Stride Posts Record Quarterly Results

RESTON, Va., Jan. 28, 2025 (GLOBE NEWSWIRE) -- Stride, Inc. (NYSE: LRN), one of the nation’s most successful technology-based education companies, today announced its results for the second fiscal quarter ended December 31, 2024. Second Quarter Fiscal 2025 Highlights Compared to 2024 Revenue of $587.2 million, compared with $504.9 million.Income from operations of $125.1 million, compared with $84.3 million.Net income of $96.4 million, compared with $66.8 million.Diluted net income per share of $2.03, compared with $1.54.Adjusted operating income of $135.6 million, compared with $94.9 million. (1)Adjusted EBITDA of $160.4 million, compared with $118.3 million. (1) Second Quarter Fiscal 2025 Summary Financial Metrics Three Months Ended December 31, Change 2024/2023 2024 2023 $ % (In thousands, except percentages and per share data)Revenues$587,211 $504,868 $82,343 16.3% Income from operations 125,100 84,289 40,811 48.4%Adjusted operating income (1) 135,570 94,873 40,697 42.9% Net income 96,393 66,836 29,557 44.2%Net income per share, diluted 2.03 1.54 0.49 31.8% EBITDA (1) 152,495 110,752 41,743 37.7%Adjusted EBITDA (1) 160,420 118,348 42,072 35.5% (1)To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Six Month Fiscal 2025 Highlights Compared to 2024 Revenue of $1,138.3 million, compared with $985.0 million.Income from operations of $172.4 million, compared with $87.6 million.Net income of $137.3 million, compared with $71.7 million.Diluted net income per share of $2.93, compared with $1.66.Adjusted operating income of $193.9 million, compared with $109.6 million. (1)Adjusted EBITDA of $244.3 million, compared with $158.1 million. (1) Six Month Fiscal 2025 Summary Financial Metrics Six Months Ended December 31, Change 2024/2023 2024 2023 $ % (In thousands, except percentages and per share data)Revenues$1,138,295 985,049 153,246 15.6% Income from operations 172,444 87,609 84,835 96.8%Adjusted operating income (1) 193,930 109,634 84,296 76.9% Net income 137,275 71,714 65,561 91.4%Net income per share, diluted 2.93 1.66 1.27 76.5% EBITDA (1) 227,973 142,089 85,884 60.4%Adjusted EBITDA (1) 244,347 158,111 86,236 54.5% (1)To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Revenue Data Three Months Ended Six Months Ended December 31, Change 2024 / 2023 December 31, Change 2024 / 2023 2024 2023 $ % 2024 2023 $ % (In thousands, except percentages) General Education $354,315 $313,902 $40,413 12.9% $683,722 613,241 $70,481 11.5%Career Learning Middle - High School 213,079 165,080 47,999 29.1% 411,965 316,053 95,912 30.3%Adult 19,817 25,886 (6,069) (23.4%) 42,608 55,755 (13,147) (23.6%)Total Career Learning 232,896 190,966 41,930 22.0% 454,573 371,808 82,765 22.3%Total Revenues $587,211 $504,868 $82,343 16.3% $1,138,295 985,049 $153,246 15.6% Enrollment and Revenue Per Enrollment Data Second quarter enrollments averaged 230.6K, up 19.4% compared to 193.1K enrollments in the second quarter of fiscal year 2024. Of the total average enrollments, 94.8K were Career Learning enrollments, up 30.9% compared to 72.4K Career Learning enrollments in the second quarter of fiscal 2024. Enrollments only include those students in full service public or private programs where Stride provides a combination of curriculum, technology, and instructional and support services, inclusive of administrative support and may include enrollments for which Stride receives no public funding or revenue. Stride does not report enrollments for our Adult Learning business. Revenue per enrollment for the second quarter was $2,395, flat compared to $2,396 in the second quarter of fiscal year 2024. General Education revenue per enrollment was $2,497, up 1.3%, and Career Learning revenue per enrollment was $2,248, down 1.4%, compared to the second quarter of fiscal year 2024, respectively. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different. Cash Flow and Capital Allocation As of December 31, 2024, the Company’s cash and cash equivalents and marketable securities totaled $738.1 million, compared with $714.2 million reported at June 30, 2024. Capital expenditures for the three months ended December 31, 2024 were $14.8 million, compared to $12.7 million in the three months ended December 31, 2023, and were comprised of $0.5 million of property and equipment, $9.8 million of capitalized software development and $4.5 million of capitalized curriculum development. Fiscal Year 2025 Outlook The Company is raising its revenue and adjusted operating forecast for the full fiscal year 2025: Revenue in the range of $2.320 billion to $2.355 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 $430 million to $450 million. (1) The Company is forecasting the following for the third quarter of fiscal year 2025: Revenue in the range of $585 million to $600 million.Capital expenditures in the range of $15 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 $130 million to $140 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 2025 financial results during a conference call scheduled for Tuesday, January 28, 2025 at 5:00 p.m. eastern time (ET). A live webcast of the call will be available at https://events.q4inc.com/attendee/534139423. 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/534139423 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 RelationsStride, 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 systems and facilities, resulting from cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; failure to prevent or mitigate a cybersecurity incident that affects our systems; and risks related to artificial intelligence; 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, 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 three and six months ended December 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 Six Months Ended December 31, December 31, 2024 2023 2024 2023 (In thousands except share and per share data) Revenues $587,211 $504,868 $1,138,295 $985,049 Instructional costs and services 347,353 303,694 682,584 610,987 Gross margin 239,858 201,174 455,711 374,062 Selling, general, and administrative expenses 114,758 116,885 283,267 286,453 Income from operations 125,100 84,289 172,444 87,609 Interest expense, net (2,670) (2,022) (5,023) (4,090)Other income, net 7,330 6,538 16,108 11,703 Income before income taxes and income (loss) from equity method investments 129,760 88,805 183,529 95,222 Income tax expense (33,361) (22,190) (44,638) (23,726)Income (loss) from equity method investments (6) 221 (1,616) 218 Net income attributable to common stockholders $96,393 $66,836 $137,275 $71,714 Net income attributable to common stockholders per share: Basic $2.24 $1.57 $3.20 $1.69 Diluted $2.03 $1.54 $2.93 $1.66 Weighted average shares used in computing per share amounts: Basic 43,017,190 42,561,035 42,942,750 42,530,523 Diluted 47,462,688 43,463,763 46,905,355 43,214,119 STRIDE, INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS December 31, June 30, 2024 2024 (audited) (In thousands except share and per share data)ASSETS Current assets Cash and cash equivalents $515,049 $500,614 Accounts receivable, net of allowance of $35,517 and $31,298 582,548 472,754 Inventories, net 20,707 36,748 Prepaid expenses 51,367 29,164 Marketable securities 202,447 191,672 Other current assets 16,361 14,494 Total current assets 1,388,479 1,245,446 Operating lease right-of-use assets, net 48,563 54,503 Property and equipment, net 84,685 50,856 Capitalized software, net 77,299 81,952 Capitalized curriculum development costs, net 53,759 53,232 Intangible assets, net 55,170 60,282 Goodwill 246,676 246,676 Deferred tax asset — 7,200 Deposits and other assets 116,150 120,318 Total assets $2,070,781 $1,920,465 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $30,896 $40,970 Accrued liabilities 82,664 60,796 Accrued compensation and benefits 44,508 64,878 Deferred revenue 16,797 35,742 Current portion of finance lease liability 43,212 29,146 Current portion of operating lease liability 12,583 12,748 Total current liabilities 230,660 244,280 Long-term finance lease liability 50,731 26,452 Long-term operating lease liability 39,202 45,192 Long-term debt 415,522 414,675 Deferred tax liability 470 — Other long-term liabilities 16,091 13,841 Total liabilities 752,676 744,440 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; 48,890,343 and 48,576,164 shares issued; and 43,555,600 and 43,241,421 shares outstanding, respectively 4 4 Additional paid-in capital 724,839 720,033 Accumulated other comprehensive loss (43) (42)Retained earnings 695,787 558,512 Treasury stock of 5,334,743 shares at cost (102,482) (102,482)Total stockholders’ equity 1,318,105 1,176,025 Total liabilities and stockholders' equity $2,070,781 $1,920,465 STRIDE, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended December 31, 2024 2023 (In thousands)Cash flows from operating activities Net income $137,275 $71,714 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 55,529 54,480 Stock-based compensation expense 16,374 16,022 Deferred income taxes 9,289 425 Provision for credit losses 9,624 15,332 Amortization of fees on debt 847 834 Noncash operating lease expense 6,222 7,913 Other 1,869 1,430 Changes in assets and liabilities: Accounts receivable (119,416) (61,247)Inventories, prepaid expenses, deposits and other current and long-term assets (4,084) 883 Accounts payable (8,983) (15,994)Accrued liabilities 20,248 (20,987)Accrued compensation and benefits (20,303) (14,340)Operating lease liability (6,437) (8,587)Deferred revenue and other liabilities (16,694) (9,849)Net cash provided by operating activities 81,360 38,029 Cash flows from investing activities Purchase of property and equipment (1,153) (1,703)Capitalized software development costs (18,601) (18,402)Capitalized curriculum development costs (9,841) (8,731)Other acquisitions, loans and investments, net of distributions (950) (275)Proceeds from the maturity of marketable securities 140,740 80,361 Purchases of marketable securities (145,865) (120,047)Net cash used in investing activities (35,670) (68,797)Cash flows from financing activities Repayments on finance lease obligations (16,714) (22,491)Repurchase of restricted stock for income tax withholding (11,963) (3,161)Net cash used in financing activities (28,677) (25,652)Net change in cash, cash equivalents and restricted cash 17,013 (56,420)Cash, cash equivalents and restricted cash, beginning of period 500,614 410,807 Cash, cash equivalents and restricted cash, end of period $517,627 $354,387 Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: Cash and cash equivalents $515,049 $354,387 Deposits and other assets (restricted cash) 2,578 — Total cash, cash equivalents and restricted cash $517,627 $354,387 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; andin 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 Fiscal Year 2025 Reconciliation of Income from Operations to Adjusted Operating Income Three Months Ended Six Months Ended December 31, December 31, 2024 2023 2024 2023 (In thousands) Income from operations$125,100 $84,289 $172,444 $87,609 Amortization of intangible assets 2,545 2,988 5,112 6,003 Stock-based compensation expense 7,925 7,596 16,374 16,022 Adjusted operating income 135,570 94,873 193,930 109,634 Reconciliation of Net Income to EBITDA and Adjusted EBITDA Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 (In thousands)Net income$96,393 $66,836 $137,275 $71,714 Interest expense, net 2,670 2,022 5,023 4,090 Other income, net (7,330) (6,538) (16,108) (11,703)Income tax expense 33,361 22,190 44,638 23,726 (Income) loss from equity method investments 6 (221) 1,616 (218)Depreciation and amortization 27,395 26,463 55,529 54,480 EBITDA 152,495 110,752 227,973 142,089 Stock-based compensation expense 7,925 7,596 16,374 16,022 Adjusted EBITDA$160,420 $118,348 $244,347 $158,111 Fiscal Year 2025 Outlook Reconciliation of Income from Operations to Adjusted Operating Income (unaudited) Three Months Ended March 31, 2025 Year Ended June 30, 2025 Low High Low High (In millions)Income from operations$119.8 $127.3 $387.5 $402.5 Stock-based compensation expense 8.0 10.0 33.0 37.0 Amortization of intangible assets 2.2 2.7 9.5 10.5 Adjusted operating income$130.0 $140.0 $430.0 $450.0

Stride Posts Record Quarterly Results

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