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Finance and Operating Leases

9 Months Ended

Mar. 31, 2025

5. Finance and Operating Leases

Finance Leases

The Company is a lessee under finance leases for student computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”) and CSI Leasing, Inc. (“CSI Leasing”). As of March 31, 2025 and June 30, 2024, the finance lease liability was $96.8 million and $55.6 million, respectively, with lease interest rates ranging from 3.95% to 6.72%. As of March 31, 2025 and June 30, 2024, the balance of the associated right-of-use assets was $78.3 million and $39.8 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 instructional costs and services on the condensed consolidated statements of operations.

The Company entered into agreements with BALC and CSI Leasing in April 2020 and August 2022, respectively, to provide financing for its student computers and peripherals. Individual leases with BALC include 36-month payment terms, fixed rates ranging from 3.95% to 6.72%, and a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. Individual leases under the agreement with CSI Leasing include 36-month payment terms, but do not include a stated interest rate. The Company uses its incremental borrowing rate as the implied interest rate and the total lease payments to calculate its lease liability.

The following is a summary, as of March 31, 2025 and June 30, 2024, respectively, of the present value of the net minimum lease payments under the Company’s finance leases:


	March 31, 2025		June 30, 2024

	(in thousands)
2025	$	12,666	$	31,655
2026		45,454		19,880
2027		33,265		7,691
2028		11,542		82
Total minimum payments		102,927		59,308
Less: imputed interest		(6,153)		(3,710)
Finance lease liability		96,774		55,598
Less: current portion of finance lease liability		(44,011)		(29,146)
Long-term finance lease liability	$	52,763	$	26,452

Operating Leases

The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of March 31, 2025 and June 30, 2024, the operating lease liability was $49.1 million and $57.9 million, respectively. As of March 31, 2025 and June 30, 2024, the balance of the associated right-of-use assets was $46.0 million and $54.5 million, respectively. Lease expense associated with the Company’s operating leases is recorded within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations.

Individual operating leases range in terms of 1 to 9 years and expire on various dates through fiscal year 2034 and the minimum lease payments are discounted using the Company’s incremental borrowing rate.

The following is a summary as of March 31, 2025 and June 30, 2024, respectively, of the present value of the minimum lease payments under the Company’s operating leases:



	March 31, 2025		June 30, 2024

	(in thousands)
2025	$	3,558	$	14,263
2026		12,508		12,361
2027		8,881		8,705
2028		7,894		7,713
2029		7,711		7,599
Thereafter		12,552		12,381
Total minimum payments		53,104		63,022
Less: imputed interest		(4,008)		(5,082)
Operating lease liability		49,096		57,940
Less: current portion of operating lease liability		(12,306)		(12,748)
Long-term operating lease liability	$	36,790	$	45,192

The Company is subleasing one of its facilities through December 2025. Sublease income is recorded as an offset to the related lease expense within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations. The following is a summary as of March 31, 2025 and June 30, 2024, respectively, of the expected sublease income:



	March 31, 2025		June 30, 2024

	(in thousands)
2025	$	70	$	455
2026		139		139
Total sublease income	$	209	$	594

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


	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025			2024

	(in thousands)
Lease cost

Finance lease cost:
Amortization of right-of-use assets	$	10,556	$	7,775	$	27,033		$	23,760
Interest on lease liabilities		1,225		887		3,105			1,870
Instructional costs and services:
Operating lease cost		2,269		2,363		6,913			7,284
Short-term lease cost		12		10		38			42
Sublease income		(66)		(66)		(197)			(263)
Selling, general, and administrative expenses:
Operating lease cost		984		1,146		3,097			4,891
Short-term lease cost		23		16		70			128
Sublease income		—		(123)		(149)			(368)
Total lease cost	$	15,003	$	12,008	$	39,910		$	37,344

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(3,146)	$	(3,108)	$	(9,583)		$	(11,695)
Financing cash flows from finance leases		(13,243)		(9,721)		(29,957)			(32,212)
Right-of-use assets obtained in exchange for new finance lease liabilities		15,628		6,220		67,567			32,497
Right-of-use assets obtained in exchange for new operating lease liabilities		457		180		739			805
Weighted-average remaining lease term - finance leases						2.21	yrs.		2.09	yrs.
Weighted-average remaining lease term - operating leases						5.24	yrs.		5.80	yrs.
Weighted-average discount rate - finance leases						5.51	%		5.45	%
Weighted-average discount rate - operating leases						2.94	%		2.93	%