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Stride Posts Another Record Year
Source: Nasdaq GlobeNewswire / 06 Aug 2024 16:15:00 America/New_York
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.
tcasey@k12.comSpecial 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 OPERATIONSThree 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 SHEETSJune 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