Ends Quarter with over 180 Thousand
Enrollments
Stride, Inc. (NYSE: LRN), one of the nation’s leading
technology-based education companies, today announced its results
for the second fiscal quarter ended December 31, 2022.
Second Quarter Fiscal 2023 Highlights Compared to
2022
- Revenue of $458.4 million, compared with $409.5 million, driven
by enrollment strength, increases in revenue per enrollment, and
Adult Learning growth.
- Income from operations of $68.1 million, compared with $56.9
million.
- Net income of $50.7 million, compared with $42.0 million.
- Diluted net income per share of $1.19, compared with
$1.00.
- Adjusted operating income of $76.3 million, compared with $60.7
million. (1)
- Adjusted EBITDA of $100.5 million, compared with $82.7 million.
(1)
Second Quarter Fiscal 2023 Summary Financial Metrics
Three Months Ended December
31,
Change 2022/2021
2022
2021
$
%
(In thousands, except percentages and per share data)
Revenues $
458,435
$
409,507
$
48,928
11.9
%
Income from operations
68,073
56,915
11,158
19.6
%
Adjusted operating income (1)
76,293
60,731
15,562
25.6
%
Net income
50,705
42,004
8,701
20.7
%
Net income per share, diluted
1.19
1.00
0.19
19.0
%
EBITDA (1)
95,536
82,095
13,441
16.4
%
Adjusted EBITDA (1)
100,477
82,697
17,780
21.5
%
(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.
Six Month Fiscal 2023 Highlights Compared to 2022
- Revenue of $883.6 million, compared with $809.7 million.
- Income from operations of $39.4 million, compared with $49.9
million.
- Net income of $28.0 million, compared with $36.1 million.
- Diluted net income per share of $0.66, compared with
$0.85.
- Adjusted operating income of $56.4 million, compared with $65.3
million. (1)
- Adjusted EBITDA of $103.5 million, compared with $108.2
million. (1)
Six Month Fiscal 2023 Summary Financial Metrics
Six Months Ended December
31,
Change 2022/2021
2022
2021
$
%
(In thousands, except
percentages and per share data)
Revenues $
883,585
809,733
73,852
9.1
%
Income from operations
39,354
49,938
(10,584
)
-21.2
%
Adjusted operating income (1)
56,373
65,253
(8,880
)
-13.6
%
Net income
28,033
36,121
(8,088
)
-22.4
%
Net income per share, diluted
0.66
0.85
(0.19
)
-22.4
%
EBITDA (1)
93,068
99,265
(6,197
)
-6.2
%
Adjusted EBITDA (1)
103,519
108,153
(4,634
)
-4.3
%
(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
Six Months Ended
December 31,
Change 2022 / 2021
December 31,
Change 2022 / 2021
2022
2021
$
%
2022
2021
$
%
(In thousands, except percentages) General
Education $
274,764
$
313,241
$
(38,477
)
(12.3
%)
$
546,422
$
619,582
$
(73,160
)
(11.8
%)
Career Learning Middle - High School
153,795
75,287
78,508
104.3
%
279,330
146,699
132,631
90.4
%
Adult
29,876
20,979
8,897
42.4
%
57,833
43,452
14,381
33.1
%
Total Career Learning
183,671
96,266
87,405
90.8
%
337,163
190,151
147,012
77.3
%
Total Revenues $
458,435
$
409,507
$
48,928
11.9
%
$
883,585
$
809,733
$
73,852
9.1
%
Enrollment Data1
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
Six Months Ended
Change
December 31,
2022 / 2021
December 31,
2022 / 2021
2022
2021
#
%
2022
2021
#
%
(In thousands, except percentages) General Education
(2)
111.2
145.6
(34.4
)
(23.6
%)
111.5
146.1
(34.6
)
(23.7
%)
Career Learning (2)(3)
66.3
41.9
24.4
58.2
%
65.1
41.9
23.2
55.4
%
Average Enrollment
177.5
187.5
(10.0
)
(5.3
%)
176.6
188.0
(11.4
)
(6.1
%)
(1)
Enrollments are presented as the average monthly enrollments
during the second quarter fiscal year 2023. Total ending
enrollments were 180.3 thousand and 187.6 thousand, as of December
31, 2022 and 2021, respectively. General Education enrollments were
112.8 thousand and 145.5 thousand and Career Learning enrollments
were 67.5 thousand and 42.1 thousand as of December 31, 2022 and
2021, respectively.
(2) This data includes enrollments for which Stride receives no
public funding or revenue. (3)
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
Six Months Ended
Change
December 31,
2022 / 2021
December 31,
2022 / 2021
2022
2021
$
%
2022
2021
$
%
General Education $
2,281
$
1,953
$
328
16.8
%
$
4,508
$
3,852
$
656
17.0
%
Career Learning
2,319
1,794
525
29.3
%
4,280
3,482
798
22.9
%
Cash Flow and Capital Allocation
As of December 31, 2022, the Company’s cash and cash equivalents
totaled $318.3 million, compared with $389.4 million reported at
June 30, 2022. The decrease is largely the result of normal
seasonal trends.
Capital expenditures for three months ended December 31, 2022
were $16.9 million, compared to $14.2 million in the second quarter
of fiscal year 2022, and were comprised of $1.9 million of property
and equipment, $11.6 million of capitalized software development,
and $3.4 million of capitalized curriculum development.
Fiscal Year 2023 Outlook
The Company is raising its revenue and adjusted operating
forecast and narrowing its capital expenditures forecast for the
full year fiscal 2023:
- Revenue in the range of $1.775 billion to $1.815 billion.
- Capital expenditures in the range of $70.0 million to $75.0
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 $180.0 million to
$200.0 million. (1)
The Company is forecasting the following for the third quarter
fiscal year 2023:
- Revenue in the range of $445.0 million to $465.0 million.
- Capital expenditures in the range of $16.0 million to $19.0
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 second quarter fiscal year 2023
financial results during a conference call scheduled for Tuesday,
January 24, 2023 at 5:00 p.m. eastern time (ET).
A live webcast of the call will be available at
https://events.q4inc.com/attendee/833472576. To participate in the
live call, investors and analysts should dial (888) 210-2831
(domestic) or 1 (289) 514-2968 (international) and provide the
conference ID number 4812941. 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/833472576 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, curriculums, and programs
directly to students, schools, the military, and enterprises in
primary, secondary, and postsecondary settings. Stride is a premier
provider of K–12 education for students, schools, and districts,
including career learning services through middle and high school
curriculums. 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 and six
months ended December 31, 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
December 31, 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
Six Months Ended
December 31,
December 31,
2022
2021
2022
2021
(In thousands except share and
per share data)
Revenues $
458,435
$
409,507
$
883,585
$
809,733
Instructional costs and services
288,347
261,950
583,848
535,774
Gross margin
170,088
147,557
299,737
273,959
Selling, general, and administrative expenses
102,015
90,642
260,383
224,021
Income from operations
68,073
56,915
39,354
49,938
Interest expense, net
(2,082
)
(1,875
)
(4,128
)
(3,868
)
Other income, net
3,970
3,884
5,007
3,795
Income before income taxes and loss from equity method
investments
69,961
58,924
40,233
49,865
Income tax expense
(18,860
)
(15,928
)
(11,353
)
(13,035
)
Loss from equity method investments
(396
)
(992
)
(847
)
(709
)
Net income attributable to common stockholders $
50,705
$
42,004
$
28,033
$
36,121
Net income attributable to common stockholders per share:
Basic $
1.20
$
1.01
$
0.66
$
0.88
Diluted $
1.19
$
1.00
$
0.66
$
0.85
Weighted average shares used in computing per share amounts:
Basic
42,259,061
41,525,736
42,167,844
41,042,401
Diluted
42,547,334
41,963,399
42,602,405
42,413,828
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
December 31,
June 30,
2022
2022
(audited)
(In thousands except share and
per share data)
ASSETS Current assets Cash and cash equivalents $
318,279
$
389,398
Accounts receivable, net of allowance of $25,744 and $26,993
442,166
418,558
Inventories, net
23,960
36,003
Prepaid expenses
43,822
25,974
Other current assets
100,588
80,601
Total current assets
928,815
950,534
Operating lease right-of-use assets, net
75,823
85,457
Property and equipment, net
68,124
61,537
Capitalized software, net
76,192
71,800
Capitalized curriculum development costs, net
50,557
50,580
Intangible assets, net
83,410
88,669
Goodwill
246,676
241,022
Deposits and other assets
89,694
93,946
Total assets $
1,619,291
$
1,643,545
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $
32,809
$
61,997
Accrued liabilities
40,909
63,200
Accrued compensation and benefits
34,083
73,027
Deferred revenue
83,799
53,630
Current portion of finance lease liability
44,377
37,389
Current portion of operating lease liability
13,281
12,830
Total current liabilities
249,258
302,073
Long-term finance lease liability
28,925
28,888
Long-term operating lease liability
65,827
75,127
Long-term debt
412,260
411,438
Deferred tax liability
10,752
3,205
Other long-term liabilities
10,370
10,233
Total liabilities
777,392
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;
48,431,576 and 48,112,664 shares issued; and 43,096,833 and
42,777,921 shares outstanding, respectively
4
4
Additional paid-in capital
688,695
687,454
Accumulated other comprehensive income (loss)
187
143
Retained earnings
255,495
227,462
Treasury stock of 5,334,743 shares at cost
(102,482
)
(102,482
)
Total stockholders’ equity
841,899
812,581
Total liabilities and stockholders' equity $
1,619,291
$
1,643,545
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
December 31,
2022
2021
(In thousands)
Cash flows from operating activities Net income $
28,033
$
36,121
Adjustments to reconcile net income to net cash provided by
(used in) operating activities: Depreciation and amortization
expense
53,714
49,327
Stock-based compensation expense
10,451
8,888
Deferred income taxes
7,995
6,008
Provision for doubtful accounts
2,173
4,730
Amortization of fees on debt
822
809
Noncash operating lease expense
7,369
10,074
Other
(2,869
)
5,550
Changes in assets and liabilities: Accounts receivable
(25,680
)
(65,606
)
Inventories, prepaid expenses, deposits and other current and
long-term assets
(9,177
)
11,944
Accounts payable
(26,059
)
(26,810
)
Accrued liabilities
(10,681
)
(8,570
)
Accrued compensation and benefits
(38,806
)
(39,157
)
Operating lease liability
(5,966
)
(10,662
)
Deferred revenue and other liabilities
29,863
5,686
Net cash provided by (used in) operating activities
21,182
(11,668
)
Cash flows from investing activities Purchase of property
and equipment
(2,823
)
(2,705
)
Capitalized software development costs
(21,399
)
(19,330
)
Capitalized curriculum development costs
(9,527
)
(7,461
)
Sale of other investments
60
5,261
Acquisition of assets
(1,409
)
—
Other acquisitions, loans and investments, net of distributions
(767
)
(3,956
)
Proceeds from the maturity of marketable securities
36,729
7,248
Purchases of marketable securities
(55,879
)
(38,720
)
Net cash used in investing activities
(55,015
)
(59,663
)
Cash flows from financing activities Repayments on finance
lease obligations
(19,938
)
(14,744
)
Payments of contingent consideration
(7,024
)
—
Payments of deferred purchase consideration
—
(7,858
)
Proceeds from exercise of stock options
10
246
Repurchase of restricted stock for income tax withholding
(10,334
)
(35,404
)
Net cash used in financing activities
(37,286
)
(57,760
)
Net change in cash, cash equivalents and restricted cash
(71,119
)
(129,091
)
Cash, cash equivalents and restricted cash, beginning of
period
389,398
386,582
Cash, cash equivalents and restricted cash, end of period $
318,279
$
257,491
Reconciliation of cash, cash equivalents and restricted
cash to balance sheet as of December 31st: Cash and cash
equivalents $
318,279
$
256,986
Other current assets (restricted cash)
—
505
Total cash, cash equivalents and restricted cash $
318,279
$
257,491
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 Income from
Operations to Adjusted Operating Income, EBITDA and Adjusted
EBITDA
Second Quarter Fiscal Year
2023
Three Months Ended
Six Months Ended
December 31,
December 31,
2022
2021
2022
2021
(In thousands) Income from operations
$
68,073
$
56,915
$
39,354
$
49,938
Stock-based compensation expense
4,941
602
10,451
8,888
Amortization of intangible assets
3,279
3,214
6,568
6,427
Adjusted operating income
76,293
60,731
56,373
65,253
Depreciation and other amortization
24,184
21,966
47,146
42,900
Adjusted EBITDA
$
100,477
$
82,697
$
103,519
$
108,153
EBITDA
$
95,536
$
82,095
$
93,068
$
99,265
Reconciliation of Income from
Operations to Adjusted Operating Income (unaudited)
Fiscal Year 2023 Outlook
Three Months Ended
Year Ended
March 31, 2023
June 30, 2023
Low
High
Low
High
(In millions) Income from operations
$
62.5
$
70.5
$
147.5
$
164.5
Stock-based compensation expense
4.5
5.5
20.0
22.0
Amortization of intangible assets
3.0
4.0
12.5
13.5
Adjusted operating income
$
70.0
$
80.0
$
180.0
$
200.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230124005730/en/
Investor Contact Timothy Casey Vice President, Investor
Relations Stride, Inc. tcasey@k12.com
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