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 Data and Key Metrics Changes - Total revenue for Q3 was $613.4 million, an increase of 17.8% year-over-year [12] - Adjusted operating income was $141.7 million, up 47% [16] - Adjusted EBITDA reached $168.3 million, up 40% [16] - Gross margins improved to 40.6%, up 190 basis points from last year [15] - Diluted earnings per share for the quarter were $2.20 [16] Business Line Data and Key Metrics Changes - Revenue from career learning, middle, and high school programs grew to $223.9 million, up 33% [12] - General education revenue was $370.8 million, up 13% [12] - Enrollment in career learning programs increased by 34% to 98,700 [12] - Average enrollments rose 14% from last year to 141,500 [13] Market Data and Key Metrics Changes - Enrollment was up over 21% from last year, setting the company up for continued growth [11] - Demand for full-time online programs remains strong, with 27% of parents considering such options [6] - Application volumes have grown significantly, almost doubling compared to two years ago and quadrupling compared to four years ago [9] Company Strategy and Development Direction - The company aims to leverage its core capabilities to deliver innovative, outcomes-driven solutions for over 50 million students [9] - Focus on building an enduring business for the next 25 years while celebrating its 25th anniversary [8] - Plans to invest in tutoring and socialization opportunities for students in online programs [61][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing the year with more enrollments than started, marking the third consecutive year of growth [11] - The macro environment remains favorable, with strong demand trends supporting future growth [6] - Management noted a generally favorable funding environment for FY 2026 [14] Other Important Information - The company raised its full-year revenue guidance to a range of $2.37 to $2.385 billion, up from $2.32 to $2.355 billion [18] - Capital expenditures for the quarter were $15.8 million, slightly down from $16.3 million [17] - Free cash flow was $37.3 million, down from $52.2 million due to timing of cash receipts [17] Q&A Session Summary Question: Strong enrollment growth in Career Learning program - Management acknowledged ongoing tests to develop a separate funnel for career learning but noted challenges in cracking the code [20][22] Question: Improving socialization opportunities for online students - Management discussed initiatives like the K-12 zone and geographic pods to enhance socialization for students [24][26] Question: Marketing strategy and spend - Management indicated that marketing strategies will remain consistent, focusing on testing and optimizing media placements without significantly increasing spend [34][38] Question: Impact of federal policies on demand - Management expressed confidence that the current administration's focus on choice will positively impact demand, particularly at the state level [41] Question: Growth in Career Learning and missed opportunities in lower grades - Management highlighted strong growth in middle and high school but acknowledged the need to improve communication and offerings in lower grades [46][47] Question: Constraints on enrollment due to school policies - Management confirmed that some schools have closed enrollment windows, impacting the ability to meet demand [50][51] Question: Future gross margin expansion - Management indicated that while gross margins are currently strong, they do not expect significant increases beyond current levels [59][60]

Financial Performance - Q3 FY25 revenue reached $613.4 million, an 18% year-over-year increase[9] - Adjusted Operating Income for Q3 FY25 was $141.7 million, a 47% year-over-year increase[9] - Adjusted EBITDA for Q3 FY25 was $168.3 million, a 40% year-over-year increase[9] - Revenue for the first nine months of FY25 reached $1751.7 million, a 16% year-over-year increase[9] - Adjusted Operating Income for the first nine months of FY25 was $335.7 million, a 63% year-over-year increase[9] - Adjusted EBITDA for the first nine months of FY25 was $412.6 million, a 48% year-over-year increase[9] Enrollment Trends - Average Q3 enrollments reached 240200, up 21.1% from the prior year[7] - General Education enrollments increased by 16900, up 14% year-over-year[17] - Career Learning enrollments increased by 24900, up 34% year-over-year[17] Guidance and Targets - The company increased its full-year revenue guidance to a range of $2370 billion to $2385 billion[18] - The company increased its full-year Adjusted Operating Income guidance to a range of $455 million to $465 million[18]

Financial Data and Key Metrics Changes - Total revenue for Q3 was $613.4 million, an increase of 17.8% year-over-year [12] - Adjusted operating income was $141.7 million, up 47% [17] - Adjusted EBITDA reached $168.3 million, up 40% [17] - Gross margins improved to 40.6%, up 190 basis points from last year [15] - Diluted earnings per share for the quarter were $2.20 [17] - Free cash flow was $37.3 million, down from $52.2 million due to timing of cash receipts [18] Business Line Data and Key Metrics Changes - Revenue from career learning, middle and high school programs grew to $223.9 million, up 33% [12] - General education revenue was $370.8 million, up 13% [12] - Enrollment in career learning programs increased by 34% to 98,700 [12] - Average enrollments rose 14% from last year to 141,500 [13] Market Data and Key Metrics Changes - Demand for full-time online programs remains strong, with 27% of parents considering such options [5] - Application volumes have grown significantly, nearly doubling compared to two years ago and quadrupling compared to four years ago [9] Company Strategy and Development Direction - The company aims to leverage its core capabilities to deliver innovative, outcomes-driven solutions for over 50 million students [9] - Focus on building an enduring business for the next 25 years while celebrating its 25th anniversary [8] - Plans to invest in tutoring and socialization opportunities for students in online programs [26][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing the fiscal year with more enrollments than started, marking the third consecutive year of growth [11] - The macro environment remains favorable, with strong demand trends supporting future growth [5][10] - Management noted that less than 5% of overall revenues come from federal sources, indicating limited impact from federal funding changes [14] Other Important Information - The company raised its full-year revenue guidance to a range of $2.37 to $2.385 billion, up from previous guidance [18] - Capital expenditures for the year are expected to remain between $60 and $65 million [19] Q&A Session Summary Question: Strong enrollment growth in Career Learning program - Management acknowledged ongoing tests to develop a separate enrollment funnel for career learning but noted challenges in cracking the code [21][23] Question: Improving socialization opportunities for online students - Management highlighted initiatives like the K-12 zone and geographic pods to enhance socialization for students [25][27] Question: Marketing strategy and spend - Management indicated that marketing strategies will remain consistent, focusing on testing and optimizing without significantly increasing spend [33][37] Question: Impact of federal policies on demand - Management expressed confidence that the current administration's focus on choice will positively impact demand, particularly at the state level [40][41] Question: Growth in middle and high school areas - Management noted strong growth in these areas but emphasized the need to improve communication and offerings for lower grades [45][46] Question: Enrollment constraints due to closed windows - Management confirmed that demand continues to grow, but enrollment windows often close during this period, limiting capacity to meet demand [48][50] Question: Impact of uncertainty on demand - Management indicated that local uncertainties, such as school safety and district-level volatility, have positively influenced demand [55] Question: Future gross margin expansion - Management expects continued efficiency improvements but does not anticipate significant increases in gross margins beyond current levels [57][58]