In-Year Enrollment Momentum Continues
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, 2023.
Third Quarter Fiscal 2023 Highlights Compared to 2022
- Revenue of $470.3 million, compared with $421.7 million, driven
by continued enrollment strength, increases in revenue per
enrollment, and Adult Learning growth.
- Income from operations of $72.2 million, compared with $60.6
million.
- Net income of $55.5 million, compared with $42.9 million.
- Diluted net income per share of $1.30, compared with
$1.02.
- Adjusted operating income of $80.2 million, compared with $69.4
million. (1)
- Adjusted EBITDA of $103.9 million, compared with $90.3 million.
(1)
Third Quarter Fiscal 2023 Summary
Financial Metrics
Three Months Ended March 31, Change
2023/2022
2023
2022
$ % (In thousands, except percentages and per
share data) Revenues $
470,284
$
421,722
$
48,562
11.5
%
Income from operations
72,199
60,594
11,605
19.2
%
Adjusted operating income (1)
80,224
69,440
10,784
15.5
%
Net income
55,462
42,919
12,543
29.2
%
Net income per share, diluted
1.30
1.02
0.28
27.5
%
EBITDA (1)
99,141
84,731
14,410
17.0
%
Adjusted EBITDA (1)
103,886
90,307
13,579
15.0
%
(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 2023 Highlights Compared to 2022
- Revenue of $1,353.9 million, compared with $1,231.5
million.
- Income from operations of $111.6 million, compared with $110.5
million.
- Net income of $83.5 million, compared with $79.0 million.
- Diluted net income per share of $1.96, compared with
$1.87.
- Adjusted operating income of $136.6 million, compared with
$134.7 million. (1)
- Adjusted EBITDA of $207.4 million, compared with $198.5
million. (1)
Nine Month Fiscal 2023 Summary
Financial Metrics
Nine Months Ended March 31, Change
2023/2022
2023
2022
$ % (In thousands, except percentages and per
share data) Revenues $
1,353,869
1,231,455
122,414
9.9
%
Income from operations
111,553
110,532
1,021
0.9
%
Adjusted operating income (1)
136,597
134,693
1,904
1.4
%
Net income
83,495
79,040
4,455
5.6
%
Net income per share, diluted
1.96
1.87
0.09
4.8
%
EBITDA (1)
192,209
183,996
8,213
4.5
%
Adjusted EBITDA (1)
207,405
198,460
8,945
4.5
%
(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.
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 2023 / 2022 March 31, Change 2023 /
2022
2023
2022
$ %
2023
2022
$ % (In thousands, except percentages)
General Education $
289,566
$
315,858
$
(26,292
)
(8.3
%)
$
835,989
$
935,440
$
(99,451
)
(10.6
%)
Career Learning Middle - High School
150,772
83,238
67,534
81.1
%
430,101
229,937
200,164
87.1
%
Adult
29,946
22,626
7,320
32.4
%
87,779
66,078
21,701
32.8
%
Total Career Learning
180,718
105,864
74,854
70.7
%
517,880
296,015
221,865
75.0
%
Total Revenues $
470,284
$
421,722
$
48,562
11.5
%
$
1,353,869
$
1,231,455
$
122,414
9.9
%
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 Nine Months Ended
Change March 31, 2023 / 2022 March 31,
2023 / 2022
2023
2022
# %
2023
2022
# % (In thousands, except percentages)
General Education (1)
114.6
143.8
(29.2
)
(20.3
%)
112.8
145.1
(32.3
)
(22.3
%)
Career Learning (1)(2)
67.2
42.0
25.2
60.0
%
66.0
41.9
24.1
57.5
%
Average Enrollment
181.8
185.8
(4.0
)
(2.2
%)
178.8
187.0
(8.2
)
(4.4
%)
(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 Nine Months Ended
Change March 31,
2023 / 2022
March 31,
2023 / 2022
2023
2022
$ %
2023
2022
$ % General Education $
2,332
$
2,006
$
326
16.3
%
$
6,823
$
5,867
$
956
16.3
%
Career Learning
2,237
1,981
256
12.9
%
6,500
5,463
1,037
19.0
%
Cash Flow and Capital Allocation
As of March 31, 2023, the Company’s cash and cash equivalents
totaled $373.7 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 March 31, 2023 were
$15.2 million, compared to $18.4 million in the third quarter of
fiscal year 2022, and were comprised of $0.7 million of property
and equipment, $11.2 million of capitalized software development,
and $3.3 million of capitalized curriculum development.
Fiscal Year 2023 Outlook
The Company is raising its revenue forecast and tightening its
adjusted operating income forecast for the full year fiscal
2023:
- Revenue in the range of $1.805 billion to $1.825 billion, up
from $1.775 billion to $1.815 billion previously.
- Capital expenditures in the range of $65.0 million to $70.0
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 26% to 28%.
- Adjusted operating income in the range of $193.0 million to
$200.0 million, from $180.0 million to $200.0 million previously.
(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 third quarter fiscal year 2023
financial results during a conference call scheduled for Tuesday,
April 25, 2023 at 5:00 p.m. eastern time (ET).
A live webcast of the call will be available at
https://events.q4inc.com/attendee/303582920. 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/303582920 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 nine
months ended March 31, 2023 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, 2023, 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,
2023
2022
2023
2022
(In thousands except share and per share data)
Revenues $
470,284
$
421,722
$
1,353,869
$
1,231,455
Instructional costs and services
295,032
266,883
878,880
802,657
Gross margin
175,252
154,839
474,989
428,798
Selling, general, and administrative expenses
103,053
94,245
363,436
318,266
Income from operations
72,199
60,594
111,553
110,532
Interest expense, net
(2,206
)
(2,373
)
(6,334
)
(6,241
)
Other income, net
4,587
496
9,594
4,291
Income before income taxes and income (loss) from equity method
investments
74,580
58,717
114,813
108,582
Income tax expense
(19,525
)
(16,716
)
(30,878
)
(29,751
)
Income (loss) from equity method investments
407
918
(440
)
209
Net income attributable to common stockholders $
55,462
$
42,919
$
83,495
$
79,040
Net income attributable to common stockholders per share:
Basic $
1.31
$
1.03
$
1.98
$
1.91
Diluted $
1.30
$
1.02
$
1.96
$
1.87
Weighted average shares used in computing per share amounts:
Basic
42,375,480
41,823,564
42,237,056
41,302,789
Diluted
42,714,090
42,136,042
42,652,223
42,351,877
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
March 31,
June 30,
2023
2022
(audited) (In thousands except share and per share
data) ASSETS Current assets Cash and cash
equivalents $
373,678
$
389,398
Accounts receivable, net of allowance of $28,994 and $26,993
474,663
418,558
Inventories, net
22,884
36,003
Prepaid expenses
39,012
25,974
Other current assets
96,569
80,601
Total current assets
1,006,806
950,534
Operating lease right-of-use assets, net
72,154
85,457
Property and equipment, net
61,326
61,537
Capitalized software, net
80,360
71,800
Capitalized curriculum development costs, net
50,970
50,580
Intangible assets, net
80,131
88,669
Goodwill
246,676
241,022
Deposits and other assets
101,425
93,946
Total assets $
1,699,848
$
1,643,545
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $
35,252
$
61,997
Accrued liabilities
45,745
63,200
Accrued compensation and benefits
53,761
73,027
Deferred revenue
94,342
53,630
Current portion of finance lease liability
40,971
37,389
Current portion of operating lease liability
14,176
12,830
Total current liabilities
284,247
302,073
Long-term finance lease liability
26,059
28,888
Long-term operating lease liability
62,295
75,127
Long-term debt
412,638
411,438
Deferred tax liability
5,351
3,205
Other long-term liabilities
9,897
10,233
Total liabilities
800,487
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;
48,376,408 and 48,112,664 shares issued; and 43,041,665 and
42,777,921 shares outstanding, respectively
4
4
Additional paid-in capital
690,823
687,454
Accumulated other comprehensive income (loss)
59
143
Retained earnings
310,957
227,462
Treasury stock of 5,334,743 shares at cost
(102,482
)
(102,482
)
Total stockholders’ equity
899,361
812,581
Total liabilities and stockholders' equity $
1,699,848
$
1,643,545
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31,
2023
2022
(In thousands) Cash flows from operating activities
Net income $
83,495
$
79,040
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization expense
80,656
73,464
Stock-based compensation expense
15,196
14,464
Deferred income taxes
2,982
6,572
Provision for credit losses
5,939
7,047
Amortization of fees on debt
1,200
1,182
Noncash operating lease expense
11,039
15,084
Other
(2,015
)
4,675
Changes in assets and liabilities: Accounts receivable
(61,949
)
(56,072
)
Inventories, prepaid expenses, deposits and other current and
long-term assets
(9,966
)
7,967
Accounts payable
(26,101
)
(26,761
)
Accrued liabilities
(6,455
)
(14,630
)
Accrued compensation and benefits
(19,130
)
(20,652
)
Operating lease liability
(8,602
)
(15,899
)
Deferred revenue and other liabilities
39,931
5,922
Net cash provided by operating activities
106,220
81,403
Cash flows from investing activities Purchase of property
and equipment
(3,579
)
(4,734
)
Capitalized software development costs
(32,574
)
(30,837
)
Capitalized curriculum development costs
(12,798
)
(12,361
)
Sale of other investments
60
5,261
Acquisition of assets
(1,409
)
—
Other acquisitions, loans and investments, net of distributions
(1,377
)
(3,654
)
Proceeds from the maturity of marketable securities
66,204
19,904
Purchases of marketable securities
(85,289
)
(64,151
)
Net cash used in investing activities
(70,762
)
(90,572
)
Cash flows from financing activities Repayments on finance
lease obligations
(31,238
)
(23,919
)
Payments of contingent consideration
(7,024
)
—
Payments of deferred purchase consideration
—
(7,858
)
Proceeds from exercise of stock options
20
391
Repurchase of restricted stock for income tax withholding
(12,936
)
(37,463
)
Net cash used in financing activities
(51,178
)
(68,849
)
Net change in cash, cash equivalents and restricted cash
(15,720
)
(78,018
)
Cash, cash equivalents and restricted cash, beginning of
period
389,398
386,582
Cash, cash equivalents and restricted cash, end of period $
373,678
$
308,564
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
Third Quarter and Fiscal Year
2023
Three Months Ended Nine Months Ended March
31, March 31,
2023
2022
2023
2022
(In thousands) Income from operations
$
72,199
$
60,594
$
111,553
$
110,532
Stock-based compensation expense
4,745
5,576
15,196
14,464
Amortization of intangible assets
3,280
3,270
9,848
9,697
Adjusted operating income
80,224
69,440
136,597
134,693
Depreciation and other amortization
23,662
20,867
70,808
63,767
Adjusted EBITDA
$
103,886
$
90,307
$
207,405
$
198,460
EBITDA
$
99,141
$
84,731
$
192,209
$
183,996
Reconciliation of Income from Operations to Adjusted
Operating Income (unaudited)
Fiscal Year 2023 Outlook
Year Ended
June 30, 2023
Low High (In millions) Income from operations
$
161.0
$
165.5
Stock-based compensation expense
19.0
21.0
Amortization of intangible assets
13.0
13.5
Adjusted operating income
$
193.0
$
200.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425005149/en/
Investor Contact Timothy Casey Vice President, Investor
Relations Stride, Inc. tcasey@k12.com
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