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What changed in Stride, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Stride, Inc.'s 2023 and 2024 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 2024 report.

+280 added−367 removedSource: 10-K (2024-08-07) vs 10-K (2023-08-16)

Top changes in Stride, Inc.'s 2024 10-K

280 paragraphs added · 367 removed · 236 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

88 edited+15 added−80 removed67 unchanged
Biggest changeAreas of focus include: (i) integration and user experience—making sure that all of our systems and solutions are easy for teachers, administrators, students, and parents to use; (ii) mobile enabled products; (iii) portability—making sure that our platforms integrate with and onto third-party platforms; (iv) features which personalize learning for all students we serve; (v) courses that are flexible enough to provide assistance to struggling students; (vi) reading and oral fluency scoring; (vii) alignment with state standards; (viii) built-in tutoring and support functionality; and (ix) a virtual learning platform which supports the scheduling and delivery of instruction, tracking of attendance, recording of instructional sessions, and allows student group work.
Biggest changeMuch of our investment has been in the development of improved functionality of our curriculum and technology systems. Areas of focus include: (i) integration and user experience (ii) mobile enabled products; (iii) portability; (iv) personalization; (v) flexibility; (vi) reading and oral fluency scoring; (vii) state standard alignment; (viii) tutoring & support; and (ix) automated and artificial intelligence (AI)-assisted learning.
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.
Technology Platform 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.
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.
A student enrolled in a school that offers Stride’s General Education program may elect to take career courses, but that student and the associated revenue is reported as a General Education enrollment and General Education revenue .
These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning. Our clients are primarily public and private schools, school districts, and charter boards. Additionally, we offer solutions to employers, government agencies and consumers.
These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning. Our clients are primarily public and private schools, school districts, and charter boards. Additionally, we provide solutions to employers, government agencies and consumers.
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.
Of those who were considering switching, 21.8% 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.
Support Services We offer a broad range of support services, including marketing and enrollment (e.g., 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., providing student computers, offline learning kits, internet access and technology support services).
Support Services We provide a broad range of support services, including marketing and enrollment (e.g., 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., providing student computers, offline learning kits, internet access and technology support services).
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.
To the extent these schools receive federal funds, such as through a grant 11 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.
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.
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 webcast live via the Investors section of our website.
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 addition to providing a comprehensive course catalog, related books and physical materials, a learning management system (“LMS”) for online learning, and, in certain cases, student computers, we also provide these schools a variety of administrative support, technology and academic support services.
Our student recruitment and marketing team is focused on promoting the K-12 online education category and generating enrollments for the Company’s virtual and blended school customers within that category. This is achieved by creating awareness among families with K-12 students through integrated marketing campaigns that include offline and digital media, as well as web assets.
Our student recruitment and marketing team is focused on promoting the K-12 online education category and generating enrollments for our virtual school customers. This is achieved by creating awareness and conversion among families with K-12 students through integrated marketing campaigns that include offline and digital media, as well as web assets.
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 .
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 as stand-alone products and services.
Other Federal Laws. Other federal laws also apply to virtual managed schools, in some cases depending on the demographics associated with a school. For example, Title VI of the Civil Rights Act of 1964 has been deemed to apply to ELL Students, as further defined in the joint guidance issued by the U.S.
Other federal laws also apply to virtual managed schools, in some cases depending on the demographics associated with a school. For example, Title VI of the Civil Rights Act of 1964 has been deemed to apply to English language learners (“ELL”) Students, as further defined in the joint guidance issued by the U.S.
Individuals with Disabilities Education Act (“IDEA”). The IDEA is implemented through regulations governing every aspect of the special education of a child with one or more specific disabilities that fit within any of the disability categories listed in the Act.
Department of Education to demonstrate compliance with ESSA. Individuals with Disabilities Education Act (“IDEA”). The IDEA is implemented through regulations governing every aspect of the special education of a child with one or more specific disabilities that fit within any of the disability categories listed in the Act.
Notwithstanding these federal limitations, states are still required under ESSA to test students in reading or language arts and math annually in grades 3-8 and once in grades 10-12, and in science once in each of the following grade spans: 3-5, 6-9 and 10-12. All states have plans approved by the U.S. Department of Education to demonstrate compliance with ESSA.
Notwithstanding these federal limitations, states are 13 Table of Contents still required under ESSA to test students in reading or language arts and math annually in grades 3-8 and once in grades 10-12, and in science once in each of the following grade spans: 3-5, 6-9 and 10-12. All states have plans approved by the U.S.
Additionally, state unfair competition and consumer protection laws and regulations apply to Galvanize, Tech Elevator and MedCerts in their dealings with the public, which include limitations on advertising and disclosures, and the structure of financing methods for consumer customers.
Additionally, state unfair competition and consumer protection laws and regulations apply to Galvanize, Tech Elevator and MedCerts in their dealings with the public, which include limitations on advertising, disclosures, and the structure of financing methods for consumer customers as well as registration requirements under state consumer finance laws.
We compete primarily with companies that provide online curriculum and school support services to K-12 virtual and blended public schools and school districts, including those with a career orientation. These companies include Pearson PLC (Connections Academy), Lincoln Learning Solutions, StrongMind, Pansophic Learning, Inspire Charter Schools, and Charter Schools USA, and state administered online programs, among others.
We compete primarily with companies that provide online curriculum and school support services to K-12 virtual and blended public schools, including Pearson PLC (Connections Academy), Lincoln Learning Solutions, StrongMind, Pansophic Learning, Inspire Charter Schools, and Charter Schools USA, and state administered online programs, among others.
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.
We are proud of our diverse workforce and recognize the value diversity brings to our team. ● 55% of our Board is comprised of minorities and 33% are women. ● 67% of our executive leadership team is comprised of minorities and women. ● 83% 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.
Through our Career Learning programs, we offer middle and high school students content pathways that include job-ready skills and work experiences and, for high school students, that can lead toward an industry certification and/or college credits.
Through our Career 4 Table of Contents Learning programs, we provide middle and high school students content pathways that include job-ready skills and work experiences and, for high school students, that can lead toward an industry certification and/or college credits.
If we fail to comply with these federal laws, we could be determined ineligible to receive funds from federal programs or face penalties. ​ 19 Table of Contents
If we fail to comply with these federal laws, we could be determined ineligible to receive funds from federal programs or face penalties.
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 .
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 2024 data from the Bureau of Labor Statistics estimates that demand for occupations that require nondegree postsecondary education will grow 5.5% by 2032, a faster rate than overall employment.
The authority to operate a private post-secondary school is dependent on the laws and regulations of each state. Laws and regulations vary significantly from one state to the next and are constantly evolving, with regulatory authority vesting under various state agencies. Galvanize, Tech Elevator and MedCerts each currently operate in a multi-jurisdictional regulatory environment, maintaining licenses in several states.
Laws and regulations vary significantly from one state to the next and are constantly evolving, with regulatory authority vesting under various state agencies. Galvanize, Tech Elevator and MedCerts each currently operate in a multi-jurisdictional regulatory environment, maintaining licenses in several states.
The authorizers who issue the charters to our school-as-a-service customers can renew, revoke, or modify those charters as well. The majority of our revenue is derived from these school-as-a-service agreements with the governing authorities of the public schools we serve.
The authorizers who issue the charters to our school-as-a-service customers can renew, revoke, or modify those charters as well. 6 Table of Contents The majority of our revenue is derived from these school-as-a-service service agreements with the governing authorities of our public school partners.
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.
The schools we manage are responsible for helping ensure 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.
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.
A student is reported as a Career Learning enrollment and associated Career Learning revenue only if the student is enrolled in a Career Learning program. Like General Education products and services, the products and services for Career Learning are sold as a comprehensive school-as-a-service offering or as stand-alone products and services.
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.
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.
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.
We also face competition from digital and print curriculum providers including Curriculum Associates, Imagine Learning LLC, Edmentum Inc., Discovery Education, and traditional textbook publishers such as Houghton Mifflin Harcourt and McGraw Hill.
These programs are offered directly to consumers, as well as to employers and government agencies. ​ For both the General Education and Career Learning markets, the majority of revenue is derived from our comprehensive school-as-a-service offering which includes an integrated package of curriculum, technology systems, instruction, and support services that we administer on behalf of our customers.
This business also delivers talent development programs to employers and government agencies. ​ For both the General Education and Career Learning markets, the majority of revenue is derived from our comprehensive school-as-a-service offering which includes an integrated package of curriculum, technology systems, instruction, and support services that we administer on behalf of our customers.
Our Business Strategy We are committed to maximizing every learner’s potential by personalizing their educational experience, delivering a quality education to schools and students, and supporting our customers in their quest to improve academic outcomes and prepare them for college and future careers. In furtherance of those objectives, we plan to continue investing in our curriculum and learning systems.
Business Strategy We are committed to maximizing every learner’s potential by personalizing their educational experience, delivering a quality education to schools and students, and supporting our customers in their quest to improve academic outcomes and prepare them for college and future careers.
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.
During the 2023-2024 school year, we provided our school-as-a-service offering to 91 schools in 31 states and the District of Columbia in the General Education market, and 56 schools or programs in 27 states and the District of Columbia in the Career Learning market.
We believe that our employee relations are good. Our success depends in large part on continued employment of senior management and key personnel who can effectively operate our business, which is necessary in the highly regulated public education sector involving a publicly traded for profit company.
Our success depends in large part on continued employment of senior management and key personnel who can effectively operate our business, which is necessary in the highly regulated public education sector involving a publicly traded for profit company. We believe a critical component to our success depends on the ability to attract, develop and retain key personnel.
Our range of training options are designed to enhance skills needed to teach using an online learning platform, and include hands-on training, on-demand courses, and support materials.
Stride also provides training options to support teachers and parents to meet students’ learning needs. Our range of training options are designed to enhance skills needed to teach using an online learning platform, and include hands-on training, on-demand courses, and support materials.
We receive numerous inquiries from school districts, legislators, public charter school boards, community leaders, state departments of education, educators and parents who express the desire to have a choice in public school options.
Public Affairs and School Development We seek to increase public awareness of the educational and fiscal benefits of our online learning. We receive numerous inquiries from school districts, legislators, public charter school boards, community leaders, state departments of education, educators and parents who express the desire to have a choice in public school options.
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.
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. Stride offers multiple career pathways through a diverse catalog of courses.
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.
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.
Federal Laws Applicable Each of Galvanize, Tech Elevator and MedCerts does not qualify or receive Title IV funding under the Higher Education Act but is eligible for federal funding through its veteran's education and workforce programs.
Federal Laws Applicable None of Galvanize, Tech Elevator and MedCerts qualifies or receives Title IV funding under the Higher Education Act, but each of them is eligible for federal funding through its respective veterans education and workforce programs.
These campaigns are continuously optimized using data analytics and market research. The marketing team also assists in enhancing the onboarding experience of new students to online schooling. Additionally, our marketing team is working to ensure awareness of our adult learning options, delivered through our Galvanize, Tech Elevator, and MedCerts brands.
These campaigns are continuously optimized using data analytics and market research. The marketing team also 8 Table of Contents assists in enhancing and reducing friction in the onboarding experience of new students to online schooling. Additionally, our marketing team is working to ensure awareness and conversion in our adult learning offerings.
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.
An increasing number of states are also enacting more general laws about personal information that apply regardless of whether the individual is a student. 12 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.
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.
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.
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.
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.
Our public affairs and school development teams work together with these interested parties to identify and pursue opportunities to expand the use of our products and services in new and existing jurisdictions.
Our public affairs and school development teams work together with these interested parties to identify and pursue opportunities to expand the use of our products and services in new and existing jurisdictions. Operations We are responsible for the sourcing, assembly and delivery of school supplies and materials for our school-as-a-service offerings.
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.
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; 9 Table of Contents ● 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; ● student outcomes for math and reading, graduation and job placement; ● scale and ability to leverage our assets across our business; and ● sophisticated government affairs knowledge and experience in virtual and blended school regulatory environments. ​ Parents in search of an alternative to their full time local public school have a number of alternatives beyond virtual schools, including private schools, public charter schools and home schooling.
Our fulfillment partner stores our inventory, assembles our learning kits and ships the kits to students. We have invested in systems, including our Order Management System, to automatically translate the curriculum selected by each enrolled student into a personalized order to fulfill the corresponding learning kits to ship to each student.
We have invested in systems, including our Order Management System, to automatically translate the curriculum selected by each enrolled student into a personalized order to fulfill the corresponding new or refurbished learning kits to ship to each student through an end to end efficient and scalable warehousing and fulfillment operation.
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.
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.
Our individualized learning approach allows students to optimize their educational experience and, therefore, their chances of achieving their goals. ​ Although the COVID-19 pandemic changed the awareness and acceptance of virtual and blended learning, we continue to expect most students in the United States will be educated in traditional school buildings and classrooms.
Our individualized learning approach allows students to optimize their educational experience and, therefore, their chances of achieving their goals, regardless of their unique challenges. ​ The pandemic changed the awareness and acceptance of online learning, and although we expect that most students in the United States will be educated in traditional school settings, we believe that a fundamental shift has taken place, and that states and districts will continue to expand virtual solutions.
Over the past few years, both as a result of the COVID-19 pandemic and continuing trends toward digital solutions, public schools and school districts have been increasingly adopting online solutions to augment teaching practices, launch new learning models, cost effectively expand course offerings, provide schedule flexibility, improve student engagement, increase graduation rates, replace textbooks, and retain students.
Public schools and school districts are increasingly adopting digital educational solutions to augment teaching practices, launch new learning models, cost effectively expand course offerings, provide schedule flexibility, improve student engagement, increase graduation rates, replace textbooks, and retain students.
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.
We also compete with institutions such as The Laurel Springs School (Spring Education Group) and Penn Foster Inc. for online private pay school students.
We own copyrights related to the lessons contained in the courses that comprise our proprietary curriculum. We also have obtained federal, state and foreign registrations for numerous trademarks that are related to our offerings, and we have applied to the U.S. Patent and Trademark Office to register certain new trademarks.
We also have obtained federal, state and foreign registrations for numerous trademarks that are related to our offerings, and we have applied to the U.S. Patent and Trademark Office to register certain new trademarks. We grant licenses to individuals and schools to use our software and access our online learning systems.
ITEM 1. BUSINESS Company Overview We are an education services company providing virtual and blended learning. Our technology-based products and services enable our clients to attract, enroll, educate, track progress, and support students.
ITEM 1. BUSINESS Company Overview We are a technology company providing an educational platform to deliver online learning to students throughout the U.S. Our platform hosts products and services to attract, enroll, educate, track progress, and support students.
In addition to the complexities involved in measuring academic performance of students, we believe that the virtual and blended public schools we serve face unique challenges impacting academic success not necessarily encountered to the same extent by traditional brick and mortar schools.
Academic Performance Our fundamental goal for every child who enrolls in our school-as-a-service offerings is to improve their academic performance. In addition to the complexities involved in measuring academic performance of students, we believe that online schools face unique challenges impacting academic success not necessarily encountered to the same extent by traditional brick and mortar schools.
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.
For example: ● A January 2024 survey by the National School Choice Awareness Foundation, found that 72% of parents had considered, searched for, or chosen a new school for their school-aged child within the past year.
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.
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. Our educational platform also offers the ability to deliver products and services directly to families.
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.
They also compete with upskilling and reskilling training programs developed in-house by employers. 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.
Instructional Services We offer a broad range of instructional services that include customer support for instructional teams, including recruitment of state certified teachers, training in research-based online instruction methods and systems, oversight and evaluation services, and ongoing professional development. Stride also provides training options to support teachers and parents to meet students’ learning needs.
Additionally, through our Adult Learning offerings, we have high-quality, engaging coursework and content in information technology and healthcare. Instructional Services We provide a broad range of instructional services that include customer support for instructional teams, including recruitment of state certified teachers, training in research-based online instruction methods and systems, oversight and evaluation services, and ongoing professional development.
In addition, our integrated learning systems consist of components that face competition from many different types of education companies, such as traditional textbook publishers, test and assessment firms and private education management companies.
In our private schools, we compete for students seeking an English based K-12 education worldwide. In addition, our educational platform consists of components that face competition from many different types of education companies, such as traditional textbook publishers, test and assessment firms and private education management companies.
We also conduct live classroom sessions using Internet-based collaboration software and we may offer certain online community platforms for students and parents. While the CDA affords us with some protection from liability associated with the interactive online services we offer, there are exceptions to the CDA that could result in successful actions against us that give rise to financial liability.
While the CDA affords us with some protection from liability 14 Table of Contents associated with the interactive online services we offer, there are exceptions to the CDA that could result in successful actions against us that give rise to financial liability. Other Federal 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.
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. Our patent portfolio includes four U.S.-issued patents and one foreign-issued patent directed towards various aspects of our educational products and offerings. Two of the U.S.-issued patents encompass our online foreign language instruction.
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.
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.
The average duration of the agreements for our school-as-a-service offering is greater than five years, and most provide for automatic renewals absent a customer notification of non-renewal.
The average duration of the agreements for our school-as-a-service offering is greater than five years, and most provide for automatic renewals absent a customer notification of non-renewal. ​ Our History We were founded in 2000 to utilize advances in technology to provide children with access to a high quality education regardless of their geographic location or socioeconomic background.
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.
These purchasers desire to offer supplemental educational products to further their child’s existing public or private school education. Customers of our consumer products have the option of purchasing complete curriculum, individual courses, tutoring, career learning products, or a variety of other supplemental products, covering various subjects depending on their child’s needs.
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 ​ ​ ​ ​ ​ 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.
Our platform addresses two markets in the K-12 space: General Education and Career Learning. Products and services for the General Education market are predominantly focused on core subjects for kindergarten through twelfth grade students to help build a common foundation of knowledge.
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.
In total, we manage approximately 8,400 teachers, 4,600 of whom are employees and 3,800 who are employed by virtual or blended public schools that we manage under contracts with those schools but are not direct employees of Stride.
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.
Our key systems leverage a proprietary technology architecture that allows us to develop iterative, agile and customizable solutions to meet both present and future market needs. Our systems run 7 X 24 X 365 on world-class cloud infrastructure from AWS and Azure that operate in multiple availability zones.
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.
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.
We anticipate that this market will continue to grow as more employers recognize the benefits of retaining existing talent rather than sourcing new talent. ​ 6 Table of Contents Our Lines of Revenue General Education 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.
To address this challenge, companies are partnering with training providers to prepare candidates for entry-level positions as well as to upskill their existing workforce. ​ Our Lines of Revenue General Education 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.
We also own many of the trademarks and service marks that we use as part of the student recruitment and branding services we provide to schools. Those marks are licensed to the schools for use during the term of the products and services agreements.
These licenses are intended to protect our ownership and the confidentiality of the embedded information and technology contained in our software and systems. We also own many of the trademarks and service marks that we use as part of the student recruitment and branding services we provide to schools.
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.
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. If we fail to comply with these and other federal laws, we could be determined ineligible to receive funds from federal programs or face penalties.
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.
Human Capital Resources As of June 30, 2024, we had approximately 7,800 employees (including teachers), and substantially all of these employees are located in the United States.
We also believe all learners can benefit from more engaging technology-enriched educational content. ​ We anticipate that full time online public schools will meet the needs of a small percentage of the overall United States K-12 student population, but that segment will still represent a large and growing opportunity for us in absolute terms.
We anticipate that our customers’ full time online public schools will meet the needs of a small portion of the overall United States K-12 student population, but the expansion of our educational platform with new products and services can address a much larger and growing opportunity for us.
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. Additionally, districts are seeking support for implementations that blend virtual and in-person instruction.
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. Consumer Sales We provide tuition-based online private schools that meet a range of student needs from individual course credit recovery to college preparatory programs.
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.
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 as stand-alone products and services. Through our Adult Learning business, we provide training programs leading to certifications in high-demand, growing industries like healthcare and technology.
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.
Typical applications include summer school course work, home-schooling, enrichment, and educational supplements. We provide adult learning programs that address the skills gap facing companies in the information technology and healthcare sectors. We provide 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.
We subsequently added new grades and new schools in additional states. We also launched blended public schools that combine face to face time in the classroom with online instruction and opened an online private school to reach students worldwide.
In September 2001, we introduced our kindergarten through 2nd grade offering and subsequently added new grades and new school clients in additional states. We also opened online private schools to reach students worldwide.
Customers of these programs can obtain the administrative support, information technology, academic support services, online curriculum, learning system platforms and instructional services under the terms of a negotiated service and product agreement. We provide our school-as-a-service offerings to virtual and blended public charter schools and school districts.
Customers of these programs can obtain administrative support, information technology, academic support services, online curriculum, learning systems and instructional services under the terms of negotiated service and product agreements. These contracts are negotiated with, and approved by, the governing authorities of the customer.
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.
Additionally, our Adult Learning offerings compete with other in-person and remote immersive programs and self-paced online training programs including General Assembly (a subsidiary of Adecco), Bloom Institute of Technology, Penn Foster Inc. and Education to Go (a subsidiary of Cengage Learning), among others.
Private Programs We also operate tuition-based private schools that meet a range of student needs from individual course credit recovery to college preparatory programs. These programs address students and families in the states in which we do not offer a free public option, as well as students looking for additional flexibility.
These programs address students and families in the states in which we do not offer a free public option, as well as students looking for additional flexibility. Additionally, many families can use education savings accounts, tax credits and vouchers to attend these schools for low or no cost.
If we fail to comply with these and other federal laws, we could be determined ineligible to receive funds from federal programs or face penalties. ​ Laws and Regulations Applicable to Consumer Education Products offered by Galvanize, Tech Elevator and MedCerts State Laws Authorizing or Restricting Private Post-Secondary Schools.
Laws and Regulations Applicable to Consumer Education Products offered by Galvanize, Tech Elevator and MedCerts State Laws Authorizing or Restricting Private Post-Secondary Schools. The authority to operate a private post-secondary school is dependent on the laws and regulations of each state.
These brands also work directly with enterprises to create customized, tailored education plans to help companies train, upskill, and reskill their employees.
Our allied health programs provide self-paced, fully online structured training programs that lead to certifications in the healthcare field. We can also provide these programs directly to enterprises to create customized, tailored education plans to help companies train, upskill, and reskill their employees .
These challenges include students who enter behind grade level or under credited, high student mobility, lack of control over the student learning environment and higher than average percentages of students eligible for free or reduced price lunch in many states.
These challenges include students who enter behind grade level or under credited, high student mobility, and lack of control over the student learning environment. ​ While measuring academic performance is necessary, taking meaningful steps to improve academic performance and student outcomes is an integral part of our mission.
We also offer focused post-secondary career learning programs to adult learners, through our Galvanize, Tech Elevator, and MedCerts brands. These include skills training for the software engineering, healthcare, and medical fields, as well as staffing and talent development services to employers. These programs are offered directly to consumers, as well as to employers and government agencies.
We also provide focused post-secondary career learning programs to adult learners, for the software engineering, healthcare, and medical fields. These programs are sold directly to consumers, employers and government agencies. Sales Channels Virtual Schools Our educational platform can be offered in an integrated package of systems, services, products, and professional expertise to support a virtual public school.
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.
In 2020, we significantly expanded our Career Learning opportunity by acquiring three adult learning companies, Galvanize, Tech Elevator, and MedCerts. These Adult Learning brands deliver training in software engineering and allied healthcare to consumers and enterprises . Our Market The U.S. market for K-12 education is large and school choice and alternative educational options continue to gain share and acceptance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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 regulatory requirements, 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; ● Any failure to comply with the laws and regulations applicable to our business, resulting in a loss of public funding and an obligation to repay funds previously received; ● 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; ● Enactment of new laws or regulations not currently applicable to for-profit education companies in the K-12 sector; ● 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; ● 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; ● Any nonpayment or nonperformance by our customers, including due to actions taken by the independent governing authorities of our customers; ● 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; 17 Table of Contents ● 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; ● 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 enterprise resource planning (“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, including AI; ● AI technology is new and developing, and may present business, compliance, and reputational challenges, that could lead to operational or reputational damage, competitive harm, legal and regulatory risk, and additional costs; 18 Table of Contents ● Our ability to attract and retain key executives and skilled employees; and ● Our ability to obtain additional capital in the future on acceptable terms.
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.
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, 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.
These regulations cover specific program standards and financial requirements including, but not limited to: (i) student eligibility standards; (ii) numeric and geographic limitations or caps on enrollments; (iii) state-specific curriculum requirements and standards; (iv) restrictions on open-enrollment policies by and among districts; (v) prescribed teacher-to-student ratios and teacher funding allocations from per pupil funding; (vi) teacher certification and reporting requirements; and (vii) virtual school attendance reporting.
These regulations cover specific program standards and financial requirements including, but are not limited to: (i) student eligibility standards; (ii) numeric and geographic limitations or caps on enrollments; (iii) state-specific curriculum requirements and standards; (iv) restrictions on open-enrollment policies by and among districts; (v) prescribed teacher-to-student ratios and teacher funding allocations from per pupil funding; (vi) teacher certification and reporting requirements; and (vii) virtual school attendance reporting.
Furthermore, a natural disaster, fire, power interruption, work stoppage or other unanticipated catastrophic event, especially during the period from April through June when we are awaiting receipt of most of the curriculum materials for the school year and have not yet shipped such materials to students, could significantly disrupt our ability to deliver our products and operate our business.
Furthermore, a natural disaster, fire, earthquake, power interruption, work stoppage or other unanticipated catastrophic event, especially during the period from April through June when we are awaiting receipt of most of the curriculum materials for the school year and have not yet shipped such materials to students, could significantly disrupt our ability to deliver our products and operate our business.
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.
We have migrated the applications that form the basis of our products to 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.
Our marketing efforts, therefore, may not be wholly successful, and could lead to an overall decline in enrollment for our school-as-a-service, thus adversely affecting our revenue, results of operations and financial condition.
Our marketing efforts, therefore, may not be wholly successful, and could lead to an overall decline in enrollment for our school-as-a-service offering, thus adversely affecting our revenue, results of operations and financial condition.
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.
In addition, teachers in the public schools we manage or who provide instruction in connection with 29 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.
In order to provide our services and solutions, we depend on various hardware, software, infrastructure, online sites and connected networks (hereinafter, "IT Systems"), including those of third parties.
In order to provide our services and solutions, we depend on various computer systems, hardware, software, infrastructure, online sites and connected networks (hereinafter, "IT Systems"), including those of third parties.
As implementation proceeds at the state level, and use of the assessments previously developed by the Partnership for Assessment of Readiness for College and Careers and Smarter Balanced Assessment Consortium consortia continues to erode, a multitude of different standards and assessments may emerge and result in temporary misalignments of our curriculum offerings with state standards, cause academic performance to decline, create a need for additional teacher training and product investments, all of which could adversely affect our relationship with public school contracting with us for a school-as-a-service offering and school district customers, financial condition, contract renewals and reputation.
As implementation proceeds at the state level, and use of the assessments previously developed by the Partnership for Assessment of Readiness for College and Careers and Smarter Balanced Assessment Consortium consortia continues to erode, a multitude of different standards and assessments may emerge and result in temporary misalignments of our curriculum offerings with state standards, cause 25 Table of Contents academic performance to decline, create a need for additional teacher training and product investments, all of which could adversely affect our relationship with public school contracting with us for a school-as-a-service offering and school district customers, financial condition, contract renewals and reputation.
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 .
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. 33 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 .
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.
The political process and potential variability in general economic conditions, including due to possible pandemics, changing interest rates, 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.
In the absence of compatible business processes, adequate employee training, integration with other dependent systems, and sufficient staffing, this expanded capacity alone may not result in improved performance or outcomes. We may be unable to keep pace with changes in our industry and advancements in technology as our business and market strategy evolves.
In the absence of compatible business processes, adequate employee training, integration with other dependent systems, and sufficient staffing, this expanded capacity alone may not result in improved performance or outcomes. We may be unable to keep pace with changes in our industry and advancements in technology as our business and market strategy evolves, including AI.
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.
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, AI 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.
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 fiscal year 2024, 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.
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.
As a result, we believe that sequential quarterly comparisons of our financial results may not provide an accurate assessment of our financial position. 28 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.
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.
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. 34 Table of Contents Our efforts to expand capacity may not produce the operational and financial results for which those investments were intended.
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.
System delays or malfunctioning could also disrupt our ability to timely and accurately process and report results of our 30 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.
To the extent that we enter into federal government contracts, different standards of compliance could be imposed on us under Section 508 of the Rehabilitation Act, or by states who apply these federal standards under Section 508 or other standards to education providers, which standards may be changed from time to time.
To the extent that we enter into federal government contracts, different standards of compliance could be imposed on us under Section 508, or by states who apply these federal standards under Section 508 or other standards to education providers, which standards may be changed from time to time.
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.
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, and including new AI-enabled products and programs, may not receive sufficient market acceptance to be economically viable; ● 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.
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.
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, 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.
For example, a non-practicing entity sued us alleging that our proprietary learning 31 Table of Contents systems infringed three of its patents although its lawsuit was ultimately dismissed on the merits in 2014.
We cannot assure that we will have the financial resources, technical expertise, marketing, distribution or support capabilities to compete effectively. Regulatory frameworks on the accessibility of technology and curriculum are continually evolving due to legislative and administrative developments and the rapid evolution of technology, which could result in increased product development costs and compliance risks.
We cannot assure that we will have the financial resources, technical expertise, marketing, distribution or support capabilities to compete effectively. 27 Table of Contents Regulatory frameworks on the accessibility of technology and curriculum are continually evolving due to legislative and administrative developments and the rapid evolution of technology, which could result in increased product development costs and compliance risks.
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.
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, AI 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 27 Table of Contents 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 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 30 Table of Contents 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 individuals with disabilities.
As we pursue our post-secondary Career Learning strategic initiatives through our Galvanize, Tech Elevator and MedCerts subsidiaries, we will be competing with corporate training businesses and some employers that offer education as an employee benefit. We anticipate intensifying competition both from existing competitors and new entrants.
As we pursue our post-secondary Career Learning strategic initiatives through our Galvanize, Tech Elevator and MedCerts subsidiaries, we are competing with corporate training businesses and some employers that offer education as an employee benefit. We anticipate intensifying competition both from existing competitors and new entrants.
For example, in fiscal year 2017, as the Agora Cyber Charter School continued to operate as a self-managed charter school, it delayed its payments to us and our accounts receivable from the school have grown significantly, resulting in a revised payment schedule agreement, which accompanied a contract extension.
For example, in fiscal year 2017, as the Agora Cyber Charter School continued to operate as a self-managed charter school, it delayed its payments to us and our accounts receivable from the school grew significantly, resulting in a revised payment schedule agreement, which accompanied a contract extension.
Failure to maintain and support customer facing services, systems, and platforms, including addressing quality issues and execution on time of new products and enhancements, could negatively impact our revenues and reputation. We use complex IT systems and products to support our business activities, including customer-facing systems, back-office processing and infrastructure.
Failure to maintain and support customer facing services, systems, and platforms, including addressing quality issues and execution on time of new products and enhancements, could negatively impact our revenues and reputation. We use complex IT systems (as defined below) and products to support our business activities, including customer-facing systems, back-office processing and infrastructure.
For example, for-profit education companies that own and operate post-secondary colleges and programs depend in significant part on student loans provided by the federal government to cover tuition expenses and income sharing agreements, and federal laws prohibit incentive compensation for success in securing enrollments or financial aid to any person engaged in student recruiting or admission activities.
For example, for-profit education companies that own and operate post-secondary colleges and programs depend in significant part on student loans provided by the federal government to cover tuition expenses and 21 Table of Contents income sharing agreements, and federal laws prohibit incentive compensation for success in securing enrollments or financial aid to any person engaged in student recruiting or admission activities.
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.
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 of non-compliance.
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.
The pursuit of 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.
In addition, the laws applicable to the Internet are still developing. These laws impact pricing, advertising, taxation, consumer protection, quality of products and services, and are in a state of change. New or amended laws may also be enacted, which could increase the costs of regulatory compliance for us or force us to change our business practices.
In addition, the laws applicable to the Internet continue to develop. These laws impact pricing, advertising, taxation, consumer protection, quality of products and services, and are in a state of change. New or amended laws may also be enacted, which could increase the costs of regulatory compliance for us or force us to change our business practices.
These payment delays have occurred in the past and can deprive us of significant working capital until the matter is resolved, which could hinder our ability to implement our growth strategies and conduct our business.
These payment delays have occurred in the past and can deprive us of significant working capital until the matter is resolved, 19 Table of Contents which could hinder our ability to implement our growth strategies and conduct our business.
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.
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 could be enacted that make for-profit management companies serving such schools subject to similar recruitment or other restrictions.
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.
In fiscal year 2024, we had contracts for our school-as-a-service offerings for 91 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.
For example, in fiscal year 2018, the Buckeye Community Hope Foundation terminated the charter of Insight School of Ohio. Actual or alleged misconduct by current or former directors, officers, key employees or officials could make it more difficult for us to enter into new contracts or renew existing contracts.
For example, in fiscal year 2018, our contract with the Insight School of Ohio was terminated because the Buckeye Community Hope Foundation terminated the charter of Insight School of Ohio. Actual or alleged misconduct by current or former directors, officers, key employees or officials could make it more difficult for us to enter into new contracts or renew existing contracts.
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.
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 2024, we served 91 virtual public schools and blended schools in 31 states and the District of Columbia.
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.
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/phishing, malware (including ransomware)) by internal or external actors (including through the use of AI), or through human or technological errors that result from negligence or software “bugs” or other vulnerabilities.
State and federal funding authorities conduct regular program and financial audits of the public schools we serve to ensure compliance with applicable regulations.
State and federal funding authorities conduct regular program and financial audits of the public schools we serve to ensure compliance with applicable 20 Table of Contents regulations.
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.
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.
If activist stockholders were to emerge, their activities could interfere with our ability to execute our strategic plan and divert resources from our business.
If activist stockholders were to emerge, their activities could 26 Table of Contents interfere with our ability to execute our strategic plan and divert resources from our business.
However, this data may not fully capture trends in the performance of our business for a number of reasons, including: ● 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; ● This data includes enrollments for which Stride receives no public funding or revenue; ● No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts; and ● Over time a student may move from being counted as a General Education enrollment to being counted as a Career Learning enrollment, or vice versa, depending on the educational choices made by each student, which choices in certain cases may be impacted by counseling from Stride employees, and this may result in enrollment growth in one line of revenue being offset by a corresponding decrease in enrollments for the other line of revenue.
However, this data may not fully capture trends in the performance of our business for a number of reasons, including: ● 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; ● This data includes enrollments for which Stride receives no public funding or revenue; ● No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts; and ● Over time a student may move from being counted as a General Education enrollment to being counted as a Career Learning enrollment, or vice versa, depending on the educational choices made by each student, which choices in certain cases may be impacted by counseling from Stride employees, and this may result in enrollment growth in one line of revenue being offset by a corresponding decrease in enrollments for the other line of revenue. 23 Table of Contents Accordingly, changes in enrollment data may not entirely correspond with changes in the financial performance of our business, and if the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.
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 is designed to ensure that students with disabilities have an equal opportunity to access each school’s website and online learning environment.
We operate a complex Company-wide enterprise resource planning (“ERP”) system, and if it were to experience significant operating problems, it could adversely affect our business and results of operations.
We operate a complex Company-wide ERP system, and if it were to experience significant operating problems, it could adversely affect our business and results of operations.
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.
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.
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.
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 receivables, if at all. Any nonpayment or nonperformance by our customers could adversely affect our business, financial condition, results of operations and cash flows.
As our cost structure evolves due to the demographics, educational profile and mix of the students enrolled in our school-as-a-service offerings, our profit margins may decline, and we may have increasing difficulty in sustaining or growing our operating income commensurate with our revenues.
As the relative percentage of high school students increases as part of the total average enrollment in our school-as-a-service offerings, our costs are likely to increase. 24 Table of Contents As our cost structure evolves due to the demographics, educational profile and mix of the students enrolled in our school-as-a-service offerings, our profit margins may decline, and we may have increasing difficulty in sustaining or growing our operating income commensurate with our revenues.
We may be unable to attract and retain key executives and skilled employees, and because our employees are located throughout the United States, we may incur additional compliance and litigation costs that could adversely impact our business, financial condition and our results of operations.
Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in our efforts related to deploying AI in our business. 35 Table of Contents We may be unable to attract and retain key executives and skilled employees, and because our employees are located throughout the United States, we may incur additional compliance and litigation costs that could adversely impact our business, financial condition and our results of operations.
In addition, as we enter into service and product agreements with multiple schools in a single state, the aggregate impact of funding reductions applicable to those schools could be material.
Our annual revenue growth is impacted by changes in federal, state and district per pupil funding levels. In addition, as we enter into service and product agreements with multiple schools in a single state, the aggregate impact of funding reductions applicable to those schools could be material.
Education of high school students is generally more costly than K-8 as more teachers with subject matter expertise (e.g., chemistry, calculus) must be hired to support an expansive curriculum, electives, and counseling services. As the relative percentage of high school students increases as part of the total average enrollment in our school-as-a-service offerings, our costs are likely to increase.
Education of high school students is generally more costly than K-8 as more teachers with subject matter expertise (e.g., chemistry, calculus) must be hired to support an expansive curriculum, electives, and counseling services.
The need to respond to technological changes may require us to make substantial, unanticipated expenditures. There can be no assurance that we will be able to respond successfully to technological change.
The need to respond to technological changes may require us to make substantial, unanticipated expenditures. There can be no assurance that we will be able to respond successfully to technological change. While working to capture the significant benefits of AI, we recognize that the technology is new and developing.
If our school-as-a-service offerings experience higher withdrawal rates during the year and/or enroll fewer new students as the year progresses than we have experienced in the past, our revenues, results of operations and financial condition would be adversely affected. 25 Table of Contents Similarly, at the start of each new school year, students who had remained enrolled through the end of the previous year may have graduated from the terminal grade in a school or have left our school-as-a-service offerings for any number of reasons.
If our school-as-a-service offerings experience higher 22 Table of Contents withdrawal rates during the year and/or enroll fewer new students as the year progresses than we have experienced in the past, our revenues, results of operations and financial condition would be adversely affected.
From time to time we have experienced verifiable attacks on our system by unauthorized parties, and our plans and procedures to reduce such risks may not be successful.
From time to time we have experienced verifiable attacks on our system by unauthorized parties, and our plans and procedures to reduce such risks may not be successful. Thus, our business could be adversely affected if our systems and infrastructure experience a significant failure or interruption in the event of future attacks on our system by unauthorized parties.
Thus, our business could be adversely affected if our systems and infrastructure experience a significant failure or interruption in the event of future attacks on our system by unauthorized parties. ​ The failure to prevent a cybersecurity incident affecting our systems could result in the disruption of our services and the disclosure or misappropriation of sensitive information, which could harm our reputation, decrease demand for our services and products, expose us to liability, penalties, and remedial costs, or otherwise adversely affect our financial performance.
Moreover, any use or integration of generative or other AI in our, or any third party’s, operations, products or services will pose new and/or unknown cybersecurity risks and challenges. ​ The failure to prevent a cybersecurity incident affecting our systems could result in the disruption of our services and the disclosure or misappropriation of sensitive information, which could harm our reputation, decrease demand for our services and products, expose us to liability, penalties, and remedial costs, or otherwise adversely affect our financial performance.
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.
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 nonpayment or nonperformance by our customers could adversely affect our business, financial condition, results of operations and cash flows.
Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations. ​
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.
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. 32 Table of Contents Furthermore, we may acquire companies or enter into IT systems integrations with companies that have cybersecurity vulnerabilities or unsophisticated security measures, which would expose us to increased risks. ​ 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.
Although we dedicate personnel and resources toward protecting against cybersecurity risks and threats, our efforts may fail to prevent a security incident. For example, on December 1, 2020, we announced a security incident involving a ransomware attack. The incident resulted in the attacker accessing certain parts of our corporate back-office systems, including some student and employee information on those systems.
Although we dedicate personnel and resources toward protecting against cybersecurity risks and threats, our efforts may fail to prevent a security incident.
Removed
Our annual revenue growth is impacted by changes in federal, state and district per pupil funding levels.
Added
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.
Removed
For example, due to the budgetary problems arising from the 2008 recession, many states reduced per pupil funding for public education affecting many of the public schools we serve, including even abrupt midyear cuts in certain states, which in some cases were retroactively applied to the start of the school year as a result of formulaic adjustments.
Added
Similarly, at the start of each new school year, students who had remained enrolled through the end of the previous year may have graduated from the terminal grade in a school or have left our school-as-a-service offerings for any number of reasons.
Removed
Accordingly, changes in enrollment data may not entirely correspond with changes in the financial performance of our business, and if the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.
Added
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.
Removed
We do not believe the incident has had a material impact on our business, operations or financial results.
Added
Furthermore, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information.
Removed
We worked with our cyber insurance provider to make a payment to the ransomware attacker, as a proactive and preventive step to prevent the information obtained by the attacker from being released on the Internet or otherwise disclosed, although there is always a risk that the threat actor will not adhere to negotiated terms.
Added
Our introduction and use of AI may present business, compliance, and reputational challenges that could lead to operational or reputational damage, competitive harm, legal and regulatory risk, and additional costs, any of which could materially and adversely affect our business, financial condition, and results of operations.
Removed
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.
Added
We use AI technologies in our platform and offerings, and we are making investments in expanding the use of AI throughout our business. This new and emerging technology, which is in its early stages of commercial use, presents a number of inherent risks.
Removed
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
For example AI technologies can create accuracy issues, unintended biases, and discriminatory outcomes and create other perceived or actual technical, legal, compliance, privacy, security, and ethical risks which could slow our partners' and customers' adoption of our products and services that use AI.
Removed
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
While AI-powered applications may help provide more tailored or personalized learner experiences, if the content, analyses, or recommendations that AI applications assist in producing on our platform are, or are perceived to be, deficient, inaccurate, or biased, our reputation, competitive position, and business may be materially and adversely affected.
Removed
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
Further, the use of AI technology is subject to ongoing debate in the education industry, including with respect to issues such as plagiarism, cheating, academic integrity, and the scope of appropriate or permissible use of generative AI in the context of both learning and teaching.
Removed
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
Furthermore, privacy concerns arise when sensitive student data is used to train generative models, potentially exposing personal information to unauthorized access or misuse. Further, our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively.
Removed
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
In addition, litigation or government regulation related to the use of AI (including the use of generative AI) may also adversely impact our ability to develop and offer products that use AI, as well as increase the cost and complexity of doing so.

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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 497,000 square feet in multiple locations throughout the United States under individual leases that expire between July 2023 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 399,000 square feet in multiple locations throughout the United States under individual leases that expire between August 2024 and July 2033. ITEM 3.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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 .
Biggest changeITEM 3. Legal Proceedings 38 ITEM 4 Mine Safety Disclosures 38 PART II ​ ​ ITEM 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 ITEM 6 . [Reserved] 40 ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 ITEM 7A .
Quantitative and Qualitative Disclosures About Market Risk 57 ITEM 8 . Financial Statements and Supplementary Data 59
Quantitative and Qualitative Disclosures About Market Risk 54 ITEM 8 . Financial Statements and Supplementary Data 55

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-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.
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-19 30-Jun-20 ​ 30-Jun-21 ​ 30-Jun-22 ​ 30-Jun-23 ​ 30-Jun-24 LRN 100 101 ​ 127 ​ 153 150 221 Peer Group Index 100 107 ​ 110 ​ 65 51 63 S&P 500 100 110 ​ 144 ​ 133 150 172 Nasdaq Composite 100 129 ​ 167 ​ 144 168 195 Russell 2000 100 101 ​ 153 ​ 125 135 145 39 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, 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.
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, 2019 and tracks it through June 30, 2024. 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 August 11, 2023, there were 388 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 2, 2024, there were 342 registered holders of our common stock.
Dividend Policy We have never declared or paid any cash dividends on our common stock, and we currently do not anticipate paying any cash dividends for the foreseeable future.
Dividend Policy We have never declared or paid any cash dividends on our common stock, and we currently do not anticipate paying any cash dividends.

Item 7. Management's Discussion & Analysis

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

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Biggest changeWe 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.
Biggest changeThe following represents our current enrollment for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ 2024 / 2023 ​ 2023 / 2022 ​ 2024 2023 2022 Change Change % Change Change % ​ ​ (In thousands, except percentages) General Education (1) ​ ​ 121.6 ​ ​ 112.3 ​ ​ 143.2 ​ ​ 9.3 ​ 8.3% ​ ​ (30.9) ​ (21.6%) Career Learning (1) (2) ​ ​ 72.7 ​ ​ 65.9 ​ ​ 41.9 ​ ​ 6.8 ​ 10.3% ​ ​ 24.0 ​ 57.3% Total Enrollment ​ ​ 194.3 ​ ​ 178.2 ​ ​ 185.1 ​ ​ 16.1 ​ 9.0% ​ ​ (6.9) ​ (3.7%) (1) Enrollments reported for the first quarter are equal to the official count date number, which was September 30, 2023 for the first quarter of fiscal year 2024, September 30, 2022 for the first quarter of fiscal year 2023, and September 30, 2021 for the first quarter of fiscal year 2022.
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.
In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that facilitate success in today’s digital, tech-enabled economy.
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.
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, 2024. ● 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.
We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements: Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services using the following steps: ​ ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. ​ Revenues related to the products and services that we provide to students in kindergarten through twelfth grade or adult learners are considered to be General Education or Career Learning based on the school or adult program in which the student is enrolled.
We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements: 45 Table of Contents Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services using the following steps: ​ ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. ​ Revenues related to the products and services that we provide to students in kindergarten through twelfth grade or adult learners are considered to be General Education or Career Learning based on the school or adult program in which the student is enrolled.
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.
In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at June 30, 2024. ​ 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.
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.
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 6.72%, and a $1 purchase option at the end of each lease term.
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.
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.
Instructional Services – We offer a broad range of instructional services that includes customer support for instructional teams, including recruitment of state certified teachers, training in research-based online instruction methods and Stride systems, oversight and evaluation services, and ongoing professional development. Stride also provides training options to support teachers and parents to meet students’ learning needs.
Instructional Services – We provide a broad range of instructional services that includes customer support for instructional teams, including recruitment of state - certified teachers, training in research-based online instruction methods and Stride systems, oversight and evaluation services, and ongoing professional development. Stride also provides training options to support teachers and parents to meet students’ learning needs.
The decrease was primarily due to the net proceeds from the issuance of our Notes of $408.6 million, partially offset by capped call purchases related to the Notes of $60.4 million, the repayment on our Credit Facility of $100.0 million in fiscal year 2021; $22.9 million in deferred purchase consideration payments related to MedCerts and Tech Elevator in fiscal year 2022; and an increase in the repurchase of restricted stock for income tax withholding of $37.9 million.
The decrease was primarily due to the net proceeds from the issuance of our Notes of $408.6 million, partially offset by capped call purchases related to the Notes of $60.4 million, the repayment on our Credit Facility of $100.0 million in fiscal year 2021; $22.9 million in deferred purchase consideration payments related to MedCerts and 53 Table of Contents Tech Elevator in fiscal year 2022; and an increase in the repurchase of restricted stock for income tax withholding of $37.9 million.
We pledged the assets financed to secure the outstanding leases. ​ We entered into an agreement with CSI Leasing in August 2022 to provide financing for our leases. Individual leases under the agreement with CSI Leasing include 36-month payments terms, but do not include a stated interest rate.
We pledged the assets financed to secure the outstanding leases. ​ We entered into an agreement with CSI Leasing in August 2022 to provide financing for our leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate.
These programs are offered directly to consumers, as well as to employers and government agencies. ​ For both the General Education and Career Learning markets, the majority of revenue is derived from our comprehensive school-as-a-service offering which includes an integrated package of curriculum, technology systems, instruction, and support services that we administer on behalf of our customers.
These programs are sold directly to consumers, employers and government agencies. ​ For both the General Education and Career Learning markets, the majority of revenue is derived from our comprehensive school-as-a-service offering which includes an integrated package of curriculum, technology systems, instruction, and support services that we administer on behalf of our customers.
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.
Instructional costs and services expenses for the year ended 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.
This is due to the following: (i) generally lower student-to-teacher ratios; (ii) higher compensation costs for some teaching positions requiring subject-matter expertise; (iii) ancillary costs for required student support services, including college placement, SAT preparation and guidance counseling; (iv) use of third-party courses to augment our proprietary curriculum; and (v) use of a third-party learning management system to service high school students.
This is due to the following: (i) generally lower student-to-teacher ratios; (ii) higher compensation costs for some teaching positions requiring subject-matter expertise; (iii) ancillary costs for required student support services, including college placement, SAT preparation and guidance counseling; (iv) use of third-party courses to augment our proprietary curriculum; and (v) use of a third-party LMS to service high school students.
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.
As part of the proceeds received from the Notes, we repaid our $100.0 million outstanding balance and as of June 30, 2024, we had no amounts outstanding on the Credit Facility.
We craft policies that are appropriate for our industry and that are of concern to our employees, investors, customers and other key stakeholders. Our Board ensures that the Company’s leaders have ample opportunity to leverage ESG for the long-term good of the organization, its stakeholders, and society.
We craft policies that are appropriate for our industry and that are of concern to our employees, investors, customers and other key stakeholders. Our Board helps ensure that the Company’s leaders have ample opportunity to leverage ESG for the long-term good of the organization, its stakeholders, and society.
Over time, we may partially offset these factors by obtaining productivity gains in our high school instructional model, replacing third-party high school courses with proprietary content, replacing our third-party learning management system with another third-party system, leveraging our school infrastructure and obtaining purchasing economies of scale.
Over time, we may partially offset these factors by obtaining productivity gains in our high school instructional model, replacing third-party high school courses with proprietary content, replacing our third-party LMS with another third-party system, leveraging our school infrastructure and obtaining purchasing economies of scale.
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.
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.
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.
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 traditional public schools 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, 2024.
Since the end of the school year coincides with the end of our fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for our services to the schools plus other costs the schools may incur).
Since the end of the school year coincides with the end of our fiscal year, annual revenues are generally based on actual 46 Table of Contents school funding and actual costs incurred (including costs for our services to the schools plus other costs the schools may incur).
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 have a valuation allowance on net deferred tax assets of $7.4 million and $6.8 million as of June 30, 2024 and 2023, respectively, for the amount that will likely not be realized.
Our accounts receivable balance fluctuates throughout the fiscal year based on the timing of customer billings and collections and tends to be highest in our first fiscal quarter as we begin billing for students.
Our accounts receivable balance fluctuates throughout the fiscal year based on the timing of customer billings and collections and tends to be highest in our 51 Table of Contents first fiscal quarter as we begin billing for students.
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.
For the years ended June 30, 2023, 2022 and 2021, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately 2.8%, 1.6%, and 1.4%, 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.
They are also responsible for understanding the potential impact and related risks of environmental, social and governance (“ESG”) issues on the organization’s operating model. Our Board and management are committed to identifying those ESG issues most likely to impact business operations and growth.
They are also responsible for understanding the potential impact and related risks of environmental, social and governance (“ESG”) issues on the organization’s operating model. Our Board and management aim to identify those ESG issues most likely to impact business operations and growth.
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.
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, 2024 was $278.8 million compared to $203.2 million for the year ended June 30, 2023.
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.
As of June 30, 2024 and 2023, the finance lease liability was $55.6 million and $56.9 million, respectively, with lease interest rates ranging from 2.10% to 6.72%. ​ 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.
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.
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.
The public schools we administer are the primary drivers of these costs, including teacher and administrator salaries and benefits and expenses of related support services. We also employ teachers and administrators for instruction and oversight in Learning Solutions and Private Schools.
The public schools we administer are the primary drivers of these costs, including teacher and administrator salaries and benefits and expenses of related support services. We also employ teachers and administrators for instruction and oversight to support traditional public schools and private schools.
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.
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.
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 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, 2024, we were in compliance with the financial covenants.
Our end-to-end platform includes single-sign on capability for our 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. A la carte offerings can provide curriculum and content hosting on customers’ learning management systems, or integration with customers’ student information systems.
Our end-to-end platform includes single-sign on capability for our 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. Stand-alone products and services can provide curriculum and content hosting on customers’ LMSs, or integration with customers’ student information systems.
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.
We provide middle and high school students with Career Learning programs that complement their core general education coursework. Stride offers multiple career pathways through a diverse catalog of courses. The middle school program exposes students to a variety of career options and introduces career skill development.
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.
Results of Operations Lines of Revenue ​ We operate in one operating and reportable business segment as a technology company providing an educational platform to deliver 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.
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.
Historically, aggregate funding estimates have differed from actual reimbursements, generally in the range of 2% of annual revenue or less, 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 play a vital role in 42 Table of Contents assessing our organization’s environmental and social impacts.
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.
Our working capital includes cash and cash equivalents of $500.6 million and accounts receivable of $472.8 million. Our working capital provides a significant source of liquidity for our normal operating needs.
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.
We believe that the 52 Table of Contents 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.
Over the past few years, public schools and school districts have been increasingly adopting online solutions to augment teaching practices, launch new learning models, cost-effectively expand course offerings, provide schedule flexibility, improve student engagement, increase graduation rates, replace textbooks, and retain students.
Public schools and school districts are increasingly adopting digital educational solutions to augment teaching practices, launch new learning models, cost effectively expand course offerings, provide schedule flexibility, improve student engagement, increase graduation rates, replace textbooks, and retain students.
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.
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; 43 Table of Contents (vi) growth in our adult learning programs; and (vii) revenues from new initiatives, mergers and acquisitions.
Instructional costs and services expenses were 64.6% of revenues during the year ended June 30, 2022, a decrease from 65.2% for the year ended June 30, 2021. Selling, general, and administrative expenses.
Instructional costs and services expenses were 62.6% of revenues during the year ended June 30, 2024, a decrease from 64.8% for the year ended June 30, 2023. ​ 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. 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.
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, 2024 were 194.3 thousand, an increase of 16.1 thousand, or 9.0%, over the prior year.
Instructional costs and services expenses for the year ended June 30, 2022 were $1,090.2 million, representing an increase of $88.3 million, or 8.8%, from $1,001.9 million for the year ended June 30, 2021. This increase in expense was due to hiring of personnel in growth states and salary increases.
Instructional costs and services expenses for the year ended June 30, 2024 were $1,276.5 million, representing an increase of $86.2 million, or 7.2%, from $1,190.3 million for the year ended June 30, 2023. This increase in expense was due to hiring of personnel in growth states and salary increases.
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.
Investing Activities Net cash used in investing activities for the years ended June 30, 2024, 2023 and 2022 was $139.9 million, $118.2 million and $110.8 million, respectively. Net cash used in investing activities for the year ended June 30, 2024 increased $21.7 million from the year ended June 30, 2023.
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.
During the year ended June 30, 2024, revenues increased to $2,040.1 million from $1,837.4 million in the prior year, an increase of 11.0%. Over the same period, operating income increased to $249.6 million from $165.5 million in the prior year, an increase of 50.8%. The increase in operating income was driven by revenue growth and an increase in gross margin.
The decrease was primarily due to the acquisitions of MedCerts and Tech Elevator for $71.1 million in fiscal year 2021, partially offset by an increase in capital expenditures year over year of $15.3 million. Net cash used in investing activities for the year ended June 30, 2021 decreased $52.0 million from the year ended June 30, 2020.
The decrease was primarily due to the acquisitions of MedCerts and Tech Elevator for $71.1 million in fiscal year 2021, partially offset by an increase in capital expenditures year over year of $15.3 million.
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.
The increase in General Education revenues was primarily due to the 8.3% increase in enrollments, and changes to school mix (distribution of enrollments by school). Career Learning revenues increased $44.9 million, or 6.4%, primarily due to a 10.3% increase in enrollments and school mix. ​ Instructional costs and services expenses.
Selling, general, and administrative expenses were 26.1% of revenues during the year ended June 30, 2022, a decrease from 27.6% for the year ended June 30, 2021. ​ Interest income (expense), net . Net interest expense for the year ended June 30, 2022 was $8.3 million as compared to $18.0 million in the year ended June 30, 2021.
Selling, general, and administrative expenses were 25.2% of revenues during the year ended June 30, 2024, a decrease from 26.2% for the year ended June 30, 2023. ​ Interest income (expense), net. Net interest expense for the year ended June 30, 2024 was $8.8 million as compared to $8.4 million for the year ended June 30, 2023.
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.
Periodically, a middle school or high school student enrollment may change line of revenue classification. ​ 48 Table of Contents The following represents our current revenues for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ Change 2024 / 2023 ​ Change 2023 / 2022 ​ 2024 2023 2022 $ % $ % ​ ​ (In thousands, except percentages) General Education ​ $ 1,289,193 ​ $ 1,131,391 ​ $ 1,273,783 ​ $ 157,802 ​ 13.9% ​ $ (142,392) ​ (11.2%) Career Learning ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Middle - High School ​ ​ 651,191 ​ ​ 586,770 ​ ​ 321,416 ​ ​ 64,421 ​ 11.0% ​ ​ 265,354 ​ 82.6% Adult ​ ​ 99,685 ​ ​ 119,197 ​ ​ 91,467 ​ ​ (19,512) ​ (16.4%) ​ ​ 27,730 ​ 30.3% Total Career Learning ​ ​ 750,876 ​ ​ 705,967 ​ ​ 412,883 ​ ​ 44,909 ​ 6.4% ​ ​ 293,084 ​ 71.0% Total Revenues ​ $ 2,040,069 ​ $ 1,837,358 ​ $ 1,686,666 ​ $ 202,711 ​ 11.0% ​ $ 150,692 ​ 8.9% ​ Products and Services Stride has invested over $700 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.
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.
Financing Activities Net cash used in financing activities for the years ended June 30, 2024, 2023 and 2022 was $49.1 million, $63.5 million and $93.3 million, respectively. Net cash used in financing activities for the year ended June 30, 2024 decreased $14.4 million from the year ended June 30, 2023.
During any fiscal year, we may enter into new agreements, receive non-automatic renewal notices, negotiate replacement agreements, terminate such agreements or receive notices of termination, or customers may transition a school to a different offering.
These contracts are negotiated with, and approved by, the governing authorities of the customer. During any fiscal year, the Company may enter into new agreements, receive non-automatic renewal notices, negotiate replacement agreements, terminate such agreements or receive notice of termination, or customers may transition a school to a different offering.
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.
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. ​ Our educational platform also offers the ability to deliver products and services directly to families.
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.
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.
Selling, general, and administrative expenses for the year ended June 30, 2022 were $439.8 million, representing an increase of $15.4 million, or 3.6%, from $424.4 million for the year ended June 30, 2021.
Selling, general and administrative expenses for the year ended June 30, 2024 were $514.0 million, representing an increase of $32.4 million, or 6.7% from $481.6 million for the year ended June 30, 2023.
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. ​
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. ​
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.
A student enrolled in a school that offers Stride’s General Education program may elect to take career courses, but that student and the associated revenue is reported as a General Education enrollment and General Education revenue. ​ 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.
Our revenues for the year ended June 30, 2022 were $1,686.7 million, representing an increase of $149.9 million, or 9.8%, from $1,536.8 million for the year ended June 30, 2021. General Education revenues decreased $6.4 million, or 0.5%, year over year.
Our revenues for the year ended June 30, 2024 were $2,040.1 million, representing an increase of $202.7 million, or 11.0%, from $1,837.4 million for the year ended June 30, 2023. General Education revenues increased $157.8 million, or 13.9%, year over year.
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, ​ ​ ​ ​ 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.
Support Services – We provide a broad range of support services, including marketing and enrollment, supporting prospective students through the admission process, assessment management, administrative support (e.g., budget proposals, financial reporting, and student data reporting), and technology and materials support (e.g., provisioning of student computers, offline learning kits, internet access and technology support services). 49 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ (In thousands, except percentages) ​ Revenues ​ ​ $ 2,040,069 100.0 % $ 1,837,358 100.0 % $ 1,686,666 100.0 % Instructional costs and services ​ ​ ​ ​ 1,276,466 ​ ​ 62.6 ​ ​ 1,190,288 ​ ​ 64.8 ​ ​ 1,090,191 ​ ​ 64.6 ​ Gross margin ​ ​ ​ ​ 763,603 ​ ​ 37.4 ​ ​ 647,070 ​ ​ 35.2 ​ ​ 596,475 ​ ​ 35.4 ​ Selling, general, and administrative expenses ​ ​ ​ ​ 514,003 ​ ​ 25.2 ​ ​ 481,571 ​ ​ 26.2 ​ ​ 439,847 ​ ​ 26.1 ​ Income from operations ​ ​ ​ ​ 249,600 ​ ​ 12.2 ​ ​ 165,499 ​ ​ 9.0 ​ ​ 156,628 ​ ​ 9.3 ​ Interest expense, net ​ ​ ​ ​ (8,812) ​ ​ (0.4) ​ ​ (8,404) ​ ​ (0.5) ​ ​ (8,277) ​ ​ (0.5) ​ Other income (expense), net ​ ​ ​ ​ 26,900 ​ ​ 1.3 ​ ​ 15,452 ​ ​ 0.8 ​ ​ (1,277) ​ ​ (0.1) ​ Income before income taxes and income (loss) from equity method investments ​ ​ ​ ​ 267,688 ​ ​ 13.1 ​ ​ 172,547 ​ ​ 9.4 ​ ​ 147,074 ​ ​ 8.7 ​ Income tax expense ​ ​ ​ ​ (64,482) ​ ​ (3.2) ​ ​ (45,346) ​ ​ (2.5) ​ ​ (40,088) ​ ​ (2.4) ​ Income (loss) from equity method investments ​ ​ ​ ​ 977 ​ ​ 0.0 ​ ​ (334) ​ ​ (0.0) ​ ​ 144 ​ ​ 0.0 ​ Net income attributable to common stockholders ​ ​ ​ $ 204,183 ​ ​ 10.0 % $ 126,867 ​ ​ 6.9 % $ 107,130 ​ ​ 6.4 % ​ Comparison of the Years Ended June 30, 2024 and 2023 ​ Revenues.
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.
We provide 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. Our allied health programs provide self-paced, fully online structured training programs that lead to certifications in the healthcare field.
Income tax expense was $40.1 million for the year ended June 30, 2022, or 27.2% of income before taxes, as compared to $24.5 million, or 25.6% of income before taxes for the year ended June 30, 2021.
Income tax expense was $64.5 million for the year ended June 30, 2024, or 24.0% of income before taxes, as compared to $45.3 million, or 26.3% of income before taxes for the year ended June 30, 2023.
Customers of these programs can obtain the administrative support, information technology, academic support services, online curriculum, learning system platforms and instructional services under the terms of a negotiated service and product agreement. We provide our school-as-a-service offerings to virtual and blended public charter schools and school districts.
Virtual Schools Our educational platform can be offered in an integrated package of systems, services, products, and professional expertise to support a virtual public school. Customers of these programs can obtain administrative support, information technology, academic support services, online curriculum, learning systems and instructional services under the terms of negotiated service and product agreements.
Curriculum and Content – Stride has one of the largest digital research-based curriculum portfolios for the K-12 online education industry that includes some of the best in class content available in the market. Our customers can select from hundreds of high-quality, engaging, online coursework and content, as well as many state customized versions of those courses, electives, and instructional supports.
Curriculum and Content – Stride has one of the largest digital research-based curriculum portfolios for the K-12 online education industry that includes some of the best - in - class content available in the market.
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.
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. Consumer Sales We provide tuition-based online private schools that meet a range of student needs from individual course credit recovery to college preparatory programs.
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.
These purchasers desire to offer supplemental educational products to further their child’s existing public or private school education. Customers of our consumer products have the option of purchasing complete curriculum, individual courses, tutoring, career learning products, or a variety of other supplemental products, covering various subjects depending on their child’s needs.
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.
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.
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.
Our comprehensive school-as-a-service offering supports our clients in operating full-time virtual schools in the K-12 market.Together with our network of online schools, Stride has served millions of students with our products and services. ​ Our platform addresses two markets in the K-12 space: General Education and Career Learning. ​ General Education ​ 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.
We exercise significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets.
We exercise significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. 47 Table of Contents Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgments that could become subject to examination by tax authorities in the ordinary course of business.
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 54 Table of Contents June 30, 2021, was primarily due to the increase in the amount of non-deductible compensation, which was partially offset by the increase in excess tax benefit of stock-based compensation.
The decrease in the effective income tax rate for the year ended June 30, 2024, as compared to the effective tax rate for the year ended June 30, 2023, was primarily due to non-deductible compensation and state taxes. 50 Table of Contents Comparison of the Years Ended June 30, 2023 and 2022 Revenues.
Executive Summary We are an education services company providing virtual and blended learning. Our technology-based products and services enable our clients to attract, enroll, educate, track progress, and support students. These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning.
These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning. Our clients are primarily public and private schools, school districts, and charter boards. Additionally, we provide solutions to employers, government agencies and consumers.
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.
A student is reported as a Career Learning enrollment and associated Career Learning revenue only if the student is enrolled in a Career Learning program.
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 $75.6 million increase in cash provided by operations between periods was primarily due to the increase in net income. ​ 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.
Since our inception, we have built core courses on a foundation of rigorous standards, following the guidance and recommendations of leading educational organizations at the national and state levels. State standards are continually evolving, and we continually invest in our curriculum to meet these changing requirements.
Our customers can select from hundreds of high-quality, engaging, online coursework and content, as well as many state customized versions of those courses, electives, and instructional supports. Since our inception, we have built core courses on a foundation of rigorous standards, following the guidance and recommendations of leading educational organizations at the national and state levels.
We routinely monitor state legislative activity and regulatory proceedings that might impact the funding received by the schools we serve and to the extent possible, factor potential outcomes into our business planning decisions. The deferred revenue related to our direct-to-consumer business results from advance payments for twelve month subscriptions to our online school.
We routinely monitor state legislative activity and regulatory proceedings that might impact the funding received by the schools we serve and to the extent possible, factor potential outcomes into our business planning decisions. Liquidity and Capital Resources As of June 30, 2024, we had net working capital, or current assets minus current liabilities, of $1,001.2 million.
The increase was primarily due to an increase of $9.1 million in bad debt expense resulting primarily from reserves related to our investment in Tallo, Inc., $8.7 million in licensing fees, and $8.0 million in professional services and marketing expenses, partially offset by a $7.8 million decrease in personnel and related benefit costs, including stock-based compensation.
The increase was primarily due to an increase of $9.5 million in personnel and related benefit costs, $6.4 million in professional services, and $13.7 million in bad debt expense.
The average duration of the agreements for our school-as-a-service offering is greater than five years, and most provide for automatic renewals absent a customer notification of non-renewal.
The average duration of the agreements for our school-as-a-service offering is greater than five years, and most provide for automatic renewals absent a customer notification of non-renewal. ​ During the 2023-2024 school year, we provided our school-as-a-service offering to 91 schools in 31 states and the District of Columbia in the General Education market, and 56 schools or programs in 27 states and the District of Columbia in the Career Learning market. ​ In 2020, we significantly expanded our Career Learning opportunity by acquiring three adult learning companies, Galvanize, Tech Elevator, and MedCerts.
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.
These Adult Learning brands deliver training in software engineering and allied healthcare to consumers and enterprises. ​ We generate a significant portion of our revenues from the sale of curriculum, administration support and technology services to virtual and blended public schools.
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.
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.
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. Products and services are delivered as a comprehensive school-as-a-service offering for schools or as stand-alone products 41 Table of Contents and services.
Through our subsidiaries Galvanize, Tech Elevator and MedCerts, we have added high-quality, engaging, 52 Table of Contents online coursework and content in software engineering, healthcare, and medical fields.
State standards are continually evolving, and we continually invest in our curriculum to meet these changing requirements. We provide high-quality, engaging, online coursework and content in software engineering, healthcare, and medical fields.
Continued growth in these brands will also require that we demonstrate success in placing these learners in jobs following their completion of the program. ​ Instructional Costs and Services Expenses Instructional costs and services expenses include expenses directly attributable to the educational products and services we provide.
We can also provide these programs directly to enterprises to create customized, tailored education plans to help companies train, upskill, and reskill their employees. 44 Table of Contents Instructional Costs and Services Expenses Instructional costs and services expenses include expenses directly attributable to the educational products and services we provide.
The $53.8 million increase in cash provided by operations between periods was primarily due to an increase in net income including non-cash adjustments partially offset by a decrease in working capital of $56.8 million.
The increase was primarily due to higher net purchases of marketable securities of $24.4 million, partially offset by a decrease in capital expenditures year over year of $4.8 million. ​ Net cash used in investing activities for the year ended June 30, 2023 increased $7.4 million from the year ended June 30, 2022.
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Our clients are primarily public and private schools, school districts, and charter boards. Additionally, we offer solutions to employers, government agencies and consumers. We offer a wide range of individual products and services, as well as customized solutions, such as our most comprehensive school-as-a-service offering which supports our clients in operating full-time virtual or blended schools.
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Executive Summary We are a technology company providing an educational platform to deliver online learning to students throughout the U.S. Our platform hosts products and services to attract, enroll, educate, track progress, and support students.

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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 changeAdditionally, 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.
Biggest changeAdditionally, 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.
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
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. ​ 54 Table of Contents
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, 2024, 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.
Our 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.
Our excess cash has been invested in money market funds, government securities, corporate debt securities and similar investments. At June 30, 2024, a 1% gross increase in interest rates for our variable-interest instruments would result in a $5.0 million annualized increase in interest income.
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.
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, 2024 and 2023, we had cash and cash equivalents totaling $500.6 million and $410.8 million, respectively.

Other LRN 10-K year-over-year comparisons