Stride Posts Another Record Quarter
RESTON, Va., April 23, 2024 (GLOBE NEWSWIRE) -- 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, 2024.*Third Quarter Fiscal 2024 Highlights Compared to 2023*
· Revenue of $520.8 million, compared with $470.3 million, driven by continued strong enrollment trends.
· Income from operations of $88.3 million, compared with $72.2 million.
· Net income of $69.7 million, compared with $55.5 million.
· Diluted net income per share of $1.60 compared with $1.30.
· Adjusted operating income of $96.4 million, compared with $80.2 million. (1)
· Adjusted EBITDA of $120.5 million, compared with $103.9 million. (1)
*Third Quarter Fiscal 2024 Summary Financial Metrics *
*Three Months Ended March 31,* *Change 2024/2023* *2024* * * *2023* *$* *%* *(In thousands, except percentages and per share data)*
Revenues $ 520,837 $ 470,284 $ 50,553 10.7 %
Income from operations 88,313 72,199 16,114 22.3 %
Adjusted operating income (1) 96,410 80,224 16,186 20.2 %
Net income 69,687 55,462 14,225 25.6 %
Net income per share, diluted 1.60 1.30 0.30 23.1 %
EBITDA (1) 115,297 99,141 16,156 16.3 %
Adjusted EBITDA (1) 120,547 103,886 16,661 16.0 %
(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 2024 Highlights Compared to 2023*
· Revenue of $1,505.9 million, compared with $1,353.9 million.
· Income from operations of $175.9 million, compared with $111.6 million.
· Net income of $141.4 million, compared with $83.5 million.
· Diluted net income per share of $3.26, compared with $1.96.
· Adjusted operating income of $206.0 million, compared with $136.6 million. (1)
· Adjusted EBITDA of $278.7 million, compared with $207.4 million. (1)
*Nine Month Fiscal 2024 Summary Financial Metrics*
*Nine Months Ended March 31,* *Change 2024/2023* *2024* * * *2023* *$* *%* *(In thousands, except percentages and per share data)*
Revenues $ 1,505,886 1,353,869 152,017 11.2 %
Income from operations 175,922 111,553 64,369 57.7 %
Adjusted operating income (1) 206,044 136,597 69,447 50.8 %
Net income 141,401 83,495 57,906 69.4 %
Net income per share, diluted 3.26 1.96 1.30 66.3 %
EBITDA (1) 257,386 192,209 65,177 33.9 %
Adjusted EBITDA (1) 278,658 207,405 71,253 34.4 %
(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 2024 / 2023* *March 31,* *Change 2024 / 2023* * * *2024* * * *2023* * * *$* * * *%* *2024* * * *2023* * * *$* * * *%* *(In thousands, except percentages)*
*General Education* $ 328,894 $ 289,566 $ 39,328 13.6 % $ 942,135 $ 835,989 $ 106,146 12.7 %
*Career Learning*
Middle - High School 167,919 150,772 17,147 11.4 % 483,972 430,101 53,871 12.5 %
Adult 24,024 29,946 (5,922 ) (19.8 %) 79,779 87,779 (8,000 ) (9.1 %)
Total Career Learning 191,943 180,718 11,225 6.2 % 563,751 517,880 45,871 8.9 %
*Total Revenues* $ 520,837 $ 470,284 $ 50,553 10.7 % $ 1,505,886 $ 1,353,869 $ 152,017 11.2 %
*
Enrollment Data*^*1*
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,* *2024 / 2023* *March 31,* *2024 / 2023* * ** * *2024* * * *2023* * * *#* * * *%* * ** * *2024* * * *2023* * * *#* * * *%* *(In thousands, except percentages)*
General Education (2) 124.6 114.6 10.0 8.7 % 121.9 112.8 9.1 8.1 %
Career Learning (2)(3) 73.8 67.2 6.6 9.8 % 72.7 66.0 6.7 10.2 %
Average Enrollment 198.4 181.8 16.6 9.1 % 194.6 178.8 15.8 8.8 %
(1) Enrollments are presented as the average monthly enrollments during the third quarter fiscal year 2024.
(2) This data includes enrollments for which Stride receives no public funding or revenue.
(3) No enrollments are included in Career Learning for the Adult Learning offerings.*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,* *2024 / 2023* *March 31,* *2024 / 2023* * ** * *2024* * * *2023* * * *$* * * *%* * ** * *2024* * * *2023* * * *$* * * *%*
General Education $ 2,507 $ 2,332 $ 175 7.5 % $ 7,298 $ 6,823 $ 475 7.0 %
Career Learning 2,272 2,237 35 1.6 % 6,652 6,500 152 2.3 %
*
Cash Flow and Capital Allocation*
As of March 31, 2024, the Company’s cash and cash equivalents and marketable securities totaled $570.7 million, compared with $545.5 million reported at June 30, 2023.
Capital expenditures for three months ended March 31, 2024 were $16.3 million, compared to $15.2 million in the third quarter of fiscal year 2023, and were comprised of ($0.2) million of property and equipment, $11.7 million of capitalized software development and $4.8 million of capitalized curriculum development.
*Fiscal Year 2024 Outlook*
The Company is raising its adjusted operating and tightening its revenue forecast for the full year fiscal 2024:
· Revenue in the range of $2.025 billion to $2.040 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 24% to 26%.
· Adjusted operating income in the range of $280 million to $290 million. (1)
*Conference Call*
The Company will discuss its third quarter fiscal year 2024 financial results during a conference call scheduled for Tuesday, April 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/945956563. To participate in the live call, investors and analysts should dial (800) 715-9871 (domestic) or +1 (646) 307-1963 (international) and provide the conference ID number 8901384. 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/945956563 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.
*Investor Contact*
Timothy Casey
Vice President, Investor Relations
Stride, Inc.
tcasey@k12.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 nine months ended March 31, 2024 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, 2024, 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,* * * *2024* * * *2023* * * *2024* * * *2023* *(In thousands except share and per share data)*
*Revenues * $ 520,837 $ 470,284 $ 1,505,886 $ 1,353,869
Instructional costs and services 319,508 295,032 930,495 878,880
*Gross margin* 201,329 175,252 575,391 474,989
Selling, general, and administrative expenses 113,016 103,053 399,469 363,436
*Income from operations * 88,313 72,199 175,922 111,553
Interest expense, net (2,404 ) (2,206 ) (6,494 ) (6,334 )
Other income, net 7,678 4,587 19,381 9,594
*Income before income taxes and income (loss) from equity method investments* 93,587 74,580 188,809 114,813
Income tax expense (24,657 ) (19,525 ) (48,383 ) (30,878 )
Income (loss) from equity method investments 757 407 975 (440 )
*Net income attributable to common stockholders* $ 69,687 $ 55,462 $ 141,401 $ 83,495
*Net income attributable to common stockholders per share:*
Basic $ 1.63 $ 1.31 $ 3.32 $ 1.98
Diluted $ 1.60 $ 1.30 $ 3.26 $ 1.96
*Weighted average shares used in computing per share amounts:*
Basic 42,684,561 42,375,480 42,581,869 42,237,056
Diluted 43,655,841 42,714,090 43,389,903 42,652,223
*
*
*STRIDE, INC.
**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS* *March 31, * *June 30,* * * *2024* *2023* *(audited)* *(In thousands except share and per share data)*
*ASSETS*
*Current assets*
Cash and cash equivalents $ 376,577 $ 410,807
Accounts receivable, net of allowance of $34,852 and $30,031 577,792 463,722
Inventories, net 21,038 36,716
Prepaid expenses 40,127 24,817
Other current assets 193,547 129,137
*Total current assets * 1,209,081 1,065,199
Operating lease right-of-use assets, net 57,725 69,508
Property and equipment, net 57,213 52,332
Capitalized software, net 83,320 83,465
Capitalized curriculum development costs, net 51,451 50,787
Intangible assets, net 64,668 74,771
Goodwill 246,676 246,676
Deferred tax asset 14,773 8,776
Deposits and other assets 107,306 109,152
*Total assets * $ 1,892,213 $ 1,760,666
*LIABILITIES AND STOCKHOLDERS' EQUITY*
*Current liabilities*
Accounts payable $ 37,156 $ 48,854
Accrued liabilities 67,671 76,626
Accrued compensation and benefits 62,383 57,426
Deferred revenue 70,907 76,159
Current portion of finance lease liability 30,991 35,621
Current portion of operating lease liability 12,853 14,449
*Total current liabilities * 281,961 309,135
Long-term finance lease liability 29,920 21,278
Long-term operating lease liability 48,418 59,425
Long-term debt 414,271 413,035
Other long-term liabilities 14,436 10,497
*Total liabilities * 789,006 813,370
*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; 48,586,413 and 48,339,048 shares issued; and 43,251,670 and 43,004,305 shares outstanding, respectively 4 4
Additional paid-in capital 709,997 695,480
Accumulated other comprehensive loss (42 ) (35 )
Retained earnings 495,730 354,329
Treasury stock of 5,334,743 shares at cost (102,482 ) (102,482 )
*Total stockholders’ equity * 1,103,207 947,296
*Total liabilities and stockholders' equity * $ 1,892,213 $ 1,760,666
*
*
*STRIDE, INC.
*UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** *Nine Months Ended* *March 31,* * * *2024* * * *2023* *(In** **thousands)*
*Cash flows from operating activities*
Net income $ 141,401 $ 83,495
*Adjustments to reconcile net income to net cash provided by operating activities:*
Depreciation and amortization expense 81,464 80,656
Stock-based compensation expense 21,272 15,196
Deferred income taxes (4,629 ) 2,982
Provision for credit losses 18,895 5,939
Amortization of fees on debt 1,236 1,200
Noncash operating lease expense 11,055 11,039
Other 1,444 (2,015 )
Changes in assets and liabilities:
Accounts receivable (133,144 ) (61,949 )
Inventories, prepaid expenses, deposits and other current and long-term assets (2,763 ) (9,966 )
Accounts payable (11,585 ) (26,101 )
Accrued liabilities (9,875 ) (6,455 )
Accrued compensation and benefits 4,834 (19,130 )
Operating lease liability (11,695 ) (8,602 )
Deferred revenue and other liabilities (1,315 ) 39,931
*Net cash provided by operating activities * 106,595 106,220
*Cash flows from investing activities*
Purchase of property and equipment (1,500 ) (3,579 )
Capitalized software development costs (30,130 ) (32,574 )
Capitalized curriculum development costs (13,534 ) (12,798 )
Sale of other investments — 60
Acquisition of assets — (1,409 )
Other acquisitions, loans and investments, net of distributions (693 ) (1,377 )
Proceeds from the maturity of marketable securities 107,020 66,204
Purchases of marketable securities (162,179 ) (85,289 )
*Net cash used in investing activities * (101,016 ) (70,762 )
*Cash flows from financing activities*
Repayments on finance lease obligations (32,212 ) (31,238 )
Payments of contingent consideration — (7,024 )
Proceeds from exercise of stock options — 20
Repurchase of restricted stock for income tax withholding (7,597 ) (12,936 )
*Net cash used in financing activities * (39,809 ) (51,178 )
*Net change in cash, cash equivalents and restricted cash* (34,230 ) (15,720 )
*Cash, cash equivalents and restricted cash, beginning of period* 410,807 389,398
*Cash, cash equivalents and restricted cash, end of period* $ 376,577 $ 373,678
*
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.
*Third Quarter and Nine Months Fiscal Year 2024*
*Reconciliation of Income from Operations to Adjusted Operating Income*
*Three Months Ended * *Nine Months Ended * *March 31,* *March 31,* *2024* *2023* *2024* *2023* *(In thousands)*
Income from operations $ 88,313 $ 72,199 $ 175,922 $ 111,553
Amortization of intangible assets 2,847 3,280 8,850 9,848
Stock-based compensation expense 5,250 4,745 21,272 15,196
Adjusted operating income 96,410 80,224 206,044 136,597
*
Reconciliation of Net Income to EBITDA and Adjusted EBITDA*
*Three Months Ended March 31, * *Nine Months Ended March 31, * *2024* *2023* *2024* *2023* *(In thousands)*
Net income $ 69,687 $ 55,462 $ 141,401 $ 83,495
Interest expense, net 2,404 2,206 6,494 6,334
Other income, net (7,678 ) (4,587 ) (19,381 ) (9,594 )
Income tax expense 24,657 19,525 48,383 30,878
(Income) loss from equity method investments (757 ) (407 ) (975 ) 440
Depreciation and amortization 26,984 26,942 81,464 80,656
EBITDA 115,297 99,141 257,386 192,209
Stock-based compensation expense 5,250 4,745 21,272 15,196
Adjusted EBITDA $ 120,547 $ 103,886 $ 278,658 $ 207,405
*
Fiscal Year 2024 Outlook*
*Reconciliation of Income from Operations to Adjusted Operating Income (unaudited)*
*Year Ended June 30, 2024* *Low* *High* *(In millions)*
Income from operations $ 240.5 $ 247.0
Stock-based compensation expense 28.0 31.0
Amortization of intangible assets 11.5 12.0
Adjusted operating income $ 280.0 $ 290.0