Raising Full Year Guidance
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, 2023.
Second Quarter Fiscal 2024 Highlights Compared to
2023
- Revenue of $504.9 million, compared with $458.4 million, driven
by strong enrollment trends.
- Income from operations of $84.3 million, compared with $68.1
million.
- Net income of $66.8 million, compared with $50.7 million.
- Diluted net income per share of $1.54 compared with $1.19.
- Adjusted operating income of $94.9 million, compared with $76.3
million. (1)
- Adjusted EBITDA of $118.3 million, compared with $100.5
million. (1)
Second Quarter Fiscal 2024 Summary Financial Metrics
Three Months Ended December 31, Change 2023/2022
2023
2022
$
%
(In thousands, except percentages and per share data)
Revenues $
504,868
$
458,435
$
46,433
10.1
%
Income from operations
84,289
68,073
16,216
23.8
%
Adjusted operating income (1)
94,873
76,293
18,580
24.4
%
Net income
66,836
50,705
16,131
31.8
%
Net income per share, diluted
1.54
1.19
0.35
29.4
%
EBITDA (1)
110,752
95,536
15,216
15.9
%
Adjusted EBITDA (1)
118,348
100,477
17,871
17.8
%
(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 2024 Highlights Compared to 2023
- Revenue of $985.0 million, compared with $883.6 million.
- Income from operations of $87.6 million, compared with $39.4
million.
- Net income of $71.7 million, compared with $28.0 million.
- Diluted net income per share of $1.66, compared with
$0.66.
- Adjusted operating income of $109.6 million, compared with
$56.4 million. (1)
- Adjusted EBITDA of $158.1 million, compared with $103.5
million. (1)
Six Month Fiscal 2024 Summary Financial Metrics
Six Months Ended December 31, Change 2023/2022
2023
2022
$
%
(In thousands, except percentages and per share data)
Revenues $
985,049
883,585
101,464
11.5
%
Income from operations
87,609
39,354
48,255
122.6
%
Adjusted operating income (1)
109,634
56,373
53,261
94.5
%
Net income
71,714
28,033
43,681
155.8
%
Net income per share, diluted
1.66
0.66
1.00
151.5
%
EBITDA (1)
142,089
93,068
49,021
52.7
%
Adjusted EBITDA (1)
158,111
103,519
54,592
52.7
%
(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 2023 / 2022
December 31,
Change 2023 / 2022
2023
2022
$
%
2023
2022
$
%
(In thousands, except percentages) General
Education $
313,902
$
274,764
$
39,138
14.2
%
$
613,241
$
546,422
$
66,819
12.2
%
Career Learning Middle - High School
165,080
153,795
11,285
7.3
%
316,053
279,330
36,723
13.1
%
Adult
25,886
29,876
(3,990
)
(13.4
%)
55,755
57,833
(2,078
)
(3.6
%)
Total Career Learning
190,966
183,671
7,295
4.0
%
371,808
337,163
34,645
10.3
%
Total Revenues $
504,868
$
458,435
$
46,433
10.1
%
$
985,049
$
883,585
$
101,464
11.5
%
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, 2023 / 2022 December
31, 2023 / 2022
2023
2022
#
%
2023
2022
# % (In thousands, except percentages)
General Education (2)
120.7
111.2
9.5
8.5
%
119.9
111.5
8.4
7.5
%
Career Learning (2)(3)
72.4
66.3
6.1
9.2
%
71.9
65.1
6.8
10.4
%
Average Enrollment
193.1
177.5
15.6
8.8
%
191.8
176.6
15.2
8.6
%
(1)
Enrollments are presented as the average monthly enrollments
during the second quarter fiscal year 2024. Total ending
enrollments were 196.5 thousand and 180.3 thousand, as of December
31, 2023 and 2022, respectively. General Education enrollments were
123.0 thousand and 112.8 thousand and Career Learning enrollments
were 73.5 thousand and 67.5 thousand as of December 31, 2023 and
2022, 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,
2023 / 2022
December 31,
2023 / 2022
2023
2022
$
%
2023
2022
$
%
General Education $
2,465
$
2,281
$
184
8.1
%
$
4,816
$
4,508
$
308
6.8
%
Career Learning
2,281
2,319
(38
)
(1.6
%)
4,395
4,280
115
2.7
%
Cash Flow and Capital Allocation
As of December 31, 2023, the Company’s cash and cash equivalents
totaled $354.4 million, compared with $410.8 million reported at
June 30, 2023. The decrease is largely the result of normal
seasonal trends.
Capital expenditures for three months ended December 31, 2023
were $12.7 million, compared to $16.9 million in the second quarter
of fiscal year 2023, and were comprised of $8.4 million of
capitalized software development and $4.3 million of capitalized
curriculum development.
Fiscal Year 2024 Outlook
The Company is raising its revenue and adjusted operating
forecast for the full year fiscal 2024:
- Revenue in the range of $1.99 billion to $2.04 billion.
- Capital expenditures in the range of $60 million to $65
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 $265 million to $285
million. (1)
The Company is forecasting the following for the third quarter
fiscal year 2024:
- Revenue in the range of $500 million to $520 million.
- Capital expenditures in the range of $14 million to $17
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 $85 million to $95
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 2024
financial results during a conference call scheduled for Tuesday,
January 23, 2024 at 5:00 p.m. eastern time (ET).
A live webcast of the call will be available at
https://events.q4inc.com/attendee/460100403. 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/460100403 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, curriculum, and programs directly
to students, schools, the military, and enterprises in primary,
secondary, and postsecondary settings. Through K12, 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.
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 and six
months ended December 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
December 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
Six Months Ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands except share and per share data)
Revenues $
504,868
$
458,435
$
985,049
$
883,585
Instructional costs and services
303,694
288,347
610,987
583,848
Gross margin
201,174
170,088
374,062
299,737
Selling, general, and administrative expenses
116,885
102,015
286,453
260,383
Income from operations
84,289
68,073
87,609
39,354
Interest expense, net
(2,022
)
(2,082
)
(4,090
)
(4,128
)
Other income, net
6,538
3,970
11,703
5,007
Income before income taxes and income (loss) from equity method
investments
88,805
69,961
95,222
40,233
Income tax expense
(22,190
)
(18,860
)
(23,726
)
(11,353
)
Income (loss) from equity method investments
221
(396
)
218
(847
)
Net income attributable to common stockholders $
66,836
$
50,705
$
71,714
$
28,033
Net income attributable to common stockholders per share:
Basic $
1.57
$
1.20
$
1.69
$
0.66
Diluted $
1.54
$
1.19
$
1.66
$
0.66
Weighted average shares used in computing per share amounts:
Basic
42,561,035
42,259,061
42,530,523
42,167,844
Diluted
43,463,763
42,547,334
43,214,119
42,602,405
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
December 31,
June 30,
2023
2023
(audited) (In thousands except share and per share
data) ASSETS Current assets Cash and cash
equivalents $
354,387
$
410,807
Accounts receivable, net of allowance of $35,880 and $30,031
509,635
463,722
Inventories, net
19,506
36,716
Prepaid expenses
35,529
24,817
Other current assets
169,815
129,137
Total current assets
1,088,872
1,065,199
Operating lease right-of-use assets, net
60,687
69,508
Property and equipment, net
60,555
52,332
Capitalized software, net
81,413
83,465
Capitalized curriculum development costs, net
50,290
50,787
Intangible assets, net
68,768
74,771
Goodwill
246,676
246,676
Deferred tax asset
9,499
8,776
Deposits and other assets
115,436
109,152
Total assets $
1,782,196
$
1,760,666
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $
31,319
$
48,854
Accrued liabilities
56,334
76,626
Accrued compensation and benefits
43,076
57,426
Deferred revenue
64,237
76,159
Current portion of finance lease liability
33,108
35,621
Current portion of operating lease liability
12,828
14,449
Total current liabilities
240,902
309,135
Long-term finance lease liability
30,623
21,278
Long-term operating lease liability
51,552
59,425
Long-term debt
413,869
413,035
Other long-term liabilities
12,572
10,497
Total liabilities
749,518
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;
48,718,413 and 48,339,048 shares issued; and 43,383,670 and
43,004,305 shares outstanding, respectively
4
4
Additional paid-in capital
709,157
695,480
Accumulated other comprehensive loss
(44
)
(35
)
Retained earnings
426,043
354,329
Treasury stock of 5,334,743 shares at cost
(102,482
)
(102,482
)
Total stockholders’ equity
1,032,678
947,296
Total liabilities and stockholders' equity $
1,782,196
$
1,760,666
STRIDE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31,
2023
2022
(In thousands) Cash flows from operating activities
Net income $
71,714
$
28,033
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization expense
54,480
53,714
Stock-based compensation expense
16,022
10,451
Deferred income taxes
425
7,995
Provision for credit losses
15,332
2,173
Amortization of fees on debt
834
822
Noncash operating lease expense
7,913
7,369
Other
1,430
(2,869
)
Changes in assets and liabilities: Accounts receivable
(61,247
)
(25,680
)
Inventories, prepaid expenses, deposits and other current and
long-term assets
883
(9,177
)
Accounts payable
(15,994
)
(26,059
)
Accrued liabilities
(20,987
)
(10,681
)
Accrued compensation and benefits
(14,340
)
(38,806
)
Operating lease liability
(8,587
)
(5,966
)
Deferred revenue and other liabilities
(9,849
)
29,863
Net cash provided by operating activities
38,029
21,182
Cash flows from investing activities Purchase of property
and equipment
(1,703
)
(2,823
)
Capitalized software development costs
(18,402
)
(21,399
)
Capitalized curriculum development costs
(8,731
)
(9,527
)
Sale of other investments
—
60
Acquisition of assets
—
(1,409
)
Other acquisitions, loans and investments, net of distributions
(275
)
(767
)
Proceeds from the maturity of marketable securities
80,361
36,729
Purchases of marketable securities
(120,047
)
(55,879
)
Net cash used in investing activities
(68,797
)
(55,015
)
Cash flows from financing activities Repayments on finance
lease obligations
(22,491
)
(19,938
)
Payments of contingent consideration
—
(7,024
)
Proceeds from exercise of stock options
—
10
Repurchase of restricted stock for income tax withholding
(3,161
)
(10,334
)
Net cash used in financing activities
(25,652
)
(37,286
)
Net change in cash, cash equivalents and restricted cash
(56,420
)
(71,119
)
Cash, cash equivalents and restricted cash, beginning of
period
410,807
389,398
Cash, cash equivalents and restricted cash, end of period $
354,387
$
318,279
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.
Second Quarter and Six Months Fiscal Year 2024
Reconciliation of Income from Operations to Adjusted
Operating Income
Three Months Ended
Six Months Ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands) Income from operations
$
84,289
$
68,073
$
87,609
$
39,354
Amortization of intangible assets
2,988
3,279
6,003
6,568
Stock-based compensation expense
7,596
4,941
16,022
10,451
Adjusted operating income
94,873
76,293
109,634
56,373
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
Three Months EndedDecember 31, Six Months EndedDecember
31,
2023
2022
2023
2022
(In thousands) Net income
$
66,836
$
50,705
$
71,714
$
28,033
Interest expense, net
2,022
2,082
4,090
4,128
Other income, net
(6,538
)
(3,970
)
(11,703
)
(5,007
)
Income tax expense
22,190
18,860
23,726
11,353
(Income) loss from equity method investments
(221
)
396
(218
)
847
Depreciation and amortization
26,463
27,463
54,480
53,714
EBITDA
110,752
95,536
142,089
93,068
Stock-based compensation expense
7,596
4,941
16,022
10,451
Adjusted EBITDA
$
118,348
$
100,477
$
158,111
$
103,519
Fiscal Year 2024 Outlook
Reconciliation of Income from Operations to Adjusted
Operating Income (unaudited)
Three Months EndedMarch 31, 2024 Year EndedJune 30,
2024 Low High Low High (In
millions) Income from operations
$
76.0
$
83.0
$
224.5
$
238.5
Stock-based compensation expense
6.5
8.5
29.0
33.0
Amortization of intangible assets
2.5
3.5
11.5
13.5
Adjusted operating income
$
85.0
$
95.0
$
265.0
$
285.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240123464161/en/
Investor Contact Timothy Casey Vice President, Investor
Relations Stride, Inc. tcasey@k12.com
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