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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33883

Stride, Inc.

(Exact name of registrant as specified in its charter)


Delaware		95-4774688
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

11720 Plaza America Drive, 9^th Floor
Reston, VA 20190		(703) 483-7000
(Address of Principal Executive Offices, including Zip Code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	LRN	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧

Accelerated filer ◻

Non-accelerated filer ◻

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of January 23, 2026, the Registrant had 42,580,290 shares of common stock, $0.0001 par value per share outstanding.

Table of Contents

Stride, Inc.

Form 10-Q

For the Quarterly Period Ended December 31, 2025

Index

		Page
		Number

PART I.	Financial Information
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40

PART II.	Other Information
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

Signatures		43

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


		December 31,		June 30,
		2025		2025
					(audited)
		(In thousands except share and per share data)
ASSETS
Current assets
Cash and cash equivalents		$	497,098	$	782,497
Accounts receivable, net of allowance of $31,507 and $31,124			868,964		559,646
Inventories, net			17,942		37,570
Prepaid expenses			74,384		35,579
Marketable securities			128,615		202,769
Other current assets			13,314		14,673
Total current assets			1,600,317		1,632,734
Property and equipment, net			110,580		78,582
Capitalized software, net			79,084		75,314
Capitalized curriculum development costs, net			61,066		58,584
Intangible assets, net			14,416		18,227
Goodwill			246,676		246,676
Deferred tax asset			—		26,377
Deposits and other assets			194,411		157,465
Total assets		$	2,306,550	$	2,293,959
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	45,739	$	43,962
Accrued liabilities			63,369		103,276
Accrued compensation and benefits			43,409		74,939
Deferred revenue			5,084		26,995
Current portion of finance lease liability			58,459		42,316
Current portion of operating lease liability			4,073		11,391
Total current liabilities			220,133		302,879
Long-term finance lease liability			65,986		44,567
Long-term operating lease liability			10,566		35,164
Long-term debt			417,182		416,322
Deferred tax liability			26,533		—
Other long-term liabilities			18,309		15,408
Total liabilities			758,709		814,340
Commitments and contingencies
Stockholders’ equity
Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding			—		—
Common stock, par value $0.0001; 100,000,000 shares authorized; 49,194,315 and 48,852,419 shares issued; and 42,586,782 and 43,517,676 shares outstanding, respectively			4		4
Additional paid-in capital			724,366		735,711
Accumulated other comprehensive loss			(63)		(67)
Retained earnings			1,014,730		846,453
Treasury stock of 6,607,533 and 5,334,743 shares at cost, respectively			(191,196)		(102,482)
Total stockholders’ equity			1,547,841		1,479,619
Total liabilities and stockholders' equity		$	2,306,550	$	2,293,959

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


		Three Months Ended December 31,						Six Months Ended December 31,
		2025			2024			2025			2024

		(In thousands except share and per share data)
Revenues		$	631,261		$	587,211		$	1,252,145		$	1,138,295
Instructional costs and services			371,630			347,353			750,391			682,584
Gross margin			259,631			239,858			501,754			455,711
Selling, general, and administrative expenses			112,779			114,758			285,919			283,267
Income from operations			146,852			125,100			215,835			172,444
Interest expense, net			(2,814)			(2,670)			(5,888)			(5,023)
Other income (expense), net			(10,764)			7,330			6,148			16,108
Income before income taxes and income (loss) from equity method investments			133,274			129,760			216,095			183,529
Income tax expense			(33,966)			(33,361)			(48,388)			(44,638)
Income (loss) from equity method investments			169			(6)			570			(1,616)
Net income attributable to common stockholders		$	99,477		$	96,393		$	168,277		$	137,275
Net income attributable to common stockholders per share:
Basic		$	2.31		$	2.24		$	3.89		$	3.20
Diluted		$	2.12		$	2.03		$	3.49		$	2.93
Weighted average shares used in computing per share amounts:
Basic			43,074,993			43,017,190			43,223,473			42,942,750
Diluted			46,863,391			47,462,688			48,265,257			46,905,355

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three Months Ended December 31,					Six Months Ended December 31,
		2025			2024		2025			2024

		(In thousands)
Net income		$	99,477		$	96,393	$	168,277		$	137,275
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment			1			15		4			(1)
Comprehensive income attributable to common stockholders		$	99,478		$	96,408	$	168,281		$	137,274

See accompanying notes to unaudited condensed consolidated financial statements.

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STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	Stride, Inc. Stockholders' Equity
(In thousands except share data)	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Retained		Treasury Stock
	Shares		Amount			Capital			Income (Loss)			Earnings		Shares		Amount			Total
Balance, June 30, 2025	48,852,419		$	4		$	735,711		$	(67)		$	846,453	(5,334,743)		$	(102,482)		$	1,479,619
Net income	—			—			—			—			68,800	—			—			68,800
Foreign currency translation adjustment	—			—			—			3			—	—			—			3
Stock-based compensation expense	—			—			10,393			—			—	—			—			10,393
Vesting of performance share units, net of tax withholding	241,863			—			—			—			—	—			—			—
Issuance of restricted stock awards	176,212			—			—			—			—	—			—			—
Forfeiture of restricted stock awards	(18,377)			—			—			—			—	—			—			—
Repurchase of restricted stock for tax withholding	(57,296)			—			(31,407)			—			—	—			—			(31,407)
Balance, September 30, 2025	49,194,821		$	4		$	714,697		$	(64)		$	915,253	(5,334,743)		$	(102,482)		$	1,527,408
Net income	—			—			—			—			99,477	—			—			99,477
Foreign currency translation adjustment	—			—			—			1			—	—			—			1
Stock-based compensation expense	—			—			10,245			—			—	—			—			10,245
Purchase of treasury stock, net of tax	—			—			—			—			—	(1,272,790)			(88,714)			(88,714)
Vesting of performance share units, net of tax withholding	3,549			—			—			—			—	—			—			—
Issuance of restricted stock awards	25,036			—			—			—			—	—			—			—
Forfeiture of restricted stock awards	(23,368)			—			—			—			—	—			—			—
Repurchase of restricted stock for tax withholding	(5,723)			—			(576)			—			—	—			—			(576)
Balance, December 31, 2025	49,194,315		$	4		$	724,366		$	(63)		$	1,014,730	(6,607,533)		$	(191,196)		$	1,547,841

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	Stride, Inc. Stockholders' Equity
(In thousands except share data)	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Retained		Treasury Stock
	Shares		Amount			Capital			Income (Loss)			Earnings		Shares		Amount			Total

Balance, June 30, 2024	48,576,164		$	4		$	720,033		$	(42)		$	558,512	(5,334,743)		$	(102,482)		$	1,176,025
Net income	—			—			—			—			40,882	—			—			40,882
Foreign currency translation adjustment	—			—			—			(16)			—	—			—			(16)
Stock-based compensation expense	—			—			8,592			—			—	—			—			8,592
Vesting of performance share units, net of tax withholding	135,921			—			—			—			—	—			—			—
Issuance of restricted stock awards	278,234			—			—			—			—	—			—			—
Forfeiture of restricted stock awards	(14,037)			—			—			—			—	—			—			—
Repurchase of restricted stock for tax withholding	(54,345)			—			(11,137)			—			—	—			—			(11,137)
Balance, September 30, 2024	48,921,937		$	4		$	717,488		$	(58)		$	599,394	(5,334,743)		$	(102,482)		$	1,214,346
Net income	—			—			—			—			96,393	—			—			96,393
Foreign currency translation adjustment	—			—			—			15			—	—			—			15
Stock-based compensation expense	—			—			8,110			—			—	—			—			8,110
Vesting of performance share units, net of tax withholding	3,437			—			—			—			—	—			—			—
Issuance of restricted stock awards	18,998			—			—			—			—	—			—			—
Forfeiture of restricted stock awards	(47,472)			—			—			—			—	—			—			—
Repurchase of restricted stock for tax withholding	(6,557)			—			(759)			—			—	—			—			(759)
Balance, December 31, 2024	48,890,343		$	4		$	724,839		$	(43)		$	695,787	(5,334,743)		$	(102,482)		$	1,318,105

See accompanying notes to unaudited condensed consolidated financial statements.

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STRIDE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Six Months Ended December 31,
		2025			2024

		(In thousands)
Cash flows from operating activities
Net income		$	168,277		$	137,275
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense			60,187			55,529
Stock-based compensation expense			20,489			16,374
Deferred income taxes			54,448			9,289
Provision for credit losses			8,318			9,624
Amortization of fees on debt			859			847
Noncash operating lease expense			3,998			6,222
Other			(623)			1,869
Changes in assets and liabilities:
Accounts receivable			(317,628)			(119,416)
Inventories, prepaid expenses, deposits and other current and long-term assets			(549)			(4,084)
Accounts payable			3,804			(8,983)
Accrued liabilities			(41,737)			20,248
Accrued compensation and benefits			(31,315)			(20,303)
Operating lease liability			(13,466)			(6,437)
Deferred revenue and other liabilities			(19,006)			(16,694)
Net cash provided by (used in) operating activities			(103,944)			81,360
Cash flows from investing activities
Purchase of property and equipment			(52)			(1,153)
Capitalized software development costs			(24,691)			(18,601)
Capitalized curriculum development costs			(12,924)			(9,841)
Other acquisitions, loans and investments, net of distributions			(50,294)			(950)
Proceeds from the maturity of marketable securities			183,426			140,740
Purchases of marketable securities			(130,138)			(145,865)
Net cash used in investing activities			(34,673)			(35,670)
Cash flows from financing activities
Repayments on finance lease obligations			(25,939)			(16,714)
Purchase of treasury stock			(88,645)			—
Repurchase of restricted stock for income tax withholding			(32,198)			(11,963)
Net cash used in financing activities			(146,782)			(28,677)
Net change in cash, cash equivalents and restricted cash			(285,399)			17,013
Cash, cash equivalents and restricted cash, beginning of period			782,497			500,614
Cash, cash equivalents and restricted cash, end of period		$	497,098		$	517,627

Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st:
Cash and cash equivalents		$	497,098		$	515,049
Deposits and other assets (restricted cash)			—			2,578
Total cash, cash equivalents and restricted cash		$	497,098		$	517,627

See accompanying notes to unaudited condensed consolidated financial statements.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Business

Stride, Inc., together with its subsidiaries (“Stride” or the “Company”) is a technology company providing an educational platform to deliver online learning to students throughout the U.S. The brand reflects the Company’s continued growth into lifelong learning, regardless of a student’s age or location. The Company’s platform hosts products and services 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. The Company’s clients are primarily public and private schools, school districts, and charter boards. Additionally, it provides solutions to employers, government agencies and consumers. These products and services are provided through two lines of revenue:

●

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

2. Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2025, the condensed consolidated statements of operations and comprehensive income for the three and six months ended December 31, 2025 and 2024, the condensed consolidated statements of cash flows for the six months ended December 31, 2025 and 2024, and the condensed consolidated statements of stockholders’ equity for the three and six months ended December 31, 2025 and 2024 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations for the periods presented. The results for the three and six months ended December 31, 2025 are not necessarily indicative of the results to be expected for the year ending June 30, 2026, for any other interim period or for any other future fiscal year. The condensed consolidated balance sheet as of June 30, 2025 has been derived from the audited consolidated financial statements at that date.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, the Company does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these statements include all

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s condensed consolidated results of operations, financial position and cash flows. Preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This quarterly report on Form 10-Q should be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 5, 2025 (the “Annual Report”), which contains the Company’s audited financial statements for the fiscal year ended June 30, 2025.

3. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and for interim periods for fiscal years beginning after December 15, 2025. The Company will review the extent of new disclosures necessary in the coming quarters, prior to implementation during fiscal year 2026. Other than additional disclosure, the Company does not expect a change to its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). This update provides investors with enhanced detail regarding components of expenses presented in the income statement, aiming to improve transparency and enable precise understanding of a company’s cost structure. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company will review the extent of new disclosures necessary in the coming quarters, prior to implementation during fiscal year 2028. Other than additional disclosure, the Company does not expect a change to its condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The update provides an optional practical expedient for public companies to estimate expected credit losses on current accounts receivable and contract assets arising from ASC 606 transactions by assuming that conditions at the balance sheet date remain unchanged over the assets’ remaining lives. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 (including interim periods), with early adoption permitted. The Company will review the impact of the ASU and whether to elect the practical expedient upon adoption in fiscal year 2027.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 is intended to modernize and clarify the accounting for internal-use software, including updates to capitalization guidance that remove references to project stages and replaces them with the concept of a probable-to-complete recognition threshold. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

Segment Reporting

Stride, Inc. operates 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 for students and adults.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company’s primary revenue source is derived from educational products and services provided through its General Education and Career Learning lines of revenue.

Operating as a cohesive technology company, the Company offers its products and services across the United States via an integrated online platform, using a centralized management approach for all educational and support functions.

The Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”). The CODM evaluates the Company’s performance based on consolidated net income. This measure aligns with Stride’s consolidated financial statements and serves as the basis for resource allocation and performance assessment. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM monitors profitability and strategic growth initiatives on a consolidated basis without disaggregating profit or loss into separate operating segments. The Company determined there are no significant segment expenses that require a separate disclosure. The consolidated net income is used to assess overall company performance, benchmark against industry standards, and identify profitability trends, which guides resource allocation and investment in expansion and technology upgrades. The CODM also evaluates company performance using operating income. Operating income provides the CODM with a focused view of the company’s profitability excluding the effects of financing activities, tax strategies, and other non-operating items. This measure enables the CODM to assess operational efficiency, monitor performance trends, and evaluate the effectiveness of strategies aimed at revenue generation and cost management.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration it expects 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 the Company provides 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. General Education products and services are focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge. Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, healthcare and general business, for students in middle school through high school and adult learners.

The majority of the Company’s contracts are with the following types of customers:

●

a virtual or blended school whereby the amount of revenue is primarily determined by funding the school receives;

●

a school or individual who licenses certain curriculum on a subscription or course-by-course basis; or

●

an enterprise who contracts with the Company to provide online job training.

Funding-based Contracts

The Company provides an integrated package of systems, services, products, and professional expertise that is administered together to support a virtual or blended public school. Contracts generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the fiscal year. Customers of these programs can obtain administrative support, information technology, academic support services, online curriculum, learning systems platforms and instructional services under the terms of a negotiated service agreement. The schools

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

receive funding on a per student basis from the state in which the public school or school district is located. Shipments of materials for schools that occur in the fourth fiscal quarter and the upcoming school year are recorded in deferred revenue.

The Company generates revenues under contracts with virtual and blended public schools and includes the following components, where required:

●

providing each of a school’s students with access to the Company’s 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. In certain contracts, revenues are determined directly by per enrollment funding.

To determine the ratable amount of revenue to recognize in a fiscal quarter, the Company estimates the total expected funds each school will receive in a particular school year. Total funds for a school are primarily a function of the number of students enrolled in the school and established per enrollment funding levels, which are generally published on an annual basis by the state or school district. The Company reviews its estimates of funding periodically, and updates as necessary, by adjusting its year-to-date earned revenues to be proportional to the total expected revenues to be earned during the fiscal year. Actual school funding may vary from these estimates and the impact of these differences could impact the Company’s results of operations. Since the end of the school year coincides with the end of the fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for the Company’s services to the schools plus other costs the schools may incur). The Company’s reported results are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results of these audits are incorporated into the Company’s monthly funding estimates for the three and six months ended December 31, 2025 and 2024. Historically, aggregate funding estimates have differed from actual reimbursements, generally in the range of 2% of annual revenue or less, which may vary from quarter to quarter.

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. As the Company estimates funding for each school, it takes into account the state definition for count dates on which reported enrollment numbers will be used for per pupil funding. The parameters the Company considers in estimating funding for revenue recognition purposes include school district count definitions, withdrawal rates, new registrations, average daily attendance, special needs enrollment, academic progress, historical completion, student location, funding caps and other state specified categorical program funding.

Under the contracts where the Company provides products and services to schools, the Company is responsible for substantially all of the expenses incurred by the school and has generally agreed to absorb any operating losses of the schools in a given school year. These school operating losses represent the excess of costs incurred over revenues earned by the virtual or blended public school (the school’s expected funding), as reflected in its respective financial statements, including Company charges to the schools. To the extent a school does not receive sufficient funding for each student enrolled in the school, the school would still incur costs associated with serving the unfunded enrollment. If losses due to unfunded enrollments result in a net operating loss for the year that loss is reflected as a reduction in the revenues and net receivables that the Company collects from the school. A school net operating loss in one year does not necessarily mean the Company anticipates losing money on the entire contract with the school. However, a school’s net operating loss may reduce the Company’s ability to collect its management fees in full and revenues recognized are constrained to reflect the expected cash collections from such schools. The Company records the school’s estimated net operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Actual school net operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. For the three months ended December 31, 2025 and 2024, the Company’s revenues included an adjustment for net school operating losses at the schools of $4.1 million and $3.7 million, respectively, and $10.9 million and $8.7 million for the six months ended December 31, 2025 and 2024, respectively. Because the Company has agreed to absorb any operating losses of the schools, the Company records the expenses incurred by the school as both revenue and expense in the condensed consolidated statements of operations. During the three months ended December 31, 2025 and 2024, the Company recognized revenue associated with these schools of $172.8 million

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

and $157.5 million, respectively, and for the six months ended December 31, 2025 and 2024, the Company recognized revenue of $342.9 million and $311.8 million, respectively.

Subscription-based Contracts

The Company provides certain online curriculum and services to schools and school districts under subscription agreements. Revenues from the licensing of curriculum under subscription arrangements are recognized on a ratable basis over the subscription period. Revenues from professional consulting, training and support services are deferred and recognized ratably over the service period.

In addition, the Company contracts with individual customers who have access for one to two years to company-provided online curriculum and generally prepay for services to be received. Adult learners enroll in courses that provide specialized training in a specific industry. Each of these contracts is considered to be one performance obligation. The Company recognizes these revenues ratably over the maximum term of the customer contract based on the defined contract price.

Enterprise Contracts

The Company provides online job training over a specified contract period to enterprises. Each of these contracts is considered to be one performance obligation. The Company recognizes these revenues based on the number of students trained during the term of the contract based on the defined contract price.

Disaggregated Revenues

The revenue recognition related to the types of contracts discussed above can span both of the Company’s lines of revenue as shown below. For example, a funding-based contract may include both General Education and Career Learning students. In total, there is one performance obligation and revenue is recognized over the fiscal year. The revenue is then disaggregated between General Education and Career Learning based on the Company’s estimated full-year enrollment totals of each category. During the three months ended December 31, 2025 and 2024, approximately 95% and 94%, respectively, of the Company’s General Education revenues, and 100% and 100%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. During the six months ended December 31, 2025 and 2024, approximately 95% and 94%, respectively, of the Company’s General Education revenues, and 100% and 100%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts.

The following table presents the Company’s revenues disaggregated based on its two lines of revenue for the three and six months ended December 31, 2025 and 2024:


	Three Months Ended December 31,				Six Months Ended December 31,
	2025		2024		2025		2024

	(In thousands)
General Education	$	341,397	$	354,315	$	704,513	$	683,722
Career Learning
Middle - High School		275,590		213,079		517,090		411,965
Adult		14,274		19,817		30,542		42,608
Total Career Learning		289,864		232,896		547,632		454,573
Total Revenues	$	631,261	$	587,211	$	1,252,145	$	1,138,295

Concentration of Customers

During each of the three and six months ended December 31, 2025 and 2024, the Company had no contracts that represented greater than 10% of total revenues.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Contract Balances

The timing of revenue recognition, invoicing, and cash collection results in accounts receivable, unbilled receivables (a contract asset) and deferred revenue (a contract liability) in the condensed consolidated balance sheets. Accounts receivable are recorded when there is an executed customer contract and the customer is billed. An allowance is recorded to reflect expected losses at the time the receivable is recorded. The collectability of outstanding receivables is evaluated regularly by the Company to determine if additional allowances are needed. Unbilled receivables are created when revenue is earned prior to the customer being billed. Deferred revenue is recorded when customers are billed or cash is collected in advance of services being provided.

The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows:


	December 31,		June 30,		June 30,
	2025		2025		2024

	(In thousands)
Accounts receivable	$	868,964	$	559,646	$	472,754
Unbilled receivables (included in accounts receivable)		57,088		19,902		19,499
Deferred revenue		5,084		26,995		35,742
Deferred revenue, long-term (included in other long-term liabilities)		186		327		1,097

The difference between the opening and closing balance of the accounts receivable and unbilled receivables relates to the timing of the Company’s billing in relation to month end and its contracts. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the term of the contract, as well as changes in the estimates of variable consideration. Typically, each of these balances are at their highest during the first quarter of the fiscal year and lowest at the end of the fiscal year. The amount of revenue recognized during the three months ended December 31, 2025 and 2024 that was included in the previous October 1^st deferred revenue balance was $13.6 million and $20.1 million, respectively. The amount of revenue recognized during the six months ended December 31, 2025 and 2024 that was included in the previous July 1st deferred revenue balance was $21.3 million and $24.2 million, respectively. During the three months ended December 31, 2025 and 2024, the Company recorded revenues of $6.0 million and $9.4 million, respectively, and $6.6 million and $9.6 million, respectively, during the six months ended December 31, 2025 and 2024, related to performance obligations satisfied in prior periods.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the majority of its contracts, the Company’s performance obligations are satisfied over time, as the Company delivers, and the customer receives the services, over the service period of the contract. The Company’s payment terms are generally net 30 or net 45, but can vary depending on the customer or when the school receives its funding from the state.

The Company has elected, as a practical expedient, not to report the value of unsatisfied performance obligations for contracts with customers that have an expected duration of one year or less. The amount of unsatisfied performance obligations for contracts with customers which extend beyond one year as of December 31, 2025 was $0.2 million.

Significant Judgments

The Company determined that the majority of its contracts with customers contain one performance obligation. The Company markets the products and services as an integrated package building off its curriculum offerings. It does not market distinct products or services to be sold independently from the curriculum offering. The Company provides the

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

significant service of integrating the goods and services into the operation of the school and education of its students, for which the customer has contracted.

The Company has determined that the time elapsed method is the most appropriate measure of progress towards the satisfaction of the performance obligation. Generally, the Company delivers the integrated products and services package over the course of the Company’s fiscal year. This package includes enrollment, marketing, teacher training, etc. in addition to the core curriculum and instruction. All of these activities are necessary and contribute to the overall education of its students, which occurs evenly throughout the year. Accordingly, the Company recognizes revenue on a straight-line basis.

The Company determined that the expected value method is the most appropriate method to account for variable consideration and the Company’s forecasting method is an estimation process that uses probability to determine expected funding. On a monthly basis, the Company estimates the total funds each school will receive in a particular school year and the amount of full-year school revenues and operating expenses to determine the amount of revenue the Company will recognize. Enrollment and state funding rates are key inputs to this estimate. The estimates are adjusted monthly, and a cumulative catch-up adjustment is recorded to revenue as necessary to reflect the total revenues earned to date to be proportional to the total revenues to be earned in the fiscal year. The Company builds in known constraints (i.e., enrollment, funding, net operating losses, etc.) into the estimate of the variable consideration to record the most probable amount.

Sales Taxes

Sales tax collected from customers is excluded from revenues. Collected but unremitted sales tax is included as part of accrued liabilities in the condensed consolidated balance sheets. Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax.

Consolidation

The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Investments in Marketable Securities

The Company’s marketable securities generally consist of bonds and other securities which are classified as held-to-maturity. The securities with maturities between three months and one year are classified as short-term and are included in marketable securities on the condensed consolidated balance sheets. The securities with maturities greater than one year are classified as long-term and are included in deposits and other assets on the condensed consolidated balance sheets. Held-to-maturity securities are recorded at their amortized cost. The Company recorded interest income of $6.8 million and $7.4 million for the three months ended December 31, 2025 and 2024, respectively, and $16.3 million and $15.6 million for the six months ended December 31, 2025 and 2024, respectively. This activity is recorded within other income (expense) within the condensed consolidated statements of operations.

The Company reviews the held-to-maturity debt securities for declines in fair value below the amortized cost basis under the credit loss model of Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses (“ASC 326”). Any decline in fair value related to a credit loss is recognized in the condensed consolidated statements of operations, with the amount of the loss limited to the difference between fair value and amortized cost. As of December 31, 2025 and June 30, 2025, the allowance for credit losses recognized related to held-to-maturity debt securities was zero.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 31, 2025, the Company’s marketable securities consisted of investments in corporate bonds, U.S. treasury notes and commercial paper. The short-term and long-term portions were $128.6 million and $50.3 million, respectively. The maturities of the Company’s long-term marketable debt securities range from one to two years. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands).


				Allowance for		Net Carrying		Gross Unrealized
		Amortized Cost		Credit Losses		Amount		Gains (Losses)		Fair Value
Corporate Bonds	$	57,110	$	-	$	57,110	$	139	$	57,249
U.S. Treasury Notes		34,403		-		34,403		51		34,454
Commercial Paper		87,399		-		87,399		(12)		87,387
Total	$	178,912	$	-	$	178,912	$	178	$	179,090

As of June 30, 2025, the Company’s marketable securities consisted of investments in corporate bonds, U.S. treasury notes and commercial paper. The short-term and long-term portions were $202.8 million and $26.1 million, respectively. The maturities of the Company’s long-term marketable debt securities range from one to two years. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands).


				Allowance for		Net Carrying		Gross Unrealized
		Amortized Cost		Credit Losses		Amount		Gains (Losses)		Fair Value
Corporate Bonds	$	48,837	$	-	$	48,837	$	97	$	48,934
U.S. Treasury Notes		35,816		-		35,816		27		35,843
Commercial Paper		144,257		-		144,257		(6)		144,251
Total	$	228,910	$	-	$	228,910	$	118	$	229,028

In addition to bonds and other held-to-maturity securities, the Company’s marketable securities also include investments in publicly-held equity securities. The publicly-held equity securities have readily determinable fair values, are included in deposits and other assets on the condensed consolidated balance sheets, and are measured at fair value with changes recognized in other income (expense) within the condensed consolidated statement of operations.

As of December 31, 2025 and June 30, 2025, the Company’s investments in publicly-held equity securities were $55.2 million and $19.9 million, respectively. The Company recorded a net unrealized loss of $17.8 million and $11.1 million for the three and six months ended December 31, 2025, respectively, related to changes in the fair value of the underlying securities of its minority equity investments. The Company recorded unrealized gains (losses) of zero for the three and six months ended December 31, 2024.

Allowance for Credit Losses

The Company maintains an allowance for credit losses primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company maintains an allowance under ASC 326 based on historical losses, changes in payment history, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions.

The Company’s allowance for credit losses increased from $31.1 million as of June 30, 2025 to $31.5 million as of December 31, 2025. The increase of $0.4 million is due primarily to a $8.3 million current year provision, less $7.9 million in amounts written off.

The Company writes-off accounts receivable based on the age of the receivable and the facts and circumstances surrounding the customer and reasons for non-payment. Actual write-offs might differ from the recorded allowance.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Inventories

Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to virtual and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of December 31, 2025 and June 30, 2025, $13.0 million and $13.6 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $7.6 million and $6.8 million at December 31, 2025 and June 30, 2025, respectively.

Other Current Assets

Other current assets primarily include textbooks, curriculum materials and other supplies which are expected to be returned upon the completion of the school year. Materials not returned are expensed as part of instructional costs and services.

Capitalized Software-as-a-Service Costs

The Company capitalizes Software-as-a-Service (“SaaS”) license and implementation costs incurred in cloud computing contracts that are service contracts if they meet certain requirements. Those requirements are similar to the requirements for capitalizing costs incurred to develop internal-use software. Capitalization of SaaS costs ceases once the project is substantially complete and the software is ready for its intended purpose. Amortization is computed using the straight-line method over the term of the associated hosting contract, usually between three and five years. The Company classifies its SaaS implementation costs as current or long-term based on the terms of the associated hosting contract. SaaS implementation costs deemed short-term are included in prepaid expenses, and those deemed long-term are included in deposits and other assets, on the condensed consolidated balance sheets. Impairment is recognized when it is no longer probable that the SaaS project will be completed and placed in service.

As of December 31, 2025 and June 30, 2025, the Company recorded $29.4 million and $17.5 million, respectively, of costs related to SaaS implementation within prepaid expenses in the condensed consolidated balance sheets. As of December 31, 2025 and June 30, 2025, the Company recorded $26.5 million and $43.3 million, respectively, of costs related to SaaS implementation within deposits and other assets in the condensed consolidated balance sheets.

During the three months ended December 31, 2025 and 2024, the Company amortized $4.5 million and $0.9 million, respectively, and $6.7 million and $1.6 million, respectively, during the six months ended December 31, 2025 and 2024, of SaaS implementation costs to instructional costs and services. SaaS implementation costs amortized to selling, general and administrative expenses were $5.1 million and $3.9 million during the three months ended December 31, 2025 and 2024, respectively, and $9.5 million and $8.2 million, respectively, during the six months ended December 31, 2025 and 2024. There were no material impairments of SaaS implementation costs during the three and six months ended December 31, 2025 and 2024, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful life of the asset (or the lesser of the term of the lease and the estimated useful life of the asset under the finance lease). Amortization of assets capitalized under finance lease arrangements is included in depreciation expense. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. The determination of the lease term is discussed below under “Leases.”

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Property and equipment are depreciated over the following useful lives:


		Useful Life
Computer hardware		3 - 7 years
Computer software		3 - 5 years
Financed computers and printers		3 years
Web site development		3 years
Office equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Shorter of useful life or term of the lease

The Company makes an estimate of unreturned student computers and printers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $1.5 million and $1.3 million for the three months ended December 31, 2025 and 2024, respectively, and $2.4 million and $2.2 million for the six months ended December 31, 2025 and 2024, respectively, related to unreturned student computers and printers.

Depreciation expense, including accelerated depreciation, related to property and equipment reflected in instructional costs and services for the three months ended December 31, 2025 and 2024 was $14.0 million and $9.8 million, respectively, and $25.3 million and $17.3 million, respectively, during the six months ended December 31, 2025 and 2024. Depreciation expense related to property and equipment reflected in selling, general, and administrative expenses for the three months ended December 31, 2025 and 2024 was $0.7 million and $0.7 million, respectively, and $1.5 million and $1.4 million, respectively, during the six months ended December 31, 2025 and 2024.

The Company fully expenses computer peripheral equipment (e.g., keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $0.8 million and $1.1 million for the three months ended December 31, 2025 and 2024, respectively, and $3.3 million and $3.1 million for the six months ended December 31, 2025 and 2024, respectively, and are recorded as instructional costs and services.

Capitalized Software Costs

The Company develops software for internal use. Software development costs incurred during the application development stage are capitalized. The Company amortizes these costs over the estimated useful life of the software, which is generally three years. Capitalized software development costs are stated at cost less accumulated amortization.

Capitalized software additions totaled $24.7 million and $18.6 million for the six months ended December 31, 2025 and 2024, respectively. The Company recorded amortization expense related to capitalized software of $6.7 million and $8.0 million during the three months ended December 31, 2025 and 2024, respectively, and $14.4 million and $18.9 million during the six months ended December 31, 2025 and 2024, respectively, within instructional costs and services. Amortization expense related to capitalized software reflected in selling, general, and administrative expenses during the three months ended December 31, 2025 and 2024 was $3.1 million and $2.1 million, respectively, and $6.0 million and $4.0 million, respectively, during the six months ended December 31, 2025 and 2024.

Capitalized Curriculum Development Costs

The Company internally develops curriculum, which is primarily provided as online content and accessed via the Internet. The Company also creates textbooks and other materials that are complementary to online content.

The Company capitalizes curriculum development costs incurred during the application development stage, as well as the design and deployment phases of the project. As a result, a significant portion of the Company’s courseware development costs qualify for capitalization due to the concentration of its development efforts on the content of the courseware. Capitalization ends when a course is available for general release to its customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs are amortized is generally five years.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Total capitalized curriculum development additions were $12.9 million and $9.8 million for the six months ended December 31, 2025 and 2024, respectively. These amounts are recorded on the condensed consolidated balance sheets net of amortization charges. Amortization expense for the three months ended December 31, 2025 and 2024 was $4.6 million and $4.2 million, respectively, and $9.3 million and $8.8 million for the six months ended December 31, 2025 and 2024, respectively, and is recorded in instructional costs and services.

Leases

The Company’s principal leasing activities include computers and peripherals, classified as finance leases, and facilities, classified as operating leases.

Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease:

●

the lease transfers ownership of the asset at the end of the lease;

●

the lease grants an option to purchase the asset which the lessee is expected to exercise;

●

the lease term reflects a major part of the asset’s economic life;

●

the present value of the lease payments equals or exceeds the fair value of the asset; or

●

the asset is specialized with no alternative use to the lessor at the end of the term.

Finance Leases

The Company enters into agreements to finance the purchase of computers and peripherals. Individual leases typically include 3-year payment terms. The Company pledges the assets financed to secure the outstanding leases.

Operating Leases

The Company enters into agreements for facilities that serve as offices for its headquarters and school operations. Lease terms vary between 1 and 8 years. Certain leases include renewal options, usually based upon current market rates, as well as termination rights. The Company performs an evaluation of each lease to determine if the lease payments included in the renewal option should be included in the initial measurement of the lease liability.

Discount Rate

The present value of the lease payments is calculated using either the rate implicit in the lease, or the lessee’s incremental borrowing rate, over the lease term. For the majority of the Company’s finance and operating leases, the stated rate is not defined within the lease terms. Therefore, the Company uses its incremental borrowing rate as the discount rate. The incremental borrowing rate is defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment and is calculated using comparative credit ratings.

Policy Elections

Short-term Leases

The Company has elected as an on-going accounting policy election not to record a right-of-use asset or lease liability on its short-term facility leases of 12 months or less, and will expense its lease payments on a straight-line basis over the lease term. The accounting policy election is made by class of underlying asset to which the right of use relates. The Company has elected to apply the accounting policy election only to operating leases.

Income Taxes

Deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. The net deferred tax asset is reduced by a valuation

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized.

Goodwill and Intangible Assets

The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended December 31, 2025 and 2024 was $1.9 million and $2.5 million, respectively, and $3.8 million and $5.1 million for the six months ended December 31, 2025 and 2024, respectively, and is included within selling, general, and administrative expenses in the condensed consolidated statements of operations. Future amortization of intangible assets is expected to be $3.5 million, $5.9 million, $4.1 million, $0.3 million, and $0.2 million in the fiscal years ending June 30, 2026 through June 30, 2030, respectively, and $0.2 million thereafter.

The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset.

The Company has one reporting unit. The process for testing goodwill and intangible assets with indefinite lives for impairment is performed annually, as well as when an event triggering impairment may have occurred. Companies are also allowed to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo the quantitative impairment test as part of their annual goodwill impairment process. The Company performs its annual assessment on May 31^st, which is then updated for any changes in condition as of June 30^th.

During the three and six months ended December 31, 2025 and 2024, there were no events or changes in circumstances that would indicate that the carrying amount of the goodwill was impaired.

The following table represents the balance of the Company’s intangible assets as of December 31, 2025 and June 30, 2025:


		December 31, 2025									June 30, 2025
($ in millions)		Gross Carrying Amount			Accumulated Amortization and Impairment			Net Carrying Value			Gross Carrying Amount			Accumulated Amortization and Impairment			Net Carrying Value
Trade names		$	70.6		$	(62.2)		$	8.4		$	70.6		$	(60.4)		$	10.2
Customer and distributor relationships			37.1			(34.8)			2.3			37.1			(33.7)			3.4
Developed technology			21.7			(18.2)			3.5			21.7			(17.3)			4.4
Other			1.4			(1.2)			0.2			1.4			(1.2)			0.2
Total		$	130.8		$	(116.4)		$	14.4		$	130.8		$	(112.6)		$	18.2

Impairment of Long-Lived Assets

Long-lived assets include property, equipment, right-of-use assets, capitalized curriculum and software developed or obtained for internal use. Management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset.

During the three and six months ended December 31, 2025 and 2024, there were no events or changes in circumstances that may indicate that the carrying amount of the long-lived assets may not be recoverable.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Measurements are described in a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs used to measure fair value are:

Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date;

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and

Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

The carrying values reflected in the condensed consolidated balance sheets for cash and cash equivalents, receivables, and short-term obligations approximate their fair values, as they are largely short-term in nature. As of December 31, 2025, the estimated fair value of the long-term debt was $596.8 million. The Company estimated the fair value based on the quoted market prices in an inactive market (Level 2). The long-term debt, comprised of the Company’s convertible senior notes due 2027, is recorded at face value less the unamortized debt issuance costs on its condensed consolidated balance sheet, and is discussed in more detail in Note 6, “Debt.” As of December 31, 2025, the estimated fair value of the Company’s held-to-maturity marketable securities was $179.1 million. The Company estimated the fair value based on the quoted market prices in an inactive market (Level 2). As of December 31, 2025, the fair value of the Company’s publicly-held equity securities was $55.2 million. The fair value was determined using quoted prices in an active market (Level 1). The held-to-maturity marketable securities and publicly-held equity securities are discussed in more detail in Note 3, “Summary of Significant Accounting Policies - Investments in Marketable Securities.”

There was no activity related to the Company’s fair value measurements categorized as Level 3 in the valuation hierarchy, valued on a recurring basis, for the three and six months ended December 31, 2025 and 2024.

Net Income (Loss) Per Common Share

Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and vesting of all dilutive unvested restricted stock awards. The dilutive effect of stock options and restricted stock awards is determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options and restricted stock awards, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded as income tax expense when the stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are anti-dilutive. Common stock outstanding reflected in the Company’s condensed consolidated balance sheets includes restricted stock awards outstanding. The dilutive effect of the Company’s convertible debt is determined using the if-converted method when the Company’s stock is trading above the conversion price. However, based on the structure of the instrument and how it is settled upon conversion, it would produce a similar result as the previously applied treasury stock method.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following schedule presents the calculation of basic and diluted net income (loss) per share:


	Three Months Ended December 31,				Six Months Ended December 31,
	2025		2024		2025		2024

	(In thousands except share and per share data)
Basic net income per share computation:

Net income attributable to common stockholders	$	99,477	$	96,393	$	168,277	$	137,275
Weighted average common shares — basic		43,074,993		43,017,190		43,223,473		42,942,750
Basic net income per share	$	2.31	$	2.24	$	3.89	$	3.20

Diluted net income per share computation:

Net income attributable to common stockholders	$	99,477	$	96,393	$	168,277	$	137,275
Share computation:
Weighted average common shares — basic		43,074,993		43,017,190		43,223,473		42,942,750
Effect of dilutive restricted stock and convertible debt		3,788,398		4,445,498		5,041,784		3,962,605
Weighted average common shares — diluted		46,863,391		47,462,688		48,265,257		46,905,355
Diluted net income per share	$	2.12	$	2.03	$	3.49	$	2.93

For the three months ended December 31, 2025 and 2024, shares issuable in connection with restricted stock and convertible debt of 3,168,823 and 2,784,556 shares, respectively, were excluded from the diluted income per common share calculation because the effect would have been anti-dilutive. For the six months ended December 31, 2025 and 2024, 2,419,731 and 3,069,566 shares, respectively, were excluded. In connection with the issuance of the 1.125% Convertible Senior Notes due 2027 (“Notes”), the Company entered into capped call transactions (the “Capped Call Transactions”) as described further in Note 6, “Debt.” The Capped Call Transactions are intended to reduce the potential dilution to the Company’s common stock upon conversion of the Notes and/or to offset any cash payments the Company may be required to make in excess of the principal amount of the Notes.

Reclassification

Certain previous year amounts have been reclassified to conform with current year presentation, as related to the balance sheet.

4. Income Taxes

The provision for income taxes is based on earnings reported in the condensed consolidated financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense or benefit is measured by the change in the deferred income tax asset or liability during the period. For the three months ended December 31, 2025 and 2024, the Company’s effective income tax rate was 25.5% and 25.7%, respectively, and for the six months ended December 31, 2025 and 2024, the rate was 22.3% and 24.5%, respectively. The decrease in the effective income tax rate for the six months ended December 31, 2025, as compared to the effective tax rate for the six months ended December 31, 2024, was primarily due to stock-based compensation. As of December 31, 2025, and June 30, 2025, the balance of income taxes payable was zero and $52.6 million, respectively. Income taxes payable is recorded within accrued liabilities on the condensed consolidated balance sheets.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

5. Finance and Operating Leases

Finance Leases

The Company is a lessee under finance leases for computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of December 31, 2025 and June 30, 2025, the finance lease liability was $124.4 million and $86.9 million, respectively, with lease interest rates ranging from 4.25% to 6.72%. As of December 31, 2025 and June 30, 2025, the balance of the associated right-of-use assets was $103.5 million and $69.5 million, respectively. The right-of-use asset is recorded within property and equipment, net on the condensed consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations.

The Company entered into agreements with BALC and CSI Leasing in April 2020 and August 2022, respectively, to provide financing for its computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 4.75% to 6.72%, and a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate. The Company uses its incremental borrowing rate as the implied interest rate and the total lease payments to calculate its lease liability.

The following is a summary, as of December 31, 2025 and June 30, 2025, respectively, of the present value of the net minimum lease payments under the Company’s finance leases:


		December 31, 2025		June 30, 2025

		(in thousands)
2026		$	32,532	$	45,781
2027			56,457		33,864
2028			34,210		12,095
2029			8,174		297
2030			—		—
Total minimum payments			131,373		92,037
Less: imputed interest			(6,928)		(5,154)
Finance lease liability			124,445		86,883
Less: current portion of finance lease liability			(58,459)		(42,316)
Long-term finance lease liability		$	65,986	$	44,567

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Operating Leases

The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of December 31, 2025 and June 30, 2025, the operating lease liability was $14.6 million and $46.6 million, respectively. As of December 31, 2025 and June 30, 2025, the balance of the associated right-of-use assets was $7.8 million and $16.0 million, respectively. The right-of-use asset is recorded within deposits and other assets on the condensed consolidated balance sheets. Lease expense associated with the Company’s operating leases is recorded within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations.

Individual operating leases range in terms of 1 to 8 years and expire on various dates through fiscal year 2034 and the minimum lease payments are discounted using the Company’s incremental borrowing rate.

The following is a summary as of December 31, 2025 and June 30, 2025, respectively, of the present value of the minimum lease payments under the Company’s operating leases:



		December 31, 2025		June 30, 2025

		(in thousands)
2026		$	4,447	$	12,957
2027			2,988		8,942
2028			1,925		7,957
2029			1,544		7,776
2030			1,446		7,878
Thereafter			3,713		4,748
Total minimum payments			16,063		50,258
Less: imputed interest			(1,424)		(3,703)
Operating lease liability			14,639		46,555
Less: current portion of operating lease liability			(4,073)		(11,391)
Long-term operating lease liability		$	10,566	$	35,164

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company was subleasing one of its facilities through December 2025. Sublease income is recorded as an offset to the related lease expense within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations.

During the three months ended December 31, 2025, the Company signed an agreement with the landlord of its San Francisco lease to terminate the lease prior its expiration date and recorded a lease termination gain of $14.3 million as a result of eliminating its remaining lease liability and right-of-use asset. The lease termination gain is recorded within instructional costs and services within the condensed consolidated statements of operations.

The following is a summary of the Company’s lease cost, weighted-average remaining lease term, weighted-average discount rate and certain other cash flows as it relates to its operating and finance leases for the three and six months ended December 31, 2025 and 2024:


	Three Months Ended December 31,				Six Months Ended December 31,
	2025		2024		2025			2024

	(in thousands)
Lease cost

Finance lease cost:
Instructional costs and services:
Amortization of right-of-use assets	$	13,524	$	9,357	$	23,876		$	16,396
Selling, general, and administrative expenses:
Amortization of right-of-use assets		233		48		391			81
Interest on lease liabilities		1,361		1,103		2,884			1,880
Operating lease cost:
Instructional costs and services:
Operating lease cost		1,002		2,304		3,327			4,644
Short-term lease cost		15		13		69			26
Sublease income		(61)		(66)		(126)			(131)
Selling, general, and administrative expenses:
Operating lease cost		375		987		880			2,113
Short-term lease cost		24		23		47			46
Sublease income		—		(27)		—			(149)
Total lease cost	$	16,473	$	13,742	$	31,348		$	24,906

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(12,587)	$	(3,178)	$	(13,466)		$	(6,437)
Financing cash flows from finance leases		(13,978)		(7,967)		(25,939)			(16,714)
Right-of-use assets obtained in exchange for new finance lease liabilities		12,923		11,100		60,232			51,939
Right-of-use assets obtained in exchange for new operating lease liabilities		—		—		693			282
Weighted-average remaining lease term - finance leases						2.20	yrs.		2.19	yrs.
Weighted-average remaining lease term - operating leases						4.75	yrs.		5.36	yrs.
Weighted-average discount rate - finance leases						4.82	%		5.53	%
Weighted-average discount rate - operating leases						3.75	%		2.93	%

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

6. Debt

The following is a summary, as of December 31, 2025 and June 30, 2025, respectively, of the components of the Company’s outstanding long-term debt:


	December 31, 2025		June 30, 2025

	(in thousands)
Convertible Senior Notes due 2027	$	420,000	$	420,000
Less: unamortized debt issuance costs		(2,818)		(3,678)
Total debt		417,182		416,322
Less: current portion of debt		—		—
Long-term debt	$	417,182	$	416,322

Future maturities of long-term debt are expected to be $420.0 million in the fiscal year ending June 30, 2028 and zero in each of the fiscal years ending June 30, 2026 and 2027.

Convertible Senior Notes due 2027

In August and September 2020, the Company issued $420.0 million aggregate principal amount of Notes. The Notes are governed by an indenture (the “Indenture”) between the Company and U.S. Bank National Association, as trustee. The net proceeds from the offering of the Notes were approximately $408.6 million after deducting the underwriting fees and other expenses paid by the Company.

The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1^st and September 1^st of each year, beginning on March 1, 2021. The Notes will mature on September 1, 2027. The Company recorded coupon interest expense of $1.2 million during each of the three months ended December 31, 2025 and 2024, and $2.4 million during each of the six months ended December 31, 2025 and 2024.

The Company incurred debt issuance costs of $11.4 million which are amortized over the contractual term of the Notes. The Company recorded interest expense of $0.4 million related to the amortization of the debt issuance costs during each of the three months ended December 31, 2025 and 2024, and $0.9 million and $0.8 million, respectively, during the six months ended December 31, 2025 and 2024.

Before June 1, 2027, noteholders will have the right to convert their Notes only upon the occurrence of certain events. After June 1, 2027, noteholders may convert their Notes at any time at their election until two days prior to the maturity date. The Company will settle conversions by paying cash up to the outstanding principal amount, and at the Company’s election, will settle the conversion spread by paying or delivering cash or shares of its common stock, or a combination of cash and shares of its common stock. The initial conversion rate is 18.9109 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.88 per share of common stock (lower strike price). The Notes will be redeemable at the Company’s option at any time after September 6, 2024 at a cash redemption price equal to the principal amount of the Notes, plus accrued and unpaid interest, subject to certain stock price hurdles as discussed in the Indenture.

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

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

7. Equity Incentive Plan

On December 4, 2025, the Company’s stockholders approved a second amendment and restatement of the 2016 Equity Incentive Award Plan (the “amended and restated 2016 Plan”). The amended and restated 2016 Plan reflects an additional increase in the number of shares of common stock available for issuance by 740,000 shares and an extension of the term of the amended and restated 2016 Plan to October 17, 2035.

The amended and restated 2016 Plan is designed to attract, retain and motivate employees who make important contributions to the Company by providing such individuals with equity ownership opportunities. Awards granted under the amended and restated 2016 Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the amended and restated 2016 Plan, unissued shares related to forfeited or cancelled awards granted under the amended and restated 2016 Plan or awards granted under the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”) (to the extent such awards granted under the Prior Plan were outstanding as of December 15, 2016 and were forfeited or cancelled prior to September 19, 2022), will again be available for issuance under the amended and restated 2016 Plan. Notwithstanding the foregoing, shares tendered to pay the exercise price or tax withholding with respect to a stock option, or shares that are not issued in connection with the settlement of a stock appreciation right on exercise thereof, or shares purchased on the open market with the cash proceeds from the exercise of options will not again be available for issuance under the amended and restated 2016 Plan.

At December 31, 2025, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the amended and restated 2016 Plan was 2,323,626. At December 31, 2025, there were 1,278,087 shares of the Company’s common stock that remain outstanding or nonvested under the amended and restated 2016 Plan and Prior Plan.

Compensation expense for all equity-based compensation awards is based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The vesting of performance-based awards is contingent on the achievement of certain performance metrics. Compensation expense is recognized retroactively, through a cumulative catch-up adjustment, when the performance conditions are satisfied or when the Company determines that it is probable that the performance conditions will be satisfied. The amount of compensation expense recognized for a performance-based award is affected by the level of achievement attained. Management has established three levels of attainment: threshold, target, and outperform. Stock-based compensation expense is recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations.

Restricted Stock Awards

The Company has approved grants of restricted stock awards (“RSA”) pursuant to the amended and restated 2016 Plan and Prior Plan. Under the amended and restated 2016 Plan and Prior Plan, employees, outside directors and independent contractors are able to participate in the Company’s future performance through the awards of restricted stock. Each RSA vests pursuant to the vesting schedule set forth in the restricted stock agreement granting such RSAs, generally over three years.

Restricted stock award activity during the six months ended December 31, 2025 was as follows:


				Weighted
				Average
				Grant-Date
		Shares		Fair Value
Nonvested, June 30, 2025		576,854		$	62.72
Granted		201,248			139.32
Vested		(179,293)			50.54
Canceled		(41,745)			74.18
Nonvested, December 31, 2025		557,064		$	93.45

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

Summary of All Restricted Stock Awards

As of December 31, 2025, there was $41.0 million of total unrecognized compensation expense related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.7 years. The fair value of restricted stock awards granted for the six months ended December 31, 2025 and 2024 was $28.0 million and $24.6 million, respectively. The total fair value of shares vested for the six months ended December 31, 2025 and 2024 was $26.7 million and $16.1 million, respectively. During the three months ended December 31, 2025 and 2024, the Company recognized $5.4 million and $4.7 million, respectively, of stock-based compensation expense related to restricted stock awards. During the six months ended December 31, 2025 and 2024, the expense was $10.6 million and $9.6 million, respectively.

Performance Share Units

The Company has approved grants of performance share units (“PSUs”) pursuant to the amended and restated 2016 Plan. Each PSU is earned through the achievement of a performance-based metric, combined with the continuation of employee service over a defined period. The level of performance determines the number of PSUs earned, and is generally measured against threshold, target and outperform achievement levels of the award. Each PSU represents the right to receive one share of the Company’s common stock, or at the option of the Company, an equivalent amount of cash, and is classified as an equity or liability award. When the grant is a fixed monetary amount, and the number of shares is not determined until achievement and the value of the Company’s stock on that day, the PSU is a liability-classified award. Each PSU vests pursuant to the vesting schedule found in the respective PSU agreement.

In addition to the performance conditions of the PSUs, there is a service vesting condition which is dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon a change in control and qualifying termination, as defined by the PSU agreement. PSUs are generally subject to graduated vesting schedules and stock-based compensation expense is computed by tranche and recognized on a straight-line basis over the tranches’ applicable vesting period based on the expected achievement level.

Performance share unit activity (excluding liability-classified awards) during the six months ended December 31, 2025 was as follows:


				Weighted
				Average
				Grant-Date
		Shares		Fair Value
Nonvested, June 30, 2025		701,907		$	51.27
Granted		354,664			83.87
Vested		(413,681)			34.90
Canceled		(2,970)			82.07
Nonvested, December 31, 2025		639,920		$	79.78

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company has granted PSUs under a Long-Term Incentive Plan (“LTIP”) which are tied to operating income targets (“Tranche #1”) and compounded annual stock price growth (“Tranche #2”) over a three-year performance period. The level of performance will determine the number of PSUs earned as measured against threshold (50%), target (100%) and outperform (200%) achievement levels. The Company begins to amortize the fair value of Tranche #1 over the vesting period when it assesses that achievement is probable at the threshold level. The fair value of Tranche #2 is determined using a Monte Carlo simulation model and is amortized over the vesting period. Tranche #2 is a market-based award and therefore is not subject to any probability assessment by the Company. The following table is a summary of the PSUs outstanding:

Fiscal Year

Grant Date
Fair Value

Number
of
Target Shares

Weighted
Average
Grant Date
Fair Value

Tranche #1

Tranche #2

Vest Date

Tranche #1
Probability
Assessment

Fiscal Year 2026

$22.2 million

146,911

$151.16

81,093 shares
based on FY28
Operating Income

65,818
shares based
on Stock
Price Growth
in September 2029

First Quarter of
Fiscal Year 2029

Not Yet
Determinable

Fiscal Year 2025

$17.0 million

210,620

$80.89

158,470 shares
based on FY27
Operating Income

52,150
shares based
on Stock
Price Growth
in September 2028

First Quarter of
Fiscal Year 2028

Outperform

Fiscal Year 2024

$14.4 million

354,090

$40.84

265,630 shares
based on FY26
Operating Income

88,460
shares based
on Stock
Price Growth
in September 2027

First Quarter of
Fiscal Year 2027

Outperform

Fiscal Year 2023

$10.0 million

289,640

$34.41

144,820 shares
based on FY25
Operating Income

144,820
shares based
on Stock
Price Growth
in September 2026

First Quarter of
Fiscal Year 2026

Achieved

Fiscal Year 2023 LTIP

In July 2025, achievement was certified at 200% of target for Tranche #1, which resulted in the vesting of 204,340 shares. In September 2025, achievement was certified at 200% of target for Tranche #2, which resulted in the vesting of 204,340 shares.

Summary of All Performance Share Units

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 31, 2025, there was $28.1 million of total unrecognized compensation expense related to nonvested PSUs that are expected to vest based on the Company’s probability assumptions discussed above. The cost is expected to be recognized over a weighted average period of 1.4 years. During the three months ended December 31, 2025 and 2024, the Company recognized $4.8 million and $3.2 million, respectively, of stock-based compensation expense related to PSUs. During the six months ended December 31, 2025 and 2024, the expense was $9.9 million and $6.7 million, respectively.

Deferred Stock Units (“DSUs”)

The DSUs vest on the grant-date anniversary and are settled in the form of shares of common stock issued to the holder upon separation from the Company. DSUs are specific only to board members.

Deferred stock unit activity during the six months ended December 31, 2025 was as follows:


				Weighted
				Average
				Grant-Date
		Shares		Fair Value
Nonvested, June 30, 2025		68,779		$	42.58
Granted		12,324			61.22
Vested		—			—
Canceled		—			—
Nonvested, December 31, 2025		81,103		$	45.41

Summary of All Deferred Stock Units

As of December 31, 2025, there was $0.7 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.9 years. During the three months ended December 31, 2025 and 2024, the Company recognized $0.2 million of stock-based compensation expense related to DSUs. During the six months ended December 31, 2025 and 2024, the expense was $0.4 million and $0.4 million, respectively.

8. Stock Repurchase Program

On November 3, 2025, the Company’s board of directors authorized a stock repurchase program for the purchase of up to $500 million of the Company’s common stock until October 31, 2026. Share repurchases may be made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The Company repurchased 1,272,790 shares of its common stock in open market transactions during the six months ended December 31, 2025 at an average price of $69.65 per share. As of December 31, 2025, $411.4 million remained available for repurchases under the stock repurchase program.

9. Related Party Transactions

The Company contributed to Future of School, a charity focused on access to quality education. Future of School was a related party because a former executive officer of the Company formerly served on its Board of Directors. For the three and six months ended December 31, 2025 and 2024, contributions made by the Company to Future of School were zero. In fiscal year 2019 and 2021, the Company accrued $2.5 million and $3.5 million, respectively, for contributions to be made in subsequent years. In October 2022, a lawsuit was filed regarding future contributions, and in January 2024, a Virginia trial court found that the Company was not obligated to make any additional contributions. The trial court’s decision was affirmed by an intermediate appellate court, and in December 2025, the Supreme Court of Virginia declined Future of School’s petition for appeal, resulting in a confirmation of the trial court’s ruling. As a result, during the three months ended December 31, 2025, the Company reversed the remaining $2.3 million that had been accrued.

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STRIDE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

10. Commitments and Contingencies

Litigation

In the ordinary conduct of the Company’s business, the Company is subject to lawsuits, arbitrations, disputes and administrative proceedings from time to time. The Company vigorously defends these claims; however, no assurances can be given as to the outcome of any pending legal proceedings or disputes. The Company believes, based on currently available information, that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on its business, financial condition, liquidity or results of operations.

Employment Arrangements

The Company has entered into employment arrangements with certain executive officers that provide for severance payments and, in some cases, other benefits, upon certain terminations of employment. All arrangements provide for employment on an “at-will” basis. If the employee resigns for “good reason” or is terminated without cause, the employee is entitled to salary continuation, and in some cases benefit continuation, for varying periods depending on the arrangement.

Off-Balance Sheet Arrangements

The Company contractually guarantees that certain schools under the Company’s management will not have annual operating deficits and the Company’s management fees from these schools may be reduced accordingly to cover any school operating deficits.

Other than the operating deficit guarantees, the Company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

11. Supplemental Disclosure of Cash Flow Information


		Six Months Ended December 31,
		2025			2024

		(In thousands)
Cash paid for interest		$	5,257		$	3,967
Cash paid for taxes		$	58,242		$	19,005

Supplemental disclosure of non-cash financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities		$	60,232		$	51,939

Supplemental disclosure of non-cash investing activities:
Stock-based compensation expense capitalized on software development		$	300		$	249
Stock-based compensation expense capitalized on curriculum development		$	71		$	79

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements in Management’s Discussion and Analysis or MD&A, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, which we refer to as our Annual Report, and those referenced in our other SEC filings, including in Part II, Item 1A of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

This MD&A is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. As used in this MD&A, the words, “we,” “our” and “us” refer to Stride, Inc. and its consolidated subsidiaries. This MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report, as well as the consolidated financial statements and MD&A of our Annual Report. 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 three and six months ended December 31, 2025.

●

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 condensed consolidated financial statements.

●

Liquidity and Capital Resources — an analysis of cash flows, sources and uses of cash, commitments and contingencies, and quantitative and qualitative disclosures about market risk.

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. 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.

We provide a wide range of products and services across our platform with the ability to deliver customized solutions. 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. In our most recent academic year ended June 30, 2025, we graduated 19,045 high school students from our partner schools.

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Our platform addresses two markets in the K-12 space: General Education and Career Learning.

General Education

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 broad catalog of courses. The middle school program exposes students to a variety of career options and introduces career skill development. In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that facilitate success in today’s digital, tech-enabled economy. A student is reported as a Career Learning enrollment and associated Career Learning revenue only if the student is enrolled in a Career Learning program. Like General Education products and services, the products and services for Career Learning are sold as a comprehensive school-as-a-service offering or as stand-alone products and services.

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.

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. 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.

For the 2025-2026 school year, we provide our school-as-a-service offering to 92 schools in 31 states and the District of Columbia in the General Education market, and 57 schools or programs in 25 states 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. 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. The amount of revenue generated from these contracts is impacted largely by the number of enrollments, the mix of enrollments across grades and states, state or district per student funding levels and attendance requirement, among other items.

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The two key financial metrics that we use to assess financial performance are revenues and operating income. During the six months ended December 31, 2025, revenues increased to $1,252.1 million from $1,138.3 million in the prior year, an increase of 10.0%. Over the same period, operating income increased to $215.8 million from $172.4 million in the prior year, an increase of 25.2%. The increase in operating income was driven by revenue growth and an increase in gross margin. Additionally, we use the non-financial metric of total enrollments to assess performance, as enrollment is a key driver of our revenues. Total enrollments for the six months ended December 31, 2025 were 248.3 thousand, an increase of 19.6 thousand, or 8.6%, over the prior year. Our revenues are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results from these audits and other routine changes in funding estimates are incorporated into the Company’s monthly funding estimates for the current and prior periods. Historically, aggregate funding estimates have differed from actual reimbursements, generally in the range of 2% of annual revenue or less, which may vary from quarter to quarter.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our condensed consolidated financial statements. Critical accounting policies and estimates are disclosed in our Annual Report. There have been no significant updates to our critical accounting estimates disclosed in our Annual Report.

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. We have two lines of revenue: (i) General Education and (ii) Career Learning.

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. 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. 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.

The following represents our current enrollment for each of the periods indicated:


	Three Months Ended							Six Months Ended
	December 31,				2025 / 2024			December 31,				2025 / 2024
	2025		2024		Change		Change %	2025		2024		Change		Change %

	(In thousands, except percentages)
General Education (1)		137.0		135.8		1.2	0.9%		137.2		134.6		2.6	1.9%
Career Learning (1) (2)		111.5		94.8		16.7	17.6%		111.1		94.1		17.0	18.1%
Total Enrollment		248.5		230.6		17.9	7.8%		248.3		228.7		19.6	8.6%

(1)	Enrollments reported for the first quarter are equal to the official count date number, which was September 30, 2025 for the first quarter of fiscal year 2026 and September 30, 2024 for the first quarter of fiscal year 2025.

(2)	No enrollments are included in Career Learning for Galvanize, Tech Elevator or MedCerts.

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Revenue Data

Revenues are captured by market based on the underlying customer contractual agreements. Where customers purchase products and services for both General Education and Career Learning markets we allocate revenues based on the program for which each student is enrolled. All kindergarten through fifth grade students are considered General Education students. Periodically, a middle school or high school student enrollment may change line of revenue classification.

The following represents our current revenues for each of the periods indicated:


	Three Months Ended							Six Months Ended
	December 31,				Change 2025 / 2024			December 31,				Change 2025 / 2024
	2025		2024		$		%	2025		2024		$		%

	(In thousands, except percentages)
General Education	$	341,397	$	354,315	$	(12,918)	(3.6%)	$	704,513	$	683,722	$	20,791	3.0%
Career Learning
Middle - High School		275,590		213,079		62,511	29.3%		517,090		411,965		105,125	25.5%
Adult		14,274		19,817		(5,543)	(28.0%)		30,542		42,608		(12,066)	(28.3%)
Total Career Learning		289,864		232,896		56,968	24.5%		547,632		454,573		93,059	20.5%
Total Revenues	$	631,261	$	587,211	$	44,050	7.5%	$	1,252,145	$	1,138,295	$	113,850	10.0%

Products and Services

We have developed curriculum, systems, instructional practices and support services that enable us to support hundreds of thousands of students. The following describes the various products and services that we provide to customers. Products and services are provided on an individual basis 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. Stride is continuously innovating to remain at the forefront of effective educational techniques to meet students’ needs. It continues to expand upon its personalized learning model, improve the user experience of its products, and develop tools and partnerships to more effectively engage and serve students, teachers, and administrators.

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

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. 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’ learning management systems, or integration with customers’ student information systems.

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. Stride’s 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.

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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).

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:


	Three Months Ended December 31,								Six Months Ended December 31,
	2025				2024				2025				2024

	(Dollars in thousands)
Revenues	$	631,261	100.0	%	$	587,211	100.0	%	$	1,252,145	100.0	%	$	1,138,295	100.0	%
Instructional costs and services		371,630	58.9			347,353	59.2			750,391	59.9			682,584	60.0
Gross margin		259,631	41.1			239,858	40.8			501,754	40.1			455,711	40.0
Selling, general, and administrative expenses		112,779	17.9			114,758	19.5			285,919	22.8			283,267	24.9
Income from operations		146,852	23.3			125,100	21.3			215,835	17.2			172,444	15.1
Interest expense, net		(2,814)	(0.4)			(2,670)	(0.5)			(5,888)	(0.5)			(5,023)	(0.4)
Other income (expense), net		(10,764)	(1.7)			7,330	1.2			6,148	0.5			16,108	1.4
Income before income taxes and income (loss) from equity method investments		133,274	21.1			129,760	22.1			216,095	17.3			183,529	16.1
Income tax expense		(33,966)	(5.4)			(33,361)	(5.7)			(48,388)	(3.9)			(44,638)	(3.9)
Income (loss) from equity method investments		169	0.0			(6)	(0.0)			570	0.0			(1,616)	(0.1)
Net income attributable to common stockholders	$	99,477	15.8	%	$	96,393	16.4	%	$	168,277	13.4	%	$	137,275	12.1	%

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

Revenues. Our revenues for the three months ended December 31, 2025 were $631.3 million, an increase of $44.1 million, or 7.5%, from $587.2 million for the same period in the prior year. General Education revenues decreased $12.9 million, or 3.6%, year over year. The primary drivers for the decrease in revenue were changes in client mix, partially offset by a 0.9% increase in enrollments. Career Learning revenues increased $57.0 million, or 24.5%, primarily due to a 17.6% increase in enrollments and client mix. In addition, revenue recognized in each of the periods includes certain adjustments resulting from the completion of state and district audits and reconciliation processes related to services provided in prior years. These adjustments were not material and were recognized in the period in which the audit or reconciliation was finalized and the outcome became known and reasonably estimable. While these items contributed to reported revenue in each period, they were not a significant driver of the year over year change.

Instructional costs and services expenses. Instructional costs and services expenses for the three months ended December 31, 2025 were $371.6 million, an increase of $24.2 million, or 7.0%, from $347.4 million for the same period in the prior year. This increase in expense was due to hiring of personnel in growth states and salary increases, partially offset by a lease termination gain related to our San Francisco lease. Instructional costs and services expenses were 58.9% of revenues during the three months ended December 31, 2025, a decrease from 59.2% for the three months ended December 31, 2024.

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Selling, general, and administrative expenses. Selling, general, and administrative expenses for the three months ended December 31, 2025 were $112.8 million, a decrease of $2.0 million, or 1.7%, from $114.8 million for the same period in the prior year. The decrease was primarily due to a decrease of $4.5 million in personnel and related benefit costs, partially offset by an increase of $2.4 million in bad debt expense. Selling, general, and administrative expenses were 17.9% of revenues during the three months ended December 31, 2025, a decrease from 19.5% for the three months ended December 31, 2024.

Interest expense, net. Net interest expense for the three months ended December 31, 2025 was $2.8 million as compared to $2.7 million for the same period in the prior year. The increase in net interest expense was primarily due to an increase in our finance leases.

Other income (expense), net. Other income (expense), net for the three months ended December 31, 2025 was expense of ($10.8) million as compared to income of $7.3 million for the same period in the prior year. The decrease in other income (expense), net was due to unrealized losses related to our investments in publicly-held equity securities.

Income tax expense. Income tax expense was $34.0 million for the three months ended December 31, 2025, or 25.5% of income before income taxes, as compared to $33.4 million, or 25.7% of income before income taxes for the same period in the prior year.

Comparison of the Six Months Ended December 31, 2025 and 2024

Revenues. Our revenues for the six months ended December 31, 2025 were $1,252.1 million, an increase of $113.8 million, or 10.0%, from $1,138.3 million for the same period in the prior year. General Education revenues increased $20.8 million, or 3.0%, year over year. The primary drivers for the increase in revenue were a 1.9% increase in enrollments, and changes to client mix. Career Learning revenues increased $93.1 million, or 20.5%, primarily due to a 18.1% increase in enrollments and client mix. In addition, revenue recognized in each of the periods includes certain adjustments resulting from the completion of state and district audits and reconciliation processes related to services provided in prior years. These adjustments were not material and were recognized in the period in which the audit or reconciliation was finalized and the outcome became known and reasonably estimable. While these items contributed to reported revenue in each period, they were not a significant driver of the year over year change.

Instructional costs and services expenses. Instructional costs and services expenses for the six months ended December 31, 2025 were $750.4 million, an increase of $67.8 million, or 9.9%, from $682.6 million for the same period in the prior year. This increase in expense was due to hiring of personnel in growth states and salary increases, partially offset by a lease termination gain related to our San Francisco lease. Instructional costs and services expenses were 59.9% of revenues during the six months ended December 31, 2025, a decrease from 60.0% for the six months ended December 31, 2024.

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the six months ended December 31, 2025 were $285.9 million, an increase of $2.6 million, or 0.9%, from $283.3 million for the same period in the prior year. The increase was primarily due to an increase of $5.7 million in professional services, partially offset by a decrease of $1.3 million in personnel and related benefit costs, $1.3 million in bad debt expense, and $1.1 million in operating lease expense. Selling, general, and administrative expenses were 22.8% of revenues during the six months ended December 31, 2025, a decrease from 24.9% for the six months ended December 31, 2024.

Interest expense, net. Net interest expense for the six months ended December 31, 2025 was $5.9 million as compared to $5.0 million for the same period in the prior year. The increase in net interest expense was primarily due to an increase in our finance leases.

Other income (expense), net. Other income (expense), net for the six months ended December 31, 2025 was income of $6.1 million as compared to income of $16.1 million for the same period in the prior year. The decrease in other income (expense), net was due to unrealized losses related to our investments in publicly-held equity securities, partially offset by the returns on our investments in marketable securities year over year.

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Income tax expense. Income tax expense was $48.4 million for the six months ended December 31, 2025, or 22.3% of income before income taxes, as compared to $44.6 million, or 24.5% of income before income taxes for the same period in the prior year. The decrease in the effective income tax rate for the six months ended December 31, 2025, as compared to the effective tax rate for the six months ended December 31, 2024, was primarily due to stock-based compensation.

Liquidity and Capital Resources

As of December 31, 2025, we had net working capital, or current assets minus current liabilities, of $1,380.2 million. Our working capital includes cash and cash equivalents of $497.1 million and accounts receivable of $869.0 million. Our working capital provides a significant source of liquidity for our normal operating needs. Our accounts receivable balance fluctuates throughout the fiscal year based on the timing of customer billings and collections and tends to be highest in our first fiscal quarter as we begin billing for students. In addition, our cash and accounts receivable were significantly in excess of our accounts payable and short-term accrued liabilities at December 31, 2025.

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 the indenture between us and U.S. Bank National Association, as trustee. The net proceeds from the offering of the Notes were approximately $408.6 million after deducting the underwriting fees and other expenses paid by the Company. The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1^st and September 1^st of each year, beginning on March 1, 2021. The Notes will mature on September 1, 2027. In connection with the Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain counterparties. The Capped Call Transactions are expected to cover the aggregate number of shares of the Company’s common stock that initially underlie the Notes, and are expected to reduce potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes. The upper strike price of the Capped Call Transactions is $86.174 per share. The cost of the Capped Call Transactions was $60.4 million and was recorded within additional paid-in capital.

Before June 1, 2027, noteholders will have the right to convert their Notes only upon the occurrence of certain events. After June 1, 2027, noteholders may convert their Notes at any time at their election until two days prior to the maturity date. We will settle conversions by paying cash up to the outstanding principal amount, and at our election, will settle the conversion spread by paying or delivering cash or shares of our common stock, or a combination of cash and shares of our common stock. The initial conversion rate is 18.9109 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.88 per share of common stock. The Notes will be redeemable at our option at any time after September 6, 2024 at a cash redemption price equal to the principal amount of the Notes, plus accrued and unpaid interest, subject to certain stock price hurdles as discussed in the Indenture.

We are a lessee under finance leases for computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of December 31, 2025 and June 30, 2025, the finance lease liability was $124.4 million and $86.9 million, respectively, with lease interest rates ranging from 4.25% to 6.72%.

We entered into agreements with BALC and CSI Leasing in April 2020 and August 2022, respectively, to provide financing for our computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 4.75% to 6.72%, and a $1 purchase option at the end of each lease term. We pledged the assets financed to secure the outstanding leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate. We use our incremental borrowing rate as the implied interest rate and the total lease payments to calculate our lease liability.

On November 3, 2025, our board of directors authorized a stock repurchase program for the purchase of up to $500 million of the Company’s common stock until October 31, 2026. Share repurchases may be made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise.

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to interest on our Notes, office facility leases, capital equipment leases and other operating leases. We expect to make future payments on existing leases from cash generated from operations. We believe that the combination of funds to be generated from operations and net working capital on hand will be adequate to finance our

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ongoing operations on a short-term (the next 12 months) and long-term (beyond the next 12 months) basis. In addition, we continue to explore acquisitions, strategic investments and joint ventures related to our business that we may acquire using cash, stock, debt, contribution of assets or a combination thereof.

Stride, Inc. 10-Q