Stride(LRN) - 2025 Q1 - Quarterly Results

Financial Performance Overview Stride's financial performance for Q1 FY2025 demonstrated significant year-over-year growth across key metrics, reflecting strong operational leverage and demand First Quarter Fiscal 2025 Highlights Stride reported significant year-over-year growth in Q1 FY2025, with revenue up 14.8% and profitability surging over 700% Q1 FY2025 Financial Highlights vs. Q1 FY2024 (In thousands, except per share data) | Metric | Q1 FY2025 | Q1 FY2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $551,084 | $480,181 | $70,903 | 14.8% | | Income from operations | $47,344 | $3,320 | $44,024 | 1326.0% | | Net income | $40,882 | $4,878 | $36,004 | 738.1% | | Diluted net income per share | $0.94 | $0.11 | $0.83 | 754.5% | | Adjusted operating income | $58,360 | $14,761 | $43,599 | 295.4% | | Adjusted EBITDA | $83,927 | $39,763 | $44,164 | 111.1% | Key Operational Metrics Student enrollments grew 18.5% year-over-year, driven by a 30.4% rise in Career Learning enrollments, while revenue per enrollment remained stable - Total enrollments for Q1 FY2025 reached 222.6K, an 18.5% increase from 187.9K in the prior year[4] - Career Learning enrollments were a key growth driver, increasing 30.4% year-over-year to 91.7K[4] Revenue Per Enrollment (Q1 FY2025 vs. Q1 FY2024) | Category | Q1 FY2025 | Q1 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue per Enrollment | $2,303 | $2,292 | 0.5% | | General Education | $2,400 | N/A | 0.8% | | Career Learning | $2,166 | N/A | 1.0% | Segment Performance Revenue growth was primarily fueled by a 22.6% increase in the Career Learning segment, led by a strong 31.7% rise in Middle-High School revenue Revenue by Segment Revenue growth was primarily fueled by a 22.6% increase in the Career Learning segment, with the Adult learning sub-segment experiencing a 23.7% decline Revenue by Segment (Three Months Ended September 30, In thousands) | Segment | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | General Education | $329,407 | $299,338 | $30,069 | 10.0% | | Career Learning | | | | | | Middle - High School | $198,885 | $150,974 | $47,911 | 31.7% | | Adult | $22,792 | $29,869 | ($7,077) | (23.7%) | | Total Career Learning | $221,677 | $180,843 | $40,834 | 22.6% | | Total Revenues | $551,084 | $480,181 | $70,903 | 14.8% | Financial Position and Cash Flow Stride maintained a solid liquidity position with $539.4 million in cash and equivalents, despite net cash used in operating activities of $142.0 million Balance Sheet and Liquidity As of September 30, 2024, Stride maintained a solid liquidity position with cash, cash equivalents, and marketable securities totaling $539.4 million - Cash, cash equivalents, and marketable securities totaled $539.4 million as of September 30, 2024, compared to $714.2 million at June 30, 2024[5] Cash Flow and Capital Allocation For the first quarter, the company reported net cash used in operating activities of $142.0 million, with capital expenditures totaling $14.8 million - Net cash used in operating activities for the three months ended September 30, 2024, was $142.0 million[17] Capital Expenditures (Three Months Ended September 30) | Category | 2024 | 2023 | | :--- | :--- | :--- | | Property and equipment | $0.7 million | $1.7 million (approx.) | | Capitalized software development | $8.8 million | $10.0 million | | Capitalized curriculum development | $5.3 million | $4.4 million | | Total Capital Expenditures | $14.8 million | $16.1 million | Fiscal Year 2025 Outlook Stride forecasts FY2025 revenue between $2.225 billion and $2.300 billion, with adjusted operating income projected from $395 million to $425 million Full Year Fiscal 2025 Guidance Stride forecasts full fiscal year 2025 revenue between $2.225 billion and $2.300 billion, and adjusted operating income from $395 million to $425 million Full Fiscal Year 2025 Outlook | Metric | Range | | :--- | :--- | | Revenue | $2.225 billion to $2.300 billion | | Capital expenditures | $60 million to $65 million | | Effective tax rate | 24% to 26% | | Adjusted operating income | $395 million to $425 million | Second Quarter Fiscal 2025 Guidance For the upcoming second quarter of fiscal 2025, the company anticipates continued growth with revenue projected to be between $560 million and $580 million Second Quarter Fiscal Year 2025 Outlook | Metric | Range | | :--- | :--- | | Revenue | $560 million to $580 million | | Capital expenditures | $13 million to $15 million | | Adjusted operating income | $115 million to $125 million | Supplemental Information This section provides details regarding the upcoming conference call to discuss the first-quarter fiscal year 2025 financial results Conference Call Information Stride will host a conference call on Tuesday, October 22, 2024, at 5:00 p.m. ET to discuss its first-quarter fiscal year 2025 financial results - A conference call to discuss Q1 FY2025 results is scheduled for Tuesday, October 22, 2024, at 5:00 p.m. eastern time (ET)[7] - Dial-in numbers for domestic and international participants are (800) 715-9871 and +1 (646) 307-1963 respectively, with conference ID 8901384[8] Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows Unaudited Condensed Consolidated Statements of Operations The statement of operations for the three months ended September 30, 2024, highlights a significant improvement in profitability, with net income increasing to $40.9 million Q1 FY2025 Statement of Operations (In thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $551,084 | $480,181 | | Gross margin | $215,853 | $172,888 | | Income from operations | $47,344 | $3,320 | | Net income | $40,882 | $4,878 | Unaudited Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2024, shows total assets of $1.97 billion, a slight increase from $1.92 billion at June 30, 2024 Consolidated Balance Sheet Highlights (In thousands) | Account | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Total current assets | $1,291,326 | $1,245,446 | | Total assets | $1,971,961 | $1,920,465 | | Total current liabilities | $230,655 | $244,280 | | Total liabilities | $757,615 | $744,440 | | Total stockholders' equity | $1,214,346 | $1,176,025 | Unaudited Condensed Consolidated Statements of Cash Flows For the first quarter, the company reported a net cash usage of $182.8 million, driven by operating activities and investing activities Consolidated Cash Flow Highlights (Three Months Ended Sep 30, In thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($142,004) | ($135,305) | | Net cash used in investing activities | ($20,894) | ($7,065) | | Net cash used in financing activities | ($19,951) | ($13,811) | | Net change in cash | ($182,849) | ($156,181) | | Cash, end of period | $317,765 | $254,626 | Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures, providing a clearer view of the company's consistent operating performance Definition and Rationale of Non-GAAP Measures Stride utilizes non-GAAP financial measures to supplement its GAAP-based financial statements, offering investors useful information by excluding non-cash charges - Adjusted operating income is defined as income from operations adjusted for stock-based compensation and the amortization of intangible assets[19] - Adjusted EBITDA is defined as income from operations adjusted for stock-based compensation, depreciation, and amortization[19] - Management uses these non-GAAP measures to assist in comparing performance on a consistent basis and for presentations to the Board of Directors[20] Reconciliation of Non-GAAP Measures This section provides detailed tables reconciling the company's non-GAAP measures to the most directly comparable GAAP figures for Q1 FY2025 and the FY2025 outlook Q1 Reconciliation of Income from Operations to Adjusted Operating Income (In thousands) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Income from operations | $47,344 | $3,320 | | Amortization of intangible assets | $2,567 | $3,015 | | Stock-based compensation expense | $8,449 | $8,426 | | Adjusted operating income | $58,360 | $14,761 | Q1 Reconciliation of Net Income to EBITDA and Adjusted EBITDA (In thousands) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $40,882 | $4,878 | | Adjustments (Interest, Tax, etc.) | $6,462 | ($1,558) | | Depreciation and amortization | $28,134 | $28,017 | | EBITDA | $75,478 | $31,337 | | Stock-based compensation expense | $8,449 | $8,426 | | Adjusted EBITDA | $83,927 | $39,763 | FY2025 Outlook Reconciliation of Income from Operations to Adjusted Operating Income (In millions) | Description | Q2 2025 Low | Q2 2025 High | FY 2025 Low | FY 2025 High | | :--- | :--- | :--- | :--- | :--- | | Income from operations | $104.3 | $112.3 | $351.5 | $375.5 | | Stock-based compensation | $8.5 | $10.0 | $34.0 | $39.0 | | Amortization of intangibles | $2.2 | $2.7 | $9.5 | $10.5 | | Adjusted operating income | $115.0 | $125.0 | $395.0 | $425.0 |