Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jul. 30, 2021 | Dec. 31, 2020 | |
Cover | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Jun. 30, 2021 | ||
Entity File Number | 001-33883 | ||
Entity Registrant Name | Stride, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 95-4774688 | ||
Entity Address, Address Line One | 2300 Corporate Park Drive | ||
Entity Address, City or Town | Herndon | ||
Entity Address, State or Province | VA | ||
Entity Address, Postal Zip Code | 20171 | ||
City Area Code | 703 | ||
Local Phone Number | 483-7000 | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | ||
Trading Symbol | LRN | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 41,591,963 | ||
Entity Public Float | $ 638,551,439 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001157408 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets | ||
Cash and cash equivalents | $ 386,080 | $ 212,299 |
Accounts receivable, net of allowance of $21,384 and $6,808 | 369,303 | 236,134 |
Inventories, net | 39,690 | 28,300 |
Prepaid expenses | 19,453 | 13,058 |
Other current assets | 43,004 | 11,480 |
Total current assets | 857,530 | 501,271 |
Operating lease right-of-use assets, net | 94,671 | 111,768 |
Property and equipment, net | 72,069 | 38,668 |
Capitalized software, net | 57,308 | 48,493 |
Capitalized curriculum development costs, net | 50,376 | 48,849 |
Intangible assets, net | 99,480 | 77,451 |
Goodwill | 240,353 | 174,939 |
Deposits and other assets | 105,510 | 71,824 |
Total assets | 1,577,297 | 1,073,263 |
Current liabilities | ||
Accounts payable | 62,144 | 40,428 |
Accrued liabilities | 77,642 | 27,351 |
Accrued compensation and benefits | 80,363 | 47,227 |
Deferred revenue | 38,110 | 24,417 |
Credit facility | 100,000 | |
Current portion of finance lease liability | 27,336 | 13,304 |
Current portion of operating lease liability | 20,649 | 20,689 |
Total current liabilities | 306,244 | 273,416 |
Long-term finance lease liability | 41,568 | 4,634 |
Long-term operating lease liability | 77,458 | 96,544 |
Long-term debt | 299,271 | |
Deferred tax liability | 31,853 | 13,771 |
Other long-term liabilities | 16,255 | 9,569 |
Total liabilities | 772,649 | 397,934 |
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; 46,911,527 and 46,341,627 shares issued; and 41,576,784 and 41,006,884 shares outstanding | 4 | 4 |
Additional paid-in capital | 795,449 | 730,761 |
Accumulated other comprehensive income (loss) | (474) | 93 |
Retained earnings | 112,151 | 46,953 |
Treasury stock of 5,334,743 shares at cost | (102,482) | (102,482) |
Total stockholders' equity | 804,648 | 675,329 |
Total liabilities and stockholders' equity | $ 1,577,297 | $ 1,073,263 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $ 21,384 | $ 6,808 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 46,911,527 | 46,341,627 |
Common stock, shares outstanding | 41,576,784 | 41,006,884 |
Treasury stock, shares | 5,334,743 | 5,334,743 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenues | $ 1,536,760 | $ 1,040,765 | $ 1,015,752 |
Instructional costs and services | 1,001,860 | 693,232 | 663,437 |
Gross margin | 534,900 | 347,533 | 352,315 |
Selling, general, and administrative expenses | 424,444 | 315,076 | 306,829 |
Income from operations | 110,456 | 32,457 | 45,486 |
Interest income (expense), net | (17,979) | 698 | 2,761 |
Other income, net | 2,829 | 272 | 114 |
Income before income taxes and income (loss) from equity method investments | 95,306 | 33,427 | 48,361 |
Income tax expense | (24,539) | (8,541) | (10,520) |
Income (loss) from equity method investments | 684 | (380) | (632) |
Net income attributable to common stockholders | $ 71,451 | $ 24,506 | $ 37,209 |
Net income attributable to common stockholders per share: | |||
Basic (in dollars per share) | $ 1.78 | $ 0.62 | $ 0.96 |
Diluted (in dollars per share) | $ 1.71 | $ 0.60 | $ 0.91 |
Weighted average shares used in computing per share amounts: | |||
Basic (in shares) | 40,211,016 | 39,478,928 | 38,848,780 |
Diluted (in shares) | 41,868,580 | 40,663,224 | 40,944,800 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income | $ 71,451 | $ 24,506 | $ 37,209 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustment | (567) | 133 | 212 |
Comprehensive income attributable to common stockholders | $ 70,884 | $ 24,639 | $ 37,421 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Treasury Stock | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance (ASU 2014-09) at Jun. 30, 2018 | $ (1,330) | $ (1,330) | ||||||
Balance at Jun. 30, 2018 | $ 4 | $ 703,351 | $ (252) | $ (13,432) | $ (102,482) | $ 587,189 | ||
Balance (in shares) at Jun. 30, 2018 | 44,902,567 | (5,334,743) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 37,209 | 37,209 | ||||||
Foreign currency translation adjustment | 212 | 212 | ||||||
Stock-based compensation expense | 17,013 | 17,013 | ||||||
Exercise of stock options | 3,030 | $ 3,030 | ||||||
Exercise of stock options (in shares) | 150,290 | 150,290 | ||||||
Vesting of performance share units, net of tax withholding (in shares) | 258,263 | |||||||
Issuance of restricted stock awards (in shares) | 828,833 | |||||||
Forfeiture of restricted stock awards (in shares) | (235,485) | |||||||
Repurchase of restricted stock for tax withholding | (9,958) | $ (9,958) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (329,232) | |||||||
Balance at Jun. 30, 2019 | $ 4 | 713,436 | (40) | 22,447 | $ (102,482) | 633,365 | ||
Balance (in shares) at Jun. 30, 2019 | 45,575,236 | (5,334,743) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 24,506 | 24,506 | ||||||
Foreign currency translation adjustment | 133 | 133 | ||||||
Stock-based compensation expense | 24,022 | 24,022 | ||||||
Exercise of stock options | 64 | $ 64 | ||||||
Exercise of stock options (in shares) | 4,000 | 4,000 | ||||||
Issuance of restricted stock awards (in shares) | 1,126,227 | |||||||
Forfeiture of restricted stock awards (in shares) | (79,541) | |||||||
Repurchase of restricted stock for tax withholding | (6,761) | $ (6,761) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (284,295) | |||||||
Balance at Jun. 30, 2020 | $ 4 | 730,761 | 93 | 46,953 | $ (102,482) | 675,329 | ||
Balance (in shares) at Jun. 30, 2020 | 46,341,627 | (5,334,743) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 71,451 | 71,451 | ||||||
Foreign currency translation adjustment | (567) | (567) | ||||||
Stock-based compensation expense | 38,927 | 38,927 | ||||||
Exercise of stock options | 748 | $ 748 | ||||||
Exercise of stock options (in shares) | 990,067 | 990,067 | ||||||
Withholding of stock options for tax withholding | (10,885) | $ (10,885) | ||||||
Withholding of stock options for tax withholding (in shares) | (655,219) | |||||||
Equity component of convertible senior notes, net of issuance costs and taxes | 105,502 | 105,502 | ||||||
Purchases of capped calls in connection with convertible senior notes | (60,354) | (60,354) | ||||||
Issuance of restricted stock awards (in shares) | 578,070 | |||||||
Forfeiture of restricted stock awards (in shares) | (82,419) | |||||||
Repurchase of restricted stock for tax withholding | (9,250) | (9,250) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (260,599) | |||||||
Balance (ASU 2016-13) at Jun. 30, 2021 | $ (6,253) | $ (6,253) | ||||||
Balance at Jun. 30, 2021 | $ 4 | $ 795,449 | $ (474) | $ 112,151 | $ (102,482) | $ 804,648 | ||
Balance (in shares) at Jun. 30, 2021 | 46,911,527 | (5,334,743) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | |||
Net income | $ 71,451 | $ 24,506 | $ 37,209 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 90,077 | 72,091 | 71,400 |
Stock-based compensation expense | 39,333 | 23,609 | 16,676 |
Deferred income taxes | 2,549 | (1,305) | 3,693 |
Provision for doubtful accounts | 6,561 | 2,882 | 6,325 |
Amortization of discount and fees on debt | 12,620 | ||
Noncash operating lease expense | 19,567 | 11,827 | |
Other | 9,766 | 7,751 | 3,985 |
Changes in assets and liabilities: | |||
Accounts receivable | (143,073) | (37,772) | (21,637) |
Inventories, prepaid expenses, deposits and other current and long-term assets | (39,164) | (16,181) | (3,321) |
Accounts payable | 18,930 | (6,213) | 20,174 |
Accrued liabilities | 15,899 | 7,424 | 8,295 |
Accrued compensation and benefits | 32,437 | 3,103 | 5,948 |
Operating lease liability | (21,025) | (13,124) | |
Deferred revenue and other liabilities | 18,222 | 1,817 | (7,141) |
Net cash provided by operating activities | 134,150 | 80,415 | 141,606 |
Cash flows from investing activities | |||
Purchase of property and equipment | (3,567) | (1,677) | (5,477) |
Capitalized software development costs | (31,264) | (23,988) | (26,318) |
Capitalized curriculum development costs | (17,432) | (19,332) | (16,611) |
Sale of long-lived assets | 223 | 389 | |
Acquisition of Galvanize, Inc., net of cash acquired | (167,995) | ||
Acquisition of MedCerts, LLC, net of cash acquired | (55,031) | ||
Acquisition of Tech Elevator, Inc., net of cash acquired | (16,107) | ||
Other acquisitions and investments, net of distributions | (1,723) | (4,373) | (13,092) |
Purchases of marketable securities | (40,542) | ||
Net cash used in investing activities | (165,443) | (217,365) | (61,109) |
Cash flows from financing activities | |||
Repayments on finance lease obligations | (24,315) | (27,675) | (21,034) |
Borrowing from credit facility | 105,000 | ||
Repayments on credit facility | (100,000) | (5,000) | |
Issuance of convertible senior notes, net of issuance costs | 408,610 | ||
Purchases of capped calls in connection with convertible senior notes | (60,354) | ||
Payments of contingent consideration | (1,027) | ||
Proceeds from exercise of stock options | 748 | 64 | 3,030 |
Withholding of stock options for tax withholding | (10,885) | ||
Repurchase of restricted stock for income tax withholding | (9,228) | (6,761) | (9,958) |
Net cash provided by (used in) financing activities | 204,576 | 65,628 | (28,989) |
Net change in cash, cash equivalents and restricted cash | 173,283 | (71,322) | 51,508 |
Cash, cash equivalents and restricted cash, beginning of period | 213,299 | 284,621 | 233,113 |
Cash, cash equivalents and restricted cash, end of period | $ 386,582 | $ 213,299 | $ 284,621 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of June 30th: | |||
Cash and cash equivalents | $ 386,080 | $ 212,299 | $ 283,121 |
Total cash, cash equivalents and restricted cash | 386,582 | 213,299 | 284,621 |
Other current assets | |||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of June 30th: | |||
Restricted cash | $ 502 | 500 | 500 |
Deposits and other assets | |||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of June 30th: | |||
Restricted cash | $ 500 | $ 1,000 |
Description of the Business
Description of the Business | 12 Months Ended |
Jun. 30, 2021 | |
Description of the Business | |
Description of the Business | 1. Description of the Business Stride, Inc., together with its subsidiaries (“Stride” or the “Company”) is an education services company providing virtual and blended learning. On December 16, 2020, the Company changed its name from K12 Inc. to Stride, Inc. The brand reflects the Company’s continued growth into lifelong learning, regardless of a student’s age or location. The Company’s technology-based products and services enable its clients to attract, enroll, educate, track progress, and support students. These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning. The Company’s clients are primarily public and private schools, school districts, and charter boards. Additionally, it offers solutions to employers, government agencies and consumers. These products and services are provided through two lines of revenue: ● Products and services for the General Education market are predominantly focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge. Programs utilizing General Education products and services are for students that are not specializing in any particular curriculum or course of study. These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning. Products and services are sold as a comprehensive school-as-a-service offering or à la carte. ● Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, health care and business. The Company pr ovides middle and high school students with Career Learning programs that complement their core general education coursework in math, English, science and history. Stride offers multiple career pathways supported by a diverse catalog of Career Learning courses. The middle school program exposes students to a variety of career options and introduces career skill development. In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students also have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that are required to succeed in today’s digital, tech-enabled economy. A student enrolled in a school offering Stride’s General Education program may take Career Learning courses, but that student and the associated revenue is not reported as a Career Learning enrollment or Career Learning revenue. However, a student and the associated revenue, whether in middle or high school, is counted as a Career Learning enrollment or Career Learning revenue if the student is enrolled in a Career Learning program . Like General Education products and services, the products and services for the Career Learning market are sold as a comprehensive school-as-a-service offering or à la carte . The Company also offers focused post-secondary career learning programs to adult learners , through its Galvanize, Inc. (“Galvanize”), Tech Elevator, Inc. (“Tech Elevator”), and MedCerts, LLC (“MedCerts”) brands. These include skills training in the data science, software engineering, healthcare, and medical fields, as well as providing staffing and talent development services to employers . These programs are offered directly to consumers, as well as to employers and government agencies. During the first quarter of fiscal year 2021, the Company revised its lines of revenue. Previously, the lines of revenue were (i) Managed Public School Programs, (ii) Institutional, and (iii) Private Pay Schools and Other. The Company believes that the change in the lines of revenue will facilitate a better understanding of the markets in which the Company competes. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company operates in one operating and reportable individualized learning for students and adults. The Chief Operating Decision Maker evaluates profitability based on consolidated results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses On July 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and interest expense will be recognized at the coupon rate. Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods. The Company early adopted this standard in the first quarter of fiscal year 2022. The adoption resulted in the elimination of the debt discount (and related deferred tax liability) that had been recorded within equity. The net impact of the adjustments will be recorded to the opening balance of retained earnings. Preliminarily, the impacts to the consolidated balance sheet were the following: (1) increase of $110.6 million to long-term debt, (2) decrease of $89.4 million to additional paid-in capital, (3) decrease of $29.4 million to deferred tax liability, and (4) increase to retained earnings of $8.2 million. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to the allowance for doubtful accounts, inventory reserves, amortization periods, the allocation of purchase price to the fair value of net assets and liabilities acquired in business combinations, fair values used in asset impairment evaluations, valuation of long-lived assets, accrual for incurred but not reported (“IBNR”) claims, contingencies, income taxes, fair value of contingent consideration and stock-based compensation expense. The Company bases its estimates on historical experience and various assumptions that it believes are reasonable under the circumstances. The results of the analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. 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, business, and health services, 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 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. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s 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 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 for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to 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 pro rata 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 Company’s 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 schools’ 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 current and prior periods. For the years ended June 30, 2020, 2019 and 2018, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately (0.1)%, 0.6%, and 0.4%, respectively. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. 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 and 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 recognized revenues 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 years ended June 30, 2021, 2020 and 2019, the Company’s revenues included a reduction for net school operating losses at the schools of $63.4 million, $45.4 million, and $54.7 million, 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 expenses in the consolidated statements of operations. Amounts recorded as revenues and expenses for the years ended June 30, 2021, 2020 and 2019, were $412.1 million, $325.5 million and $342.7 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 Enterprise Contracts The Company provides job training over a specified contract period to enterprises. Each of these contracts are 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 Company’s 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 years ended June 30, 2021, 2020 and 2019, approximately 88%, 88%, and 87%, respectively, of the Company’s General Education revenues, and 98%, 99% 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 business for the years ended June 30, 2021, 2020 and 2019: Year Ended June 30, 2021 2020 2019 (In thousands) General Education $ 1,280,199 $ 933,809 $ 965,931 Career Learning Middle - High School 200,774 96,003 49,821 Adult 55,787 10,953 — Total Career Learning 256,561 106,956 49,821 Total Revenues $ 1,536,760 $ 1,040,765 $ 1,015,752 Concentration of Customers During the years ended June 30, 2021, 2020 and 2019, the Company had zero, zero and one contract, respectively, that represented greater than 10% of revenues. In fiscal year 2018, the Company and the Agora Cyber Charter School entered into an agreement related to its outstanding receivable of $28.7 million at June 30, 2018 to be paid over a four-year period. In addition, the term of the service agreement was extended through June 30, 2022. The Company reclassified the long-term portion of $23.2 million to deposits and other assets on the consolidated balance sheets as of June 30, 2018. The balance as of June 30, 2021 was $4.2 million and is included in accounts receivable on the consolidated balance sheets. The Company accrues interest on its long-term receivables based on contracted terms. 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 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: June 30, 2021 2020 (In thousands) Accounts receivable $ 369,303 $ 236,134 Unbilled receivables (included in accounts receivable) 24,794 15,688 Deferred revenue 38,110 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,973 2,236 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 contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. 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 years ended June 30, 2021, 2020 and 2019, that was included in the previous July 1 st 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. Significant Judgments 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. 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 accompanying consolidated balance sheets. Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax. Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are classified as instructional costs and services in the accompanying consolidated statements of operations. Shipping and handling charges invoiced to a customer are included in revenues. Research and Development Costs All research and development costs, including patent application costs, are expensed as incurred. Research and development costs totaled $3.7 million, $9.7 million and $9.5 million for the years ended June 30, 2021, 2020 and 2019, respectively, and are included within selling, general and administrative expenses in the consolidated statements of operations. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents generally consist of cash on hand and cash held in money market and demand deposit accounts. The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company periodically has cash balances which exceed federally insured limits. Restricted cash consists of amounts held in escrow related to the Company’s settlement agreement with Agora Cyber Charter School. The restricted cash which is short-term in nature is included in other current assets, while the portion that is long-term is included in deposits and other assets on the consolidated balance sheets. 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 other current assets on the consolidated balance sheets. The securities with maturities greater than one year are classified as long-term and are included in other assets on the consolidated balance sheet. Held-to-maturity securities are recorded at their amortized cost. Interest income and dividends are recorded within the 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 ASC 326. Any declines in fair value related to a credit loss is recognized in the consolidated statements of operations, with the amount of the loss limited to the difference between fair value and amortized cost. As of June 30, 2021, the allowance for credit losses related to held-to-maturity debt securities was zero. As of June 30, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $17.3 million and $23.2 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument. Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company maintains an allowance under ASC 326 based on historical losses, 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 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. 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 June 30, 2021 and 2020, $8.8 million and $5.2 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the 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 $5.6 million and $4.8 million at June 30, 2021 and 2020, respectively. Other Current Assets Other current assets consist primarily of 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. Additionally, other current assets include short-term marketable securities. 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.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 Computer hardware 3 - 7 years Computer software 3 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 based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $3.2 million, $2.4 million and $2.3 million for the years ended June 30, 2021, 2020 and 2019, respectively, related to unreturned student computers. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $8.4 million, $3.8 million and $4.1 million for the years ended June 30, 2021, 2020 and 2019, 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 $31.3 million, $24.0 million and $26.3 million for the years ended June 30, 2021, 2020 and 2019, respectively. There were no material write-downs of capitalized software projects for the years ended June 30, 2021, 2020 and 2019. 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. Total capitalized curriculum development additions were $17.4 million, $19.3 million and $16.6 million for the years ended June 30, 2021, 2020 and 2019, respectively. These amounts are recorded on the accompanying consolidated balance sheets, net of amortization charges. There were no material write-downs of capitalized curriculum development costs for the years ended June 30, 2021, 2020 and 2019. Leases The Company adopted ASC Topic 842, 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 student computers and peripherals provided to students of its schools. Individual leases typically include 1 to 3-year payment terms, at varying rates, with a $1 purchase option at the end of each lease term. 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, sales and enrollment teams, and school operations. Initial lease terms vary between 1 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 Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. For its adoption of ASC 842 the Company utilized its agreements used for its finance leases as the basis for calculating its incremental borrowing rate. The rate was collateralized and its term reflected a similar term of the remaining lease payments of the Company’s largest operating lease. As of the adoption date, the incremental borrowing rate was 3.86%. Upon the execution of its senior secured revolving credit facility in January 2020 (see Note 8, “Credit Facility”), the Company reassessed its incremental borrowing rate as 2.55%. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to apply ASC 842 to short-term facility leases of 12 months or less. By making this election, the Company will not record a right-of-use asset or lease liability at the commencement of the lease, and will continue to 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. 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 years ended June 30, 2021, 2020 and 2019 was $11.6 million, $6.1 million and $3.0 million, respectively, and is included within selling, general, and administrative expenses in the consolidated statements of operations. Future amortization of intangible assets is expected to be $12.9 million, $12.7 million, $11.7 million, $10.5 million and $9.4 million in the fiscal years ending June 30, 2022 through June 30, 2026, respectively and $42.2 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 31st, which is then updated for any changes in conditions as of June 30 th During the years ended June 30, 2021 and 2020, the Company qualitatively assessed its goodwill and intangible assets for impairment. It identified Coronavirus disease 2019 (“COVID-19”) as a triggering event, however there were no indicators that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. On January 27, 2020, the Company acquired Galvanize for $165.0 million and working capital. On November 30, 2020, the Company acquired 100% of MedCerts in exchange for $70.0 million and estimated contingent consideration of $10.8 million; and 100% of Tech Elevator in exchange for $23.5 million, plus working capital of $2.2 million. The Company’s acquisitions are discussed in more detail in Note 13, “Acquisitions and Investments.” The following table represents goodwill additions/reductions resulting from the acquisitions mentioned above during the years ended June 30, 2021, 2020 and 2019: ($ in millions) Amount Goodwill Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 Acquisition of MedCerts, LLC 51.1 Acquisition of Tech Elevator, Inc. 17.9 Adjustments related to Galvanize, Inc. (3.5) Balance as of June 30, 2021 $ 240.4 |
Property and Equipment and Capi
Property and Equipment and Capitalized Software and Curriculum | 12 Months Ended |
Jun. 30, 2021 | |
Property and Equipment and Capitalized Software and Curriculum | |
Property and Equipment and Capitalized Software and Curriculum | 4. Property and Equipment and Capitalized Software and Curriculum Property and equipment consists of the following at: June 30, 2021 2020 (In thousands) Student computers $ 99,728 $ 48,153 Computer software 16,201 17,268 Computer hardware 9,461 14,505 Leasehold improvements 18,320 17,396 State testing computers 7,440 7,461 Furniture and fixtures 7,104 7,178 Office equipment 1,455 1,372 159,709 113,333 Less accumulated depreciation and amortization (87,640) (74,665) $ 72,069 $ 38,668 The Company recorded depreciation expense related to property and equipment reflected in selling, general, and administrative expenses of $6.6 million, $4.3 million and $5.2 million during the years ended June 30, 2021, 2020 and 2019, respectively. Depreciation expense of $31.4 million, $17.9 million and $15.0 million related to computers provided to students is reflected in instructional costs and services during the years ended June 30, 2021, 2020 and 2019, respectively. The Company incurs maintenance and repair expenses, which are expensed as incurred, and are generally recorded in selling, general, and administrative expenses. Maintenance and repair expenses totaled $7.9 million, $10.3 million and $13.7 million for the years ended June 30, 2021, 2020 and 2019, respectively. Capitalized software costs consist of the following at: June 30, 2021 2020 (In thousands) Capitalized software $ 281,705 $ 249,720 Less accumulated depreciation and amortization (224,397) (201,227) $ 57,308 $ 48,493 The Company recorded amortization expense of $19.7 million, $20.8 million and $22.3 million related to capitalized software reflected in instructional costs and services and $4.2 million, $5.5 million and $7.4 million reflected in selling, general, and administrative expenses during the years ended June 30, 2021, 2020 and 2019, respectively. Capitalized curriculum development costs consist of the following at: June 30, 2021 2020 (In thousands) Capitalized curriculum development costs $ 173,971 $ 156,018 Less accumulated depreciation and amortization (123,595) (107,169) $ 50,376 $ 48,849 The Company recorded amortization expense of $16.4 million, $17.5 million and $18.5 million related to capitalized curriculum development cost reflected in instructional costs and services during the years ended June 30, 2021, 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | 5. Income Taxes The provision for income taxes is based on earnings reported in the 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 year. Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting. Deferred tax assets and liabilities consist of the following: June 30, 2021 2020 (In thousands) Deferred tax assets Net operating loss carryforward $ 22,159 $ 21,850 Reserves 5,038 3,374 Accrued expenses 5,552 4,117 Stock compensation expense 8,193 7,064 Other assets 7,466 2,252 Deferred revenue 437 759 Lease liability 27,812 29,640 Federal tax credits — 20 State tax credits — 44 Total deferred tax assets 76,657 69,120 Deferred tax liabilities Capitalized curriculum development (9,307) (9,245) Capitalized software and website development costs (14,026) (11,907) Property and equipment (11,613) (6,213) Right-of-use assets (26,889) (28,273) Returned materials (4,520) (2,385) Purchased intangibles (22,031) — Convertible debt (15,077) (19,877) Total deferred tax liabilities (103,463) (77,900) Net deferred tax liability before valuation allowance (26,806) (8,780) Valuation allowance (5,047) (4,991) Net deferred tax liability $ (31,853) $ (13,771) Reported as: Long-term deferred tax liabilities $ (31,853) $ (13,771) The Company maintained a valuation allowance on net noncurrent deferred tax assets of $5.0 million and $5.0 million as of June 30, 2021 and 2020, respectively, predominantly related to foreign income tax net operating losses ("NOL"). At June 30, 2021, the Company had approximately $65.8 million of available federal NOL carryforwards solely related to the acquisition of Galvanize in January 2020. The federal NOL carryforwards, in the amount of $9.2 million, generated prior to 2018 will begin to expire, if unused, in 2035. Due to the Tax Cuts and Jobs Act (the “Tax Act”), the federal NOL carryforwards, in the amount of $56.6 million, generated after 2017 have an indefinite carryforward period. Section 382 of the Internal Revenue Code limits the utilization of NOL carryforwards following a change of control. The Company has performed an analysis of the Section 382 ownership changes and have determined that it will be able to fully utilize its available NOLs subject to the Section 382 limitation. At June 30, 2021, the Company had tax effected state NOL carryforwards of $3.3 million, net of valuation allowances, and will expire on various dates. The components of the income before income taxes for the years ended June 30, 2021, 2020 and 2019 were as follows: Year Ended June 30, 2021 2020 2019 (In thousands) Domestic $ 81,068 $ 27,672 $ 43,448 Foreign 14,922 5,375 4,281 Total income before income taxes $ 95,990 $ 33,047 $ 47,729 The components of the income tax expense (benefit) for the years ended June 30, 2021, 2020 and 2019 were as follows: Year Ended June 30, 2021 2020 2019 (In thousands) Current: Federal $ 12,290 $ 6,907 $ 3,919 State 6,643 1,911 1,988 Foreign 3,057 1,028 920 Total current 21,990 9,846 6,827 Deferred: Federal 2,287 (1,687) 3,412 State 262 382 281 Total deferred 2,549 (1,305) 3,693 Total income tax expense (benefit) $ 24,539 $ 8,541 $ 10,520 The provision for (benefit from) income taxes can be reconciled to the income tax that would result from applying the statutory rate to the net income before income taxes as follows: Year Ended June 30, 2021 2020 2019 U.S. federal tax at statutory rates 21.0 % 21.0 % 21.0 % Permanent items (0.4) 1.1 0.5 Lobbying 0.2 0.4 0.4 Non-deductible compensation 4.9 9.0 1.6 State taxes, net of federal benefit 5.8 5.3 4.3 Research and development tax credits (0.9) (1.8) (0.5) Change in valuation allowance (0.1) 0.1 0.2 Effects of foreign operations 0.4 0.3 0.1 Reserve for unrecognized tax benefits 0.2 (2.4) (2.1) Other (0.5) (0.8) (0.4) Stock-based compensation (5.0) (6.4) (3.1) Provision for (benefit from) income taxes 25.6 % 25.8 % 22.0 % Tax Uncertainties The Company follows the provisions of ASC 740, Income Taxes (“ASC 740”) which applies to all tax positions related to income taxes. ASC 740 provides a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. ASC 740 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than 50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon ultimate settlement related to unrecognized tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. As of June 30, 2021, 2020 and 2019, the Company had $0.1 million, $0.1 million and $0.2 million in accrued interest and penalties, respectively. The unrecognized tax benefits for the years ended June 30, 2021, 2020 and 2019 were as follows: Year Ended June 30, 2021 2020 2019 (In thousands) Balance at beginning of the year $ 850 $ 1,545 $ 2,392 Additions for prior year tax positions 196 161 194 Additions for current year tax positions 261 179 87 Reductions for prior year tax positions (250) (1,035) (1,128) Balance at end of the year $ 1,057 $ 850 $ 1,545 If recognized, all of the $1.1 million balance of unrecognized tax benefits as of June 30, 2021 would affect the effective tax rate. The Company does not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months. The Company remains subject to audit by the Internal Revenue Service for federal tax purposes for tax years after June 30, 2017. Certain state and foreign tax jurisdictions are also either currently under audit or remain open under the statute of limitations for the tax years after June 30, 2015. |
Finance and Operating Leases
Finance and Operating Leases | 12 Months Ended |
Jun. 30, 2021 | |
Finance and Operating Leases | |
Finance and Operating Leases | 6. Finance and Operating Leases Finance Leases The Company is a lessee under finance leases for student computers and peripherals under agreements with PNC Equipment Finance, LLC (“PNC”) and Banc of America Leasing & Capital, LLC (“BALC”). As of June 30, 2021 and 2020, the finance lease liability was $68.9 million and $17.9 million, respectively, with lease interest rates ranging from 1.52% to 3.87%. As of June 30, 2021 and 2020, the balance of the associated right-of-use assets was $49.0 million and $19.8 million, respectively. The right-of-use asset is recorded within property and equipment, net on the consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within instructional costs and services on the consolidated statements of operations. Individual leases under the agreement with PNC include 36-month payment terms at varying rates, with a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. The Company entered into an agreement with BALC in April 2020 for $25.0 million (increased to $41.0 million in July 2020) to provide financing for its leases through March 2021 at varying rates. The Company entered into additional agreements during fiscal year 2021 to provide financing of $54.0 million for its student computers and peripherals leases through October 2021 at varying rates. Individual leases with BALC include 12-month and 36-month payment terms, fixed rates ranging from 1.52% to 2.58%, and a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. The following is a summary, as of June 30, 2021 and June 30, 2020, respectively, of the present value of the net minimum lease payments under the Company’s finance leases: Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 13,587 2022 28,715 2,653 2023 28,105 2,040 2024 14,303 — Total minimum payments 71,123 18,280 Less: imputed interest (2,219) (342) Finance lease liability 68,904 17,938 Less: current portion of finance lease liability (27,336) (13,304) Long-term finance lease liability $ 41,568 $ 4,634 Operating Leases The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of June 30, 2021 and 2020, the operating lease liability was $98.1 million and $117.2 million, respectively. As of June 30, 2021 and 2020 the balance of the associated right-of-use assets was $94.7 million and $111.8 million, respectively. The impact of Galvanize’s adoption of ASC 842 was part of the purchase price accounting which is discussed in more detail in Note 13, “Acquisitions and Investments.” 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 consolidated statements of operations. Individual operating leases range in terms of 1 to 11 years and expire on various dates through fiscal year 2031 and the minimum lease payments are discounted using the Company’s incremental borrowing rate. The following is a summary as of June 30, 2021 and June 30, 2020, respectively, of the present value of the minimum lease payments under the Company’s operating leases: Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 23,626 2022 23,030 22,326 2023 16,204 15,841 2024 15,032 14,769 2025 14,222 13,949 Thereafter 38,679 38,544 Total minimum payments 107,167 129,055 Less: imputed interest (9,060) (11,822) Operating lease liability 98,107 117,233 Less: current portion of operating lease liability (20,649) (20,689) Long-term operating lease liability $ 77,458 $ 96,544 The Company is subleasing two of its facilities through May 2022 and one through July 2023. 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 consolidated statements of operations. The following is a summary as of June 30, 2021 and June 30, 2020, respectively, of the expected sublease income: Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 1,960 2022 1,496 1,496 2023 797 797 2024 66 66 Total sublease income $ 2,359 $ 4,319 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 leases for the years ended June 30, 2021 and 2020: Year Ended June 30, 2021 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 28,647 $ 16,740 Interest on lease liabilities 1,111 820 Instructional costs and services: Operating lease cost 15,877 6,902 Short-term lease cost 181 222 Sublease income (920) (419) Selling, general, and administrative expenses: Operating lease cost 6,681 6,227 Short-term lease cost 970 992 Sublease income (916) (760) Total lease cost $ 51,631 $ 30,724 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (21,025) $ (13,124) Financing cash flows from finance leases (24,315) (27,675) Right-of-use assets obtained in exchange for new finance lease liabilities 66,861 17,160 Right-of-use assets obtained in exchange for new operating lease liabilities 1,643 6,311 Weighted-average remaining lease term - finance leases 2.52 yrs. 0.79 yrs. Weighted-average remaining lease term - operating leases 6.58 yrs. 7.15 yrs. Weighted-average discount rate - finance leases 2.45 % 2.86 % Weighted-average discount rate - operating leases 2.75 % 2.76 % |
Debt
Debt | 12 Months Ended |
Jun. 30, 2021 | |
Debt | |
Debt | 7. Debt Year Ended June 30, 2021 2020 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ — Less: unamortized discount (113,331) — Less: unamortized debt issuance costs (7,398) — Total debt 299,271 — Less: current portion of debt — — Long-term debt $ 299,271 $ — Convertible Senior Notes due 2027 The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1 st st The Company separated the Notes into liability and equity components. The initial carrying amount of the liability component was $294.6 million and was calculated using a discount rate of 6.5%. The discount rate was based on the terms of a similar debt instrument as the Notes without the associated conversion feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of the Notes, or $125.4 million. The amount recorded in equity is not subject to remeasurement or amortization. The $125.4 million also represents the initial discount recorded on the Notes. The discount is accreted to interest expense using the effective interest rate method over the contractual term of the Notes. The Company incurred debt issuance costs of $11.4 million. These costs were allocated pro rata to liabilities and equity based upon the initial carrying values attributable to each. The portion of the debt issuance costs allocated to equity is not subject to amortization; while the portion allocated to liabilities is amortized over the contractual term of the Notes. The Company recorded interest expense related to the accretion of the discount and the amortization of the debt issuance costs of $12.0 million and $0.6 million, respectively, during the year ended June 30, 2021. The effective interest rate of the Notes for the year ended June 30, 2021 was 6.4%. 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. 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 (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. |
Credit Facility
Credit Facility | 12 Months Ended |
Jun. 30, 2021 | |
Credit Facility | |
Credit Facility | 8. Credit Facility amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. As of June 30, 2021, the Company was in compliance with the financial covenants. As part of the proceeds received from the Notes, the Company repaid its $100.0 million outstanding balance and as of June 30, 2021, the Company had no amounts outstanding on the Credit Facility. The Credit Facility also includes a $200.0 million accordion feature. |
Equity Incentive Plan
Equity Incentive Plan | 12 Months Ended |
Jun. 30, 2021 | |
Equity Incentive Plan | |
Equity Incentive Plan | 9. Equity Incentive Plan On December 15, 2016 (the “Effective Date”), the Company’s stockholders approved the 2016 Incentive Award Plan (the “Plan”). The 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 Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the Plan, the following types of shares go back into the pool of shares available for issuance: ● unissued shares related to forfeited or cancelled restricted stock and stock options from Plan awards and Prior Plan awards (that were outstanding as of the Effective Date), and; ● shares tendered to satisfy the tax withholding obligation related to the vesting of restricted stock (but not stock options). Unlike the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”), the Plan has no evergreen provision to increase the shares available for issuance; any new shares would require stockholder approval. The Prior Plan expired in October 2017, and the Company no longer awards equity from the Prior Plan. At June 30, 2021, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 575,026. At June 30, 2021, there were 4,378,183 shares of the Company’s common stock that remain outstanding or nonvested under the 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. For awards subject to service and performance-based vesting conditions, the Company recognizes stock-based compensation expense retroactively through a cumulative catch-up adjustment when it is probable that the performance condition will be achieved. Stock-based compensation expense is recorded within selling, general, and administrative expenses on the consolidated statements of operations. Stock Options Each stock option is exercisable pursuant to the vesting schedule set forth in the stock option agreement granting such stock option, generally over four years. No stock option shall be exercisable after the expiration of its option term. The Company has granted stock options under the Prior Plan and the Company has also granted stock options to executive officers under stand-alone agreements outside the Prior Plan. Stock option activity including stand-alone agreements during the years ended June 30, 2021, 2020 and 2019 was as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2018 1,199,307 $ 19.97 3.55 $ 788,277 Granted — — Exercised (150,290) 20.16 Forfeited or canceled (13,000) 29.82 Outstanding, June 30, 2019 1,036,017 $ 19.82 2.64 $ 11,312,871 Granted — — Exercised (4,000) 16.07 Forfeited or canceled (10,500) 30.92 Outstanding, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 Granted — — Exercised (990,067) 19.83 Forfeited or canceled — — Outstanding and exercisable, June 30, 2021 31,450 $ 16.58 0.82 $ 437,037 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last day of the year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2021. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the years ended June 30, 2021, 2020 and 2019 was $24.6 million, $0.0 million, and $1.2 million, respectively. As of June 30, 2021, there was no unrecognized compensation expense related to nonvested stock options granted. During the years ended June 30, 2021, 2020 and 2019, the Company recognized $0.0 million, $0.1 million and $0.6 million, respectively, of stock-based compensation expense related to stock options. Restricted Stock Awards The Company has approved grants of restricted stock awards (“RSA”) pursuant to the Plan and Prior Plan. Under the 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. Under the Plan and Prior Plan, there have been no awards of restricted stock to independent contractors. Restricted stock award activity during the years ended June 30, 2021, 2020 and 2019 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 1,676,907 $ 15.12 Granted 828,833 18.44 Vested (947,703) 14.72 Canceled (235,485) 17.40 Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,126,227 26.84 Vested (750,634) 16.93 Canceled (79,541) 21.48 Nonvested, June 30, 2020 1,618,604 $ 23.73 Granted 578,070 37.87 Vested (704,921) 21.78 Canceled (82,419) 27.94 Nonvested, June 30, 2021 1,409,334 $ 30.26 Performance-Based Restricted Stock Awards (included above) During the year ended June 30, 2021, 126,417 new performance-based restricted stock awards were granted and in total, 574,611 remain nonvested at June 30, 2021. During the year ended June 30, 2021, 110,594 performance-based restricted stock awards vested. Vesting of the performance-based restricted stock awards is contingent on the achievement of certain financial performance goals and service vesting conditions. one two During the year ended June 30, 2021, the Company granted 82,710 performance-based restricted stock awards to the Company’s named executive officers (“NEOs”) with a weighted average grant-date fair value of $45.33 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics in fiscal year 2021. If achieved, one two two one Company’s NEOs with a weighted average grant-date fair value of $27.91 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics in fiscal year 2020. In August 2020, achievement was certified at 109% of target, which resulted in an additional 13,343 shares, and one two Service-Based Restricted Stock Awards (included above) During the year ended June 30, 2021 451,653 new service-based restricted stock awards were granted and in total, 834,724 remain nonvested at June 30, 2021. During the year ended June 30, 2021, 594,327 service-based restricted stock awards vested. Summary of All Restricted Stock Awards As of June 30, 2021, there was $24.2 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 1.3 years. The fair value of restricted stock awards granted for the years ended June 30, 2021 and 2020 was $21.9 million and $30.2 million, respectively. The total fair value of shares vested for the years ended June 30, 2021 and 2020 was $24.5 million and $17.9 million, respectively. During the years ended June 30, 2021, 2020 and 2019, the Company recognized $22.6 million, $17.1 million and $12.3 million, respectively, of stock-based compensation expense related to restricted stock awards. Performance Share Units (“PSU”) The Company has approved grants of performance share units (“PSU”) pursuant to the 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 years ended June 30, 2021, 2020 and 2019 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 708,979 $ 13.15 Granted 2,372,241 10.61 Vested (427,954) 13.24 Canceled (281,025) 13.02 Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 100,964 15.30 Vested — — Canceled (8,352) 29.93 Nonvested, June 30, 2020 2,464,853 $ 10.78 Granted 477,700 40.17 Vested — — Canceled (64,509) 28.33 Nonvested, June 30, 2021 2,878,044 $ 15.26 Fiscal Year 2021 Tech Elevator MIP During the year ended June 30, 2021, the Company granted, to the executive team of Tech Elevator, a time-based award with a value of $4.0 million and a performance-based award with a target value of $4.0 million under a Management Incentive Plan (“MIP”). The time-based award vests equally over three years on the anniversary of the closing date of the acquisition of Tech Elevator (see Note 13, “Acquisitions and Investments” for additional detail on the Company’s acquisition). The performance-based award is tied to the achievement of certain revenue and EBITDA targets of Tech Elevator. Seventy percent of the award is based on Tech Elevator’s revenues for the calendar year 2023 (“Tranche #1”) and thirty percent of the earned award is based on Tech Elevator’s EBITDA for the calendar year 2023 (“Tranche #2”), both of which are expected to vest after achievement is certified in January 2024. The level of performance will determine the number of PSUs earned as measured against threshold and target achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The MIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions are not able to be determined at this time. Fiscal Year 2021 LTIP During the year ended June 30, 2021, the Company granted 111,450 PSUs at target under a Long Term Incentive Plan (“LTIP”) which are tied to the achievement of certain individualized financial and non-financial performance targets. These PSUs had a grant date fair value of $2.7 million, or a weighted average grant-date fair value of $24.15 per share. Forty percent will vest after achievement is certified during the first quarter of fiscal year 2023 and sixty percent will vest one year later. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 LTIP is an equity-classified award. The Company is currently amortizing certain awards over their vesting periods because it believes that it is probable that the specific metrics will be achieved. One metric with a target grant date fair value of $0.3 million is assumed to be achieved at target, two metrics with a target grant date fair value of $0.2 million is assumed to be achieved at threshold, and the remaining metrics are currently being assessed as not probable of achievement. Fiscal Year 2021 Career Learning PSUs During the year ended June 30, 2021, the Company granted 366,250 PSUs at target which are tied to the achievement of Career Learning revenues targets for fiscal years 2021 – 2023. These PSUs had a grant date fair value of $16.5 million, or a weighted average grant-date fair value of $45.05 per share. The vesting is as follows: ● 77,690 PSUs relate to fiscal year 2021 revenues and if achieved, one -third of the award will vest immediately, and the remaining two -thirds will vest annually over two years ; ● 122,080 PSUs relate to fiscal year 2022 revenues and if achieved, two -thirds of the award will vest immediately, and the remaining one -third will vest the following year; and ● 166,480 PSUs relate to fiscal year 2023 revenues and if achieved, the award will vest immediately. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 Career Learning PSUs are an equity-classified award. The Company determined the achievement of the performance conditions associated with the fiscal year 2021 revenues and fiscal year 2022 revenues was not probable, and probable at the target level, respectively. The Company determined the likelihood of achievement of the performance conditions associated with the fiscal year 2023 revenues are not able to be determined at this time. Fiscal Year 2020 Galvanize TRIP During fiscal year 2020, the Company granted, to the executive team of Galvanize, a target level of $12.3 million under a Transaction Related Incentive Plan (“TRIP”) which is tied to the achievement of certain revenue and EBITDA targets of Galvanize. Seventy percent of the earned award is based on the performance of Galvanize for the calendar year 2021 (“Tranche #1”) and thirty percent of the earned award is based on the performance of Galvanize for the calendar year 2022 (“Tranche #2”), both of which are expected to vest after achievement is certified in January following each of the calendar year ends. The revenue and EBITDA targets are split sixty percent and forty percent, respectively, for both tranches. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. The TRIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions associated with all tranches are not probable. Fiscal Year 2019 LTIP During fiscal year 2019, the Company granted 263,936 PSUs at target under a LTIP which are tied to certain career learning revenue targets and enrollment levels, as well as students’ academic progress. These PSUs had a grant date fair value of $7.9 million, or a weighted average grant-date fair value of $30.05 per share. During fiscal year 2020, the Company granted an additional 34,030 PSUs at target with a grant date fair value of $0.8 million, or $23.51 per share. Forty-five percent of the earned award is based on students’ academic progress (“Tranche #1”) and twenty-five percent of the earned award is based on certain enrollment levels (“Tranche #2”), both of which will vest after achievement is certified on October 15, 2021. The remaining thirty percent of the earned award is based on certain revenue targets (“Tranche #3”) and will vest after achievement is certified on August 15, 2022. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The Company determined the achievement of the performance conditions associated with Tranche #1 was not probable, while Tranche #2 and Tranche #3 was determined to be probable at the outperform level for both. Fiscal Year 2019 SPP During fiscal year 2019, the Company adopted a new long-term shareholder performance plan (“2019 SPP”) that provides for incentive award opportunities to its key senior executives. The awards were granted in the form of PSUs and will be earned based on the Company’s market capitalization growth over a completed three-year performance period. The 2019 SPP was designed to provide the executives with a percentage of shareholder value growth. No amounts will be earned if total stock price growth over the three-year period is below 25% (7.6% annualized). An amount of 6% of total value growth will be earned based on achieving total stock price growth of 33% (10% annualized) and a maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95% (25% annualized). During fiscal year 2019, the Company granted 2,108,305 PSUs at a weighted average grant-date fair value of $8.18 per share, based on the highest level of performance. During fiscal year 2020, the Company granted an additional 66,934 PSUs at a weighted average grant-date fair value of $12.56 per share, based on the highest level of performance. The final amount of PSUs will be determined (and vesting will occur) based on the 30-day average price of the Company’s stock subsequent to seven days after the release of fiscal year 2021 results. The fair value was determined using a Monte Carlo simulation model and is amortized on a straight-line basis over the vesting period. The SPP is a market-based award, and therefore is not subject to any probability assessment by the Company. Summary of All Performance Share Units As of June 30, 2021, there was $11.6 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 0.5 years. During the years ended June 30, 2021, 2020, and 2019 the Company recognized $16.7 million, $6.3 million and $3.9 million, respectively, of stock-based compensation expense related to PSUs. Included in the stock-based compensation expense above is $0.8 million related to the Tech Elevator time-based portion of the MIP. This amount was recorded in accrued liabilities on the consolidated balance sheets because it is a liability-classified award. Deferred Stock Units (“DSU”) 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 years ended June 30, 2021, 2020 and 2019 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 — $ — Granted 18,258 25.41 Vested — — Canceled — — Nonvested, June 30, 2019 18,258 $ 25.41 Granted 23,844 20.13 Vested — — Canceled — — Nonvested, June 30, 2020 42,102 $ 22.42 Granted 17,252 21.01 Vested — — Canceled — — Nonvested, June 30, 2021 59,354 $ 22.01 Summary of All Deferred Stock Units As of June 30, 2021, there was $0.2 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.5 years. During the years ended June 30, 2021, 2020 and 2019, the Company recognized $0.4 million, $0.5 million and $0.5 million, respectively, of stock-based compensation expense related to DSUs. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Litigation In the ordinary conduct of the Company’s business, the Company is subject to lawsuits, arbitrations 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. 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. Georgia Cyber Academy Arbitration On May 10, 2019, K12 Virtual Schools LLC filed a demand for arbitration with the American Arbitration Association (“AAA”), Case No. 01-19-001-4778, naming Georgia Cyber Academy, Inc. (“GCA”) as the respondent. The demand asserted claims for GCA’s breach and anticipatory breach of the Educational Products and Services Agreement between GCA and K12 Virtual Schools LLC, as amended on January 4, 2019, based on GCA’s engagement of other educational products and service providers for the school year 2019-2020. On May 29, 2019, GCA filed counterclaims against K12 Virtual Schools, LLC for breach of contract, fraud, breach of the duty of good faith and fair dealing, and negligent misrepresentation. The AAA appointed an arbitrator on June 12, 2019, and the parties presented evidence in support of their respective claims during merits hearings in March and June 2020. On July 8, 2020, the parties executed an agreement, effective June 30, 2020, to resolve all of their claims. Under the terms of the settlement agreement, GCA will pay the Company $19 million over a period of two years, of which $10 million was paid in July 2020. The Company recorded revenues of $4.6 million for services provided by the Company during fiscal year 2020 and the remaining $14.4 million reflected a prior year receivable, as part of a comprehensive settlement agreement. Securities Litigation On November 19 and December 11, 2020, respectively, two putative securities class action lawsuits captioned Yun Chau Lee v. K12 Inc., et al, Case No. 1:20-cv-01419 (the “Lee Case”), and Jennifer Baig v. K12 Inc., et al, Case No. 1:20-cv-01528 (the “Baig Case”) were filed against the Company, one of its current officers, and one of its former officers in the United States District Court for the Eastern District of Virginia, purportedly on behalf of a class of persons who purchased or otherwise acquired the Company’s common stock between April 27, 2020 and September 18, 2020, inclusive. On February 17, 2021, the Court consolidated the Lee Case and the Baig Case under the caption In re K12 Inc. Securities Litigation, Case No. 1:20-cv-01419 (the “Consolidated Securities Class Action”), and appointed a lead plaintiff. The lead plaintiff filed a consolidated amended complaint on April 5, 2021, alleging violations by the Company and the individual defendants of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated under the Exchange Act, and violations by the individual defendants of Section 20(a) of the Exchange Act. The complaint alleges, among other things, that the Company and the individual defendants made false or misleading statements and/or omitted to disclose material facts concerning its technological capabilities and expertise to support increased demand for virtual and blended education related to the global emergence of COVID-19, its cybersecurity protocols and protections, and its administrative support and training to teachers, students, and parents. The complaint seeks unspecified monetary damages and other relief. The Company filed a motion to dismiss the complaint in its entirety on May 20, 2021, and a decision on the motion remains outstanding. On December 21, 2020 and April 30, 2021, respectively, related derivative lawsuits captioned Larry Shemen, et al v. Aida M. Alvarez, et al, Case No. 1:20-cv-01731 (the “Shemen Case”), and Wajid Ahmed v. Aida M. Alvarez, et al, Case No. 1:21-cv-00618 (the “Ahmed Case) were filed by three of the Company’s shareholders in the United States District Court for the District of Delaware. The plaintiffs in the Shemen Case and the Ahmed Case allege substantially the same facts alleged in the Consolidated Securities Class Action. By stipulation of the parties on May 14, 2021, the Court consolidated the Shemen Case and the Ahmed Case under the caption In re Stride Inc. Derivative Litigation, Case No. 20-01731 (the “Consolidated Derivative Action”), and designated as operative the complaint filed in the Ahmed Case. The operative complaint purports to assert claims on the Company’s behalf against certain of its officers and directors for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, and for violation of Sections 14(a) and 20(a) of the Exchange Act. The complaint seeks unspecified monetary damages, corporate governance reforms, and other relief. The Consolidated Derivative Action is stayed pending resolution of the Company’s motion to dismiss in the Consolidated Securities Class Action. We intend to defend vigorously against each and every allegation and asserted claim in these matters. Employment Agreements The Company has entered into employment agreements with certain executive officers that provide for severance payments and, in some cases other benefits, upon certain terminations of employment. Except for the agreement with the Company’s Executive Chairman with an amended extended term to September 30, 2022, all other agreements 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 agreement. Off-Balance Sheet Arrangements As of June 30, 2021, the Company provided guarantees of approximately $0.5 million related to lease commitments on the buildings for certain of the Company’s schools. In addition, 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 these lease and 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. Risks and Uncertainties Impacts of COVID-19 on Stride’s Business While the long-term impact of the global emergence of COVID-19 is not estimable or determinable, beginning in late fiscal year 2020, the Company experienced an increase in demand for its products and services. The Company continues to conduct business as usual with some modifications to employee travel, employee work locations, and cancellation of certain events. The Company will continue to actively monitor the situation and may take further actions that alter its business operations as may be required by federal, state or local authorities or that it determines is in the best interests of its employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on the Company’s business, including the effects on its customers and prospects, or on its long-term financial results. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The Company has evaluated the business provisions in the CARES Act and adopted the deferral of the employer portion of the social security payroll tax (6.2%) outlined within. The deferral is effective from the enactment date through December 31, 2020. The deferred amount of $14.1 million will be paid in two installments, 50% of the deferred amount by December 31, 2021 and the remainder by December 31, 2022. The deferred payroll taxes due on December 31, 2021 are recorded within accrued liabilities and the deferred payroll taxes due on December 31, 2022 are recorded within other long-term liabilities on the consolidated balance sheets. |
Restructuring
Restructuring | 12 Months Ended |
Jun. 30, 2021 | |
Restructuring | |
Restructuring | 11. Restructuring In the third quarter of fiscal year 2017, the Company exited three facilities that were no longer being utilized, which were subject to operating leases. In aggregate, during fiscal year 2017, the Company recorded an impairment of $5.4 million for the three leases. As part of the adoption of ASC 842, the lease impairment liability of $1.8 million as of June 30, 2019 was offset against the right-of-use asset. |
Severance
Severance | 12 Months Ended |
Jun. 30, 2021 | |
Severance | |
Severance | 12. Severance |
Acquisitions and Investments
Acquisitions and Investments | 12 Months Ended |
Jun. 30, 2021 | |
Acquisitions and Investments | |
Acquisitions and Investments | 13. Acquisitions and Investments Acquisition of MedCerts, LLC On November 30, 2020, the Company acquired 100% of MedCerts in exchange for $70.0 million and estimated contingent consideration of $10.8 million. The purchase price is payable in two tranches; $55.0 million was paid at closing, and $15.0 million plus the final contingent consideration will be paid on the 18-month anniversary of the closing. In addition, during the fourth quarter of fiscal year 2021, the Company paid an additional $0.3 million related to the finalization of the working capital. MedCerts students participate in online, hands-on career training courses in the healthcare and medical fields as they prepare for more than a dozen national healthcare certifications. The acquisition of MedCerts further expands the Company’s post-secondary skills training in the healthcare and medical fields. The Company also plans to use MedCerts’ curriculum to create appropriate content to offer high school students. The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair values as of November 30, 2020, the acquisition date. As of the acquisition date, goodwill was measured as the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which was based on estimates and assumptions that are subject to change, the preliminary estimated purchase price was allocated as follows (in thousands): Allocation of Purchase Price Cash $ 205 Current assets, excluding cash 5,074 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 51,033 Current liabilities (2,201) Deferred revenue (1,562) Deferred tax asset (liability) 16 Total consideration $ 81,068 The final purchase price allocation will be completed within one year of the acquisition date (“measurement period”). If information becomes available which would indicate material adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. The fair value of the identified intangible assets was determined primarily using an income-based approach of either the multi-period excess earnings method or relief from royalty method, as appropriate. Intangible assets are amortized on a straight-line basis over the amortization periods noted below. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 12,072 5.84 Developed technology 11,970 7.00 Trade names 2,565 5.00 $ 26,607 The contingent consideration represents the fair value of additional consideration payable to the seller, estimated using a Monte Carlo simulation model. The amount of consideration to be distributed on the 18-month anniversary of the closing is based on a multiplier calculated using the annualized earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the period December 2021 – May 2022. This multiplier is applied to the annualized trailing EBITDA for the period March 2022 – May 2022 to calculate an enterprise value of MedCerts as of May 2022. The payment, if any, will equal 49% of the enterprise value less 49% of the original purchase price of $70.0 million ($34.3 million). Subsequent to the acquisition date, the Company is required to reassess its estimate of the fair value of contingent consideration, and record any changes in earnings when the estimate is based on information not known as of the acquisition date. During the year ended June 30, 2021, the Company recorded an expense of $0.3 million related to the estimate of the fair value of its contingent consideration. That adjustment is recorded within selling, general, and administrative expenses on the consolidated statements of operations. The fair value of the contingent consideration as of June 30, 2021 was $11.1 million and is recorded within accrued liabilities on the consolidated balance sheets. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is deductible for tax purposes. Included in the Company’s consolidated results of operations for the year ended June 30, 2021 are revenues and a loss from operations of $14.6 million and $3.5 million, respectively, related to MedCerts. Acquisition of Tech Elevator, Inc. On November 30, 2020, the Company acquired 100% of Tech Elevator in exchange for $23.5 million, plus working capital of $2.2 million. Like Galvanize, Tech Elevator provides talent development for individuals and enterprises in information technology fields. The acquisition of Tech Elevator expands Galvanize’s student demographic profile, geographic footprint, and hiring partner portfolio; as well as provides additional curriculum to create appropriate content to offer high school students. The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair values as of November 30, 2020, the acquisition date. As of the acquisition date, goodwill was measured as the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which was based on estimates and assumptions that are subject to change, the preliminary estimated purchase price was allocated as follows (in thousands): Allocation of Purchase Price Cash $ 1,736 Current assets, excluding cash 518 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 17,897 Other assets 377 Current liabilities (267) Deferred revenue (534) Deferred tax liability (1,650) Current operating lease liability (420) Long-term operating lease liability (304) Total consideration $ 25,695 The final purchase price allocation will be completed within one year of the acquisition date (“measurement period”). If information becomes available which would indicate material adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. The fair value of the identified intangible assets was determined primarily using an income-based approach of either the multi-period excess earnings method or relief from royalty method, as appropriate. Intangible assets are amortized on a straight-line basis over the amortization periods noted below. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 311 3.92 Developed technology 2,796 5.00 Trade names 3,998 15.00 $ 7,105 Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is not deductible for tax purposes. Included in the Company’s consolidated results of operations for the year ended June 30, 2021 are revenues and income from operations of $7.2 million and $0.4 million, respectively, related to Tech Elevator. Acquisition of Galvanize, Inc. On January 27, 2020, the Company acquired 100% of Galvanize in exchange for $165.0 million, plus working capital of $9.2 million. Galvanize provides talent development for individuals and enterprises in information technology fields. The acquisition of Galvanize expands the Company’s offerings to include post-secondary skills training in data science and software engineering, technology staffing and developing talent and capabilities for companies. The Company also plans to use Galvanize’s curriculum to create appropriate content to offer high school students. The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their fair values as of January 27, 2020, the acquisition date. As of the acquisition date, goodwill was measured as the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. Allocation of Purchase Price Cash $ 9,232 Current assets, excluding cash 8,888 Property and equipment, net 11,270 Operating lease right-of-use assets, net 100,232 Intangible assets, net 68,483 Goodwill 81,225 Other assets 1,802 Current liabilities (4,370) Deferred revenue (3,374) Deferred tax asset (liability) 2,372 Current operating lease liability (11,620) Long-term operating lease liability (89,782) Other long-term liabilities (130) Total consideration $ 174,228 ● The value of the operating lease right-of-use assets, net increased from $99.7 million to $100.2 million. Lease expense in fiscal year 2021 was not significantly impacted by the updated balance as of the acquisition date. ● The Company and the sellers finalized its working capital calculation resulting in an adjustment to the purchase price of $3.0 million. ● Goodwill decreased from $84.7 million to $81.2 million as a result of the adjustments above. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 4,785 4.22 Developed technology 3,357 4.00 Trade names 60,341 15.00 $ 68,483 Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized, but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is not deductible for tax purposes. Included in the Company’s consolidated results of operations for the years ended June 30, 2021 and 2020 are revenues of $33.7 million and $11.0 million, respectively, and loss from operations of $42.2 million and $18.1 million, respectively, related to Galvanize. Pro Forma Combined Results of Operations The following unaudited pro forma combined results of operations give effect to the acquisition of Galvanize as if it had occurred on July 1, 2018, and MedCerts and Tech Elevator as if they had occurred on July 1, 2019. The unaudited pro forma combined results of operations are provided for informational purposes only and do not purport to represent the Company’s actual consolidated results of operations had the acquisitions occurred on the dates assumed, nor are these financial statements necessarily indicative of the Company’s future consolidated results of operations. The unaudited pro forma combined results of operations do not reflect the costs of any integration activities or any benefits that may result from operating efficiencies or revenue synergies. Year Ended June 30, (In thousands) 2021 2020 2019 Revenues $ 1,552,173 $ 1,091,429 $ 1,066,304 Income (loss) from operations 111,287 2,647 23,148 Net income (loss) 72,443 (4,506) 13,729 Investments in Limited Partnerships Investment in Tallo, Inc. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions | |
Related Party Transactions | 14. Related Party Transactions The Company contributed to Future of School, a charity focused on access to quality education. Future of School is a related party as an executive officer of the Company serves on its Board of Directors. During the years ended June 30, 2021, 2020 and 2019, contributions made by the Company to Future of School were $1.3 million, $1.2 million, and $1.4 million, respectively. In fiscal year 2019, the Company accrued $2.5 million for contributions to be made in subsequent years. The amounts shown for fiscal year 2021 reduced that obligation to zero as of June 30, 2021. In fiscal year 2021, the Company accrued $3.5 million for contributions to be made over the next five years with $1.2 million committed to be paid in fiscal year 2022. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Jun. 30, 2021 | |
Employee Benefits | |
Employee Benefits | 15. Employee Benefits The Company maintains a 401(k) salary deferral plan (the “401(k) Plan”) for its employees. Employees who have been employed for at least 30 |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 12 Months Ended |
Jun. 30, 2021 | |
Supplemental Disclosure of Cash Flow Information | |
Supplemental Disclosure of Cash Flow Information | 16. Supplemental Disclosure of Cash Flow Information Year Ended June 30, 2021 2020 2019 Cash paid for interest $ 4,504 $ 1,287 $ 1,108 Cash paid for taxes $ 18,717 3,384 $ 4,453 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 $ — $ 17,652 $ — Right-of-use assets obtained from acquisitions $ 1,280 $ 99,676 $ — Right-of-use assets obtained in exchange for new finance lease liabilities 66,861 17,160 19,664 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 255 $ 229 $ 167 Stock-based compensation expense capitalized on curriculum development 116 184 170 Business combinations: Acquired assets $ 11,043 $ 130,868 $ — Intangible assets 33,712 68,483 — Goodwill 68,930 84,741 — Assumed liabilities (4,826) (103,490) — Deferred revenue (2,096) (3,374) — |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Jun. 30, 2021 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II STRIDE, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ending June 30, 2021, 2020 and 2019 1. ALLOWANCE FOR DOUBTFUL ACCOUNTS Additions Balance at Charged to Deductions from Beginning Cost and (Net Increases to) Balance at of Period Expenses Allowance End of Period June 30, 2021 $ 6,807,674 6,561,243 (8,014,626) $ 21,383,543 June 30, 2020 $ 11,765,869 2,882,067 7,840,262 $ 6,807,674 June 30, 2019 $ 12,384,279 6,325,188 6,943,598 $ 11,765,869 2. INVENTORY RESERVES Balance at Charged to Deductions, Beginning Cost and Shrinkage and Balance at of Period Expenses Obsolescence End of Period June 30, 2021 $ 4,817,300 1,038,019 208,036 $ 5,647,283 June 30, 2020 $ 4,131,386 877,357 191,443 $ 4,817,300 June 30, 2019 $ 3,491,655 1,359,595 719,864 $ 4,131,386 3. COMPUTER RESERVE (1) Additions Balance at Charged to Deductions, Beginning Cost and Shrinkage and Balance at of Period Expenses Obsolescence End of Period June 30, 2021 $ 811,682 2,007,076 $ 545,386 $ 2,273,372 June 30, 2020 $ 788,230 835,488 812,036 $ 811,682 June 30, 2019 $ 899,654 383,770 495,194 $ 788,230 (1) A reserve account is maintained against potential obsolescence of, and damage beyond economic repair to, computers provided to the Company’s students. The reserve is calculated based upon several factors including historical percentages, the net book value and the remaining useful life. During fiscal years 2021, 2020 and 2019, certain computers were written off against the reserve. 4. INCOME TAX VALUATION ALLOWANCE Additions to Deductions in Balance at Net Deferred Net Deferred Beginning Tax Asset Tax Asset Balance at of Period Allowance Allowance End of Period June 30, 2021 $ 4,990,768 123,249 66,939 $ 5,047,078 June 30, 2020 $ 4,548,900 441,868 — $ 4,990,768 June 30, 2019 $ 4,458,517 90,383 — $ 4,548,900 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses On July 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and interest expense will be recognized at the coupon rate. Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods. The Company early adopted this standard in the first quarter of fiscal year 2022. The adoption resulted in the elimination of the debt discount (and related deferred tax liability) that had been recorded within equity. The net impact of the adjustments will be recorded to the opening balance of retained earnings. Preliminarily, the impacts to the consolidated balance sheet were the following: (1) increase of $110.6 million to long-term debt, (2) decrease of $89.4 million to additional paid-in capital, (3) decrease of $29.4 million to deferred tax liability, and (4) increase to retained earnings of $8.2 million. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to the allowance for doubtful accounts, inventory reserves, amortization periods, the allocation of purchase price to the fair value of net assets and liabilities acquired in business combinations, fair values used in asset impairment evaluations, valuation of long-lived assets, accrual for incurred but not reported (“IBNR”) claims, contingencies, income taxes, fair value of contingent consideration and stock-based compensation expense. The Company bases its estimates on historical experience and various assumptions that it believes are reasonable under the circumstances. The results of the analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Revenue Recognition | 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, business, and health services, 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 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. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s 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 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 for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to 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 pro rata 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 Company’s 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 schools’ 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 current and prior periods. For the years ended June 30, 2020, 2019 and 2018, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately (0.1)%, 0.6%, and 0.4%, respectively. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. 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 and 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 recognized revenues 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 years ended June 30, 2021, 2020 and 2019, the Company’s revenues included a reduction for net school operating losses at the schools of $63.4 million, $45.4 million, and $54.7 million, 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 expenses in the consolidated statements of operations. Amounts recorded as revenues and expenses for the years ended June 30, 2021, 2020 and 2019, were $412.1 million, $325.5 million and $342.7 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 Enterprise Contracts The Company provides job training over a specified contract period to enterprises. Each of these contracts are 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 Company’s 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 years ended June 30, 2021, 2020 and 2019, approximately 88%, 88%, and 87%, respectively, of the Company’s General Education revenues, and 98%, 99% 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 business for the years ended June 30, 2021, 2020 and 2019: Year Ended June 30, 2021 2020 2019 (In thousands) General Education $ 1,280,199 $ 933,809 $ 965,931 Career Learning Middle - High School 200,774 96,003 49,821 Adult 55,787 10,953 — Total Career Learning 256,561 106,956 49,821 Total Revenues $ 1,536,760 $ 1,040,765 $ 1,015,752 Concentration of Customers During the years ended June 30, 2021, 2020 and 2019, the Company had zero, zero and one contract, respectively, that represented greater than 10% of revenues. In fiscal year 2018, the Company and the Agora Cyber Charter School entered into an agreement related to its outstanding receivable of $28.7 million at June 30, 2018 to be paid over a four-year period. In addition, the term of the service agreement was extended through June 30, 2022. The Company reclassified the long-term portion of $23.2 million to deposits and other assets on the consolidated balance sheets as of June 30, 2018. The balance as of June 30, 2021 was $4.2 million and is included in accounts receivable on the consolidated balance sheets. The Company accrues interest on its long-term receivables based on contracted terms. 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 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: June 30, 2021 2020 (In thousands) Accounts receivable $ 369,303 $ 236,134 Unbilled receivables (included in accounts receivable) 24,794 15,688 Deferred revenue 38,110 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,973 2,236 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 contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. 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 years ended June 30, 2021, 2020 and 2019, that was included in the previous July 1 st 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. Significant Judgments 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. 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 accompanying consolidated balance sheets. Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are classified as instructional costs and services in the accompanying consolidated statements of operations. Shipping and handling charges invoiced to a customer are included in revenues. |
Research and Developments Costs | Research and Development Costs All research and development costs, including patent application costs, are expensed as incurred. Research and development costs totaled $3.7 million, $9.7 million and $9.5 million for the years ended June 30, 2021, 2020 and 2019, respectively, and are included within selling, general and administrative expenses in the consolidated statements of operations. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents generally consist of cash on hand and cash held in money market and demand deposit accounts. The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company periodically has cash balances which exceed federally insured limits. Restricted cash consists of amounts held in escrow related to the Company’s settlement agreement with Agora Cyber Charter School. The restricted cash which is short-term in nature is included in other current assets, while the portion that is long-term is included in deposits and other assets on the consolidated balance sheets. |
Investments in Marketable Securities | 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 other current assets on the consolidated balance sheets. The securities with maturities greater than one year are classified as long-term and are included in other assets on the consolidated balance sheet. Held-to-maturity securities are recorded at their amortized cost. Interest income and dividends are recorded within the 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 ASC 326. Any declines in fair value related to a credit loss is recognized in the consolidated statements of operations, with the amount of the loss limited to the difference between fair value and amortized cost. As of June 30, 2021, the allowance for credit losses related to held-to-maturity debt securities was zero. As of June 30, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $17.3 million and $23.2 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument. Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company maintains an allowance under ASC 326 based on historical losses, 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 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. |
Inventories | 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 June 30, 2021 and 2020, $8.8 million and $5.2 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the 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 $5.6 million and $4.8 million at June 30, 2021 and 2020, respectively. |
Other Current Assets | Other Current Assets Other current assets consist primarily of 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. Additionally, other current assets include short-term marketable securities. |
Property and Equipment | 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.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 Computer hardware 3 - 7 years Computer software 3 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 based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $3.2 million, $2.4 million and $2.3 million for the years ended June 30, 2021, 2020 and 2019, respectively, related to unreturned student computers. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $8.4 million, $3.8 million and $4.1 million for the years ended June 30, 2021, 2020 and 2019, respectively, and are recorded as instructional costs and services. |
Capitalized Software Costs | 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 $31.3 million, $24.0 million and $26.3 million for the years ended June 30, 2021, 2020 and 2019, respectively. There were no material write-downs of capitalized software projects for the years ended June 30, 2021, 2020 and 2019. |
Capitalized Curriculum Development Costs | 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. Total capitalized curriculum development additions were $17.4 million, $19.3 million and $16.6 million for the years ended June 30, 2021, 2020 and 2019, respectively. These amounts are recorded on the accompanying consolidated balance sheets, net of amortization charges. There were no material write-downs of capitalized curriculum development costs for the years ended June 30, 2021, 2020 and 2019. |
Leases | Leases The Company adopted ASC Topic 842, 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 student computers and peripherals provided to students of its schools. Individual leases typically include 1 to 3-year payment terms, at varying rates, with a $1 purchase option at the end of each lease term. 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, sales and enrollment teams, and school operations. Initial lease terms vary between 1 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 Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. For its adoption of ASC 842 the Company utilized its agreements used for its finance leases as the basis for calculating its incremental borrowing rate. The rate was collateralized and its term reflected a similar term of the remaining lease payments of the Company’s largest operating lease. As of the adoption date, the incremental borrowing rate was 3.86%. Upon the execution of its senior secured revolving credit facility in January 2020 (see Note 8, “Credit Facility”), the Company reassessed its incremental borrowing rate as 2.55%. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to apply ASC 842 to short-term facility leases of 12 months or less. By making this election, the Company will not record a right-of-use asset or lease liability at the commencement of the lease, and will continue to 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. |
Goodwill and Intangible Assets | 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 years ended June 30, 2021, 2020 and 2019 was $11.6 million, $6.1 million and $3.0 million, respectively, and is included within selling, general, and administrative expenses in the consolidated statements of operations. Future amortization of intangible assets is expected to be $12.9 million, $12.7 million, $11.7 million, $10.5 million and $9.4 million in the fiscal years ending June 30, 2022 through June 30, 2026, respectively and $42.2 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 31st, which is then updated for any changes in conditions as of June 30 th During the years ended June 30, 2021 and 2020, the Company qualitatively assessed its goodwill and intangible assets for impairment. It identified Coronavirus disease 2019 (“COVID-19”) as a triggering event, however there were no indicators that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. On January 27, 2020, the Company acquired Galvanize for $165.0 million and working capital. On November 30, 2020, the Company acquired 100% of MedCerts in exchange for $70.0 million and estimated contingent consideration of $10.8 million; and 100% of Tech Elevator in exchange for $23.5 million, plus working capital of $2.2 million. The Company’s acquisitions are discussed in more detail in Note 13, “Acquisitions and Investments.” The following table represents goodwill additions/reductions resulting from the acquisitions mentioned above during the years ended June 30, 2021, 2020 and 2019: ($ in millions) Amount Goodwill Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 Acquisition of MedCerts, LLC 51.1 Acquisition of Tech Elevator, Inc. 17.9 Adjustments related to Galvanize, Inc. (3.5) Balance as of June 30, 2021 $ 240.4 June 30, 2021 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (17.4) $ 67.1 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (21.2) 16.5 25.3 (17.2) 8.1 Developed technology 21.3 (5.7) 15.6 6.6 (3.5) 3.1 Other 1.4 (1.1) 0.3 1.4 (1.0) 0.4 Total $ 144.9 $ (45.4) $ 99.5 $ 111.2 $ (33.7) $ 77.5 |
Impairment of Long-Lived Assets | 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 years ended June 30, 2021 and 2020, the Company considered whether there were events or circumstances that may indicate that the carrying amount of the long-lived assets may not be recoverable. It identified COVID-19 as a triggering event, however based on its assessment, the Company determined that COVID-19 did not impact the recoverability of its long-lived assets. |
Income Taxes | 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 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. |
Stock-Based Compensation | Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant. The fair value of restricted stock awards is based on the closing price of the Company’s common stock on the date of grant. Certain restricted stock awards with a market-based performance component are valued using a Monte Carlo simulation model that considers a variety of factors including, but not limited to, the Company’s common stock price, risk-free rate, and expected stock price volatility over the expected life of awards. The Company recognizes forfeitures of share-based awards as they occur in the period of forfeiture. |
Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs consist primarily of internet advertising, online marketing, direct mail, print media and television commercials and are expensed when incurred. Advertising costs totaled $23.0 million, $32.7 million and $38.0 million for the years ended June 30, 2021, 2020 and 2019, respectively, and are included within selling, general, and administrative expenses in the consolidated statements of operations. |
Fair Value Measurements | 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. 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 accompanying consolidated balance sheets for cash and cash equivalents, receivables, and short term debt approximate their fair values, as they are largely short-term in nature. The contingent consideration and Tallo, Inc. convertible note are discussed in more detail in Note 13, “Acquisitions and Investments.” As of June 30, 2021, the estimated fair value of the long-term debt was $389.3 million. The Company estimated the fair value based on the quoted market prices in an inactive market on the last day of the reporting period (Level 2). The long-term debt, comprised of the Company’s convertible senior notes due 2027, is recorded at face value less the unamortized discount and debt issuance costs on its consolidated balance sheet, and is discussed in more detail in Note 7, “Debt.” As of June 30, 2021, the estimated fair value of the Company’s marketable securities was $40.5 million. The Company estimated the fair value based on the quoted market prices in an inactive market on the last day of the reporting period (Level 2). The marketable securities are discussed in more detail in Note 3, “Summary of Significant Accounting Policies / Investments in Marketable Securities.” The following table summarizes certain fair value information at June 30, 2021 for assets or liabilities measured at fair value on a recurring basis. Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ — $ 11,082 Convertible note received in acquisition 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2020 for assets or liabilities measured at fair value on a recurring basis. Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2021. Year Ended June 30, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) June 30, 2021 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ 249 $ 11,082 Convertible note received in acquisition 5,006 — — 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2020. Year Ended June 30, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) June 30, 2020 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2019. Year Ended June 30, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) June 30, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — Convertible note received in acquisition — 5,006 — 5,006 |
Net Income Per Common Share | Net Income 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 was 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 antidilutive. Common stock outstanding reflected in the Company’s consolidated balance sheets includes restricted stock awards outstanding. The following schedule presents the calculation of basic and diluted net income per share: Year Ended June 30, 2021 2020 2019 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 71,451 $ 24,506 $ 37,209 Weighted average common shares — basic 40,211,016 39,478,928 38,848,780 Basic net income per share $ 1.78 $ 0.62 $ 0.96 Diluted net income per share computation: Net income attributable to common stockholders $ 71,451 $ 24,506 $ 37,209 Share computation: Weighted average common shares — basic 40,211,016 39,478,928 38,848,780 Effect of dilutive stock options and restricted stock awards 1,657,564 1,184,296 2,096,020 Weighted average common shares — diluted 41,868,580 40,663,224 40,944,800 Diluted net income per share $ 1.71 $ 0.60 $ 0.91 For the years ended June 30, 2021, 2020 and 2019, shares issuable in connection with stock options and restricted stock of 296,577, 729,008 and 140,657, respectively, were excluded from the diluted income per common share calculation because the effect would have been antidilutive. |
Reclassifications | Reclassification Certain previous year amounts have been reclassified to conform with current year presentations, as related to the statement of cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue | Year Ended June 30, 2021 2020 2019 (In thousands) General Education $ 1,280,199 $ 933,809 $ 965,931 Career Learning Middle - High School 200,774 96,003 49,821 Adult 55,787 10,953 — Total Career Learning 256,561 106,956 49,821 Total Revenues $ 1,536,760 $ 1,040,765 $ 1,015,752 |
Schedule of accounts receivables, unbilled receivables and deferred revenue | June 30, 2021 2020 (In thousands) Accounts receivable $ 369,303 $ 236,134 Unbilled receivables (included in accounts receivable) 24,794 15,688 Deferred revenue 38,110 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,973 2,236 |
Schedule of investments in marketable securities | Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 |
Schedule of useful lives of property and equipment | Useful Life Student and state testing computers 3 Computer hardware 3 - 7 years Computer software 3 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 |
Schedule of goodwill activity | ($ in millions) Amount Goodwill Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 Acquisition of MedCerts, LLC 51.1 Acquisition of Tech Elevator, Inc. 17.9 Adjustments related to Galvanize, Inc. (3.5) Balance as of June 30, 2021 $ 240.4 |
Schedule of intangible assets | June 30, 2021 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (17.4) $ 67.1 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (21.2) 16.5 25.3 (17.2) 8.1 Developed technology 21.3 (5.7) 15.6 6.6 (3.5) 3.1 Other 1.4 (1.1) 0.3 1.4 (1.0) 0.4 Total $ 144.9 $ (45.4) $ 99.5 $ 111.2 $ (33.7) $ 77.5 |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table summarizes certain fair value information at June 30, 2021 for assets or liabilities measured at fair value on a recurring basis. Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ — $ 11,082 Convertible note received in acquisition 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2020 for assets or liabilities measured at fair value on a recurring basis. Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Schedule of activity related to fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2021. Year Ended June 30, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) June 30, 2021 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ 249 $ 11,082 Convertible note received in acquisition 5,006 — — 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2020. Year Ended June 30, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) June 30, 2020 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the year ended June 30, 2019. Year Ended June 30, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) June 30, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — Convertible note received in acquisition — 5,006 — 5,006 |
Schedule of calculation of basic and diluted net income (loss) per share | Year Ended June 30, 2021 2020 2019 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 71,451 $ 24,506 $ 37,209 Weighted average common shares — basic 40,211,016 39,478,928 38,848,780 Basic net income per share $ 1.78 $ 0.62 $ 0.96 Diluted net income per share computation: Net income attributable to common stockholders $ 71,451 $ 24,506 $ 37,209 Share computation: Weighted average common shares — basic 40,211,016 39,478,928 38,848,780 Effect of dilutive stock options and restricted stock awards 1,657,564 1,184,296 2,096,020 Weighted average common shares — diluted 41,868,580 40,663,224 40,944,800 Diluted net income per share $ 1.71 $ 0.60 $ 0.91 |
Property and Equipment and Ca_2
Property and Equipment and Capitalized Software and Curriculum (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Property and Equipment and Capitalized Software and Curriculum | |
Schedule of property and equipment | June 30, 2021 2020 (In thousands) Student computers $ 99,728 $ 48,153 Computer software 16,201 17,268 Computer hardware 9,461 14,505 Leasehold improvements 18,320 17,396 State testing computers 7,440 7,461 Furniture and fixtures 7,104 7,178 Office equipment 1,455 1,372 159,709 113,333 Less accumulated depreciation and amortization (87,640) (74,665) $ 72,069 $ 38,668 |
Schedule of capitalized software | June 30, 2021 2020 (In thousands) Capitalized software $ 281,705 $ 249,720 Less accumulated depreciation and amortization (224,397) (201,227) $ 57,308 $ 48,493 |
Schedule of capitalized curriculum development costs | June 30, 2021 2020 (In thousands) Capitalized curriculum development costs $ 173,971 $ 156,018 Less accumulated depreciation and amortization (123,595) (107,169) $ 50,376 $ 48,849 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | June 30, 2021 2020 (In thousands) Deferred tax assets Net operating loss carryforward $ 22,159 $ 21,850 Reserves 5,038 3,374 Accrued expenses 5,552 4,117 Stock compensation expense 8,193 7,064 Other assets 7,466 2,252 Deferred revenue 437 759 Lease liability 27,812 29,640 Federal tax credits — 20 State tax credits — 44 Total deferred tax assets 76,657 69,120 Deferred tax liabilities Capitalized curriculum development (9,307) (9,245) Capitalized software and website development costs (14,026) (11,907) Property and equipment (11,613) (6,213) Right-of-use assets (26,889) (28,273) Returned materials (4,520) (2,385) Purchased intangibles (22,031) — Convertible debt (15,077) (19,877) Total deferred tax liabilities (103,463) (77,900) Net deferred tax liability before valuation allowance (26,806) (8,780) Valuation allowance (5,047) (4,991) Net deferred tax liability $ (31,853) $ (13,771) Reported as: Long-term deferred tax liabilities $ (31,853) $ (13,771) |
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | Year Ended June 30, 2021 2020 2019 (In thousands) Domestic $ 81,068 $ 27,672 $ 43,448 Foreign 14,922 5,375 4,281 Total income before income taxes $ 95,990 $ 33,047 $ 47,729 |
Schedule of components of income before income taxes | Year Ended June 30, 2021 2020 2019 (In thousands) Domestic $ 81,068 $ 27,672 $ 43,448 Foreign 14,922 5,375 4,281 Total income before income taxes $ 95,990 $ 33,047 $ 47,729 |
Schedule of related components of the income tax expense | Year Ended June 30, 2021 2020 2019 (In thousands) Current: Federal $ 12,290 $ 6,907 $ 3,919 State 6,643 1,911 1,988 Foreign 3,057 1,028 920 Total current 21,990 9,846 6,827 Deferred: Federal 2,287 (1,687) 3,412 State 262 382 281 Total deferred 2,549 (1,305) 3,693 Total income tax expense (benefit) $ 24,539 $ 8,541 $ 10,520 |
Schedule of reconciliation of provision for income taxes to the income tax from applying the statutory rate | Year Ended June 30, 2021 2020 2019 U.S. federal tax at statutory rates 21.0 % 21.0 % 21.0 % Permanent items (0.4) 1.1 0.5 Lobbying 0.2 0.4 0.4 Non-deductible compensation 4.9 9.0 1.6 State taxes, net of federal benefit 5.8 5.3 4.3 Research and development tax credits (0.9) (1.8) (0.5) Change in valuation allowance (0.1) 0.1 0.2 Effects of foreign operations 0.4 0.3 0.1 Reserve for unrecognized tax benefits 0.2 (2.4) (2.1) Other (0.5) (0.8) (0.4) Stock-based compensation (5.0) (6.4) (3.1) Provision for (benefit from) income taxes 25.6 % 25.8 % 22.0 % |
Schedule of unrecognized tax benefits | Year Ended June 30, 2021 2020 2019 (In thousands) Balance at beginning of the year $ 850 $ 1,545 $ 2,392 Additions for prior year tax positions 196 161 194 Additions for current year tax positions 261 179 87 Reductions for prior year tax positions (250) (1,035) (1,128) Balance at end of the year $ 1,057 $ 850 $ 1,545 |
Finance and Operating Leases (T
Finance and Operating Leases (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Finance and Operating Leases | |
Schedule of present value of the minimum lease payments on finance leases | Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 13,587 2022 28,715 2,653 2023 28,105 2,040 2024 14,303 — Total minimum payments 71,123 18,280 Less: imputed interest (2,219) (342) Finance lease liability 68,904 17,938 Less: current portion of finance lease liability (27,336) (13,304) Long-term finance lease liability $ 41,568 $ 4,634 |
Schedule of future minimum lease payments under non-cancelable operating leases | Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 23,626 2022 23,030 22,326 2023 16,204 15,841 2024 15,032 14,769 2025 14,222 13,949 Thereafter 38,679 38,544 Total minimum payments 107,167 129,055 Less: imputed interest (9,060) (11,822) Operating lease liability 98,107 117,233 Less: current portion of operating lease liability (20,649) (20,689) Long-term operating lease liability $ 77,458 $ 96,544 |
Schedule of expected sublease income | Year Ended June 30, 2021 2020 (in thousands) 2021 $ — $ 1,960 2022 1,496 1,496 2023 797 797 2024 66 66 Total sublease income $ 2,359 $ 4,319 |
Schedule of lease cost, weighted-average remaining lease term, weighted-average discount rate | Year Ended June 30, 2021 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 28,647 $ 16,740 Interest on lease liabilities 1,111 820 Instructional costs and services: Operating lease cost 15,877 6,902 Short-term lease cost 181 222 Sublease income (920) (419) Selling, general, and administrative expenses: Operating lease cost 6,681 6,227 Short-term lease cost 970 992 Sublease income (916) (760) Total lease cost $ 51,631 $ 30,724 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (21,025) $ (13,124) Financing cash flows from finance leases (24,315) (27,675) Right-of-use assets obtained in exchange for new finance lease liabilities 66,861 17,160 Right-of-use assets obtained in exchange for new operating lease liabilities 1,643 6,311 Weighted-average remaining lease term - finance leases 2.52 yrs. 0.79 yrs. Weighted-average remaining lease term - operating leases 6.58 yrs. 7.15 yrs. Weighted-average discount rate - finance leases 2.45 % 2.86 % Weighted-average discount rate - operating leases 2.75 % 2.76 % |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Debt | |
Schedule of components of debt | Year Ended June 30, 2021 2020 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ — Less: unamortized discount (113,331) — Less: unamortized debt issuance costs (7,398) — Total debt 299,271 — Less: current portion of debt — — Long-term debt $ 299,271 $ — |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2018 1,199,307 $ 19.97 3.55 $ 788,277 Granted — — Exercised (150,290) 20.16 Forfeited or canceled (13,000) 29.82 Outstanding, June 30, 2019 1,036,017 $ 19.82 2.64 $ 11,312,871 Granted — — Exercised (4,000) 16.07 Forfeited or canceled (10,500) 30.92 Outstanding, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 Granted — — Exercised (990,067) 19.83 Forfeited or canceled — — Outstanding and exercisable, June 30, 2021 31,450 $ 16.58 0.82 $ 437,037 |
Schedule of restricted stock award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 1,676,907 $ 15.12 Granted 828,833 18.44 Vested (947,703) 14.72 Canceled (235,485) 17.40 Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,126,227 26.84 Vested (750,634) 16.93 Canceled (79,541) 21.48 Nonvested, June 30, 2020 1,618,604 $ 23.73 Granted 578,070 37.87 Vested (704,921) 21.78 Canceled (82,419) 27.94 Nonvested, June 30, 2021 1,409,334 $ 30.26 |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 708,979 $ 13.15 Granted 2,372,241 10.61 Vested (427,954) 13.24 Canceled (281,025) 13.02 Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 100,964 15.30 Vested — — Canceled (8,352) 29.93 Nonvested, June 30, 2020 2,464,853 $ 10.78 Granted 477,700 40.17 Vested — — Canceled (64,509) 28.33 Nonvested, June 30, 2021 2,878,044 $ 15.26 |
Deferred Stock Units | |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 — $ — Granted 18,258 25.41 Vested — — Canceled — — Nonvested, June 30, 2019 18,258 $ 25.41 Granted 23,844 20.13 Vested — — Canceled — — Nonvested, June 30, 2020 42,102 $ 22.42 Granted 17,252 21.01 Vested — — Canceled — — Nonvested, June 30, 2021 59,354 $ 22.01 |
Supplemental Disclosure of Ca_2
Supplemental Disclosure of Cash Flow Information (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Supplemental Disclosure of Cash Flow Information | |
Schedule of supplemental disclosure of cash flow information | Year Ended June 30, 2021 2020 2019 Cash paid for interest $ 4,504 $ 1,287 $ 1,108 Cash paid for taxes $ 18,717 3,384 $ 4,453 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 $ — $ 17,652 $ — Right-of-use assets obtained from acquisitions $ 1,280 $ 99,676 $ — Right-of-use assets obtained in exchange for new finance lease liabilities 66,861 17,160 19,664 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 255 $ 229 $ 167 Stock-based compensation expense capitalized on curriculum development 116 184 170 Business combinations: Acquired assets $ 11,043 $ 130,868 $ — Intangible assets 33,712 68,483 — Goodwill 68,930 84,741 — Assumed liabilities (4,826) (103,490) — Deferred revenue (2,096) (3,374) — |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Acquisitions | |
Schedule of intangible assets | June 30, 2021 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (17.4) $ 67.1 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (21.2) 16.5 25.3 (17.2) 8.1 Developed technology 21.3 (5.7) 15.6 6.6 (3.5) 3.1 Other 1.4 (1.1) 0.3 1.4 (1.0) 0.4 Total $ 144.9 $ (45.4) $ 99.5 $ 111.2 $ (33.7) $ 77.5 |
Schedule of unaudited pro forma combined results of operations | Year Ended June 30, (In thousands) 2021 2020 2019 Revenues $ 1,552,173 $ 1,091,429 $ 1,066,304 Income (loss) from operations 111,287 2,647 23,148 Net income (loss) 72,443 (4,506) 13,729 |
MedCerts | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 205 Current assets, excluding cash 5,074 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 51,033 Current liabilities (2,201) Deferred revenue (1,562) Deferred tax asset (liability) 16 Total consideration $ 81,068 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 12,072 5.84 Developed technology 11,970 7.00 Trade names 2,565 5.00 $ 26,607 |
Tech Elevator | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 1,736 Current assets, excluding cash 518 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 17,897 Other assets 377 Current liabilities (267) Deferred revenue (534) Deferred tax liability (1,650) Current operating lease liability (420) Long-term operating lease liability (304) Total consideration $ 25,695 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 311 3.92 Developed technology 2,796 5.00 Trade names 3,998 15.00 $ 7,105 |
Galvanize | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 9,232 Current assets, excluding cash 8,888 Property and equipment, net 11,270 Operating lease right-of-use assets, net 100,232 Intangible assets, net 68,483 Goodwill 81,225 Other assets 1,802 Current liabilities (4,370) Deferred revenue (3,374) Deferred tax asset (liability) 2,372 Current operating lease liability (11,620) Long-term operating lease liability (89,782) Other long-term liabilities (130) Total consideration $ 174,228 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 4,785 4.22 Developed technology 3,357 4.00 Trade names 60,341 15.00 $ 68,483 |
Description of the Business (De
Description of the Business (Details) | 12 Months Ended |
Jun. 30, 2021item | |
Description of the Business | |
Number of lines of revenue | 2 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 12 Months Ended |
Jun. 30, 2021segment | |
Basis of Presentation | |
Number of operating segments | 1 |
Number of reportable business segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - ASU (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Jul. 01, 2020 | Jun. 30, 2020 |
Summary of Significant Accounting Policies | ||||
Accounts receivable allowance for credit losses | $ 21,384 | $ 6,808 | ||
Retained earnings | 112,151 | 46,953 | ||
Deferred tax liability | 31,853 | 13,771 | ||
Long-term debt | 299,271 | |||
Additional paid-in capital | $ 795,449 | $ 730,761 | ||
ASU 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | ||||
Summary of Significant Accounting Policies | ||||
Accounts receivable allowance for credit losses | $ 8,500 | |||
Retained earnings | (6,200) | |||
Deferred tax liability | $ (2,300) | |||
ASU 2020-06 | Cumulative Effect, Period of Adoption, Adjustment | ||||
Summary of Significant Accounting Policies | ||||
Retained earnings | $ 8,200 | |||
Deferred tax liability | (29,400) | |||
Long-term debt | 110,600 | |||
Additional paid-in capital | $ (89,400) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |||
Revenues | $ 1,536,760 | $ 1,040,765 | $ 1,015,752 |
Percentage of impact on total revenue | (0.10%) | 0.60% | 0.40% |
School operating losses included in the entity's revenue | $ 63,400 | $ 45,400 | $ 54,700 |
Minimum | |||
Summary of Significant Accounting Policies | |||
Duration of contracts providing access to curriculum via the entity's Web site | 1 year | ||
Maximum | |||
Summary of Significant Accounting Policies | |||
Duration of contracts providing access to curriculum via the entity's Web site | 2 years | ||
Primary Obligor | |||
Summary of Significant Accounting Policies | |||
Revenues | $ 412,100 | $ 325,500 | $ 342,700 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | |
Summary of Significant Accounting Policies | |||
Number of lines of business | item | 2 | ||
Number of lines of revenue | item | 2 | ||
Total Revenues | $ 1,536,760 | $ 1,040,765 | $ 1,015,752 |
General Education | |||
Summary of Significant Accounting Policies | |||
Percentage of revenues from funding-based contracts | 88.00% | 88.00% | 87.00% |
Total Revenues | $ 1,280,199 | $ 933,809 | $ 965,931 |
Career Learning | |||
Summary of Significant Accounting Policies | |||
Total Revenues | $ 256,561 | $ 106,956 | $ 49,821 |
Middle - High School | |||
Summary of Significant Accounting Policies | |||
Percentage of revenues from funding-based contracts | 98.00% | 99.00% | 100.00% |
Total Revenues | $ 200,774 | $ 96,003 | $ 49,821 |
Adult | |||
Summary of Significant Accounting Policies | |||
Total Revenues | $ 55,787 | $ 10,953 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk and Inventories (Details) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2021USD ($)contract | Jun. 30, 2020USD ($)contract | Jun. 30, 2019contract | Jun. 30, 2018USD ($) | |
Concentration of revenues | ||||
Accounts receivable | $ 369,303 | $ 236,134 | ||
Deposits and other assets | 105,510 | 71,824 | ||
Inventories | ||||
Inventory deemed long-term and included in deposits and other assets | 8,800 | 5,200 | ||
Excess and obsolete inventory reserve | $ 5,600 | $ 4,800 | ||
Revenue | Customer Concentration Risk | ||||
Concentration of revenues | ||||
Number of customers with concentration | contract | 0 | 0 | 1 | |
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | |
Agora | ||||
Concentration of revenues | ||||
Accounts receivable | $ 28,700 | |||
Settlement repayment period | 4 years | |||
Deposits and other assets | $ 23,200 | |||
Current and long-term balance | $ 4,200 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounts receivables, contract assets and deferred revenue | |||
Accounts receivable | $ 369,303 | $ 236,134 | |
Unbilled receivables (included in accounts receivable) | 24,794 | 15,688 | |
Deferred revenue | 38,110 | 24,417 | |
Deferred revenue, long-term (included in other long-term liabilities) | 1,973 | 2,236 | |
Revenue recognized that was included in opening deferred revenue balance | 25,500 | 21,500 | $ 23,700 |
Revenue recognized from performance obligation satisfied in prior periods | $ (1,400) | $ 5,900 | $ 4,100 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Performance Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |||
Minimum payment term | 30 days | ||
Maximum payment term | 45 days | ||
Practical expedient | |||
Unsatisfied performance obligations | true | ||
Unsatisfied performance obligations amount | $ 2 | ||
Research and development costs | $ 3.7 | $ 9.7 | $ 9.5 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Marketable Securities (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Marketable securities | |
Marketable securities, short-term portion | $ 17,300 |
Marketable securities, long-term portion | 23,200 |
Amortized Cost | 40,542 |
Net Carrying Amount | 40,542 |
Gross Unrealized Gains (Losses) | (24) |
Fair Value | 40,518 |
Corporate Bonds | |
Marketable securities | |
Amortized Cost | 31,850 |
Net Carrying Amount | 31,850 |
Gross Unrealized Gains (Losses) | (24) |
Fair Value | 31,826 |
U.S. Treasury Notes | |
Marketable securities | |
Amortized Cost | 8,692 |
Net Carrying Amount | 8,692 |
Fair Value | $ 8,692 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Property and Equipment and Leases (Details) - USD ($) | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 27, 2020 | Jul. 01, 2019 | |
Property and equipment | |||||
Equipment expense | $ 8,400,000 | $ 3,800,000 | $ 4,100,000 | ||
Capitalized software development costs | 31,264,000 | 23,988,000 | 26,318,000 | ||
Net income | 71,451,000 | 24,506,000 | 37,209,000 | ||
Finance Leases | |||||
Purchase option | $ 1 | ||||
Operating Leases | |||||
Incremental borrowing rate used as discount rate | 2.55% | 3.86% | |||
Capitalized Curriculum Development Costs | |||||
Estimated useful life of the software | 5 years | ||||
Capitalized curriculum development costs | $ 17,432,000 | 19,332,000 | 16,611,000 | ||
Minimum | |||||
Finance Leases | |||||
Finance lease term | 1 year | ||||
Operating Leases | |||||
Operating leases initial term | 1 year | ||||
Maximum | |||||
Finance Leases | |||||
Finance lease term | 3 years | ||||
Operating Leases | |||||
Operating leases initial term | 17 years | ||||
Student and state testing computers | Minimum | |||||
Property and equipment | |||||
Useful Life | 3 years | ||||
Student and state testing computers | Maximum | |||||
Property and equipment | |||||
Useful Life | 5 years | ||||
Student computers | |||||
Property and equipment | |||||
Accelerated depreciation | $ 3,200,000 | 2,400,000 | 2,300,000 | ||
Computer hardware | Minimum | |||||
Property and equipment | |||||
Useful Life | 3 years | ||||
Computer hardware | Maximum | |||||
Property and equipment | |||||
Useful Life | 7 years | ||||
Computer software | |||||
Property and equipment | |||||
Useful Life | 3 years | ||||
Computer software | Minimum | |||||
Property and equipment | |||||
Useful Life | 3 years | ||||
Computer software | Maximum | |||||
Property and equipment | |||||
Useful Life | 5 years | ||||
Web site development costs | |||||
Property and equipment | |||||
Useful Life | 3 years | ||||
Office equipment | |||||
Property and equipment | |||||
Useful Life | 5 years | ||||
Furniture and fixtures | |||||
Property and equipment | |||||
Useful Life | 7 years | ||||
Capitalized software | |||||
Property and equipment | |||||
Capitalized software development additions | $ 31,300,000 | $ 24,000,000 | $ 26,300,000 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) $ in Thousands | Nov. 30, 2020USD ($) | Jan. 27, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Intangible Assets: | |||||
Amortization expense | $ 11,600 | $ 6,100 | $ 3,000 | ||
Goodwill | 240,353 | 174,939 | 90,200 | ||
Impairment of goodwill | 0 | 0 | |||
Working capital | $ 3,000 | ||||
Number of reporting units | segment | 1 | ||||
Future amortization of intangible assets | |||||
Fiscal 2022 | $ 12,900 | ||||
Fiscal 2023 | 12,700 | ||||
Fiscal 2024 | 11,700 | ||||
Fiscal 2025 | 10,500 | ||||
Fiscal 2026 | 9,400 | ||||
Thereafter | 42,200 | ||||
Rollforward of Goodwill | |||||
Balance at the beginning of the period | 174,939 | 90,200 | 90,200 | ||
Acquisition | 68,930 | 84,741 | |||
Balance at the end of the period | 240,353 | 174,939 | $ 90,200 | ||
Intangible Assets | |||||
Gross Carrying Amount | 144,900 | 111,200 | |||
Accumulated Amortization | (45,400) | (33,700) | |||
Net Carrying Value | 99,500 | 77,500 | |||
Trade names | |||||
Intangible Assets | |||||
Gross Carrying Amount | 84,500 | 77,900 | |||
Accumulated Amortization | (17,400) | (12,000) | |||
Net Carrying Value | 67,100 | 65,900 | |||
Customer relationships | |||||
Intangible Assets | |||||
Gross Carrying Amount | 37,700 | 25,300 | |||
Accumulated Amortization | (21,200) | (17,200) | |||
Net Carrying Value | 16,500 | 8,100 | |||
Developed technology | |||||
Intangible Assets | |||||
Gross Carrying Amount | 21,300 | 6,600 | |||
Accumulated Amortization | (5,700) | (3,500) | |||
Net Carrying Value | 15,600 | 3,100 | |||
Other | |||||
Intangible Assets | |||||
Gross Carrying Amount | 1,400 | 1,400 | |||
Accumulated Amortization | (1,100) | (1,000) | |||
Net Carrying Value | 300 | 400 | |||
Galvanize | |||||
Intangible Assets: | |||||
Goodwill | $ 81,225 | 81,200 | 84,700 | ||
Ownership percentage acquired (as a percent) | 100.00% | ||||
Cash and contingent consideration paid | $ 165,000 | ||||
Working capital | 9,200 | ||||
Rollforward of Goodwill | |||||
Balance at the beginning of the period | 84,700 | ||||
Acquisition | 84,700 | ||||
Adjustments | (3,500) | ||||
Balance at the end of the period | $ 81,225 | 81,200 | $ 84,700 | ||
MedCerts | |||||
Intangible Assets: | |||||
Goodwill | $ 51,033 | ||||
Ownership percentage acquired (as a percent) | 100.00% | ||||
Cash and contingent consideration paid | $ 70,000 | ||||
Contingent consideration | 10,800 | ||||
Rollforward of Goodwill | |||||
Acquisition | 51,100 | ||||
Balance at the end of the period | 51,033 | ||||
Tech Elevator | |||||
Intangible Assets: | |||||
Goodwill | $ 17,897 | ||||
Ownership percentage acquired (as a percent) | 100.00% | ||||
Cash and contingent consideration paid | $ 23,500 | ||||
Working capital | 2,200 | ||||
Rollforward of Goodwill | |||||
Acquisition | $ 17,900 | ||||
Balance at the end of the period | $ 17,897 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Advertising and Marketing Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Advertising and Marketing Costs | |||
Advertising costs | $ 23 | $ 32.7 | $ 38 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2018 | |
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Estimated fair value of long-term debt | $ 389,300 | |||
Estimated fair value of marketable securities | 40,500 | |||
Measured on a recurring basis | Contingent Consideration | Acquisitions | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Fair value | 11,082 | |||
Measured on a recurring basis | Convertible Note | Acquisitions | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Fair value | 5,006 | $ 5,006 | ||
Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Contingent Consideration | Acquisitions | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Fair value | 11,082 | $ 1,345 | ||
Purchases, Issuances and Settlements | $ (1,347) | |||
Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Convertible Note | Acquisitions | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Fair value | $ 5,006 | $ 5,006 | $ 5,006 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Acquisitions - Measured on a recurring basis - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2019 | |
Contingent Consideration | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, ending of period | $ 11,082 | |
Convertible Note | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, beginning of period | 5,006 | |
Fair Value, ending of period | 5,006 | |
Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, beginning of period | $ 1,345 | |
Purchases, Issuances and Settlements | 10,833 | |
Unrealized Gains/(Losses) | 249 | 2 |
Fair Value, ending of period | 11,082 | |
Significant Unobservable Inputs (Level 3) | Convertible Note | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, beginning of period | 5,006 | |
Purchases, Issuances and Settlements | 5,006 | |
Fair Value, ending of period | $ 5,006 | $ 5,006 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Basic and diluted income (loss) per share computation: | |||
Net income (loss) attributable to common stockholders | $ 71,451 | $ 24,506 | $ 37,209 |
Weighted average common shares-basic | 40,211,016 | 39,478,928 | 38,848,780 |
Basic net income (loss) per share (in dollars per share) | $ 1.78 | $ 0.62 | $ 0.96 |
Dilutive earnings per share computation: | |||
Net income attributable to common stockholders | $ 71,451 | $ 24,506 | $ 37,209 |
Additional disclosures | |||
Weighted average common shares-basic | 40,211,016 | 39,478,928 | 38,848,780 |
Effect of dilutive stock options and restricted stock awards (in shares) | 1,657,564 | 1,184,296 | 2,096,020 |
Weighted average common shares-diluted | 41,868,580 | 40,663,224 | 40,944,800 |
Diluted net income (loss) per share (in dollars per share) | $ 1.71 | $ 0.60 | $ 0.91 |
Anti-dilutive shares | 140,657 | ||
Stock options and restricted stock | |||
Additional disclosures | |||
Anti-dilutive shares | 296,577 | 729,008 | 140,657 |
Property and Equipment and Ca_3
Property and Equipment and Capitalized Software and Curriculum (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | $ 159,709 | $ 113,333 | |
Less accumulated depreciation and amortization | (87,640) | (74,665) | |
Property and equipment and capitalized software, Net | 72,069 | 38,668 | |
Maintenance and repair expenses | 7,900 | 10,300 | $ 13,700 |
Selling, general and administrative expenses | |||
Property and equipment and capitalized software | |||
Depreciation expense | 6,600 | 4,300 | 5,200 |
Student computers | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 99,728 | 48,153 | |
Student computers | Instructional costs and services | |||
Property and equipment and capitalized software | |||
Depreciation expense | 31,400 | 17,900 | 15,000 |
Computer software | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 16,201 | 17,268 | |
Computer hardware | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 9,461 | 14,505 | |
Leasehold improvements | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 18,320 | 17,396 | |
State testing computers | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 7,440 | 7,461 | |
Furniture and fixtures | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 7,104 | 7,178 | |
Office equipment | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 1,455 | 1,372 | |
Capitalized software | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 281,705 | 249,720 | |
Less accumulated depreciation and amortization | (224,397) | (201,227) | |
Property and equipment and capitalized software, Net | 57,308 | 48,493 | |
Capitalized software | Selling, general and administrative expenses | |||
Property and equipment and capitalized software | |||
Amortization expense | 4,200 | 5,500 | 7,400 |
Capitalized software | Instructional costs and services | |||
Property and equipment and capitalized software | |||
Amortization expense | 19,700 | 20,800 | 22,300 |
Capitalized curriculum | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 173,971 | 156,018 | |
Less accumulated depreciation and amortization | (123,595) | (107,169) | |
Property and equipment and capitalized software, Net | 50,376 | 48,849 | |
Amortization expense | $ 16,400 | $ 17,500 | $ 18,500 |
Income Taxes - Deferred (Detail
Income Taxes - Deferred (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 22,159 | $ 21,850 |
Reserves | 5,038 | 3,374 |
Accrued expenses | 5,552 | 4,117 |
Stock compensation expense | 8,193 | 7,064 |
Other assets | 7,466 | 2,252 |
Deferred revenue | 437 | 759 |
Lease liability | 27,812 | 29,640 |
Federal tax credits | 20 | |
State tax credits | 44 | |
Total deferred tax assets | 76,657 | 69,120 |
Deferred tax liabilities: | ||
Capitalized curriculum development | (9,307) | (9,245) |
Capitalized software and website development costs | (14,026) | (11,907) |
Property and equipment | (11,613) | (6,213) |
Right-of-use assets | (26,889) | (28,273) |
Returned materials | (4,520) | (2,385) |
Purchased intangibles | (22,031) | |
Convertible debt | (15,077) | (19,877) |
Total deferred tax liabilities | (103,463) | (77,900) |
Net deferred tax liability before valuation allowance | (26,806) | (8,780) |
Valuation Allowance | (5,047) | (4,991) |
Net deferred tax liability | (31,853) | (13,771) |
Reported as: | ||
Long-term deferred tax liabilities | $ (31,853) | $ (13,771) |
Income Taxes - Carryforward (De
Income Taxes - Carryforward (Details) $ in Millions | Jun. 30, 2021USD ($) |
Income Taxes | |
NOL carryforward | $ 65.8 |
Operating Loss Carryforwards, Subject to Expiration | 9.2 |
Operating Loss Carryforwards, Not Subject to Expiration | 56.6 |
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 3.3 |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes | |||
Domestic | $ 81,068 | $ 27,672 | $ 43,448 |
Foreign | 14,922 | 5,375 | 4,281 |
Total income before income taxes | 95,990 | 33,047 | 47,729 |
Current: | |||
Federal | 12,290 | 6,907 | 3,919 |
State | 6,643 | 1,911 | 1,988 |
Foreign | 3,057 | 1,028 | 920 |
Total current | 21,990 | 9,846 | 6,827 |
Deferred: | |||
Federal | 2,287 | (1,687) | 3,412 |
State | 262 | 382 | 281 |
Total deferred | 2,549 | (1,305) | 3,693 |
Total income tax expense (benefit) | $ 24,539 | $ 8,541 | $ 10,520 |
Reconciliation to income tax at the statutory rate: | |||
U.S. Federal tax at statutory rates (as a percent) | 21.00% | 21.00% | 21.00% |
Permanent items (as a percent) | (0.40%) | 1.10% | 0.50% |
Lobbying (as a percent) | 0.20% | 0.40% | 0.40% |
Non-deductible compensation | 4.90% | 9.00% | 1.60% |
State taxes, net of federal benefit (as a percent) | 5.80% | 5.30% | 4.30% |
Research and development tax credits (as a percent) | (0.90%) | (1.80%) | (0.50%) |
Change in valuation allowance (as a percent) | (0.10%) | 0.10% | 0.20% |
Effects of foreign operations (as a percent) | 0.40% | 0.30% | 0.10% |
Reserve for unrecognized tax benefits (as a percent) | 0.20% | (2.40%) | (2.10%) |
Other (as a percent) | (0.50%) | (0.80%) | (0.40%) |
Stock-based compensation | (5.00%) | (6.40%) | (3.10%) |
Provision for (benefit from) income taxes | 25.60% | 25.80% | 22.00% |
Income Taxes - Tax Uncertaintie
Income Taxes - Tax Uncertainties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Tax Uncertainties | |||
Interest and penalties accrued | $ 100 | $ 100 | $ 200 |
Balance at beginning of the year | 850 | 1,545 | 2,392 |
Additions for prior year tax positions | 196 | 161 | 194 |
Additions for current year tax positions | 261 | 179 | 87 |
Reductions for prior year tax positions | (250) | (1,035) | (1,128) |
Balance at end of the year | 1,057 | $ 850 | $ 1,545 |
Unrecognized tax benefits that would affect the effective tax rate | $ 1,100 |
Finance and Operating Leases (D
Finance and Operating Leases (Details) - USD ($) | Jun. 30, 2021 | Jul. 31, 2020 | Jun. 30, 2020 | Apr. 30, 2020 |
Finance and Operating Leases | ||||
Finance lease liability | $ 68,904,000 | $ 17,938,000 | ||
Finance lease right-of-use assets | 49,000,000 | $ 19,800,000 | ||
Purchase option | 1 | |||
Additional amount of borrowings as at the and of the reporting period | $ 54,000,000 | |||
Minimum | ||||
Finance and Operating Leases | ||||
Interest rate on finance lease (as a percent) | 1.52% | |||
Finance lease term | 1 year | |||
Maximum | ||||
Finance and Operating Leases | ||||
Interest rate on finance lease (as a percent) | 3.87% | |||
Finance lease term | 3 years | |||
PNC | ||||
Finance and Operating Leases | ||||
Finance lease term | 36 months | |||
Purchase option | $ 1 | |||
BALC | ||||
Finance and Operating Leases | ||||
Available line of credit | $ 41,000,000 | $ 25,000,000 | ||
Purchase option | $ 1 | |||
BALC | Minimum | ||||
Finance and Operating Leases | ||||
Finance lease term | 12 months | |||
Fixed interest rate (as a percent) | 1.52% | |||
BALC | Maximum | ||||
Finance and Operating Leases | ||||
Finance lease term | 36 months | |||
Fixed interest rate (as a percent) | 2.58% |
Finance and Operating Leases -
Finance and Operating Leases - Finance leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Finance leases | ||
Year 1 | $ 28,715 | $ 13,587 |
Year 2 | 28,105 | 2,653 |
Year 3 | 14,303 | 2,040 |
Total minimum payments | 71,123 | 18,280 |
Less: imputed interest | (2,219) | (342) |
Finance lease liability | 68,904 | 17,938 |
Less: current portion of finance lease liability | (27,336) | (13,304) |
Long-term finance lease liability | $ 41,568 | $ 4,634 |
Finance and Operating Leases _2
Finance and Operating Leases - Operating Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Operating Leases | ||
Year 1 | $ 23,030 | $ 23,626 |
Year 2 | 16,204 | 22,326 |
Year 3 | 15,032 | 15,841 |
Year 4 | 14,222 | 14,769 |
Year 5 | 13,949 | |
Thereafter | 38,679 | |
Thereafter | 38,544 | |
Total minimum payments | 107,167 | 129,055 |
Less: imputed interest | (9,060) | (11,822) |
Operating lease liability | 98,107 | 117,233 |
Less: current portion of operating lease liability | (20,649) | (20,689) |
Long-term operating lease liability | 77,458 | 96,544 |
Operating lease right-of-use assets, net | $ 94,671 | $ 111,768 |
Minimum | ||
Operating Leases | ||
Operating leases initial term | 1 year | |
Maximum | ||
Operating Leases | ||
Operating leases initial term | 17 years | |
Buildings | Minimum | ||
Operating Leases | ||
Operating leases initial term | 1 year | |
Buildings | Maximum | ||
Operating Leases | ||
Operating leases initial term | 11 years |
Finance and Operating Leases _3
Finance and Operating Leases - Sub Leases (Details) $ in Thousands | Jun. 30, 2021USD ($)facility | Jun. 30, 2020USD ($) |
Finance and Operating Leases | ||
Year 1 | $ 1,496 | $ 1,960 |
Year 2 | 797 | 1,496 |
Year 3 | 66 | 797 |
Year 4 | 66 | |
Total sublease income | $ 2,359 | $ 4,319 |
Number of entity's facilities that are being subleased through May 2022 | facility | 2 | |
Number of entity's facilities that are being subleased through July 2023 | facility | 1 |
Finance and Operating Leases _4
Finance and Operating Leases - Lease cost and other information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Finance lease cost: | ||
Amortization of right-of-use assets | $ 28,647 | $ 16,740 |
Interest on lease liabilities | 1,111 | 820 |
Total lease cost | 51,631 | 30,724 |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | (21,025) | (13,124) |
Financing cash flows from finance leases | (24,315) | (27,675) |
Right-of-use assets obtained in exchange for new finance lease liabilities | 66,861 | 17,160 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 1,643 | $ 6,311 |
Weighted-average remaining lease term - finance leases | 2 years 6 months 7 days | 9 months 14 days |
Weighted-average remaining lease term - operating leases | 6 years 6 months 29 days | 7 years 1 month 24 days |
Weighted-average discount rate - finance leases | 2.45% | 2.86% |
Weighted-average discount rate - operating leases | 2.75% | 2.76% |
Instructional Costs and Services | ||
Finance lease cost: | ||
Operating lease cost | $ 15,877 | $ 6,902 |
Short-term lease cost | 181 | 222 |
Sublease income | (920) | (419) |
Selling, general and administrative expenses | ||
Finance lease cost: | ||
Operating lease cost | 6,681 | 6,227 |
Short-term lease cost | 970 | 992 |
Sublease income | $ (916) | $ (760) |
Debt (Details)
Debt (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Debt | |
Less: unamortized discount | $ (113,331) |
Less: unamortized debt issuance costs | (7,398) |
Total debt | 299,271 |
Long-term debt | 299,271 |
Convertible Senior Notes Due 2027 | |
Debt | |
Total debt | $ 420,000 |
Debt - Additional Information (
Debt - Additional Information (Details) - Convertible Senior Notes Due 2027 - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Jun. 30, 2021 | |
Debt | ||
Face amount | $ 420 | |
Interest rate (as percent) | 1.125% | |
Net proceeds | $ 408.6 | |
Interest expense | $ 3.9 | |
Carrying amount of the liability component | $ 294.6 | |
Discount rate (as percent) | 6.50% | |
Fair value of the liability component | $ 125.4 | |
Debt issuance costs | $ 11.4 | |
Accretion of debt discount | 12 | |
Amortization of debt issuance costs | $ 0.6 | |
Effective interest percentage (as percent) | 6.40% | |
Conversion rate | 18.9109 | |
Conversion price (in dollars per share) | $ 52.88 | |
Upper strike price (in dollars per share) | $ 86.174 | |
Capped call transaction | $ 60.4 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) $ in Thousands | Jan. 27, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Credit Facility | |||
Repayments on credit facility | $ 100,000 | $ 5,000 | |
Credit Facility | |||
Credit Facility | |||
Face amount | $ 100,000 | ||
Term of debt | 5 years | ||
Repayments on credit facility | 100,000 | ||
Amount outstanding | 0 | ||
Amount of accordion feature under the credit facility | $ 200,000 | ||
Credit Facility | LIBOR | Minimum | |||
Credit Facility | |||
Interest rate spread added to base rate (as a percent) | 0.875% | ||
Credit Facility | LIBOR | Maximum | |||
Credit Facility | |||
Interest rate spread added to base rate (as a percent) | 1.50% |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - shares | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity Transactions | ||||
Options outstanding (in shares) | 31,450 | 1,021,517 | 1,036,017 | 1,199,307 |
Employee and Non Employees Stock Option | ||||
Equity Transactions | ||||
Vesting period | 4 years | |||
Plan | ||||
Equity Transactions | ||||
Shares reserved for issuance | 575,026 | |||
Plan and prior plan | ||||
Equity Transactions | ||||
Options outstanding (in shares) | 4,378,183 |
Equity Incentive Plan - Activit
Equity Incentive Plan - Activity (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Shares | ||||
Outstanding at the beginning of the period (in shares) | 1,021,517 | 1,036,017 | 1,199,307 | |
Exercised (in shares) | (990,067) | (4,000) | (150,290) | |
Forfeited or canceled (in shares) | (10,500) | (13,000) | ||
Outstanding at the end of the period (in shares) | 31,450 | 1,021,517 | 1,036,017 | 1,199,307 |
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 19.73 | $ 19.82 | $ 19.97 | |
Exercised (in dollars per share) | 19.83 | 16.07 | 20.16 | |
Forfeited or canceled (in dollars per share) | 30.92 | 29.82 | ||
Outstanding at the end of the period (in dollars per share) | $ 16.58 | $ 19.73 | $ 19.82 | $ 19.97 |
Additional information | ||||
Weighted Average Remaining Contractual Life | 9 months 25 days | 1 year 7 months 24 days | 2 years 7 months 20 days | 3 years 6 months 18 days |
Aggregate Intrinsic Value | $ 437,037 | $ 8,325,869 | $ 11,312,871 | $ 788,277 |
Equity Incentive Plan - Relatio
Equity Incentive Plan - Relationship (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Employee and Non Employees Stock Option | |||
Equity Transactions | |||
Intrinsic value of options exercised | $ 24,600 | $ 0 | $ 1,200 |
Unrecognized compensation | 0 | ||
Stock based compensation expense | 0 | 100 | 600 |
Performance Share Units | |||
Equity Transactions | |||
Unrecognized compensation | $ 11,600 | ||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 6 months | ||
Stock based compensation expense | $ 16,700 | $ 6,300 | $ 3,900 |
Equity Incentive Plan - Other (
Equity Incentive Plan - Other (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2020shares | Jun. 30, 2021USD ($)item$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares | |
Equity Transactions | ||||
Granted (in dollars per share) | $ / shares | $ 12.56 | |||
2019 SPP | ||||
Equity Transactions | ||||
Vesting period | 3 years | |||
Fiscal Year 2021 MIP | ||||
Equity Transactions | ||||
Vesting period | 3 years | |||
Fiscal Year 2021 LTIP | ||||
Equity Transactions | ||||
Granted (in shares) | 111,450 | |||
Fair value | $ | $ 2.7 | |||
Granted (in dollars per share) | $ / shares | $ 24.15 | |||
Number of metrics assumed to be achieved at target | item | 1 | |||
Target grant date fair value of metrics | $ | $ 0.3 | |||
Number of metrics assumed to be achieved at threshold | item | 2 | |||
Threshold grant date fair value of metrics | $ | $ 0.2 | |||
Vest immediately | Fiscal Year 2021 MIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 70.00% | |||
Vest immediately | Fiscal Year 2021 LTIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 40.00% | |||
Vest annually over two years | Fiscal Year 2021 MIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 30.00% | |||
Vest annually over two years | Fiscal Year 2021 LTIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 60.00% | |||
Career Learning Revenue Performance Based Share Units | ||||
Equity Transactions | ||||
Granted (in shares) | 366,250 | |||
Fair value | $ | $ 16.5 | |||
Granted (in dollars per share) | $ / shares | $ 45.05 | |||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2021 | ||||
Equity Transactions | ||||
Granted (in shares) | 77,690 | |||
Vesting period | 2 years | |||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2022 | ||||
Equity Transactions | ||||
Granted (in shares) | 122,080 | |||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2023 | ||||
Equity Transactions | ||||
Granted (in shares) | 166,480 | |||
Career Learning Revenue Performance Based Share Units | Vest immediately | Fiscal Year 2021 | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.3333% | |||
Career Learning Revenue Performance Based Share Units | Vest immediately | Fiscal Year 2022 | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.6667% | |||
Career Learning Revenue Performance Based Share Units | Vest annually over two years | Fiscal Year 2021 | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.6667% | |||
Career Learning Revenue Performance Based Share Units | Vest annually over two years | Fiscal Year 2022 | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.3333% | |||
Restricted Stock | ||||
Equity Transactions | ||||
Stock based compensation expense | $ | $ 22.6 | $ 17.1 | $ 12.3 | |
Fair value of share-based compensation awards granted in period | $ | 21.9 | 30.2 | ||
Fair value of share-based compensation awards vested in period | $ | $ 24.5 | $ 17.9 | ||
Performance shares | 1,409,334 | 1,618,604 | 1,322,552 | |
Unrecognized compensation | $ | $ 24.2 | |||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 3 months 18 days | |||
Nonvested at the beginning of the period (in shares) | 1,618,604 | 1,322,552 | 1,676,907 | |
Granted (in shares) | 578,070 | 1,126,227 | 828,833 | |
Vested (in shares) | (704,921) | (750,634) | (947,703) | |
Forfeited or canceled (in shares) | (82,419) | (79,541) | (235,485) | |
Nonvested at the end of the period (in shares) | 1,409,334 | 1,618,604 | 1,322,552 | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 23.73 | $ 17.08 | $ 15.12 | |
Granted (in dollars per share) | $ / shares | 37.87 | 26.84 | 18.44 | |
Vested (in dollars per share) | $ / shares | 21.78 | 16.93 | 14.72 | |
Forfeited or canceled (in dollars per share) | $ / shares | 27.94 | 21.48 | 17.40 | |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 30.26 | $ 23.73 | $ 17.08 | |
Vesting period | 3 years | |||
Restricted Stock | Vesting Performance | ||||
Equity Transactions | ||||
Performance shares | 574,611 | |||
Granted (in shares) | 126,417 | |||
Nonvested at the end of the period (in shares) | 574,611 | |||
Restricted Stock | Service based awards | ||||
Equity Transactions | ||||
Granted (in shares) | 451,653 | |||
Performance shares | 834,724 | |||
Vested (in shares) | (594,327) | |||
Nonvested at the end of the period (in shares) | 834,724 | |||
Restricted Stock | Vesting Based On Performance And Service | ||||
Equity Transactions | ||||
Vested (in shares) | (110,594) | |||
Performance Share Units | ||||
Equity Transactions | ||||
Stock based compensation expense | $ | $ 16.7 | $ 6.3 | $ 3.9 | |
Granted (in shares) | 66,934 | |||
Performance shares | 2,878,044 | 2,464,853 | 2,372,241 | |
Unrecognized compensation | $ | $ 11.6 | |||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 6 months | |||
Nonvested at the beginning of the period (in shares) | 2,464,853 | 2,372,241 | 708,979 | |
Granted (in shares) | 477,700 | 100,964 | 2,372,241 | |
Vested (in shares) | (427,954) | |||
Forfeited or canceled (in shares) | (64,509) | (8,352) | (281,025) | |
Nonvested at the end of the period (in shares) | 2,878,044 | 2,464,853 | 2,372,241 | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 10.78 | $ 10.61 | $ 13.15 | |
Granted (in dollars per share) | $ / shares | 40.17 | 15.30 | 10.61 | |
Vested (in dollars per share) | $ / shares | 13.24 | |||
Forfeited or canceled (in dollars per share) | $ / shares | 28.33 | 29.93 | 13.02 | |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 15.26 | $ 10.78 | $ 10.61 | |
Performance Share Units | 2019 SPP | ||||
Equity Transactions | ||||
Granted (in shares) | 2,108,305 | |||
Performance Share Units | Fiscal Year 2019 LTIP | ||||
Equity Transactions | ||||
Fair value | $ | $ 0.8 | $ 7.9 | ||
Granted (in shares) | 34,030 | 263,936 | ||
Granted (in dollars per share) | $ / shares | $ 23.51 | $ 30.05 | ||
Performance Share Units | Fiscal Year 2020 TRIP | ||||
Equity Transactions | ||||
Fair value | $ | $ 12.3 | |||
Performance Share Units | Fiscal Year 2021 MIP | ||||
Equity Transactions | ||||
Intrinsic value of awards | $ | $ 4 | |||
Performance Share Units | Tech Elevator | ||||
Equity Transactions | ||||
Stock based compensation expense | $ | 0.8 | |||
Performance Share Units | Revenue | Fiscal Year 2020 TRIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 60.00% | |||
Performance Share Units | EBITDA | Fiscal Year 2020 TRIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 40.00% | |||
Performance Shares Tranche #1 | Fiscal Year 2019 LTIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 45.00% | |||
Performance Shares Tranche #1 | Calendar Year 2021 | Fiscal Year 2020 TRIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 70.00% | |||
Performance Shares Tranche #2 | Fiscal Year 2019 LTIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 25.00% | |||
Performance Shares Tranche #2 | Calendar Year 2022 | Fiscal Year 2020 TRIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 30.00% | |||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | ||||
Equity Transactions | ||||
Earned award vesting percentage | 30.00% | |||
Time Based Award | Fiscal Year 2021 MIP | ||||
Equity Transactions | ||||
Intrinsic value of awards | $ | 4 | |||
Deferred Stock Units | ||||
Equity Transactions | ||||
Stock based compensation expense | $ | $ 0.4 | $ 0.5 | $ 0.5 | |
Performance shares | 59,354 | 42,102 | 18,258 | |
Unrecognized compensation | $ | $ 0.2 | |||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 6 months | |||
Nonvested at the beginning of the period (in shares) | 42,102 | 18,258 | ||
Granted (in shares) | 17,252 | 23,844 | 18,258 | |
Nonvested at the end of the period (in shares) | 59,354 | 42,102 | 18,258 | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 22.42 | $ 25.41 | ||
Granted (in dollars per share) | $ / shares | 21.01 | 20.13 | $ 25.41 | |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 22.01 | $ 22.42 | $ 25.41 | |
Chief Executive Officer And Executive Chairman | Performance Share Units | ||||
Equity Transactions | ||||
Granted (in shares) | 358,294 | |||
Granted (in dollars per share) | $ / shares | $ 27.91 | |||
Chief Executive Officer And Executive Chairman | Performance Share Units | Vesting Performance | ||||
Equity Transactions | ||||
Vesting in first subsequent fiscal year (as a percent) | 0.667% | |||
Vesting in second subsequent fiscal year (as a percent) | 0.3333% | |||
Chief Executive Officer And Executive Chairman | Performance Shares Tranche #1 | ||||
Equity Transactions | ||||
Amortization period | 3 years | |||
Senior Executives | Performance Share Units | 2019 SPP | ||||
Equity Transactions | ||||
Market capitalization growth performance period | 3 years | |||
Threshold period average price of stock to determine final amount | 30 days | |||
Threshold days after release of fiscal year 2021 results to calculate average price of stock | 7 days | |||
Granted (in dollars per share) | $ / shares | $ 8.18 | |||
Senior Executives | Performance Share Units | Total stock price growth less than 25% | 2019 SPP | ||||
Equity Transactions | ||||
Amount earned as percentage of total value growth | 0.00% | |||
Percentage of total stock price growth | 25.00% | |||
Annualized percentage of total stock price growth | 7.60% | |||
Senior Executives | Performance Share Units | Total stock price growth 33% | 2019 SPP | ||||
Equity Transactions | ||||
Amount earned as percentage of total value growth | 6.00% | |||
Percentage of total stock price growth | 33.00% | |||
Annualized percentage of total stock price growth | 10.00% | |||
Senior Executives | Performance Share Units | Total stock price growth equals or greater than 95% | 2019 SPP | ||||
Equity Transactions | ||||
Amount earned as percentage of total value growth | 7.50% | |||
Percentage of total stock price growth | 95.00% | |||
Annualized percentage of total stock price growth | 25.00% | |||
CEO | Performance Share Units | Vest immediately upon achievement of the performance goals | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.3333% | |||
CEO | Performance Share Units | Vest annually over two years | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.6667% | |||
Vesting period | 2 years | |||
CEO | Performance Share Units | Vesting Performance | ||||
Equity Transactions | ||||
Granted (in shares) | 30,364 | |||
Granted (in dollars per share) | $ / shares | $ 24.70 | |||
Executive Officers | Performance Share Units | Vest immediately upon achievement of the performance goals | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.3333% | 0.3333% | ||
Executive Officers | Performance Share Units | Vest annually over two years | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.6667% | |||
Vesting period | 2 years | 2 years | ||
Executive Officers | Performance Share Units | Vesting Performance | ||||
Equity Transactions | ||||
Granted (in shares) | 82,710 | 141,524 | ||
Granted (in dollars per share) | $ / shares | $ 45.33 | $ 27.91 | ||
Executive Officers | Performance Share Units | Vest annually over two years | ||||
Equity Transactions | ||||
Earned award vesting percentage | 0.6667% | |||
Executive Officers | Performance Share Units | Vesting Based On Performance And Service | ||||
Equity Transactions | ||||
Certified achievement percentage | 109.00% | |||
Number of shares earned upon reaching performance threshold | 13,343 |
Equity Incentive Plan - Vesting
Equity Incentive Plan - Vesting (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Weighted-Average Grant Date Fair Value | ||||
Granted (in dollars per share) | $ 12.56 | |||
Restricted Stock | ||||
Shares | ||||
Nonvested at the beginning of the period (in shares) | 1,618,604 | 1,322,552 | 1,676,907 | |
Granted (in shares) | 578,070 | 1,126,227 | 828,833 | |
Vested (in shares) | (704,921) | (750,634) | (947,703) | |
Forfeited or canceled (in shares) | (82,419) | (79,541) | (235,485) | |
Nonvested at the end of the period (in shares) | 1,409,334 | 1,618,604 | 1,322,552 | |
Weighted-Average Grant Date Fair Value | ||||
Nonvested at the beginning of the period (in dollars per share) | $ 23.73 | $ 17.08 | $ 15.12 | |
Granted (in dollars per share) | 37.87 | 26.84 | 18.44 | |
Vested (in dollars per share) | 21.78 | 16.93 | 14.72 | |
Forfeited or canceled (in dollars per share) | 27.94 | 21.48 | 17.40 | |
Nonvested at the end of the period (in dollars per share) | $ 30.26 | $ 23.73 | $ 17.08 | |
Period over which shares vest in semi-annual intervals | 3 years | |||
Restricted Stock | Independent contractors | ||||
Shares | ||||
Granted (in shares) | 0 | |||
Restricted Stock | Vesting Performance | ||||
Shares | ||||
Granted (in shares) | 126,417 | |||
Nonvested at the end of the period (in shares) | 574,611 | |||
Restricted Stock | Vesting Based On Performance And Service | ||||
Shares | ||||
Vested (in shares) | (110,594) | |||
Performance Share Units | ||||
Shares | ||||
Nonvested at the beginning of the period (in shares) | 2,464,853 | 2,372,241 | 708,979 | |
Granted (in shares) | 477,700 | 100,964 | 2,372,241 | |
Vested (in shares) | (427,954) | |||
Forfeited or canceled (in shares) | (64,509) | (8,352) | (281,025) | |
Nonvested at the end of the period (in shares) | 2,878,044 | 2,464,853 | 2,372,241 | |
Weighted-Average Grant Date Fair Value | ||||
Nonvested at the beginning of the period (in dollars per share) | $ 10.78 | $ 10.61 | $ 13.15 | |
Granted (in dollars per share) | 40.17 | 15.30 | 10.61 | |
Vested (in dollars per share) | 13.24 | |||
Forfeited or canceled (in dollars per share) | 28.33 | 29.93 | 13.02 | |
Nonvested at the end of the period (in dollars per share) | $ 15.26 | $ 10.78 | $ 10.61 | |
Performance Share Units | Vesting Performance | Executive Officers | ||||
Shares | ||||
Granted (in shares) | 82,710 | 141,524 | ||
Weighted-Average Grant Date Fair Value | ||||
Granted (in dollars per share) | $ 45.33 | $ 27.91 | ||
Performance Share Units | Vest immediately upon achievement of the performance goals | Executive Officers | ||||
Weighted-Average Grant Date Fair Value | ||||
Earned award vesting percentage | 0.3333% | 0.3333% | ||
Performance Share Units | Vest annually over two years | Executive Officers | ||||
Weighted-Average Grant Date Fair Value | ||||
Earned award vesting percentage | 0.6667% | |||
Period over which shares vest in semi-annual intervals | 2 years | 2 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Mar. 27, 2020USD ($)installment | |
Commitments and contingencies | ||||
Employer portion of social security payroll tax percentage | 6.20% | |||
Deferred amount of employer portion of social security payroll tax | $ 14,100 | |||
Number of installments that deferred employer social security payroll taxes will be repaid | installment | 2 | |||
Percentage of deferred social security employer payroll tax to be paid by prescribed dates to be considered timely | 50.00% | |||
Revenue from Contract with Customer, Including Assessed Tax | $ 1,536,760 | $ 1,040,765 | $ 1,015,752 | |
Buildings | ||||
Commitments and contingencies | ||||
Guarantees related to lease commitments | $ 500 | |||
Georgia Cyber Academy, Inc. | ||||
Commitments and contingencies | ||||
Settlement and release agreement | $ 19,000 | |||
Litigation settlement payment receivable period | 2 years | |||
Proceeds from legal settlements | $ 10,000 | |||
Settlement assets, current | 14,400 | |||
Revenue from Contract with Customer, Including Assessed Tax | $ 4,600 |
Restructuring (Details)
Restructuring (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017facility | Jun. 30, 2019USD ($) | Jun. 30, 2017USD ($)lease | |
Restructuring | |||
Number of facilities being exited | facility | 3 | ||
Number of lease agreements | lease | 3 | ||
Impairment of leases | $ | $ 1.8 | $ 5.4 |
Severance (Details)
Severance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Severance | |||
Severance costs | $ 2.4 | $ 1.5 | $ 1 |
Executives and other employees | |||
Severance | |||
Costs associated with accelerated vesting of equity awards | $ 0.5 | $ 0.1 | $ 0.1 |
Acquisitions and Investments (D
Acquisitions and Investments (Details) $ in Thousands | Nov. 30, 2020USD ($)tranche | Jan. 27, 2020USD ($) | Aug. 31, 2018USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($)fund | Aug. 31, 2020USD ($) | Jun. 30, 2018USD ($) |
Acquisition and Investments | |||||||||
Purchase price paid at closing | $ 167,995 | ||||||||
Working capital | $ 3,000 | ||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 26,607 | $ 33,712 | 33,712 | 68,483 | |||||
Goodwill | 240,353 | 240,353 | 174,939 | $ 90,200 | $ 90,200 | ||||
Deferred revenue | (2,096) | (2,096) | (3,374) | ||||||
Amortization expense | 11,600 | 6,100 | 3,000 | ||||||
Lease cost | 51,631 | 30,724 | |||||||
Pro forma results | |||||||||
Revenues | 1,552,173 | 1,091,429 | 1,066,304 | ||||||
Loss from operations | 111,287 | 2,647 | 23,148 | ||||||
Net loss | 72,443 | (4,506) | $ 13,729 | ||||||
Issuance of convertible note | 408,610 | ||||||||
Two early stage funds | |||||||||
Pro forma results | |||||||||
Number of limited partnerships invested in | fund | 2 | ||||||||
Investment commitment | $ 13,000 | ||||||||
Investments in limited partnerships | 6,900 | ||||||||
New Markets | |||||||||
Pro forma results | |||||||||
Investment recorded at cost | 2,000 | 2,000 | |||||||
Rethink | |||||||||
Pro forma results | |||||||||
Equity method investment | 4,900 | ||||||||
Tallo | |||||||||
Pro forma results | |||||||||
Investment | $ 6,700 | $ 2,300 | |||||||
Ownership percentage | 39.50% | 46.10% | |||||||
Convertible note | $ 5,000 | ||||||||
Ownership percentage on an if-converted basis | 53.00% | ||||||||
Term of debt | 48 months | ||||||||
Tallo | Series D Preferred shares | |||||||||
Pro forma results | |||||||||
Convertible into Series D Preferred shares | 3,670 | ||||||||
Tallo | Base Rate | |||||||||
Pro forma results | |||||||||
Interest rate spread added to base rate (as a percent) | 25.00% | ||||||||
MedCerts | |||||||||
Acquisition and Investments | |||||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||
Total consideration | $ 70,000 | ||||||||
Contingent consideration | $ 10,800 | ||||||||
Number of tranches purchase price is payable in | tranche | 2 | ||||||||
Payment Related to Finalization of Working Capital | 300 | ||||||||
Expense on Estimate of Fair Value of Contingent Consideration | 300 | ||||||||
Allocation of Purchase Price | |||||||||
Cash | $ 205 | ||||||||
Current assets, excluding cash | 5,074 | ||||||||
Property and equipment, net | 1,896 | ||||||||
Intangible assets, net | 26,607 | ||||||||
Goodwill | 51,033 | ||||||||
Current liabilities | (2,201) | ||||||||
Deferred revenue | (1,562) | ||||||||
Deferred tax asset (liability) | 16 | ||||||||
Total consideration | $ 81,068 | ||||||||
Percentage of enterprise value | 49.00% | ||||||||
Reduced percentage | 49.00% | ||||||||
Original purchase price | $ 34,300 | ||||||||
Revenues of acquiree | 14,600 | ||||||||
Income (loss) of acquiree | 3,500 | ||||||||
Pro forma results | |||||||||
Expense on Estimate of Fair Value of Contingent Consideration | 300 | ||||||||
MedCerts | Accrued Liabilities | |||||||||
Acquisition and Investments | |||||||||
Contingent Consideration Fair Value Disclosure | 11,100 | 11,100 | |||||||
MedCerts | Customer relationships | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 12,072 | ||||||||
Estimated useful life (in years) | 5 years 10 months 2 days | ||||||||
MedCerts | Developed technology | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 11,970 | ||||||||
Estimated useful life (in years) | 7 years | ||||||||
MedCerts | Trade names | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 2,565 | ||||||||
Estimated useful life (in years) | 5 years | ||||||||
MedCerts | Purchase Price Payable at Closing of Acquisition | |||||||||
Acquisition and Investments | |||||||||
Purchase price paid at closing | $ 55,000 | ||||||||
MedCerts | Purchase Price Payable at Eighteen Month Anniversary from Closing of Acquisition | |||||||||
Acquisition and Investments | |||||||||
Purchase price paid at closing | $ 15,000 | ||||||||
Tech Elevator | |||||||||
Acquisition and Investments | |||||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||
Total consideration | $ 23,500 | ||||||||
Working capital | 2,200 | ||||||||
Allocation of Purchase Price | |||||||||
Cash | 1,736 | ||||||||
Current assets, excluding cash | 518 | ||||||||
Property and equipment, net | 513 | ||||||||
Operating lease right-of-use assets, net | 724 | ||||||||
Intangible assets, net | 7,105 | ||||||||
Goodwill | 17,897 | ||||||||
Other assets | 377 | ||||||||
Current liabilities | (267) | ||||||||
Deferred revenue | (534) | ||||||||
Deferred tax asset (liability) | (1,650) | ||||||||
Current operating lease liability | (420) | ||||||||
Long-term operating lease liability | (304) | ||||||||
Total consideration | 25,695 | ||||||||
Revenues of acquiree | 7,200 | ||||||||
Income (loss) of acquiree | 400 | ||||||||
Tech Elevator | Customer relationships | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 311 | ||||||||
Estimated useful life (in years) | 3 years 11 months 1 day | ||||||||
Tech Elevator | Developed technology | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 2,796 | ||||||||
Estimated useful life (in years) | 5 years | ||||||||
Tech Elevator | Trade names | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 3,998 | ||||||||
Estimated useful life (in years) | 15 years | ||||||||
Galvanize | |||||||||
Acquisition and Investments | |||||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||
Total consideration | $ 165,000 | ||||||||
Working capital | 9,200 | ||||||||
Allocation of Purchase Price | |||||||||
Cash | 9,232 | ||||||||
Current assets, excluding cash | 8,888 | ||||||||
Property and equipment, net | 11,270 | ||||||||
Operating lease right-of-use assets, net | 100,232 | 100,200 | 100,200 | 99,700 | |||||
Intangible assets, net | 68,483 | ||||||||
Goodwill | 81,225 | $ 81,200 | 81,200 | 84,700 | |||||
Other assets | 1,802 | ||||||||
Current liabilities | (4,370) | ||||||||
Deferred revenue | (3,374) | ||||||||
Deferred tax asset (liability) | 2,372 | ||||||||
Current operating lease liability | (11,620) | ||||||||
Long-term operating lease liability | (89,782) | ||||||||
Other long-term liabilities | (130) | ||||||||
Total consideration | 174,228 | ||||||||
Revenues of acquiree | 33,700 | 11,000 | |||||||
Income (loss) of acquiree | $ 42,200 | $ 18,100 | |||||||
Galvanize | Customer relationships | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 4,785 | ||||||||
Estimated useful life (in years) | 4 years 2 months 19 days | ||||||||
Galvanize | Developed technology | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 3,357 | ||||||||
Estimated useful life (in years) | 4 years | ||||||||
Galvanize | Trade names | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 60,341 | ||||||||
Estimated useful life (in years) | 15 years |
Related Party Transactions (Det
Related Party Transactions (Details) - Future of School - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions | |||
Contributions made to related party | $ 1.3 | $ 1.2 | $ 1.4 |
Due to related party | 0 | $ 2.5 | |
Amount of accrued contributions to related party due in next twelve months | 1.2 | ||
Amount of accrued contributions to related party due in next five years | $ 3.5 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Employee Benefits | |||
Minimum length of service for participation | 30 days | ||
Company match percentage of participant's compensation | 50.00% | ||
Percentage of participant's compensation that company matches on | 4.00% | ||
401(k) Plan expense | $ 3.8 | $ 1.8 | $ 1.6 |
Supplemental Disclosure of Ca_3
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Nov. 30, 2020 | |
Supplemental Disclosure of Cash Flow Information | ||||
Cash paid for interest | $ 4,504 | $ 1,287 | $ 1,108 | |
Cash paid for taxes | 18,717 | 3,384 | 4,453 | |
Supplemental disclosure of non-cash financing activities: | ||||
Right-of-use assets obtained as a result of the adoption of ASC 842 | 17,652 | |||
Right-of-use assets obtained from acquisitions | 1,280 | 99,676 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 66,861 | 17,160 | 19,664 | |
Supplemental disclosure of non-cash investing activities: | ||||
Stock-based compensation expense capitalized on software development | 255 | 229 | 167 | |
Stock-based compensation expense capitalized on curriculum development | 116 | 184 | $ 170 | |
Business Combinations: | ||||
Acquired assets | 11,043 | 130,868 | ||
Intangible assets, net | 33,712 | 68,483 | $ 26,607 | |
Goodwill | 68,930 | 84,741 | ||
Assumed liabilities | (4,826) | (103,490) | ||
Deferred revenue | $ (2,096) | $ (3,374) |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) 10K - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | $ 6,807,674 | $ 11,765,869 | $ 12,384,279 |
Additions (Deductions) Charged to Cost and Expenses | 6,561,243 | 2,882,067 | 6,325,188 |
Deductions from Allowance | (8,014,626) | 7,840,262 | 6,943,598 |
Balance at End of Period | 21,383,543 | 6,807,674 | 11,765,869 |
INVENTORY RESERVES | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 4,817,300 | 4,131,386 | 3,491,655 |
Additions (Deductions) Charged to Cost and Expenses | 1,038,019 | 877,357 | 1,359,595 |
Deductions from Allowance | 208,036 | 191,443 | 719,864 |
Balance at End of Period | 5,647,283 | 4,817,300 | 4,131,386 |
COMPUTER RESERVE | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 811,682 | 788,230 | 899,654 |
Additions (Deductions) Charged to Cost and Expenses | 2,007,076 | 835,488 | 383,770 |
Deductions from Allowance | 545,386 | 812,036 | 495,194 |
Balance at End of Period | 2,273,372 | 811,682 | 788,230 |
INCOME TAX VALUATION ALLOWANCE | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 4,990,768 | 4,548,900 | 4,458,517 |
Additions to Net Deferred Tax Asset Allowance | 123,249 | 441,868 | 90,383 |
Deductions from Allowance | 66,939 | ||
Balance at End of Period | $ 5,047,078 | $ 4,990,768 | $ 4,548,900 |