Business Headlines

K12 Inc. Reports FY2017 Revenue of $888.5 Million

HERNDON, Va.--(via BUSINESS WIRE)--K12 Inc. (NYSE: LRN), a technology-based education company and leading provider of online curriculum and online school programs for students in pre-K through high school, today announced its results for the fourth fiscal quarter and full fiscal year ended June 30, 2017.

Financial Highlights for the Three Months Ended June 30, 2017 (Fourth Quarter Fiscal 2017)
• Revenues of $215.8 million, compared to $221.3 million in the fourth quarter of FY 2016.
• Operating income of $4.7 million, compared to $0.5 million in the fourth quarter of FY 2016.
• Net loss attributable to common stockholders of $6.5 million, compared to a net loss of $1.0 million in the fourth quarter of FY 2016. ? The net loss in the fourth quarter is due to a $10.0 million non-operating charge relating to Web International.
• Diluted net loss attributable to common stockholders per share of $0.17, compared to a diluted net loss of $0.03 in the fourth quarter of FY 2016.

To supplement our financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), we are also presenting adjusted operating income (loss) and adjusted EBITDA. Management believes that these additional metrics provide useful information to our investors as an indicator of performance because they exclude non-cash stock-based compensation expense. Non-GAAP Financial Highlights for the three months ended June 30, 2017 (Fourth Quarter Fiscal Year 2017) are as follows. Historical information for these metrics can be found in Appendix A.
• Adjusted operating income of $12.8 million, compared to $5.4 million in the fourth quarter of FY 2016.
• Adjusted EBITDA of $30.7 million, compared to $23.0 million in the fourth quarter of FY 2016.

Financial Highlights for the Year Ended June 30, 2017
• Revenues of $888.5 million, compared to $872.7 million for the full fiscal year of 2016.
• Operating income of $13.1 million compared to $13.9 million for the full fiscal year of 2016.
• Net income attributable to common stockholders of $0.5 million, compared to $9.0 million for the full fiscal year of 2016.
• Diluted net income attributable to common stockholders per share of $0.01, compared to $0.23 for the full fiscal year of 2016.

Non-GAAP Financial Highlights for the year ended June 30, 2017 are as follows.
• Adjusted operating income of $35.7 million, compared to $32.5 million for the full fiscal year of 2016.
• Adjusted EBITDA of $110.0 million, compared to $100.8 million for the full fiscal year of 2016.

Liquidity
As of June 30, 2017, the Company had cash and cash equivalents of $230.9 million, an increase of $16.9 million compared to the $214.0 million reported at June 30, 2016.

Comments from Management
“In fiscal 2017, we delivered increased revenues and improved operating efficiencies across the organization while strategically allocating capital toward products, technology and programs that support the students, teachers and schools we serve,” said Stuart Udell, Chief Executive Officer. “We will continue to work with our partners and school districts to deliver a robust and engaging set of educational options for students, while driving consistent revenue growth and higher levels of free cash flow in our businesses over the long-term,” Udell added.

Capital Expenditures
Capital expenditures for the year ended June 30, 2017 were $48.2 million, a decrease of $14.7 million from the prior year’s full fiscal year, and was comprised of:
• $2.2 million for property and equipment,
• $26.9 million for capitalized software development, and
• $19.1 million for capitalized curriculum.

Revenue and Enrollment Data

Revenue
The Company’s revenues are generally in three categories -- Managed Public School Programs (where K12 provides substantially all management, technology and academic support services in addition to curriculum, learning systems and instructional services), Institutional (Non-managed Public School Programs – curriculum, technology and other educational services where K12 does not provide primary administrative oversight, and Institutional Software and Services – educational software and services provided to school districts, public schools and other educational institutions), and Private Pay Schools and Other (private schools for which it charges student tuition and makes direct consumer sales) –

Fiscal Year 2018 Outlook
As was done in fiscal year 2017, the Company will provide an outlook for fiscal 2018 results as part of the first quarter results report for fiscal year 2018. This first quarter results is planned to be published at or near the end of October 2017. No separate guidance communication, or enrollment counts, for fiscal 2018 will be provided before that time.

Conference Call
The Company will discuss its fourth quarter, and full fiscal year 2017 financial results during a conference call scheduled for Tuesday, August 8, 2017 at 5:00 p.m. eastern time (ET).

The conference call will be webcast and available at http://public.viavid.com/index.php?id=125165. Please access the web site at least 15 minutes prior to the start of the call.

To participate in the live call, investors and analysts should dial (877) 407-4019 (domestic) or (201) 689-8337 (international) at 4:45 p.m. (ET). No passcode is required.

A replay of the call will be available starting on August 8, 2017 at 8:00 p.m. ET through September 8, 2017 at 8:00 p.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13664754. A webcast replay of the call will be available at http://public.viavid.com/index.php?id=125165 for 30 days.

About K12 Inc.
K12 Inc. (NYSE: LRN) is driving innovation and advancing the quality of education by delivering state-of-the-art, digital learning platforms and technology to students and school districts across the globe. K12’s award-winning curriculum serves over 2,000 schools and school districts and has delivered more than four million courses over the past decade. K12 is a company consisting of thousands of online school educators providing instruction, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and directly to families. The K12 program is offered in more than seventy K12 partner public schools across the country, and through private schools serving students in all 50 states and more than 100 countries. More information can be found at K12.com.

Contact: K12 Inc., Mike Kraft, VP Finance, 571-353-7778, mkraft@k12.com