Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2020 | Jan. 22, 2021 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2020 | |
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, $0.0001 par value | |
Trading Symbol | LRN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,602,453 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001157408 | |
Amendment Flag | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Jun. 30, 2020 |
Current assets | ||
Cash and cash equivalents | $ 258,107 | $ 212,299 |
Accounts receivable, net of allowance of $20,924 and $6,808 | 435,254 | 236,134 |
Inventories, net | 28,618 | 28,300 |
Prepaid expenses | 21,525 | 13,058 |
Other current assets | 24,973 | 11,480 |
Total current assets | 768,477 | 501,271 |
Operating lease right-of-use assets, net | 104,010 | 111,768 |
Property and equipment, net | 78,503 | 38,668 |
Capitalized software, net | 50,296 | 48,493 |
Capitalized curriculum development costs, net | 48,147 | 48,849 |
Intangible assets, net | 106,547 | 77,451 |
Goodwill | 240,799 | 174,939 |
Deposits and other assets | 75,175 | 71,824 |
Total assets | 1,471,954 | 1,073,263 |
Current liabilities | ||
Accounts payable | 39,251 | 40,428 |
Accrued liabilities | 41,514 | 27,351 |
Accrued compensation and benefits | 42,501 | 47,227 |
Deferred revenue | 62,635 | 24,417 |
Credit facility | 100,000 | |
Current portion of finance lease liability | 21,506 | 13,304 |
Current portion of operating lease liability | 21,204 | 20,689 |
Total current liabilities | 228,611 | 273,416 |
Long-term finance lease liability | 37,796 | 4,634 |
Long-term operating lease liability | 86,977 | 96,544 |
Long-term debt | 291,624 | |
Deferred tax liability | 34,645 | 13,771 |
Other long-term liabilities | 39,872 | 9,569 |
Total liabilities | 719,525 | 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; 46,893,934 and 46,341,627 shares issued; and 41,559,191 and 41,006,884 shares outstanding | 4 | 4 |
Additional paid-in capital | 777,409 | 730,761 |
Accumulated other comprehensive income (loss) | (369) | 93 |
Retained earnings | 77,867 | 46,953 |
Treasury stock of 5,334,743 shares at cost | (102,482) | (102,482) |
Total stockholders' equity | 752,429 | 675,329 |
Total liabilities and stockholders' equity | $ 1,471,954 | $ 1,073,263 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Jun. 30, 2020 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $ 20,924 | $ 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 | 46,893,934 | 46,341,627 |
Common stock, shares outstanding | 41,559,191 | 41,006,884 |
Treasury stock, shares | 5,334,743 | 5,334,743 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 376,145 | $ 257,559 | $ 747,105 | $ 514,680 |
Instructional costs and services | 246,754 | 167,470 | 487,823 | 336,828 |
Gross margin | 129,391 | 90,089 | 259,282 | 177,852 |
Selling, general, and administrative expenses | 90,939 | 59,784 | 208,766 | 166,935 |
Income from operations | 38,452 | 30,305 | 50,516 | 10,917 |
Interest income (expense), net | (5,024) | 441 | (7,131) | 1,351 |
Other income, net | 1,361 | 365 | 1,790 | 357 |
Income before income taxes and loss from equity method investments | 34,789 | 31,111 | 45,175 | 12,625 |
Income tax expense | (10,642) | (10,392) | (8,266) | (1,574) |
Income (loss) from equity method investments | 354 | (125) | 258 | (187) |
Net income attributable to common stockholders | $ 24,501 | $ 20,594 | $ 37,167 | $ 10,864 |
Net income attributable to common stockholders per share: | ||||
Basic (in dollars per share) | $ 0.61 | $ 0.52 | $ 0.93 | $ 0.28 |
Diluted (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.89 | $ 0.27 |
Weighted average shares used in computing per share amounts: | ||||
Basic (in shares) | 40,160,362 | 39,450,017 | 40,072,360 | 39,369,287 |
Diluted (in shares) | 41,102,425 | 39,973,933 | 41,681,061 | 40,692,822 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income | $ 24,501 | $ 20,594 | $ 37,167 | $ 10,864 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | (270) | (287) | (462) | (148) |
Comprehensive income attributable to common stockholders | $ 24,231 | $ 20,307 | $ 36,705 | $ 10,716 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED 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 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) | (9,730) | (9,730) | ||||||
Foreign currency translation adjustment | 139 | 139 | ||||||
Stock-based compensation expense | 5,594 | 5,594 | ||||||
Exercise of stock options | 42 | 42 | ||||||
Exercise of stock options (in shares) | 2,500 | |||||||
Issuance of restricted stock awards (in shares) | 918,702 | |||||||
Forfeiture of restricted stock awards (in shares) | (34,090) | |||||||
Repurchase of restricted stock for tax withholding | (4,698) | (4,698) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (171,778) | |||||||
Balance at Sep. 30, 2019 | $ 4 | 714,374 | 99 | 12,717 | $ (102,482) | 624,712 | ||
Balance (in shares) at Sep. 30, 2019 | 46,290,570 | (5,334,743) | ||||||
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) | 10,864 | |||||||
Repurchase of restricted stock for tax withholding | (4,883) | |||||||
Balance at Dec. 31, 2019 | $ 4 | 720,451 | (188) | 33,311 | $ (102,482) | 651,096 | ||
Balance (in shares) at Dec. 31, 2019 | 46,282,173 | (5,334,743) | ||||||
Balance at Sep. 30, 2019 | $ 4 | 714,374 | 99 | 12,717 | $ (102,482) | 624,712 | ||
Balance (in shares) at Sep. 30, 2019 | 46,290,570 | (5,334,743) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 20,594 | 20,594 | ||||||
Foreign currency translation adjustment | (287) | (287) | ||||||
Stock-based compensation expense | 6,256 | 6,256 | ||||||
Exercise of stock options | 6 | 6 | ||||||
Exercise of stock options (in shares) | 500 | |||||||
Issuance of restricted stock awards (in shares) | 18,000 | |||||||
Forfeiture of restricted stock awards (in shares) | (18,019) | |||||||
Repurchase of restricted stock for tax withholding | (185) | (185) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (8,878) | |||||||
Balance at Dec. 31, 2019 | $ 4 | 720,451 | (188) | 33,311 | $ (102,482) | 651,096 | ||
Balance (in shares) at Dec. 31, 2019 | 46,282,173 | (5,334,743) | ||||||
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) | 12,666 | 12,666 | ||||||
Foreign currency translation adjustment | (192) | (192) | ||||||
Stock-based compensation expense | 9,009 | 9,009 | ||||||
Exercise of stock options | 32 | 32 | ||||||
Exercise of stock options (in shares) | 948,867 | |||||||
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 | 105,477 | 105,477 | ||||||
Purchases of capped calls in connection with convertible senior notes | (60,354) | (60,354) | ||||||
Issuance of restricted stock awards (in shares) | 383,223 | |||||||
Forfeiture of restricted stock awards (in shares) | (9,329) | |||||||
Repurchase of restricted stock for tax withholding | (5,808) | (5,808) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (136,194) | |||||||
Balance (ASU 2016-13) at Sep. 30, 2020 | $ (6,253) | $ (6,253) | ||||||
Balance at Sep. 30, 2020 | $ 4 | 768,232 | (99) | 53,366 | $ (102,482) | 719,021 | ||
Balance (in shares) at Sep. 30, 2020 | 46,872,975 | (5,334,743) | ||||||
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) | $ 37,167 | |||||||
Exercise of stock options (in shares) | 963,867 | |||||||
Purchases of capped calls in connection with convertible senior notes | $ (60,354) | |||||||
Repurchase of restricted stock for tax withholding | (6,108) | |||||||
Balance at Dec. 31, 2020 | $ 4 | 777,409 | (369) | 77,867 | $ (102,482) | 752,429 | ||
Balance (in shares) at Dec. 31, 2020 | 46,893,934 | (5,334,743) | ||||||
Balance at Sep. 30, 2020 | $ 4 | 768,232 | (99) | 53,366 | $ (102,482) | 719,021 | ||
Balance (in shares) at Sep. 30, 2020 | 46,872,975 | (5,334,743) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 24,501 | 24,501 | ||||||
Foreign currency translation adjustment | (270) | (270) | ||||||
Stock-based compensation expense | 9,181 | 9,181 | ||||||
Exercise of stock options | 271 | 271 | ||||||
Exercise of stock options (in shares) | 15,000 | |||||||
Equity component of convertible senior notes, net of issuance costs and taxes | 25 | 25 | ||||||
Issuance of restricted stock awards (in shares) | 19,500 | |||||||
Forfeiture of restricted stock awards (in shares) | (2,122) | |||||||
Repurchase of restricted stock for tax withholding | (300) | (300) | ||||||
Repurchase of restricted stock for tax withholding (in shares) | (11,419) | |||||||
Balance at Dec. 31, 2020 | $ 4 | $ 777,409 | $ (369) | $ 77,867 | $ (102,482) | $ 752,429 | ||
Balance (in shares) at Dec. 31, 2020 | 46,893,934 | (5,334,743) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 37,167 | $ 10,864 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization expense | 41,438 | 34,376 |
Stock-based compensation expense | 17,967 | 11,699 |
Deferred income taxes | 5,375 | 346 |
Provision for (recovery of) doubtful accounts | 6,382 | (344) |
Amortization of discount and fees on debt | 4,973 | |
Other | 16,871 | 7,116 |
Changes in assets and liabilities: | ||
Accounts receivable | (208,870) | (59,650) |
Inventories, prepaid expenses, deposits and other current and long-term assets | (23,231) | 2,556 |
Accounts payable | (7,202) | (14,141) |
Accrued liabilities | 4,346 | 690 |
Accrued compensation and benefits | (5,401) | (13,943) |
Operating lease liability | (10,364) | (4,089) |
Deferred revenue and other liabilities | 40,592 | 3,255 |
Net cash used in operating activities | (79,957) | (21,265) |
Cash flows from investing activities | ||
Purchase of property and equipment | (1,969) | (1,338) |
Capitalized software development costs | (14,061) | (12,978) |
Capitalized curriculum development costs | (7,524) | (11,991) |
Sale of long-lived assets | 223 | |
Acquisition of MedCerts, LLC, net of cash acquired | (54,775) | |
Acquisition of Tech Elevator, Inc., net of cash acquired | (15,981) | |
Other acquisitions and investments, net of distributions | (188) | (4,114) |
Net cash used in investing activities | (94,275) | (30,421) |
Cash flows from financing activities | ||
Repayments on finance lease obligations | (11,455) | (14,959) |
Repayments on credit facility | (100,000) | |
Issuance of convertible senior notes | 408,610 | |
Purchases of capped calls in connection with convertible senior notes | (60,354) | |
Proceeds from exercise of stock options | 303 | 48 |
Withholding of stock options for tax withholding | (10,885) | |
Repurchase of restricted stock for income tax withholding | (6,108) | (4,883) |
Net cash provided by (used in) financing activities | 220,111 | (19,794) |
Net change in cash, cash equivalents and restricted cash | 45,879 | (71,480) |
Cash, cash equivalents and restricted cash, beginning of period | 213,299 | |
Cash, cash equivalents and restricted cash, end of period | $ 259,178 | $ 213,141 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Cash and cash equivalents | $ 258,107 | $ 211,641 |
Total cash, cash equivalents and restricted cash | 259,178 | 213,141 |
Other current assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Restricted cash | 571 | 500 |
Deposits and other assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Restricted cash | $ 500 | $ 1,000 |
Description of the Business
Description of the Business | 6 Months Ended |
Dec. 31, 2020 | |
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 online 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 on a scalable basis. These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners reach their educational goals 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, including through private schools which it operates. These products and services are provided through two lines of revenue: ● General Education products and services are predominantly focused on kindergarten through twelfth grade students for core subjects including math, English, science and history, 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 serve a range of student needs including safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning among other reasons. Products and services are sold a la carte or combined into customized customer offerings. ● Career Learning products and services are focused on developing skills for students, in middle school through high school and adult learners, to enter careers in high-growth, in-demand industries—including information technology, business, and health services. The Company provides middle and high school students with Career Learning programs that complement their core general education coursework in math, English, science and history. Stride currently offers a catalog of over 160 Career Learning courses in 23 Career Pathways™ in five of the sixteen National Career Clusters. The middle school program spans career exploration, 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 our General Education program may take Career Learning courses but that student and associated revenue is not reported as Career Learning enrollment and revenue. A student and the associated revenue, whether in middle or high school is counted as Career Learning if enrolled in a school offering our Career Learning program and must commit to a career pathway and its associated services, including the Exploratory Pathways. Like General Education, products and services for the Career Learning market are sold a la carte or combined into a Career Learning program or customized customer offering. The Company also offers post-secondary Career Learning programs to adult learners, through its Galvanize, Inc. (“Galvanize”), Tech Elevator, Inc. (“Tech Elevator”), and MedCerts, LLC (“MedCerts”) subsidiaries. These programs include skills training in data science and software engineering, healthcare and medical fields, technology staffing and talent development, and are offered directly to consumers, 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 | 6 Months Ended |
Dec. 31, 2020 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2020, the condensed consolidated statements of operations and comprehensive income for the three and six months ended December 31, 2020 and 2019, the condensed consolidated statements of cash flows for the six months ended December 31, 2020 and 2019, and the condensed consolidated statements of stockholders’ equity for the three and six months ended December 31, 2020 and 2019 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations for the periods presented. The results for the three and six months ended December 31, 2020 are not necessarily indicative of the results to be expected for the year ending June 30, 2021, for any other interim period or for any other future fiscal year. The condensed consolidated balance sheet as of June 30, 2020 has been derived from the audited consolidated financial statements at that date. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, the Company does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s condensed consolidated results of operations, financial position and cash flows. Preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This quarterly report on Form 10-Q should be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 12, 2020, which contains the Company’s audited financial statements for the fiscal year ended June 30, 2020. The Company operates in one operating and reportable |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2020 | |
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 reform, e.g. LIBOR, that is tentatively planned for the end of calendar year 2022. The ASU permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement. This ASU will be effective for the Company as of March 12, 2020 through December 31, 2022 and adoption is permitted at any time during the period on a prospective basis. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) 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 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: ● an online 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 an online 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 online 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 an online 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 three and six months ended December 31, 2020 and 2019. 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, 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 online 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 three months ended December 31, 2020 and 2019, the Company’s revenues included a reduction for net school operating losses at the schools of $24.2 million and $11.2 million, respectively, and $44.2 million and $27.5 million for the six months ended December 31, 2020 and 2019, 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 condensed consolidated statements of operations. Amounts recorded as revenues and expenses for the three months ended December 31, 2020 and 2019 were $102.4 million and $83.9 million, respectively, and for the six months ended December 31, 2020 and 2019 were $212.1 million and $169.4 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 three months ended December 31, 2020 and 2019, approximately 88% and 88%, respectively, of the Company’s General Education revenues; and 98% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. During the six months ended December 31, 2020 and 2019, approximately 88% and 88%, respectively, of the Company’s General Education revenues; and 98% and 99%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. The following table presents the Company’s revenues disaggregated based on its two lines of revenue for the three and six months ended December 31, 2020 and 2019: Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 (In thousands) General Education $ 313,989 $ 232,619 $ 627,838 $ 466,185 Career Learning Middle - High School 51,376 24,940 100,147 48,495 Adult 10,780 — 19,120 — Total Career Learning 62,156 24,940 119,267 48,495 Total Revenues $ 376,145 $ 257,559 $ 747,105 $ 514,680 Concentration of Customers During the three and six months ended December 31, 2020 and 2019, the Company had zero contracts that represented greater than 10% of total revenues. Contract Balances to reflect expected losses at the time the receivable is recorded. The collectability of outstanding receivables is evaluated regularly by the Company to determine if additional allowances are needed. Unbilled receivables are created when revenue is earned prior to the customer being billed. Deferred revenue is recorded when customers are billed or cash is collected in advance of services being provided. The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: December 31, June 30, 2020 2020 (In thousands) Accounts receivable $ 435,254 $ 236,134 Unbilled receivables (included in accounts receivable) 19,031 15,688 Deferred revenue 62,635 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,970 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 three months ended December 31, 2020 and 2019 that was included in the previous October 1 st st Performance Obligations one 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 Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. 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 condition. Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to online and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of December 31, 2020 and June 30, 2020, $4.8 million and $5.2 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $5.2 million and $4.8 million at December 31, 2020 and June 30, 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. 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 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $1.1 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively, and $1.9 million and $1.3 million for the six months ended December 31, 2020 and 2019, respectively, related to unreturned student computers. Depreciation expense, including accelerated depreciation, related to computers provided to students and reflected in instructional costs and services for the three months ended December 31, 2020 and 2019 was $9.3 million and $4.3 million, respectively, and $14.8 million and $8.2 million, respectively, during the six months ended December 31, 2020 and 2019. Depreciation expense related to property and equipment reflected in selling, general, and administrative expenses for the three months ended December 31, 2020 and 2019 was $1.0 million and $1.1 million, respectively and $1.9 million and $2.3 million, respectively, during the six months ended December 31, 2020 and 2019. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $1.6 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively, and $6.0 million and $3.2 million for the six months ended December 31, 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 $14.1 million and $13.0 million for the six months ended December 31, 2020 and 2019, respectively. The Company recorded amortization expense related to capitalized software of $5.0 million and $5.2 million during the three months ended December 31, 2020 and 2019, respectively, and $9.7 million and $10.6 million during the six months ended December 31, 2020 and 2019, respectively, within instructional costs and services. Amortization expense related to capitalized software reflected in selling, general, and administrative expenses for the three months ended December 31, 2020 and 2019 was $1.1 million and $1.5 million, respectively and $2.2 million and $3.0 million, respectively, during the six months ended December 31, 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 $7.5 million and $12.0 million for the six months ended December 31, 2020 and 2019, respectively. These amounts are recorded on the condensed consolidated balance sheets net of amortization charges. Amortization expense for the three months ended December 31, 2020 and 2019 was $4.3 million and $4.4 million, respectively, and $8.3 million and $8.8 million for the six months ended December 31, 2020 and 2019, respectively, and is recorded in instructional costs and services. Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 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 Topic 842, Leases 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. 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. Goodwill and Intangible Assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended December 31, 2020 and 2019 was $2.5 million and $0.8 million, respectively, and $4.6 million and $1.5 million for the six months ended December 31, 2020 and 2019, respectively, and is included within selling, general, and administrative expenses in the condensed consolidated statements of operations. Future amortization of intangible assets is expected to be $6.8 million, $12.9 million, $12.7 million, $11.8 million, and $10.5 million in the fiscal years ending June 30, 2021 through June 30, 2025, respectively, and $51.5 million thereafter. At December 31, 2020 and June 30, 2020, the goodwill balance was $240.8 million and $174.9 million, respectively. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. The process for testing goodwill and intangible assets with indefinite lives for impairment is a two-step process that is performed annually, as well as when an event triggering impairment may have occurred. Companies are also allowed to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo Step 1 of their annual goodwill impairment process. This qualitative screening process will hereinafter be referred to as “Step 0”. The Company performs its annual assessment on May 31 st The Company performed a qualitative assessment of Coronavirus disease 2019 (“COVID-19”) as a triggering event related to the value of its goodwill and intangible assets and concluded that there were no indicators of impairment during the three and six months ended December 31, 2020. The following table represents the balance of the Company’s intangible assets as of December 31, 2020 and June 30, 2020: December 31, 2020 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (14.5) $ 70.0 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (18.6) 19.1 25.3 (17.2) 8.1 Developed technology 21.3 (4.2) 17.1 6.6 (3.5) 3.1 Other 1.3 (1.0) 0.3 1.4 (1.0) 0.4 Total $ 144.8 $ (38.3) $ 106.5 $ 111.2 $ (33.7) $ 77.5 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. The Company performed a qualitative assessment of COVID-19 as a triggering event related to the value of its long-lived assets and concluded that there were no indicators of impairment during the three and six months ended December 31, 2020. 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 condensed 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 is discussed in more detail in Note 11, “Acquisitions and Investments.” The convertible senior notes due 2027 are discussed in more detail in Note 6, “Debt.” The following table summarizes certain fair value information at December 31, 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) Contingent consideration associated with acquisitions $ 10,833 $ — $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Convertible Senior Notes due 2027 345,975 — 345,975 — 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 three and six months ended December 31, 2020 and 2019: Three Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2020 and Settlements Gains/(Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2019 and Settlements Gains/(Losses) December 31, 2019 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 Six Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Six Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) December 31, 2019 (In thousands) Convertible note recei |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | 4. Income Taxes The provision for income taxes is based on earnings reported in the condensed consolidated financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense or benefit is measured by the change in the deferred income tax asset or liability during the period. For the three months ended December 31, 2020 and 2019, the Company’s effective income tax rate was 30.3% and 33.5%, respectively, and for the six months ended December 31, 2020 and 2019, the rate was 18.2% and 12.7%, respectively. |
Finance and Operating Leases
Finance and Operating Leases | 6 Months Ended |
Dec. 31, 2020 | |
Finance and Operating Leases | |
Finance and Operating Leases | 5. 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 December 31, 2020 and June 30, 2020, the finance lease liability was $59.3 million and $17.9 million, respectively, with lease interest rates ranging from 1.52% to 3.87%. As of December 31, 2020 and June 30, 2020, the balance of the associated right-of-use assets was $53.1 million and $19.8 million, respectively. The right-of-use asset is recorded within property and equipment, net on the condensed consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within selling, general, and administrative expenses on the condensed 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 an additional agreement in September 2020 to provide financing of $45.0 million for its leases through March 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 December 31, 2020 and June 30, 2020, respectively, of the present value of the net minimum lease payments under the Company’s finance leases: December 31, 2020 June 30, 2020 (in thousands) 2021 $ 12,069 $ 13,587 2022 20,943 2,653 2023 20,330 2,040 2024 8,100 — Total minimum payments 61,442 18,280 Less: imputed interest (2,140) (342) Finance lease liability 59,302 17,938 Less: current portion of finance lease liability (21,506) (13,304) Long-term finance lease liability $ 37,796 $ 4,634 Operating Leases The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of December 31, 2020 and June 30, 2020, the operating lease liability was $108.2 million and $117.2 million, respectively. As of December 31, 2020 and June 30, 2020, the balance of the associated right-of-use assets was $104.0 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 11, “Acquisitions and Investments.” Lease expense associated with the Company’s operating leases is recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations. Individual operating leases range in terms of 1 The following is a summary as of December 31, 2020 and June 30, 2020, respectively of the present value of the minimum lease payments under the Company’s operating leases: December 31, 2020 June 30, 2020 (in thousands) 2021 $ 12,091 $ 23,626 2022 22,880 22,326 2023 16,164 15,841 2024 14,890 14,769 2025 13,956 13,949 Thereafter 38,544 38,544 Total minimum payments 118,525 129,055 Less: imputed interest (10,344) (11,822) Operating lease liability 108,181 117,233 Less: current portion of operating lease liability (21,204) (20,689) Long-term operating lease liability $ 86,977 $ 96,544 The Company is subleasing one of its facilities through June 2021, two others through May 2022 and one through July 2023. Sublease income is recorded as an offset to the related lease expense within selling, general, and administrative expenses on the condensed consolidated statements of operations. The following is a summary as of December 31, 2020 and June 30, 2020, respectively, of the expected sublease income: December 31, 2020 June 30, 2020 (in thousands) 2021 $ 980 $ 1,960 2022 1,496 1,496 2023 797 797 2024 66 66 Total sublease income $ 3,339 $ 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 three and six months ended December 31, 2020 and 2019: Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 Lease cost Finance lease cost: Amortization of right-of-use assets $ 8,341 $ 4,241 $ 13,178 $ 8,186 Interest on lease liabilities 155 178 273 381 Operating lease cost 5,579 1,728 11,112 3,335 Short-term lease cost 315 319 600 707 Sublease income (447) (128) (927) (315) Total lease cost $ 13,943 $ 6,338 $ 24,236 $ 12,294 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (5,199) $ (2,016) $ (10,364) $ (4,089) Financing cash flows from finance leases (5,786) (7,499) (11,455) (14,959) Right-of-use assets obtained in exchange for new finance lease liabilities 30,111 6,329 46,865 12,775 Right-of-use assets obtained in exchange for new operating lease liabilities 377 — 589 4,847 Weighted-average remaining lease term - finance leases 2.84 yrs. 1.07 yrs. Weighted-average remaining lease term - operating leases 6.81 yrs. 2.99 yrs. Weighted-average discount rate - finance leases 2.49 % 3.33 % Weighted-average discount rate - operating leases 2.76 % 3.86 % |
Debt
Debt | 6 Months Ended |
Dec. 31, 2020 | |
Debt | |
Debt | 6. Debt The following is a summary, as of December 31, 2020 and June 30, 2020, respectively, of the components of the Company’s outstanding long-term debt: December 31, 2020 June 30, 2020 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ — Less: unamortized discount (120,614) — Less: unamortized debt issuance costs (7,762) — Total debt 291,624 — Less: current portion of debt — — Long-term debt $ 291,624 $ — 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 $3.6 million and $0.2 million, respectively, during the three months ended December 31, 2020, and $4.7 million and $0.2 million, respectively, during the six months ended December 31, 2020. Within the next twelve months, the Company will record interest expense related to the accretion of the discount and the amortization of the debt issuance costs of $15.0 million and $0.8 million, respectively. The effective interest rate of the Notes for the three and six months ended December 31, 2020 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 or delivering cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, with an intent to net settle by settling the outstanding principal in cash and conversion spread in shares of its common stock. The initial conversion rate is 18.9109 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.88 per share of common stock (lower strike price). The Notes will be redeemable at the Company’s option at any time after September 6, 2024 at a cash redemption price equal to the principal amount of the Notes, plus accrued and unpaid interest, subject to certain stock price hurdles as discussed in the Indenture. In connection with the Notes, the Company entered into privately negotiated capped call transactions (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 | 6 Months Ended |
Dec. 31, 2020 | |
Credit Facility | |
Credit Facility | 7. Credit Facility On January 27, 2020, the Company entered into a $100.0 million senior secured revolving credit facility (“Credit Facility”) to be used for general corporate operating purposes with PNC Capital Markets LLC. The Credit Facility has a five-year term and incorporates customary financial and other covenants, including but not limited to a maximum leverage ratio and a minimum interest coverage ratio. The majority of the Company’s borrowings under the Credit Facility are at LIBOR plus an additional rate ranging from 0.875% - 1.50% based on the Company’s leverage ratio as defined in the agreement. The Credit Facility is secured by the Company’s assets. As of December 31, 2020, 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 December 31, 2020, 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 | 6 Months Ended |
Dec. 31, 2020 | |
Equity Incentive Plan | |
Equity Incentive Plan | 8. 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. As of December 31, 2020, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 539,207. As of December 31, 2020, there were 4,658,310 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. 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 six months ended December 31, 2020 was as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 Granted — — Exercised (963,867) 19.91 Forfeited or canceled — — Outstanding and exercisable, December 31, 2020 57,650 $ 16.76 1.81 $ 271,701 The total intrinsic value of options exercised during the six months ended December 31, 2020 and 2019 was $24.3 million and $0.0 million, respectively. During the three months ended December 31, 2020 and 2019, the Company recognized zero stock-based compensation expense related to stock options; while during the six months ended December 31, 2020 and 2019, the expense was zero and $0.1 million, respectively. 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 six months ended December 31, 2020 Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 1,618,604 $ 23.73 Granted 402,723 43.41 Vested (373,827) 20.41 Canceled (11,450) 24.44 Nonvested, December 31, 2020 1,636,050 $ 29.33 Performance-Based Restricted Stock Awards (included above) During the six months ended December 31, 2020, 96,053 new performance-based restricted stock awards were granted and 544,247 remain nonvested at December 31, 2020. During the six months ended December 31, 2020, 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 two one one two Service-Based Restricted Stock Awards (included above) During the six months ended December 31, 2020, 306,670 new service-based restricted stock awards were granted and 1,091,803 remain nonvested at December 31, 2020. During the six months ended December 31, 2020, 263,233 service-based restricted stock awards vested. Summary of All Restricted Stock Awards As of December 31, 2020, there was $32.0 million of total unrecognized compensation expense related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.6 years. The fair value of restricted stock awards granted for the six months ended December 31, 2020 and 2019 was $17.5 million and $26.2 million, respectively. The total fair value of shares vested for the six months ended December 31, 2020 and 2019 was $15.4 million and $12.4 million, respectively. During the three months ended December 31, 2020 and 2019, the Company recognized $5.6 million and $4.5 million, respectively, of stock-based compensation expense related to restricted stock awards. During the six months ended December 31, 2020 and 2019, the expense was $11.1 million and $8.4 million, respectively. Performance Share Units 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 six months ended December 31, 2020 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 2,464,853 $ 10.78 Granted 477,700 40.17 Vested — — Canceled (20,045) 29.93 Nonvested, December 31, 2020 2,922,508 $ 15.45 Fiscal Year 2021 MIP During the six months ended December 31, 2020, 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 11, “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 six months ended December 31, 2020, 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 determined the likelihood of achievement of the performance conditions are not able to be determined at this time. Fiscal Year 2021 Career Learning PSUs During the six months ended December 31, 2020, 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. During the three months ended December 31, 2020, the Company determined the achievement of the performance conditions associated with the fiscal year 2021 revenues was probable at the target level. The Company determined the likelihood of achievement of the performance conditions associated with the fiscal year 2022 and 2023 revenues are not able to be determined at this time. Fiscal Year 2020 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 able to be determined at this time. Fiscal Year 2019 LTIP During fiscal year 2019, the Company granted 263,936 PSUs at target under a LTIP which are tied to certain 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. During the three months ended September 30, 2020, the Company determined the achievement of the performance condition for Tranche #2 and Tranche #3, was probable at the threshold (updated to target level during the three months ended December 31, 2020) and target level, respectively, while Tranche #1 remained not probable. 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 December 31, 2020, there was $8.0 million of total unrecognized compensation expense related to nonvested PSUs. The cost is expected to be recognized over a weighted average period of 1.0 years. During the three months ended December 31, 2020 and 2019, the Company recognized $3.4 million and $1.5 million, respectively, of stock-based compensation expense related to PSUs. During the six months ended December 31, 2020 and 2019, the expense was $6.8 million and $3.1 million, respectively. Deferred Stock Units (“DSU”) Deferred stock unit activity during the six months ended December 31, 2020 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 42,102 $ 22.42 Granted — — Vested — — Canceled — — Nonvested, December 31, 2020 42,102 $ 22.42 Summary of All Deferred Stock Units As of December 31, 2020, there was $0.0 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.0 years. During the three months ended December 31, 2020 and 2019, the Company recognized $0.1 million and $0.1 million, respectively, of stock-based compensation expense related to DSUs. During the six months ended December 31, 2020 and 2019, the expense was $0.2 million and $0.2 million, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Litigation 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 Chairman and Chief Executive Officer 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 December 31, 2020, the Company provided guarantees of approximately $0.7 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, the Company is currently experiencing increased 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 financial results for the remaining portion of fiscal year 2021. 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 condensed consolidated balance sheets. |
Acquisitions and Investments
Acquisitions and Investments | 6 Months Ended |
Dec. 31, 2020 | |
Acquisitions and Investments. | |
Acquisitions and Investments | 11. 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. 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 and 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 $ 225 Current assets, excluding cash 5,054 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 50,814 Current liabilities (2,201) Deferred revenue (1,562) Total consideration $ 80,833 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 estimated fair values for deferred revenue, contingent consideration and the intangible assets are considered preliminary and are subject to change based on final purchase price valuation amounts. The purchase price valuation is still under review. 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 March 2022 – May 2022. This multiplier is applied to the EBITDA for the period December 2021 – 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 original purchase price of $70.0 million ($34.3 million). 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 condensed consolidated results of operations for the three and six months ended December 31, 2020 are revenues of $1.0 million and a loss from operations of $1.2 million, 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 and 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 $ 1,862 Current assets, excluding cash 469 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 18,562 Other assets 377 Current liabilities (1,009) Deferred revenue (534) Deferred tax asset (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 estimated fair values for deferred revenue and the intangible assets are considered preliminary and are subject to change based on final purchase price valuation amounts. The purchase price valuation is still under review. 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 condensed consolidated results of operations for the three and six months ended December 31, 2020 are revenues of $0.6 million and a loss from operations of $0.3 million. 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 and the fair values of the assets acquired and liabilities assumed. Based on management’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price was allocated as follows (in thousands): 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 Company made several adjustments to its fiscal year 2020 allocation of the preliminary purchase price during fiscal year 2021. ● 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 transactions above. 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 well as the replacement cost approach, 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 $ 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 condensed consolidated results of operations for the three and six months ended December 31, 2020 are revenues of $9.1 million and $17.5 million, respectively, and loss from operations of $10.0 million and $19.7 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 MedCerts, Tech Elevator and Galvanize, 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. Three Months Ended December 31, Six Months Ended December 31, (In thousands) 2020 2019 2020 2019 Revenues $ 382,911 $ 274,293 $ 762,518 $ 543,223 Income (loss) from operations 38,881 23,304 51,347 (4,851) Net income (loss) 25,033 13,758 38,159 (3,085) Investments in Limited Partnerships Investment in Tallo, Inc. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 6 Months Ended |
Dec. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Supplemental Disclosure of Cash Flow Information | 12. Supplemental Disclosure of Cash Flow Information Six Months Ended December 31, 2020 2019 (In thousands) Cash paid for interest $ 1,176 $ 381 Cash paid for taxes $ 8,479 $ 2,628 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 $ 1,280 $ 17,652 Right-of-use assets obtained in exchange for new finance lease liabilities $ 46,865 $ 12,775 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 127 $ 61 Stock-based compensation expense capitalized on curriculum development $ 96 $ 90 Business combinations: Acquired assets $ 11,120 $ — Intangible assets 33,712 — Goodwill 69,376 — Assumed liabilities (5,584) — Deferred revenue (2,096) — |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2020 | |
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 reform, e.g. LIBOR, that is tentatively planned for the end of calendar year 2022. The ASU permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement. This ASU will be effective for the Company as of March 12, 2020 through December 31, 2022 and adoption is permitted at any time during the period on a prospective basis. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) |
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 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: ● an online 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 an online 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 online 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 an online 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 three and six months ended December 31, 2020 and 2019. 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, 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 online 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 three months ended December 31, 2020 and 2019, the Company’s revenues included a reduction for net school operating losses at the schools of $24.2 million and $11.2 million, respectively, and $44.2 million and $27.5 million for the six months ended December 31, 2020 and 2019, 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 condensed consolidated statements of operations. Amounts recorded as revenues and expenses for the three months ended December 31, 2020 and 2019 were $102.4 million and $83.9 million, respectively, and for the six months ended December 31, 2020 and 2019 were $212.1 million and $169.4 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 three months ended December 31, 2020 and 2019, approximately 88% and 88%, respectively, of the Company’s General Education revenues; and 98% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. During the six months ended December 31, 2020 and 2019, approximately 88% and 88%, respectively, of the Company’s General Education revenues; and 98% and 99%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. The following table presents the Company’s revenues disaggregated based on its two lines of revenue for the three and six months ended December 31, 2020 and 2019: Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 (In thousands) General Education $ 313,989 $ 232,619 $ 627,838 $ 466,185 Career Learning Middle - High School 51,376 24,940 100,147 48,495 Adult 10,780 — 19,120 — Total Career Learning 62,156 24,940 119,267 48,495 Total Revenues $ 376,145 $ 257,559 $ 747,105 $ 514,680 Concentration of Customers During the three and six months ended December 31, 2020 and 2019, the Company had zero contracts that represented greater than 10% of total revenues. Contract Balances to reflect expected losses at the time the receivable is recorded. The collectability of outstanding receivables is evaluated regularly by the Company to determine if additional allowances are needed. Unbilled receivables are created when revenue is earned prior to the customer being billed. Deferred revenue is recorded when customers are billed or cash is collected in advance of services being provided. The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: December 31, June 30, 2020 2020 (In thousands) Accounts receivable $ 435,254 $ 236,134 Unbilled receivables (included in accounts receivable) 19,031 15,688 Deferred revenue 62,635 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,970 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 three months ended December 31, 2020 and 2019 that was included in the previous October 1 st st Performance Obligations one 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 |
Consolidation | Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
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 condition. |
Inventories | Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to online and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of December 31, 2020 and June 30, 2020, $4.8 million and $5.2 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $5.2 million and $4.8 million at December 31, 2020 and June 30, 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. |
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 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $1.1 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively, and $1.9 million and $1.3 million for the six months ended December 31, 2020 and 2019, respectively, related to unreturned student computers. Depreciation expense, including accelerated depreciation, related to computers provided to students and reflected in instructional costs and services for the three months ended December 31, 2020 and 2019 was $9.3 million and $4.3 million, respectively, and $14.8 million and $8.2 million, respectively, during the six months ended December 31, 2020 and 2019. Depreciation expense related to property and equipment reflected in selling, general, and administrative expenses for the three months ended December 31, 2020 and 2019 was $1.0 million and $1.1 million, respectively and $1.9 million and $2.3 million, respectively, during the six months ended December 31, 2020 and 2019. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $1.6 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively, and $6.0 million and $3.2 million for the six months ended December 31, 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 $14.1 million and $13.0 million for the six months ended December 31, 2020 and 2019, respectively. The Company recorded amortization expense related to capitalized software of $5.0 million and $5.2 million during the three months ended December 31, 2020 and 2019, respectively, and $9.7 million and $10.6 million during the six months ended December 31, 2020 and 2019, respectively, within instructional costs and services. Amortization expense related to capitalized software reflected in selling, general, and administrative expenses for the three months ended December 31, 2020 and 2019 was $1.1 million and $1.5 million, respectively and $2.2 million and $3.0 million, respectively, during the six months ended December 31, 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 $7.5 million and $12.0 million for the six months ended December 31, 2020 and 2019, respectively. These amounts are recorded on the condensed consolidated balance sheets net of amortization charges. Amortization expense for the three months ended December 31, 2020 and 2019 was $4.3 million and $4.4 million, respectively, and $8.3 million and $8.8 million for the six months ended December 31, 2020 and 2019, respectively, and is recorded in instructional costs and services. |
Leases | Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 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 Topic 842, Leases 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. |
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. |
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 three months ended December 31, 2020 and 2019 was $2.5 million and $0.8 million, respectively, and $4.6 million and $1.5 million for the six months ended December 31, 2020 and 2019, respectively, and is included within selling, general, and administrative expenses in the condensed consolidated statements of operations. Future amortization of intangible assets is expected to be $6.8 million, $12.9 million, $12.7 million, $11.8 million, and $10.5 million in the fiscal years ending June 30, 2021 through June 30, 2025, respectively, and $51.5 million thereafter. At December 31, 2020 and June 30, 2020, the goodwill balance was $240.8 million and $174.9 million, respectively. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. The process for testing goodwill and intangible assets with indefinite lives for impairment is a two-step process that is performed annually, as well as when an event triggering impairment may have occurred. Companies are also allowed to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo Step 1 of their annual goodwill impairment process. This qualitative screening process will hereinafter be referred to as “Step 0”. The Company performs its annual assessment on May 31 st The Company performed a qualitative assessment of Coronavirus disease 2019 (“COVID-19”) as a triggering event related to the value of its goodwill and intangible assets and concluded that there were no indicators of impairment during the three and six months ended December 31, 2020. The following table represents the balance of the Company’s intangible assets as of December 31, 2020 and June 30, 2020: December 31, 2020 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (14.5) $ 70.0 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (18.6) 19.1 25.3 (17.2) 8.1 Developed technology 21.3 (4.2) 17.1 6.6 (3.5) 3.1 Other 1.3 (1.0) 0.3 1.4 (1.0) 0.4 Total $ 144.8 $ (38.3) $ 106.5 $ 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. The Company performed a qualitative assessment of COVID-19 as a triggering event related to the value of its long-lived assets and concluded that there were no indicators of impairment during the three and six months ended December 31, 2020. |
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 condensed 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 is discussed in more detail in Note 11, “Acquisitions and Investments.” The convertible senior notes due 2027 are discussed in more detail in Note 6, “Debt.” The following table summarizes certain fair value information at December 31, 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) Contingent consideration associated with acquisitions $ 10,833 $ — $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Convertible Senior Notes due 2027 345,975 — 345,975 — 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 three and six months ended December 31, 2020 and 2019: Three Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2020 and Settlements Gains/(Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2019 and Settlements Gains/(Losses) December 31, 2019 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 Six Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Six Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) December 31, 2019 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and vesting of all dilutive unvested restricted stock awards. The dilutive effect of stock options and restricted stock awards 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 condensed consolidated balance sheets includes restricted stock awards outstanding. The following schedule presents the calculation of basic and diluted net income per share: Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 (In thousands except share and per share data) Basic net income (loss) per share computation: Net income (loss) attributable to common stockholders $ 24,501 $ 20,594 $ 37,167 $ 10,864 Weighted average common shares — basic 40,160,362 39,450,017 40,072,360 39,369,287 Basic net income (loss) per share $ 0.61 $ 0.52 $ 0.93 $ 0.28 Diluted net income (loss) per share computation: Net income (loss) attributable to common stockholders $ 24,501 $ 20,594 $ 37,167 $ 10,864 Share computation: Weighted average common shares — basic 40,160,362 39,450,017 40,072,360 39,369,287 Effect of dilutive stock options and restricted stock awards 942,063 523,916 1,608,701 1,323,535 Weighted average common shares — diluted 41,102,425 39,973,933 41,681,061 40,692,822 Diluted net income (loss) per share $ 0.60 $ 0.52 $ 0.89 $ 0.27 For the three months ended December 31, 2020 and 2019, 372,016 and 1,015,949 shares issuable in connection with stock options and restricted stock were excluded from the diluted income per share calculation because the effect would have been antidilutive. For the six months ended December 31, 2020 and 2019, 284,792 and 797,292 shares were excluded, respectively. As of December 31, 2020, the Company had 46,893,934 shares issued and 41,559,191 shares outstanding. |
Reclassifications | Reclassifications As discussed in Note 1, “Description of the Business”, the Company has revised its lines of revenue. There was no impact on the presentation of the Company’s condensed consolidated statements of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policy (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue | Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 (In thousands) General Education $ 313,989 $ 232,619 $ 627,838 $ 466,185 Career Learning Middle - High School 51,376 24,940 100,147 48,495 Adult 10,780 — 19,120 — Total Career Learning 62,156 24,940 119,267 48,495 Total Revenues $ 376,145 $ 257,559 $ 747,105 $ 514,680 |
Schedule of accounts receivables, unbilled receivables and deferred revenue | December 31, June 30, 2020 2020 (In thousands) Accounts receivable $ 435,254 $ 236,134 Unbilled receivables (included in accounts receivable) 19,031 15,688 Deferred revenue 62,635 24,417 Deferred revenue, long-term (included in other long-term liabilities) 1,970 2,236 |
Schedule of useful lives of property and equipment | Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease |
Schedule of intangible assets | December 31, 2020 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (14.5) $ 70.0 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (18.6) 19.1 25.3 (17.2) 8.1 Developed technology 21.3 (4.2) 17.1 6.6 (3.5) 3.1 Other 1.3 (1.0) 0.3 1.4 (1.0) 0.4 Total $ 144.8 $ (38.3) $ 106.5 $ 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 December 31, 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) Contingent consideration associated with acquisitions $ 10,833 $ — $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Convertible Senior Notes due 2027 345,975 — 345,975 — 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 | Three Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2020 and Settlements Gains/(Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2019 and Settlements Gains/(Losses) December 31, 2019 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 Six Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition 5,006 — — 5,006 Six Months Ended December 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) December 31, 2019 (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Schedule of calculation of basic and diluted net income (loss) per share | Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 (In thousands except share and per share data) Basic net income (loss) per share computation: Net income (loss) attributable to common stockholders $ 24,501 $ 20,594 $ 37,167 $ 10,864 Weighted average common shares — basic 40,160,362 39,450,017 40,072,360 39,369,287 Basic net income (loss) per share $ 0.61 $ 0.52 $ 0.93 $ 0.28 Diluted net income (loss) per share computation: Net income (loss) attributable to common stockholders $ 24,501 $ 20,594 $ 37,167 $ 10,864 Share computation: Weighted average common shares — basic 40,160,362 39,450,017 40,072,360 39,369,287 Effect of dilutive stock options and restricted stock awards 942,063 523,916 1,608,701 1,323,535 Weighted average common shares — diluted 41,102,425 39,973,933 41,681,061 40,692,822 Diluted net income (loss) per share $ 0.60 $ 0.52 $ 0.89 $ 0.27 |
Finance and Operating Leases (T
Finance and Operating Leases (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Finance and Operating Leases | |
Schedule of present value of the minimum lease payments on finance leases | December 31, 2020 June 30, 2020 (in thousands) 2021 $ 12,069 $ 13,587 2022 20,943 2,653 2023 20,330 2,040 2024 8,100 — Total minimum payments 61,442 18,280 Less: imputed interest (2,140) (342) Finance lease liability 59,302 17,938 Less: current portion of finance lease liability (21,506) (13,304) Long-term finance lease liability $ 37,796 $ 4,634 |
Schedule of future minimum lease payments under non-cancelable operating leases | December 31, 2020 June 30, 2020 (in thousands) 2021 $ 12,091 $ 23,626 2022 22,880 22,326 2023 16,164 15,841 2024 14,890 14,769 2025 13,956 13,949 Thereafter 38,544 38,544 Total minimum payments 118,525 129,055 Less: imputed interest (10,344) (11,822) Operating lease liability 108,181 117,233 Less: current portion of operating lease liability (21,204) (20,689) Long-term operating lease liability $ 86,977 $ 96,544 |
Schedule of expected sublease income | December 31, 2020 June 30, 2020 (in thousands) 2021 $ 980 $ 1,960 2022 1,496 1,496 2023 797 797 2024 66 66 Total sublease income $ 3,339 $ 4,319 |
Schedule of lease cost, weighted-average remaining lease term, weighted-average discount rate | Three Months Ended December 31, Six Months Ended December 31, 2020 2019 2020 2019 Lease cost Finance lease cost: Amortization of right-of-use assets $ 8,341 $ 4,241 $ 13,178 $ 8,186 Interest on lease liabilities 155 178 273 381 Operating lease cost 5,579 1,728 11,112 3,335 Short-term lease cost 315 319 600 707 Sublease income (447) (128) (927) (315) Total lease cost $ 13,943 $ 6,338 $ 24,236 $ 12,294 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (5,199) $ (2,016) $ (10,364) $ (4,089) Financing cash flows from finance leases (5,786) (7,499) (11,455) (14,959) Right-of-use assets obtained in exchange for new finance lease liabilities 30,111 6,329 46,865 12,775 Right-of-use assets obtained in exchange for new operating lease liabilities 377 — 589 4,847 Weighted-average remaining lease term - finance leases 2.84 yrs. 1.07 yrs. Weighted-average remaining lease term - operating leases 6.81 yrs. 2.99 yrs. Weighted-average discount rate - finance leases 2.49 % 3.33 % Weighted-average discount rate - operating leases 2.76 % 3.86 % |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Debt | |
Schedule of components of debt | December 31, 2020 June 30, 2020 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ — Less: unamortized discount (120,614) — Less: unamortized debt issuance costs (7,762) — Total debt 291,624 — Less: current portion of debt — — Long-term debt $ 291,624 $ — |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 Granted — — Exercised (963,867) 19.91 Forfeited or canceled — — Outstanding and exercisable, December 31, 2020 57,650 $ 16.76 1.81 $ 271,701 |
Schedule of restricted stock award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 1,618,604 $ 23.73 Granted 402,723 43.41 Vested (373,827) 20.41 Canceled (11,450) 24.44 Nonvested, December 31, 2020 1,636,050 $ 29.33 |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 2,464,853 $ 10.78 Granted 477,700 40.17 Vested — — Canceled (20,045) 29.93 Nonvested, December 31, 2020 2,922,508 $ 15.45 |
Deferred Stock Units | |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2020 42,102 $ 22.42 Granted — — Vested — — Canceled — — Nonvested, December 31, 2020 42,102 $ 22.42 |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Acquisitions | |
Schedule of intangible assets | December 31, 2020 June 30, 2020 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 84.5 $ (14.5) $ 70.0 $ 77.9 $ (12.0) $ 65.9 Customer and distributor relationships 37.7 (18.6) 19.1 25.3 (17.2) 8.1 Developed technology 21.3 (4.2) 17.1 6.6 (3.5) 3.1 Other 1.3 (1.0) 0.3 1.4 (1.0) 0.4 Total $ 144.8 $ (38.3) $ 106.5 $ 111.2 $ (33.7) $ 77.5 |
Schedule of unaudited pro forma combined results of operations | Three Months Ended December 31, Six Months Ended December 31, (In thousands) 2020 2019 2020 2019 Revenues $ 382,911 $ 274,293 $ 762,518 $ 543,223 Income (loss) from operations 38,881 23,304 51,347 (4,851) Net income (loss) 25,033 13,758 38,159 (3,085) |
MedCerts | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 225 Current assets, excluding cash 5,054 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 50,814 Current liabilities (2,201) Deferred revenue (1,562) Total consideration $ 80,833 |
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 $ 1,862 Current assets, excluding cash 469 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 18,562 Other assets 377 Current liabilities (1,009) Deferred revenue (534) Deferred tax asset (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 |
Supplemental Disclosure of Ca_2
Supplemental Disclosure of Cash Flow Information (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Schedule of supplemental disclosure of cash flow information | Six Months Ended December 31, 2020 2019 (In thousands) Cash paid for interest $ 1,176 $ 381 Cash paid for taxes $ 8,479 $ 2,628 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 $ 1,280 $ 17,652 Right-of-use assets obtained in exchange for new finance lease liabilities $ 46,865 $ 12,775 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 127 $ 61 Stock-based compensation expense capitalized on curriculum development $ 96 $ 90 Business combinations: Acquired assets $ 11,120 $ — Intangible assets 33,712 — Goodwill 69,376 — Assumed liabilities (5,584) — Deferred revenue (2,096) — |
Description of the Business (De
Description of the Business (Details) | 6 Months Ended |
Dec. 31, 2020item | |
Description of the Business | |
Number of lines of revenue | 2 |
Career learning courses offered by company | 160 |
Career Pathways | 23 |
Number of National Career Clusters covered | 5 |
Number of National Career Clusters | 16 |
Basis of Presentation (Details)
Basis of Presentation (Details) - segment | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Jun. 30, 2020 | |
Basis of Presentation | ||
Number of operating segments | 1 | |
Number of reportable business segments | 1 | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - ASU (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jul. 01, 2020 | Jun. 30, 2020 |
Summary of Significant Accounting Policies | |||
Accounts receivable allowance for credit losses | $ 20,924 | $ 6,808 | |
Retained earnings | 77,867 | 46,953 | |
Deferred tax liability | $ 34,645 | $ 13,771 | |
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) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | ||||
Revenues | $ 376,145 | $ 257,559 | $ 747,105 | $ 514,680 |
School operating losses included in the entity's revenue | 24,200 | 11,200 | $ 44,200 | 27,500 |
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 | $ 102,400 | $ 83,900 | $ 212,100 | $ 169,400 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Summary of Significant Accounting Policies | ||||
Number of lines of revenue | item | 2 | |||
Total Revenues | $ 376,145 | $ 257,559 | $ 747,105 | $ 514,680 |
General Education | ||||
Summary of Significant Accounting Policies | ||||
Percentage of revenues from funding-based contracts | 88.00% | 88.00% | 88.00% | 88.00% |
Total Revenues | $ 313,989 | $ 232,619 | $ 627,838 | $ 466,185 |
Career Learning | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | $ 62,156 | $ 24,940 | $ 119,267 | $ 48,495 |
Middle - High School | ||||
Summary of Significant Accounting Policies | ||||
Percentage of revenues from funding-based contracts | 98.00% | 98.00% | 98.00% | 99.00% |
Total Revenues | $ 51,376 | $ 24,940 | $ 100,147 | $ 48,495 |
Adult | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | $ 10,780 | $ 19,120 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk and Inventories (Details) - Revenue - Customer Concentration Risk - contract | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration of revenues | ||||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% |
Number of customers with concentration | 0 | 0 | 0 | 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Accounts receivables, contract assets and deferred revenue | |||||
Accounts receivable | $ 435,254 | $ 435,254 | $ 236,134 | ||
Unbilled receivables (included in accounts receivable) | 19,031 | 19,031 | 15,688 | ||
Deferred revenue | 62,635 | 62,635 | 24,417 | ||
Deferred revenue, long-term (included in other long-term liabilities) | 1,970 | 1,970 | $ 2,236 | ||
Revenue recognized that was included in opening deferred revenue balance | 47,800 | $ 22,500 | 21,400 | $ 16,100 | |
Revenue recognized from performance obligation satisfied in prior periods | $ 1,700 | $ 2,400 | $ 1,600 | $ 2,800 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Performance Obligations (Details) $ in Millions | 6 Months Ended |
Dec. 31, 2020USD ($) | |
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 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Summary of Significant Accounting Policies | ||
Inventory deemed long-term and included in deposits and other assets | $ 4.8 | $ 5.2 |
Excess and obsolete inventory reserve | $ 5.2 | $ 4.8 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Property and Equipment and Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 27, 2020 | Jul. 01, 2019 | |
Property and equipment | ||||||
Equipment expense | $ 1,600,000 | $ 700,000 | $ 6,000,000 | $ 3,200,000 | ||
Capitalized software development costs | $ 14,061,000 | 12,978,000 | ||||
Capitalized Curriculum Development Costs | ||||||
Estimated useful life of the software | 5 years | |||||
Capitalized curriculum development additions | $ 7,524,000 | 11,991,000 | ||||
Amortization expense | 4,300,000 | 4,400,000 | 8,300,000 | 8,800,000 | ||
Finance Leases | ||||||
Purchase option | $ 1 | $ 1 | ||||
Operating Leases | ||||||
Incremental borrowing rate used as discount rate | 2.55% | 3.86% | ||||
Minimum | ||||||
Finance Leases | ||||||
Finance lease term | 1 year | 1 year | ||||
Operating Leases | ||||||
Operating leases initial term | 1 year | 1 year | ||||
Maximum | ||||||
Finance Leases | ||||||
Finance lease term | 3 years | 3 years | ||||
Operating Leases | ||||||
Operating leases initial term | 11 years | 11 years | ||||
Instructional costs and services | ||||||
Property and equipment | ||||||
Depreciation expense | $ 9,300,000 | 4,300,000 | $ 14,800,000 | 8,200,000 | ||
Amortization expense | 5,000,000 | 5,200,000 | 9,700,000 | 10,600,000 | ||
Selling, general and administrative expenses | ||||||
Property and equipment | ||||||
Depreciation expense | 1,000,000 | 1,100,000 | 1,900,000 | 2,300,000 | ||
Amortization expense | 1,100,000 | 1,500,000 | 2,200,000 | 3,000,000 | ||
Student computers | ||||||
Property and equipment | ||||||
Accelerated depreciation | $ 1,100,000 | $ 700,000 | $ 1,900,000 | $ 1,300,000 | ||
Student computers | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Student computers | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 5 years | |||||
Computer hardware | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Computer hardware | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 7 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 | ||||||
Useful Life | 3 years | |||||
Buildings | Minimum | ||||||
Operating Leases | ||||||
Operating leases initial term | 1 year | 1 year | ||||
Buildings | Maximum | ||||||
Operating Leases | ||||||
Operating leases initial term | 17 years | 17 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Goodwill and Intangibles (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Jun. 30, 2020USD ($)segment | |
Intangible Assets: | |||||
Amortization expense | $ 2,500 | $ 800 | $ 4,600 | $ 1,500 | |
Goodwill | 240,799 | 240,799 | $ 174,939 | ||
Intangible assets, net | 106,547 | 106,547 | 77,451 | ||
Gross Carrying Amount | 144,800 | 144,800 | 111,200 | ||
Accumulated Amortization | (38,300) | (38,300) | (33,700) | ||
Net Carrying Value | 106,500 | $ 106,500 | $ 77,500 | ||
Number of reporting units | segment | 1 | 1 | |||
Impairment of goodwill | $ 0 | ||||
Future amortization of intangible assets | |||||
Fiscal 2021 - remainder | 6,800 | $ 6,800 | |||
Fiscal 2022 | 12,900 | 12,900 | |||
Fiscal 2023 | 12,700 | 12,700 | |||
Fiscal 2024 | 11,800 | 11,800 | |||
Fiscal 2025 | 10,500 | 10,500 | |||
Thereafter | 51,500 | 51,500 | |||
Trade names | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 84,500 | 84,500 | 77,900 | ||
Accumulated Amortization | (14,500) | (14,500) | (12,000) | ||
Net Carrying Value | 70,000 | 70,000 | 65,900 | ||
Customer and distributor relationships | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 37,700 | 37,700 | 25,300 | ||
Accumulated Amortization | (18,600) | (18,600) | (17,200) | ||
Net Carrying Value | 19,100 | 19,100 | 8,100 | ||
Developed technology | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 21,300 | 21,300 | 6,600 | ||
Accumulated Amortization | (4,200) | (4,200) | (3,500) | ||
Net Carrying Value | 17,100 | 17,100 | 3,100 | ||
Other | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 1,300 | 1,300 | 1,400 | ||
Accumulated Amortization | (1,000) | (1,000) | (1,000) | ||
Net Carrying Value | $ 300 | $ 300 | $ 400 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Fair Value (Details) - Measured on a recurring basis - Acquisitions - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 |
Contingent Consideration | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | $ 10,833 | |||||
Convertible Note | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 5,006 | $ 5,006 | ||||
Convertible Senior Notes | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 345,975 | |||||
Significant Other Observable Inputs (Level 2) | Convertible Senior Notes | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 345,975 | |||||
Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 10,833 | |||||
Significant Unobservable Inputs (Level 3) | Convertible Note | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Acquisitions - Measured on a recurring basis - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 31, 2020 | Dec. 31, 2020 | |
Contingent Consideration | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, ending of period | $ 10,833 | $ 10,833 |
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 | 5,006 |
Convertible Senior Notes | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, ending of period | 345,975 | 345,975 |
Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Purchases, Issuances and Settlements | 10,833 | 10,833 |
Fair Value, ending of period | 10,833 | 10,833 |
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 | 5,006 |
Fair Value, ending of period | $ 5,006 | $ 5,006 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Basic and diluted income (loss) per share computation: | |||||||
Net income (loss) attributable to common stockholders | $ 24,501 | $ 12,666 | $ 20,594 | $ (9,730) | $ 37,167 | $ 10,864 | |
Weighted average common shares-basic | 40,160,362 | 39,450,017 | 40,072,360 | 39,369,287 | |||
Basic net income (loss) per share (in dollars per share) | $ 0.61 | $ 0.52 | $ 0.93 | $ 0.28 | |||
Effect of dilutive stock options and restricted stock awards (in shares) | 942,063 | 523,916 | 1,608,701 | 1,323,535 | |||
Weighted average common shares-diluted | 41,102,425 | 39,973,933 | 41,681,061 | 40,692,822 | |||
Diluted net income (loss) per share (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.89 | $ 0.27 | |||
Additional disclosures | |||||||
Common stock, shares issued | 46,893,934 | 46,893,934 | 46,341,627 | ||||
Common stock, shares outstanding | 41,559,191 | 41,559,191 | 41,006,884 | ||||
Stock options and restricted stock | |||||||
Basic and diluted income (loss) per share computation: | |||||||
Anti-dilutive shares | 372,016 | 1,015,949 | 284,792 | 797,292 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation to income tax at the statutory rate: | ||||
Effective income tax rate (as a percent) | 30.30% | 33.50% | 18.20% | 12.70% |
Finance and Operating Leases (D
Finance and Operating Leases (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | Apr. 30, 2020 | Jan. 27, 2020 | Jul. 01, 2019 |
Finance and Operating Leases | |||||||
Finance lease liability | $ 59,302,000 | $ 17,938,000 | |||||
Finance lease right-of-use assets | 53,100,000 | $ 19,800,000 | |||||
Purchase option | $ 1 | ||||||
Incremental borrowing rate used as discount rate | 2.55% | 3.86% | |||||
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% | 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 | $ 45,000,000 | $ 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 | Dec. 31, 2020 | Jun. 30, 2020 |
Finance leases | ||
Remainder of current fiscal year | $ 12,069 | |
Year 1 | 20,943 | $ 13,587 |
Year 2 | 20,330 | 2,653 |
Year 3 | 8,100 | 2,040 |
Total minimum payments | 61,442 | 18,280 |
Less: imputed interest | (2,140) | (342) |
Finance lease liability | 59,302 | 17,938 |
Less: current portion of finance lease liability | (21,506) | (13,304) |
Long-term finance lease liability | $ 37,796 | $ 4,634 |
Finance and Operating Leases _2
Finance and Operating Leases - Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jun. 30, 2020 |
Operating Leases | ||
Remainder of fiscal year | $ 12,091 | |
Year 1 | 22,880 | $ 23,626 |
Year 2 | 16,164 | 22,326 |
Year 3 | 14,890 | 15,841 |
Year 4 | 13,956 | 14,769 |
Year 5 | 13,949 | |
Thereafter | 38,544 | |
Thereafter | 38,544 | |
Total minimum payments | 118,525 | 129,055 |
Less: imputed interest | (10,344) | (11,822) |
Operating lease liability | 108,181 | 117,233 |
Less: current portion of operating lease liability | (21,204) | (20,689) |
Long-term operating lease liability | 86,977 | 96,544 |
Operating lease right-of-use assets, net | $ 104,010 | $ 111,768 |
Minimum | ||
Operating Leases | ||
Operating leases initial term | 1 year | |
Maximum | ||
Operating Leases | ||
Operating leases initial term | 11 years | |
Buildings | Minimum | ||
Operating Leases | ||
Operating leases initial term | 1 year | |
Buildings | Maximum | ||
Operating Leases | ||
Operating leases initial term | 17 years |
Finance and Operating Leases _3
Finance and Operating Leases - Sub Leases (Details) $ in Thousands | Dec. 31, 2020USD ($)facility | Jun. 30, 2020USD ($) |
Finance and Operating Leases | ||
Remainder of current fiscal year | $ 980 | |
Year 1 | 1,496 | $ 1,960 |
Year 2 | 797 | 1,496 |
Year 3 | 66 | 797 |
Year 4 | 66 | |
Total sublease income | $ 3,339 | $ 4,319 |
Number of entity's facilities that are being subleased through June 2021 | facility | 1 | |
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 | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finance lease cost: | ||||
Amortization of right-of-use assets | $ 8,341 | $ 4,241 | $ 13,178 | $ 8,186 |
Interest on lease liabilities | 155 | 178 | 273 | 381 |
Operating lease cost | 5,579 | 1,728 | 11,112 | 3,335 |
Short-term lease cost | 315 | 319 | 600 | 707 |
Sublease income | (447) | (128) | (927) | (315) |
Total lease cost | 13,943 | 6,338 | 24,236 | 12,294 |
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | (5,199) | (2,016) | (10,364) | (4,089) |
Financing cash flows from finance leases | (5,786) | (7,499) | (11,455) | (14,959) |
Right-of-use assets obtained in exchange for new finance lease liabilities | 30,111 | $ 6,329 | 46,865 | 12,775 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 377 | $ 589 | $ 4,847 | |
Weighted-average remaining lease term - finance leases | 2 years 10 months 2 days | 1 year 25 days | 2 years 10 months 2 days | 1 year 25 days |
Weighted-average remaining lease term - operating leases | 6 years 9 months 21 days | 2 years 11 months 26 days | 6 years 9 months 21 days | 2 years 11 months 26 days |
Weighted-average discount rate - finance leases | 2.49% | 3.33% | 2.49% | 3.33% |
Weighted-average discount rate - operating leases | 2.76% | 3.86% | 2.76% | 3.86% |
Debt (Details)
Debt (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Debt | |
Less: unamortized discount | $ (120,614) |
Less: unamortized debt issuance costs | (7,762) |
Total debt | 291,624 |
Long-term debt | 291,624 |
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 | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | |
Debt | ||||
Face amount | $ 420 | |||
Interest rate (as percent) | 1.125% | |||
Net proceeds | $ 408.6 | |||
Interest expense | $ 1.2 | $ 1.6 | ||
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 | 3.6 | 4.7 | ||
Amortization of debt issuance costs | $ 0.2 | $ 0.2 | ||
Effective interest percentage (as percent) | 6.40% | 6.40% | ||
Period where noteholders may convert their notes at their election prior to the maturity date | 2 days | |||
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 | |||
Forecast | ||||
Debt | ||||
Accretion of debt discount | $ 15 | |||
Amortization of debt issuance costs | $ 0.8 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) $ in Thousands | Jan. 27, 2020 | Dec. 31, 2020 |
Credit Facility | ||
Repayments on credit facility | $ 100,000 | |
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 - Share B
Equity Incentive Plan - Share Based Compensation (Details) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | |
Shares | ||
Outstanding at the beginning of the period (in shares) | 1,021,517 | |
Exercised (in shares) | (963,867) | |
Outstanding at the end of the period (in shares) | 57,650 | 1,021,517 |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 19.73 | |
Exercised (in dollars per share) | $ / shares | 19.91 | |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 16.76 | $ 19.73 |
Additional information | ||
Weighted Average Remaining Contractual Life | 1 year 9 months 21 days | 1 year 7 months 24 days |
Aggregate Intrinsic Value | $ | $ 271,701 | $ 8,325,869 |
Plan | ||
Stock option activity | ||
Shares reserved for issuance | 539,207 | |
Vesting period | 4 years | |
Shares | ||
Exercisable (in shares) | 0 | |
Plan and Prior Plan | ||
Shares | ||
Outstanding at the end of the period (in shares) | 4,658,310 |
Equity Incentive Plan - Vesting
Equity Incentive Plan - Vesting (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | 15 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2020 | |
Employee and Non Employees Stock Option | |||||||
Equity Transactions | |||||||
Intrinsic value of options exercised | $ 24.3 | $ 0 | |||||
Stock based compensation expense | 0 | 0.1 | $ 0 | ||||
Restricted Stock | |||||||
Equity Transactions | |||||||
Unrecognized compensation | $ 32 | $ 32 | 32 | ||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 7 months 6 days | ||||||
Stock based compensation expense | 5.6 | $ 4.5 | $ 11.1 | 8.4 | |||
Granted (in shares) | 402,723 | ||||||
Granted (in dollars per share) | $ 43.41 | ||||||
Performance Share Units | |||||||
Equity Transactions | |||||||
Unrecognized compensation | 8 | $ 8 | $ 8 | ||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year | ||||||
Stock based compensation expense | $ 3.4 | $ 1.5 | $ 6.8 | $ 3.1 | |||
Granted (in shares) | 477,700 | ||||||
Granted (in dollars per share) | $ 40.17 | $ 12.56 | |||||
Performance Share Units | Fiscal Year 2019 LTIP | |||||||
Equity Transactions | |||||||
Granted (in shares) | 34,030 | 263,936 | |||||
Fair value | $ 0.8 | $ 7.9 | |||||
Granted (in dollars per share) | $ 23.51 | $ 30.05 | |||||
Performance Share Units | Fiscal Year 2020 TRIP | |||||||
Equity Transactions | |||||||
Fair value | $ 12.3 | ||||||
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 #2 | Fiscal Year 2019 LTIP | |||||||
Equity Transactions | |||||||
Earned award vesting percentage | 25.00% | ||||||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | |||||||
Equity Transactions | |||||||
Earned award vesting percentage | 30.00% | ||||||
Calendar Year 2021 | Performance Shares Tranche #1 | Fiscal Year 2020 TRIP | |||||||
Equity Transactions | |||||||
Earned award vesting percentage | 70.00% | ||||||
Calendar Year 2022 | Performance Shares Tranche #2 | Fiscal Year 2020 TRIP | |||||||
Equity Transactions | |||||||
Earned award vesting percentage | 30.00% |
Equity Incentive Plan - Restric
Equity Incentive Plan - Restricted Stock (Details) - $ / shares | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Aug. 31, 2020 | Dec. 31, 2020 | Jun. 30, 2020 | |
Restricted Stock | |||
Shares | |||
Nonvested at the beginning of the period (in shares) | 1,618,604 | ||
Granted (in shares) | 402,723 | ||
Vested (in shares) | (373,827) | ||
Forfeited or canceled (in shares) | (11,450) | ||
Nonvested at the end of the period (in shares) | 1,636,050 | 1,618,604 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 23.73 | ||
Granted (in dollars per share) | 43.41 | ||
Vested (in dollars per share) | 20.41 | ||
Forfeited or canceled (in dollars per share) | 24.44 | ||
Nonvested at the end of the period (in dollars per share) | $ 29.33 | $ 23.73 | |
Vesting period | 3 years | ||
Restricted Stock | Vesting Based On Performance And Service | |||
Shares | |||
Granted (in shares) | 96,053 | ||
Vested (in shares) | (110,594) | ||
Nonvested at the end of the period (in shares) | 544,247 | ||
Performance Share Units | |||
Shares | |||
Nonvested at the beginning of the period (in shares) | 2,464,853 | ||
Granted (in shares) | 477,700 | ||
Forfeited or canceled (in shares) | (20,045) | ||
Nonvested at the end of the period (in shares) | 2,922,508 | 2,464,853 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 10.78 | ||
Granted (in dollars per share) | 40.17 | $ 12.56 | |
Forfeited or canceled (in dollars per share) | 29.93 | ||
Nonvested at the end of the period (in dollars per share) | $ 15.45 | $ 10.78 | |
Performance Share Units | Executive Officers | Vesting Based On Performance And Service | |||
Weighted-Average Grant Date Fair Value | |||
Certified achievement percentage | 109.00% | ||
Number of shares earned upon reaching performance threshold | 13,343 | ||
Performance Share Units | Executive Officers | Vesting Performance | |||
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 | Executive Officers | Vest immediately upon achievement of the performance goals | |||
Weighted-Average Grant Date Fair Value | |||
Earned award vesting percentage | 33.33% | 33.33% | |
Performance Share Units | Executive Officers | Vest annually over two years | |||
Weighted-Average Grant Date Fair Value | |||
Earned award vesting percentage | 66.67% | 66.67% | |
Vesting period | 2 years | 2 years | |
Deferred Stock Units | |||
Shares | |||
Nonvested at the beginning of the period (in shares) | 42,102 | ||
Nonvested at the end of the period (in shares) | 42,102 | 42,102 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 22.42 | ||
Nonvested at the end of the period (in dollars per share) | $ 22.42 | $ 22.42 |
Equity Incentive Plan - Other (
Equity Incentive Plan - Other (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Aug. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2020 | Jun. 30, 2020 | |
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) | $ 24.15 | ||||||||
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) | $ 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 | 33.33% | ||||||||
Career Learning Revenue Performance Based Share Units | Vest immediately | Fiscal Year 2022 | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 33.33% | ||||||||
Career Learning Revenue Performance Based Share Units | Vest annually over two years | Fiscal Year 2021 | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 66.67% | ||||||||
Career Learning Revenue Performance Based Share Units | Vest the following year | Fiscal Year 2022 | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 66.67% | ||||||||
Restricted Stock | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 5.6 | $ 4.5 | $ 11.1 | $ 8.4 | |||||
Fair value of share-based compensation awards granted in period | 17.5 | 26.2 | |||||||
Fair value of share-based compensation awards vested in period | $ 15.4 | 12.4 | |||||||
Performance shares | 1,636,050 | 1,636,050 | 1,618,604 | 1,636,050 | 1,618,604 | ||||
Unrecognized compensation | $ 32 | ||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 7 months 6 days | ||||||||
Nonvested at the beginning of the period (in shares) | 1,618,604 | ||||||||
Granted (in shares) | 402,723 | ||||||||
Vested (in shares) | (373,827) | ||||||||
Forfeited or canceled (in shares) | (11,450) | ||||||||
Nonvested at the end of the period (in shares) | 1,636,050 | 1,636,050 | 1,618,604 | ||||||
Nonvested at the beginning of the period (in dollars per share) | $ 23.73 | ||||||||
Granted (in dollars per share) | 43.41 | ||||||||
Vested (in dollars per share) | 20.41 | ||||||||
Forfeited or canceled (in dollars per share) | 24.44 | ||||||||
Nonvested at the end of the period (in dollars per share) | $ 29.33 | $ 29.33 | $ 23.73 | ||||||
Vesting period | 3 years | ||||||||
Restricted Stock | Service based awards | |||||||||
Equity Transactions | |||||||||
Performance shares | 1,091,803 | 1,091,803 | 1,091,803 | ||||||
Granted (in shares) | 306,670 | ||||||||
Vested (in shares) | (263,233) | ||||||||
Nonvested at the end of the period (in shares) | 1,091,803 | 1,091,803 | |||||||
Restricted Stock | Vesting Based On Performance And Service | |||||||||
Equity Transactions | |||||||||
Performance shares | 544,247 | 544,247 | 544,247 | ||||||
Granted (in shares) | 96,053 | ||||||||
Vested (in shares) | (110,594) | ||||||||
Nonvested at the end of the period (in shares) | 544,247 | 544,247 | |||||||
Performance Share Units | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 3.4 | 1.5 | $ 6.8 | 3.1 | |||||
Granted (in shares) | 66,934 | ||||||||
Performance shares | 2,922,508 | 2,922,508 | 2,464,853 | 2,922,508 | 2,464,853 | ||||
Unrecognized compensation | $ 8 | ||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year | ||||||||
Nonvested at the beginning of the period (in shares) | 2,464,853 | ||||||||
Granted (in shares) | 477,700 | ||||||||
Forfeited or canceled (in shares) | (20,045) | ||||||||
Nonvested at the end of the period (in shares) | 2,922,508 | 2,922,508 | 2,464,853 | ||||||
Nonvested at the beginning of the period (in dollars per share) | $ 10.78 | ||||||||
Granted (in dollars per share) | 40.17 | $ 12.56 | |||||||
Forfeited or canceled (in dollars per share) | 29.93 | ||||||||
Nonvested at the end of the period (in dollars per share) | $ 15.45 | $ 15.45 | $ 10.78 | ||||||
Performance Share Units | 2019 SPP | |||||||||
Equity Transactions | |||||||||
Granted (in shares) | 2,108,305 | ||||||||
Performance Share Units | Fiscal Year 2019 LTIP | |||||||||
Equity Transactions | |||||||||
Fair value | $ 7.9 | $ 0.8 | |||||||
Granted (in shares) | 34,030 | 263,936 | |||||||
Granted (in dollars per share) | $ 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 | 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 | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 | |||||
Performance shares | 42,102 | 42,102 | 42,102 | 42,102 | 42,102 | ||||
Unrecognized compensation | $ 0 | ||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 0 years | ||||||||
Nonvested at the beginning of the period (in shares) | 42,102 | ||||||||
Nonvested at the end of the period (in shares) | 42,102 | 42,102 | 42,102 | ||||||
Nonvested at the beginning of the period (in dollars per share) | $ 22.42 | ||||||||
Nonvested at the end of the period (in dollars per share) | $ 22.42 | $ 22.42 | $ 22.42 | ||||||
Chief Executive Officer And Executive Chairman | Performance Share Units | |||||||||
Equity Transactions | |||||||||
Granted (in shares) | 358,294 | ||||||||
Granted (in dollars per share) | $ 27.91 | ||||||||
Chief Executive Officer And Executive Chairman | Performance Share Units | Vesting Performance | |||||||||
Equity Transactions | |||||||||
Vesting in first subsequent fiscal year (as a percent) | 66.67% | ||||||||
Vesting in second subsequent fiscal year (as a percent) | 33.33% | ||||||||
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) | $ 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% | ||||||||
Executive Officers | Performance Share Units | Vest immediately upon achievement of the performance goals | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 33.33% | 33.33% | |||||||
Executive Officers | Performance Share Units | Vest annually over two years | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 66.67% | 66.67% | |||||||
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) | $ 45.33 | $ 27.91 | |||||||
Executive Officers | Performance Share Units | Vesting Based On Performance And Service | |||||||||
Equity Transactions | |||||||||
Number of shares earned upon reaching performance threshold | 13,343 |
Related Party Transactions (Det
Related Party Transactions (Details) - Future of School - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | |
Related Party Transactions | |||||
Contributions made to related party | $ 0.3 | $ 0.4 | $ 1 | $ 0.8 | |
Accrued contributions to related party | $ 0.4 | $ 0.4 | $ 2.5 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Dec. 31, 2020USD ($)installment | Mar. 27, 2020 |
Commitments and contingencies | ||
Employer portion of social security payroll tax percentage | 6.20% | |
Deferred amount of employer portion of social security payroll tax | $ 14.1 | |
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% | |
Buildings | ||
Commitments and contingencies | ||
Guarantees related to lease commitments | $ 0.7 |
Acquisitions and Investments (D
Acquisitions and Investments (Details) item in Thousands, $ in Thousands | Nov. 30, 2020USD ($) | Jan. 27, 2020USD ($) | Aug. 31, 2018USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($)fund | Aug. 31, 2020USD ($) | Jun. 30, 2020USD ($) |
Acquisition and Investments | ||||||||||
Payment to tranches | $ 188 | $ 4,114 | ||||||||
Allocation of Purchase Price | ||||||||||
Intangible assets, net | $ 33,712 | 33,712 | ||||||||
Goodwill | 240,799 | 240,799 | $ 174,939 | |||||||
Deferred revenue | (2,096) | (2,096) | ||||||||
Working capital | 3,000 | |||||||||
Amortization expense | 2,500 | $ 800 | 4,600 | 1,500 | ||||||
Lease cost | 13,943 | 6,338 | 24,236 | 12,294 | ||||||
Pro forma results | ||||||||||
Revenues | 382,911 | 274,293 | 762,518 | 543,223 | ||||||
Loss from operations | 38,881 | 23,304 | 51,347 | (4,851) | ||||||
Net loss | 25,033 | $ 13,758 | 38,159 | $ (3,085) | ||||||
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 | 5,400 | |||||||||
New Markets | ||||||||||
Pro forma results | ||||||||||
Investment recorded at cost | 1,800 | 1,800 | ||||||||
Rethink | ||||||||||
Pro forma results | ||||||||||
Equity method investment | 3,600 | |||||||||
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 | item | 3,670 | |||||||||
Tallo | Base Rate | ||||||||||
Pro forma results | ||||||||||
Interest rate spread added to base rate (as a percent) | 0.25% | |||||||||
MedCerts | ||||||||||
Acquisition and Investments | ||||||||||
Ownership percentage acquired (as a percent) | 100.00% | |||||||||
Total consideration | $ 70,000 | 70,000 | ||||||||
Contingent consideration | 10,800 | 10,800 | ||||||||
Allocation of Purchase Price | ||||||||||
Cash | 225 | |||||||||
Current assets, excluding cash | 5,054 | |||||||||
Property and equipment, net | 1,896 | |||||||||
Intangible assets, net | 26,607 | |||||||||
Goodwill | 50,814 | |||||||||
Current liabilities | (2,201) | |||||||||
Deferred revenue | (1,562) | |||||||||
Total consideration | $ 80,833 | |||||||||
Percentage of enterprise value | 49.00% | |||||||||
Reduced percentage | 49.00% | |||||||||
Original purchase price | $ 34,300 | |||||||||
Revenues of acquiree | 1,000 | 1,000 | ||||||||
Income (loss) of acquiree | 1,200 | 1,200 | ||||||||
MedCerts | Customer and distributor 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 | ||||||||||
Payment to tranches | 55,000 | |||||||||
MedCerts | Purchase Price Payable at Eighteen Month Anniversary from Closing of Acquisition | ||||||||||
Acquisition and Investments | ||||||||||
Payment to tranches | 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 | 1,862 | |||||||||
Current assets, excluding cash | 469 | |||||||||
Property and equipment, net | 513 | |||||||||
Operating lease right-of-use assets, net | 724 | |||||||||
Intangible assets, net | 7,105 | |||||||||
Goodwill | 18,562 | |||||||||
Other assets | 377 | |||||||||
Current liabilities | (1,009) | |||||||||
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 | 600 | 600 | ||||||||
Income (loss) of acquiree | 300 | 300 | ||||||||
Tech Elevator | Customer and distributor 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 | 9,100 | 17,500 | ||||||||
Income (loss) of acquiree | $ 10,000 | $ 19,700 | ||||||||
Galvanize | Customer and distributor 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 |
Supplemental Disclosure of Ca_3
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | $ 1,176 | $ 381 |
Cash paid for taxes | 8,479 | 2,628 |
Supplemental disclosure of non-cash financing activities: | ||
Right-of-use assets obtained as a result of the adoption of ASC 842 | 1,280 | 17,652 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 46,865 | 12,775 |
Supplemental disclosure of non-cash investing activities: | ||
Stock-based compensation expense capitalized on software development | 127 | 61 |
Stock-based compensation expense capitalized on curriculum development | 96 | $ 90 |
Business Combinations: | ||
Acquired assets | 11,120 | |
Intangible assets, net | 33,712 | |
Goodwill | 69,376 | |
Deferred revenue | (2,096) | |
Assumed liabilities | $ 5,584 |