Stride(LRN) - 2026 Q1 - Quarterly Report

Financial Performance - Revenues for the three months ended September 30, 2025, increased to $620.9 million, up 12.7% from $551.1 million in the prior year[165] - Operating income for the same period rose to $69.0 million, a 45.9% increase from $47.3 million in the prior year, driven by revenue growth and an increase in gross margin[165] - Net income attributable to common stockholders was $68.8 million, or 11.1% of revenues, compared to $40.9 million, or 7.4%, in the prior year[180] - Other income, net for the three months ended September 30, 2025, was $16.9 million, an increase from $8.8 million in the prior year[185] - The effective income tax rate decreased to 17.3% for the three months ended September 30, 2025, from 21.6% in the prior year, primarily due to stock-based compensation[186] Enrollment and Education Services - Total enrollments for the three months ended September 30, 2025, were 247.7 thousand, an increase of 25.1 thousand, or 11.3%, over the prior year[165] - General Education revenues reached $363.1 million, a 10.2% increase from $329.4 million in the prior year[173] - Career Learning revenues totaled $257.8 million, reflecting a 16.3% increase from $221.7 million in the prior year[173] - Enrollment in Career Learning programs increased by 20.0%, from 91.7 thousand to 110.0 thousand[170] - The company graduated 19,045 high school students from partner schools in the most recent academic year ended June 30, 2025[156] Expenses and Costs - Instructional costs and services expenses were $378.8 million, up $43.6 million, or 13.0%, from $335.2 million, representing 61.0% of revenues, an increase from 60.8%[182] - Selling, general, and administrative expenses were $173.1 million, an increase of $4.6 million, or 2.7%, and represented 27.9% of revenues, down from 30.6%[183] Cash Flow and Financing - Net cash used in operating activities was $195.8 million for the three months ended September 30, 2025, compared to $142.0 million in the same period of 2024, reflecting a $53.8 million increase[194] - Net cash used in investing activities was $24.7 million, an increase of $3.8 million from $20.9 million in the prior year, primarily due to higher capital expenditures[195] - Net cash used in financing activities was $43.6 million, up $23.6 million from $20.0 million in the prior year, mainly due to increased stock repurchase and finance lease repayments[196] - The company issued $420.0 million in Convertible Senior Notes due 2027, with net proceeds of approximately $408.6 million after expenses[188] Strategic Initiatives - The company has expanded its Career Learning opportunity by acquiring three adult learning companies, enhancing its offerings in software engineering and healthcare[163] - The company is exploring acquisitions, strategic investments, and joint ventures that may be financed through cash, stock, debt, or asset contributions[193] - The company expects to finance future lease payments from cash generated from operations and believes current working capital will be adequate for ongoing operations in both the short and long term[193] Lease and Asset Management - The average duration of agreements for the school-as-a-service offering is greater than five years, with most providing for automatic renewals[162] - Individual leases with BALC have 36-month payment terms and fixed rates ranging from 4.87% to 6.72%[191] - The total lease payments are calculated using the company's incremental borrowing rate as the implied interest rate[191] - The company pledged financed assets to secure outstanding leases[191] - An increase in cash used in investing activities was partially offset by higher net maturities of marketable securities of $5.4 million year over year[195] - The increase in cash used in operating activities was partially offset by higher net income adjusted for non-cash items[194]