Stride Reports Record Revenue and Earnings

August 15, 2023

Earnings Per Share Grows 400% since 2020

Stride, Inc. (NYSE: LRN), one of the nation’s leading technology-based education companies, today announced the results from its fourth fiscal quarter and full fiscal year ended June 30, 2023.

Fiscal 2023 Highlights Compared to 2022

  • Revenue of $1,837.4 million, compared with $1,686.7 million, driven by in-year enrollment strength and increases in revenue per enrollment.
  • Income from operations of $165.5 million, compared with $156.6 million.
  • Net income of $126.9 million, compared with $107.1 million.
  • Diluted net income per share of $2.97, compared with $2.52.
  • Adjusted operating income of $201.0 million, compared with $188.2 million. (1)
  • Adjusted EBITDA of $296.2 million, compared with $273.1 million. (1)

Fiscal 2023 Summary Financial Metrics

Year Ended June 30,

 

Change 2023/2022

2023

 

2022

 

$

 

%

(In thousands, except percentages and per share data)

Revenues $

1,837,358

$

1,686,666

$

150,692

8.9

%

 
Income from operations

165,499

156,628

8,871

5.7

%

Adjusted operating income (1)

201,027

188,166

12,861

6.8

%

 
Net income

126,867

107,130

19,737

18.4

%

Net income per share, diluted

2.97

2.52

0.45

17.9

%

 
EBITDA (1)

275,857

254,542

21,315

8.4

%

Adjusted EBITDA (1)

296,177

273,112

23,065

8.4

%

(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.

Fourth Quarter Fiscal 2023 Highlights Compared to 2022

  • Revenue of $483.5 million, compared with $455.2 million.
  • Income from operations of $53.9 million, compared with $46.1 million.
  • Net income of $43.4 million, compared with $28.1 million.
  • Diluted net income per share of $1.01, compared with $0.66.
  • Adjusted operating income of $64.4 million, compared with $53.5 million. (1)
  • Adjusted EBITDA of $88.8 million, compared with $74.7 million. (1)

Fourth Quarter Fiscal 2023 Summary Financial Metrics

 

Three Months Ended June 30,

 

Change 2023/2022

2023

 

2022

 

$

 

%

(In thousands, except percentages and per share data)
Revenues $

483,489

$

455,211

$

28,278

6.2

%

 

Income from operations

53,946

46,096

 

7,850

17.0

%

Adjusted operating income (1)

64,430

53,473

 

10,957

20.5

%

 

Net income

43,372

28,090

 

15,282

54.4

%

Net income per share, diluted

1.01

0.66

 

0.35

53.0

%

 

EBITDA (1)

83,648

70,546

 

13,102

18.6

%

Adjusted EBITDA (1)

88,772

74,652

 

14,120

18.9

%

(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.

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 2023 / 2022

 

June 30,

 

Change 2023 / 2022

 

 

2023

 

2022

 

$

 

%

 

2023

 

2022

 

$

 

%

(In thousands, except percentages)
 
General Education $

295,402

$

338,343

$

(42,941)

(12.7%)

$

1,131,391

$

1,273,783

$

(142,392)

(11.2%)

Career Learning
Middle - High School

156,668

91,479

65,189

71.3%

586,770

321,416

265,354

82.6%

Adult

31,419

25,389

6,030

23.8%

119,197

91,467

27,730

30.3%

Total Career Learning

188,087

116,868

71,219

60.9%

705,967

412,883

293,084

71.0%

Total Revenues $

483,489

$

455,211

$

28,278

6.2%

$

1,837,358

$

1,686,666

$

150,692

8.9%

Enrollment Data

The following table sets forth enrollment data for students in our General Education and Career Learning lines of revenue. Enrollments for General Education and Career Learning only include those students in full service public or private programs where Stride provides a combination of curriculum, technology, instructional and support services inclusive of administrative support.

Three Months Ended Change Year Ended Change
June 30, 2023 / 2022 June 30, 2023 / 2022

2023

2022

# %

2023

2022

# %
(In thousands, except percentages)
 
General Education (1)

110.6

136.5

(25.9)

(19.0%)

112.3

143.2

(30.9)

(21.6%)

Career Learning (1)(2)

65.5

41.9

23.6

56.3%

65.9

41.9

24.0

57.3%

Average Enrollment

176.1

178.4

(2.3)

(1.3%)

178.2

185.1

(6.9)

(3.7%)

(1)

This data includes enrollments for which Stride receives no public funding or revenue.

(2)

No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts.

Revenue per Enrollment Data

The following table sets forth revenue per average enrollment data for students for the period indicated. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.

Three Months Ended Change Year Ended Change
June 30, 2023 / 2022 June 30, 2023 / 2022

2023

 

2022

 

$

 

%

 

2023

 

2022

 

$

 

%

 
General Education $

2,455

$

2,266

$

189

8.3%

$

9,270

$

8,104

$

1,166

14.4%

Career Learning

2,389

2,177

212

9.7%

8,885

7,640

1,245

16.3%

Cash Flow and Capital Allocation

As of June 30, 2023, the Company’s cash and cash equivalents totaled $410.8 million, compared with $389.4 million reported at June 30, 2022.

Capital expenditures for fiscal year ended June 30, 2023 were $66.5 million, compared to $67.6 million in fiscal year 2022, and were comprised of $4.3 million of property and equipment, $45.0 million of capitalized software development, and $17.2 million of capitalized curriculum development.

Fiscal Year 2024 Outlook

The Company will provide an outlook for fiscal year 2024 when it reports results for the first quarter of fiscal year 2024, anticipated to be released in October 2023. No separate guidance communication, or enrollment counts, for fiscal 2024 will be provided before that time.

Conference Call

The Company will discuss its fourth quarter and full fiscal year 2023 financial results during a conference call scheduled for Tuesday, August 15, 2023 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/973677329. 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/973677329 as soon as it is available.

About Stride Inc.

At Stride, Inc. (NYSE: LRN), we are reimagining learning—where learning is lifelong, deeply personal, and prepares learners for tomorrow. The company has transformed millions of people’s teaching and learning experiences by providing innovative, high-quality, tech-enabled education solutions, curriculums, and programs directly to students, schools, the military, and enterprises in primary, secondary, and postsecondary settings. Stride is a premier provider of K–12 education for students, schools, and districts, including career learning services through middle and high school curriculums. For adult learners, Stride delivers professional skills training in healthcare and technology, as well as staffing and talent development for Fortune 500 companies. Stride has delivered millions of courses over the past decade and serves learners in all 50 states and more than 100 countries. More information can be found at stridelearning.com, K12.com, galvanize.com, techelevator.com, and medcerts.com.

Special Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,” “likely,” “may,” “opportunity,” “potential,” “projects,” “will,” “will be,”expects,” “plans,” “intends” and similar expressions to identify forward looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve a sufficient level of new enrollments to sustain our business model; limitations of the enrollment data we present, which may not fully capture trends in the performance of our business; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; failure of the schools we serve or us to comply with federal, state and local regulations, resulting in a loss of funding, an obligation to repay funds previously received, or contractual remedies; governmental investigations that could result in fines, penalties, settlements, or injunctive relief; declines or variations in academic performance outcomes of the students and schools we serve as curriculum standards, testing programs and state accountability metrics evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and/or in any school in which we operate; legal and regulatory challenges from opponents of virtual public education or for-profit education companies; changes in national and local economic and business conditions and other factors, such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health; 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 presentation 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, 2023 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, 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

 

Year Ended

June 30,

 

June 30,

2023

 

2022

 

2023

 

2022

(In thousands except share and per share data)
Revenues $

483,489

$

455,211

$

1,837,358

$

1,686,666

Instructional costs and services

311,408

287,534

1,190,288

1,090,191

Gross margin

172,081

167,677

647,070

596,475

Selling, general, and administrative expenses

118,135

121,581

481,571

439,847

Income from operations

53,946

46,096

165,499

156,628

Interest expense, net

(2,070)

(2,036)

(8,404)

(8,277)

Other income (expense), net

5,858

(5,568)

15,452

(1,277)

Income before income taxes and income (loss) from equity method investments

57,734

38,492

172,547

147,074

Income tax expense

(14,468)

(10,337)

(45,346)

(40,088)

Income (loss) from equity method investments

106

(65)

(334)

144

Net income attributable to common stockholders $

43,372

$

28,090

$

126,867

$

107,130

Net income attributable to common stockholders per share:
Basic $

1.02

$

0.67

$

3.00

$

2.58

Diluted $

1.01

$

0.66

$

2.97

$

2.52

Weighted average shares used in computing per share amounts:
Basic

42,434,397

41,896,039

42,286,392

41,451,101

Diluted

42,849,355

42,574,712

42,728,108

42,441,524

STRIDE, INC.

CONSOLIDATED BALANCE SHEETS

June 30,

2023

 

2022

(In thousands except share and per share data)
ASSETS
Current assets
Cash and cash equivalents $

410,807

$

389,398

Accounts receivable, net of allowance of $30,031 and $26,993

463,722

418,558

Inventories, net

36,716

36,003

Prepaid expenses

24,817

25,974

Other current assets

129,137

80,601

Total current assets

1,065,199

950,534

Operating lease right-of-use assets, net

69,508

85,457

Property and equipment, net

52,332

61,537

Capitalized software, net

83,465

71,800

Capitalized curriculum development costs, net

50,787

50,580

Intangible assets, net

74,771

88,669

Goodwill

246,676

241,022

Deferred tax asset

8,776

Deposits and other assets

109,152

93,946

Total assets $

1,760,666

$

1,643,545

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $

48,854

$

61,997

Accrued liabilities

76,626

63,200

Accrued compensation and benefits

57,426

73,027

Deferred revenue

76,159

53,630

Current portion of finance lease liability

35,621

37,389

Current portion of operating lease liability

14,449

12,830

Total current liabilities

309,135

302,073

Long-term finance lease liability

21,278

28,888

Long-term operating lease liability

59,425

75,127

Long-term debt

413,035

411,438

Deferred tax liability

3,205

Other long-term liabilities

10,497

10,233

Total liabilities

813,370

830,964

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; 48,339,048 and 48,112,664 shares issued; and 43,004,305 and 42,777,921 shares outstanding, respectively

4

4

Additional paid-in capital

695,480

687,454

Accumulated other comprehensive income (loss)

(35)

143

Retained earnings

354,329

227,462

Treasury stock of 5,334,743 shares at cost

(102,482)

(102,482)

Total stockholders’ equity

947,296

812,581

Total liabilities and stockholders' equity $

1,760,666

$

1,643,545

STRIDE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended
June 30,

2023

2022

(In thousands)
Cash flows from operating activities
Net income $

126,867

$

107,130

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense

110,358

97,914

Stock-based compensation expense

20,320

18,570

Deferred income taxes

(10,373)

1,190

Provision for credit losses

9,158

15,673

Amortization of fees on debt

1,597

1,573

Noncash operating lease expense

14,728

19,810

Other

(1,966)

9,949

Changes in assets and liabilities:
Accounts receivable

(54,908)

(57,501)

Inventories, prepaid expenses, deposits and other current and long-term assets

(19,389)

4,798

Accounts payable

(11,999)

11

Accrued liabilities

24,132

7,598

Accrued compensation and benefits

(15,473)

(7,465)

Operating lease liability

(12,243)

(20,742)

Deferred revenue and other liabilities

22,341

8,376

Net cash provided by operating activities

203,150

206,884

Cash flows from investing activities
Purchase of property and equipment

(4,336)

(9,748)

Capitalized software development costs

(44,973)

(42,191)

Capitalized curriculum development costs

(17,239)

(15,687)

Sale of other investments

60

5,261

Acquisition of assets

(1,409)

Other acquisitions, loans and investments, net of distributions

(1,652)

(3,899)

Proceeds from the maturity of marketable securities

91,879

40,163

Purchases of marketable securities

(140,570)

(84,657)

Net cash used in investing activities

(118,240)

(110,758)

Cash flows from financing activities
Repayments on finance lease obligations

(42,956)

(33,011)

Payments of contingent consideration

(7,024)

Payments of deferred purchase consideration

(22,858)

Proceeds from exercise of stock options

20

414

Repurchase of restricted stock for income tax withholding

(13,541)

(37,855)

Net cash used in financing activities

(63,501)

(93,310)

Net change in cash, cash equivalents and restricted cash

21,409

2,816

Cash, cash equivalents and restricted cash, beginning of period

389,398

386,582

Cash, cash equivalents and restricted cash, end of period $

410,807

$

389,398

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP, we have presented adjusted operating income (loss), EBITDA, and adjusted EBITDA, which are not presented in accordance with GAAP.

  • Adjusted operating income (loss) is defined as income (loss) from operations as adjusted for stock-based compensation and the amortization of intangible assets.
  • EBITDA is defined as net income (loss) as adjusted for interest (income) expense, net; other (income) expense, net; income tax expense; (income) loss from equity method investments; and depreciation and amortization.
  • Adjusted EBITDA is defined as net income (loss) as adjusted for interest (income) expense, net; other (income) expense, net; income tax expense; (income) loss from equity method investments; depreciation and amortization; and stock-based compensation
  • Adjusted EBITDA and adjusted operating income (loss) exclude stock-based compensation, which consists of expenses for restricted stock, restricted stock units, and performance stock units.

Management believes that the presentation of these non-GAAP financial measures provides useful information to investors relating to our financial performance. Adjusted operating income (loss) and Adjusted EBITDA remove stock-based compensation, which is a non-cash charge that varies based on market volatility and the terms and conditions of the awards. EBITDA and Adjusted EBITDA remove depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. EBITDA and Adjusted EBITDA provide a measure of corporate performance exclusive of capital structure and the method by which assets were acquired.

Our management uses these non-GAAP financial measures:

  • as additional measures of operating performance because they assist us in comparing our performance on a consistent basis; and
  • in presentations to the members of our Board of Directors to enable our Board to review the same measures used by management to compare our current operating results with corresponding prior periods.

Other companies may define these non-GAAP financial measures differently and, as a result, our use of these non-GAAP financial measures may not be directly comparable to similar non-GAAP financial measures used by other companies. Although we use these non-GAAP financial measures to assess the performance of our business, the use of non-GAAP financial measures is limited as they include and/or do not include certain items not included and/or included in the most directly comparable GAAP financial measure.

These non-GAAP financial measures should be considered in addition to, and not as a substitute for, revenues, income (loss) from operations, net income (loss) and net income (loss) per share or other related financial information prepared in accordance with GAAP. Adjusted EBITDA is not intended to be a measure of liquidity. You are cautioned not to place undue reliance on these non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

Reconciliation of Income from Operations to Adjusted Operating Income

Three Months Ended

 

Year Ended

June 30,

 

June 30,

2023

 

2022

 

2023

 

2022

(In thousands)
Income from operations

$

53,946

$

46,096

$

165,499

$

156,628

Amortization of intangible assets

 

5,360

 

3,271

 

15,208

 

12,968

Stock-based compensation expense

 

5,124

 

4,106

 

20,320

 

18,570

Adjusted operating income

 

64,430

 

53,473

 

201,027

 

188,166

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Three Months Ended
June 30,
Year Ended
June 30,

2023

2022

2023

2022

(In thousands)
Net income

$

43,372

 

$

28,090

$

126,867

 

$

107,130

 

Interest (income) expense, net

 

2,070

 

 

2,036

 

8,404

 

 

8,277

 

Other (income) expense, net

 

(5,858

)

 

5,568

 

(15,452

)

 

1,277

 

Income tax expense

 

14,468

 

 

10,337

 

45,346

 

 

40,088

 

(Income) loss from equity method investments

 

(106

)

 

65

 

334

 

 

(144

)

Depreciation and amortization

 

29,702

 

 

24,450

 

110,358

 

 

97,914

 

EBITDA

 

83,648

 

 

70,546

 

275,857

 

 

254,542

 

Stock-based compensation expense

 

5,124

 

 

4,106

 

20,320

 

 

18,570

 

Adjusted EBITDA

$

88,772

 

$

74,652

$

296,177

 

$

273,112

 

 

Investor Contact
Timothy Casey
Vice President, Investor Relations
Stride, Inc.
tcasey@k12.com

Source: Stride, Inc.