Stride Posts Another Record Year

RESTON, Va., Aug. 06, 2024 (GLOBE NEWSWIRE) — Stride, Inc. (NYSE: LRN), one of the nation’s most successful technology-based education companies, today announced its results for the fourth quarter and full fiscal year ended June 30, 2024.

Fiscal 2024 Highlights Compared to 2023

  • Revenue of $2,040.1 million, compared with $1,837.4 million.
  • Income from operations of $249.6 million, compared with $165.5 million.
  • Net income of $204.2 million, compared with $126.9 million.
  • Diluted net income per share of $4.69, compared with $2.97.
  • Adjusted operating income of $293.9 million, compared with $201.0 million. (1)
  • Adjusted EBITDA of $390.7 million, compared with $296.2 million. (1)

Fiscal 2024 Summary Financial Metrics

  Year Ended June 30,   Change 2024/2023  
  2024   2023     $   %  
  (In thousands, except percentages and per share data)  
Revenues $ 2,040,069     1,837,358     202,711   11.0 %  
                       
Income from operations   249,600     165,499     84,101   50.8 %  
Adjusted operating income (1)   293,940     201,027     92,913   46.2 %  
                       
Net income   204,183     126,867     77,316   60.9 %  
Net income per share, diluted   4.69     2.97     1.72   57.9 %  
                       
EBITDA (1)   359,283     275,857     83,426   30.2 %  
Adjusted EBITDA (1)   390,745     296,177     94,568   31.9 %  
(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.
     

Fourth Quarter Fiscal 2024 Highlights Compared to 2023

  • Revenue of $534.2 million, compared with $483.5 million.
  • Income from operations of $73.7 million, compared with $53.9 million.
  • Net income of $62.8 million, compared with $43.4 million.
  • Diluted net income per share of $1.42 compared with $1.01.
  • Adjusted operating income of $87.9 million, compared with $64.4 million. (1)
  • Adjusted EBITDA of $112.1 million, compared with $88.8 million. (1)

Fourth Quarter Fiscal 2024 Summary Financial Metrics

                       
  Three Months Ended June 30,   Change 2024/2023  
  2024   2023     $   %  
  (In thousands, except percentages and per share data)  
Revenues $ 534,183   $ 483,489   $ 50,694   10.5 %  
                       
Income from operations   73,678     53,946     19,732   36.6 %  
Adjusted operating income (1)   87,896     64,430     23,466   36.4 %  
                       
Net income   62,782     43,372     19,410   44.8 %  
Net income per share, diluted   1.42     1.01     0.41   40.6 %  
                       
EBITDA (1)   101,897     83,648     18,249   21.8 %  
Adjusted EBITDA (1)   112,087     88,772     23,315   26.3 %  
(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             Year Ended          
    June 30,   Change 2024 / 2023   June 30,   Change 2024 / 2023
    2024   2023   $   %   2024   2023   $   %
    (In thousands, except percentages)
                                             
General Education   $ 347,058   $ 295,402   $ 51,656     17.5 %   $ 1,289,193   $ 1,131,391   $ 157,802     13.9 %
Career Learning                                            
Middle – High School     167,219     156,668     10,551     6.7 %     651,191     586,770     64,421     11.0 %
Adult     19,906     31,419     (11,513 )   (36.6 %)     99,685     119,197     (19,512 )   (16.4 %)
Total Career Learning     187,125     188,087     (962 )   (0.5 %)     750,876     705,967     44,909     6.4 %
Total Revenues   $ 534,183   $ 483,489   $ 50,694     10.5 %   $ 2,040,069   $ 1,837,358   $ 202,711     11.0 %
                                             

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   Year Ended   Change  
    June 30,   2024 / 2023   June 30,   2024 / 2023  
    2024   2023   #   %   2024   2023   #   %  
    (In thousands, except percentages)  
                                               
General Education (1)     120.6     110.6     10.0   9.0 %     121.6     112.3     9.3   8.3 %  
Career Learning (1)(2)     72.8     65.5     7.3   11.1 %     72.7     65.9     6.8   10.3 %  
Average Enrollment     193.4     176.1     17.3   9.8 %     194.3     178.2     16.1   9.0 %  
(1)   This data includes enrollments for which Stride receives no public funding or revenue.
(2)   No enrollments are included in Career Learning for Stride’s 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   Year Ended   Change
    June 30,   2024 / 2023   June 30,   2024 / 2023
    2024   2023   $   %   2024   2023   $   %
                                             
General Education   $ 2,735   $ 2,455   $ 280     11.4 %   $ 10,028   $ 9,270   $ 758   8.2 %
Career Learning     2,294     2,389     (95 )   (4.0 %)     8,946     8,885     61   0.7 %
                                             

Cash Flow and Capital Allocation

As of June 30, 2024, the Company’s cash and cash equivalents and marketable securities totaled $714.2 million, compared with $545.5 million reported at June 30, 2023.

Capital expenditures for the fiscal year ended June 30, 2024 were $61.6 million, compared to $66.5 million in fiscal year 2023, and were comprised of $2.3 million of property and equipment, $40.7 million of capitalized software development and $18.7 million of capitalized curriculum development.

Fiscal Year 2025 Outlook

The Company will provide an outlook for fiscal year 2025 when it reports results for the first quarter of fiscal year 2025, anticipated to be released in October 2024. No separate guidance communication, or enrollment counts, for fiscal 2025 will be provided before that time.

Conference Call

The Company will discuss its fourth quarter and full fiscal year 2024 financial results during a conference call scheduled for Tuesday, August 6, 2024 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/804531504. 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/804531504 as soon as it is available.

About Stride Inc.

Stride Inc. (NYSE: LRN) is redefining lifelong learning with innovative, high-quality education solutions. Serving learners in primary, secondary, and postsecondary settings, Stride provides a wide range of services including K-12 education, career learning, professional skills training, and talent development. Stride reaches learners in all 50 states and over 100 countries. Learn more at stridelearning.com.

Investor Contact

Timothy Casey
Vice President, Investor Relations
Stride, Inc.
[email protected]

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 systems and 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 twelve months ended June 30, 2024 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.’s Annual Report on Form 10-K for the year ended June 30, 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

 
    Three Months Ended   Year Ended  
    June 30,   June 30,  
    2024     2023     2024     2023    
    (In thousands except share and per share data)  
Revenues   $ 534,183     $ 483,489     $ 2,040,069     $ 1,837,358    
Instructional costs and services     345,971       311,408       1,276,466       1,190,288    
Gross margin     188,212       172,081       763,603       647,070    
Selling, general, and administrative expenses     114,534       118,135       514,003       481,571    
Income from operations     73,678       53,946       249,600       165,499    
Interest expense, net     (2,318 )     (2,070 )     (8,812 )     (8,404 )  
Other income, net     7,519       5,858       26,900       15,452    
Income before income taxes and income (loss) from equity method investments     78,879       57,734       267,688       172,547    
Income tax expense     (16,099 )     (14,468 )     (64,482 )     (45,346 )  
Income (loss) from equity method investments     2       106       977       (334 )  
Net income attributable to common stockholders   $ 62,782     $ 43,372     $ 204,183     $ 126,867    
Net income attributable to common stockholders per share:                          
Basic   $ 1.47     $ 1.02     $ 4.79     $ 3.00    
Diluted   $ 1.42     $ 1.01     $ 4.69     $ 2.97    
Weighted average shares used in computing per share amounts:                          
Basic     42,760,745       42,434,397       42,626,588       42,286,392    
Diluted     44,248,689       42,849,355       43,535,441       42,728,108    
                           
STRIDE, INC.

CONSOLIDATED BALANCE SHEETS

 
    June 30,  
    2024     2023    
    (In thousands except share and per share data)  
ASSETS              
Current assets              
Cash and cash equivalents   $ 500,614     $ 410,807    
Accounts receivable, net of allowance of $31,298 and $30,031     472,754       463,722    
Inventories, net     36,748       36,716    
Prepaid expenses     29,164       24,817    
Marketable securities     191,672       111,918    
Other current assets     14,494       17,219    
Total current assets     1,245,446       1,065,199    
Operating lease right-of-use assets, net     54,503       69,508    
Property and equipment, net     50,856       52,332    
Capitalized software, net     81,952       83,465    
Capitalized curriculum development costs, net     53,232       50,787    
Intangible assets, net     60,282       74,771    
Goodwill     246,676       246,676    
Deferred tax asset     7,200       8,776    
Deposits and other assets     120,318       109,152    
Total assets   $ 1,920,465     $ 1,760,666    
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities              
Accounts payable   $ 40,970     $ 48,854    
Accrued liabilities     60,796       76,626    
Accrued compensation and benefits     64,878       57,426    
Deferred revenue     35,742       76,159    
Current portion of finance lease liability     29,146       35,621    
Current portion of operating lease liability     12,748       14,449    
Total current liabilities     244,280       309,135    
Long-term finance lease liability     26,452       21,278    
Long-term operating lease liability     45,192       59,425    
Long-term debt     414,675       413,035    
Other long-term liabilities     13,841       10,497    
Total liabilities     744,440       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; 48,576,164 and 48,339,048 shares issued; and 43,241,421 and 43,004,305 shares outstanding, respectively     4       4    
Additional paid-in capital     720,033       695,480    
Accumulated other comprehensive loss     (42 )     (35 )  
Retained earnings     558,512       354,329    
Treasury stock of 5,334,743 shares at cost     (102,482 )     (102,482 )  
Total stockholders’ equity     1,176,025       947,296    
Total liabilities and stockholders’ equity   $ 1,920,465     $ 1,760,666    
               
    Year Ended  
    June 30,  
       2024        2023    
    (In thousands)  
Cash flows from operating activities              
Net income   $ 204,183     $ 126,867    
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization expense     109,683       110,358    
Stock-based compensation expense     31,462       20,320    
Deferred income taxes     2,890       (10,373 )  
Provision for credit losses     22,844       9,158    
Amortization of fees on debt     1,640       1,597    
Noncash operating lease expense     14,246       14,728    
Other     849       (1,966 )  
Changes in assets and liabilities:              
Accounts receivable     (32,056 )     (54,908 )  
Inventories, prepaid expenses, deposits and other current and long-term assets     (8,877 )     (19,389 )  
Accounts payable     (6,844 )     (11,999 )  
Accrued liabilities     (16,556 )     24,132    
Accrued compensation and benefits     7,394       (15,473 )  
Operating lease liability     (14,990 )     (12,243 )  
Deferred revenue and other liabilities     (37,071 )     22,341    
Net cash provided by operating activities     278,797       203,150    
Cash flows from investing activities              
Purchase of property and equipment     (2,270 )     (4,336 )  
Capitalized software development costs     (40,653 )     (44,973 )  
Capitalized curriculum development costs     (18,666 )     (17,239 )  
Sale of other investments           60    
Acquisition of assets           (1,409 )  
Other acquisitions, loans and investments, net of distributions     (5,196 )     (1,652 )  
Proceeds from the maturity of marketable securities     204,487       91,879    
Purchases of marketable securities     (277,573 )     (140,570 )  
Net cash used in investing activities     (139,871 )     (118,240 )  
Cash flows from financing activities              
Repayments on finance lease obligations     (40,919 )     (42,956 )  
Payments of contingent consideration           (7,024 )  
Proceeds from exercise of stock options           20    
Repurchase of restricted stock for income tax withholding     (8,200 )     (13,541 )  
Net cash used in financing activities     (49,119 )     (63,501 )  
Net change in cash, cash equivalents and restricted cash     89,807       21,409    
Cash, cash equivalents and restricted cash, beginning of period     410,807       389,398    
Cash, cash equivalents and restricted cash, end of period   $ 500,614     $ 410,807    
               

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.

Fourth Quarter and Full Fiscal Year 2024

Reconciliation of Income from Operations to Adjusted Operating Income

  Three Months Ended   Year Ended
  June 30,   June 30,
    2024     2023     2024     2023
  (In thousands)
Income from operations $ 73,678   $ 53,946   $ 249,600   $ 165,499
Amortization of intangible assets   4,028     5,360     12,878     15,208
Stock-based compensation expense   10,190     5,124     31,462     20,320
Adjusted operating income   87,896     64,430     293,940     201,027
               

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

  Three Months Ended
June 30,
  Year Ended
June 30,
 
    2024       2023       2024       2023    
  (In thousands)  
Net income $ 62,782     $ 43,372     $ 204,183     $ 126,867    
Interest expense, net   2,318       2,070       8,812       8,404    
Other income, net   (7,519 )     (5,858 )     (26,900 )     (15,452 )  
Income tax expense   16,099       14,468       64,482       45,346    
(Income) loss from equity method investments   (2 )     (106 )     (977 )     334    
Depreciation and amortization   28,219       29,702       109,683       110,358    
EBITDA   101,897       83,648       359,283       275,857    
Stock-based compensation expense   10,190       5,124       31,462       20,320    
Adjusted EBITDA $ 112,087     $ 88,772     $ 390,745     $ 296,177    
                 


Bay Street News