Stride, Inc. · NYSE:LRN
Stride — K12 — Investor Day (November 2020)
110 slides from Stride's investor day presentation, Nov 17, 2020
Slide 1: Investor Day 2020
Investor Day 2020 Stride
Slide 2: Welcome
Welcome Michael Lawson VP, Investor Relations
Slide 3: Safe Harbor
Safe Harbor This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,
Slide 4: Presentation / Q&A
Presentation / Q&A Slides for today’s presentation can be found at: www.investors.stridelearning.com Please submit your questions throughout the day via the Q&A submission form on your screen 4
Slide 5: Today's Agenda
Today’sAgenda TIMESPEAKERTITLE 10:30 – 10:35Mike Lawson, VP, Investor RelationsWelcome 10:35 – 11:05Nate Davis, CEO & Chairman of the BoardCompany Overview & Strategic Direction 11:05 – 11:25Kevin Chavous, President, Academic Policy & External AffairsRegulatory & Policy Overview 11:25 – 11:30BreakBr
Slide 6: Video Presentation
Video Presentation stride
Slide 7: Company Overview & Strategy
Company Overview & Strategy Nate Davis CEO and Chairman of the Board of Directors
Slide 8: K12: From innovator to solutions provider
K12: From innovator to solutions provider Innovator in full-time online options for K-12 education market Market Unmet demand for alternative to in-person public schools K12 Supported changes to regulation / legislation to create online charter schools Developed online schools — Initially focused on
Slide 9: Expanding strategy focuses on career learning
Expanding strategy focuses on career learning Targets new $65B market opportunity – in just 4 years Career Learning business has grown to ~$250M in annual revenue serving over 30,000 learners $65B+ addressable market Market evolution drives demand for career learning Increasing acceptance of full-ti
Slide 10: Acquisitions: MedCerts and Tech Elevator
Purchase $23.5M $70.0M** Price Revenue* ~$11M ~$19M Offerings Remote and in-person software engineering bootcamps Online allied healthcare and IT training, including certification prep and job placement support Fast growing, profitable Fast growing, profitable business expands Galvanize business add
Slide 11: The new Stride
The new Leveraging over 20 years of experience with over 2 million students supported, and a scalable education services platform, Stride provides online and blended lifelong learning solutions for public and private schools, school districts, charter boards, employers, government K-12 General Educa
Slide 12: Our Mission
OUR MISSION We help learners of all ages reach their full potential through inspired teaching and personalized learning 12
Slide 13: Compelling long-term investment thesis
Compellinglong-term investment thesis Growing in the $100B+ addressable market 0102030405 Leading education services platform With scale, expertise & broad, long-term customer relationships 20 years experience Largest online K–12 provider in U.S. with 2M+ students supported since 2000 $500+M investe
Slide 14: Leading education services platform
01 Leading education services platform $500M+ invested in a ‘digital first’ curriculum, ‘mobile ready’ platform & service suite to support online & blended education – scalable across all ages & subjects 980+ online courses 100,000+ lessons 1,000,000+ multimedia components Differentiated & Personali
Slide 15: Strong customer relationships
01 Strong customer relationships Long-standing relationships built over 20-year history with high retention rates and over 2 million students supported 100+ Schools & Programs 75 general education schools, including 2 private schools 32 career learning programs New schools added annually 195,000+ St
Slide 16: Consistent general education business
02 Consistent general education business Online & blended learning expertise & assets to address large K-12 market General Education Solutions Growing mass acceptance of online learning Parents are now digital natives and are used to learning and getting information online Full-time Online Programs
Slide 17: High-growth career learning business
03 High-growth career learning business Leveraging expertise & assets to address adjacent market Career Learning Solutions Bi-partisan support for workforce development at K-12 and adult levels Increasingly competitive global market Career Preparation Middle-High School Career Education Entry-level
Slide 18: Strong start to career learning business
03 Strong start to career learning business In just five years, Stride has built the assets, capabilities and infrastructure to support a ~$250M business in FY 2021 and beyond Career Preparation 30.8K students enrolled 32 schools / programs reaching 60% of H.S. students in U.S. 50 customized courses
Slide 19: Industry leading management team
04 Industry leading management team with diverse expertise Senior Leadership Team Composition ~7 82% 62 Education Experience% Diverse Representation 19 Statistics represent 26 person Senior Leadership Team Darren Reed SVP, School Service – Northern Region Donna Blackman Chief Accounting 19 Officer &
Slide 20: ESG factors engrained in company culture
04 ESG factors engrained in company culture Support inclusive & equitable education & promote lifelong learning EnvironmentalSocialGovernance Online schools – no transportation 75+% employees work remote School supply / computer refurbishment & recycling policy Ensure supply chain reflects communiti
Slide 21: Execution track record: enrollment and revenue
05 Execution track record Stable enrollment and revenue growth… Total Enrollment1 (K) QE 9/30 15% 195 Total Revenue ($M) FYE 6/30 14% 1,457 – 1,485 CAGR 112114121124 889918 CAGR2 1,0161,041 FY2017FY2018FY2019FY2020FY2021 FY2017FY2018FY2019FY2020FY2021G Depicts high-low number for guidance or target
Slide 22: Execution track record: profitability and free cash flow
05 Execution track record …leading to consistent profitability growth and free cash flow generation Adj. Operating Income ($M) FYE 6/30 35% 120 - 130 Free Cash Flow ($M) FYE 6/30 34% 120 - 130 CAGR(1) 77 65 49 3962 CAGR (1) 93 48 62 4135 FY2017FY2018FY2019FY2020FY2021G FY2017FY2018FY2019FY2020FY2021
Slide 23: Financial outlook
05 Financial outlook Support improving learner outcomes while delivering sustained double-digit top-& bottom-line growth and increased shareholder value Updated FY21 Total Revenue ($B) $1.457B – $1.485B $1.9B – $2.2B Adj. Operating Income ($M) $120M – $130M $250M – $350M Free Cash Flow Targets ($M)
Slide 24: Today's Agenda
Today’sAgenda TIMESPEAKERTITLE 10:30 – 10:35Mike Lawson, VP, Investor RelationsWelcome 10:35 – 11:05Nate Davis, CEO & Chairman of the BoardCompany Overview & Strategic Direction 11:05 – 11:25Kevin Chavous, President, Academic Policy & External AffairsRegulatory & Policy Overview 11:25 – 11:30BreakBr
Slide 25: Investor Day 2020
Investor Day 2020 Stride
Slide 26: Regulatory and Policy Overview
Regulatory and Policy Overview Kevin Chavous President, Academic Policy & External Affairs
Slide 27: Regulatory & Policy Highlights
REGULATORY & POLICY Highlights Successfully operating in a complex industry with regulatory expertise to build upon strong customer and government relationships K–12 education state based with low impact from Federal regulatory regime or Presidential election 03 04Strong and deep partner relationshi
Slide 28: Deep political, regulatory & policy expertise
01 Deep political, regulatory & policy expertise Successfully operating in a complex industry with vast knowledge and understanding of legislative, political, policy, and advocacy operations Experienced Public Affairs Team Formidable national network of professional state and federal lobbyists, cons
Slide 29: Election 2020
02 Election 2020 Political winds have changed multiple times but have not disrupted overall growth trajectory Operate a largely state-based business – lower impact from federal elections Strong, experienced, bipartisan government affairs representation Bipartisan support for Career Learning initiati
Slide 30: Fulltime programs & funds flow
03 Fulltime programs & funds flow As a service provider to the school, all vendors are paid from funding provided by the state to the school & the school pays the vendor StateProvides “Authorizer” ability to grant public school status Authorizer FUNDING Dept. of Ed, School District, Independent Comm
Slide 31: Increasing education spending over time
03 Increasing education spending over time supports consistent revenue growth On average states spend 21% of annual budgets on education Increases for K12 funding driven by: Consistent growth in education funding over time Optimizing school mix Narrowing funding gap to brick and mortar schools Impro
Slide 32: Strong and deep customer relationships
04 Strong and deep customer relationships Long-standing customer relationships supported by unique combination of offerings and expertise Meet Students’ Unique Needs Help students reach their full potential through inspired teaching & personalized learning Provide How-To Expertise Apply best practic
Slide 33: Potential for footprint expansion
05 Potential for footprint expansion Utilize multiple models to expand capacity in existing schools / states and new states / geographies 100,000+ year incremental enrollment capacity target New States Georgia New York New Jersey Massachusetts Hawaii Kentucky Illinois New Schools / Programs Virginia
Slide 34: Regulatory & Policy Highlights
REGULATORY & POLICY Highlights Successfully operating in a complex industry with regulatory expertise to build upon strong customer and government relationships K–12 education state based with low impact from Federal regulatory regime or Presidential election 03 04Strong and deep partner relationshi
Slide 35: Please enjoy this media content
Please enjoy this media content
Slide 36: General Education Schools
General Education Schools Dr. Tony Bennett SVP, School Management
Slide 37: General Education Highlights
GENERAL EDUCATION Highlights Increasing demand for virtual education drives growing addressable market opportunity with high barriers to entry Nationwide reach with large and diverse customer base and student population Drive school excellence to improve academic outcomes and student retention Impro
Slide 38: Increasing demand for virtual education
01 Increasing demand for virtual education Secular Trends Driving Increased Penetration in Online Learning Growing mass acceptance of online learning Parents are now digital natives and are used to learning and getting information online School districts shifting from print to digital format at acce
Slide 39: General education snapshot
02 General education snapshot Nationwide reach and strong customer base addresses 75% of the K–12 student population ME ~165K students enrolled in full time programs – FY21 70+ full time programs in 30+ states WA MTND ORMN IDSD MA NH NY MI CT 63% / 37% charter / district customer mix WY IAOH NE PA M
Slide 40: Why students choose a K12-powered school
02 Why students choose a K12-powered school 83%(1) of students enter school behind grade level Over 160,000 Students. Over 160,000 Reasons. Traditional School Not the Right Fit Advanced Learner Bullying Negative Social Experience Working Student Athlete Artist Military Family Religion Health Issues
Slide 41: The Covid experience
02 The Covid experience School districts are not providing the same experience as K12-powered programs School Districts Spring 2020K12-Powered Programs ExperienceOne-to-many teaching – couldn’t replicate in class experience – no integrated offline materials – limited onboarding programs Synchronous,
Slide 42: Driving academic excellence
03 Driving academic excellence Rigor, Relevance & Relationships drive academic results with inspired teachers & leaders Instilling a culture of expectations and accountability Literacy: Focused on one year of academic growth, Grade 3–8 Test Scores by Student Persistence at K12-Powered Programs* 73%7
Slide 43: Increasing customer satisfaction
04 Increasing customer satisfaction Continued commitment to academic outcomes and improving student experience driving higher satisfaction Student Acceptances to Leading Universities % Satisfied with Overall Experience Net Promoter Score – School 70%72% 76%78% 80% 84% 5657 50 74 6668 201520162017201
Slide 44: General Education Highlights
GENERAL EDUCATION Highlights Increasing demand for virtual education drives growing addressable market opportunity with high barriers of entry Nationwide reach with large and diverse customer base and student population Drive school excellence to improve academic outcomes and student retention Impro
Slide 45: Investor Day 2020
Investor Day 2020 Stride
Slide 46: Scale & Growth
Scale & Growth James Rhyu President, Corporate Strategy, Marketing & Technology
Slide 47: Scale & Growth Highlights
SCALE & GROWTH Highlights Invest in Education-as-a-Service platform to serve large and growing addressable markets: Including full-time online learning, part-time online learning, blended learning, career training, military, institutional / district, and corporate training Differentiate through inno
Slide 48: Investing in Education-as-a-Service platform
01 Investing in Education-as-a-Service platform Continue to develop our end-to-end technology, product & service suite to support the unique needs of online & blended education for all markets and learners General Education Content & Curriculum One of the largest digital research-based learning cont
Slide 49: Platform supports growth in career learning
01 Platform supports growth in career learning Technology, product & service suite is leveraged across business lines to support multiple markets Education-as-a-Service platform customized for Career Learning Content & Curriculum Instructional Services Systems Support Services Project-based Learning
Slide 50: Video Presentation
Video Presentation stride
Slide 51: Differentiate through innovation
02 Differentiate through innovation Focused on driving academic outcomes & retention Customer & Student Experience Gaming Augmented reality Virtual student collaboration On-demand tutoring Teacher Efficiencies Natural language processing Predictive analytics Automated scoring Personalized Learning C
Slide 52: Retention programs support student outcomes
03 Retention programs support student outcomes and financial objectives Improving withdrawal rate by 100 bps increases Adj. Operating Income by ~$4 million per year Retention Activities (example programming) Early mitigation of student / family issues Differentiated programming, teacher and class su
Slide 53: Increase efficiencies: lower per unit costs
04 Increase efficiencies: lower per unit costs Leverage technology and automation to lower SG&A as a percent of revenue 30% 500 bps improvement Marketing Lower customer acquisition cost by further optimizing digital & social channels Onboarding & School Start Lower customer support costs through ext
Slide 54: Scale & Growth Highlights
SCALE & GROWTH Highlights Invest in Education-as-a-Service platform to serve large and growing addressable markets: Including full-time online learning, part-time online learning, blended learning, career training, military, institutional / district, and corporate training Differentiate through inno
Slide 55: Please enjoy this media content
Please enjoy this media content
Slide 56: Career Learning
Career Learning Dr. Shaun McAlmont President, Career Learning Solutions
Slide 57: Career Learning Highlights
CAREER LEARNING Highlights Large and expanding addressable market fueled by strong secular trends provides significant opportunities to sustain high-growth trajectory Strong and diversified portfolio of assets / partners addresses trends and demand for next-decade jobs; servicing underserved markets
Slide 58: Large & expanding addressable market
01 Large & expanding addressable market Strong Secular Market Trends Driving Demand for Our Solutions Bi-partisan support for workforce development at middle / high school and adult levels Increasingly competitive global market Technology advancement driving need to reskill / upskill talent Economic
Slide 59: Secular market trends driving demand
01 Secular market trends driving demand for our solutions Workforce demands are changing, and students and employers are struggling to find and fill jobs – Even with $164B in annual private sector spending on employee training and development, the skills gap continues to grow Student loan burden con
Slide 60: Strong and diversified portfolio
02 Strong and diversified portfolio Assets & partners support learners from career prep through adult / employer career development & advancement Middle / High School StudentsAdult LearnersTalent Platform * Career Prep Provides career exploration & preparation for middle & high school students IT Wo
Slide 61: Competitive Positioning
02 Competitive Positioning First mover in high school market with innovative project-based learning courses; large and growing alumni network for adults with high quality brand name and exceptional job placement. Market Dynamics K–12 Market: Few national competitors; largely regional and local playe
Slide 62: Destination Career Academy Footprint
03 Destination Career Academy Footprint supports growth objectives 30.8K students will attend 32 DCA programs in FY21 ME WA VT MTND OR IDSD WY NE MN WIMI IAOH NY PA MD NH MA RI CT NJ DE 60%+ High school students have access to NV CAUTCO KSMO ILIN KY WVVA NC Washington D.C. DCA program AZNM AK HI OKA
Slide 63: A Unique Career Prep Experience
03 AUnique Career Prep Experience Destinations Career Academy’s nationwide solution provides students with differentiated learning option Courses & Pathways Catalog of 160+ career learning courses in 23 pathways Project-based Learning Student project collaboration including in-person & hands-on expe
Slide 64: Case Study: Project Based Learning
03 Case Study: Project Based Learning Enhancing a student’s academic experience through project-based learning Our Differentiated Project-Based Learning Solution Opportunities for in-field research through authentic, real-world problem solving Collaborative student-driven process versus direct instr
Slide 65: Video Presentation
Video Presentation stride
Slide 66: Destinations Career Academy learning pathways
03 Destinations Career Academy learning pathways Existing Industry PathwaysNew Industry Pathways TechnologyHealth & human servicesBusiness administration Arts, AV digital design & comms Legal & law enforcement Advanced manufacturing & trades Agriculture, food & natural resources Education & training
Slide 67: Sample IT pathway
03 Sample IT pathway High School IT Pathway Nascent skill development and industry exposure Entry-level certification post-graduation $30–$40K initial earning potential Prep Courses Post-HS training with Galvanize / Tech Elevator prep courses Training Program Full-or part-time training in software d
Slide 68: Adult Learning Programs: Health
Adult Learning Programs: Health 68
Slide 69: MedCerts
03 MedCerts Extends reach into adult education market in healthcare vertical Offerings: Healthcare training for consumers and enterprise Channels: Direct pay Adult Learnings Centers using Workforce Innovation and Opportunity Act (WIOA) funding Army Credentialing Opportunities On-Line (Army COOL) Mil
Slide 70: MedCerts Offerings
03 MedCerts Offerings Top MedCerts Programs: 100% online Medical Assistant Phlebotomy Technician Pharmacy Technician Professional Medical Front Office Administrative Assistant Professional Coder Certification Providers: Veterinary Assistant EKG Technician Dental Assistant and Office Administration B
Slide 71: Sample healthcare pathway
03 Sample healthcare pathway High School Health Pathway Entry-level leading to certification at graduation in MA, PT, CAN $28–$35K initial earnings potential Post High School Courses Training programs leading to advanced certifications $35–$50K initial earnings potential Nursing Career Partnerships
Slide 72: Strategic relationships create differentiated program
03 Strategic relationships create differentiated program Extensive local / national / strategic corporate & post secondary relationships offer internships, branded content / pathways & structure for jobs or next step in career development Relationships span local, national Stride and Tallo partners7
Slide 73: Significant growth potential
04 Significant growth potential Diverse and comprehensive strategies to accelerate growth 1 Enhance program quality and content to drive retention and outcomes Improve acquisition through marketing effectiveness Expand enrollment capacity in existing programs / new programs / new states 2 Expand ent
Slide 74: Career Learning Highlights
CAREER LEARNING Highlights Large and expanding addressable market fueled by strong secular trends provides significant opportunities to sustain high-growth trajectory Strong and diversified portfolio of assets / partners addresses trends and demand for next-decade jobs; servicing underserved markets
Slide 75: Investor Day 2020
Investor Day 2020 Stride
Slide 76: Galvanize
Galvanize Harsh Patel Chief Executive Officer, Galvanize
Slide 77: Galvanize Highlights
GALVANIZE Highlights Leading provider of workforce training solutions in the high-demand fields of software engineering and data science Strong consumer education business with in-person and remote options for adult learners Large and expanding market opportunities in enterprise training, military a
Slide 78: Galvanize
01 Galvanize Software Engineering and Data Science training for consumers, enterprise, and military markets Consumer Education Full-time in person, and full-time / part-time remote Enterprise Training Upskilling or reskilling programs & talent sourcing Military Training Reskilling active & transitio
Slide 79: Secular trends driving market demand
01 Secular trends driving market demand Technical skills paramount in age of digitization, automation, and advances in artificial intelligence TOP 5 fastest growing jobs are highly skilled technical roles 27% recent job openings are IT related 1 MILLION IT jobs went unfilled due to demand exceeding
Slide 80: Competitive advantages drive success
01 Competitive advantages drive success Strong brand & alumni network Drives acquisition, referrals and job placement Integrated career service & guidance program Deliver high placement rates, strong salary levels, and high return on student investment Industry-leading technology platform Supported
Slide 81: Consumer education: in-person reach
02 Consumer education: in-person reach Data Science ImmersiveSoftware Engineering Immersive Seattle, WA ■■ San Francisco, CA ■■ San Jose, CA (new campus) Boulder, CO ■ Denver, CO ■■ New York, NY ■■ Los Angeles, CA ■■ Phoenix, AZ ■■ Dallas, TX (new campus) Austin, TX ■■ 81
Slide 82: Consumer education: remote
02 Consumer education: remote Canada United States Mexico Costa Rica Haiti Jamaica United Kingdom France Spain Poland Germany Switzerland Pakistan Russia Bangladesh India Korea China Japan Taiwan Columbia Brazil Nigeria Singapore Australia Chile New Zealand 82
Slide 83: Consumer education: impact
02 Consumer education: impact 2,250+ companies hiring Galvanize graduates, all time ONE OF THE 1ST data science, JavaScript, & remote bootcamps 70%+ software engineering graduates hired within 6 months of graduation 50% Fortune 100 companies have hired Galvanize graduates TOP 10 data science bootcam
Slide 84: Enterprise training
03 Enterprise training Re-skilling or cross-skilling enterprise workforces and hiring, training and placing graduates within those organizations 2,000+ enterprise employees trained / upskilled Talent Development Courses Talent-as-a-Service Executive Workshops Learn Platform 84
Slide 85: Military training
03 Military training Military Career Skills Program Provide active military personnel, who are separating from service, the skills and training needed for a career in software engineering Currently the only software engineer skills provider in the Department of Defense Active Military Technical Trai
Slide 86: Strategies to accelerate growth
04 Strategies to accelerate growth 86
Slide 87: Tech Elevator
04 Tech Elevator Expands student demographic & experience level reach, geographic footprint, and hiring partner portfolio Offerings: Software engineering training Locations: Cleveland, Columbus, Cincinnati, Pittsburgh, Detroit, Philadelphia Employee recruitment, upskilling & technical training platf
Slide 88: Galvanize & Tech Elevator
04 Galvanize & Tech Elevator Creating a nationwide technical skills training company at scale Complementary Organization, Reach & Capabilities GalvanizeTech Elevator Software Engineering Data ScienceOpportunity ME WA VT MTND ORMN IDSD WY WIMI NY PA MD NH MA RI CT NJ LanguagesJavaScript, Python C#, J
Slide 89: Galvanize Highlights
GALVANIZE Highlights Leading provider of workforce training solutions in the high-demand fields of software engineering and data science Strong consumer education business with in-person and remote options for adult learners Large and expanding market opportunities in enterprise training, military a
Slide 90: Please enjoy this media content
Please enjoy this media content
Slide 91: Financial Overview & Outlook
Financial Overview & Outlook Tim Medina Chief Financial Officer
Slide 92: Financial Highlights
FINANCIAL Highlights Solid financial foundation built upon steady performance Sustainable business model with high visibility to revenue growth and improving margins 03 Disciplined capital allocation prioritizing free cash flow sustainability, educational platform development, and synergistic M&A Co
Slide 93: Solid financial foundation
01 Solid financial foundation(1) $1.04 BILLION FY20 Revenue 4.5% Four Year CAGR $62 MILLION FY20 Adjusted Operating Income(4) 33% FY20 Gross Margin(2) $46 MILLION Average capital expenditures per year(5) 12% FY20 Adjusted EBITDA Margin(3) $58 MILLION Average free cash flow generated per year(5) Adju
Slide 94: Sustainable business model
02 Sustainable business model Growing student enrollments Total Enrollment (K)(1) Consistent & increasing growth in General Education 195.4 111.8114.0121.1124.4 0.91.67.113.6 30.8 164.6 Career Learning in early stage of growth 110.9112.4114.0110.8 Q1 FY2017Q1 FY2018Q1 FY2019Q1 FY2020Q1 FY2021 Career
Slide 95: Consistent revenue growth
02 Consistent revenue growth Visible runway for long-term growth Massive addressable market Total Revenue ($M) FYE 6/30 889918 1,0161,041 1,457 – 1,485 Increasing acceptance of online learning Career Learning programs expected to drive higher growth FY2017FY2018FY2019FY2020FY2021G High barriers to e
Slide 96: Improving margins
02 Improving margins… Strong track record of performance Adj. Operating Income ($M) FYE 6/30 Adj. Operating Income Margin (%) FYE 6/30 120 – 130 8% – 9% 77 65 4962 39 7% 6% 5% 4%6% FY2017FY2018FY2019FY2020FY2021G FY2017FY2018FY2019FY2020FY2021G Depicts high-low for guidance or target range Excluding
Slide 97: … and free cash flow
02 … and free cash flow Strong track record of performance Adj. EBITDA ($M) FYE 6/30 200 – 210 Free Cash Flow ($M) FYE 6/30 120 – 130 93 110 122 134 142 62 12848 41 35 FY2017FY2018FY2019FY2020FY2021 Target FY2017FY2018FY2019FY2020FY2021 Target Depicts high-low for guidance or target range Excluding
Slide 98: Strong balance sheet & liquidity
03 Strong balance sheet & liquidity Flexibility to maintain long-term low leverage ratios Select balance sheet and other information For the Three Months Ended September 30, 2020 ($M) Cash and Cash Equivalents$308.8 Accounts Receivable, net419.6 Accounts Payable92.0 Total Debt Obligations452.8 Revol
Slide 99: Disciplined capital allocation
04 Disciplined capital allocation 99
Slide 100: Strategic approach to M&A
100 Strategic approach to M&A Strategic Criteria Focus on businesses that align to strategy & create long-term value Operates in $1B+ or fast-growing nascent addressable market Strong U.S. presence Cultural fit & experienced management team Financial Filters Revenue growth relative to business size
Slide 101: Acquisition metrics: MedCerts and Tech Elevator
04 Purchase Price $23.5M $70.0M** Revenue* ~$11M ~$19M Revenue Growth* 47% 38% Gross Margins* 50%+ 80%+ Adj. EBITDA* $2M $4M & EBITDA positive businesses Companies expand addressable market *Stand-alone results annual trailing twelve months through September 30, 2020 **Plus contingent considerationB
Slide 102: Financial guidance
04 Financial guidance Acquisitions driving improved revenue outlook and expected to be immediately accretive to Adj. OI excluding purchase accounting Acquisition Impacts Revenue: Original FY21 Guidance Updating and Reaffirming FY21 Guidance* ~ $16M – $19M Total Revenue ($B) $1.45B – $1.47B $1.457B –
Slide 103: Compelling financial targets
05 Compellingfinancial targets Updated FY21 Guidance & Long-term Financial Outlook Key drivers and assumptions for long-term outlook Large addressable markets General education business generating significant free cash flow Higher growth Career Learning business driving scale & operating leverage Ne
Slide 104: Compelling financial targets: margins
05 Compellingfinancial targets Growth in career learning adds scale to realize gross margin improvement and operating leverage Drivers of improved margins Investments in automation and process improvements Machine learning Robotic process automation Conversational AI chat bots Lower curriculum costs
Slide 105: Financial Highlights
FINANCIAL Highlights Solid financial foundation built upon steady performance Sustainable business model with high visibility to revenue growth and improving margins 03 Disciplined capital allocation prioritizing free cash flow sustainability, educational platform development, and synergistic M&A Co
Slide 106: Thank you
Thank you Question & Answer Session Stride
Slide 107: Appendix
Appendix Stride
Slide 108: Adj. Operating Income and EBITDA to GAAP Reconciliation
ADJ. OPERATING INCOME AND EBITDA TO GAAP FINANCIALS Reconciliation (In millions, expect percentages) 2017 2018 20202021 2019 (excl. Galvanize) Revenues $888.5 $917.7 $1,015.8 $1,040.8 $11.0 $1,029.8 $1,457.0 $1,485.0 Net Income (loss) (0.5) 27.4 37.2 24.5 (18.1) 42.6 Loss from equity method investme
Slide 109: Free Cash Flow to GAAP Reconciliation
FREE CASH FLOW TO GAAP FINANCIALS Reconciliation Year Ended June 30 (In millions)201720182019 2020 As ReportedGalvanizeAs Reported (excl. Galvanize) 109
Slide 110: Acquisitions Reconciliation
ACQUISITIONS Reconciliation October 1 through September 30 110