Record Career Learning Enrollments
Stride, Inc. (NYSE: LRN), one of the nation’s leading
technology-based education companies, today announced its results
for the first fiscal quarter ended September 30, 2022.
First Quarter Fiscal 2023 Highlights Compared to 2022
- Revenue of $425.2 million, compared with $400.2 million, driven
by Career Learning enrollment strength, increases in revenue per
enrollment, and Adult Learning growth.
- Loss from operations of $28.7 million, compared with $7.0
million, due to increased instructional costs from earlier hiring,
and inflationary pressure on salary and marketing expenses, and
continued investments in new products.
- Net loss of $22.7 million, compared with $5.9 million.
- Diluted net loss per share of $0.54, compared with $0.15.
- Adjusted operating loss of $19.9 million, compared with
adjusted operating income of $4.5 million. (1)
- Adjusted EBITDA of $3.0 million, compared with adjusted EBITDA
of $25.5 million. (1)
First Quarter Fiscal 2023 Summary Financial Metrics
Three Months Ended September 30, Change 2022/2021
2022
2021
$
%
(In thousands, except percentages and per share data)
Revenues $
425,150
400,226
$
24,924
6.2%
Loss from operations
(28,719)
(6,977)
(21,742)
-311.6%
Adjusted operating income (loss) (1)
(19,920)
4,522
(24,442)
-540.5%
Net loss
(22,672)
(5,883)
(16,789)
-285.4%
Net loss per share, diluted
(0.54)
(0.15)
(0.39)
-260.0%
EBITDA (1)
(2,468)
17,170
(19,638)
-114.4%
Adjusted EBITDA (1)
3,042
25,456
(22,414)
-88.0%
(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.
Revenue and Enrollment Data
Revenue
The following table sets forth the Company’s revenues for the
periods indicated:
Three Months EndedSeptember 30, Change 2022 /
2021
2022
2021
$
%
(In thousands, except percentages) General
Education $
271,658
306,341
$
(34,683)
(11.3%)
Career Learning Middle - High School
125,535
71,411
54,124
75.8%
Adult
27,957
22,474
5,483
24.4%
Total Career Learning
153,492
93,885
59,607
63.5%
Total Revenues $
425,150
400,226
$
24,924
6.2%
Enrollment Data
The following table sets forth total 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 September 30,
2022 / 2021
2022
2021
#
%
(In thousands, except percentages) General Education
(1)
112.3
147.6
(35.3)
(23.9%)
Career Learning (1)(2)
61.6
42.0
19.6
46.7%
Total Enrollment
173.9
189.6
(15.7)
(8.3%)
(1) This data includes enrollments for which Stride receives no
public funding or revenue.
(2) No enrollments are included in Career Learning for
Galvanize, Tech Elevator or MedCerts.
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 September 30,
2022 / 2021
2022
2021
$
%
General Education $
2,216
1,885
$
331
17.6%
Career Learning
2,029
1,688
341
20.2%
Cash Flow and Capital Allocation
As of September 30, 2022, the Company’s cash and cash
equivalents totaled $194.5 million, compared with $389.4 million
reported at June 30, 2022. The decrease is largely the result of
normal seasonal expenditures incurred at the start of the school
year.
Capital expenditures for three months ended September 30, 2022
were $16.8 million, compared to $15.4 million the three months
ended September 30, 2021, and were comprised of $0.9 million of
property and equipment, $9.8 million of capitalized software
development, and $6.1 million of capitalized curriculum
development.
Fiscal Year 2023 Outlook
The Company is forecasting the following for the full fiscal
year 2023:
- Revenue in the range of $1.71 billion to $1.79 billion.
- Capital expenditures in the range of $70.0 million to $80.0
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 27% to 29%.
- Adjusted operating income in the range of $160.0 million to
$190.0 million. (1)
The Company is forecasting the following for the second quarter
fiscal year 2023:
- Revenue in the range of $435.0 million to $465.0 million.
- Capital expenditures in the range of $17.0 million to $20.0
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.
- Adjusted operating income in the range of $70.0 million to
$80.0 million. (1)
(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 fiscal year 2023
financial results during a conference call scheduled for Tuesday,
October 25, 2022 at 5:00 p.m. eastern time (ET).
A live webcast of the call will be available at
https://events.q4inc.com/attendee/795050869. To participate in the
live call, investors and analysts should dial (888) 210-2831
(domestic) or 1 (289) 514-2968 (international) at 4:45 p.m. ET. The
conference ID number is 4812941. Please access the website at least
15 minutes prior to the start of the call.
A replay of the call will be available starting on October 25,
2022 at 8:00 p.m. ET through November 25, 2022 at 8:00 p.m. ET by
dialing (800) 770- 2030 (domestic) or 1 (647) 362 9199
(international) and entering the conference ID 4812941. A webcast
replay will be available at
https://events.q4inc.com/attendee/795050869 for 30 days.
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 the teaching and learning
experience for millions of people by providing innovative,
high-quality, tech-enabled education solutions, curriculum, and
programs directly to students, schools, the military, and
enterprises in primary, secondary, and post-secondary settings.
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,
K12.com, galvanize.com, techelevator.com, and medcerts.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,” “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,
such as coronavirus disease 2019 (“COVID-19”); 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,
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 presentation 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, 2022 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 September 30,
2022, 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,
2022
2021
(In thousands except share and per share data)
Revenues $
425,150
$
400,226
Instructional costs and services
295,501
273,824
Gross margin
129,649
126,402
Selling, general, and administrative expenses
158,368
133,379
Loss from operations
(28,719)
(6,977)
Interest expense, net
(2,046)
(1,993)
Other income (expense), net
1,037
(89)
Loss before income taxes and income (loss) from equity method
investments
(29,728)
(9,059)
Income tax benefit
7,507
2,893
Income (loss) from equity method investments
(451)
283
Net loss attributable to common stockholders $
(22,672)
$
(5,883)
Net loss attributable to common stockholders per share:
Basic $
(0.54)
$
(0.15)
Diluted $
(0.54)
$
(0.15)
Weighted average shares used in computing per share amounts:
Basic
42,076,628
40,559,066
Diluted
42,076,628
40,559,066
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2022
2022
(audited) (In thousands except share and per share
data) ASSETS Current assets Cash and cash
equivalents $
194,524
$
389,398
Accounts receivable, net of allowance of $28,623 and $26,993
543,705
418,558
Inventories, net
27,919
36,003
Prepaid expenses
71,149
25,974
Other current assets
93,840
80,601
Total current assets
931,137
950,534
Operating lease right-of-use assets, net
79,327
85,457
Property and equipment, net
72,307
61,537
Capitalized software, net
74,748
71,800
Capitalized curriculum development costs, net
51,430
50,580
Intangible assets, net
86,690
88,669
Goodwill
246,238
241,022
Deposits and other assets
80,221
93,946
Total assets $
1,622,098
$
1,643,545
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $
68,956
$
61,997
Accrued liabilities
42,540
63,200
Accrued compensation and benefits
40,084
73,027
Deferred revenue
80,682
53,630
Current portion of finance lease liability
43,627
37,389
Current portion of operating lease liability
13,356
12,830
Total current liabilities
289,245
302,073
Long-term finance lease liability
34,401
28,888
Long-term operating lease liability
69,113
75,127
Long-term debt
411,848
411,438
Deferred tax liability
20,182
3,205
Other long-term liabilities
10,486
10,233
Total liabilities
835,275
830,964
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;48,386,472 and 48,112,664 shares issued; and
43,051,729and 42,777,921 shares outstanding, respectively
4
4
Additional paid-in capital
683,993
687,454
Accumulated other comprehensive income (loss)
518
143
Retained earnings
204,790
227,462
Treasury stock of 5,334,743 shares at cost
(102,482)
(102,482)
Total stockholders’ equity
786,823
812,581
Total liabilities and stockholders' equity $
1,622,098
$
1,643,545
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30,
2022
2021
(In thousands) Cash flows from operating activities
Net loss $
(22,672)
$
(5,883)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization expense
26,251
24,147
Stock-based compensation expense
5,510
8,286
Deferred income taxes
17,223
5,484
Provision for doubtful accounts
1,503
152
Amortization of fees on debt
410
404
Noncash operating lease expense
3,866
5,005
Other
(3,918)
4,325
Changes in assets and liabilities: Accounts receivable
(126,521)
(150,263)
Inventories, prepaid expenses, deposits and other current and
long-term assets
(34,695)
1,260
Accounts payable
8,425
(1,256)
Accrued liabilities
(9,971)
(2,464)
Accrued compensation and benefits
(32,805)
(44,395)
Operating lease liability
(2,605)
(5,321)
Deferred revenue and other liabilities
26,853
29,009
Net cash used in operating activities
(143,146)
(131,510)
Cash flows from investing activities Purchase of property
and equipment
(913)
(1,278)
Capitalized software development costs
(9,793)
(9,690)
Capitalized curriculum development costs
(6,145)
(4,376)
Sale of other investments
60
—
Acquisition of assets
(1,409)
—
Other acquisitions, loans and investments, net of distributions
(213)
(192)
Proceeds from the maturity of marketable securities
12,044
1,501
Purchases of marketable securities
(20,126)
(9,196)
Net cash used in investing activities
(26,495)
(23,231)
Cash flows from financing activities Repayments on finance
lease obligations
(9,314)
(7,020)
Payments of contingent consideration
(7,024)
—
Proceeds from exercise of stock options
10
246
Repurchase of restricted stock for income tax withholding
(8,905)
(6,043)
Net cash used in financing activities
(25,233)
(12,817)
Net change in cash, cash equivalents and restricted cash
(194,874)
(167,558)
Cash, cash equivalents and restricted cash, beginning of
period
389,398
386,582
Cash, cash equivalents and restricted cash, end of period $
194,524
$
219,024
Reconciliation of cash, cash equivalents and restricted
cash to balance sheetas of September 30th: Cash and cash
equivalents $
194,524
$
218,519
Other current assets (restricted cash)
—
505
Total cash, cash equivalents and restricted cash $
194,524
$
219,024
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.
Reconciliation of Loss from Operations to Adjusted Operating
Income (Loss) and Adjusted EBITDA
First Quarter Fiscal Year 2023
Three Months Ended September 30,
2022
2021
(In thousands) Loss from operations
$
(28,719)
$
(6,977)
Stock-based compensation expense
5,510
8,286
Amortization of intangible assets
3,289
3,213
Adjusted operating income (loss)
(19,920)
4,522
Depreciation and other amortization
22,962
20,934
Adjusted EBITDA
$
3,042
$
25,456
EBITDA
$
(2,468)
$
17,170
Reconciliation of Income from Operations to Adjusted
Operating Income (unaudited)
Fiscal Year 2023 Outlook
Three Months EndedDecember 31, 2022 Year EndedJune 30,
2023 Low High Low High (In
millions) Income from operations
$
62.0
$
70.5
$
127.5
$
151.5
Stock-based compensation expense
5.0
6.0
20.0
25.0
Amortization of intangible assets
3.0
3.5
12.5
13.5
Adjusted operating income
$
70.0
$
80.0
$
160.0
$
190.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025005237/en/
Investor Contact Timothy Casey Vice President, Investor
Relations Stride, Inc. tcasey@k12.com
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