Stride, Inc. (NYSE: LRN), one of the nation’s leading
technology-based education companies, today announced the results
from its first fiscal quarter ended September 30, 2023.
First Quarter Fiscal 2024 Highlights Compared to 2023
- Revenue of $480.2 million, compared with $425.2 million, driven
by General Education and Career Learning enrollment strength.
- Income from operations of $3.3 million, compared with loss from
operations of $28.7 million.
- Net income of $4.9 million, compared with net loss of $22.7
million.
- Diluted net income per share of $0.11, compared with diluted
net loss per share of $0.54.
- Adjusted operating income of $14.8 million, compared with
adjusted operating loss of $19.9 million. (1)
- Adjusted EBITDA of $39.8 million, compared with $3.0 million.
(1)
First Quarter Fiscal 2024 Summary Financial Metrics
Three Months Ended September 30, Change 2023/2022
2023
2022
$ % (In thousands, except percentages and per
share data) Revenues $
480,181
$
425,150
$
55,031
12.9
%
Income from operations
3,320
(28,719
)
32,039
NM
Adjusted operating income (1)
14,761
(19,920
)
34,681
NM
Net income
4,878
(22,672
)
27,550
NM
Net income per share, diluted
0.11
(0.54
)
0.65
NM
EBITDA (1)
31,337
(2,468
)
33,805
NM
Adjusted EBITDA (1)
39,763
3,042
36,721
NM
(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 September 30, Change 2023 /
2022
2023
2022
$ % (In thousands, except percentages)
General Education $
299,338
$
271,658
$
27,680
10.2%
Career Learning Middle - High School
150,974
125,535
25,439
20.3%
Adult
29,869
27,957
1,912
6.8%
Total Career Learning
180,843
153,492
27,351
17.8%
Total Revenues $
480,181
$
425,150
$
55,031
12.9%
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 September 30,
2023 / 2022
2023
2022
# % (In thousands, except percentages)
General Education (1)
117.6
112.3
5.3
4.7
%
Career Learning (1)(2)
70.3
61.6
8.7
14.1
%
Total Enrollment
187.9
173.9
14.0
8.1
%
(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,
2023 / 2022
2023
2022
$ % General Education $
2,381
$
2,216
$
165
7.4
%
Career Learning
2,144
2,029
115
5.7
%
Cash Flow and Capital Allocation
As of September 30, 2023, the Company’s cash and cash
equivalents totaled $254.6 million, compared with $410.8 million
reported at June 30, 2023. 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, 2023
were $16.1 million, compared to $16.8 million the three months
ended September 30, 2022, and were comprised of $1.7 million of
property and equipment, $10.0 million of capitalized software
development, and $4.4 million of capitalized curriculum
development.
Fiscal Year 2024 Outlook
The Company is forecasting the following for the full fiscal
year 2024:
- Revenue in the range of $1.96 billion to $2.03 billion.
- Capital expenditures in the range of $65.0 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 25% to 27%.
- Adjusted operating income in the range of $250.0 million to
$275.0 million. (1)
The Company is forecasting the following for the second quarter
fiscal year 2024:
- Revenue in the range of 490.0 million to $510.0 million.
- Capital expenditures in the range of $15.0 million to $18.0
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 $80.0 million to
$90.0 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 2024
financial results during a conference call scheduled for Tuesday,
October 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/520963323. 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/520963323 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,” “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 months
ended September 30, 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 September 30,
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 September 30,
2023
2022
(In thousands except share and per share data)
Revenues $
480,181
$
425,150
Instructional costs and services
307,293
295,501
Gross margin
172,888
129,649
Selling, general, and administrative expenses
169,568
158,368
Income (loss) from operations
3,320
(28,719
)
Interest expense, net
(2,068
)
(2,046
)
Other income, net
5,165
1,037
Income (loss) before income taxes and loss from equity method
investments
6,417
(29,728
)
Income tax benefit (expense)
(1,536
)
7,507
Loss from equity method investments
(3
)
(451
)
Net income (loss) attributable to common stockholders $
4,878
$
(22,672
)
Net income (loss) attributable to common stockholders per
share: Basic $
0.11
$
(0.54
)
Diluted $
0.11
$
(0.54
)
Weighted average shares used in computing per share amounts:
Basic
42,500,011
42,076,628
Diluted
42,982,385
42,076,628
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2023
2023
(audited) (In thousands except share and per share
data) ASSETS Current assets Cash and cash
equivalents $
254,626
$
410,807
Accounts receivable, net of allowance of $33,689 and $30,031
629,600
463,722
Inventories, net
21,752
36,716
Prepaid expenses
50,350
24,817
Other current assets
123,948
129,137
Total current assets
1,080,276
1,065,199
Operating lease right-of-use assets, net
64,588
69,508
Property and equipment, net
61,085
52,332
Capitalized software, net
82,046
83,465
Capitalized curriculum development costs, net
50,114
50,787
Intangible assets, net
71,755
74,771
Goodwill
246,676
246,676
Deferred tax asset
1,766
8,776
Deposits and other assets
109,339
109,152
Total assets $
1,767,645
$
1,760,666
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $
74,586
$
48,854
Accrued liabilities
50,834
76,626
Accrued compensation and benefits
40,014
57,426
Deferred revenue
83,920
76,159
Current portion of finance lease liability
35,065
35,621
Current portion of operating lease liability
14,717
14,449
Total current liabilities
299,136
309,135
Long-term finance lease liability
29,641
21,278
Long-term operating lease liability
54,991
59,425
Long-term debt
413,452
413,035
Other long-term liabilities
11,932
10,497
Total liabilities
809,152
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;
48,681,280 and 48,339,048 shares issued; and 43,346,537 and
43,004,305 shares outstanding, respectively
4
4
Additional paid-in capital
701,799
695,480
Accumulated other comprehensive income (loss)
(35)
(35)
Retained earnings
359,207
354,329
Treasury stock of 5,334,743 shares at cost
(102,482)
(102,482)
Total stockholders’ equity
958,493
947,296
Total liabilities and stockholders' equity $
1,767,645
$
1,760,666
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30,
2023
2022
(In thousands) Cash flows from operating activities
Net income (loss) $
4,878
$
(22,672
)
Adjustments to reconcile net income (loss) to net cash used in
operating activities: Depreciation and amortization expense
28,017
26,251
Stock-based compensation expense
8,426
5,510
Deferred income taxes
7,901
17,223
Provision for credit losses
9,350
1,503
Amortization of fees on debt
416
410
Noncash operating lease expense
4,372
3,866
Other
853
(3,918
)
Changes in assets and liabilities: Accounts receivable
(175,215
)
(126,521
)
Inventories, prepaid expenses, deposits and other current and
long-term assets
(14,330
)
(34,695
)
Accounts payable
28,747
8,425
Accrued liabilities
(26,895
)
(9,971
)
Accrued compensation and benefits
(17,402
)
(32,805
)
Operating lease liability
(3,619
)
(2,605
)
Deferred revenue and other liabilities
9,196
26,853
Net cash used in operating activities
(135,305
)
(143,146
)
Cash flows from investing activities Purchase of property
and equipment
(1,694
)
(913
)
Capitalized software development costs
(10,041
)
(9,793
)
Capitalized curriculum development costs
(4,414
)
(6,145
)
Sale of other investments
—
60
Acquisition of assets
—
(1,409
)
Other acquisitions, loans and investments, net of distributions
(166
)
(213
)
Proceeds from the maturity of marketable securities
40,734
12,044
Purchases of marketable securities
(31,484
)
(20,126
)
Net cash used in investing activities
(7,065
)
(26,495
)
Cash flows from financing activities Repayments on finance
lease obligations
(11,721
)
(9,314
)
Payments of contingent consideration
—
(7,024
)
Proceeds from exercise of stock options
—
10
Repurchase of restricted stock for income tax withholding
(2,090
)
(8,905
)
Net cash used in financing activities
(13,811
)
(25,233
)
Net change in cash, cash equivalents and restricted cash
(156,181
)
(194,874
)
Cash, cash equivalents and restricted cash, beginning of
period
410,807
389,398
Cash, cash equivalents and restricted cash, end of period $
254,626
$
194,524
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 net income (loss) as adjusted for interest
(income) expense, net; other (income) expense, net; income tax
expense; (income) loss from equity method investments; and
depreciation and amortization.
- Adjusted EBITDA is defined as net income (loss) as adjusted for
interest (income) expense, net; other (income) expense, net; income
tax expense; (income) loss from equity method investments;
depreciation and amortization; and stock-based compensation
- Adjusted EBITDA and adjusted operating income (loss) exclude
stock-based compensation, which consists of expenses for 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.
First Quarter Fiscal Year 2024
Reconciliation of Income (Loss) from
Operations to Adjusted Operating Income (Loss)
Three Months Ended September 30,
2023
2022
(In thousands) Income (loss) from operations
$
3,320
$
(28,719
)
Amortization of intangible assets
3,015
3,289
Stock-based compensation expense
8,426
5,510
Adjusted operating income (loss)
14,761
(19,920
)
Reconciliation of Net Income (Loss) to
EBITDA and Adjusted EBITDA
Three Months EndedSeptember 30,
2023
2022
(In thousands) Net income (loss)
$
4,878
$
(22,672
)
Interest (income) expense, net
2,068
2,046
Other (income) expense, net
(5,165
)
(1,037
)
Income tax (benefit) expense
1,536
(7,507
)
(Income) loss from equity method investments
3
451
Depreciation and amortization
28,017
26,251
EBITDA
31,337
(2,468
)
Stock-based compensation expense
8,426
5,510
Adjusted EBITDA
$
39,763
$
3,042
Fiscal Year 2024 Outlook
Reconciliation of Income from
Operations to Adjusted Operating Income (unaudited)
Three Months EndedDecember 31, 2023 Year EndedJune
30, 2024 Low High Low High (In
millions) Income from operations
$
70.5
$
79.0
$
210.5
$
228.5
Stock-based compensation expense
6.5
7.5
28.0
33.0
Amortization of intangible assets
3.0
3.5
11.5
13.5
Adjusted operating income
$
80.0
$
90.0
$
250.0
$
275.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024411011/en/
Investor Contact Timothy Casey Vice President, Investor
Relations Stride, Inc. tcasey@k12.com
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