Stride, Inc.

Previous wording

Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, healthcare and general business. We provide middle and high school students with Career Learning programs that complement their core general education coursework. Stride offers multiple career pathways through a diverse catalog of courses. The middle school program exposes students to a variety of career options and introduces career skill development. In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that facilitate success in today’s digital, tech-enabled economy. A student is reported as a Career Learning enrollment and associated Career Learning revenue only if the student is enrolled in a Career Learning program. Like General Education products and services, the products and services for Career Learning are sold as a comprehensive school-as-a-service offering or as stand-alone products and services.

Current wording

Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, healthcare and general business. We provide middle and high school students with Career Learning programs that complement their core general education coursework. Stride offers multiple career pathways through a broad catalog of courses. The middle school program exposes students to a variety of career options and introduces career skill development. In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that facilitate success in today’s digital, tech-enabled economy. A student is reported as a Career Learning enrollment and associated Career Learning revenue only if the student is enrolled in a Career Learning program. Like General Education products and services, the products and services for Career Learning are sold as a comprehensive school-as-a-service offering or as stand-alone products and services.

Previous wording

The two key financial metrics that we use to assess financial performance are revenues and operating income. For the six months ended December 31, 2024, revenues increased to $1,138.3 million from $985.0 million in the prior year, an increase of 15.6%. Over the same period, operating income increased to $172.4 million from $87.6 million in the prior year. 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, 2024 were 228.7 thousand, an increase of 36.9 thousand, or 19.2%, 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. For the nine months ended March 31, 2025, revenues increased to $1,751.7 million from $1,505.9 million in the prior year, an increase of 16.3%. Over the same period, operating income increased to $303.2 million from $175.9 million in the prior year. 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 nine months ended March 31, 2025 were 233.5 thousand, an increase of 38.9 thousand, or 20.0%, 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

private programs where Stride provides a combination of curriculum, technology, instructional and support services inclusive of administrative support. No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts. This data includes enrollments for which Stride receives no public funding or revenue.

Current wording

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 only 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. No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts. This data includes enrollments for which Stride receives no public funding or revenue.

Previous wording

select from hundreds of high-quality, engaging, online coursework and content, as well as many state customized versions of those courses, electives, and instructional supports. Since our inception, we have built core courses on a foundation of rigorous standards, following the guidance and recommendations of leading educational organizations at the national and state levels. State standards are continually evolving, and we continually invest in our curriculum to meet these changing requirements. We provide high-quality, engaging, online coursework and content in software engineering, healthcare, and medical fields.

Current wording

Curriculum and Content – Stride has one of the largest digital research-based curriculum portfolios for the K-12 online education industry that includes some of the best in class content available in the market. Our customers can select from hundreds of high-quality, engaging, online coursework and content, as well as many state customized versions of those courses, electives, and instructional supports. Since our inception, we have built core courses on a foundation of rigorous standards, following the guidance and recommendations of leading educational organizations at the national and state levels. State standards are continually evolving, and we continually invest in our curriculum to meet these changing requirements. We provide high-quality, engaging, online coursework and content in software engineering, healthcare, and medical fields.

Previous wording

Comparison of the Three Months Ended December 31,2024 and 2023

Current wording

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

Previous wording

Revenues. Our revenues for the three months ended December 31, 2024 were $587.2 million, representing an increase of $82.3 million, or 16.3%, from $504.9 million for the same period in the prior year. General Education revenues increased $40.4 million, or 12.9%, year over year. The increase in General Education revenues was primarily due to the 12.5% increase in enrollments, and school mix (distribution of enrollments by school). Career Learning revenues increased $41.9 million, or 22.0%, primarily due to a 30.9% increase in enrollments and school mix.

Current wording

Revenues. Our revenues for the three months ended March 31, 2025 were $613.4 million, representing an increase of $92.6 million, or 17.8%, from $520.8 million for the same period in the prior year. General Education revenues increased $41.9 million, or 12.7%, year over year. The increase in General Education revenues was primarily due to the 13.6% increase in enrollments, and school mix (distribution of enrollments by school). Career Learning revenues increased $50.6 million, or 26.4%, primarily due to a 33.7% increase in enrollments and school mix.

Previous wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the three months ended December 31, 2024 were $347.4 million, representing an increase of $43.7 million, or 14.4%, from $303.7 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 59.2% of revenues during the three months ended December 31, 2024, a decrease from 60.2% for the three months ended December 31, 2023.

Current wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the three months ended March 31, 2025 were $364.1 million, representing an increase of $44.6 million, or 14.0%, from $319.5 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 59.4% of revenues during the three months ended March 31, 2025, a decrease from 61.3% for the three months ended March 31, 2024.

Previous wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the six months ended December 31, 2024 were $283.3 million, representing a decrease of $3.2 million, or 1.1% from $286.5 million for the same period in the prior year. Selling, general, and administrative expenses were 24.9% of revenues during the six months ended December 31, 2024, a decrease from 29.1% for the six months ended December 31, 2023.

Current wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the three months ended March 31, 2025 were $118.5 million, representing an increase of $5.5 million, or 4.9% from $113.0 million for the same period in the prior year. The increase was primarily due to an increase of $7.8 million in personnel and related benefit costs, including stock-based compensation, partially offset by a decrease of $1.0 million in professional services. Selling, general, and administrative expenses were 19.3% of revenues during the three months ended March 31, 2025, a decrease from 21.7% for the three months ended March 31, 2024.

Previous wording

Interest expense, net. Net interest expense for the three months ended December 31, 2024 was $2.7 million as compared to $2.0 million for the same period in the prior year. The increase in net interest expense was primarily due to our finance leases.

Current wording

Interest expense, net. Net interest expense for the three months ended March 31, 2025 was $2.8 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 our finance leases.

Previous wording

Other income, net. Other income, net for the six months ended December 31, 2024 was $16.1 million as compared to $11.7 million for the same period in the prior year. The increase in other income, net was primarily due to the increase in our investments in marketable securities and the returns on those investments year over year.

Current wording

Other income, net. Other income, net for the three months ended March 31, 2025 was $7.4 million as compared to $7.7 million for the same period in the prior year. The decrease in other income, net was primarily due to lower other non-operating income, partially offset by an increase in our investments in marketable securities and the returns on those investments year over year.

Previous wording

Income tax expense. Income tax expense was $33.4 million for the three months ended December 31, 2024, or 25.7% of income before income taxes, as compared to an expense of $22.2 million, or 24.9% of income before income taxes for the same period in the prior year. The increase in the effective tax rate for the three months ended December 31, 2024 was primarily due to the tax impact of non-deductible compensation and the excess tax benefit of stock-based compensation.

Current wording

Income tax expense. Income tax expense was $35.5 million for the three months ended March 31, 2025, or 26.3% of income before income taxes, as compared to $24.7 million, or 26.1% of income before income taxes for the same period in the prior year.

Previous wording

Revenues. Our revenues for the six months ended December 31, 2024 were $1,138.3 million, representing an increase of $153.3 million, or 15.6%, from $985.0 million for the same period in the prior year. General Education revenues increased $70.5 million, or 11.5%, year over year. The increase in General Education revenues was primarily due to the 12.3% increase in enrollments, and school mix (distribution of enrollments by school). Career Learning revenues increased $82.8 million, or 22.3%, primarily due to a 30.9% increase in enrollments and school mix.

Current wording

Revenues. Our revenues for the nine months ended March 31, 2025 were $1,751.7 million, representing an increase of $245.8 million, or 16.3%, from $1,505.9 million for the same period in the prior year. General Education revenues increased $112.4 million, or 11.9%, year over year. The increase in General Education revenues was primarily due to the 12.8% increase in enrollments, and school mix (distribution of enrollments by school). Career Learning revenues increased $133.4 million, or 23.7%, primarily due to a 32.0% increase in enrollments and school mix.

Previous wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the six months ended December 31, 2024 were $682.6 million, representing an increase of $71.6 million, or 11.7%, from $611.0 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 60.0% of revenues during the six months ended December 31, 2024, a decrease from 62.0% for the six months ended December 31, 2023.

Current wording

*Instructional costs and services expenses.*Instructional costs and services expenses for the nine months ended March 31, 2025 were $1,046.7 million, representing an increase of $116.2 million, or 12.5%, from $930.5 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 59.8% of revenues during the nine months ended March 31, 2025, a decrease from 61.8% for the nine months ended March 31, 2024.

Previous wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the three months ended December 31, 2024 were $114.8 million, representing a decrease of $2.1 million, or 1.8% from $116.9 million for the same period in the prior year. Selling, general, and administrative expenses were 19.5% of revenues during the three months ended December 31, 2024, a decrease from 23.2% for the three months ended December 31, 2023.

Current wording

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the nine months ended March 31, 2025 were $401.8 million, representing an increase of $2.3 million, or 0.6% from $399.5 million for the same period in the prior year. Selling, general, and administrative expenses were 22.9% of revenues during the nine months ended March 31, 2025, a decrease from 26.5% for the nine months ended March 31, 2024.

Previous wording

Interest expense, net. Net interest expense for the six months ended December 31, 2024 was $5.0 million as compared to $4.1 million for the same period in the prior year. The increase in net interest expense was primarily due to our finance leases.

Current wording

Interest expense, net. Net interest expense for the nine months ended March 31, 2025 was $7.8 million as compared to $6.5 million for the same period in the prior year. The increase in net interest expense was primarily due to our finance leases.

Previous wording

Other income, net. Other income, net for the three months ended December 31, 2024 was $7.3 million as compared to $6.5 million for the same period in the prior year. The increase in other income, net was primarily due to the increase in our investments in marketable securities and the returns on those investments year over year.

Current wording

Other income, net. Other income, net for the nine months ended March 31, 2025 was $23.5 million as compared to $19.4 million for the same period in the prior year. The increase in other income, net was primarily due to the increase in our investments in marketable securities and the returns on those investments year over year, partially offset by lower other non-operating income.

Previous wording

Income tax expense. Income tax expense was $44.6 million for the six months ended December 31, 2024, or 24.5% of income before income taxes, as compared to an expense of $23.7 million, or 24.9% of income before income taxes for the same period in the prior year. The decrease in the effective tax rate for the six months ended December 31, 2024 was primarily due to the tax impact of non-deductible compensation and the excess tax benefit of stock-based compensation.

Current wording

Income tax expense. Income tax expense was $80.1 million for the nine months ended March 31, 2025, or 25.3% of income before income taxes, as compared to $48.4 million, or 25.5% of income before income taxes for the same period in the prior year.

Previous wording

As of December 31, 2024, we had net working capital, or current assets minus current liabilities, of $1,157.8 million. Our working capital includes cash and cash equivalents of $515.1 million and accounts receivable of $582.6 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, 2024.

Current wording

As of March 31, 2025, we had net working capital, or current assets minus current liabilities, of $1,243.4 million. Our working capital includes cash and cash equivalents of $528.6 million and accounts receivable of $699.8 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 March 31, 2025.

Previous wording

During the first quarter of fiscal year 2021, we issued $420.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2027 (“Notes”). The Notes are governed by an indenture (the “Indenture”) between us and U.S. Bank National Association, as trustee. The net proceeds from the offering of the Notes were approximately $408.6 million after deducting the underwriting fees and other expenses paid by the Company. The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1 st and September 1 st of each year, beginning on March 1, 2021. The Notes will mature on September 1, 2027. In connection with the Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain counterparties. The Capped Call Transactions are expected to cover the aggregate number of shares of the Company’s common stock that initially underlie the Notes, and are expected to reduce potential dilution to the Company’s common stock upon any conversion of Notes

Current wording

During the first quarter of fiscal year 2021, we issued $420.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2027 (“Notes”). The Notes are governed by an indenture (the “Indenture”) between us and U.S. Bank National Association, as trustee. The net proceeds from the offering of the Notes were approximately $408.6 million after deducting the underwriting fees and other expenses paid by the Company. The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1 st and September 1 st of each year, beginning on March 1, 2021. The Notes will mature on September 1, 2027. In connection with the Notes, we entered into privately

Previous wording

and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes. The upper strike price of the Capped Call Transactions is $86.174 per share. The cost of the Capped Call Transactions was $60.4 million and was recorded within additional paid-in capital.

Current wording

negotiated capped call transactions (the “Capped Call Transactions”) with certain counterparties. The Capped Call Transactions are expected to cover the aggregate number of shares of the Company’s common stock that initially underlie the Notes, and are expected to reduce potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes. The upper strike price of the Capped Call Transactions is $86.174 per share. The cost of the Capped Call Transactions was $60.4 million and was recorded within additional paid-in capital.

Previous wording

On January 27, 2020, we entered into a $100.0 million senior secured revolving credit facility (“Credit Facility”) to be used for general corporate operating purposes with PNC Capital Markets LLC. The Credit Facility had a five-year term and incorporated customary financial and other covenants, including but not limited to a maximum leverage ratio and a minimum interest coverage ratio. The majority of our borrowings under the Credit Facility were at LIBOR plus an additional rate ranging from 0.875% - 1.50% based on our leverage ratio as defined in the agreement. The Credit Facility was secured by our assets. The Credit Facility agreement allowed for an amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. As of December 31, 2024, we were in compliance with the financial covenants. As part of the proceeds received from the Notes, we repaid our $100.0 million outstanding balance and as of December 31, 2024, we had no amounts outstanding on the Credit Facility. The Credit Facility also included a $200.0 million accordion feature. The Credit Facility expired on January 27, 2025 and was not renewed.

Current wording

On January 27, 2020, we entered into a $100.0 million senior secured revolving credit facility (“Credit Facility”) to be used for general corporate operating purposes with PNC Capital Markets LLC. The Credit Facility had a five-year term and incorporated customary financial and other covenants, including but not limited to a maximum leverage ratio and a minimum interest coverage ratio. The majority of our borrowings under the Credit Facility were at LIBOR plus an additional rate ranging from 0.875% - 1.50% based on our leverage ratio as defined in the agreement. The Credit Facility was secured by our assets. The Credit Facility agreement allowed for an amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. Up through its expiration, we were in compliance with the financial covenants. As part of the proceeds received from the Notes, we repaid our $100.0 million outstanding balance under the Credit Facility. The Credit Facility also included a $200.0 million accordion feature. The Credit Facility expired on January 27, 2025 and was not renewed.

Previous wording

We are a lessee under finance leases for student computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of December 31, 2024 and June 30, 2024, the finance lease liability was $93.9 million and $55.6 million, respectively, with lease interest rates ranging from 2.55% to 6.72%.

Current wording

We are a lessee under finance leases for student computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of March 31, 2025 and June 30, 2024, the finance lease liability was $96.8 million and $55.6 million, respectively, with lease interest rates ranging from 3.95% to 6.72%.

Previous wording

We entered into an agreement with CSI Leasing in August 2022 to provide financing for our 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 student computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 3.95% 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, borrowing on our Credit Facility 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 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.

Previous wording

Net cash provided by operating activities for the six months ended December 31, 2024 was $81.4 million compared to $38.0 million for the six months ended December 31, 2023. The $43.4 million increase in cash provided by operating activities was primarily due to higher net income in the current period as compared to the prior period, partially offset by changes in working capital resulting from seasonal fluctuations in accounts receivable and accrued liabilities.

Current wording

Net cash provided by operating activities for the nine months ended March 31, 2025 was $134.5 million compared to $106.6 million for the nine months ended March 31, 2024. The $27.9 million increase in cash provided by operating activities was primarily due to higher net income in the current period as compared to the prior period, partially offset by changes in working capital resulting from seasonal fluctuations in accounts receivable, accrued liabilities, and accounts payable.

Previous wording

Net cash used in investing activities for the six months ended December 31, 2024 was $35.7 million compared to $68.8 million for the six months ended December 31, 2023, a decrease of $33.1 million. The decrease was primarily due to a decrease in net purchases of marketable securities of $34.6 million partially offset by an increase in capital expenditures year over year of $0.8 million.

Current wording

Net cash used in investing activities for the nine months ended March 31, 2025 was $53.3 million compared to $101.0 million for the nine months ended March 31, 2024, a decrease of $47.7 million. The decrease was primarily due to a decrease in net purchases of marketable securities of $48.9 million partially offset by an increase in capital expenditures year over year of $0.2 million.

Previous wording

Net cash used in financing activities for the six months ended December 31, 2024 was $28.7 million compared to $25.7 million during the six months ended December 31, 2023, an increase of $3.0 million. The increase was primarily due to an increase in the repurchase of restricted stock for income tax withholding of $8.8 million partially offset by a decrease in the repayment of finance lease obligations incurred for the acquisition of student computers of $5.8 million.

Current wording

Net cash used in financing activities for the nine months ended March 31, 2025 was $50.6 million compared to $39.8 million during the nine months ended March 31, 2024, an increase of $10.8 million. The increase was primarily due to an increase in the repurchase of restricted stock for income tax withholding of $13.1 million partially offset by a decrease in the repayment of finance lease obligations incurred for the acquisition of student computers of $2.2 million.