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What changed in Stride, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Stride, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+233 added−220 removedSource: 10-K (2023-08-16) vs 10-K (2022-08-10)

Top changes in Stride, Inc.'s 2023 10-K

233 paragraphs added · 220 removed · 198 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+5 added−7 removed164 unchanged
Biggest changeWe believe the growth in careers requiring non degree post-secondary awards will drive more adult learners to seek training solutions that lead to credentials or certifications. It is anticipated that these learners will seek lower cost, more accessible training solutions that prepare them for the workforce in less time than traditional post-secondary degree programs.
Biggest changeIt is anticipated that these learners will seek lower cost, more accessible training solutions that prepare them for the workforce in less time than traditional post-secondary degree programs. Our adult learning solutions provide these types of learners with content, instruction, and career placement services to help them achieve their career goals.
Our school-as-a-service offering offers a full service, integrated program, and a complete solution for districts and schools that desire a comprehensive option. For public school customers who need less than a full service offering, our Learning Solutions sales channel provides online curriculum and services on a solutions-oriented, customized basis.
Our school-as-a-service offering offers a full service, integrated program, and a complete solution for districts and schools that desire a comprehensive option. For public school customers who need less than a full-service offering, our Learning Solutions sales channel provides online curriculum and services on a solution oriented, customized basis.
Our international students are typically from expatriate families who wish to study in English and foreign students who desire a U.S. high school diploma. In addition, we have entered into agreements that enable us to distribute our products and services to our international school partners who use our courses to provide broad elective offerings and dual diploma programs.
Our international students are typically from expatriate families who wish to study in English and foreign students who desire a U.S. high school diploma. In addition, we have entered into agreements that enable us to distribute our products and services to our international and domestic school partners who use our courses to provide broad elective offerings and dual diploma programs.
Examples of students for whom our full-time virtual or blended solutions may fit include, but are not limited to, families with: (i) students seeking to learn in a way that better accommodates their individual needs; (ii) safety, social and health concerns about their local school, including students who are being bullied or are subjected to discrimination; (iii) students with disabilities who are seeking alternatives to traditional classrooms; (iv) students for whom the local public school is not meeting their needs; (v) students who seek or need greater flexibility than other alternatives, such as student-athletes and performers who are not able to attend regularly scheduled classes; (vi) college-bound students who want to bolster their college readiness and application appeal by taking additional Advanced Placement (“AP”), honors and/or elective courses; (vii) students seeking career and technical skills; (viii) high school dropouts who have decided to re-enroll in school to earn a diploma; and (ix) students of military families who desire high-quality, consistent education as they relocate to new locations.
Examples of students for whom our full-time virtual or blended solutions may fit include, but are not limited to, families with: (i) students seeking to learn in a way that better accommodates their individual needs; (ii) safety, social and health concerns about their local school, including students who are being bullied or are subjected to discrimination; (iii) students with disabilities who are seeking alternatives to traditional classrooms; (iv) students for whom the local public school is not meeting their needs; (v) students who seek or need greater flexibility than other alternatives, such as student athletes and performers who are not able to attend regularly scheduled classes; (vi) college bound students who want to bolster their college readiness and application appeal by taking additional Advanced Placement (“AP”), honors and/or elective courses; (vii) students seeking career and technical skills; (viii) high school dropouts who have decided to reenroll in school to earn a diploma; and (ix) students of military families who desire high-quality, consistent education as they relocate to new locations.
We believe that the primary factors on which we compete are: ● extensive experience in, and understanding of, virtual education delivery; ● comprehensive suite of academic programs; ● customer satisfaction; ● quality of integrated curriculum and materials with an online delivery platform; ● qualifications, experience and training teachers for online instruction; ● comprehensiveness of school management and student support services; ● integrated K-12 solutions, with components designed and built to work together; ● ability to leverage our assets across our business; and ● sophisticated government affairs knowledge and experience in virtual and blended school regulatory environments. ​ 12 Table of Contents Broadly speaking, we participate in the market for digital education and adult training.
We believe that the primary factors on which we compete are: ● extensive experience in, and understanding of, virtual education delivery; ● comprehensive suite of academic programs; ● customer satisfaction; ● quality of integrated curriculum and materials with an online delivery platform; ● qualifications, experience and training teachers for online instruction; ● comprehensiveness of school management and student support services; ● integrated K-12 solutions, with components designed and built to work together; ● ability to leverage our assets across our business; and ● sophisticated government affairs knowledge and experience in virtual and blended school regulatory environments. ​ Broadly speaking, we participate in the market for digital education and adult training.
Additionally, many families can use education savings accounts, tax credits and vouchers to attend these schools for low or no cost. We also pursue international opportunities where we believe there is significant demand for a quality online education.
Additionally, many families can use education savings accounts, tax credits and vouchers to attend these schools for low or no cost. We also pursue international opportunities where we believe there is significant demand for quality online education.
In addition, we offer customized training for teams, as well as training that focuses on diversity and inclusion topics, including mandatory unconscious bias training for all employees. Corporate Information Our website address is www.stridelearning.com.
In addition, we offer customized training for teams, as well as training that focuses on diversity and inclusion topics, including unconscious bias training for all employees. Corporate Information Our website address is www.stridelearning.com.
We also face competition from digital and print curriculum developers. The digital curriculum providers include Apex Learning Inc., Curriculum Associates, Imagine Learning LLC, Edmentum Inc., Dreambox Learning, Inc., and traditional textbook publishers such as Houghton Mifflin Harcourt and McGraw Hill.
We also face competition from digital and print curriculum developers. The digital curriculum providers include Curriculum Associates, Imagine Learning LLC, Edmentum Inc., Dreambox Learning, Inc., and traditional textbook publishers such as Houghton Mifflin Harcourt and McGraw Hill.
Operations Over our 20 years of operation, we believe that we have gained significant experience in the sourcing, assembly and delivery of school supplies and materials. We have developed strong relationships with partners allowing us to source goods at favorable price, quality and service levels.
Operations Over our more than 20 years of operation, we believe that we have gained significant experience in the sourcing, assembly and delivery of school supplies and materials. We have developed strong relationships with partners allowing us to source goods at favorable price, quality and service levels.
Parents in search of an alternative to their local public school have a number of alternatives beyond virtual and blended public schools, including private schools, public charter schools and home schooling. In our private schools, we compete for students seeking an English-based K-12 education worldwide.
Parents in search of an alternative to their local public school have a number of alternatives beyond virtual and blended public schools, including private schools, public charter schools and home schooling. In our private schools, we compete for students seeking an English-based K-12 12 Table of Contents education worldwide.
Other competing digital curriculum providers, including Khan Academy, Duolingo, IXL Learning, Inc. and Nearpod Inc., offer a different pricing model which provides curriculum at a lower cost (sometimes free) but may charge for additional products or services.
Other competing digital curriculum providers, including Khan Academy, Duolingo, IXL Learning, Inc. and Renaissance Learning, Inc., offer a different pricing model which provides curriculum at a lower cost (sometimes free) but may charge for additional products or services.
Further, Section 230 of the CDA grants interactive online services of all types, broad immunity from tort liability so long as the information at issue is provided or posted by a third party. As part of our technology services offering, we provide an online school platform on which teachers and students 18 Table of Contents may communicate.
Further, Section 230 of the CDA grants interactive online services of all types, broad immunity from tort liability so long as the information at issue is provided or posted by a third party. As part of our technology services offering, we provide an online school platform on which teachers and students may communicate.
The convergence of these factors and rapid advances in Internet networks created the opportunity to make a significant impact by deploying online learning software and systems on a flexible, online platform. In September 2001, we introduced our kindergarten through 2 nd grade offering in Pennsylvania and Colorado, serving approximately 900 students in the two states combined.
The convergence of these factors and rapid advances in Internet networks created the opportunity to make a significant impact by deploying online learning software and systems on a flexible, online platform. In September 2001, we introduced our kindergarten through 2nd grade offering in Pennsylvania and Colorado, serving approximately 900 students in the two states combined.
In addition to annual goals, and individual job duties, we consider demonstration of our core values—passion, accountability, courage, trust, and inclusiveness—an important factor in performance appraisals. We support professional development opportunities that reflect our desire to ‘hire from within’ and to enhance employees’ skillsets in ways that improve their effectiveness and sense of fulfillment.
In addition to annual goals, and individual job duties, we consider demonstration of our core values—passion, accountability, courage, trust, and inclusiveness—an important factor in performance appraisals. 14 Table of Contents We support professional development opportunities that reflect our desire to ‘hire from within’ and to enhance employees’ skillsets in ways that improve their effectiveness and sense of fulfillment.
Customers of our consumer 8 Table of Contents products have the option of purchasing a complete curriculum, individual courses, or a variety of other supplemental products, covering various subjects depending on their child’s needs. Typical applications include summer school course work, home-schooling, enrichment, and educational supplements.
Customers of our consumer products have the option of purchasing a complete curriculum, individual courses, or a variety of other supplemental products, covering various subjects depending on their child’s needs. Typical applications include summer school course work, home-schooling, enrichment, and educational supplements.
Traditional school districts are becoming a greater percentage of our customer base. Grow Our Learning Solutions Sales Channel. Our broad Learning Solutions course catalog ranges from pre-K to 12th grade, instructional services, supplemental solutions, and teacher development and is the key driver for Learning Solutions growth.
Traditional school districts are becoming a greater percentage of our customer base. 9 Table of Contents Grow Our Learning Solutions Sales Channel. Our broad Learning Solutions course catalog ranges from pre-K to 12th grade, instructional services, supplemental solutions, and teacher development and is the key driver for Learning Solutions growth.
As part 11 Table of Contents of the academic framework, schools implement plans to collect student-level data throughout the year through the use of norm-referenced growth measures at least three times per year, along with strategically placed formative interims, benchmarks, and summative assessments.
As part of the academic framework, schools implement plans to collect student level data throughout the year through the use of norm-referenced growth measures at least three times per year, along with strategically placed formative interims, benchmarks, and summative assessments.
To the extent these schools receive federal funds, such as through a grant 15 Table of Contents program or financial support dedicated for the education of low-income families, these schools also become subject to additional federal regulation. State Laws Authorizing or Restricting Virtual and Blended Public Schools.
To the extent these schools receive federal funds, such as through a grant program or financial support dedicated for the education of low income families, these schools also become subject to additional federal regulation. State Laws Authorizing or Restricting Virtual and Blended Public Schools.
Our end-to-end platform includes content management, learning management, student information, data reporting and analytics, and various support systems that allow customers to provide a high-quality, and personalized educational experience for students. À la carte offerings can provide curriculum and content hosting on customers’ learning management systems, or integrate with customers’ student information systems.
Our end-to-end platform includes content management, learning management, student information, data reporting and analytics, and various support systems that allow customers to provide a high-quality, and personalized 10 Table of Contents educational experience for students. À la carte offerings can provide curriculum and content hosting on customers’ learning management systems, or integrate with customers’ student information systems.
The schools we manage are responsible for ensuring the requirements of IDEA are met. The virtual public schools and blended schools are required to comply with certain requirements in IDEA concerning teacher certification and training.
The schools we manage are 17 Table of Contents responsible for ensuring the requirements of IDEA are met. The virtual public schools and blended schools are required to comply with certain requirements in IDEA concerning teacher certification and training.
In addition, there are approximately 3,800 teachers 14 Table of Contents who are employed by virtual or blended public schools that we manage under contracts with those schools but are not direct employees of Stride. None of our employees are represented by a labor union or covered by a collective bargaining agreement; however, certain schools we serve employ unionized teachers.
In addition, there are approximately 3,400 teachers who are employed by virtual or blended public schools that we manage under contracts with those schools but are not direct employees of Stride. None of our employees are represented by a labor union or covered by a collective bargaining agreement; however, certain schools we serve employ unionized teachers.
This approach is now reflected in the ESSA as well. All of our school-as-a-service offerings administer nationally recognized, norm-referenced assessments to measure student growth during the school year, to prepare students for state assessments and to guide instruction.
This approach is now reflected in the ESSA as well. All of our school-as-a-service offerings administer state or nationally recognized assessments to measure student achievement and growth during the school year, to prepare students for state assessments and to guide instruction.
Adult Learning We offer adult learning training programs through Galvanize, Tech Elevator, and MedCerts, which provide programs that address the skills gap facing companies in the information technology and health care sectors.
Adult Learning We offer adult learning training programs through Galvanize, Tech Elevator, and MedCerts, which provide programs that address the skills gap facing companies in the information technology and healthcare sectors.
With rare exceptions, the data shows that students identified as eligible for free lunch had lower percentages at or above proficiency levels than students eligible for reduced-price lunch, and both groups usually underperformed students identified as not eligible for subsidized meals.
With rare exceptions, the data shows that students identified as eligible for free lunch had lower percentages at or above proficiency levels than students 11 Table of Contents eligible for reduced price lunch, and both groups usually underperformed students identified as not eligible for subsidized meals.
In either case, for parents who believe their child is not thriving in their current school or for students and families who require time or location flexibility in their schooling, virtual and blended public schools can provide a compelling choice.
In either case, for parents who believe their child is not thriving in their current school or for students and families who require time or location flexibility 7 Table of Contents in their schooling, virtual and blended public schools can provide a compelling choice.
Our employees, contractors and other parties with access to our confidential information sign agreements that prohibit the unauthorized use or disclosure of our proprietary rights, information and technology. Human Capital Resources As of June 30, 2022, we had approximately 7,500 employees, including approximately 4,200 teachers. Substantially all of these employees are located in the United States.
Our employees, contractors and other parties with access to our confidential information sign agreements that prohibit the unauthorized use or disclosure of our proprietary rights, information and technology. Human Capital Resources As of June 30, 2023, we had approximately 7,800 employees, including approximately 4,400 teachers. Substantially all of these employees are located in the United States.
Expand Virtual and Blended Public School Presence into Additional States and Cities. As laws change and opportunities arise, we work with states, school districts, regional education organizations, and charter schools to authorize and establish new virtual and blended public schools and to contract with them to provide our curriculum, online learning platform, support services, and other related offerings.
As laws change and opportunities arise, we work with states, school districts, regional education organizations, and charter schools to authorize and establish new virtual and blended public schools and to contract with them to provide our curriculum, online learning platform, support services, and other related offerings.
We also compete with institutions such as The Laurel Springs School (Nobel Learning Communities, Inc.) and Penn Foster Inc. for online private pay school students. Additionally, our Adult Learning offerings compete with other in-person and remote immersive programs and self-paced online training programs.
We also compete with institutions such as The Laurel Springs School (Spring Education Group) and Penn Foster Inc. for online private pay school students. Additionally, our Adult Learning offerings compete with other in-person and remote immersive programs and self-paced online training programs.
However, a student and the associated revenue, whether in middle or high school, is counted as a Career Learning enrollment or Career Learning revenue if the student is enrolled in a Career Learning program. ​ Like General Education products and services, the products and services for the Career Learning market are sold as a comprehensive school-as-a-service offering or à la carte.
A student and the associated revenue is counted as a Career Learning enrollment or Career Learning revenue only if the student is enrolled in a Career Learning program or school. Like General Education products and services, the products and services for the Career Learning market are sold as a comprehensive school-as-a-service offering or à la carte.
Prior to the COVID-19 pandemic, the number of students was 2.5 million, and estimates showed home-educated student enrollments growing by 2% per year since 2016. ● April 2022 data from the Bureau of Labor Statistics estimates that demand for occupations that require nondegree postsecondary education will grow 9.7% by 2030, a faster rate than overall employment.
Prior to the COVID-19 5 Table of Contents pandemic, the number of students was 2.5 million, and estimates showed home-educated student enrollments growing by 2% per year since 2016 . ● September 2022 data from the Bureau of Labor Statistics estimates that demand for occupations that require nondegree postsecondary education will grow 6.7% by 2031, a faster rate than overall employment .
Many other federal and state laws, such as deceptive trade practices laws, the Lanham Act and others apply to us, just as they do to other businesses.
Many other federal and state laws, such as deceptive trade practices laws, the 18 Table of Contents Lanham Act and others apply to us, just as they do to other businesses.
We are proud of our diverse workforce and recognize the value diversity brings to our team. ● 44% of our Board is comprised of minorities and 33% are women. ● 73% of our executive leadership team is comprised of minorities and women. ● 82% of our full-time employees are women. ● For direct education-related roles, largely the K-12 teacher population, employee demographics mirror national averages for these positions.
We are proud of our diverse workforce and recognize the value diversity brings to our team. ● 50% of our Board is comprised of minorities and 30% are women. ● 65% of our executive leadership team is comprised of minorities and women. ● 81% of our full-time employees are women. ● For direct education-related roles, largely the K-12 teacher population, employee demographics mirror national averages for these positions.
Products and services are sold as a comprehensive school-as-a-service offering or à la carte. ​ 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, health care and business.
Products and services are sold as a comprehensive school-as-a-service offering or à la carte. 4 Table of Contents ​ 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.
A student enrolled in a school offering Stride’s General Education program may take Career Learning courses, but that student and the associated revenue is not reported as a Career Learning enrollment or Career Learning revenue.
A student enrolled in a school that offers Stride’s General Education program may elect to take Career Learning courses, but that student and the associated revenue is reported as a General Education enrollment and General Education revenue.
Our earnings conference calls are web cast live via the Investors section of our website. Information contained on our website is expressly not incorporated by reference into this Annual Report. ​ Regulation We and the virtual and blended public schools that we serve are subject to regulation by and laws of each of the states in which we operate.
Information contained on our website is expressly not incorporated by reference into this Annual Report. ​ Regulation We and the virtual and blended public schools that we serve are subject to regulation by and laws of each of the states in which we operate.
Galvanize and Tech Elevator offer in-person and remote immersive full-time software engineering programs designed for adult learners looking to advance their technology careers by providing such learners with skills and real-world experiences. MedCerts provides self-paced, fully online structured training programs that lead to certifications in the health care field.
We offer in- 8 Table of Contents person and remote immersive full-time software engineering programs designed for adult learners looking to advance their technology careers by providing such learners with skills and real-world experiences. MedCerts provides self-paced, fully online structured training programs that lead to certifications in the healthcare field.
These include General Assembly (a subsidiary of Adecco), Lambda School (Lambda Inc.), Carrus, Inc., and Education to Go (a subsidiary of Cengage Learning), among others.
These include General Assembly (a subsidiary of Adecco), Bloom Institute of Technology, Carrus, Inc., and Education to Go (a subsidiary of Cengage Learning), among others.
At the direction of our school board and 9 Table of Contents school district customers, we seek to provide an opportunity for more students to attend these schools, and support their efforts to work with legislators, state departments of education, educators and parents to increase or remove student enrollment caps.
At the direction of our school board and school district customers, we seek to provide an opportunity for more students to attend these schools, and support their efforts to work with legislators, state departments of education, educators and parents to increase or remove student enrollment caps. Expand Virtual and Blended Public School Presence into Additional States and Cities.
Of particular significance to the Company is that the states have the discretion to develop and design their own accountability systems within a broad federal framework. In addition, states have been given the authority to adopt different types of annual 17 Table of Contents accountability plans for school performance, including proficiency and growth standards for all students and subgroups.
Under the ESSA, the states have the discretion to develop and design their own accountability systems within a broad federal framework. In addition, states have been given the authority to adopt different types of annual accountability plans for school performance, including proficiency and growth standards for all students and subgroups. The ESSA makes clear that the U.S.
The ESSA makes clear that the U.S. Department of Education has a more limited role to impose federal mandates, direction or control over the authority given to the states.
Department of Education has a limited role to impose federal mandates, direction or control over the authority given to the states.
Some states do not currently have legislation that provides for virtual and blended public schools or have requirements that effectively prohibit such schools and, as a result, may require new legislation before virtual and blended public schools can open in the state.
Some states do not currently have legislation that provides for virtual and blended public schools or have requirements that effectively prohibit such schools and, as a result, may require new legislation before virtual and blended public schools can open in the state. 15 Table of Contents Obtaining new legislation in the remaining states where we do not have virtual and blended public schools can be a protracted and uncertain process.
In addition to providing a comprehensive course catalog, related books and physical materials, a learning management system for online learning, and, in certain cases, student computers, we also offer these schools a variety of administrative support, technology and academic support services. Full-time virtual and blended school students access online lessons over the internet and utilize offline learning materials we provide.
In addition to providing a comprehensive course catalog, related books and physical materials, a learning management system for online learning, and, in certain cases, student computers, we also offer these schools a variety of administrative support, technology and academic support services.
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 are required to succeed in today’s digital, tech-enabled economy.
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.
For example: ● According to a May 2021 report of the National Education Policy Center (“NEPC”) entitled “Virtual Schools in the U.S. 2021,” in 2019-20, 477 full-time virtual schools enrolled 332,279 students, and 306 blended schools enrolled 152,530 students.
For example: ● According to a May 2023 report of the National Education Policy Center (“NEPC”) entitled “Virtual Schools in the U.S. 2023,” in 2021-22, 1,093 full-time virtual schools enrolled 566,344 students, and 332 blended schools enrolled 106,219 students.
Additionally, through our Galvanize, Tech Elevator and MedCerts brands, we have high-quality, engaging, online coursework and content in information technology and health care Systems We have established a secure and reliable technology platform, which integrates proprietary and third-party systems to provide a high-quality educational environment and gives us the capability to grow our customer programs and enrollment.
Systems We have established a secure and reliable technology platform, which integrates proprietary and third-party systems to provide a high-quality educational environment and gives us the capability to grow our customer programs and enrollment.
States such as California, Nevada and Virginia are also enacting more general laws about personal information that apply regardless of whether the individual is a student. 16 Table of Contents As with any public school, virtual and blended public schools must comply with state laws and regulations applicable to governmental entities, such as open meetings or sunshine laws, which may require the board of trustees of a virtual or blended public school to provide advance public notice of and hold its meetings open to the public unless an exception in the law allows an executive session.
As with any public school, virtual and blended public schools must comply with state laws and regulations applicable to governmental entities, such as open meetings or sunshine laws, which may require the board of trustees of a virtual or blended public school to provide advance public notice of and hold its meetings open to the public unless an exception in the law allows an executive session.
There remains uncertainty about the extent to which virtual and blended public schools we serve may be required to comply with state laws and regulations applicable to traditional public schools because the concept of virtual and blended public schools is still evolving, especially as technology advances.
Other types of regulation applicable to virtual and blended public schools include restrictions on the use of public funds, the types of investments made with public funds, accounting and financial management, and marketing practices. 16 Table of Contents There remains uncertainty about the extent to which virtual and blended public schools we serve may be required to comply with state laws and regulations applicable to traditional public schools because the concept of virtual and blended public schools is still evolving, especially as technology advances.
Programs utilizing General Education products and services are for students that are not specializing in any particular curriculum or course of study. These programs provide an alternative to traditional “brick-and-mortar” school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, 4 Table of Contents physical/health restrictions or advanced learning.
These programs provide an alternative to traditional “brick-and-mortar” school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning.
Stride’s key systems leverage a technology architecture that allows us to develop iterative solutions to meet both present and future market needs. Availability and Redundancy. Stride’s systems run on world-class cloud infrastructure from AWS and Azure that operate in multiple availability zones. Cybersecurity.
Technology Stride’s online learning systems, along with our back-office support systems, run on cloud infrastructure from Amazon Web Services (AWS) and Microsoft Azure. Architecture. Stride’s key systems leverage a technology architecture that allows us to develop iterative solutions to meet both present and future market needs. Availability and Redundancy.
Programs utilizing General Education products and services are for students that are not specializing in any particular curriculum or course of study. These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning.
These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning. Products and services are sold as a comprehensive school-as-a-service offering or à la carte .
Students receive assignments, complete lessons, take assessments, and are instructed by teachers with whom they interact via email, 7 Table of Contents telephonically, in synchronous virtual classroom environments, and sometimes face-to-face.
Full time virtual and blended school students access online lessons over the internet and utilize offline learning materials we provide. Students receive assignments, complete lessons, take assessments, and are instructed by teachers with whom they interact via email, telephonically, in synchronous virtual classroom environments, and sometimes face to face.
To ensure that students in virtual and blended public schools have access to our systems, we often provide students with a computer, where applicable or required and all necessary support.
To ensure that students in virtual and blended public schools have access to our systems, we often provide students with a computer, where applicable or required and all necessary support. We source computers and ship them to students when they enroll and reclaim the computers upon termination of their enrollment or withdrawal from the school in which they are enrolled.
For the 2021-2022 school year, we provided our school-as-a-service offering to 80 schools in 30 states and the District of Columbia in the General Education market, and 42 schools in 24 states in the Career Learning market. We also serve schools in 49 states and the District of Columbia through our Learning Solutions sales channel.
For the 2022-2023 school year, we provided our school-as-a-service offering to 87 schools in 31 states and the District of Columbia in the General Education market, and 52 schools or programs in 27 states and the District of Columbia in the Career Learning market.
We continue to add features and tools to our proprietary learning platform and support systems to assist teachers and students and improve educational outcomes, such as adaptive learning technologies. These intellectual property assets are critical to our success and we avail ourselves of the full protections provided under the patent, copyright, trademark and trade secrets laws.
These intellectual property assets are critical to our success and we avail ourselves of the full protections provided under the patent, copyright, trademark and trade secrets laws.
Other Information Intellectual Property We continue to invest in our intellectual property through internal development and by acquisitions as we aim to offer more courses for new grades and expand into adjacent education markets, both in the United States and overseas. Through acquisitions, we have also obtained curriculum, patents and trademarks that expand our portfolio of educational products and services.
We leverage various technologies to monitor our application and infrastructure ecosystem on a 7 X 24 X 365 basis. Other Information Intellectual Property We continue to invest in our intellectual property through internal development and by acquisitions as we aim to offer more courses for new grades and expand into adjacent education markets, both in the United States and overseas.
A virtual or blended public school must also comply with requirements for performing criminal background checks on school staff, reporting criminal activity by school staff and reporting suspected child abuse.
A virtual or blended public school must also comply with requirements for performing criminal background checks on school staff, reporting criminal activity by school staff and reporting suspected child abuse. An increasing number of states are also enacting more general laws about personal information that apply regardless of whether the individual is a student.
We provide middle and high school students with Career Learning programs that complement their core general education coursework in math, English, science and history. Stride offers multiple career pathways supported by a diverse catalog of Career Learning courses. The middle school program exposes students to a variety of career options and introduces career skill development.
Stride offers multiple career pathways supported by a diverse catalog of Career Learning 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.
Our Market The U.S. market for K-12 education is large and virtual and blended learning has gained broader usage due to the impact of the COVID-19 pandemic.
These Adult Learning brands deliver a mix of in-person and remote training in software engineering and allied healthcare to consumers and enterprises . Our Market The U.S. market for K-12 education is large and virtual and blended learning has gained broader awareness and acceptance following the COVID-19 pandemic.
To address this challenge, companies are beginning to cover the cost of training for entry-level positions as well as increasing budgets for upskilling and reskilling of their existing workforce. Stride’s adult learning solutions address these employer needs by providing training and job placement and recruitment services.
Additionally, according to the Society for Human Resource Management, recruiting and hiring remains one of the top challenges for companies. To address this challenge, companies are beginning to cover the cost of training for entry-level positions as well as increasing budgets for upskilling and reskilling of their existing workforce.
A business-centric information security program has also been adopted that is tailored to adjust to an ever-changing IT compliance and information security threat landscape. Our cybersecurity measures and policies are aligned with cybersecurity guidance from the National Institute of Standards & Technologies (NIST) across our cloud ecosystems. Physical Infrastructure.
Stride’s systems run on world-class cloud infrastructure from AWS and Azure that operate in multiple availability zones. Cybersecurity. A business-centric information security program has also been adopted that is tailored to adjust to an ever-changing IT compliance and information security threat landscape.
This included 29% of students who preferred a hybrid approach, and 4% of students who preferred a full-time virtual education. 5 Table of Contents ● In 2021, the National Home Education Research Institute estimated that there were approximately 3.7 million home-educated students in the United States during School Year 2020-2021.
Of those who were considering switching, 20.8% of parents visited, inquired about, or researched full-time online school . ● In 2022, the National Home Education Research Institute estimated that there were approximately 3.1 million home-educated students in the United States during School Year 2021-2022.
These investments are intended to expand our current assets into markets that have appeal to today’s education consumers. Moreover, we have pursued, and will continue to pursue, selected markets outside the United States where we believe our products and services can address local foreign market needs.
Moreover, we have pursued, and will continue to pursue, selected markets outside the United States where we believe our products and services can address local foreign market needs. ​ We believe the growth in careers requiring non-degree post-secondary awards will drive more adult learners to seek training solutions that lead to credentials or certifications.
Products and services are sold as a comprehensive school-as-a-service offering or à la carte. Career Learning 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, health care and business.
Career Learning 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 in math, English, science and history.
In 2020, we acquired three adult learning companies, Galvanize, Tech Elevator, and MedCerts to enter into and expand the Company’s offerings. These Adult Learning brands deliver a mix of in-person and remote training in software engineering and allied healthcare to consumers and enterprises..
We also serve schools in 48 states and the District of Columbia through our Learning Solutions sales channel. In 2020, we acquired three adult learning companies, Galvanize, Tech Elevator, and MedCerts to enter into and expand the Company’s offerings.
State standards 10 Table of Contents continue to evolve, and we invest in our curriculum to meet these changing requirements.
State standards continue to evolve, and we invest in our curriculum to meet these changing requirements. Additionally, through our Galvanize, Tech Elevator and MedCerts brands, we have high-quality, engaging, online coursework and content in information technology and healthcare.
Stride has completed the migration of our entire application portfolio to Amazon Web Services (AWS) and Microsoft Azure. We leverage various technologies to monitor our application and infrastructure ecosystem on a 7 X 24 X 365 basis.
Our cybersecurity measures and policies are 13 Table of Contents aligned with cybersecurity guidance from the National Institute of Standards & Technologies (NIST) across our cloud ecosystems. Physical Infrastructure. Stride has completed the migration of our entire application portfolio to Amazon Web Services (AWS) and Microsoft Azure.
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The NEPC report further states forty states had either virtual or blended schools. ● In an April 2021 study of 16 to 18 year old students in the U.S. and U.K., the Society for Industrial and Applied Mathematics found that one-third of students would choose either full-time or part-time online education even after things return to normal after the pandemic.
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The NEPC report further states thirty-five states had full-time virtual schools. ● A January 2023 survey by the National School Choice Awareness Foundation, found that 53.7% of parents had considered, searched for, or chosen a new or different school or learning environment for their school-aged child within the past year.
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Our adult learning solutions provide these types of learners with content, instruction, and career placement services to help them achieve their career goals. Additionally, according to the Society for Human Resource Management, recruiting and hiring remains one of the top challenges for companies.
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These investments are intended to expand our current assets into markets that have appeal to today’s education consumers.
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These virtual public schools operate under different brands including Virtual Academies (our General Education offering), Stride Career Prep (including Destinations Career Academies, which focus on career pathways), Insight schools (which tend to focus on particular student segments, such as only middle and high school grade levels, at-risk students and career readiness programs), and iQ Academy Minnesota (where responsibility for academic program and regulatory compliance rests with the school district).
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Stride’s adult learning solutions address these employer needs by providing training and job placement and recruitment services.
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We source computers and ship them to students when they enroll and reclaim the computers upon termination of their enrollment or withdrawal from the school in which they are enrolled. 13 Table of Contents Technology Stride’s online learning systems, along with our back-office support systems, run on cloud infrastructure from Amazon Web Services (AWS) and Microsoft Azure. Architecture.
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Through acquisitions, we have also obtained curriculum, patents and trademarks that expand our portfolio of educational products and services. We continue to add features and tools to our proprietary learning platform and support systems to assist teachers and students and improve educational outcomes, such as adaptive learning technologies.
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Obtaining new legislation in the remaining states where we do not have virtual and blended public schools can be a protracted and uncertain process.
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These filings are also available on the SEC’s website at www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our earnings conference calls are web cast live via the Investors section of our website.
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Other types of regulation applicable to virtual and blended public schools include restrictions on the use of public funds, the types of investments made with public funds, accounting and financial management, and marketing practices.
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The ESSA, which took effect on August 2, 2016 and requires reauthorization after the 2020-2021 school year, represents a major change in federal education law by shifting much of education policy decision making back to the states and by providing most funding through block grants.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+13 added−5 removed225 unchanged
Biggest changeOur business, results of operations and financial conditions, as well as your investment in our common stock, could be materially and adversely affected by any of the following material risks: ● The majority of our revenues come from our school-as-a-service offering and depends on per pupil funding amounts and payment formulas remaining near levels existing at the time we execute service agreements with the schools we serve; ● The inability to predict how the COVID-19 pandemic will continue to impact our business; ● Opponents of public charter schools could prevail in challenging the establishment and expansion of such schools through the judicial process; ● Any failure to comply with applicable laws or regulations, the enactment of new laws or regulations, poor academic performance or misconduct by us or operators of other virtual public schools; ● Disputes over our inability to invoice and receive payments for our services due to ambiguous enabling legislation and interpretive discrepancies by regulatory authorities; ● Any failure to renew an authorizing charter for a virtual or blended public school; ● Actual or alleged misconduct by current or former directors, officers, key employees or officials; ● Changes in the objectives or priorities of the independent governing bodies of the schools we serve; ● Any failure to renew a contract for a school-as-a-service offering, which is subject to periodic renewal; ● Schools we serve or the programs we offer may fail to enroll or re-enroll a significant number of students; ● The enrollment data we present may not fully capture trends in our business performance; ● Our marketing efforts may not be effective; ● The student demographics of the schools we serve can lead to higher costs; ● The ability to meet state accountability testing standards and achieve parent and student satisfaction; ● Compliance with curriculum standards and assessments for individual state determinations under the ESSA; ● Risks due to mergers, acquisitions and joint ventures; ● Our business could be negatively affected as a result of actions by activist stockholders; ● Market demand for online options in public schooling may decrease or not continue, or additional states may not authorize or adequately fund virtual or blended public schools; ● Increasing competition in the education industry sectors that we serve; ● The continuous evolution of regulatory frameworks on the accessibility of technology and curriculum; 20 Table of Contents ● Differences between our quarterly estimates and the actual funds received and expenses incurred by the schools we serve; ● Seasonal fluctuations in our business; ● Our ability to create new products, expand distribution channels and pilot innovative educational programs; ● Our ability to recruit, train and retain quality certified teachers; ● Higher operating expenses and loss of management flexibility due to collective bargaining agreements; ● Our reliance on third-party service providers to host some of our solutions; ● Any problems with our Company-wide ERP system; ● Our ability to maintain and enhance our product and service brands; ● Our ability to protect our valuable intellectual property rights, or lawsuits against us alleging the infringement of intellectual property rights of others; ● Any legal liability from the actions of third parties; ● Any failure to maintain and support customer facing services, systems, and platforms; ● Any failure to prevent or mitigate a cybersecurity incident affecting our systems, or any significant interruption in the operation of our data centers; ● Our reliance on the Internet to enroll students and to deliver our products and services to children; ● Failure to comply with data privacy regulations; ● Any failure by the single vendor we use to manage, receive, assemble and ship our learning kits and printed educational materials; ● Scale and capacity limits on some of our technology, transaction processing systems and network hardware and software; ● Our ability to keep pace with changes in our industry and advancements in technology; ● Our ability attract and retain key executives and skilled employees; and ● Our ability to obtain additional capital in the future on acceptable terms. ​ Risks Related to Government Funding and Regulation of Public Education The majority of our revenues come from our comprehensive school-as-a-service offering in both the General Education and Career Learning markets and depends on per pupil funding amounts and payment formulas remaining near the levels existing at the time we execute service agreements with the schools we serve.
Biggest changeOur business, results of operations and financial conditions, as well as your investment in our common stock, could be materially and adversely affected by any of the following material risks: ● The majority of our revenues come from our school-as-a-service offering and depends on per pupil funding amounts and payment formulas remaining near levels existing at the time we execute service agreements with the schools we serve; ● Any failure to comply with applicable laws or regulations, the enactment of new laws or regulations, poor academic performance or misconduct by us or operators of other virtual public schools; ● Opponents of public charter schools could prevail in challenging the establishment and expansion of such schools through the judicial process; ● Disputes over our inability to invoice and receive payments for our services due to ambiguous enabling legislation and interpretive discrepancies by regulatory authorities; ● Any failure to renew an authorizing charter for a virtual or blended public school; ● Actual or alleged misconduct by current or former directors, officers, key employees or officials; ● Changes in the objectives or priorities of the independent governing bodies of the schools we serve; ● Any nonpayment or nonperformance by our customers, including due to actions taken by the independent governing authorities of our customers; ● Any failure to renew a contract for a school-as-a-service offering, which is subject to periodic renewal; ● Any failure to enroll or re-enroll a significant number of students by the schools we serve; ● The enrollment data we present may not fully capture trends in our business performance; ● Our marketing efforts may not be effective and changes in our marketing efforts and enrollment activities could lead to declines in enrollment; ● The student demographics of the schools we serve can lead to higher costs; ● The ability to meet state accountability testing standards and achieve parent and student satisfaction; ● Compliance with curriculum standards and assessments for individual state determinations under the ESSA; ● Risks due to mergers, acquisitions and joint ventures; ● Negative impacts caused by the actions of activist stockholders; ● Market demand for online options in public schooling may decrease or not continue, or additional states may not authorize or adequately fund virtual or blended public schools; ● Increasing competition in the education industry sectors that we serve; 20 Table of Contents ● The continuous evolution of regulatory frameworks on the accessibility of technology and curriculum; ● Differences between our quarterly estimates and the actual funds received and expenses incurred by the schools we serve; ● Seasonal fluctuations in our business; ● Our ability to create new products, expand distribution channels and pilot innovative educational programs; ● Our ability to recruit, train and retain quality certified teachers; ● Higher operating expenses and loss of management flexibility due to collective bargaining agreements; ● Our reliance on third-party service providers to host some of our solutions; ● Any problems with our Company-wide ERP and other systems; ● Our ability to maintain and enhance our product and service brands; ● Our ability to protect our valuable intellectual property rights, or lawsuits against us alleging the infringement of intellectual property rights of others; ● Any legal liability from the actions of third parties; ● Any failure to maintain and support customer facing services, systems, and platforms; ● Any failure to prevent or mitigate a cybersecurity incident affecting our systems, or any significant interruption in the operation of our data centers; ● Our reliance on the Internet to enroll students and to deliver our products and services; ● Failure to comply with data privacy regulations; ● Any failure by the single vendor we use to manage, receive, assemble and ship our learning kits and printed educational materials; ● Any significant interruption in the operation of AWS or Azure could cause a loss of data and disrupt our ability to manage our technological infrastructure; ● Scale and capacity limits on some of our technology, transaction processing systems and network hardware and software; ● Our ability to keep pace with changes in our industry and advancements in technology; ● Our ability to attract and retain key executives and skilled employees; ● Our ability to obtain additional capital in the future on acceptable terms; and ● The possibility that a material misstatement of our annual or interim financial statements, resulting from a material weakness in our internal control over financial reporting, would not be prevented or detected on a timely basis. ​ 21 Table of Contents Risks Related to Government Funding and Regulation of Public Education The majority of our revenues come from our comprehensive school-as-a-service offering in both the General Education and Career Learning markets and depends on per pupil funding amounts and payment formulas remaining near the levels existing at the time we execute service agreements with the schools we serve.
If a final determination of non-compliance is made, funds may be withheld, which could impair that school’s ability to pay us for services in a timely manner, or the school could be required to repay funds received during the period 23 Table of Contents of non-compliance.
If a final determination of non-compliance is made, funds may be withheld, which could impair that school’s 23 Table of Contents ability to pay us for services in a timely manner, or the school could be required to repay funds received during the period of non-compliance.
In contrast, while students in virtual or blended public K-12 schools are entitled to a public education with no federal or state loans necessary for tuition, laws 24 Table of Contents could be enacted that make for-profit management companies serving such schools subject to similar recruitment or other restrictions.
In contrast, while students in virtual or 24 Table of Contents blended public K-12 schools are entitled to a public education with no federal or state loans necessary for tuition, laws could be enacted that make for-profit management companies serving such schools subject to similar recruitment or other restrictions.
If our customers were to cause or be subjected to situations that lead to a weakened financial condition, dispute our invoices, withhold payments, or file for bankruptcy, we could experience difficulty and prolonged delays in collecting 26 Table of Contents receivables, if at all.
If our customers were to cause or be subjected to situations that lead 26 Table of Contents to a weakened financial condition, dispute our invoices, withhold payments, or file for bankruptcy, we could experience difficulty and prolonged delays in collecting receivables, if at all.
The pursuit of acquisitions and their integrations may divert the resources that could otherwise be used to support and grow our existing 28 Table of Contents lines of business. The combination of two or more independent enterprises is a complex, costly and time-consuming process.
The pursuit of 28 Table of Contents acquisitions and their integrations may divert the resources that could otherwise be used to support and grow our existing lines of business. The combination of two or more independent enterprises is a complex, costly and time-consuming process.
Any perceived or actual unauthorized disclosure of personally identifiable information, whether through breach of our network or a vendor’s network by an unauthorized party, employee theft, misuse or error or otherwise, could harm our reputation, impair our ability to attract and retain our customers, or subject us to claims or litigation arising from damages suffered by individuals.
Any perceived or actual unauthorized access, disclosure of personally identifiable information, whether through breach of our network or a vendor’s network by an unauthorized party, employee theft, misuse or error or otherwise, could harm our reputation, impair our ability to attract and retain our customers, or subject us to claims or litigation arising from damages suffered by individuals.
As we create and acquire new products, expand our existing customer base and pilot new educational programs, we expect to face challenges distinct from those we currently encounter, including: ● our continual efforts to innovate and pilot new programs to enhance student learning and to foster college and career opportunities, such as our Stride Career Prep schools which offer pathways for Career Learning, may not receive sufficient market acceptance to be economically viable; ● the ongoing transition of our curriculum from Flash to HTML, and our use of third-party educational platforms that we do not control, could create issues with customer satisfaction, early withdrawals and declines in re-registrations, and potentially harm our reputation; 31 Table of Contents ● the acquisition or opening of additional school-as-a-service offering in states where we already have a contract with other schools can potentially complicate the school selection process for prospective parents, and present marketing differentiation challenges depending on the facts and circumstances in that state; ● our development of public blended schools has raised different operational challenges than those we face with full-time virtual schools.
As we create and acquire new products, expand our existing customer base and pilot new educational programs, we expect to face challenges distinct from those we currently encounter, including: ● our continual efforts to innovate and pilot new programs to enhance student learning and to foster college and career opportunities, such as our Stride Career Prep schools which offer pathways for Career Learning, may not receive sufficient market acceptance to be economically viable; ● the ongoing transition of our curriculum from Flash to HTML, and our use of third-party educational platforms that we do not control, could create issues with customer satisfaction, early withdrawals and declines in re-registrations, and potentially harm our reputation; ● the acquisition or opening of additional school-as-a-service offering in states where we already have a contract with other schools can potentially complicate the school selection process for prospective parents, and present marketing differentiation challenges depending on the facts and circumstances in that state; ● our development of public blended schools has raised different operational challenges than those we face with full-time virtual schools.
We may also be required to expend significant capital and other resources in response to a security incident, including notification under data privacy laws and regulations, and incur expenses related to containing the incident, restoring lost or corrupted data, and remediating our IT Systems.
We may also be required to expend significant capital and other resources in response to a security incident, including notification under data privacy laws and regulations, and incur expenses related to investigating and containing the incident, restoring lost or corrupted data, and remediating our IT Systems.
We face several technological risks associated with online product service delivery, information technology security (including virus and cyber-attacks, as well as software related bugs, misconfigurations or other vulnerabilities), e-commerce and enterprise resource planning system implementation and upgrades.
We face several technological risks associated with online product service delivery, information technology security (including virus and cyber-attacks, ransomware, as well as software related bugs, misconfigurations or other vulnerabilities), e-commerce and enterprise resource planning system implementation and upgrades.
In addition, remote working arrangements that started during the COVID-19 pandemic may continue in the future, which presents additional opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities present in many non-corporate networks.
In addition, remote and hybrid working arrangements that started during the COVID-19 pandemic may continue in the future, which presents additional opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities present in many non-corporate networks.
A majority of our revenues are a direct function of how many students are enrolled in our school-as-a-service offerings, the number of school districts and students who subscribe to such district programs, and the enrollments in our three international and private schools.
A majority of our revenues are a direct function of how many students are enrolled in our school-as-a-service offerings, the number of school districts and students who subscribe to such district programs, and the enrollments in our international and private schools.
We rely on the Internet to enroll students and to deliver our products and services to children and to market ourselves and schools that contract with us, all of which exposes us to a growing number of legal risks and increasing regulation.
We rely on the Internet to enroll students and to deliver our products and services and to market ourselves and schools that contract with us, all of which exposes us to a growing number of legal risks and increasing regulation.
In fiscal year 2022, a majority of our revenue was derived from our comprehensive school-as-a-service offerings in both the General Education and Career Learning markets, the majority of which were virtual and blended public schools operating under a charter. The service and products agreements for these schools are with the charter holder or the charter board.
In fiscal year 2023, a majority of our revenue was derived from our comprehensive school-as-a-service offerings in both the General Education and Career Learning markets, the majority of which were virtual and blended public schools operating under a charter. The service and products agreements for these schools are with the charter holder or the charter board.
In addition, teachers in the public schools we manage or who provide instruction in connection with the online programs we offer to school districts, must be state certified (with limited exceptions or temporary waiver provisions in various states), and we must implement effective internal controls in each jurisdiction to ensure valid teacher certifications, as well as the proper matching of certifications with student grade levels and subjects to be taught.
In addition, teachers in the public schools we manage or who provide instruction in connection with 32 Table of Contents the online programs we offer to school districts, must be state certified (with limited exceptions or temporary waiver provisions in various states), and we must implement effective internal controls in each jurisdiction to ensure valid teacher certifications, as well as the proper matching of certifications with student grade levels and subjects to be taught.
For example, in fiscal year 2016, the Commonwealth of Pennsylvania was unable to approve a budget, including funding for public school education, and thus the Agora Cyber Charter School received no funds and could not make timely contractual payments to the Company for our products and services, even though we continued to incur the costs to keep the school operating.
For example, in 22 Table of Contents fiscal year 2016, the Commonwealth of Pennsylvania was unable to approve a budget, including funding for public school education, and thus the Agora Cyber Charter School received no funds and could not make timely contractual payments to the Company for our products and services, even though we continued to incur the costs to keep the school operating.
As our business and market strategy evolves, we also will need to respond to technological advances and emerging industry standards in a cost-effective and timely manner in order to remain competitive, such as the ubiquitous use of tablets for public school applications, adaptive learning technologies, and web accessibility standards.
As our business and market strategy evolves, we also will need to respond to technological advances and emerging industry standards in a cost-effective and timely manner in order to remain competitive, such as the ubiquitous use of tablets for public school applications, artificial intelligence and machine learning, adaptive learning technologies, and web accessibility standards.
The success of our business depends in part on the choice of a family to have their child begin or continue his or her education in a virtual or blended public school that we serve. This decision is based on many factors, including student performance and parent and student satisfaction.
The success of our business depends in part on the choice of a family to have their child begin or continue his or her education in a virtual or blended public school that we serve. This decision is based on many factors, including student 27 Table of Contents performance and parent and student satisfaction.
Our online curriculum is made available to students through websites, computers and other display devices connected to the Internet. The website platforms and online curriculum include a combination of software applications that include graphics, pictures, videos, animations, sounds and interactive content that may present challenges to individuals with disabilities.
Our online curriculum is made available to students through websites, computers and other display devices connected to the Internet. The website platforms and online curriculum include a combination of software applications that include graphics, pictures, videos, animations, sounds and interactive content that may present challenges to 30 Table of Contents individuals with disabilities.
If we are unable to further enhance our brand recognition and increase awareness of our products and services, or if we incur excessive sales and marketing expenses, our business and results of operations could be adversely affected. 33 Table of Contents Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.
If we are unable to further enhance our brand recognition and increase awareness of our products and services, or if we incur excessive sales and marketing expenses, our business and results of operations could be adversely affected. Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.
Even if unsuccessful, such a claim could create unfavorable publicity, cause us to incur substantial expenses and divert the time and attention of management. 34 Table of Contents We operate in markets that are dependent on Information Technology (IT) systems and technological change.
Even if unsuccessful, such a claim could create unfavorable publicity, cause us to incur substantial expenses and divert the time and attention of management. We operate in markets that are dependent on Information Technology (IT) systems and technological change.
System delays or malfunctioning could also disrupt our ability to timely and accurately process and report results of our operations, financial position and cash flows, which could impact our ability to timely complete important business processes. The continued development of our product and service brands is important to our business.
System delays or malfunctioning could also disrupt our ability to timely and accurately process and report results of our 33 Table of Contents operations, financial position and cash flows, which could impact our ability to timely complete important business processes. The continued development of our product and service brands is important to our business.
The political process and potential variability in general economic conditions, including due to the ongoing COVID-19 pandemic, rising inflation and geo-political instability, create a number of risks that could have an adverse effect on our business including the following: ​ ● Legislative proposals can and have resulted in budget or program cuts for public education, including the virtual and blended public schools and school districts we serve, and therefore have reduced and could potentially limit or eliminate the products and services those schools purchase from us, causing our revenues to decline.
The political process and potential variability in general economic conditions, including due to possible pandemics, rising inflation and geo-political instability, create a number of risks that could have an adverse effect on our business including the following: ​ ● Legislative proposals can and have resulted in budget or program cuts for public education, including the virtual and blended public schools and school districts we serve, and therefore have reduced and could potentially limit or eliminate the products and services those schools purchase from us, causing our revenues to decline.
Shortages of qualified teachers, failures to ensure proper 32 Table of Contents teacher certifications and course assignments in each state, or decreases in the quality of our instruction, whether actual or perceived, could have an adverse effect on our business.
Shortages of qualified teachers, failures to ensure proper teacher certifications and course assignments in each state, or decreases in the quality of our instruction, whether actual or perceived, could have an adverse effect on our business.
Any security incident that results in Confidential Information being stolen, accessed or modified without authorization, or that otherwise disrupts or negatively impacts our operations or IT Systems, could harm our reputation, lead to customer attrition, and expose us to regulatory enforcement action or litigation, including class actions.
Any security incident that results in Confidential Information, including personal information, being stolen, accessed, used or modified without authorization, or that otherwise disrupts or negatively impacts our operations or IT Systems, could harm our reputation, lead to customer attrition, and expose us to regulatory investigations, enforcement actions or litigation, including class actions.
Our business is primarily dependent upon those funds with a majority of our revenue coming from our comprehensive 21 Table of Contents school-as-a-service offerings in both the General Education and Career Learning markets.
Our business is primarily dependent upon those funds with a majority of our revenue coming from our comprehensive school-as-a-service offerings in both the General Education and Career Learning markets.
For example, a non-practicing entity sued us alleging that our proprietary learning systems infringed three of its patents although its lawsuit was ultimately dismissed on the merits in 2014.
For example, a non-practicing entity sued us alleging that our proprietary learning 34 Table of Contents systems infringed three of its patents although its lawsuit was ultimately dismissed on the merits in 2014.
In addition, a security 35 Table of Contents incident could require that we expend substantial additional resources related to the security of our IT Systems, diverting resources from other projects and disrupting our businesses.
In addition, a security incident could require that we expend substantial additional resources related to the security of our IT Systems, diverting resources from other projects and disrupting our businesses.
In fiscal year 2022, we had contracts for our school-as-a-service offerings for 80 schools in 30 states and the District of Columbia. A portion of these contracts are scheduled to expire in any given year and may not be renewed or may be renewed on terms much less favorable to us.
In fiscal year 2023, we had contracts for our school-as-a-service offerings for 87 schools in 31 states and the District of Columbia. A portion of these contracts are scheduled to expire in any given year and may not be renewed or may be renewed on terms much less favorable to us.
Additionally, we do not control the operation of these cloud facilities and must rely on AWS and Azure to provide the physical security, facilities management and communications infrastructure services related to our cloud environment. Our reliance on these vendors exposes us to risks outside of our control.
Additionally, we do not control the operation of these cloud facilities and must rely on AWS and Azure to provide the physical security, facilities management and communications infrastructure services related to our cloud environment.
If adequate funds are not available or are not available on acceptable terms, our ability to expand, develop or enhance services or products, or respond to competitive pressures will be limited. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​ 38 Table of Contents
If adequate funds are not available or are not available on acceptable terms, our ability to expand, develop 38 Table of Contents or enhance services or products, or respond to competitive pressures will be limited.
Students may perform significantly below state averages or the virtual or 27 Table of Contents blended public school may fail to meet state accountability standards.
Students may perform significantly below state averages or the virtual or blended public school may fail to meet state accountability standards.
As a result, we expect to face difficulties in accurately forecasting financial results. Failure to comply with regulatory requirements, poor academic performance, or misconduct by us or operators of other virtual public schools could tarnish the reputation of all the school operators in our industry, which could have a negative impact on our business or lead to punitive legislation.
Failure to comply with regulatory requirements, poor academic performance, or misconduct by us or operators of other virtual public schools could tarnish the reputation of all the school operators in our industry, which could have a negative impact on our business or lead to punitive legislation.
As our business grows, these seasonal fluctuations may become more pronounced. As a result, we believe that sequential quarterly comparisons of our financial results may not provide an accurate assessment of our financial position. Risks Related to Our Operations We plan to continue to create new products, expand distribution channels and pilot innovative educational programs to enhance academic performance.
As a result, we believe that sequential quarterly comparisons of our financial results may not provide an accurate assessment of our financial position. 31 Table of Contents Risks Related to Our Operations We plan to continue to create new products, expand distribution channels and pilot innovative educational programs to enhance academic performance.
While historically we grew by opening new virtual public schools in new states, in recent years the pace of state expansion has declined while opening more schools in existing states has increased. In fiscal year 2022, we served 80 29 Table of Contents virtual public schools and blended schools in 30 states and the District of Columbia.
While historically we grew by opening new virtual public schools in new states, in recent years the pace of state expansion has declined while opening more schools in existing states has increased. In fiscal year 2023, we served 87 virtual public schools and blended schools in 31 states and the District of Columbia.
From time to time, proposals are introduced in state legislatures that single out virtual and blended public schools for disparate treatment. ● Economic conditions, including current and future business disruptions and debt and equity market volatility caused by the ongoing COVID-19 pandemic, rising inflation and geo-political instability, could reduce state education funding for all public schools or cause a delay in the payment of government funding to schools and school districts or a delay in payments to us for our products or services, the effects of which could be disproportionate for the schools we serve.
From time to time, proposals are introduced in state legislatures that single out virtual and blended public schools for disparate treatment. ● Economic conditions, including current and future business disruptions and debt and equity market volatility caused by changing interest rates, rising inflation, the government closures of various banks and liquidity concerns at other financial institutions, geo-political instability, possible pandemics and the potential for local and/or global economic recession, could reduce state education funding for all public schools or cause a delay in the payment of government funding to schools and school districts or a delay in payments to us for our products or services, the effects of which could be disproportionate for the schools we serve.
Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude, and threat actors are increasingly sophisticated in using techniques that circumvent controls, evade detection, and remove forensic evidence, which means that we and critical third parties may be unable to anticipate, contain or recover from future attacks or incidents in a timely or effective manner.
Any remediation measures that we have taken or that we may undertake in the future in response to this security incident may be insufficient to prevent future attacks. 35 Table of Contents Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude, and threat actors are increasingly sophisticated in using techniques that circumvent controls, evade detection, and remove forensic evidence, which means that we and critical third parties may be unable to anticipate, contain, investigate or recover from future attacks or incidents in a timely or effective manner.
In addition, we utilize the same vendor at a second location for the reclamation and redeployment of our student computers. This partnership depends upon execution on the part of us and the vendor.
We utilize a single logistics vendor for the management, receiving, assembly and shipping of all of our learning kits and printed educational materials. In addition, we utilize the same vendor at a second location for the reclamation and redeployment of our student computers. This partnership depends upon execution on the part of us and the vendor.
Monetary damages, regulatory fines or penalties and other costs or losses could be significant and may exceed insurance policy limits or may not be covered by our insurance at all.
Monetary damages, regulatory fines or penalties and other costs or losses, as well as injunctive remedies that require changes to our business model or practices, could be significant and may exceed insurance policy limits or may not be covered by our insurance at all.
In addition, we may not be able to expand and upgrade our systems and network hardware and software capabilities to accommodate significant unexpected increased or peak use. If we are unable to appropriately upgrade our systems and network hardware and software in a timely manner, our operations and processes may be temporarily disrupted.
In addition, we may not be able to expand and upgrade our systems and network hardware and software capabilities to accommodate significant unexpected increased or peak use.
Stride has migrated the applications that form the basis of our products to Amazon Web Services (AWS) and Microsoft Azure. Amazon and Microsoft are global leaders in the cloud services industry and provide world class data centers and capabilities.
We have migrated the applications that form the basis of our products to Amazon Web Services (AWS) and Microsoft Azure. Amazon and Microsoft are global leaders in the cloud services industry and provide world class data centers and capabilities. However, our reliance on these vendors exposes us to risks outside of our control.
Because there is no federal rule setting a uniform technical standard for determining web accessibility under Section 508 and Title II of the ADA, online service providers have no uniform standard of compliance.
Because there is no federal rule setting a uniform technical standard for determining web accessibility under Section 508 and Title II of the ADA, online service providers have no uniform standard of compliance. Some states have adopted the standards promulgated under Section 508 while others require WCAG Level A and/or Level AA or their own unique standards.
In addition to the possibility of penalties, remediation costs and reputational damage, the cost of compliance with foreign laws may outweigh revenue from those countries to such an extent that we may discontinue or restrict our offerings to certain countries. 36 Table of Contents We utilize a single logistics vendor for the management, receiving, assembly and shipping of all of our learning kits and printed educational materials.
In addition to the possibility of penalties, remediation costs and reputational damage, the cost of compliance with foreign laws may outweigh revenue from those countries to such an extent that we may discontinue or restrict our offerings to certain countries.
Our efforts to expand capacity may not produce the operational and financial results for which those investments were intended. As we have grown to serve more schools, students and families in an increasing number of states and countries, we have invested in infrastructure systems and technology to keep pace such as new communication systems, enterprise hardware and software systems.
As we have grown to serve more schools, students and families in an increasing number of states and countries, we have invested in infrastructure systems and technology to keep pace such as new communication systems, enterprise hardware and software systems.
In addition, as part of our business, we collect, use, process, transmit, host and store information, including personal data related to employees, customers, students, and parents, as well as proprietary business information (collectively, "Confidential Information"). Our IT Systems and Confidential Information are at risk of being compromised, whether through malicious activity or human or technological error.
In addition, as part of our business, we collect, use, process, transmit, host and store information, including personal data related to employees, customers, students, and parents, as well as proprietary business data and other sensitive information (collectively, "Confidential Information").
As a result, we may be exposed to substantial liability, including significant expenses necessary to comply with such laws and regulations and indemnification of schools we operate for liabilities resulting from a school’s failure to comply with such laws and regulations.
As a result, we may be exposed to substantial liability, including significant expenses necessary to comply with such laws and regulations and indemnification of schools we operate for liabilities resulting from a school’s failure to comply with such laws and regulations. 36 Table of Contents Failure to comply with data privacy regulations could result in reputational damage to our brands and adversely affect our business, financial condition and results of operations .
Some states have adopted the standards promulgated under Section 508 while others require WCAG Level A and/or Level AA or their own 30 Table of Contents unique standards. In addition, Section 504 of the Rehabilitation Act of 1973 is designed to ensure that students with disabilities have an equal opportunity to access each school’s website and online learning environment.
In addition, Section 504 of the Rehabilitation Act of 1973 is designed to ensure that students with disabilities have an equal opportunity to access each school’s website and online learning environment.
Any perceived uncertainties as to our future direction also could affect the market price and volatility of our securities, cause key executives to leave the Company, adversely affect the relationships we have with our school board customers, and harm existing and new business prospects.
Any perceived uncertainties as to our future direction also could affect the market price and volatility of our securities, cause key executives to leave the Company, adversely affect the relationships we have with our school board customers, and harm existing and new business prospects. 29 Table of Contents If market demand for online options in public schooling does not increase or continue or if additional states do not authorize or adequately fund virtual or blended public schools, our business, financial condition and results of operations could be adversely affected.
As changes in our industry occur or macroeconomic conditions fluctuate we may need to adjust our business strategies or find it necessary to restructure our operations or businesses, which could lead to changes in our cost structure, 37 Table of Contents the need to write down the value of assets, or impact our profitability.
As changes in our industry occur or macroeconomic conditions fluctuate, including due to changing interest rates, rising inflation, the government closures of various banks and liquidity concerns at other financial institutions, geopolitical instability, artificial intelligence and machine learning, pandemics and the potential for local and/or global economic recession, we may need to adjust our business strategies or find it necessary to restructure our operations or businesses, which could lead to changes in our cost structure, the need to write down the value of assets, or impact our profitability.
Removed
We cannot predict with any certainty whether and to what degree the disruption caused by the ongoing COVID-19 pandemic and reactions thereto will continue and how our business and results of operations will be impacted in the future.
Added
The independent boards or similar governing bodies may shift their priorities or incur new obligations, which may have financial consequences on our customers.
Removed
While we initially observed increasing demand from prospective students in the earlier part of the COVID-19 pandemic, we cannot estimate the specific impact of the ongoing COVID-19 pandemic on future demand trends, and 22 Table of Contents there is no assurance that we will continue to experience current demand levels as the COVID-19 pandemic tapers.
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As our business grows, these seasonal fluctuations may become more pronounced.
Removed
If market demand for online options in public schooling does not increase or continue or if additional states do not authorize or adequately fund virtual or blended public schools, our business, financial condition and results of operations could be adversely affected.
Added
The confidentiality, integrity and availability of our IT Systems and Confidential Information is at risk of being compromised, whether through malicious activity (including social engineering) by internal or external actors, or through human or technological errors that result from negligence or software “bugs” or other vulnerabilities.
Removed
Any remediation measures that we have taken or that we may undertake in the future in response to this security incident may be insufficient to prevent future attacks.
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If we are unable to appropriately upgrade our systems and network hardware and software in a timely manner, our operations and processes may be temporarily disrupted. 37 Table of Contents Our efforts to expand capacity may not produce the operational and financial results for which those investments were intended.
Removed
Failure to comply with data privacy regulations could result in reputational damage to our brands and adversely affect our business, financial condition and results of operations .
Added
In addition, economic conditions, including current and future business disruptions and debt and equity market volatility caused by changing interest rates, rising inflation, the government closures of various banks and liquidity concerns at other financial institutions, geopolitical instability, possible pandemics and the potential for local and/or global economic recession may impact our ability to raise funds on acceptable terms. ​ Moreover, the Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits.
Added
Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.
Added
Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations. ​ We have identified a material weakness in our internal control over financial reporting, which could result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected on a timely basis.
Added
In connection with the audit of our consolidated financial statements as of and for the year ended June 30, 2023, we have concluded that there is a material weakness relating to our internal control over financial reporting, as described in Part II, Item 9A, “Controls and Procedures.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Added
Solely as a result of this material weakness, management has concluded that our internal control over financial reporting and disclosure controls and procedures were not effective as of June 30, 2023. As described in Part II, Item 9A, “Controls and Procedures,” we have begun, and are currently in the process of, remediating the material weakness.
Added
However, the measures we have taken and expect to take to improve our internal controls may not be sufficient to address the issue, and we may need to take additional measures to ensure that our internal controls are effective or to ensure that the identified material weakness will not result in a material misstatement of our annual or interim consolidated financial statements.
Added
If we fail to establish and maintain adequate internal control over financial reporting, including any failure to implement remediation measures and enhancements for internal controls, or if we experience difficulties in their implementation, our business, financial condition and results of operations could be adversely affected.
Added
Further, any material weakness or unsuccessful remediation could affect investor confidence in the accuracy and completeness of our financial statements. In addition, perceptions of us among customers, lenders, investors, securities analysts and others could also be adversely affected.
Added
We can give no assurances that the measures we have taken to date, or any future measures we may take, will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​ 39 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our headquarters is located in approximately 23,000 square feet of office space in Reston, Virginia. The facility is under a lease that expires in July 2033. In addition, we lease approximately 552,000 square feet in multiple locations throughout the United States under individual leases that expire between July 2022 and August 2030. ITEM 3.
Biggest changeITEM 2. PROPERTIES Our headquarters is located in approximately 23,000 square feet of office space in Reston, Virginia. The facility is under a lease that expires in July 2033. In addition, we lease approximately 497,000 square feet in multiple locations throughout the United States under individual leases that expire between July 2023 and August 2030. ITEM 3.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. Legal Proceedings 39 ITEM 4 Mine Safety Disclosures 39 PART II ​ ​ ITEM 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 40 ITEM 6 . Selected Financial Data 41 ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 ITEM 7A .
Biggest changeITEM 3. Legal Proceedings 40 ITEM 4 Mine Safety Disclosures 40 PART II ​ ​ ITEM 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 ITEM 6 . [Reserved] 42 ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 ITEM 7A .
Quantitative and Qualitative Disclosures About Market Risk 57 ITEM 8 . Financial Statements and Supplementary Data 58
Quantitative and Qualitative Disclosures About Market Risk 57 ITEM 8 . Financial Statements and Supplementary Data 59

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)(2) Among Stride, Inc., S&P 500 Index, NASDAQ Composite Index, Russell 2000 Index and Peer Group Index ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-Jun-17 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21 ​ 30-Jun-22 LRN 100 93 168 169 195 221 Peer Group Index 100 141 144 151 154 110 S&P 500 100 115 127 136 171 160 Nasdaq Composite 100 125 136 164 203 179 Russell 2000 100 121 120 121 173 145 (1) The information presented above in the stock performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, except to the extent that we subsequently specifically 40 Table of Contents request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933, as amended (the “Securities Act”), or a filing under the Exchange Act.
Biggest changeCOMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)(2) Among Stride, Inc., S&P 500 Index, NASDAQ Composite Index, Russell 2000 Index and Peer Group Index ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-Jun-18 30-Jun-19 ​ 30-Jun-20 ​ 30-Jun-21 ​ 30-Jun-22 ​ 30-Jun-23 LRN 100 175 ​ 176 ​ 202 228 225 Peer Group Index 100 104 ​ 111 ​ 114 69 55 S&P 500 100 110 ​ 120 ​ 154 143 160 Nasdaq Composite 100 110 ​ 138 ​ 177 153 178 Russell 2000 100 99 ​ 100 ​ 152 124 134 41 Table of Contents (1) The information presented above in the stock performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, except to the extent that we subsequently specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933, as amended (the “Securities Act”), or a filing under the Exchange Act.
The graph assumes that the value of the investment in our common stock in each index (including reinvestment of dividends) was $100 on June 30, 2017 and tracks it through June 30, 2022. All prices reflect closing prices on the last day of trading at the end of each calendar quarter.
The graph assumes that the value of the investment in our common stock in each index (including reinvestment of dividends) was $100 on June 30, 2018 and tracks it through June 30, 2023. All prices reflect closing prices on the last day of trading at the end of each calendar quarter.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock, par value $0.0001 per share, is traded on the New York Stock Exchange (the “NYSE”) under the symbol “LRN.” As of July 29, 2022, there were 305 registered holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock, par value $0.0001 per share, is traded on the New York Stock Exchange (the “NYSE”) under the symbol “LRN.” As of August 11, 2023, there were 388 registered holders of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+15 added−10 removed113 unchanged
Biggest changeSupport Services – We offer 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). 52 Table of Contents Financial Information The following table sets forth statements of operations data and the amounts as a percentage of revenues for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ ​ ​ (In thousands, except percentages) ​ Revenues ​ ​ $ 1,686,666 100.0 % $ 1,536,760 100.0 % $ 1,040,765 100.0 % Instructional costs and services ​ ​ ​ ​ 1,090,191 ​ ​ 64.6 ​ ​ 1,001,860 ​ ​ 65.2 ​ ​ 693,232 ​ ​ 66.6 ​ Gross margin ​ ​ ​ ​ 596,475 ​ ​ 35.4 ​ ​ 534,900 ​ ​ 34.8 ​ ​ 347,533 ​ ​ 33.4 ​ Selling, general, and administrative expenses ​ ​ ​ ​ 439,847 ​ ​ 26.1 ​ ​ 424,444 ​ ​ 27.6 ​ ​ 315,076 ​ ​ 30.3 ​ Income from operations ​ ​ ​ ​ 156,628 ​ ​ 9.3 ​ ​ 110,456 ​ ​ 7.2 ​ ​ 32,457 ​ ​ 3.1 ​ Interest income (expense), net ​ ​ ​ ​ (8,277) ​ ​ (0.5) ​ ​ (17,979) ​ ​ (1.2) ​ ​ 698 ​ ​ 0.1 ​ Other income (expense), net ​ ​ ​ ​ (1,277) ​ ​ (0.1) ​ ​ 2,829 ​ ​ 0.2 ​ ​ 272 ​ ​ 0.0 ​ Income before income taxes and income (loss) from equity method investments ​ ​ ​ ​ 147,074 ​ ​ 8.7 ​ ​ 95,306 ​ ​ 6.2 ​ ​ 33,427 ​ ​ 3.2 ​ Income tax expense ​ ​ ​ ​ (40,088) ​ ​ (2.4) ​ ​ (24,539) ​ ​ (1.6) ​ ​ (8,541) ​ ​ (0.8) ​ Income (loss) from equity method investments ​ ​ ​ ​ 144 ​ ​ 0.0 ​ ​ 684 ​ ​ 0.0 ​ ​ (380) ​ ​ (0.0) ​ Net income attributable to common stockholders ​ ​ ​ $ 107,130 ​ ​ 6.4 % $ 71,451 ​ ​ 4.6 % $ 24,506 ​ ​ 2.4 % ​ Comparison of the Years Ended June 30, 2022 and 2021 ​ Revenues.
Biggest changeFinancial Information The following table sets forth statements of operations data and the amounts as a percentage of revenues for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ (In thousands, except percentages) ​ Revenues ​ ​ $ 1,837,358 100.0 % $ 1,686,666 100.0 % $ 1,536,760 100.0 % Instructional costs and services ​ ​ ​ ​ 1,190,288 ​ ​ 64.8 ​ ​ 1,090,191 ​ ​ 64.6 ​ ​ 1,001,860 ​ ​ 65.2 ​ Gross margin ​ ​ ​ ​ 647,070 ​ ​ 35.2 ​ ​ 596,475 ​ ​ 35.4 ​ ​ 534,900 ​ ​ 34.8 ​ Selling, general, and administrative expenses ​ ​ ​ ​ 481,571 ​ ​ 26.2 ​ ​ 439,847 ​ ​ 26.1 ​ ​ 424,444 ​ ​ 27.6 ​ Income from operations ​ ​ ​ ​ 165,499 ​ ​ 9.0 ​ ​ 156,628 ​ ​ 9.3 ​ ​ 110,456 ​ ​ 7.2 ​ Interest expense, net ​ ​ ​ ​ (8,404) ​ ​ (0.5) ​ ​ (8,277) ​ ​ (0.5) ​ ​ (17,979) ​ ​ (1.2) ​ Other income (expense), net ​ ​ ​ ​ 15,452 ​ ​ 0.8 ​ ​ (1,277) ​ ​ (0.1) ​ ​ 2,829 ​ ​ 0.2 ​ Income before income taxes and income (loss) from equity method investments ​ ​ ​ ​ 172,547 ​ ​ 9.4 ​ ​ 147,074 ​ ​ 8.7 ​ ​ 95,306 ​ ​ 6.2 ​ Income tax expense ​ ​ ​ ​ (45,346) ​ ​ (2.5) ​ ​ (40,088) ​ ​ (2.4) ​ ​ (24,539) ​ ​ (1.6) ​ Income (loss) from equity method investments ​ ​ ​ ​ (334) ​ ​ (0.0) ​ ​ 144 ​ ​ 0.0 ​ ​ 684 ​ ​ 0.0 ​ Net income attributable to common stockholders ​ ​ ​ $ 126,867 ​ ​ 6.9 % $ 107,130 ​ ​ 6.4 % $ 71,451 ​ ​ 4.6 % ​ Comparison of the Years Ended June 30, 2023 and 2022 ​ Revenues.
The decrease in net interest expense was primarily due to adoption of ASU 2020-06 in fiscal year 2022 which resulted in the elimination of interest expense related to the debt discount of the Convertible Senior Notes. ​ Income tax expense.
The decrease in net interest expense was primarily due to the adoption of ASU 2020-06 in fiscal year 2022 which resulted in the elimination of interest expense related to the debt discount of the Convertible Senior Notes. ​ Income tax expense.
We operate three accredited private online schools at differing price points and service levels. We define an enrollment as any student enrolled in one of these schools where we provide a combination of curriculum, technology, instructional and support services inclusive of administrative support. Our revenues are derived from tuition receipts that are a function of course enrollments and program price.
We operate accredited private online schools at differing price points and service levels. We define an enrollment as any student enrolled in one of these schools where we provide a combination of curriculum, technology, instructional and support services inclusive of administrative support. Our revenues are derived from tuition receipts that are a function of course enrollments and program price.
Factors affecting our revenues include: (i) the number of enrollments; (ii) the mix of enrollments across grades and states; (iii) administrative services and curriculum sales provided to the schools and school districts; 44 Table of Contents (iv) state or district per student funding levels and attendance requirements; (v) prices for our products and services; (vi) growth in our adult learning programs; and (vii) revenues from new initiatives, mergers and acquisitions. ​ Virtual and Blended Schools The virtual and blended schools we serve offer an integrated package of systems, services, products, and professional expertise that we administer to support a virtual or blended public school.
Factors affecting our revenues include: (i) the number of enrollments; (ii) the mix of enrollments across grades and states; (iii) administrative services and curriculum sales provided to the schools and school districts; (iv) state or district per student funding levels and attendance requirements; (v) prices for our products and services; 45 Table of Contents (vi) growth in our adult learning programs; and (vii) revenues from new initiatives, mergers and acquisitions. ​ Virtual and Blended Schools The virtual and blended schools we serve offer an integrated package of systems, services, products, and professional expertise that we administer to support a virtual or blended public school.
The following overview provides a summary of the sections included in our MD&A: ● Executive Summary —a general description of our business and key highlights of the year ended June 30, 2022. ● Key Aspects and Trends of Our Operations —a discussion of items and trends that may impact our business in the upcoming year. ● Critical Accounting Estimates —a discussion of critical accounting estimates requiring judgments and the application of critical accounting policies. ● Results of Operations —an analysis of our results of operations in our consolidated financial statements. ● Liquidity and Capital Resources —an analysis of cash flows, sources and uses of cash, commitments and contingencies, seasonality in the results of our operations, and quantitative and qualitative disclosures about market risk.
The following overview provides a summary of the sections included in our MD&A: ● Executive Summary —a general description of our business and key highlights of the year ended June 30, 2023. ● Key Aspects and Trends of Our Operations —a discussion of items and trends that may impact our business in the upcoming year. ● Critical Accounting Estimates —a discussion of critical accounting estimates requiring judgments and the application of critical accounting policies. ● Results of Operations —an analysis of our results of operations in our consolidated financial statements. ● Liquidity and Capital Resources —an analysis of cash flows, sources and uses of cash, commitments and contingencies, seasonality in the results of our operations, and quantitative and qualitative disclosures about market risk.
For the years ended June 30, 2021, 2020 and 2019, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately 1.4%, (0.1)%, and 0.6%, respectively. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools.
For the years ended June 30, 2022, 2021 and 2020, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately 1.6%, 1.4%, and (0.1)%, respectively. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools.
General Education Career Learning ● School-as-a-service ​ ● Stride Career Prep school-as-a-service ​ ● Stride Private Schools ​ ● Learning Solutions Career Learning software and services sales ​ ● Learning Solutions software and services sales ​ ● Adult Learning ​ ​ ​ ​ ​ ​ 42 Table of Contents Products and services for the General Education market are predominantly focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge.
General Education Career Learning ● School-as-a-service ​ ● Stride Career Prep school-as-a-service ​ ● Stride Private Schools ​ ● Learning Solutions Career Learning software and services sales ​ ● Learning Solutions software and services sales ​ ● Adult Learning ​ ​ ​ ​ ​ ​ 43 Table of Contents Products and services for the General Education market are predominantly focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge.
Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. ​ We generate revenues under contracts with virtual and blended public schools and include the following components, where required: ​ ● providing each of a school’s students with access to our online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual or blended school.
Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. ​ ​ ​ 49 Table of Contents We generate revenues under contracts with virtual and blended public schools and include the following components, where required: ​ ● providing each of a school’s students with access to our online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual or blended school.
Our growth strategy includes increasing revenues in other distribution channels, expanding our adult learning training programs, adding enrollments in our private schools, and expanding our learning solutions sales channel. Combined revenues from these other sectors were significantly smaller than those from the virtual and blended public schools we served in the year ended June 30, 2022.
Our growth strategy includes increasing revenues in other distribution channels, expanding our adult learning training programs, adding enrollments in our private schools, and expanding our learning solutions sales channel. Combined revenues from these other sectors were significantly smaller than those from the virtual and blended public schools we served in the year ended June 30, 2023.
The decrease in General Education revenues was primarily due to the 8.6% decrease in enrollments, and changes to school mix (distribution of enrollments by school). Career Learning revenues increased $156.3 million, or 60.9%, primarily due to a 41.6% increase in enrollments, school mix, as well as from the acquisition of MedCerts and Tech Elevator. ​ Instructional costs and services expenses.
The decrease in General Education revenues was primarily due to the 8.6% decrease in enrollments, and changes to school mix (distribution of enrollments by school). Career Learning revenues increased $156.3 million, or 60.9%, primarily due to a 41.6% increase in enrollments, school mix, as well as from the acquisitions of MedCerts and Tech Elevator. Instructional costs and services expenses.
Importantly, our Board of Directors is also diverse with female, Hispanic, and African American members. ​ Our commitment to ESG initiatives is an endeavor both the Board and management undertake for the general betterment of those both inside and outside of our Company. ​ The nature of our business supports environmental sustainability.
Importantly, our Board of Directors is also diverse with female, Hispanic, and black or African American members. ​ Our commitment to ESG initiatives is an endeavor both the Board and management undertake for the general betterment of those both inside and outside of our Company. ​ The nature of our business supports environmental sustainability.
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, business, and health services, for students in middle school through high school and adult learners. ​ The majority of our contracts are with the following types of customers: ​ ● a virtual or blended school whereby the amount of revenue is primarily determined by funding the school receives; ● a school or individual who licenses certain curriculum on a subscription or course-by-course basis; or ● an enterprise who contracts with the Company to provide job training. ​ 48 Table of Contents Funding-based Contracts ​ We provide an integrated package of systems, services, products, and professional expertise that is administered together to support a virtual or blended public school.
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, for students in middle school through high school and adult learners. ​ The majority of our contracts are with the following types of customers: ​ ● a virtual or blended school whereby the amount of revenue is primarily determined by funding the school receives; ● a school or individual who licenses certain curriculum on a subscription or course-by-course basis; or ● an enterprise who contracts with the Company to provide job training. ​ Funding-based Contracts ​ We provide an integrated package of systems, services, products, and professional expertise that is administered together to support a virtual or blended public school.
We are also developing interactive, modular courses focused on racial equity and social justice that are being made available for free to every public school. ​ Among the many ESG issues we support within the Company, we endeavor to promote diversity and inclusion across every aspect of the organization.
We developed interactive, modular courses focused on racial equity and social justice that are being made available for free to every public school. ​ Among the many ESG issues we support within the Company, we endeavor to promote diversity and inclusion across every aspect of the organization.
Actual school net operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. ​ 49 Table of Contents Subscription-based Contracts ​ We provide certain online curriculum and services to schools and school districts under subscription agreements.
Actual school net operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. ​ Subscription-based Contracts ​ We provide certain online curriculum and services to schools and school districts under subscription agreements.
As part of the proceeds received from the Notes, we repaid our $100.0 million outstanding balance and as of June 30, 2022, we had no amounts outstanding on the Credit Facility.
As part of the proceeds received from the Notes, we repaid our $100.0 million outstanding balance and as of June 30, 2023, we had no amounts outstanding on the Credit Facility.
Products and services are sold as a comprehensive school-as-a-service offering or à la carte. ​ 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, health care and general business.
Products and services are sold as a comprehensive school-as-a-service offering or à la carte. ​ 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.
Each of these contracts are considered to be one performance obligation. We recognize these revenues pro rata over the maximum term of the customer contract based on the defined contract price. ​ Enterprise Contracts ​ We provide job training over a specified contract period to enterprises. Each of these contracts are considered to be one performance obligation.
Each of these contracts are considered to be one performance obligation. We recognize these revenues pro rata over the maximum term of the customer contract based on the defined contract price. 50 Table of Contents ​ Enterprise Contracts ​ We provide job training over a specified contract period to enterprises.
State education 45 Table of Contents funds traditionally allocated for textbook and print materials have also been authorized for the purchase of digital content, including online courses, and in some cases mandated access to online courses.
State education funds traditionally allocated for textbook and print materials have also been authorized for the purchase of digital content, including online courses, and in some cases mandated access to online courses.
We recently reinforced our commitment in this area by launching several initiatives including initially offering scholarships to advance education and career opportunities for black students, expanding career pathways in socially responsible law enforcement and increasing employment of black teachers at Stride-powered schools.
We reinforced our commitment in this area by launching several initiatives including initially offering scholarships to advance education and career opportunities for students in underserved communities, expanding career pathways in socially responsible law enforcement and increasing employment of teachers in underserved communities at Stride-powered schools.
Each Committee of the Board monitors ESG efforts in their respective areas, with the Nominating and Governance Committee coordinating across all Committees. ​ Since our inception twenty years ago, we have removed barriers that impact academic equity.
Each Committee of the Board monitors ESG efforts in their respective areas, with the Nominating and Governance Committee coordinating across all Committees. ​ Since our inception more than 20 years ago, we have removed barriers that impact academic equity.
The Credit Facility also includes a $200.0 million accordion feature. ​ We are a lessee under finance lease obligations for student computers and peripherals under loan agreements with Banc of America Leasing & Capital, LLC (“BALC”).
The Credit Facility also includes a $200.0 million accordion feature. ​ We are a lessee under finance lease obligations for student computers and peripherals under loan agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”).
We entered into additional agreements during fiscal year 2021 to provide financing of $54.0 million for our student computers and peripherals leases through October 2022 at varying rates. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 1.52% to 3.95%, and a $1 purchase option at the end of each lease term.
We entered into additional agreements during fiscal year 2021 to provide financing of $54.0 million for our student computers and peripherals leases through October 2022 at varying rates. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 2.10% to 6.57%, and a $1 purchase option at the end of each lease term.
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. ​ Operating Activities Net cash provided by operating activities for the year ended June 30, 2022 was $206.9 million compared to $134.2 55 Table of Contents million for the year ended June 30, 2021.
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. ​ Operating Activities Net cash provided by operating activities for the year ended June 30, 2023 was $203.2 million compared to $206.9 million for the year ended June 30, 2022.
These advance payments are amortized over the life of the subscription and tend to be highest at the end of the fourth quarter and first quarter, when the majority of subscriptions are sold. Liquidity and Capital Resources As of June 30, 2022, we had net working capital, or current assets minus current liabilities, of $648.5 million.
These advance payments are amortized over the life of the subscription and tend to be highest at the end of the fourth quarter and first quarter, when the majority of subscriptions are sold. Liquidity and Capital Resources As of June 30, 2023, we had net working capital, or current assets minus current liabilities, of $756.1 million.
We have a valuation allowance on net deferred tax assets of $6.7 million and $5.0 million as of June 30, 2022 and 2021, respectively, for the amount that will likely not be realized.
We have a valuation allowance on net deferred tax assets of $6.8 million and $6.7 million as of June 30, 2023 and 2022, respectively, for the amount that will likely not be realized.
We capitalize selected costs incurred to develop our curriculum, beginning with application development, through production and testing into capitalized curriculum development costs. We capitalize certain costs incurred to develop internal systems into capitalized software development costs.
We capitalize selected costs incurred to develop our curriculum, 48 Table of Contents beginning with application development, through production and testing into capitalized curriculum development costs. We capitalize certain costs incurred to develop internal systems into capitalized software development costs.
The Credit Facility is secured by our assets. The Credit Facility agreement allows for an amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. As of June 30, 2022, we were in compliance with the financial covenants.
The Credit Facility agreement allows for an amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. As of June 30, 2023, we were in compliance with the financial covenants.
The increase in the effective income tax rate for the year ended June 30, 2022, as compared to the effective tax rate for the year ended June 30, 2021, was primarily due to the increase in the amount of non-deductible compensation, which was partially offset 53 Table of Contents by the increase in excess tax benefit of stock-based compensation. ​ Comparison of the Years Ended June 30, 2021 and 2020 Revenues.
The decrease in the effective income tax rate for the year ended June 30, 2023, as compared to the effective tax rate for the year ended June 30, 2022, was primarily due to the decrease in the amount of non-deductible compensation, which was partially offset by the decrease in excess tax benefit of stock-based compensation. ​ Comparison of the Years Ended June 30, 2022 and 2021 Revenues.
As of June 30, 2022 and 2021, the finance lease liability was $66.3 million and $68.9 million, respectively, with lease interest rates ranging from 1.52% to 3.95%. ​ We entered into an agreement with BALC in April 2020 for $25.0 million (increased to $41.0 million in July 2020) to provide financing for our leases through March 2021 at varying rates.
As of June 30, 2023 and 2022, the finance lease liability was $56.9 million and $66.3 million, respectively, with lease interest rates ranging from 2.10% to 6.57%. ​ We entered into an agreement with BALC in April 2020 for $25.0 million (increased to $41.0 million in July 2020) to provide financing for our leases through March 2021 at varying rates.
For the 2021-2022 school year, we provided our school-as-a-service offering for 80 schools in 30 states and the District of Columbia in the General Education market, and 42 schools or programs in 24 states in the Career Learning market. ​ We generate a significant portion of our revenues from the sale of curriculum, administration support and technology services to virtual and blended public schools.
For the 2022-2023 school year, we provided our school-as-a-service offering for 87 schools in 31 states and the District of Columbia in the General Education market, and 52 schools or programs in 27 states and the District of Columbia in the Career Learning market. ​ We generate a significant portion of our revenues from the sale of curriculum, administration support and technology services to virtual and blended public schools.
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.
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.
In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at June 30, 2022. 54 Table of Contents ​ 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”).
In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at June 30, 2023. ​ 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.
Customers of our consumer products have the option of purchasing a complete grade-level curriculum for grades K-8, individual courses, or a variety of other supplemental products, covering various subjects depending on their child’s needs. Typical applications include summer school course work, home-schooling and educational supplements.
Customers of our consumer products have the option of purchasing a complete grade-level curriculum for grades K-8, individual courses, or a variety of other supplemental products, covering various subjects depending on their child’s needs.
Net cash used in investing activities for the year ended June 30, 2022 decreased $54.6 million from the year ended June 30, 2021.
Net cash used in financing activities for the year ended June 30, 2022 decreased $297.9 million from the year ended June 30, 2021.
Our working capital includes cash and cash equivalents of $389.4 million and accounts receivable of $418.6 million. Our working capital provides a significant source of liquidity for our normal operating needs.
Our working capital includes cash and cash equivalents of $410.8 million and accounts receivable of $463.7 million. Our working capital provides a significant source of liquidity for our normal operating needs.
The $72.7 million increase in cash provided by operations between periods was primarily due to an increase in net income and a lower increase in accounts receivable, partially offset by a decrease in accrued compensation and benefits and deferred revenue and other liabilities. ​ Net cash provided by operating activities for the year ended June 30, 2021 was $134.2 million compared to $80.4 million for the year ended June 30, 2020.
The $72.7 million increase in cash provided by operations between periods was primarily due to an increase in net income and a lower increase in accounts receivable, partially offset by a decrease in accrued compensation and benefits and deferred revenue and other liabilities.
Net cash provided by operating activities for the year ended June 30, 2020 was $80.4 million compared to $141.6 million for the year ended June 30, 2019. The $61.2 million decrease in cash provided by operations between periods was primarily due to a decrease in working capital of $63.3 million.
The $3.7 million decrease in cash provided by operations between periods was primarily due to a decrease in working capital of $2.6 million. ​ Net cash provided by operating activities for the year ended June 30, 2022 was $206.9 million compared to $134.2 million for the year ended June 30, 2021.
To address the growing need for digital solutions and the recently emerging need for comprehensive virtual solutions, our Learning Solutions team provides curriculum and technology solutions, packaged in a portfolio of flexible learning and delivery models mapped to specific student and/or district needs.
Additionally, districts are seeking support for implementations that blend virtual and in-person instruction. 46 Table of Contents To address the growing need for digital solutions and the emerging need for comprehensive virtual solutions, our Learning Solutions team provides curriculum and technology solutions, packaged in a portfolio of flexible learning and delivery models mapped to specific student and/or district needs.
High school students also 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 are required to succeed in today’s digital, tech-enabled economy.
In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students also 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.
Recent Accounting Pronouncements For information regarding, “Recent Accounting Pronouncements,” please refer to Note 3, “Summary of Significant Accounting Policies,” contained within our consolidated financial statements in Part II, Item 8, of this Annual Report on Form 10-K. ​
The net increase was partially offset by the net proceeds from our Credit Facility during the year ended June 30, 2020. Recent Accounting Pronouncements For information regarding, “Recent Accounting Pronouncements,” please refer to Note 3, “Summary of Significant Accounting Policies,” contained within our consolidated financial statements in Part II, Item 8, of this Annual Report on Form 10-K. ​
Similar to our private schools, we believe our revenue growth depends primarily on the recruitment of students into our programs through effective marketing and word-of-mouth referral based on the quality of our service.
Typical applications include summer school course work, home-schooling and educational supplements. 47 Table of Contents Similar to our private schools, we believe our revenue growth depends primarily on the recruitment of students into our programs through effective marketing and word-of-mouth referral based on the quality of our service.
Periodically, a middle school or high school student enrollment may change line of revenue classification. ​ The following represents our current revenues for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ Change 2022 / 2021 ​ Change 2021 / 2020 ​ ​ 2022 2021 2020 $ % $ % ​ ​ ​ ​ ​ (In thousands, except percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General Education ​ ​ ​ $ 1,273,783 ​ $ 1,280,199 ​ $ 933,809 ​ $ (6,416) ​ (0.5%) ​ $ 346,390 ​ 37.1% Career Learning ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Middle - High School ​ ​ ​ ​ 321,416 ​ ​ 200,774 ​ ​ 96,003 ​ ​ 120,642 ​ 60.1% ​ ​ 104,771 ​ 109.1% Adult ​ ​ ​ ​ 91,467 ​ ​ 55,787 ​ ​ 10,953 ​ ​ 35,680 ​ 64.0% ​ ​ 44,834 ​ 409.3% Total Career Learning ​ ​ ​ ​ 412,883 ​ ​ 256,561 ​ ​ 106,956 ​ ​ 156,322 ​ 60.9% ​ ​ 149,605 ​ 139.9% Total Revenues ​ ​ ​ $ 1,686,666 ​ $ 1,536,760 ​ $ 1,040,765 ​ $ 149,906 ​ 9.8% ​ $ 495,995 ​ 47.7% ​ 51 Table of Contents Products and Services Stride has invested over $600 million in the last twenty years to develop curriculum, systems, instructional practices and support services that enable us to support hundreds of thousands of students.
Periodically, a middle school or high school student enrollment may change line of revenue classification. ​ The following represents our current revenues for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ Change 2023 / 2022 ​ Change 2022 / 2021 ​ ​ 2023 2022 2021 $ % $ % ​ ​ ​ ​ ​ (In thousands, except percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General Education ​ ​ ​ $ 1,131,391 ​ $ 1,273,783 ​ $ 1,280,199 ​ $ (142,392) ​ (11.2%) ​ $ (6,416) ​ (0.5%) Career Learning ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Middle - High School ​ ​ ​ ​ 586,770 ​ ​ 321,416 ​ ​ 200,774 ​ ​ 265,354 ​ 82.6% ​ ​ 120,642 ​ 60.1% Adult ​ ​ ​ ​ 119,197 ​ ​ 91,467 ​ ​ 55,787 ​ ​ 27,730 ​ 30.3% ​ ​ 35,680 ​ 64.0% Total Career Learning ​ ​ ​ ​ 705,967 ​ ​ 412,883 ​ ​ 256,561 ​ ​ 293,084 ​ 71.0% ​ ​ 156,322 ​ 60.9% Total Revenues ​ ​ ​ $ 1,837,358 ​ $ 1,686,666 ​ $ 1,536,760 ​ $ 150,692 ​ 8.9% ​ $ 149,906 ​ 9.8% ​ Products and Services Stride has invested over $600 million in the last twenty years to develop curriculum, systems, instructional practices and support services that enable us to support hundreds of thousands of students.
These purchasers desire to educate their children as homeschoolers, outside of the traditional school system or to supplement their child’s existing public or private school education without the aid of an online teacher.
Consumer Sales We also sell individual K-8 online courses and supplemental educational products directly to families. These purchasers desire to educate their children as homeschoolers, outside of the traditional school system or to supplement their child’s existing public or private school education without the aid of an online teacher.
Programs utilizing General Education products and services are for students that are not specializing in any particular curriculum or course of study. These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning.
These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning.
Through our subsidiaries Galvanize, Tech Elevator and MedCerts, we have added high-quality, engaging, online coursework and content in software engineering, healthcare, and medical fields. Systems – We have established a secure and reliable technology platform, which integrates proprietary and third-party systems, to provide a high-quality educational environment and gives us the capability to grow our customer programs and enrollment.
Systems – We have established a secure and reliable technology platform, which integrates proprietary and third-party systems, to provide a high-quality educational environment and gives us the capability to grow our customer programs and enrollment.
During the year ended June 30, 2022, revenues increased to $1,686.7 million from $1,536.8 million in the prior year, an increase of 9.8%. Over the same period, operating income increased to $156.6 million from $110.5 million in the prior year, an increase of 41.7%.
During the year ended June 30, 2023, revenues increased to $1,837.4 million from $1,686.7 million in the prior year, an increase of 8.9%. Over the same period, operating income increased to $165.5 million from $156.6 million in the prior year, an increase of 5.7%. Increases in operating income were driven by revenue growth and increases in gross margin.
Net cash provided by financing activities for the years ended June 30, 2021 and 2020 was $204.6 million and $65.6 million, respectively. Net cash used in financing activities for the year ended June 30, 2022 compared to net cash provided by financing activities for the year ended June 30, 2021, a decrease of $297.9 million.
Financing Activities Net cash used in financing activities for the years ended June 30, 2023 and 2022 was $63.5 million and $93.3 million, respectively. Net cash provided by financing activities for the year ended June 30, 2021, was $204.6 million.
The following represents our current enrollment for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ 2022 / 2021 ​ 2021 / 2020 ​ ​ 2022 2021 2020 Change Change % Change Change % ​ ​ ​ ​ ​ (In thousands, except percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General Education (1) ​ ​ ​ ​ 143.2 ​ ​ 156.7 ​ ​ 107.8 ​ ​ (13.5) ​ (8.6%) ​ ​ 48.9 ​ 45.4% Career Learning (1) (2) ​ ​ ​ ​ 41.9 ​ ​ 29.6 ​ ​ 13.1 ​ ​ 12.3 ​ 41.6% ​ ​ 16.5 ​ 126.0% Total Enrollment ​ ​ ​ ​ 185.1 ​ ​ 186.3 ​ ​ 120.9 ​ ​ (1.2) ​ (0.6%) ​ ​ 65.4 ​ 54.1% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Enrollments reported for the first quarter are equal to the official count date number, which was September 30, 2021 for the first quarter of fiscal year 2022 and October 1, 2020 for the first quarter of fiscal year 2021.
We do not award or permit incentive compensation to be paid to our public school program enrollment staff or contractors based on the number of students enrolled. 51 Table of Contents The following represents our current enrollment for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ 2023 / 2022 ​ 2022 / 2021 ​ ​ 2023 2022 2021 Change Change % Change Change % ​ ​ ​ ​ ​ (In thousands, except percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General Education (1) ​ ​ ​ ​ 112.3 ​ ​ 143.2 ​ ​ 156.7 ​ ​ (30.9) ​ (21.6%) ​ ​ (13.5) ​ (8.6%) Career Learning (1) (2) ​ ​ ​ ​ 65.9 ​ ​ 41.9 ​ ​ 29.6 ​ ​ 24.0 ​ 57.3% ​ ​ 12.3 ​ 41.6% Total Enrollment ​ ​ ​ ​ 178.2 ​ ​ 185.1 ​ ​ 186.3 ​ ​ (6.9) ​ (3.7%) ​ ​ (1.2) ​ (0.6%) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Enrollments reported for the first quarter are equal to the official count date number, which was September 30, 2022 for the first quarter of fiscal year 2023 and September 30, 2021 for the first quarter of fiscal year 2022.
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 for the foreseeable future.
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.
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.
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 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.
The increase in General Education revenues was primarily due to the 45.4% increase in enrollments, and changes to school mix (distribution of enrollments by school). Career Learning revenues increased $149.6 million, or 139.9%, primarily due to a 126.0% increase in enrollments, school mix, as well as from the acquisitions of Galvanize, MedCerts and Tech Elevator. Instructional costs and services expenses.
The decrease in General Education revenues was primarily due to the 21.6% decrease in enrollments, and changes to school mix (distribution of enrollments by school). Career Learning revenues increased $293.1 million, or 71.0%, primarily due to a 57.3% increase in enrollments and school mix. ​ Instructional costs and services expenses.
Galvanize and Tech Elevator offer in-person and remote immersive full-time programs designed for adult learners looking to advance their technology careers by providing such learners with skills and real-world experiences. These programs are offered in software engineering. MedCerts provides self-paced, fully online structured training programs that lead to certifications in the health care field.
Adult Learning We offer adult learning training programs through Galvanize, Tech Elevator, and MedCerts, which provide programs that address the skills gap facing companies in the information technology and healthcare sectors. We offer in-person and remote immersive full-time software engineering programs designed for adult learners looking to advance their technology careers by providing such learners with skills and real-world experiences.
As our enrollments and revenues grow, we expect these seasonal trends to be amplified. The bulk of our materials are shipped to students prior to the beginning of the school year, usually in July or August. In order to prepare for the upcoming school year, we generally build up inventories during the fourth quarter of our fiscal year.
Discussion of Seasonality of Financial Condition Certain accounts in our balance sheet are subject to seasonal fluctuations. As our enrollments and revenues grow, we expect these seasonal trends to be amplified. The bulk of our materials are shipped to students prior to the beginning of the school year, usually in July or August.
We have entered into agreements that enable us to distribute our products and services to our international school partners who use our courses to provide electives offerings and dual diploma programs. We believe our revenue growth depends primarily on the recruitment of students into our programs through effective marketing and word-of-mouth referral based on the quality of our service.
We have entered into agreements that enable us to distribute our products and services to our international and domestic school partners who use our courses to provide electives offerings and dual diploma programs.
We pledged the assets financed to secure the outstanding leases. ​ 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 use our incremental borrowing rate as the implied interest rate and the total lease payments to calculate our lease liability. ​ 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.
In addition, through high service quality, we seek to retain existing students and increase the total number of courses each student takes with us. In some cases, students return each summer and take only one course. In other cases, students choose a Stride private school as their principal form of education and may stay for many years.
In some cases, students return each summer and take only one course. In other cases, students choose a Stride private school as their principal form of education and may stay for many years. The flexibility of our programs, the quality of our curriculum and teaching, and the student community features lead to customer satisfaction and therefore, retention.
Therefore, inventories tend to be at the highest levels at the end of our fiscal year. In the first quarter of our fiscal year, inventories tend to decline significantly as materials are shipped to students. In our fourth quarter, inventory purchases and the extent to which we utilize early payment discounts will impact the level of accounts payable.
In our fourth quarter, inventory purchases and the extent to which we utilize early payment discounts will impact the level of accounts payable.
The Credit Facility has a five-year term and incorporates 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 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 is secured by our assets.
Our revenues for the year ended June 30, 2021 were $1,536.8 million, representing an increase of $496.0 million, or 47.7%, from $1,040.8 million for the year ended June 30, 2020. General Education revenues increased $346.4 million, or 37.1%, year over year.
Our revenues for the year ended June 30, 2023 were $1,837.4 million, representing an increase of $150.7 million, or 8.9%, from $1,686.7 million for the year ended June 30, 2022. General Education revenues decreased $142.4 million, or 11.2%, year over year.
It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers and prospects, or on our long-term financial results. ​ Lines of Revenue ​ We operate in one operating and reportable business segment as a technology-based education company providing proprietary and third-party curriculum, software systems and educational services designed to facilitate individualized learning.
Results of Operations Lines of Revenue ​ We operate in one operating and reportable business segment as a technology-based education company providing proprietary and third-party curriculum, software systems and educational services designed to facilitate individualized learning. The Chief Operating Decision Maker evaluates profitability based on consolidated results. We have two lines of revenue: (i) General Education and (ii) Career Learning.
If we are successful, we will incur start-up costs and other expenses associated with the initial launch of a school, including the funding of building leases and leasehold improvements. 47 Table of Contents Selling, General and Administrative Expenses Selling, general, and administrative expenses include the salaries and benefits of employees engaged in business development, public affairs, sales and marketing, and administrative functions, and transaction and due diligence expenses related to mergers and acquisitions.
Selling, General and Administrative Expenses Selling, general, and administrative expenses include the salaries and benefits of employees engaged in business development, public affairs, sales and marketing, and administrative functions, and transaction and due diligence expenses related to mergers and acquisitions.
Selling, general, and administrative expenses. Selling, general, and administrative expenses for the year ended June 30, 2021 were $424.4 million, representing an increase of $109.3 million, or 34.7%, from $315.1 million for the year ended June 30, 2020.
Selling, general and administrative expenses for the year ended June 30, 2023 were $481.6 million, representing an increase of $41.8 million, or 9.5% from $439.8 million for the year ended June 30, 2022.
Selling, general, and administrative expenses were 27.6% of revenues during the year ended June 30, 2021, a decrease from 30.3% for the year ended June 30, 2020. ​ Income tax expense.
Instructional costs and services expenses were 64.8% of revenues during the year ended June 30, 2023, an increase from 64.6% for the year ended June 30, 2022. ​ Selling, general, and administrative expenses.
In many cases, Galvanize, Tech Elevator, and MedCerts work directly with a company to create a customized, tailored education plan to help the company reach its goals and train its employees according to such plan. We believe that revenue growth in our adult learning brands depends on our ability to identify and attract prospective learners through various marketing channels.
We believe that revenue growth in our adult learning brands depends on our ability to identify and attract prospective learners through various marketing channels.
Net cash used in investing activities for the year ended June 30, 2020 increased $156.3 million from the year ended June 30, 2019. The increase was primarily due to the acquisition of Galvanize of $165.0 million, plus working capital, net of cash. Financing Activities Net cash used in financing activities for the year ended June 30, 2022 was $93.3 million.
The increase was primarily due to higher net purchases of marketable securities of $4.2 million and an increase in capital expenditures year over year of $1.1 million. ​ Net cash used in investing activities for the year ended June 30, 2022 decreased $54.6 million from the year ended June 30, 2021.
Instructional costs and services expenses for the year ended June 30, 2021 were $1,001.9 million, representing an increase of $308.7 million, or 44.5%, from $693.2 million for the year ended June 30, 2020.
Instructional costs and services expenses for the year ended 53 Table of Contents June 30, 2023 were $1,190.3 million, representing an increase of $100.1 million, or 9.2%, from $1,090.2 million for the year ended June 30, 2022. This increase in expense was due to hiring of personnel in growth states and salary increases.
The decrease in other assets and liabilities was primarily due to decreases in accounts payable, as well as increases in accounts receivable, and inventory, prepaid expenses and other assets. Investing Activities Net cash used in investing activities for the years ended June 30, 2022, 2021 and 2020 was $110.8 million, $165.4 million and $217.4 million, respectively.
Investing Activities Net cash used in investing activities for the years ended June 30, 2023, 2022 and 2021 was $118.2 million, $110.8 million and $165.4 million, respectively. 56 Table of Contents Net cash used in investing activities for the year ended June 30, 2023 increased $7.4 million from the year ended June 30, 2022.
We are pursuing expansion into new states for both virtual public and other specialized charter schools.
We are pursuing expansion into new states for both virtual public and other specialized charter schools. If we are successful, we will incur start-up costs and other expenses associated with the initial launch of a school, including the funding of building leases and leasehold improvements.
The net increase was partially offset by the net proceeds from our Credit Facility during the year ended June 30, 2020. Net cash provided by financing activities for the year ended June 30, 2020 increased $94.6 million from net cash used in financing activities for the year ended June 30, 2019.
Net cash used in financing activities for the year ended June 30, 2023 decreased $29.8 million from the year ended June 30, 2022.
If the mix of enrollments changes, our revenues will be impacted to the extent the average revenue per enrollment is significantly different. We do not award or permit incentive compensation to be paid to our public school program enrollment staff or contractors based on the number of students enrolled.
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. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenue per enrollment is significantly different.
The increase from net cash used in financing activities was 56 Table of Contents primarily due to borrowings from the Credit Facility of $105.0 million partially offset by an increase in the repayment of finance lease obligations incurred for the acquisition of student computers of $6.6 million.
The decrease was primarily due to a decrease in the repurchase of restricted stock for income tax withholding of $24.4 million and $22.9 million in deferred purchase consideration payments in fiscal year 2022, partially offset by a payment of contingent consideration of $7.0 million and an increase in the repayment of finance lease obligations incurred for the acquisition of student computers of $10.0 million.
Increases in operating income are driven by revenue growth, increases in gross margin and reductions in selling, general, and administrative expenses. Additionally, we use the non-financial metric of total enrollments to assess performance, as enrollment is a key driver of our revenues.
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 year ended June 30, 2023 were 178.2 thousand, a decrease of 6.9 thousand, or 3.7%, over the prior year.
Income tax expense was $24.5 million for the year ended June 30, 2021, or 25.6% of income before taxes, as compared to $8.5 million, or 25.8% of income before taxes for the year ended June 30, 2020. Discussion of Seasonality of Financial Condition Certain accounts in our balance sheet are subject to seasonal fluctuations.
Income tax expense was $45.3 million for the year ended June 30, 2023, or 26.3% of income before taxes, as compared to $40.1 million, or 27.2% of income before taxes for the year ended June 30, 2022.
This increase was primarily due to an increase of $39.9 million in personnel and related benefit costs, $26.4 million in professional services expenses, $18.8 million in licensing fees, and $15.7 million in stock-based compensation.
The increase was primarily due to an increase of $31.3 million in personnel and related benefit costs and $17.4 million in professional services and marketing expenses, partially offset by a decrease of $6.5 million in bad debt expense and $1.5 million in net operating lease expense.
Removed
In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services.
Added
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.
Removed
Total enrollments for the year ended June 30, 2022 was 185.1 thousand, a decrease of 1.2 thousand, or 0.6%, over the prior year. ​ While the long-term impact of the global emergence of COVID-19 is not estimable or determinable, in late fiscal 43 Table of Contents year 2020, we experienced an increase in demand for our products and services. ​ Environmental, Social and Governance ​ As overseers of risk and stewards of long-term enterprise value, Stride’s Board of Directors plays a vital role in assessing our organization’s environmental and social impacts.
Added
Historically, aggregate funding estimates differed from actual reimbursements by less than 2% of annual revenue, which may vary from year to year. ​ Environmental, Social and Governance ​ As overseers of risk and stewards of long-term enterprise value, Stride’s Board of Directors plays a vital role in 44 Table of Contents assessing our organization’s environmental and social impacts.
Removed
With the impact of the COVID-19 pandemic on education, school districts are seeking more complete virtual learning solutions in addition to curriculum, including virtual instructional delivery, scheduling, attendance monitoring for virtual instructional sessions, teacher professional development, consulting support in effective virtual instruction, and special education accommodations. Additionally, districts are seeking support for implementations that blend virtual and in-person instruction.
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We believe our revenue growth depends primarily on the recruitment of students into our programs through effective marketing and word-of-mouth referral based on the quality of our service. In addition, through high service quality, we seek to retain existing students and increase the total number of courses each student takes with us.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk At June 30, 2022 and 2021, we had cash and cash equivalents totaling $389.4 million and $386.1 million, respectively. Our excess cash has been invested in money market funds, government securities, corporate debt securities and similar investments.
Biggest changeOur excess cash has been invested in money market funds, government securities, corporate debt securities and similar investments. At June 30, 2023, a 1% gross increase in interest rates for our variable-interest instruments would result in a $4.1 million annualized increase in interest income.
Exchange rates between U.S. dollars and many foreign currencies have fluctuated significantly over the last few years and may continue to do so in the future. Accordingly, we may decide in the future to undertake hedging strategies to minimize the effect of currency fluctuations on our financial condition and results of operations. ​ 57 Table of Contents
Exchange rates between U.S. dollars and many foreign currencies have fluctuated significantly over the last few years and may continue to do so in the future. Accordingly, we may decide in the future to undertake hedging strategies to minimize the effect of currency fluctuations on our financial condition and results of operations. ​ 58 Table of Contents
At June 30, 2022, we had no outstanding balance on our Credit Facility. ​ Foreign Currency Exchange Risk We currently operate in several foreign countries, but we do not transact a material amount of business in a foreign currency.
At June 30, 2023, we had no outstanding balance on our Credit Facility. ​ Foreign Currency Exchange Risk We currently operate in several foreign countries, but we do not transact a material amount of business in a foreign currency.
At June 30, 2022, a 1% gross increase in interest rates for our variable-interest instruments would result in a $3.9 million annualized increase in interest income. Additionally, the fair value of our investment portfolio is subject to changes in market interest rates. ​ Our short-term debt obligations under our Credit Facility are subject to interest rate exposure.
Additionally, the fair value of our investment portfolio is 57 Table of Contents subject to changes in market interest rates. ​ Our short-term debt obligations under our Credit Facility are subject to interest rate exposure.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inflation Risk Current inflation has resulted in higher personnel costs, marketing expenses and supply chain expenses.
Added
There can be no assurance that future inflation will not have an adverse or material impact on our operating results and financial condition. ​ Interest Rate Risk At June 30, 2023 and 2022, we had cash and cash equivalents totaling $410.8 million and $389.4 million, respectively.

Other LRN 10-K year-over-year comparisons