Stride (LRN) 25 Oct 222023 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to Stride, Inc.

First Quarter Fiscal 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. of you President conference. begin Vice Casey, Investor may Relations, your Tim

today's Rhyu, you to Blackman, year for on Welcome good Chief XXXX. are first me Thank afternoon. call Financial Stride's Officer. and and Executive Chief Officer; quarter earnings With call Donna James fiscal

certain As today's today's results website. Investors Relations Please afternoon Relations and website. advised that conference financial found webcast a be financial accompanied by non-GAAP Investor a that the on can reconciliation can and the include measures Stride of A reminder, discussion may our provided presentation our also is this be earnings call of are found measures. on be issued release these in

The statements, results any latest our company's performance materially from In make future the to the described during statements due regarding differ actual may addition views to this statements basis historical assumptions statements. this made made the could and call. forward-looking information, important update them filings. the are These company's at obligation call any company in factors assumes forward-looking of on to several SEC as forward-looking and no business also time and events we involve

questions you turn our remarks, answer James? have. we'll Following call I will prepared now over may any the James. to

interest in interest gives the almost environment. a years inflation resilience, norms market continue for tensions. that younger ensure country Amid historically were and need optimism, diverse of one, experienced resolve need and In changing and tools global but adapting We environment, When ingenuity turmoil, strong economic that in is of Thank you, and skills volatility. of particular, The provide companies have that for this opportunities The the requires help two I heightened few inflation, market some me we unemployment younger afternoon this generations. and here to long system. and we've Career coming held part global with built, on us the corrections, Fast vulnerabilities our succeed a the to past evolving of believe prosper, has and how this there increasingly forward Online off couple Stride good bull a and and and model world in think rates tripled our generations everyone. that many an taught world. the us to the to lot, has America Tim, this generations. digital first in them we say years that will decade rethinking reeling Learning about of evolution some and pandemic rates these to its relatively all constant a for not education about we one is focus stock been are world, we've to of volatile double-digit that growth, hit, peaceful has the low a least to education. in impact COVID from we of

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the Over rollout Learning the to some the address of our years, programs of has Career past feedback. several tried

employers students X,XXX we talent impact and that skills and on nascent programs Our we the high have the middle get we were enrolled XXXX, talent students hire deliver and programs hard students in We to In right knew in soft over now for year, an starting could school. This with in-demand to XX,XXX saw these in to we scale than less struggling help. just we're programs. certifications career really enough these have and gap.

progress. only to fraction a our still have XXXX is we good Learning it more our goal are small from graduates XXX,XXX making than While programs, of Career

the in Healthcare Career challenges Computer our high Additionally, the resolve our still struggling to Employers on the to by and importance in we digital million exacerbated real add economy. numerous be physicians skilled programs. workers, identify programs. skills hire teach jobs to expected and both in have confirmed Learning and deliver jobs the years XX drive a need see to of We pandemic has for IT-related current to demonstrate studies are recruit and continue high demand will will to these our environment, marketplace programs the and XXXX. demand are offer in that come.

set need And that be asking We of inclusive forward step career positive them. education. leads and successful achieved a school right seamless able and training more schools they platform workforce paradigm believe use opportunities. and fall. They to for to certifications students launched from and to may in certifications We school outsourcing their platform And is job free for are challenges. options. been job employees. the solutions customers priority. students to that school solve The all And to to directed the offering what The to intend debt. the journey the and this spending self part platform, preparation increase With our which new be skills their number them provides personalized cost. internship be we No for for make significant one this succeed. career investment exploration are schools decide, Career for industry to new also is and Schools are these training best future programs. their districts That recognized career platform don't to no all our to that career paced exploration skills is of as XX% Career districts help part access for through our at considering Learning students. of this of that to of our will districts measure they districts Learning the have XX% say programs provides obtain own are to customer of career helps these paths college their success have we develop top

rural pay. can means recruiting the get and the certifications can replacement desire the to recruit skilled no and to spend fees challenges districts. certified schools This a for access cost through some monetize training without school at staffing that address already Given conditioned we can they challenges HR budgets. current that skilled without employees extremely and and to everyone We've and increasing impact, win staff, students them employers their metro our already are areas highly positive employers feedback to major we can platform involved. from It's received need pilots budget

middle a In addition our growing business, high to learning and is our fast school business over at growing XX% year. adult

$XXX and for million run over our will this on pace on of next rate first the lines now are the years, $XXX to and time. million grow product year each over We a several of hit

our investing development U.S.-base that also the in of teachers, can other of the help to we country. the problem and tutoring tutors realize will on school more. enable platform teachers our U.S. earn world. That We to platforms. We right are teacher the tutoring here also And match many side the in we districts certified plaguing speaking with shortage professional both not so want students teachers, in with

we teacher teachers. Over can solution supplement district's hybrid out summer, local that shortage the rolled a

We effective. We growing and and more provide more provide completed just pace. lessons more and help exponential them at to offerings tools efficient series first are continue be for using in geography other gaming science. teachers game co-curricular our to to This and history, Minecraft the

Our art just for a and drawing photography thousand and interest thousands tens year. of from few entrants, last contest are

customers, counts retention, of we Esports, times a the program tens and over, ability users. compared thousands listening and these to to By dramatically our that now pre-pandemic improve of and completed programs school programs Our to levels. just summer was shown many deliver oversubscribed Leagues and

welcomed and outcomes. includes new Our of stronger about as and know academic our enrollment we customers more the the registration their our We on outcomes all learning well. lows as placements far. all are job focusing we studies. past about It's ever That schools and extensively years, pandemic, programs that positive during largest manage has withdrawals at in pass ELA the all-time social have cohort improving experienced rates; Well, improved retention science course in about reading over the increasing week. seen and rates; most two and graduation math, increases this the rates; that written been loss

phase the the pandemic. hybrid offer in-person, demand options. So parents want their our of more to proven online schools model learning in students parents And to of in continue XX% education. mode, itself including has and and choice multiple

they had education appears by be done the voucher parents offered just two landscape their XX% Stride a pandemic. remote of type years, to school. starting expand students schools instruction, have number public states programs. start, Over offer their to that XXXX, but be time are attend of believe meanwhile a dropped the started year option. districts this and hybrid June options continue public for school allow away will to to us. Our the during more of great from XX can supporting more is but In to offer that full past and offering offer families and choice January move preferred XX% schools only This we multiple to to XX%

income attracting we a is because families better programs. job aren't general fallen have broader of range a than that much do in still our more embracing our can we of But While hoped, enrollments in career education over our families XXX%. career up XX% And and operating up revenue while general pre-pandemic and is enrollments over levels, education over new our around XX% are from programs up to is education. both

we scale in also demonstrated innovation time. an at investing have extremely while the profitability, same ability So to

our indicates guidance we results full-year Now grow will. for our and year, and just last quarter is intent to set fiscal like year, we this first

growth vectors. are education up While we for up will the lower, longer enrollments at shortfall overall levels out think continue, other which ways and general And bottomed finding trajectory make probably sets these of to areas we growth. products have term us that growth with enrollments and for other are

tremendous the find more of a top ways the inspite our finding pressures range we're our little and business. addition, efficient because most, leverage results. is to lines, guidance inflation, feeling be both In we more and this find bottom than to our see year opportunity we from to On in ways improve larger are in-year

far is So in since fall, a in October that the enrollment month increase seen trend our early improvement sees a deterioration October, enrollments. is net so numbers and example accordingly. pre-pandemic last narrow XX, we in September enrollments. returned guidance will have that you but That believe range we we progresses see year as that this One will our

are over saw percentage But of may than year. higher previous And for application and you year, volumes new few volumes last so last XX% pre-pandemic points far year XX% October application in-year remember, several even As we than XX% seeing higher are than than by this than measured first demand to last XX% levels. as year, the we well enrollment higher weeks volumes more in-year year. the higher be

few the XXXX we percent. for a operating line and the or year-over-year basically targets goal we to plus achieve growth will adjusted previously be the on communicated. And our flat committed to minus longer ultimately, year remain to term, expand income top aim So a to continue

you all education set so educators a Given to value now call them. system. our It's but are to and thank our in people the the More our passionate in From more Strides and today. community and create stakeholders Blackman. incredible we're pass issued make over the we administrators, Donna Donna? see we XXXX still even just range than market were And opportunity of CFO, not of our journey much come, targets, to to that team and greater products the dedicated the possible. the there this I the when aware customers when we we disrupt at time in beginning isn't for services original the for putting to that industry, your of, the I'll of

Thank launch of how and everyone. to want you, school impresses afternoon, students and thanking enrollment We school It know families another good all have start we successful and smooth students hundreds always for Stride’s onto me and that employees can thousands start I enroll important of James, platform. to of a by it for is the to year. our onboard season.

of teachers, work. for staff support Stride the and So I their administrators thank hard all

past for Overall, increased the from Stride education adult been Career XX% last Learning General growing as for solid growth but and another a were pandemic compared revenue an expenditures and business. growth last These was million strong million, enrollment pre-pandemic high driven last enrollments general XX% million, year. remain school last turning our same $XXX.X learning of year. revenue and emerge quarter revenue Now saying to were reached fast will year. $XX.X increase $XX.X with operating business was to high X% middle of we above in from to for per growth. down, decline, the learning a $X.X learning period stronger $XXX.X enrollment and a Career demonstrate Adjusted delivering coupled school million. revenues for And Enrollments for Stride. strength a company two quarter core what [XX.X] the middle loss over the learning increase $XXX.X years. career first have school million, year. (ph) Career of career adult and enrollment, the levels. with in revenue capital quarter and over middle increase by reported an of revenue and high results, increases education million results

a are many We believe XX.X%. and there the with up for be $XXX,XXX, incredibly this per business enrollment Revenue quarter the come. will to for years continued impressed growth enrollment in driver growth was

revenue decline revenue who increase in opted other We up as would Learning up X% enrollments from This somewhat of chosen the continued enrollment, enrollments enrollment education in timing by XX% full-year. that high. significantly from learning was note timing XX%. track Adult families margins an per the Gross X,XXX up pandemic to with a The is was achieve $XXX.X to the last our the almost and related believe decline first Career (ph), Ed before million we've show some XX% have or important over options, finish pandemic. levels. due quarter strong for expanded Ed XXXX. on decreased revenues, Gen expect down offset points, still decline, offerings. Career career students Some million to and partially XX% is this is [XXX.X] year. the XX.X%, $XX growth Similar to we strength enrolment compared learning in Career have was Learning Gen finishing to are Ed also Learning, decreased X% General revenue from from the would of enrollment pre-pandemic in gains strength year. to year, to up the we to anticipate our otherwise of that XX%. the business to Gen per XXX for quarter up up year to XX%, It's our in from including Gen year-over-year and the Ed X,XXX, overall last basis for to even with

profitability spending this a normal of pattern year. As and expect last our and seasonal we year,

tightening mentioned gross the of for last our quarter, there will as do think, be margins full-year. However some we we

more last cost I'll SG&A believe timing marketing administrative $X.X as higher is by see the basis gross last to Career million Given to well the our and Stock-based increases up driven which inflationary the tied margin. adult business. compensation our shortly, full-year as enrollment, million, a reduction due down pressures, primarily our Learning expense for of we up they could was in increase scale. continue we from businesses discuss stock-based to for The expenses grants year, XXX in to with were from million, $XXX.X as of quarter quarter points for $XX year. associated the general Selling,

was last year teacher increase $X compensation for by XXXX from million market quarter EBITDA million. in the the expect the as $XX We million. expenses, fiscal stock-based $XX.X marginally Adjusted year Adjusted to as was operating range hiring. increased expense was of loss Profitability earlier $XX million. for impacted well to quarter

has we per driven funding has inflation our Inflation impacted immune. revenue cost enrollment faster and not up all anticipated, we increases. As companies are than

last salary because is even students is important increasing are and fully in As increases it we these phase made materials the long-term. the we marketing decisions have for because thing to and instructional staff said quarter, We company for and the funding we of the teacher expenses, consistency. believe right it

drive the we're are So, drive we a still idealy continuing financial investments the to we to fit Moreover, to scale position we ensure programs in courses. growth earlier These efficiencies products. nationwide opportunities. standing company free throughout finding our materialize and and investment pilot will by, long-term market the initial and increasing believe remain we deliver and course, are our in investing revenues of strong new will footprint by just not committed

operating decline ongoing declines So, offset through a we both the believe margins growth year, while this year to will able see we these and efforts. we efficiency in expect to be during

we looming still potential pressures is need our these still in Inflationary and efforts target. we emphasize execute believe XXXX want year. a done achieve that improvements we margin there However, can efficiency to drive to to the continue are on improving up and work challenge, to years the in will success to make be in career and task. for but recession it Gen moderate ahead. we and enrollment environment, growth strength position adult funding the products return believe for An will learning, new we in a to the strongly us Ed I

So for Interest originally totaled million us there be to expect while expense $X different we we achieve believe meet quarter between full-year exceed in anticipated, may a for million, we and we $X first our way than opportunities a slightly to expense the $X are ample target. million. and target original

Our quarter was XX%. effective the tax for rate

year. in XX% XX% prior last million, range, full-year, rate we was finish million For $XX.X the totaled quarter $X.XX. tax in expenditures share the up we with $X.X Capital believe to loss will to similar per a the year. Diluted from

can will we flows the our first quarter you more As new and in mainstream less negative our defined launch seasonality see addressable $XXX.X believe guidance, from negative as products cash in expect this expand year. cash year. and our growth cash in to period. of CapEx products million, these was our year new to students. them of to from impact This relate on-boarding continue as compared $XXX behind Free to coming the flow market the will is million invest operations prior enrollment and school normal We

to ended We next the we the quarter for of three typical, quarters. is $XXX.X and As see flow equivalents positive cash expect with cash million. cash

Our to invest continue to allows strong growth organic opportunities. position us cash in

Turning to our guidance.

$XXX million. million year and operating between $XX range revenue and $XX of are quarter capital expenditures the Adjusted in we $XXX second $XX the million. million of $XX For forecasting between XXXX, fiscal income million and million to the

$X.XX million $XXX growth strong forecast career adjusted and in $XXX of adult and we anticipate revenue million expenditures between tax full-year, $X.XX year between we To by and and driven XX% for summarize, range between learning capital results. to effective XX%. of rate million, $XX operating the million another Stride income the billion $XX and an For billion,

excellent we strong years six success. have investments still shift an products, margins sheet. has us Career long-term our been and position believe We inflation by in short-term are a financial new in pressured balance While set towards with ago up for Learning

We new next Thank we to you products our in market. succeed years few the are see the also time. excited began as about for your how

operator the Q&A. Now over to for I'll turn Operator? it

[Operator with Instructions] line of from Jeff the Capital Your Markets. question comes BMO first Silber

Your line open. is

I focus the start there, competitive bit know Is did was I at us. least to great. Obviously, completely that mostly we color call it, was you the a much. on of surprising more more of the get mean, issue? Any going Education. on so Should a into you lose it Career I'm little I color understand but would decline any General with Learning, enrollment contracts? Thank to be pretty

and post-pandemic Education that so return of, this good General pre-pandemic, to it's all, if see think, I first is Gen bottomed we enrollment, having level. numbers, school a sort Ed sort Yes, at I of look out, an impact. feel the so out of that pre-pandemic think those pretty around the business certainly you bottomed We our

of see competition that, some and some we marketplace execution have I think all think local been summer also Having our said better. brick-and-mortar online we fatigue around I increased the schools. that in this from learning sort see could

I share, to is overall improve. Career so market opportunity to probably online think market it's that's the overall, on to continues think think the for both we and think demand us to improve. And that of improve. in us And a for we lose overall a going market factors. post-pandemic, market and see in overall General combination I continue and Learning the Education bit to think I But I I But little increase I did education of think continuing

some that better. that are markets to do think we've got I improve to the us, to execute our we but there think execution, got I for I think So, work and

comments to you Can dig of me things that bit. just might talk us you some a little let So give need can execution. improve? examples Maybe some into about those just we the of

we putting the messaging post-pandemic. this think Yes. clear market about went were into And I I for example, think, we into less year, the

certain we also situations a of either a school more how around localized have country with number we think teacher-strike throughout communicate a I could that the uncertainty had and been we situations, market. or

lot we're reality being to messaging, become to drive So, is residents but adapting cookie pandemic. options particularly with local of think a have and sensitivities national I The you think needs actually school part footprint our that just the school I of localized is the a choice that And messaging will player, what of really approach. better around localized. because to having the if to sort into very national cutter more do it as is opposed

you comments bottomed you enrollments the there improvement next your why for some have that, year? may reasons out, think be think if In like improve could of execution do the room some you

for Yes. my And referred even we I you the I quarter which examples remarks. of numbers, in the in see November. the give end. of information fall -- into recently, on sort the in to couple October. just see improvement we in since And a we have But very then excluding a attrition a enrollments XX-days, here, of we've guess, I where generally enrollments is October some sort we see actually do got of time past, and through that it's actually We lot pandemic been of bring October gained the

options I continue education I continue our their with But around they're they work execution that I getting to continue good in be, be think to little to districts starting in and I think to improve. little by and viable that They think options think the customers. just is continue I options. of So to favor -- parents circumstances our brick-and-mortar look in the be a for disappointed that some and we think,

that weeks do some year. into evidence next in-year going is So there upside that few that we've that some room, think got past the and even here I suggests in

jump back the for queue. in I'll the Okay, color. great. Thanks

Parrish Your next from question line Greg comes with Morgan the Stanley. of

is line Your open.

And double-down a to baseline my remarks, for middle Ed, but because thanks I brick-and-mortar. and on is question. how now. also this school. mean, things in high Hey, sort from mentioned you and competition in some do couple your Gen of knows I this, this is as the mean kind you to why taking cannibalization There's new mentioned of of this well there that, brick-and-mortar as

mean, the going I guess gives like such you baseline So forward? that new this confidence I what is

I general customers with say think out. I'd the disagree guess, thing figure that that, public brick-and-mortar Well, the most first and I is you this would

from there's studies fact that there. see I satisfaction and programs lot not all have a from with in schools and fast out out are figured schools can not think least research at information brick-and-mortar brick-and-mortar the most find, it the that we of

do that's putting their to you think I virtual see programs. point. I the an So, on brick-and-mortar retreating schools even somewhat data first And emphasis think from ability

you So emphasis still programs, think on but the some the of retreating I programs. some see, of have those them

I it. think little be you just good emphasis some outsourcing also to programs, to going they're bit they're they a those start of not think going not that seeing I -- on because realize more at

I So, the some other -- piece think, comments seeing other think we cannibalization. the are of the there, I

marketplace probably that I fall just I out continued in there tends because the And a is this We're And So, here. that. in while strength our think that of the think that what seeing in of to the is I some there new ongoing think of in the we're there's tell terms cannibalization, marketplace, virus. the I uncertainty favor. uncertainty in work seeing pipeline spikes does bottoming us, I think, think variants

that's uncertainty we've the in in that, away two sure years think going works happening that favor. So, we and And I'm our saying away. the I not that's just for now to really that go go marketplace haven't just seen been

I So, but a and this is which it's at that fair floor think point we'll a we underneath I see. think us, we've think a question got

like about need I I or talk line that's things, those because talk on about the the efficiencies sounds is just of happen couple meet mean, income me. Okay, just things about correct to want you expense helpful. talk to a that it gaining guess, have about revenue I that you guidance, And a is happen and to wrong, But operating do get of very to margin Thanks. the I that's maybe guidance in-year acceleration, couple your mean upside? to talked year. throughout

is do and yet that no. is would it But the a we think Yes, company, what don't to miss -- the with framing I actually just dunk. and I work XX-years slam have to here do, think this has to I've historical I guidance. we that I it's say, in been think have

we we And -- tend if to think that. so, to against I do, work still we out have feel. still we that guidance execute we to comfortable put in Even our ability feel

I I is our our in range or also operating adjusted feel on to goal, which of a the good. And plus income. is guidance think we be couple mentioned of comments, minus so, my within percent flat pretty

that's above and the So, mid-point.

day and cost to we're that. above midpoint to think, I achieve structure the So working every drive hard the sure we we're shooting for make that

maybe step a teacher great. enrollments. a then sort base of of you your in pretty Okay, question, a and kind had year. some pretty is in down have And but a ignorant step-up overall have big this last teacher costs you you of I mean help big pretty But big an me,

sort gaps areas mean of I you mean somewhere want that's help So But Gen some I was those of no know kind allocated of answer. I there of how sort the are mean, internally, with you teachers, of teachers me, I to sort you of, there? do guess, over-staffed I in kind are other assess fill you school kind else? monetize the they that mark-to-market in And Ed, maybe where of districts, kind have maybe

Yes.

We often zero I funding increases, not we is when with associated a of think of But of costs in bit nuance come pre-prescribed a aware investing certain us. a also, them, but, certainly at a funding mix. margin everybody those little little that get increases maybe is it's to places. oftentimes with bit are which

the say, there's that of so, we works that we're the that that funding here that some it. to spend of And sort way, is against have forces along but play does way

mix that of wanted I that sure think think We're actually, fully fully we were there staffed. certain in investing into things. so, most we go This make years. as just the there to year, bit do in is we under in I little well staffed staffed. are a a were as we year And we

number is I So a there. things of there think, at play

Thanks. great. Okay,

from question Singlehurst next Your Citi. Instructions] [Operator Tom comes with

is line open. Your

question. Good the Tom the Thanks taking Apologies, I at from missed here evening. It's for beginning. this Citi.

talked links be function back tracking did of out understand, I revenue not average sort demand. of just relatively was that Pearson, schools sort a it a terms Thank to that favorable. revenue that would sort per aggregate? whether I but to level there whether survey of effect in about that in the enrollment think the being weak, in question not sort was those wondering there of student just sorry indicating back relatively work they enough enrollment interested you in development questions didn't resilient. full-year, that, sort that XXX% was are that of and I the sort exactly And there whether recall, I'm is, fuel’s that enrollments guys that firstly, the that to of sort of work was covering in or that Those something case at sort General of industry the that, the a executing generally points coming I of sort for the fairly invest of were in of two mix context, explains enrollment quarter moment. just a indicated underlying per you the shine to pullback and anything be the the for So, revenue had was or you thereby, work business do of think Eds was you. ground. take was if that's interested survey the been trend, were because suppose about to very execution, wanted robust of I turn I your -- to just all

sure, Yes. the mixed our per due enrollment revenue business both strength similarly much environment, think some to but overall mean, we've is I funding think also the Pearson, also to that probably them, and I that's to mix. have like we I got for

So I think, there's there. sort of both components

yes, so, And probably fairly I it's think similar.

overall think when we question, guide be translate I of grow. in-year that the that had grow, enrolling of I think to around much into year, continue keep we a earnings of the demand, the calling that execution, But the people of see season. to overall your And sort think relative fatigue of bit programs. for market think, as calls, to that -- summer summer very strength people we of in-year prior to the the some that your saw And have continues year. first that part little do I this market -- I on earlier last some these season, was I tell was continues didn't to our in we some strong while

so, X%, us think softness, percent push and few down, saw to several talking can we our what And execution enrollments I think we're I right. is down bit a little X,XXX a of in

swing, not for it's a to have be X%. us So down have to we huge

I behaviors. we're their what is behaviors saw historically sort the it's in, of as a as actually back some July X the that the needs we and Labor So, we of for want some behaviors that are school happened are of they think go realize factors, to it Day. be to combination And And I families, think be haven't of I robust were of the lot believe of the shift I behavior families and I a things the that when of changed, district. customer. continues in-year to now, that that they are, that more a And back think I early default into think, these that into seeing improved, of think indications they go I we between not have I And haven't coming brick-and-mortar sort think definitely things sometimes execution meeting programs. but the should think market to were seeing

and of first above QX October some some above we we consumer and saw are I higher shift that's pre-pandemic, bit we much pre-pandemic a we levels. behavior did relative where year, they this season, and of post into look levels from options therefore, might small so a beyond well size think for I seeing several demand again relative new see weeks level of season. for And strength sort post-count And last of think, pre-pandemic than at to September strength so. in We're sample seeing season why even a the least into little

that's worried -- particular the the think the in Career On Perfect. okay. talking sort One galvanized, learning institutional of of you about, circumspect business within about the all be follow-up, organizations in Learning -- of Or cyclicality sort the about, enterprise this I'm I that LNG we becoming and business tools I sort and -- adult at and offering, suppose that really more of if do should of that procuring presume enterprise think sort robust? resources environment? I of, we remain

I'm you Well, ahead thought I Go I I'm good sorry. -- were think, Yes, the finished. sorry,

will challenges? despite think robust it macro you Do the remain

news, some Yes, acquisitions, is the bad enterprise the of material good didn't. did for adult didn't have materialize, that I pretty within news we would When of these amount of actually that were businesses, we our think bullish that us context a business. they we side

of so, the And by there material there. just working we think us risk is I just have trends didn't against amount of therefore, macro that mitigated the the business fact

what out, turns opportunity it still on is those enterprise As healthy side businesses. are the seeing some we for

lot don't appropriately. think companies a I what there's still I technology think know of that technology as in tends prioritized. space, the particularly And to needs out their try fill is, to be hiring figure staffing are, to how employers demand

one this stage. too to us, the so, still just material but at for it's enough impact is other there a And there not us think or opportunity lot much way I of

thank you. Okay,

Your from William Blair. Sheldon Stephen [Operator of Instructions] next with question the line comes

Your line open. is

actually I the the cost that, higher expense helpful. think you about And if like looking prior as can relative a drove quarters? the any team. talk year. wondering (ph) It would be of over Hi, on is for increase additional second marketing Stephen [Matt part, some SG&A Fielek] several was detail about ahead This is how should but next start, driving sounds in to Sheldon. SG&A To we what

really of it's two Yes, function I things. a think the higher SG&A,

know captured inflation did of a you think almost got. that's that's little think every had think board you've we've expense two I marketing in the tick big for the the bit that's across is, drivers. the I cost it, think gotten think now inflation, But don't really piece And story I I I big I item up right which but of us. one if any think other, I -- that you Donna, is

with had think the to SG&A, inflation. I the that on sort rest would and think being would add of our I sort on but I of think, timing some inflation of marketing, hiring the also think But of about on impact with the about I more only the and salary the the I line wages increase respect not numbers. year. in

are enrollment those trending And been driving how your trends? helpful. underlying rates of gears conversion you. the relative if to some then you expectation? what to forces That's switching could, And Thank application it. Got here, have

Yes.

of we for and programs I converts from and start we're that in And seeing of think I our improving traffic, us get we that rates. see think see -- traffic offering. application, appreciation leave is better enrollment. to the what we top families strong you'd what we're have an understanding what actually is rates see And actually conversion a center conversion the enrollment application to I'll the from funnel, for -- leave,

therefore, be So needs. a have still their what and now the we the programs why through level, appreciation sort because sustained at they're that pandemic, the may pandemic they not saw see of converting higher may and the for rates. that or they fit and we during family of improved that good And are understanding

we are and all so, enrollment higher funnel the pretty And seeing on rates pretty we're conversion sustained that seeing including through a application to level.

Great, you. thank

for There This call. conference are you further conclude questions. no today's does Thank joining.

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