Stride, Inc.

Previous wording

The two key financial metrics that we use to assess financial performance are revenues and operating income. During the three months ended September 30, 2025, revenues increased to $620.9 million from $551.1 million in the prior year, an increase of 12.7%. Over the same period, operating income increased to $69.0 million from $47.3 million in the prior year, an increase of 45.9%. The increase in operating income was driven by revenue growth and an increase in gross margin. Additionally, we use the non-financial metric of total enrollments to assess performance, as enrollment is a key driver of our revenues. 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. Our revenues are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results from these audits and other routine changes in funding estimates are incorporated into the Company’s monthly funding estimates for the current and prior periods. Historically, aggregate funding estimates have differed from actual reimbursements, generally in the range of 2% of annual revenue or less, which may vary from quarter to quarter.

Current wording

The two key financial metrics that we use to assess financial performance are revenues and operating income. During the six months ended December 31, 2025, revenues increased to $1,252.1 million from $1,138.3 million in the prior year, an increase of 10.0%. Over the same period, operating income increased to $215.8 million from $172.4 million in the prior year, an increase of 25.2%. The increase in operating income was driven by revenue growth and an increase in gross margin. Additionally, we use the non-financial metric of total enrollments to assess performance, as enrollment is a key driver of our revenues. Total enrollments for the six months ended December 31, 2025 were 248.3 thousand, an increase of 19.6 thousand, or 8.6%, over the prior year. Our revenues are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results from these audits and other routine changes in funding estimates are incorporated into the Company’s monthly funding estimates for the current and prior periods. Historically, aggregate funding estimates have differed from actual reimbursements, generally in the range of 2% of annual revenue or less, which may vary from quarter to quarter.

Previous wording

budget proposals, financial reporting, and student data reporting), and technology and materials support (e.g., provisioning of student computers, offline learning kits, internet access and technology support services).

Current wording

Support Services – We provide a broad range of support services, including marketing and enrollment, supporting prospective students through the admission process, assessment management, administrative support (e.g., budget proposals, financial reporting, and student data reporting), and technology and materials support (e.g., provisioning of student computers, offline learning kits, internet access and technology support services).

Previous wording

Comparison of the Three Months Ended September 30,2025 and 2024

Current wording

Comparison of the Three Months Ended December 31,2025 and 2024

Previous wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the three months ended September 30, 2025 were $378.8 million, representing an increase of $43.6 million, or 13.0%, from $335.2 million for the same period in the prior year. This increase in expense was due to hiring of personnel in growth states and salary increases. Instructional costs and services expenses were 61.0% of revenues during the three months ended September 30, 2025, an increase from 60.8% for the three months ended September 30, 2024.

Current wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the three months ended December 31, 2025 were $371.6 million, an increase of $24.2 million, or 7.0%, from $347.4 million for the same period in the prior year. This increase in expense was due to hiring of personnel in growth states and salary increases, partially offset by a lease termination gain related to our San Francisco lease. Instructional costs and services expenses were 58.9% of revenues during the three months ended December 31, 2025, a decrease from 59.2% for the three months ended December 31, 2024.

Previous wording

Interest expense, net. Net interest expense for the three months ended September 30, 2025 was $3.1 million as compared to $2.4 million for the same period in the prior year. The increase in net interest expense was primarily due to an increase in our finance leases.

Current wording

Interest expense, net. Net interest expense for the three months ended December 31, 2025 was $2.8 million as compared to $2.7 million for the same period in the prior year. The increase in net interest expense was primarily due to an increase in our finance leases.

Previous wording

Revenues. Our revenues for the three months ended September 30, 2025 were $620.9 million, representing an increase of $69.8 million, or 12.7%, from $551.1 million for the same period in the prior year. General Education revenues increased $33.7 million, or 10.2%, year over year. The primary drivers for the increase in revenue were a 5.2% increase in enrollments, and changes to school mix. Career Learning revenues increased $36.1 million, or 16.3%, primarily due to a 20.0% increase in enrollments and school mix. In addition, revenue recognized in each of the periods includes certain adjustments resulting from the completion of state and district audits and reconciliation processes related to services provided in prior years. These adjustments were not material and were recognized in the period in which the audit or reconciliation was finalized and the outcome became known and reasonably estimable. While these items contributed to reported revenue in each period, they were not a significant driver of the year over year change.

Current wording

Revenues. Our revenues for the six months ended December 31, 2025 were $1,252.1 million, an increase of $113.8 million, or 10.0%, from $1,138.3 million for the same period in the prior year. General Education revenues increased $20.8 million, or 3.0%, year over year. The primary drivers for the increase in revenue were a 1.9% increase in enrollments, and changes to client mix. Career Learning revenues increased $93.1 million, or 20.5%, primarily due to a 18.1% increase in enrollments and client mix. In addition, revenue recognized in each of the periods includes certain adjustments resulting from the completion of state and district audits and reconciliation processes related to services provided in prior years. These adjustments were not material and were recognized in the period in which the audit or reconciliation was finalized and the outcome became known and reasonably estimable. While these items contributed to reported revenue in each period, they were not a significant driver of the year over year change.

Previous wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the three months ended September 30, 2025 were $173.1 million, representing an increase of $4.6 million, or 2.7% from $168.5 million for the same period in the prior year. The increase was primarily due to an increase of $4.9 million in professional services and marketing expenses and $3.2 million in personnel and related benefit costs, including stock-based compensation, partially offset by a decrease of $3.7 million in bad debt expense. Selling, general, and administrative expenses were 27.9% of revenues during the three months ended September 30, 2025, a decrease from 30.6% for the three months ended September 30, 2024.

Current wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the six months ended December 31, 2025 were $285.9 million, an increase of $2.6 million, or 0.9%, from $283.3 million for the same period in the prior year. The increase was primarily due to an increase of $5.7 million in professional services, partially offset by a decrease of $1.3 million in personnel and related benefit costs, $1.3 million in bad debt expense, and $1.1 million in operating lease expense. Selling, general, and administrative expenses were 22.8% of revenues during the six months ended December 31, 2025, a decrease from 24.9% for the six months ended December 31, 2024.

Previous wording

Other income, net. Other income, net for the three months ended September 30, 2025 was $16.9 million as compared to $8.8 million for the same period in the prior year. The increase in other income, net was due to the increase in our investments in marketable securities and the returns on those investments year over year and other investment income.

Current wording

Other income (expense), net. Other income (expense), net for the six months ended December 31, 2025 was income of $6.1 million as compared to income of $16.1 million for the same period in the prior year. The decrease in other income (expense), net was due to unrealized losses related to our investments in publicly-held equity securities, partially offset by the returns on our investments in marketable securities year over year.

Previous wording

Income tax expense. Income tax expense was $14.4 million for the three months ended September 30, 2025, or 17.3% of income before income taxes, as compared to $11.3 million, or 21.6% of income before income taxes for the same period in the prior year. The decrease in the effective income tax rate for the three months ended September 30, 2025, as compared to the effective tax rate for the three months ended September 30, 2024, was primarily due to stock-based compensation.

Current wording

Income tax expense. Income tax expense was $48.4 million for the six months ended December 31, 2025, or 22.3% of income before income taxes, as compared to $44.6 million, or 24.5% of income before income taxes for the same period in the prior year. The decrease in the effective income tax rate for the six months ended December 31, 2025, as compared to the effective tax rate for the six months ended December 31, 2024, was primarily due to stock-based compensation.

Previous wording

As of September 30, 2025, we had net working capital, or current assets minus current liabilities, of $1,406.5 million. Our working capital includes cash and cash equivalents of $518.4 million and accounts receivable of $809.3 million. Our working capital provides a significant source of liquidity for our normal operating needs. Our accounts receivable balance fluctuates throughout the fiscal year based on the timing of customer billings and collections and tends to be highest in our first fiscal quarter as we begin billing for students. In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at September 30, 2025.

Current wording

As of December 31, 2025, we had net working capital, or current assets minus current liabilities, of $1,380.2 million. Our working capital includes cash and cash equivalents of $497.1 million and accounts receivable of $869.0 million. Our working capital provides a significant source of liquidity for our normal operating needs. Our accounts receivable balance fluctuates throughout the fiscal year based on the timing of customer billings and collections and tends to be highest in our first fiscal quarter as we begin billing for students. In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at December 31, 2025.

Previous wording

We are a lessee under finance leases for computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of September 30, 2025 and June 30, 2025, the finance lease liability was $125.0 million and $86.9 million, respectively, with lease interest rates ranging from 4.68% to 6.72%.

Current wording

We are a lessee under finance leases for computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of December 31, 2025 and June 30, 2025, the finance lease liability was $124.4 million and $86.9 million, respectively, with lease interest rates ranging from 4.25% to 6.72%.

Previous wording

We entered into agreements with BALC and CSI Leasing in April 2020 and August 2022, respectively, to provide financing for our computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 4.87% to 6.72%, and a $1 purchase option at the end of each lease term. We pledged the assets financed to secure the outstanding leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate. We use our incremental borrowing rate as the implied interest rate and the total lease payments to calculate our lease liability.

Current wording

We entered into agreements with BALC and CSI Leasing in April 2020 and August 2022, respectively, to provide financing for our computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 4.75% to 6.72%, and a $1 purchase option at the end of each lease term. We pledged the assets financed to secure the outstanding leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate. We use our incremental borrowing rate as the implied interest rate and the total lease payments to calculate our lease liability.

Previous wording

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to interest on our Notes, office facility leases, capital equipment leases and other operating leases. We expect to make future payments on existing leases from cash generated from operations. We believe that the combination of funds to be generated from operations and net working capital on hand will be adequate to finance our ongoing operations on a short-term (the next 12 months) and long-term (beyond the next 12 months) basis. In addition, we continue to explore acquisitions, strategic investments and joint ventures related to our business that we may acquire using cash, stock, debt, contribution of assets or a combination thereof.

Current wording

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to interest on our Notes, office facility leases, capital equipment leases and other operating leases. We expect to make future payments on existing leases from cash generated from operations. We believe that the combination of funds to be generated from operations and net working capital on hand will be adequate to finance our

Previous wording

Net cash used in operating activities for the three months ended September 30, 2025 was $195.8 million compared to $142.0 million for the three months ended September 30, 2024. The $53.8 million increase in cash used in operating activities was primarily due to changes in working capital, driven primarily by changes in accounts receivable, accrued liabilities, and inventories, prepaid expenses, deposits and other current and long-term assets, partially offset by higher net income adjusted for non-cash items.

Current wording

Net cash used in operating activities for the six months ended December 31, 2025 was $103.9 million compared to net cash provided by operating activities of $81.4 million for the six months ended December 31, 2024. The $185.3 million increase in cash used in operating activities was primarily due to changes in working capital, driven primarily by changes in accounts receivable and accrued liabilities, partially offset by higher net income adjusted for non-cash items.

Previous wording

Net cash used in investing activities for the three months ended September 30, 2025 was $24.7 million compared to $20.9 million for the three months ended September 30, 2024. The $3.8 million increase in cash used in investing activities was primarily due to an increase in capital expenditures of $6.9 million and an increase in investments of $2.3 million, partially offset by higher net maturities of marketable securities of $5.4 million year over year.

Current wording

Net cash used in investing activities for the six months ended December 31, 2025 was $34.7 million compared to $35.7 million for the six months ended December 31, 2024. The $1.0 million decrease in cash used in investing activities was primarily due to higher net maturities of marketable securities of $58.5 million year over year, partially offset by an increase in investments of $49.3 million and an increase in capital expenditures of $8.1 million year over year.

Previous wording

Net cash used in financing activities for the three months ended September 30, 2025 was $43.6 million compared to $20.0 million during the three months ended September 30, 2024. The $23.6 million increase in cash used in financing activities was primarily due to an increase in the repurchase of restricted stock for income tax withholding of $20.3 million and an increase in the repayment of finance lease obligations incurred for the acquisition of computers of $3.3 million.

Current wording

Net cash used in financing activities for the six months ended December 31, 2025 was $146.8 million compared to $28.7 million during the six months ended December 31, 2024. The $118.1 million increase in cash used in financing activities was primarily due to the purchase of treasury stock of $88.7 million, and increases in the repurchase of restricted stock for income tax withholding of $20.2 million and the repayment of finance lease obligations incurred for the acquisition of computers of $9.2 million.