| PART I | | |
|---|
| ITEM 1. | Business | 4 |
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| ITEM 1A. | Risk Factors | 17 |
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| ITEM 1B. | Unresolved Staff Comments | 36 |
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| ITEM 1C. | Cybersecurity | 37 |
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| ITEM 2. | Properties | 38 |
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| ITEM 3. | Legal Proceedings | 38 |
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| ITEM 4 | Mine Safety Disclosures | 38 |
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| PART II | | |
|---|
| ITEM 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 39 |
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| ITEM 6. | [Reserved] | 40 |
|---|
| ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 41 |
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| ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk | 54 |
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| ITEM 8. | Financial Statements and Supplementary Data | 55 |
|---|
| ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 98 |
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| ITEM 9A. | Controls and Procedures | 98 |
|---|
| ITEM 9B. | Other Information | 101 |
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| ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspection | 101 |
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| PART III | | |
|---|
| ITEM 10. | Directors, Executive Officers and Corporate Governance | 102 |
|---|
| ITEM 11. | Executive Compensation | 102 |
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| ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 102 |
|---|
| ITEM 13. | Certain Relationships and Related Transactions, and Director Independence | 103 |
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| ITEM 14. | Principal Accountant Fees and Services | 103 |
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| PART IV | | |
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| ITEM 15. | Exhibit and Financial Statement Schedules | 104 |
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CERTAIN DEFINITIONS
Unless the context requires otherwise, all references in this Annual Report on Form 10 K (the “Annual Report”) to “Stride,” “Company,” “we,” “our” and “us” refer to Stride, Inc. and its consolidated subsidiaries.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This Annual Report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Annual Report are forward looking statements. 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,” “will be,” “expects,” “plans,” “intends,” “should,” “would” 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; |
| ● | 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 Learning 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 and third-party cloud systems and facilities, resulting from cybersecurity attacks; |
| ● | misuse or unauthorized disclosure of student and personal data; |
| ● | failure to prevent or mitigate a cybersecurity incident that affects our systems; and |
| ● | risks related to artificial intelligence (AI). |
Forward-looking statements reflect our management’s expectations or predictions of future conditions, events or results based on various assumptions and management’s estimates of trends and economic and regulatory factors in the markets in which we are active, as well as our business plans. They are not guarantees of future performance. By their nature, forward looking statements are subject to risks and uncertainties. Our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward looking statements. There are a number of factors that could cause actual conditions, events or results to differ materially from those described in the forward looking statements contained in this Annual Report. A discussion of factors that could cause actual conditions, events or results to differ materially from those expressed in any forward looking statements appears in “Part 1—Item 1A—Risk Factors.”
Readers are cautioned not to place undue reliance on forward looking statements in this Annual Report or that we make from time to time, and to consider carefully the factors discussed in “Part 1—Item 1A—Risk Factors” of this Annual Report in evaluating these forward looking statements. These forward looking statements are representative only as of the date they are made, and we undertake no obligation to update any forward looking statement as a result of new information, future events or otherwise.
