8-K
Stride, Inc. (LRN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | January 25, 2022 | |
|---|---|---|
| Stride, Inc. | ||
| --- | ||
| (Exact name of registrant as specified in its charter) | ||
| Delaware | 001-33883 | 95-4774688 |
| --- | --- | --- |
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 2300 Corporate Park Drive,<br><br> <br>Herndon, Virginia | 20171 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant’s telephone number, including area code: | (703) 483-7000 | |
| --- | --- | |
| Former name or former address, if changed since last report | ||
| --- |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Securities registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common Stock, $0.0001 par value per share | LRN | New York Stock Exchange (NYSE) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02
Results of Operations and Financial Condition.
On January 25, 2022, Stride, Inc. (the “Company”) issued a press release announcing its financial results for the second fiscal quarter ended December 31, 2021. A copy of the Company’s press release is furnished herewith as Exhibit 99.1.
The information contained in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
| Exhibit<br><br> <br>No. | Description |
|---|---|
| 99.1 | Press Release regarding financial results for the quarter ended December 31, 2021 |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Stride, Inc. | |
|---|---|
| Date: January 25, 2022 | By: /s/ Vincent W. Mathis |
| Name: Vincent W. Mathis | |
| Title: Executive Vice President, General Counsel and Secretary |
Exhibit 99.1
Demand for Stride Career Learning Continues to Drive Strong Performance
HERNDON, Va.--(BUSINESS WIRE)--January 25, 2022--Stride, Inc. (NYSE: LRN), one of the nation’s leading technology-based education companies, today announced its results for the second fiscal quarter ended December 31, 2021.
Second Quarter Fiscal 2022 Highlights Compared to 2021
- Revenue of $409.5 million, compared with $376.1 million, driven by continued strength in middle and high school Career Learning enrollments, growth in Adult Learning, and increases in revenue per enrollment.
- Income from operations of $56.9 million, compared with $38.5 million, due to improved gross margins and flat selling, general and administrative expenses.
- Net income of $42.0 million, compared with $24.5 million.
- Diluted net income per share of $1.00, compared with $0.60.
- Adjusted operating income of $60.7 million, compared with $50.1 million. (1)
- Adjusted EBITDA of $82.7 million, compared with $70.7 million. (1)
Second Quarter Fiscal 2022 Summary Financial Metrics
| Three Months Ended December 31, | Change 2021/2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | $ | % | |||||
| (In thousands, except percentages and per share data) | ||||||||
| Revenues | $ | 409,507 | $ | 376,145 | $ | 33,362 | 8.9 | % |
| Income from operations | 56,915 | 38,452 | 18,463 | 48.0 | % | |||
| Adjusted operating income (1) | 60,731 | 50,050 | 10,681 | 21.3 | % | |||
| Net income | 42,004 | 24,501 | 17,503 | 71.4 | % | |||
| Net income per share, diluted | 1.00 | 0.60 | 0.40 | 66.7 | % | |||
| EBITDA (1) | 82,095 | 61,613 | 20,482 | 33.2 | % | |||
| Adjusted EBITDA (1) | 82,697 | 70,687 | 12,010 | 17.0 | % |
Six Month Fiscal 2022 Highlights Compared to 2021
- Revenue of $809.7 million, compared with $747.1 million.
- Income from operations of $49.9 million, compared with $50.5 million.
- Net income of $36.1 million, compared with $37.2 million.
- Diluted net income per share of $0.85, compared with $0.89.
- Adjusted operating income of $65.3 million, compared with $73.1 million. (1)
- Adjusted EBITDA of $108.2 million, compared with $109.9 million. (1)
Six Month Fiscal 2022 Summary Financial Metrics
| Six Months Ended December 31, | Change 2021/2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % | ||||||
| (In thousands, except percentages and per share data) | ||||||||
| Revenues | $ | 809,733 | $ | 747,105 | $ | 62,628 | 8.4 | % |
| Income from operations | 49,938 | 50,516 | (578 | -1.1 | % | |||
| Adjusted operating income (1) | 65,253 | 73,059 | (7,806 | -10.7 | % | |||
| Net income | 36,121 | 37,167 | (1,046 | -2.8 | % | |||
| Net income per share, diluted | 0.85 | 0.89 | (0.04 | -4.5 | % | |||
| EBITDA (1) | 99,265 | 91,954 | 7,311 | 8.0 | % | |||
| Adjusted EBITDA (1) | 108,153 | 109,921 | (1,768 | -1.6 | % |
All values are in US Dollars.
| (1) | To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted<br> operating income, EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the<br> most directly comparable GAAP financial measures is provided below. |
|---|
Revenue and Enrollment Data
Revenue
The following table sets forth the Company’s revenues for the periods indicated:
| Three Months Ended | Six Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | Change 2021 / 2020 | December 31, | Change 2021 / 2020 | |||||||||||||
| 2021 | 2020 | % | 2021 | 2020 | % | |||||||||||
| (In thousands, except percentages) | ||||||||||||||||
| General Education | $ | 313,241 | $ | 313,989 | ) | (0.2 | %) | $ | 619,582 | $ | 627,838 | ) | (1.3 | %) | ||
| Career Learning | ||||||||||||||||
| Middle - High School | 75,287 | 51,376 | 46.5 | % | 146,699 | 100,147 | 46.5 | % | ||||||||
| Adult | 20,979 | 10,780 | 94.6 | % | 43,452 | 19,120 | 127.3 | % | ||||||||
| Total Career Learning | 96,266 | 62,156 | 54.9 | % | 190,151 | 119,267 | 59.4 | % | ||||||||
| Total Revenues | $ | 409,507 | $ | 376,145 | 8.9 | % | $ | 809,733 | $ | 747,105 | 8.4 | % |
All values are in US Dollars.
Enrollment Data
The following table sets forth total enrollment data for students in our General Education and Career Learning lines of revenue. Enrollments for General Education and Career Learning include those students in full service public or private programs where Stride provides a combination of curriculum, technology, instructional and support services inclusive of administrative support.
| Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | 2021 / 2020 | December 31, | 2021 / 2020 | |||||||||||||||
| 2021 | 2020 | # | % | 2021 | 2020 | # | % | |||||||||||
| (In thousands, except percentages) | ||||||||||||||||||
| General Education (1) | 145.6 | 161.2 | (15.6 | ) | (9.7 | %) | 146.1 | 162.0 | (15.9 | ) | (9.8 | %) | ||||||
| Career Learning (1)(2) | 41.9 | 30.3 | 11.6 | 38.3 | % | 41.9 | 30.4 | 11.5 | 37.8 | % | ||||||||
| Total Enrollment | 187.5 | 191.5 | (4.0 | ) | (2.1 | %) | 188.0 | 192.4 | (4.4 | ) | (2.3 | %) | ||||||
| (1) | This data includes enrollments for which Stride receives no public funding or revenue. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| (2) | No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts. |
Revenue per Enrollment Data
The following table sets forth revenue per average enrollment data for students for the period indicated. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.
| Three Months Ended | Change | Six Months Ended | Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | 2021 / 2020 | December 31, | 2021 / 2020 | |||||||||||||
| 2021 | 2020 | # | % | 2021 | 2020 | # | % | |||||||||
| General Education | $ | 1,953 | $ | 1,755 | $ | 198 | 11.3 | % | $ | 3,852 | $ | 3,491 | $ | 361 | 10.3 | % |
| Career Learning | 1,794 | 1,681 | 113 | 6.7 | % | 3,482 | 3,258 | 224 | 6.9 | % |
Cash Flow and Capital Allocation
As of December 31, 2021, the Company’s cash and cash equivalents totaled $257.0 million, compared with $386.1 million reported at June 30, 2021. The decrease is largely the result of normal seasonal trends.
Capital expenditures for the first six months of fiscal 2022 were $29.5 million, compared to $23.6 million in the first six months of fiscal 2021, and were comprised of $2.7 million of property and equipment, $19.3 million of capitalized software development, and $7.5 million of capitalized curriculum development.
Fiscal Year 2022 Outlook
The Company is raising its forecast for the full fiscal year 2022:
- Revenue in the range of $1.62 billion to $1.64 billion.
- Capital expenditures in the range of $65 million to $75 million. Note that capital expenditures include the purchase of property and equipment, capitalized software, and curriculum development costs as defined on our Statement of Cash Flows.
- Effective tax rate of 27% to 30%.
- Adjusted operating income in the range of $175 million to $185 million. (1)
The Company is forecasting the following for the third quarter fiscal 2022:
- Revenue in the range of $405 million to $415 million.
- Capital expenditures in the range of $15 million to $18 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software and curriculum development costs as defined on our Statement of Cash Flows.
- Adjusted operating income in the range of $60 million to $65 million. (1)
| (1) | In addition to providing an outlook for revenue and capital expenditures, adjusted operating income is provided as a supplemental non-GAAP financial measure as management believes that it<br> provides useful information to our investors. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Please also see Special Note on Forward Looking Statements<br> below. |
|---|
Conference Call
The Company will discuss its second quarter fiscal year 2022 financial results during a conference call scheduled for Tuesday, January 25, 2022 at 5:00 p.m. eastern time (ET).
A live webcast of the call will be available at https://events.q4inc.com/attendee/148057977. To participate in the live call, investors and analysts should dial (888) 210-2831 (domestic) or 1 (289) 514-2968 (international) at 4:45 p.m. ET. The conference ID number is 4812941. Please access the website at least 15 minutes prior to the start of the call.
A replay of the call will be available starting on January 25, 2022 at 8:00 p.m. ET through February 25, 2022 at 8:00 p.m. ET by dialing (800) 770- 2030 (domestic) or 1 (647) 362 9199 (international) and entering the conference ID 4812941. A webcast replay will be available at https://events.q4inc.com/attendee/148057977 for 30 days.
About Stride Inc.
At Stride, Inc. (NYSE: LRN) we are reimagining learning – where learning is lifelong, deeply personal, and prepares learners for tomorrow. The company has transformed the teaching and learning experience for millions of people by providing innovative, high-quality, tech-enabled education solutions, curriculum, and programs directly to students, schools, the military, and enterprises in primary, secondary, and post-secondary settings. Stride is a premier provider of K-12 education for students, schools, and districts, including career learning services through middle and high school curriculum. For adult learners, Stride delivers professional skills training in healthcare and technology, as well as staffing and talent development for Fortune 500 companies. Stride has delivered millions of courses over the past decade and serves learners in all 50 states and more than 100 countries. The company is a proud sponsor of the Future of School, a nonprofit organization dedicated to closing the gap between the pace of technology and the pace of change in education. More information can be found at stridelearning.com, K12.com, galvanize.com, techelevator.com, and medcerts.com.
Special Note on Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,” “likely,” “may,” “opportunity,” “potential,” “projects,” “will,” “expects,” “plans,” “intends” and similar expressions to identify forward looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve a sufficient level of new enrollments to sustain our business model; limitations of the enrollment data we present, which may not fully capture trends in the performance of our business; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; failure of the schools we serve or us to comply with federal, state and local regulations, resulting in a loss of funding, an obligation to repay funds previously received, or contractual remedies; governmental investigations that could result in fines, penalties, settlements, or injunctive relief; declines or variations in academic performance outcomes of the students and schools we serve as curriculum standards, testing programs and state accountability metrics evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and/or in any school in which we operate; legal and regulatory challenges from opponents of virtual public education or for-profit education companies; changes in national and local economic and business conditions and other factors, such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as coronavirus disease 2019 (“COVID-19”); discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts, or a reduction in the scope of services, with schools; failure to develop the career readiness education business; entry of new competitors with superior technologies and lower prices; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement of our intellectual property; disruptions to our Internet-based learning and delivery systems, including, but not limited to, our data storage systems, resulting from cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; and failure to prevent a cybersecurity incident that affects our systems; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this presentation is as of today’s date, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
Financial Statements
The financial statements set forth below are not the complete set of Stride Inc.’s financial statements for the three and six months ended December 31, 2021 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, including all financial statements contained therein and the footnotes thereto, filed with the SEC, which may be retrieved from the SEC’s website at www.sec.gov or from Stride Inc.’s website at www.stridelearning.com.
| STRIDE, INC. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (In thousands except share and per share data) | ||||||||||||
| Revenues | $ | 409,507 | $ | 376,145 | $ | 809,733 | $ | 747,105 | ||||
| Instructional costs and services | 261,950 | 246,754 | 535,774 | 487,823 | ||||||||
| Gross margin | 147,557 | 129,391 | 273,959 | 259,282 | ||||||||
| Selling, general, and administrative expenses | 90,642 | 90,939 | 224,021 | 208,766 | ||||||||
| Income from operations | 56,915 | 38,452 | 49,938 | 50,516 | ||||||||
| Interest expense, net | (1,875 | ) | (5,024 | ) | (3,868 | ) | (7,131 | ) | ||||
| Other income, net | 3,884 | 1,361 | 3,795 | 1,790 | ||||||||
| Income before income taxes and income (loss) from equity method investments | 58,924 | 34,789 | 49,865 | 45,175 | ||||||||
| Income tax expense | (15,928 | ) | (10,642 | ) | (13,035 | ) | (8,266 | ) | ||||
| Income (loss) from equity method investments | (992 | ) | 354 | (709 | ) | 258 | ||||||
| Net income attributable to common stockholders | $ | 42,004 | $ | 24,501 | $ | 36,121 | $ | 37,167 | ||||
| Net income attributable to common stockholders per share: | ||||||||||||
| Basic | $ | 1.01 | $ | 0.61 | $ | 0.88 | $ | 0.93 | ||||
| Diluted | $ | 1.00 | $ | 0.60 | $ | 0.85 | $ | 0.89 | ||||
| Weighted average shares used in computing per share amounts: | ||||||||||||
| Basic | 41,525,736 | 40,160,362 | 41,042,401 | 40,072,360 | ||||||||
| Diluted | 41,963,399 | 41,102,425 | 42,413,828 | 41,681,061 |
| STRIDE, INC. | |||||
|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| June 30, | |||||
| 2021 | |||||
| (audited) | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 256,986 | $ | 386,080 | ||
| Accounts receivable, net of allowance of 26,305 and 21,384 | 430,436 | 369,303 | |||
| Inventories, net | 23,941 | 39,690 | |||
| Prepaid expenses | 29,240 | 19,453 | |||
| Other current assets | 75,528 | 43,004 | |||
| Total current assets | 816,131 | 857,530 | |||
| Operating lease right-of-use assets, net | 91,410 | 94,671 | |||
| Property and equipment, net | 74,149 | 72,069 | |||
| Capitalized software, net | 60,520 | 57,308 | |||
| Capitalized curriculum development costs, net | 49,787 | 50,376 | |||
| Intangible assets, net | 95,210 | 99,480 | |||
| Goodwill | 240,921 | 240,353 | |||
| Deposits and other assets | 97,617 | 105,510 | |||
| Total assets | 1,525,745 | $ | 1,577,297 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 33,821 | $ | 62,144 | ||
| Accrued liabilities | 61,462 | 77,642 | |||
| Accrued compensation and benefits | 41,193 | 80,363 | |||
| Deferred revenue | 50,409 | 38,110 | |||
| Current portion of finance lease liability | 36,080 | 27,336 | |||
| Current portion of operating lease liability | 15,233 | 20,649 | |||
| Total current liabilities | 238,198 | 306,244 | |||
| Long-term finance lease liability | 44,612 | 41,568 | |||
| Long-term operating lease liability | 79,020 | 77,458 | |||
| Long-term debt | 410,674 | 299,271 | |||
| Deferred tax liability | 8,282 | 31,853 | |||
| Other long-term liabilities | 10,726 | 16,255 | |||
| Total liabilities | 791,512 | 772,649 | |||
| Commitments and contingencies | |||||
| Stockholders’ equity | |||||
| Preferred stock, par value 0.0001; 10,000,000 shares authorized; zero shares issued or outstanding | — | — | |||
| Common stock, par value 0.0001; 100,000,000 shares authorized; 48,084,410 and 46,911,527 shares issued; and 42,749,667 and 41,576,784 shares<br> outstanding, respectively | 4 | 4 | |||
| Additional paid-in capital | 680,601 | 795,449 | |||
| Accumulated other comprehensive income (loss) | (343 | ) | (474 | ) | |
| Retained earnings | 156,453 | 112,151 | |||
| Treasury stock of 5,334,743 shares at cost | (102,482 | ) | (102,482 | ) | |
| Total stockholders’ equity | 734,233 | 804,648 | |||
| Total liabilities and stockholders' equity | 1,525,745 | $ | 1,577,297 |
All values are in US Dollars.
| STRIDE, INC. | ||||||
|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| Six Months Ended | ||||||
| December 31, | ||||||
| 2021 | 2020 | |||||
| (In thousands) | ||||||
| Cash flows from operating activities | ||||||
| Net income | $ | 36,121 | $ | 37,167 | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||
| Depreciation and amortization expense | 49,327 | 41,438 | ||||
| Stock-based compensation expense | 8,888 | 17,967 | ||||
| Deferred income taxes | 6,008 | 5,375 | ||||
| Provision for doubtful accounts | 4,730 | 6,382 | ||||
| Amortization of discount and fees on debt | 809 | 4,973 | ||||
| Noncash operating lease expense | 10,074 | 9,627 | ||||
| Other | 5,550 | 7,244 | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | (65,606 | ) | (208,870 | ) | ||
| Inventories, prepaid expenses, deposits and other current and long-term assets | 11,944 | (23,231 | ) | |||
| Accounts payable | (26,810 | ) | (7,202 | ) | ||
| Accrued liabilities | (8,570 | ) | 4,346 | |||
| Accrued compensation and benefits | (39,157 | ) | (5,401 | ) | ||
| Operating lease liability | (10,662 | ) | (10,364 | ) | ||
| Deferred revenue and other liabilities | 5,686 | 40,592 | ||||
| Net cash used in operating activities | (11,668 | ) | (79,957 | ) | ||
| Cash flows from investing activities | ||||||
| Purchase of property and equipment | (2,705 | ) | (1,969 | ) | ||
| Capitalized software development costs | (19,330 | ) | (14,061 | ) | ||
| Capitalized curriculum development costs | (7,461 | ) | (7,524 | ) | ||
| Sale of long-lived assets | — | 223 | ||||
| Sale of other investments | 5,261 | — | ||||
| Acquisition of MedCerts, LLC, net of cash acquired | — | (54,775 | ) | |||
| Acquisition of Tech Elevator, Inc., net of cash acquired | — | (15,981 | ) | |||
| Other acquisitions, loans and investments, net of distributions | (3,956 | ) | (188 | ) | ||
| Proceeds from the maturity of marketable securities | 7,248 | — | ||||
| Purchases of marketable securities | (38,720 | ) | — | |||
| Net cash used in investing activities | (59,663 | ) | (94,275 | ) | ||
| Cash flows from financing activities | ||||||
| Repayments on finance lease obligations | (14,744 | ) | (11,455 | ) | ||
| Repayments on credit facility | — | (100,000 | ) | |||
| Issuance of convertible senior notes, net of issuance costs | — | 408,610 | ||||
| Purchases of capped calls in connection with convertible senior notes | — | (60,354 | ) | |||
| Payments of deferred purchase consideration | (7,858 | ) | — | |||
| Proceeds from exercise of stock options | 246 | 303 | ||||
| Withholding of stock options for tax withholding | — | (10,885 | ) | |||
| Repurchase of restricted stock for income tax withholding | (35,404 | ) | (6,108 | ) | ||
| Net cash provided by (used in) financing activities | (57,760 | ) | 220,111 | |||
| Net change in cash, cash equivalents and restricted cash | (129,091 | ) | 45,879 | |||
| Cash, cash equivalents and restricted cash, beginning of period | 386,582 | 213,299 | ||||
| Cash, cash equivalents and restricted cash, end of period | $ | 257,491 | $ | 259,178 | ||
| Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||||||
| Cash and cash equivalents | $ | 256,986 | $ | 258,107 | ||
| Other current assets (restricted cash) | 505 | 571 | ||||
| Deposits and other assets (restricted cash) | — | 500 | ||||
| Total cash, cash equivalents and restricted cash | $ | 257,491 | $ | 259,178 |
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with GAAP, we have presented adjusted operating income, and adjusted EBITDA, which are not presented in accordance with GAAP.
Adjusted operating income (loss) is defined as income (loss) from operations as adjusted for stock-based compensation and the amortization of intangible assets.
Adjusted EBITDA is defined as income (loss) from operations as adjusted for stock-based compensation and depreciation and amortization.
Adjusted EBITDA and adjusted operating income (loss) exclude stock-based compensation, which consists of expenses for stock options, restricted stock, restricted stock units, and performance stock units.
Management believes that the presentation of these non-GAAP financial measures provides useful information to investors relating to our financial performance. These measures remove stock-based compensation, which is a non-cash charge that varies based on market volatility and the terms and conditions of the awards. Adjusted EBITDA also removes depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. Adjusted EBITDA provides a measure of corporate performance exclusive of capital structure and the method by which assets were acquired.
Our management uses these non-GAAP financial measures:
- as additional measures of operating performance because they assist us in comparing our performance on a consistent basis; and
- in presentations to the members of our Board of Directors to enable our Board to review the same measures used by management to compare our current operating results with corresponding prior periods.
Other companies may define these non-GAAP financial measures differently and, as a result, our use of these non-GAAP financial measures may not be directly comparable to similar non-GAAP financial measures used by other companies. Although we use these non-GAAP financial measures to assess the performance of our business, the use of non-GAAP financial measures is limited as they include and/or do not include certain items not included and/or included in the most directly comparable GAAP financial measure.
These non-GAAP financial measures should be considered in addition to, and not as a substitute for, revenues, income (loss), net income (loss) and net income (loss) per share or other related financial information prepared in accordance with GAAP. Adjusted EBITDA is not intended to be a measure of liquidity. You are cautioned not to place undue reliance on these non-GAAP financial measures.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.
Second Quarter Fiscal 2022
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||
| 2021 | 2020 | 2021 | 2020 | |||||
| (In thousands) | ||||||||
| Income from operations | $ | 56,915 | $ | 38,452 | $ | 49,938 | $ | 50,516 |
| Stock-based compensation expense | 602 | 9,074 | 8,888 | 17,967 | ||||
| Amortization of intangible assets | 3,214 | 2,524 | 6,427 | 4,576 | ||||
| Adjusted operating income | 60,731 | 50,050 | 65,253 | 73,059 | ||||
| Depreciation and other amortization | 21,966 | 20,637 | 42,900 | 36,862 | ||||
| Adjusted EBITDA | $ | 82,697 | $ | 70,687 | $ | 108,153 | $ | 109,921 |
| EBITDA | $ | 82,095 | $ | 61,613 | $ | 99,265 | $ | 91,954 |
Fiscal Year 2022 Outlook
| Three Months Ended March 31, 2022 | Year Ended June 30, 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Low | High | Low | High | |||||
| (In millions) | ||||||||
| Income from operations | $ | 50.7 | $ | 54.7 | $ | 142.0 | $ | 150.0 |
| Stock-based compensation expense | 6.0 | 7.0 | 20.0 | 22.0 | ||||
| Amortization of intangible assets | 3.3 | 3.3 | 13.0 | 13.0 | ||||
| Adjusted operating income | $ | 60.0 | $ | 65.0 | $ | 175.0 | $ | 185.0 |
Contacts
Investor Contact
Timothy Casey
Vice President, Investor Relations
Stride, Inc.
tcasey@k12.com