Core Insights - Stride (NYSE: LRN) has shown strong Q4 earnings, increased full-year guidance, and new district contracts, leading to a 12% stock increase in the last week and approximately 40% year-to-date [2][4] - The company is positioned at the intersection of digitization in K–12 education, workforce re-skilling, and state funding for online education, making it a key player in modern educational infrastructure [3] Financial Performance - For fiscal Q4, Stride reported earnings of $2.29 per share, exceeding consensus estimates by $0.46, with revenue increasing by 22.4% year-over-year to $653.6 million [4] - Stride's revenue CAGR over three years is 12%, significantly higher than the S&P 500, with a consistent operating margin of 16.5% and over $300 million in operating cash flow [5] Market Resilience - Stride has demonstrated resilience during market disruptions, recovering from a 32.8% drop in 2022 and a 48.8% decline during COVID, rebounding within a year and seven months respectively [6] - The stock is currently trading at 24.9x earnings and 3.2x sales, slightly above S&P 500 averages, with free cash flow priced at a premium of 26.0x [7] Investment Appeal - Stride offers a unique combination of consistent growth, profitability, and resilience, making it an attractive option for investors seeking stability in the education technology sector [8]

Core Viewpoint - K12 (LRN) is showing solid improvement in earnings estimates, which may lead to continued short-term price momentum for the stock [1][2]. Earnings Estimate Revisions - There is a rising trend in estimate revisions due to growing analyst optimism regarding K12's earnings prospects, which is expected to positively impact the stock price [2]. - For the current quarter, K12 is expected to earn $1.17 per share, reflecting a +24.5% change from the previous year, with a 12.82% increase in the Zacks Consensus Estimate over the last 30 days [5][6]. - For the full year, K12 is projected to earn $8.52 per share, a +5.2% change from the prior year, with a 9.84% increase in the consensus estimate due to three upward revisions [6][7]. Zacks Rank and Performance - K12 has achieved a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates, which historically correlates with stock outperformance [3][8]. - Stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500, suggesting a favorable investment outlook for K12 [8]. Investment Outlook - K12's strong estimate revisions have led to a 6% increase in stock price over the past four weeks, indicating potential for further upside, making it a candidate for portfolio addition [9].

Core Insights - Stride, Inc. (LRN) reported strong operational momentum in its fiscal Q4 results, highlighting rapid earnings expansion [1] Company Performance - The online education provider demonstrated significant growth in earnings, indicating a positive trend in operational performance [1] Investment Philosophy - The investment approach focuses on identifying mispriced securities by analyzing the drivers behind a company's financials, often revealed through DCF model valuation [1]

Market Overview - The current stock market requires caution due to the dominance of expensive large-cap tech stocks, despite the overall market not being necessarily expensive [1] Analyst Background - Gary Alexander has extensive experience covering technology companies on Wall Street and working in Silicon Valley, providing insights into themes shaping the industry [1] - He has been a contributor on Seeking Alpha since 2017 and has been quoted in various web publications, with his articles syndicated to popular trading apps like Robinhood [1]

Company Performance - K12 reported quarterly earnings of $2.29 per share, exceeding the Zacks Consensus Estimate of $1.83 per share, and up from $1.42 per share a year ago, representing an earnings surprise of +25.14% [1] - The company posted revenues of $653.65 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.94%, compared to $534.18 million in the same quarter last year [2] - Over the last four quarters, K12 has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - K12 shares have increased approximately 25.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.04 on revenues of $596.88 million, and for the current fiscal year, it is $7.76 on revenues of $2.58 billion [7] Industry Outlook - The Schools industry, to which K12 belongs, is currently ranked in the top 11% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact K12's stock performance [5][6]

Financial Data and Key Metrics Changes - Full year revenue reached $2.4 billion, an increase of 18% from the previous year [12] - Adjusted operating income was $466.2 million, up nearly 60% year-over-year [12][18] - Diluted net income per share increased to $5.95, a 27% rise from last year [19] - Adjusted earnings per share was $8.1, up 48% compared to $5.49 in FY '24 [20] - Free cash flow was $372.8 million, an increase of $155.6 million from last year [21] Business Line Data and Key Metrics Changes - Career learning and middle and high school revenues were $876.3 million, up 35% [13] - General education revenue totaled $1.45 billion, an increase of 12% [13] - Total enrollments for career learning reached 96,300, up 33% [13] - General education enrollments totaled 137,700, up 13% [14] Market Data and Key Metrics Changes - The company anticipates double-digit enrollment growth for the upcoming school year, with current trends indicating a potential 10% to 15% growth in the first quarter [9][22] - The funding environment for FY '26 is expected to be positive, with some states increasing funding while others remain flat [14][44] Company Strategy and Development Direction - The company is focusing on expanding its tutoring services, particularly for second and third graders, to enhance reading skills [10][51] - Investments in AI and technology are being pursued to improve operational efficiency and customer outcomes [10][52] - The company aims to maintain its market leadership by adapting to macro trends and enhancing its product offerings [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued demand for school choice and the company's ability to serve more families and students [5][9] - The management team acknowledged the challenges of maintaining high growth rates as the company scales but remains committed to ambitious targets [36][38] - The overall funding environment is viewed positively, with no significant negative impacts anticipated from federal changes [45][44] Other Important Information - The company received multiple awards, including being named one of America's best mid-sized companies and best EdTech company [6] - A one-time noncash impairment charge of $59.5 million was recorded, related to the galvanized business [17] Q&A Session Summary Question: Can you discuss the current trends driving the expected enrollment growth? - Management indicated that strong application volumes are a reliable indicator of demand, with early funnel activity showing positive trends [25][27] Question: What is the status of contracts in New Mexico? - Management confirmed that despite losing a contract with Gallup McKinley, new partnerships were quickly established, and families have transitioned to new programs [30][64] Question: How does the company plan to manage operating income growth? - Management acknowledged that as the company scales, achieving operating income growth at twice the rate of revenue growth will become more challenging, but they remain committed to ambitious targets [36][38] Question: What are the expectations for the funding environment in FY '26? - Management expects a favorable funding environment, with some states increasing funding and no significant negative impacts from federal changes [44][45] Question: What are the plans for the adult learning business? - Management stated that while the adult learning business is not a major part of their operations, they believe it can generate incremental value and are focused on improving its performance [97][98]

Financial Data and Key Metrics Changes - Full year revenue reached $2.4 billion, an increase of 18% from the previous year [11] - Adjusted operating income was $466.2 million, up nearly 60% year-over-year [16] - Diluted net income per share increased to $5.95, a 27% rise from last year [17] - Adjusted earnings per share was $8.1, up 48% compared to $5.49 in FY '24 [18] - Free cash flow was $372.8 million, an increase of $155.6 million from last year [19] Business Line Data and Key Metrics Changes - Career learning and middle/high school revenues were $876.3 million, up 35% [12] - General education revenue totaled $1.45 billion, a 12% increase [12] - Total enrollments for career learning reached 96,300, up 33% [12] - General education enrollments totaled 137,700, up 13% [12] Market Data and Key Metrics Changes - The company anticipates double-digit enrollment growth for the upcoming fall, with current trends indicating a potential 10% to 15% growth in the first quarter [20] - The funding environment for FY '26 is expected to be positive, with some states increasing funding while others remain flat [13][41] Company Strategy and Development Direction - The company is focusing on expanding its tutoring services, particularly for second and third graders, to enhance reading skills [9][47] - Investments in AI and technology are being pursued to improve operational efficiency and customer outcomes [9][48] - The company aims to maintain its market leadership by adapting to macro trends and increasing demand for school choice [8][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming fiscal year, citing strong demand indicators and a favorable funding environment [20][41] - The company is committed to supporting families and teachers in New Mexico despite recent contract changes, indicating resilience in its operations [28][61] - Management acknowledged challenges in the adult learning segment but remains focused on improving execution and capturing value [54][95] Other Important Information - A one-time noncash impairment charge of $59.5 million was recorded, primarily related to the coworking business and a trade name write-down [16] - The company continues to prioritize investments in products and services while managing gross margin growth [15][48] Q&A Session Summary Question: Can you elaborate on the expected enrollment growth for fiscal '26? - Management indicated that strong application volumes are a reliable indicator of demand, suggesting a positive outlook for enrollment growth [22][24] Question: What is the status of contracts in New Mexico? - Management confirmed that despite losing a contract, they quickly secured new partnerships, demonstrating the strength of their franchise [28][30] Question: How does the company plan to manage operating income growth? - Management acknowledged that as the company scales, achieving operating income growth at twice the rate of revenue growth may become more challenging [32][34] Question: What is the outlook for the adult learning business? - Management expressed disappointment in the adult learning segment but sees potential for improvement and value creation [54][95] Question: How is the company addressing the demand for tutoring services? - Management highlighted the unique characteristics of their tutoring services, including certified teachers, and noted increasing traction in the market [81][82]

Part I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Stride, Inc. provides online K-12 and adult learning platforms through school-as-a-service offerings, operating in a regulated and competitive environment [Company Overview](index=6&type=section&id=Company%20Overview) Stride offers online learning platforms for K-12 General Education and Career Learning, expanding into adult learning through strategic acquisitions - Stride provides a technology-based educational platform for online learning, with products and services spanning curriculum, systems, instruction, and support[18](index=18&type=chunk) - The company's platform addresses two key K-12 markets: General Education, focusing on core subjects, and Career Learning, focused on career-oriented skills in high-growth industries[20](index=20&type=chunk)[22](index=22&type=chunk) - During the 2024-2025 school year, Stride's school-as-a-service offering was provided to **89 General Education schools** and **56 Career Learning schools or programs**[27](index=27&type=chunk) - In 2020, Stride expanded into adult learning by acquiring Galvanize, Tech Elevator, and MedCerts, which offer training in software engineering and healthcare[28](index=28&type=chunk) [Our Market](index=8&type=section&id=Our%20Market) Stride operates in the growing U.S. K-12 and non-degree post-secondary education markets, driven by increasing demand for flexible online learning options - A January 2025 survey by the National School Choice Awareness Foundation found that over **60% of parents** considered changing their child's school, with **27%** of those considering full-time online options[30](index=30&type=chunk) - The National Home Education Research Institute estimated approximately **3.1 million home-educated students** in the U.S. during the 2021-2022 school year, up from **2.5 million** pre-pandemic[30](index=30&type=chunk) - The Bureau of Labor Statistics (April 2025) projects that demand for occupations requiring non-degree postsecondary education will grow by **6.0% by 2033**, faster than the overall average[30](index=30&type=chunk) [Business Strategy](index=12&type=section&id=Business%20Strategy) Stride's business strategy focuses on personalizing education to maximize learner potential and improve outcomes through investments in platforms and instructional methods - The company's key strategic elements include: growing enrollments, introducing new and improved products and services, improving student outcomes, and improving retention[45](index=45&type=chunk)[46](index=46&type=chunk) [Competition](index=16&type=section&id=Competition) Stride faces diverse competition across K-12 virtual schools, digital curriculum, and adult learning, leveraging its experience, comprehensive programs, and scale as competitive advantages - Primary competitors for K-12 virtual school services include Pearson PLC (Connections Academy), Lincoln Learning Solutions, StrongMind, and state-administered online programs[59](index=59&type=chunk) - Adult Learning offerings compete with immersive programs like General Assembly and self-paced training providers such as Penn Foster Inc[59](index=59&type=chunk) - The company competes based on factors such as experience in virtual education, quality of curriculum, student outcomes, and scale[60](index=60&type=chunk) [Human Capital Resources](index=18&type=section&id=Human%20Capital%20Resources) As of June 30, 2025, Stride employed approximately 8,600 individuals and managed a total of 9,100 teachers, emphasizing professional development and retention - As of June 30, 2025, the company had approximately **8,600 employees**[68](index=68&type=chunk) - Stride manages a total of approximately **9,100 teachers**, of whom **5,300 are direct employees** and **3,800 are employed by the virtual or blended public schools** it serves[68](index=68&type=chunk) [Regulation](index=20&type=section&id=Regulation) Stride and its partner schools are subject to extensive and evolving state and federal regulations governing authorization, funding, operations, and privacy in education - The company's operations are heavily regulated by state laws that authorize and restrict virtual schools, dictate funding mechanisms, and impose privacy requirements[75](index=75&type=chunk)[76](index=76&type=chunk) - Key federal laws applicable to the schools Stride serves include the Every Student Succeeds Act (ESSA), Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act, and the Family Educational Rights and Privacy Act (FERPA)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[95](index=95&type=chunk) - The company's adult learning businesses (Galvanize, Tech Elevator, MedCerts) are subject to state laws for private post-secondary schools and federal laws related to veterans' education and workforce programs[98](index=98&type=chunk)[101](index=101&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its heavy reliance on government funding, regulatory compliance, contract renewals, competition, and operational challenges including cybersecurity and new technologies [Risks Related to Government Funding and Regulation of Public Education](index=33&type=section&id=Risks%20Related%20to%20Government%20Funding%20and%20Regulation%20of%20Public%20Education) Stride's revenues are highly dependent on per-pupil government funding, which is vulnerable to legislative changes, economic conditions, and regulatory non-compliance, potentially leading to financial setbacks - The majority of revenues depend on per-pupil funding amounts, which can be reduced or modified due to economic conditions or political opposition, adversely affecting business[108](index=108&type=chunk)[109](index=109&type=chunk) - Failure to comply with extensive federal and state regulations could result in a loss of public funding and an obligation to repay previously received funds[117](index=117&type=chunk)[118](index=118&type=chunk) - The operation of virtual charter schools depends on maintaining their authorizing charters; if these are not renewed, the company's contracts with these schools would be terminated[121](index=121&type=chunk) [Risks Related to Our Business and Our Industry](index=39&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) The company faces business risks from contract non-renewal, failure to meet enrollment targets, increasing competition, and integration challenges from mergers and acquisitions - Contracts for school-as-a-service offerings are subject to periodic renewal, and the inability to renew significant contracts could adversely affect business operations and cash flow[127](index=127&type=chunk) - A majority of revenues are a direct function of student enrollment; failure to enroll or re-enroll a sufficient number of students would adversely affect financial results[128](index=128&type=chunk) - The company faces increasing competition from a variety of education providers, which could lead to pricing pressures, reduced margins, and loss of market share[158](index=158&type=chunk) - Mergers, acquisitions, and joint ventures present risks such as unsuccessful integration, diversion of management attention, and failure to realize anticipated synergies[149](index=149&type=chunk)[150](index=150&type=chunk) [Risks Related to Our Operations](index=51&type=section&id=Risks%20Related%20to%20Our%20Operations) Operational risks include challenges in teacher recruitment, reliance on third-party IT and logistics vendors, cybersecurity threats, and the complexities of integrating new technologies like AI - The inability to recruit, train, and retain a sufficient number of high-quality certified teachers could compromise academic performance and harm the company's reputation[170](index=170&type=chunk)[174](index=174&type=chunk) - A failure to prevent or mitigate a cybersecurity incident could harm the company's reputation, decrease demand, and expose it to liability and remedial costs[190](index=190&type=chunk) - The company utilizes a single logistics vendor for managing and shipping all learning kits and printed materials, and any failure by this vendor would adversely affect the business[201](index=201&type=chunk) - The introduction and use of new and developing AI technology may present business, compliance, and reputational challenges that could lead to operational damage, legal risk, and additional costs[210](index=210&type=chunk) [Item 1B. Unresolved Staff Comments](index=67&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[218](index=218&type=chunk) [Item 1C. Cybersecurity](index=69&type=section&id=Item%201C.%20Cybersecurity) Stride has implemented a cybersecurity risk management program guided by the NIST Cybersecurity Framework, overseen by the Board's Audit Committee, with no material incidents identified to date - The company's cybersecurity risk management program is guided by the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)[220](index=220&type=chunk) - The Board's Audit Committee has been delegated oversight of cybersecurity and other information technology risks[223](index=223&type=chunk) - The Chief Information Security Officer (CISO) has over **20 years of experience** and is responsible for managing the company's material risks from cybersecurity threats[227](index=227&type=chunk) - The company has not identified risks from known cybersecurity threats or prior incidents that have materially affected its operations, business strategy, results, or financial condition[222](index=222&type=chunk) [Item 2. Properties](index=71&type=section&id=Item%202.%20Properties) The company's headquarters is in Reston, Virginia, and it leases additional office space across the United States - The company's headquarters is in a **23,000 sq. ft. leased office** in Reston, Virginia, with the lease expiring in July 2033[229](index=229&type=chunk) - Stride leases an additional **361,000 square feet** in multiple U.S. locations, with leases expiring between July 2025 and August 2030[229](index=229&type=chunk) [Item 3. Legal Proceedings](index=71&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is disclosed in Note 10 – Commitments and Contingencies - Litigation, within Item 8 of Part II of this report - Refers to Item 8, Note 10 for information on legal proceedings[230](index=230&type=chunk) [Item 4. Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[230](index=230&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=72&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Stride, Inc.'s common stock trades on the NYSE under the symbol "LRN," with no cash dividends paid or planned, as earnings are reinvested for growth - The company's common stock trades on the NYSE under the symbol "**LRN**"[232](index=232&type=chunk) - Stride has never paid cash dividends and currently does not plan to, instead reinvesting earnings into the business[238](index=238&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For FY2025, Stride's revenues increased by 17.9% to $2.41 billion, and operating income grew by 44.3% to $360.1 million, driven by strong enrollment growth and improved gross margins, maintaining robust liquidity [Executive Summary](index=75&type=section&id=Executive%20Summary) In fiscal year 2025, Stride achieved significant financial growth with revenues increasing 17.9% to $2.41 billion and operating income rising 44.3% to $360.1 million, driven by a 20.4% increase in total enrollments Key Financial Metrics (FY 2025 vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenues | $2.41 billion | $2.04 billion | +$365.2 million | +17.9% | | Operating Income | $360.1 million | $249.6 million | +$110.5 million | +44.3% | - Total enrollments for the year ended June 30, 2025, were **234.0 thousand**, an increase of **20.4%** from the prior year[254](index=254&type=chunk) [Critical Accounting Estimates](index=83&type=section&id=Critical%20Accounting%20Estimates) The company's critical accounting estimates involve revenue recognition for funding-based contracts, which are subject to enrollment and state funding variations, and income tax accounting, including a valuation allowance for deferred tax assets - Revenue from funding-based contracts is estimated based on expected funds per school, which is a function of student enrollment and state/district funding levels; these estimates are periodically reviewed and updated[277](index=277&type=chunk) - For FY2024, FY2023, and FY2022, the company's aggregate funding estimates differed from actual reimbursements, impacting total reported revenue by approximately **1.8%**, **2.8%**, and **1.6%**, respectively[277](index=277&type=chunk) - The company maintains a valuation allowance on net deferred tax assets, which was **$7.6 million** as of June 30, 2025, for amounts not likely to be realized[287](index=287&type=chunk) [Results of Operations](index=87&type=section&id=Results%20of%20Operations) For FY2025, total revenues grew 17.9% to $2.41 billion, driven by increased enrollments in both General Education and Career Learning, leading to improved gross margin and operating income despite an impairment charge Enrollment Data (in thousands) | Line of Revenue | FY 2025 | FY 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | General Education | 137.7 | 121.6 | 16.1 | 13.2% | | Career Learning | 96.3 | 72.7 | 23.6 | 32.5% | | **Total Enrollment** | **234.0** | **194.3** | **39.7** | **20.4%** | Revenue Data (in thousands) | Line of Revenue | FY 2025 | FY 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | General Education | $1.45 billion | $1.29 billion | $159.5 million | 12.4% | | Career Learning | $956.6 million | $750.9 million | $205.8 million | 27.4% | | **Total Revenues** | **$2.41 billion** | **$2.04 billion** | **$365.2 million** | **17.9%** | - Instructional costs and services expenses increased **14.5% to $1.46 billion** but decreased as a percentage of revenue to **60.8% in FY2025** from **62.6% in FY2024**[306](index=306&type=chunk) - Selling, general, and administrative (SG&A) expenses increased **2.0% to $524.3 million** but decreased as a percentage of revenue to **21.8% in FY2025** from **25.2% in FY2024**[307](index=307&type=chunk) - A **$59.5 million impairment** of long-lived assets was recorded in FY2025 related to the Galvanize subsidiary; no such impairment occurred in FY2024[308](index=308&type=chunk) [Liquidity and Capital Resources](index=93&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Stride maintained a strong liquidity position with $1.33 billion in net working capital and $782.5 million in cash, supported by increased operating cash flow - As of June 30, 2025, the company had net working capital of **$1.33 billion**, including **$782.5 million in cash and cash equivalents**[315](index=315&type=chunk) - The company has **$420.0 million in 1.125% Convertible Senior Notes due 2027**; in connection with the notes, the company entered into Capped Call Transactions to reduce potential dilution[317](index=317&type=chunk)[318](index=318&type=chunk) - Net cash provided by operating activities was **$432.8 million for FY2025**, a **$154.0 million increase** from FY2024, primarily due to higher net income and favorable changes in working capital[324](index=324&type=chunk) - Net cash used in investing activities decreased to **$88.0 million in FY2025** from **$139.9 million in FY2024**, mainly due to higher net maturities of marketable securities[325](index=325&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks primarily from inflation, impacting personnel and supply chain costs, and interest rate fluctuations, with foreign currency risk currently not material - The company faces inflation risk, which has resulted in higher personnel, marketing, and supply chain expenses[328](index=328&type=chunk) - As of June 30, 2025, a **1% increase in interest rates** on variable-interest instruments would lead to a **$7.8 million annualized increase in interest income**[329](index=329&type=chunk) - Foreign currency exchange risk is currently not material as the company does not transact a significant amount of business in foreign currencies[330](index=330&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=99&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Stride, Inc.'s consolidated financial statements for FY2025, audited by KPMG LLP, detailing financial position, operations, and cash flows, with key notes on accounting policies and a critical audit matter regarding revenue recognition [Reports of Independent Registered Public Accounting Firm](index=100&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Stride's FY2025 consolidated financial statements and internal controls, identifying revenue from funding-based contracts as a critical audit matter due to subjective judgment - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the year ended June 30, 2025, and on the effectiveness of internal control over financial reporting[334](index=334&type=chunk)[335](index=335&type=chunk) - A critical audit matter identified by KPMG was the evaluation of revenue from certain funding-based contracts, which required subjective auditor judgment regarding student enrollment numbers and per-enrollment funding levels[338](index=338&type=chunk)[341](index=341&type=chunk) [Consolidated Financial Statements](index=107&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present Stride, Inc.'s financial position with total assets of $2.29 billion and total stockholders' equity of $1.48 billion, and FY2025 revenues of $2.41 billion resulting in $287.9 million net income Consolidated Balance Sheet Highlights (as of June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $1.63 billion | | Total Assets | $2.29 billion | | Total Current Liabilities | $302.9 million | | Total Liabilities | $814.3 million | | Total Stockholders' Equity | $1.48 billion | Consolidated Statement of Operations Highlights (Year Ended June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | Revenues | $2.41 billion | | Gross Margin | $943.9 million | | Income from Operations | $360.1 million | | Net Income | $287.9 million | | Diluted EPS | $5.95 | [Notes to Consolidated Financial Statements](index=113&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on Stride's accounting policies, including revenue recognition for funding-based contracts, lease liabilities, convertible senior notes, and a $59.5 million impairment charge related to the Galvanize asset group - Approximately **95% of General Education revenues** and **100% of Middle-High School Career Learning revenues** were from funding-based contracts in FY2025[400](index=400&type=chunk) - In FY2025, the company recorded an impairment loss of **$59.5 million** related to the Galvanize asset group, comprising **$32.2 million for intangible assets** and **$27.3 million for operating lease right-of-use assets**[454](index=454&type=chunk) - As of June 30, 2025, the company had a finance lease liability of **$86.9 million** and an operating lease liability of **$46.6 million**[480](index=480&type=chunk)[483](index=483&type=chunk) - As of June 30, 2025, there was **$27.9 million of total unrecognized compensation expense** related to nonvested Performance Share Units (PSUs), expected to be recognized over a weighted average period of **1.2 years**[524](index=524&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=170&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[548](index=548&type=chunk) [Item 9A. Controls and Procedures](index=170&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures, as well as internal control over financial reporting, were effective at a reasonable assurance level as of June 30, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[549](index=549&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[554](index=554&type=chunk) [Item 9B. Other Information](index=173&type=section&id=Item%209B.%20Other%20Information) On July 31, 2025, the Board of Directors amended the company's bylaws to revise provisions for exclusive forums for shareholder actions and to select federal courts for Securities Act of 1933 actions - On July 31, 2025, the company's bylaws were amended to revise provisions for exclusive forums for shareholder actions and to select federal courts for actions under the Securities Act of 1933[559](index=559&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=173&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement[564](index=564&type=chunk) [Item 11. Executive Compensation](index=173&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation, including the Compensation Discussion and Analysis, is incorporated by reference from the company's 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement[566](index=566&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=175&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management is incorporated by reference from the 2025 Proxy Statement, with 1.88 million securities available for future issuance under equity compensation plans - Information on security ownership is incorporated by reference from the 2025 Proxy Statement[568](index=568&type=chunk) Equity Compensation Plan Information (as of June 30, 2025) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | — | $ — | 1,875,859 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=175&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning related party transactions and director independence is incorporated by reference from the company's 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement[571](index=571&type=chunk) [Item 14. Principal Accountant Fees and Services](index=175&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to and services provided by the principal accountant is incorporated by reference from the company's 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the 2025 Proxy Statement[571](index=571&type=chunk) Part IV [Item 15. Exhibit and Financial Statement Schedules](index=176&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - This item contains the list of financial statements, schedules, and exhibits filed with the report[573](index=573&type=chunk)[574](index=574&type=chunk)[575](index=575&type=chunk) [Item 16. Form 10-K Summary](index=176&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for its Form 10-K - None[577](index=577&type=chunk)

Q4 FY2025 Earnings Presentation August 5, 2025 Safe Harbor This presentation and the investor call to which it relates contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties, such as statements about FY2028 targets, forecast, guidance, product offering, capital expenditures, the funding environment, seasonality, and trends (including in enrollment). All statements other than statements of historic ...

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Stride reported record fiscal year 2025 results with significant growth in revenue, net income, and adjusted EPS, while Q4 saw strong adjusted growth despite a one-time charge [Fiscal Year 2025 Performance](index=1&type=section&id=Fiscal%20Year%202025%20Performance) Stride reported a record fiscal year 2025, with significant growth across key financial metrics. Revenue increased by 17.9% to over $2.4 billion, while net income grew by 41.0% to $287.9 million. Adjusted earnings per share saw a substantial rise of 47.5% to $8.10, reflecting strong operational performance Fiscal 2025 Summary Financial Metrics (vs. 2024) | Metric | FY 2025 | FY 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $2,405.3M | $2,040.1M | 17.9% | | Income from operations | $360.1M | $249.6M | 44.3% | | Adjusted operating income | $466.2M | $293.9M | 58.6% | | Net income | $287.9M | $204.2M | 41.0% | | Net income per share, diluted | $5.95 | $4.69 | 26.9% | | Adjusted earnings per share | $8.10 | $5.49 | 47.5% | | Adjusted EBITDA | $571.0M | $390.7M | 46.1% | - The company incurred a one-time impairment charge of **$59.5 million** related to its Galvanize business, which is excluded from adjusted operating income, adjusted EBITDA, and adjusted EPS[4](index=4&type=chunk) [Fourth Quarter Fiscal 2025 Performance](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Performance) In the fourth quarter of fiscal 2025, Stride's revenue grew 22.4% year-over-year to $653.6 million. However, GAAP metrics such as income from operations and net income declined by 22.8% and 18.3% respectively, primarily due to a one-time impairment charge. Adjusted metrics showed strong growth, with adjusted operating income up 48.5% and adjusted EPS up 36.3% Q4 Fiscal 2025 Summary Financial Metrics (vs. Q4 2024) | Metric | Q4 2025 | Q4 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $653.6M | $534.2M | 22.4% | | Income from operations | $56.9M | $73.7M | (22.8%) | | Net income | $51.3M | $62.8M | (18.3%) | | Net income per share, diluted | $1.03 | $1.42 | (27.5%) | | Adjusted operating income | $130.6M | $87.9M | 48.5% | | Adjusted earnings per share | $2.29 | $1.68 | 36.3% | | Adjusted EBITDA | $158.4M | $112.1M | 41.3% | [Detailed Operational and Financial Metrics](index=2&type=section&id=Detailed%20Operational%20and%20Financial%20Metrics) The company achieved robust revenue and enrollment growth, particularly in Career Learning, while strengthening its cash position and maintaining stable capital expenditures [Revenue and Enrollment Analysis](index=2&type=section&id=Revenue%20and%20Enrollment%20Analysis) For fiscal year 2025, total revenue growth of 17.9% was driven by a 20.4% increase in average enrollments, which reached 234.0K. The Career Learning segment was the primary growth engine, with revenue up 27.4% and enrollments up 32.5% year-over-year. Revenue per enrollment remained relatively stable for the full year, increasing by 0.6% FY 2025 Revenue by Segment (vs. 2024) | Segment | FY 2025 Revenue | FY 2024 Revenue | Growth (%) | | :--- | :--- | :--- | :--- | | General Education | $1,448.7M | $1,289.2M | 12.4% | | Career Learning | $956.6M | $750.9M | 27.4% | | - Middle-High School | $876.3M | $651.2M | 34.6% | | - Adult | $80.4M | $99.7M | (19.4%) | | **Total Revenues** | **$2,405.3M** | **$2,040.1M** | **17.9%** | - Full-year average enrollments increased by **20.4%** to **234.0K**, with Career Learning enrollments growing significantly by **32.5%** to **96.3K**[11](index=11&type=chunk) - Full-year revenue per enrollment was **$9,677**, a slight increase of **0.6%** from the prior year. Career Learning revenue per enrollment grew **1.8%** to **$9,104**[15](index=15&type=chunk) [Cash Flow and Capital Allocation](index=3&type=section&id=Cash%20Flow%20and%20Capital%20Allocation) The company's financial position strengthened, with cash, cash equivalents, and marketable securities increasing to $1,011.4 million as of June 30, 2025, up from $714.2 million a year prior. Capital expenditures remained stable at $60.0 million, primarily allocated to capitalized software and curriculum development - Cash, cash equivalents, and marketable securities totaled **$1,011.4 million** at fiscal year-end, a significant increase from **$714.2 million** at the end of fiscal 2024[16](index=16&type=chunk) - Total capital expenditures for fiscal 2025 were **$60.0 million**, slightly down from **$61.6 million** in the previous year. The main components were **$36.4 million** for software development and **$21.8 million** for curriculum development[16](index=16&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) Stride's financial statements for fiscal year 2025 reflect strong revenue and net income growth, a significant increase in total assets and cash, and robust operating cash flow [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the fiscal year ended June 30, 2025, Stride's revenue increased to $2.41 billion from $2.04 billion in the prior year. Gross margin improved to $943.9 million. A significant $59.5 million impairment charge on long-lived assets impacted income from operations, which still grew to $360.1 million. Net income attributable to common stockholders rose to $287.9 million, or $5.95 per diluted share FY 2025 Statement of Operations Highlights (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Revenues | $2,405,317 | $2,040,069 | | Gross margin | $943,919 | $763,603 | | Impairment of long-lived assets | $59,478 | $— | | Income from operations | $360,094 | $249,600 | | Net income attributable to common stockholders | $287,941 | $204,183 | | Diluted net income per share | $5.95 | $4.69 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Stride's total assets grew to $2.29 billion from $1.92 billion in the prior year, driven by a significant increase in cash and cash equivalents. Total liabilities increased moderately to $814.3 million. Total stockholders' equity saw substantial growth, reaching $1.48 billion, up from $1.18 billion at the end of fiscal 2024 Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $782,497 | $500,614 | | Total current assets | $1,632,734 | $1,245,446 | | Total assets | $2,293,959 | $1,920,465 | | Total liabilities | $814,340 | $744,440 | | Total stockholders' equity | $1,479,619 | $1,176,025 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the fiscal year 2025, net cash provided by operating activities increased significantly to $432.8 million from $278.8 million in the prior year. Net cash used in investing activities decreased to $88.0 million. The company experienced a net increase in cash, cash equivalents, and restricted cash of $281.9 million for the year Statement of Cash Flows Highlights (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $432,816 | $278,797 | | Net cash used in investing activities | ($87,995) | ($139,871) | | Net cash used in financing activities | ($62,938) | ($49,119) | | Net change in cash, cash equivalents and restricted cash | $281,883 | $89,807 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Stride utilizes non-GAAP financial measures to provide a clearer view of core operating performance, with detailed reconciliations to comparable GAAP figures [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Stride uses non-GAAP financial measures such as adjusted operating income, EBITDA, adjusted EBITDA, and adjusted EPS to provide investors with additional information on financial performance. These measures exclude items like stock-based compensation, amortization of intangible assets, and other one-time charges to facilitate consistent period-over-period comparisons and are used by management for performance assessment - Non-GAAP measures like adjusted operating income, adjusted EBITDA, and adjusted EPS exclude stock-based compensation, amortization, and one-time charges to provide a clearer view of core operating performance[34](index=34&type=chunk)[35](index=35&type=chunk)[40](index=40&type=chunk) - Management uses these non-GAAP measures to compare operating performance on a consistent basis and for presentations to the Board of Directors[36](index=36&type=chunk)[41](index=41&type=chunk) [Reconciliation of Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The company provides detailed reconciliations of its non-GAAP measures to the most comparable GAAP figures. For fiscal year 2025, income from operations of $360.1 million was adjusted for items including a $59.5 million impairment charge to arrive at an adjusted operating income of $466.2 million. Similarly, net income of $287.9 million was reconciled to an adjusted net income of $372.6 million, resulting in an adjusted EPS of $8.10 FY 2025 Reconciliation of Income from Operations to Adjusted Operating Income (in thousands) | | FY 2025 | | :--- | :--- | | Income from operations (GAAP) | $360,094 | | Amortization of intangible assets | $9,867 | | Stock-based compensation expense | $36,794 | | Impairment of long-lived assets | $59,478 | | **Adjusted operating income (Non-GAAP)** | **$466,233** | FY 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | FY 2025 | | :--- | :--- | | Net income (GAAP) | $287,941 | | Adjustments (Interest, Tax, D&A, etc.) | $186,822 | | **EBITDA (Non-GAAP)** | **$474,763** | | Stock-based compensation expense | $36,794 | | Impairment of long-lived assets | $59,478 | | **Adjusted EBITDA (Non-GAAP)** | **$571,035** | FY 2025 Reconciliation of Diluted EPS to Adjusted EPS | | FY 2025 | | :--- | :--- | | Diluted net income per share (GAAP) | $5.95 | | Adjustments (Amortization, Stock Comp, Impairment, Tax Effect, etc.) | $2.15 | | **Adjusted earnings per share (Non-GAAP)** | **$8.10** | [Other Information](index=3&type=section&id=Other%20Information) This section provides details on the upcoming conference call for financial results and important disclosures regarding forward-looking statements and associated risks [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Stride will host a conference call to discuss its fourth quarter and full fiscal year 2025 financial results on Tuesday, August 5, 2025, at 5:00 p.m. Eastern Time. A live webcast and replay will be available on the company's investor relations website - A conference call to discuss Q4 and FY2025 results is scheduled for Tuesday, August **5**, **2025**, at **5:00 p.m.** ET[17](index=17&type=chunk) - Investors can access a live webcast and replay of the call on Stride's investor relations website[18](index=18&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This press release includes forward-looking statements that involve substantial risks and uncertainties. These statements are based on current beliefs and information, and actual results could differ materially. The company outlines numerous risk factors, including changes in per-pupil funding, enrollment levels, regulatory changes, and cybersecurity threats, and undertakes no obligation to update these statements - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[20](index=20&type=chunk) - Key risks include reduction of per-pupil funding, failure to achieve enrollment levels, regulatory changes, cybersecurity attacks, and risks related to artificial intelligence[20](index=20&type=chunk)[21](index=21&type=chunk)