Stride, Inc. · NYSE:LRN
Stride — Investor Day (December 2020)
107 slides from Stride's investor day presentation, December 2020
Slide 1: Investor Day 2020
Investor Day 2020 stride
Slide 2: Welcome
Welcome Michael Lawson VP, Investor Relations
Slide 3: Safe Harbor
Safe Harbor This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,
Slide 4: Presentation / Q&A
Presentation / Q&A Slides for today’s presentation can be found at: www.investors.stridelearning.com Please submit your questions throughout the day via the Q&A submission form on your screen 4
Slide 5: Today's Agenda
Today’s Agenda TIME SPEAKER TITLE 10:30 – 10:35 Mike Lawson, VP, Investor Relations Welcome 10:35 – 11:05 Nate Davis, CEO & Chairman of the Board Company Overview & Strategic Direction 11:05 – 11:25 Kevin Chavous, President, Academic Policy & External Affairs Regulatory & Policy Overview 11:25 – 11:
Slide 6: Company Overview & Strategy
Company Overview & Strategy Nate Davis CEO and Chairman of the Board of Directors
Slide 7: K12: From innovator to solutions provider
K12: From innovator to solutions provider Innovator in full-time online options for Full-time online and blended schools which K12 K-12 education market administers; a la carte digital solutions Market Market • Unmet demand for alternative to in-person public schools • Increased awareness of full-ti
Slide 8: Expanding strategy focuses on career learning
Expanding strategy focuses on career learning Market evolution drives demand for Targets new $65B market opportunity – in just 4 years Career Learning career learning business has grown to ~$250M in annual revenue serving over 30,000 learners Increasing acceptance of full-time online and blended edu
Slide 9: New acquisitions further expand addressable opportunity
New acquisitions further expand addressable Purchase $23.5M $70.0M** Price opportunity Revenue* ~$11M ~$19M Increased presence in adult learning and corporate Remote and in-person Online allied healthcare and IT training, including training markets Offerings software engineering certification prep a
Slide 10: The new Stride
The new Career Advancement (Corp. Training & Upskilling) $100B+ addressable Leveraging over 20 years Job Placement market of experience with over 2 & Recruitment million students supported, and a scalable education services platform, Stride provides Early Career online and blended lifelong & Immersi
Slide 11: Our mission
OUR MISSION We help learners of all ages reach their full potential through inspired teaching and personalized learning 11
Slide 12: Compelling long-term investment thesis
Compelling long-term investment thesis Growing in the $100B+ addressable market 01 02 03 04 05 Leading education Sustainable & New high-growth Experienced Financial services platform resilient core & higher-margin & diverse track record business career learning leadership team With scale, expertise
Slide 13: Leading education services platform
01 Leading education 980+ services platform online courses $500M+ invested in a ‘digital first’ curriculum, ‘mobile ready’ platform & service suite to support online & blended education – 100,000+ scalable across all ages & subjects lessons 1,000,000+ multimedia components Differentiated & Comprehen
Slide 14: Strong customer relationships
01 Strong customer relationships Long-standing relationships built over 20-year history with high retention rates and over 2 million students supported 100+ 195,000+ Students ~1,000 Schools & Programs • Full-Time Students Enrolled in Schools & Districts Q1 FY21 – increased in 5 • School districts se
Slide 15: Consistent general education business
02 Consistent general education business Online & blended learning expertise & assets to address large K-12 market General Education Solutions Growing mass acceptance of online learning Parents are now digital natives and are used to learning and getting information online School districts shifting
Slide 16: High-growth career learning business
03 High-growth career learning business Leveraging expertise & assets to address adjacent market Career Learning Solutions Bi-partisan support for workforce development at K-12 and adult levels Increasingly competitive global market Technology advancement driving need to Career Career Enterprise res
Slide 17: Strong start to career learning business
03 Strong start to career learning business In just five years, Stride has built the assets, capabilities and infrastructure to support a ~$250M business in FY 2021 and beyond Career Preparation Career Development / Enterprise • 30.8K students enrolled • Acquired top software engineering, data scien
Slide 18: Industry leading management team with diverse expertise
04 Industry leading management team with diverse expertise Nate Davis James Rhyu Dr. Shaun McAlmont Kevin P. Chavous Tim Medina Dr. Tony Bennett Valerie Maddy CEO and Chairman of the President, Corp. Strategy, President, Career Learning President, Academics, Chief Financial Officer SVP, School Manag
Slide 19: ESG factors engrained in company culture
04 ESG factors engrained in company culture Support inclusive & equitable education & promote lifelong learning Environmental Social Governance • Online schools – no transportation • Comprehensive D&I initiative • Board of Directors • 75+% employees work remote • CEO Action for D&I pledge — 90% inde
Slide 20: Execution track record
05 Execution track record Stable enrollment and revenue growth… Total Enrollment1 (K) Total Revenue ($M) QE 9/30 FYE 6/30 1,457 – 1,485 195 14% 15% CAGR2 CAGR 121 124 112 114 1,016 1,041 889 918 FY2017 FY2018 FY2019 FY2020 FY2021 FY2017 FY2018 FY2019 FY2020 FY2021G Depicts high-low number for (1)Num
Slide 21: Execution track record
05 Execution track record …leading to consistent profitability growth and free cash flow generation Adj. Operating Income ($M) Free Cash Flow ($M) FYE 6/30 FYE 6/30 120 - 130 120 - 130 35% 34% CAGR(1) CAGR (1) 77 65 93 49 48 39 62 62 41 35 FY2017 FY2018 FY2019 FY2020 FY2021G FY2017 FY2018 FY2019 FY2
Slide 22: Financial outlook
05 Strategic priorities Financial outlook supporting outlook Support improving learner outcomes while delivering sustained Drive consistent enrollment double-digit top- & bottom-line growth and increased shareholder value growth in K-12 and Adult programs through enhanced acquisition / retention exe
Slide 23: Today's Agenda
Today’s Agenda TIME SPEAKER TITLE 10:30 – 10:35 Mike Lawson, VP, Investor Relations Welcome 10:35 – 11:05 Nate Davis, CEO & Chairman of the Board Company Overview & Strategic Direction 11:05 – 11:25 Kevin Chavous, President, Academic Policy & External Affairs Regulatory & Policy Overview 11:25 – 11:
Slide 24: Investor Day
Investor Day 2020 stride
Slide 25: Regulatory and Policy Overview
Regulatory and Policy Overview Kevin Chavous President, Academic Policy & External Affairs
Slide 26: Highlights
REGULATORY & POLICY Highlights 01 Successfully operating in a complex industry with regulatory expertise to 04 Strong and deep partner relationships support growth build upon strong customer and objectives government relationships 02 K–12 education state based with low 05 Significant potential for f
Slide 27: Deep political, regulatory & policy expertise
01 Deep political, regulatory & Key Issues policy expertise Eliminate barriers to school development to allow Successfully operating in a complex industry with vast knowledge and schools in all states understanding of legislative, political, policy, and advocacy operations Open enrollment policies t
Slide 28: Election 2020
02 Election 2020 Political winds have changed multiple times but have not disrupted overall growth trajectory • Operate a largely state-based business – lower impact from federal elections • Strong, experienced, bipartisan government affairs representation • Bipartisan support for Career Learning in
Slide 29: Full time programs & funds flow
03 Full time programs & funds flow As a service provider to the school, all vendors are paid from funding provided by the state to the school & the school pays the vendor State Provides “Authorizer” ability to grant public school status FUNDING Confers public school status – awards Charter Authorize
Slide 30: Increasing education spending over time supports consistent revenue growth
03 Increasing education spending over time supports consistent revenue growth On average states spend 21% of annual budgets on education Increases for K12 funding driven by: $15K U.S. Per Student Expenditures • Consistent growth in education funding $14K over time $13K $12K • Optimizing school mix $
Slide 31: Strong and deep customer relationships
04 Strong and deep customer relationships Long-standing customer relationships supported by unique combination of offerings and expertise Meet Students’ Provide How-To Deliver Drive Continuous Unique Needs Expertise Comprehensive Innovation Help students reach Apply best practices Support Invest in
Slide 32: Potential for footprint expansion
05 Potential for footprint 100,000+ expansion 5-year incremental enrollment capacity target Utilize multiple models to expand capacity in existing schools / states and new states / geographies New States New Schools / Other Models Programs • Georgia Part-time Online • New York • Virginia • New Jerse
Slide 33: Highlights
REGULATORY & POLICY Highlights 01 Successfully operating in a complex industry with regulatory expertise to 04 Strong and deep partner relationships support growth build upon strong customer and objectives government relationships 02 K–12 education state based with low 05 Significant potential for f
Slide 34: Please enjoy this media content
Please enjoy this media content
Slide 35: General Education Schools
General Education Schools Dr. Tony Bennett SVP, School Management
Slide 36: Highlights
GENERAL EDUCATION Highlights 01 Increasing demand for virtual education drives growing addressable 03 Drive school excellence to improve academic market opportunity with high barriers outcomes and student to entry retention 02 Nationwide reach with large and diverse customer base and student 04 Impr
Slide 37: Increasing demand for virtual education
01 Increasing demand for virtual education Secular Trends Driving Increased Penetration $35B+Addressable in Online Learning Market • Growing mass acceptance of online learning • Parents are now digital natives and are used to learning and getting information online K-12 Online / Blended Programs Mar
Slide 38: General education snapshot
02 ~165K General education snapshot students enrolled in full time programs – FY21 Nationwide reach and strong customer base addresses 75% of the K–12 student population 70+ full time programs in 30+ states ME WA VT 63% / 37% NH MA MT ND MN NY OR ID WI RI SD MI NJ CT charter / district customer mix
Slide 39: Why students choose a K12-powered school
02 Why students choose a 83% (1) K12-powered school of students enter school behind grade level Over 160,000 Students. Over 160,000 Reasons. • Traditional School Not the Right Fit • Struggling 47%+ • Advanced Learner • Gifted & Talented eligible for free & reduced • Bullying • Rural, Urban, Suburban
Slide 40: The Covid experience
02 The Covid experience School districts are not providing the same experience as K12-powered programs School Districts Spring 2020 K12-Powered Programs Experience One-to-many teaching – couldn’t Synchronous, asynchronous, replicate in class experience – no and project-based learning integrated offl
Slide 41: Driving academic excellence
03 Driving academic excellence Rigor, Relevance & Relationships drive academic results with inspired teachers & leaders Instilling a culture of expectations and Grade 3–8 Test Scores by Student Persistence at accountability K12-Powered Programs* • Literacy: Focused on one year of academic growth, 73
Slide 42: Increasing customer satisfaction
04 Student Acceptances Increasing customer to Leading Universities satisfaction Continued commitment to academic outcomes and improving student experience driving higher satisfaction % Satisfied with Overall Experience Net Promoter Score – School 84% 74 80% 66 68 78% 76% 72% 56 57 70% 50 2015 2016 2
Slide 43: Highlights
GENERAL EDUCATION Highlights 01 Increasing demand for virtual education drives growing addressable 03 Drive school excellence to improve academic market opportunity with high barriers outcomes and student of entry retention 02 Nationwide reach with large and diverse customer base and student 04 Impr
Slide 44: Investor Day
Investor Day 2020 stride
Slide 45: Scale & Growth
Scale & Growth James Rhyu President, Corporate Strategy, Marketing & Technology
Slide 46: Highlights
SCALE & GROWTH Highlights 01 Invest in Education-as-a-Service platform to serve large and growing 03 Improve student retention: Enhance student and family addressable markets: Including full- experience, decrease acquisition time online learning, part-time online costs, & increase lifetime value lea
Slide 47: Investing in Education-as-a-Service platform
01 Investing in Education-as-a-Service platform Continue to develop our end-to-end technology, product & service suite to support the unique needs of online & blended education for all markets and learners General Education Content & Systems Instructional Support Services Curriculum Secure, reliable
Slide 48: Platform supports growth in career learning
01 Platform supports growth in career learning Technology, product & service suite is leveraged across business lines to support multiple markets Education-as-a-Service platform customized for Career Learning Content & Systems Curriculum Project-based Certificates & Industry Learning College Credit
Slide 49: Differentiate through innovation
02 Differentiate through innovation Focused on driving academic outcomes & retention Customer & Teacher Personalized Student Experience Efficiencies Learning • Gaming • Natural language • Certifications processing • Augmented reality • eBook Platform • Predictive analytics • Virtual student • Projec
Slide 50: Retention programs support student outcomes and financial objectives
03 Retention programs support student outcomes and financial objectives Improving withdrawal rate by 100 bps increases Adj. Operating Income by ~$4 million per year Retention Activities (example programming) In-year Student Withdrawal Rate • Early mitigation of student / family issues • Differentiat
Slide 51: Increase efficiencies: lower per unit costs
04 Increase efficiencies: lower per unit costs 500 bps improvement Leverage technology and automation to lower SG&A as a percent 30% of revenue Marketing Enrollment Lower customer acquisition Implement robotic process cost by further optimizing automation across customer digital & social channels en
Slide 52: Highlights
SCALE & GROWTH Highlights 01 Invest in Education-as-a-Service platform to serve large and growing 03 Improve student retention: Enhance student and family addressable markets: Including full- experience, decrease acquisition time online learning, part-time online costs, & increase lifetime value lea
Slide 53: Please enjoy this media content
Please enjoy this media content
Slide 54: Career Learning
Career Learning Dr. Shaun McAlmont President, Career Learning Solutions
Slide 55: Highlights
CAREER LEARNING Highlights 01 Large and expanding addressable market fueled by strong secular trends 03 Unique offering supports learners from career prep provides significant opportunities to through adult / employer career sustain high-growth trajectory development and advancement 02 Strong and di
Slide 56: Large & expanding addressable market
01 Large & expanding addressable market Strong Secular Market Trends Driving Demand for Our Solutions • Bi-partisan support for workforce development at middle / high school $65B+ and adult levels Addressable Market • Increasingly competitive global market • Technology advancement driving need to re
Slide 57: Secular market trends driving demand for our solutions
01 Secular market trends driving demand for our solutions Workforce demands are changing, and students and employers are struggling to find and fill jobs – Even with $164B in annual private sector spending on employee training and development, the skills gap continues to grow Student loan burden App
Slide 58: Strong and diversified portfolio
02 Strong and diversified portfolio Assets & partners support learners from career prep through adult / employer career development & advancement Middle / High School Students Adult Learners Talent Platform * Career Prep IT Workforce Healthcare Talent Profile Provides career exploration Development
Slide 59: Competitive Positioning
02 Competitive Positioning First mover in high school market with innovative project-based learning courses; large and growing alumni network for adults with high quality brand name and exceptional job placement. Market Dynamics • K–12 Market: Few national competitors; largely regional and local pla
Slide 60: Destination Career Academy
03 Destination Career Academy 30.8K Footprint supports growth objectives students will attend 32 DCA programs in FY21 ME WA VT 60%+ NH MA MT ND MN NY OR ID WI RI SD MI CT U.S. High school WY PA MD NJ IA DE students have access to OH NE IN DCA program IL WV NV VA Washington D.C. UT CA CO KY KS MO NC
Slide 61: A Unique Career Prep Experience
03 A Unique Career Prep Experience Destinations Career Academy’s nationwide solution provides students with differentiated learning option Courses & Project-based Certificates & Pathways Learning College Credit Catalog of 160+ career learning Student project collaboration Structured preparations tow
Slide 62: Case Study: Project Based Learning
03 Case Study: Project Based Learning Enhancing a student’s academic experience through project-based learning Our Differentiated Project-Based Learning Solution • Opportunities for in-field research through authentic, real-world problem solving • Collaborative student-driven process versus direct i
Slide 63: Destinations Career Academy learning pathways
03 Destinations Career Academy learning pathways Existing Industry Pathways New Industry Pathways Technology Health & human services Business administration Arts, AV digital design Legal & law enforcement & comms Advanced manufacturing Agriculture, food & Education & training & trades natural resour
Slide 64: Sample IT pathway
03 Sample IT pathway High School Prep Training IT Pathway Courses Program • Nascent skill development • Post-HS training with • Full- or part-time training and industry exposure Galvanize / Tech Elevator in software development or prep courses data science • Entry-level certification post-graduation
Slide 65: Adult Learning Programs: Health
Adult Learning Programs: Health 65
Slide 66: MedCerts
03 MedCerts Extends reach into adult education market in healthcare vertical 89% Allied Health exam pass rate Offerings: • Healthcare training for consumers and enterprise • Channels: — Direct pay 1,000+ — Adult Learnings Centers using Workforce Innovation and Opportunity companies have MedCerts Act
Slide 67: MedCerts Offerings
03 MedCerts Offerings 100% online Top MedCerts Programs: 35+ Medical Assistant Veterinary Assistant Phlebotomy Technician EKG Technician programs Pharmacy Technician Professional Dental Assistant and Office Administration Medical Front Office Behavior Technician and the Administrative Assistant Medi
Slide 68: Sample healthcare pathway
03 Sample healthcare pathway High School Post High School Nursing Health Pathway Courses Career • Entry-level leading to • Training programs leading to • Partnerships with certification at graduation in advanced certifications postsecondary providers MA, PT, CAN leading to RN / LPN degrees • $35–$50
Slide 69: Strategic relationships create differentiated program
03 Strategic relationships create differentiated program Extensive local / national / strategic corporate & post secondary relationships offer internships, branded content / pathways & structure for jobs or next step in career development Relationships span local, national Stride and Tallo partners
Slide 70: Significant growth potential
04 Significant growth potential Diverse and comprehensive strategies to accelerate growth • Enhance program quality and content to drive retention and outcomes Grow Destination 1 Career Academies • Improve acquisition through marketing effectiveness • Expand enrollment capacity in existing programs
Slide 71: Highlights
CAREER LEARNING Highlights 01 Large and expanding addressable market fueled by strong secular trends 03 Unique offering supports learners from career prep provides significant opportunities to through adult / employer career sustain high-growth trajectory development and advancement 02 Strong and di
Slide 72: Investor Day
Investor Day 2020 stride
Slide 73: Galvanize
Galvanize Harsh Patel Chief Executive Officer, Galvanize
Slide 74: Highlights
GALVANIZE Highlights 01 Leading provider of workforce training solutions in the high- 03 Large and expanding market opportunities in demand fields of software enterprise training, military engineering and data science and consumer education 02 Strong consumer education business with in-person and re
Slide 75: Galvanize
01 Galvanize Software Engineering and Data Science training for consumers, enterprise, and military markets Consumer Education Enterprise Training Military Training Membership Full-time in Upskilling or Reskilling active & Co-working space person, and full-time / reskilling programs & transitioning
Slide 76: Secular trends driving market demand
01 TOP 5 Secular trends driving fastest growing jobs are highly skilled technical roles market demand 27% Technical skills paramount in age of digitization, recent job openings are IT related automation, and advances in artificial intelligence 1 MILLION IT jobs went unfilled due to demand exceeding
Slide 77: Competitive advantages drive success
01 Competitive advantages drive success Strong brand & Integrated career Industry-leading alumni network service & guidance technology platform Drives acquisition, referrals and program Supported by experienced job placement Deliver high placement rates, instructors with deep industry strong salary
Slide 78: Consumer education: in-person reach
02 Consumer education: in-person reach Data Science Immersive Software Engineering Immersive Seattle, WA ■■ New York, NY ■■ San Francisco, CA Boulder, CO ■■ ■ San Jose, CA ■ (new campus) Denver, CO ■■ Dallas, TX Los Angeles, CA Phoenix, AZ ■■ ■ (new campus) ■■ Austin, TX ■■ 78
Slide 79: Consumer education: remote
02 Consumer education: remote Canada United Kingdom Russia Poland Germany France Switzerland United States Korea Spain Japan China Bangladesh Mexico Taiwan Haiti Pakistan Jamaica India Costa Rica Columbia Nigeria Singapore Brazil Australia Chile New Zealand 79
Slide 80: Consumer education: impact
02 Consumer education: impact 2,250+ 50% companies hiring Galvanize Fortune 100 companies have hired graduates, all time Galvanize graduates ONE OF THE 1ST TOP 10 data science, JavaScript, & remote data science bootcamp* bootcamps 70%+ 8,000+ software engineering graduates graduates since 2012 hired
Slide 81: Enterprise training
03 Enterprise training 2,000+ enterprise employees Re-skilling or cross-skilling enterprise workforces and hiring, trained / upskilled training and placing graduates within those organizations Talent Talent-as- Development a-Service Courses Executive Learn Workshops Platform 81
Slide 82: Military training
03 Military training Military Career Skills Program • Provide active military personnel, who are separating from service, the skills and training needed for a career in software engineering • Currently the only software engineer skills provider in the Department of Defense Active Military Technical
Slide 83: Strategies to accelerate growth
04 Strategies to accelerate growth • Increase density of offerings across all markets • Expand remote programs & optimize human capital 1 Consumer • Capitalize on increasing interest for part-time programs • Broaden market reach through income share agreements • Expand corporate reach/marketing nati
Slide 84: Tech Elevator
04 Tech Elevator 95% Expands student demographic & experience level reach, geographic graduation rate footprint, and hiring partner portfolio Offerings: • Software engineering training 94% hired within 6 months • Locations: Cleveland, Columbus, Cincinnati, Pittsburgh, Detroit, Philadelphia • Employe
Slide 85: Galvanize & Tech Elevator
04 Galvanize & Complementary Organization, Reach & Capabilities Tech Elevator Galvanize Tech Elevator Creating a nationwide technical skills training Software company at scale Engineering Data Science Opportunity ME WA VT MT ND NH MA C#, Java, .NET MN NY Languages JavaScript, Python OR RI Framework
Slide 86: Highlights
GALVANIZE Highlights 01 Leading provider of workforce training solutions in the high- 03 Large and expanding market opportunities in demand fields of software enterprise training, military engineering and data science and consumer education 02 Strong consumer education business with in-person and re
Slide 87: Please enjoy this media content
Please enjoy this media content
Slide 88: Financial Overview & Outlook
Financial Overview & Outlook Tim Medina Chief Financial Officer
Slide 89: Highlights
FINANCIAL Highlights 01 Solid financial foundation built upon steady performance 04 Disciplined capital allocation prioritizing free cash flow sustainability, educational platform development, and 02 Sustainable business model with high visibility to revenue growth and synergistic M&A improving marg
Slide 90: Solid financial foundation
01 Solid financial foundation (1) $1.04 BILLION 33% 12% FY20 Revenue 4.5% FY20 Gross FY20 Adjusted Four Year CAGR Margin(2) EBITDA Margin(3) $62 MILLION $46 MILLION $58 MILLION FY20 Adjusted Average capital Average free cash flow Operating Income(4) expenditures per year(5) generated per year(5) 1.
Slide 91: Sustainable business model
02 Sustainable business model Growing student enrollments Consistent & increasing growth in General Education Total Enrollment (K)(1) 195.4 30.8 Career Learning in early stage of growth 121.1 124.4 111.8 114.0 0.9 1.6 7.1 13.6 164.6 110.9 112.4 114.0 110.8 Combined lines of Q1 FY2017 Q1 FY2018 Q1 FY
Slide 92: Consistent revenue growth
02 Consistent revenue growth Massive addressable Visible runway for long-term growth market Total Revenue ($M) FYE 6/30 Increasing acceptance 1,457 – 1,485 of online learning 1,016 1,041 Career Learning 889 918 programs expected to drive higher growth FY2017 FY2018 FY2019 FY2020 FY2021G High barrier
Slide 93: Improving margins…
02 Improving margins… Strong track record of performance Adj. Operating Income ($M) Adj. Operating Income Margin (%) FYE 6/30 FYE 6/30 120 – 130 8% – 9% 77 7% 65 6% 49 5% 62 4% 39 6% FY2017 FY2018 FY2019 FY2020 FY2021G FY2017 FY2018 FY2019 FY2020 FY2021G Depicts high-low for guidance Excluding impac
Slide 94: … and free cash flow
02 … and free cash flow Strong track record of performance Adj. EBITDA ($M) Free Cash Flow ($M) FYE 6/30 FYE 6/30 120 – 130 200 – 210 93 142 134 122 62 110 128 48 41 35 FY2017 FY2018 FY2019 FY2020 FY2021 Target FY2017 FY2018 FY2019 FY2020 FY2021 Target Depicts high-low for guidance Excluding impact
Slide 95: Strong balance sheet & liquidity
03 Strong balance sheet Strong cash position driven by increasing free & liquidity cash flow Flexibility to maintain long-term low leverage ratios Liquidity position Select balance sheet and other information provides for low leverage For the Three Months Ended September 30, 2020 ($M) Cash and Cash
Slide 96: Disciplined capital allocation
04 Disciplined capital allocation • Invest in academic quality & student / customer experience to support Organic growth outcomes & retention • Implement innovative products across portfolio • Drive significant free cash flow Financial strength & flexibility • Maintain a strong balance sheet • Lever
Slide 97: Strategic approach to M&A
04 Strategic Strategic Criteria • Focus on businesses that Financial Filters • Revenue growth relative to approach align to strategy & create long-term value business size of 10% – 40% to M&A • Profitable or near-term path to • Operates in $1B+ or fast- profitability (<24 mo.) growing nascent addres
Slide 98: New acquisitions focused on high growth & EBITDA positive businesses
04 New acquisitions focused on Purchase Price $23.5M $70.0M** high growth Revenue* ~$11M ~$19M & EBITDA positive Revenue Growth* 47% 38% businesses Gross Margins* 50%+ 80%+ Companies expand Adj. EBITDA* $2M $4M addressable market *Stand-alone results annual trailing twelve months through September 3
Slide 99: Financial guidance
04 Financial guidance Acquisition Acquisitions driving improved revenue outlook and expected to be Impacts immediately accretive to Adj. OI excluding purchase accounting Revenue: Original FY21 Updating and Reaffirming FY21 ~ $16M – $19M Guidance Guidance* Total Revenue ($B) $1.45B – $1.47B $1.457B –
Slide 100: Compelling financial targets
05 Compelling financial targets Updated FY21 Guidance & Long-term Financial Outlook Key drivers and assumptions 6 – 11% $2.20B 18 – 31% $350M 19 – 32% $360M for long-term outlook CAGR CAGR CAGR • Large addressable markets • General education business $1.90B generating significant free cash flow $1.4
Slide 101: Compelling financial targets
05 Compelling financial targets Growth in career learning adds scale to realize gross margin improvement and operating leverage Drivers of improved margins • Investments in automation and 300 – 600 bps 36 – 39% improvement process improvements 900 – 1,200 bps improvement 21 – 24% — Machine learning
Slide 102: Highlights
FINANCIAL Highlights 01 Solid financial foundation built upon steady performance 04 Disciplined capital allocation prioritizing free cash flow sustainability, educational platform development, and 02 Sustainable business model with high visibility to revenue growth and synergistic M&A improving marg
Slide 103: Question & Answer Session
Thank you Question & Answer Session stride
Slide 104: Appendix
Appendix
Slide 105: Reconciliation
ADJ. OPERATING INCOME AND EBITDA TO GAAP FINANCIALS Reconciliation Year Ended June 30 2020 2021 (In millions, expect percentages) 2017 2018 2019 As Reported Galvanize As Reported Low High (excl. Galvanize) Revenues $888.5 $917.7 $1,015.8 $1,040.8 $11.0 $1,029.8 $1,457.0 $1,485.0 Net Income (loss) (0
Slide 106: Reconciliation
FREE CASH FLOW TO GAAP FINANCIALS Reconciliation Year Ended June 30 2020 (In millions) 2017 2018 2019 As Reported (excl. As Reported Galvanize Galvanize) Net cash provided by operating activities 88.7 105.4 141.6 80.4 (12.9) 93.3 Purchases of property and equipment (2.2) (8.8) (5.5) (1.7) (0.1) (1.6
Slide 107: Reconciliation
ACQUISITIONS Reconciliation October 1 through September 30 MedCerts Tech Elevator (In millions) 2019 2020 2019 2020 Revenues $13.7 $18.9 $7.4 $10.8 Income (loss) from operations 0.5 1.3 0.9 1.6 One-time expenses 0.3 0.4 - - Depreciation and amortization 1.8 2.2 0.2 0.2 Adjusted EBITDA 2.6 3.9 1.1 1.