Stride(LRN) - 2025 Q2 - Quarterly Report

Revenue Growth - For the six months ended December 31, 2024, revenues increased to $1,138.3 million from$985.0 million in the prior year, an increase of 15.6%[170] - Revenues for the three months ended December 31, 2024, were $587.2 million, an increase of$82.3 million, or 16.3%, from $504.9 million in the same period of 2023[196] - For the six months ended December 31, 2024, revenues were$1,138.3 million, an increase of $153.3 million, or 15.6$985.0 million in the same period of 2023[203] Operating Performance - Operating income for the same period increased to $172.4 million from$87.6 million, driven by revenue growth and an increase in gross margin[170] - Net income attributable to common stockholders for the three months ended December 31, 2024, was $96.4 million, or 16.4$66.8 million, or 13.2%, in the prior year[195] Enrollment Statistics - Total enrollments for the six months ended December 31, 2024, were 228.7 thousand, an increase of 36.9 thousand, or 19.2%, over the prior year[170] - General Education revenues increased by $40.4 million, or 12.9$41.9 million, or 22.0%, driven by a 30.9% increase in enrollments[196] Expenses - Instructional costs and services expenses for the three months ended December 31, 2024, were $347.4 million, an increase of$43.7 million, or 14.4%, from $303.7 million in the prior year[197] - Instructional costs and services expenses for the six months ended December 31, 2024, were$682.6 million, an increase of $71.6 million, or 11.7$611.0 million in the prior year[204] - Selling, general, and administrative expenses decreased by $2.1 million, or 1.8$114.8 million, representing 19.5% of revenues[198] Cash Flow and Working Capital - Net cash provided by operating activities for the six months ended December 31, 2024, was $81.4 million, compared to$38.0 million for the same period in 2023, reflecting a $43.4 million increase[219] - Net cash used in investing activities decreased to$35.7 million for the six months ended December 31, 2024, down from $68.8 million in the prior year, a decrease of$33.1 million[221] - Net cash used in financing activities increased to $28.7 million for the six months ended December 31, 2024, compared to$25.7 million in the prior year, an increase of $3.0 million[222] - As of December 31, 2024, the company had net working capital of$1,157.8 million, including cash and cash equivalents of $515.1 million[209] Financing Activities - The company issued$420.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2027, with net proceeds of approximately $408.6 million after fees[210] - The initial conversion rate for the Notes is 18.9109 shares of common stock per$1,000 principal amount, equating to an initial conversion price of approximately $52.88 per share[213] - The finance lease liability as of December 31, 2024, was$93.9 million, up from $55.6 million as of June 30, 2024[215] - The company entered into a$100.0 million senior secured revolving credit facility, which was repaid using proceeds from the Notes, leaving no outstanding balance as of December 31, 2024[214] Strategic Initiatives - The company continues to explore acquisitions, strategic investments, and joint ventures to enhance its business operations[218] - The company expects to finance ongoing operations through generated cash, borrowing on the Credit Facility, and net working capital[218] - The cost of the Capped Call Transactions related to the Notes was $60.4 million, recorded within additional paid-in capital[212] Service Offerings - The average duration of agreements for the school-as-a-service offering is greater than five years, with most providing for automatic renewals[168] - Stride provides its school-as-a-service offering to 89 schools in 31 states and the District of Columbia in the General Education market[168] - The company operates in two lines of revenue: General Education and Career Learning, with the majority of revenue derived from the comprehensive school-as-a-service offering[179] - Stride has served millions of students, graduating 15,987 high school students from partner schools in the most recent academic year ended June 30, 2024[161] - The company has invested over$700 million in the last twenty years to develop curriculum, systems, instructional practices, and support services[187]