913 46.2% 
            
Net income 204,183  126,867  77,316 60.9% 
Net income per share, diluted 4.69  2.97  1.72 57.9% 
            
EBITDA (1) 359,283  275,857  83,426 30.2% 
Adjusted EBITDA (1) 390,745  296,177  94,568 31.9% 


(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.
   

Fourth Quarter Fiscal 2024 Highlights Compared to 2023

  • Revenue of $534.2 million, compared with $483.5 million.
  • Income from operations of $73.7 million, compared with $53.9 million.
  • Net income of $62.8 million, compared with $43.4 million.
  • Diluted net income per share of $1.42 compared with $1.01.
  • Adjusted operating income of $87.9 million, compared with $64.4 million. (1)
  • Adjusted EBITDA of $112.1 million, compared with $88.8 million. (1)

Fourth Quarter Fiscal 2024 Summary Financial Metrics

            
 Three Months Ended June 30, Change 2024/2023 
 2024 2023  $ % 
 (In thousands, except percentages and per share data) 
Revenues$534,183 $483,489 $50,694 10.5% 
            
Income from operations 73,678  53,946  19,732 36.6% 
Adjusted operating income (1) 87,896  64,430  23,466 36.4% 
            
Net income 62,782  43,372  19,410 44.8% 
Net income per share, diluted 1.42  1.01  0.41 40.6% 
            
EBITDA (1) 101,897  83,648  18,249 21.8% 
Adjusted EBITDA (1) 112,087  88,772  23,315 26.3% 


(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      Year Ended     
  June 30, Change 2024 / 2023 June 30, Change 2024 / 2023
  2024 2023 $ % 2024 2023 $ %
  (In thousands, except percentages)
                       
General Education $347,058 $295,402 $51,656  17.5% $1,289,193 $1,131,391 $157,802  13.9%
Career Learning                      
Middle - High School  167,219  156,668  10,551  6.7%  651,191  586,770  64,421  11.0%
Adult  19,906  31,419  (11,513) (36.6%)  99,685  119,197  (19,512) (16.4%)
Total Career Learning  187,125  188,087  (962) (0.5%)  750,876  705,967  44,909  6.4%
Total Revenues $534,183 $483,489 $50,694  10.5% $2,040,069 $1,837,358 $202,711  11.0%
                       

Enrollment Data

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 Year Ended Change 
  June 30, 2024 / 2023 June 30, 2024 / 2023 
  2024 2023 # % 2024 2023 # % 
  (In thousands, except percentages) 
                        
General Education (1)  120.6  110.6  10.0 9.0%  121.6  112.3  9.3 8.3% 
Career Learning (1)(2)  72.8  65.5  7.3 11.1%  72.7  65.9  6.8 10.3% 
Average Enrollment  193.4  176.1  17.3 9.8%  194.3  178.2  16.1 9.0% 


(1) This data includes enrollments for which Stride receives no public funding or revenue.
(2) No enrollments are included in Career Learning for Stride’s 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 Year Ended Change
  June 30, 2024 / 2023 June 30, 2024 / 2023
  2024 2023 $ % 2024 2023 $ %
                       
General Education $2,735 $2,455 $280  11.4% $10,028 $9,270 $758 8.2%
Career Learning  2,294  2,389  (95) (4.0%)  8,946  8,885  61 0.7%
                       

Cash Flow and Capital Allocation

As of June 30, 2024, the Company’s cash and cash equivalents and marketable securities totaled $714.2 million, compared with $545.5 million reported at June 30, 2023.

Capital expenditures for the fiscal year ended June 30, 2024 were $61.6 million, compared to $66.5 million in fiscal year 2023, and were comprised of $2.3 million of property and equipment, $40.7 million of capitalized software development and $18.7 million of capitalized curriculum development.

Fiscal Year 2025 Outlook

The Company will provide an outlook for fiscal year 2025 when it reports results for the first quarter of fiscal year 2025, anticipated to be released in October 2024. No separate guidance communication, or enrollment counts, for fiscal 2025 will be provided before that time.

Conference Call

The Company will discuss its fourth quarter and full fiscal year 2024 financial results during a conference call scheduled for Tuesday, August 6, 2024 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/804531504. 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/804531504 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; 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 twelve months ended June 30, 2024 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.’s Annual Report on Form 10-K for the year ended June 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

 
  Three Months Ended Year Ended 
  June 30, June 30, 
  2024  2023  2024  2023  
  (In thousands except share and per share data) 
Revenues $534,183  $483,489  $2,040,069  $1,837,358  
Instructional costs and services  345,971   311,408   1,276,466   1,190,288  
Gross margin  188,212   172,081   763,603   647,070  
Selling, general, and administrative expenses  114,534   118,135   514,003   481,571  
Income from operations  73,678   53,946   249,600   165,499  
Interest expense, net  (2,318)  (2,070)  (8,812)  (8,404) 
Other income, net  7,519   5,858   26,900   15,452  
Income before income taxes and income (loss) from equity method investments  78,879   57,734   267,688   172,547  
Income tax expense  (16,099)  (14,468)  (64,482)  (45,346) 
Income (loss) from equity method investments  2   106   977   (334) 
Net income attributable to common stockholders $62,782  $43,372  $204,183  $126,867  
Net income attributable to common stockholders per share:             
Basic $1.47  $1.02  $4.79  $3.00  
Diluted $1.42  $1.01  $4.69  $2.97  
Weighted average shares used in computing per share amounts:             
Basic  42,760,745   42,434,397   42,626,588   42,286,392  
Diluted  44,248,689   42,849,355   43,535,441   42,728,108  
              



STRIDE, INC.

CONSOLIDATED BALANCE SHEETS

 
  June 30, 
  2024  2023  
  (In thousands except share and per share data) 
ASSETS       
Current assets       
Cash and cash equivalents $500,614  $410,807  
Accounts receivable, net of allowance of $31,298 and $30,031  472,754   463,722  
Inventories, net  36,748   36,716  
Prepaid expenses  29,164   24,817  
Marketable securities  191,672   111,918  
Other current assets  14,494   17,219  
Total current assets  1,245,446   1,065,199  
Operating lease right-of-use assets, net  54,503   69,508  
Property and equipment, net  50,856   52,332  
Capitalized software, net  81,952   83,465  
Capitalized curriculum development costs, net  53,232   50,787  
Intangible assets, net  60,282   74,771  
Goodwill  246,676   246,676  
Deferred tax asset  7,200   8,776  
Deposits and other assets  120,318   109,152  
Total assets $1,920,465  $1,760,666  
LIABILITIES AND STOCKHOLDERS' EQUITY       
Current liabilities       
Accounts payable $40,970  $48,854  
Accrued liabilities  60,796   76,626  
Accrued compensation and benefits  64,878   57,426  
Deferred revenue  35,742   76,159  
Current portion of finance lease liability  29,146   35,621  
Current portion of operating lease liability  12,748   14,449  
Total current liabilities  244,280   309,135  
Long-term finance lease liability  26,452   21,278  
Long-term operating lease liability  45,192   59,425  
Long-term debt  414,675   413,035  
Other long-term liabilities  13,841   10,497  
Total liabilities  744,440   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; 48,576,164 and 48,339,048 shares issued; and 43,241,421 and 43,004,305 shares outstanding, respectively  4   4  
Additional paid-in capital  720,033   695,480  
Accumulated other comprehensive loss  (42)  (35) 
Retained earnings  558,512   354,329  
Treasury stock of 5,334,743 shares at cost  (102,482)  (102,482) 
Total stockholders’ equity  1,176,025   947,296  
Total liabilities and stockholders' equity $1,920,465  $1,760,666  
        


  Year Ended 
  June 30, 
     2024     2023  
  (In thousands) 
Cash flows from operating activities       
Net income $204,183  $126,867  
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization expense  109,683   110,358  
Stock-based compensation expense  31,462   20,320  
Deferred income taxes  2,890   (10,373) 
Provision for credit losses  22,844   9,158  
Amortization of fees on debt  1,640   1,597  
Noncash operating lease expense  14,246   14,728  
Other  849   (1,966) 
Changes in assets and liabilities:       
Accounts receivable  (32,056)  (54,908) 
Inventories, prepaid expenses, deposits and other current and long-term assets  (8,877)  (19,389) 
Accounts payable  (6,844)  (11,999) 
Accrued liabilities  (16,556)  24,132  
Accrued compensation and benefits  7,394   (15,473) 
Operating lease liability  (14,990)  (12,243) 
Deferred revenue and other liabilities  (37,071)  22,341  
Net cash provided by operating activities   278,797   203,150  
Cash flows from investing activities       
Purchase of property and equipment  (2,270)  (4,336) 
Capitalized software development costs  (40,653)  (44,973) 
Capitalized curriculum development costs  (18,666)  (17,239) 
Sale of other investments     60  
Acquisition of assets     (1,409) 
Other acquisitions, loans and investments, net of distributions  (5,196)  (1,652) 
Proceeds from the maturity of marketable securities  204,487   91,879  
Purchases of marketable securities  (277,573)  (140,570) 
Net cash used in investing activities   (139,871)  (118,240) 
Cash flows from financing activities       
Repayments on finance lease obligations  (40,919)  (42,956) 
Payments of contingent consideration     (7,024) 
Proceeds from exercise of stock options     20  
Repurchase of restricted stock for income tax withholding  (8,200)  (13,541) 
Net cash used in financing activities   (49,119)  (63,501) 
Net change in cash, cash equivalents and restricted cash  89,807 �� 21,409  
Cash, cash equivalents and restricted cash, beginning of period  410,807   389,398  
Cash, cash equivalents and restricted cash, end of period $500,614  $410,807  
        

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.

Fourth Quarter and Full Fiscal Year 2024

Reconciliation of Income from Operations to Adjusted Operating Income

 Three Months Ended Year Ended
 June 30, June 30,
  2024  2023  2024  2023
 (In thousands)
Income from operations$73,678 $53,946 $249,600 $165,499
Amortization of intangible assets 4,028  5,360  12,878  15,208
Stock-based compensation expense 10,190  5,124  31,462  20,320
Adjusted operating income 87,896  64,430  293,940  201,027
        

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 Three Months Ended
June 30,
 Year Ended
June 30,
 
  2024   2023   2024   2023  
 (In thousands) 
Net income$62,782  $43,372  $204,183  $126,867  
Interest expense, net 2,318   2,070   8,812   8,404  
Other income, net (7,519)  (5,858)  (26,900)  (15,452) 
Income tax expense 16,099   14,468   64,482   45,346  
(Income) loss from equity method investments (2)  (106)  (977)  334  
Depreciation and amortization 28,219   29,702   109,683   110,358  
EBITDA 101,897   83,648   359,283   275,857  
Stock-based compensation expense 10,190   5,124   31,462   20,320  
Adjusted EBITDA$112,087  $88,772  $390,745  $296,177  
         

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