Stride (LRN) 23 Jan 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the Stride, Inc. conference call. [Operator Instructions] Thank you.

I will now hand the call over to Mr. of and President Relations. Vice Casey, Corporate Investor Development Tim

conference. You your may begin

today's Rhyu, afternoon. Thank Blackman, Year for on Call you, Chief XXXX. are Welcome me Stride's and good Financial to Officer. Second and Executive Chief Officer; Quarter Earnings With call Donna James Fiscal

As today's website. Relations and conference webcast a accompanied by Investor a that the can Stride reminder, presentation be call are found on

these measures. be measures and financial advised provided results of may A that reconciliation website. non-GAAP certain can our be earnings of Please the Relations our financial is afternoon in release found today's include this Investor discussion issued on also

In addition important described in could may results differ involve to materially SEC the from company's factors forward-looking as latest statements call filings. several also statements. any The to actual information, historical company's forward-looking this due

on that regarding assumptions the These statements call. basis statements future time the performance to during are this any and we obligation company business events made views of no update at our and make made the and forward-looking assumes

prepared answer any may have. we'll our remarks, questions you Following

James? the James. over to now turn I'll call

Thanks, our Tim. our our in and November, Good returns. market-leading to Day, for offerings. our increasing will country volatility I our strategy and believe what be business deliver we laid to has demand opportunities increase the discuss afternoon. we discussed chaos continue Investor uncertainty, In for during in will

behind results quarter us. are second speak Our trends demonstrate for and macro themselves the

play out, to we beginning is strategy executing Our and are better.

uncertainty the few the given over year year regarding past trends in see the began the The with we some might years. volatility

back and remain going market our but the that not in of to highs. been fall we a whether surpass question pre-pandemic were we still could those levels, direction, We have they to then moved pandemic convinced has

were record, retention. enrollment strength education in enrollment While learning all-time we our with both our highs. level new saw and both in second general programs an surpassing and growth pandemic We XXX,XXX enrollments career the quarter ended and

the And good have we've believe largest ever seen. choice We enrollments the is new for system. to that continue school Americans education cohort of that

YUGO what to hearing clear support, meets recent been needs are and public years. will where ability meet XX% They showed needs by their that a The want they it's that best to able want regardless every poll to change in Our U.S. live. release of we've child to feature. fall Parents the child be of attend choice. for their They be their state the their school able unique school the to this the child. in giving results want choose

certificate that for for support to to community I in also XX institutions fall, the to enroll continue or looking by declined for this decline programs XX X.X%. And that age the enrollment to This college olds learning choosing career reason Students see the group reports that year explicitly X-year workforce. in a have our short-term into fresh move are increasingly was is this programs. direct connection space.

in we're or workforce this directly institution. a focus incremental fast-growing certificates and to choose congratulate high go in-demand to core they've our school supports still on the demand our to pathways working Duties decision skills to to programs to like career post-secondary programs, While attend the our on careers. got and driving knowing Data

help investment into the demand year, know test success. last from education that higher virtual study out be the drive showed Texas school There's of our product along state-certified also in continuing new year-end. some entrance to K-XX outlined with offering, loss support teachers support academic November, scores during a a students who Trudon the tutoring drivers launched for that tutoring of $XXX A We demonstrated our our recover market. can reading And and declines. part products. solution the statewide by received Virginia using In our efforts, I part tutoring student K-X of that million individual to nation's high-dosage of learning

have I right students drive an to about market together, ever for remain success conditions The Taken student as excited Stride been. for multiple Stride's the innovator change like to are continue markets. I as ability to across future

I call And pace front plus of minus. prior and got my team both the of margins the Trailing are of as highlights a Xx on CEO. third levels couple records, achieve A are I that us. place strategy was XXX This still reported new runway financial We've in marks to I'd we to year we XX-month income Gross out previously end like the my to in see point continue EPS CEO. as to as enrollment since appointment outlined. right appointed and are executing or points, up operating CEO. expand reported against basis and long the

to Thank over call you. will And I Donna? turn Donna. the now

to tendinitis. X Thanks, just was were James, into discussed think that put and important good about about enrollment It enrollment demand we're evening. James a to sustained I alternative options. quarters I educational for perspective. numbers, year-over-year to of it's know our it's talking fielding now whether and we questions speaks it the but follow already exceeding the This ago And independent. resiliency return growth our offerings

we able trends be in growth families the give to We are a long-term that point and proud believe to a business. our to choice,

achieved the in in history first $X.X over have revenue. our resulted we that that in of billion All quarter

for exceeds revenue at As we've it updated the $X our year the now that midpoint. full billion such guidance

up $X.XX of million, results. from million slightly of period year last per our $XXX.X second up $X.XX, $XX.X expenditures 'XX. the quarterly from an down $XX.X share XX% from of from capital or to of the and Turning quarter year. increase $XX.X Earnings last operating same year revenue of of million, fiscal XX% million, reported We year-over-year. Adjusted income

high middle decline million. somewhat was This by $XXX.X enrollment. offset of Learning, growth per performance enrollment X% in Career by and a to revenue driven X% grew school year-over-year, slight revenue

strength enrollment was million, program, XX% up trends in-year September continuing last year. over growth of last the and from we from the was saw This our continued quarter education In quarter year. by X% X,XXX, enrollment in from year. growth finishing During also the $XXX.X up the quarter, revenue last the grew with average general enrollment enrollments end growth driven enrollments $X,XXX of

Revenue for increased Gen enrollment per Ed X%.

We revenue business. X% continue some and And while impact we at to in education. revenue both for finish strength funding our saw see to between we lines with Learning of timing expect still enrollment, growth the of per year X% per for enrollment Career

Our declined to adult business million. revenue $X $XX.X million learning

weakness tech On previously. MedSurg our we discussed the to in well. business perform continued

business the set did only growth in our that So declines not in

basis the We're of year. Gross into put efforts margin up points the still the for effects efficiency place seeing continue last last quarter and was from implement. XXX to XX.X%, we year

be increases to points margin half. the timing the impact full Given by year, XXX of the second for year. we a gross don't in expect still year-over-year strong last basis We improve expect XXX to the gross to margins see

Selling, Adjusted was $XXX.X to increased quarter the XX% EBITDA million. to from with the general $XX stock-based and compensation $X.X in XX% administrative $XX year of for million, million. expenses We range for was now the compensation Stock-based operating expect year. Adjusted to $XX.X was the last $XXX.X income up finish million. quarter million. million

million. $X was quarter the for expense Interest

effective the share $X.XX. tax was diluted earnings rate for quarter quarter XX.X% per Our was for and the

million, sheet the million. defined was are operations $XX range Free rate were period. raising as $XX.X to $XXX.X cash enrollment, we our of slightly the revenue down operating Turning the $XX profit and to from cash CapEx, We $XXX between our effective we billion, $XXX last XX% prior Capital $X.XX year strength expenditures $XXX.X between less Based of of million flow, balance and million and and billion our up from an cash and guidance, the on revenue with full expenditures flow. million for from expect cash cash and $X.XX capital and and year. the million in $XX.X finished adjusted million, quarter XX%. tax quarter between year million, income now equivalents

For million. between $XXX between $XX the adjusted range the forecasting million operating expenditures we million, and in $XX quarter, capital $XXX income $XX third million to million; are and and $XX million of revenue

your for time. you Thank

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

Morgan [Operator first Our from the Parrish for question comes line from Stanley. Greg Instructions] of today

Impact good on again. expense be, guess, you to out the the margin, anything Congrats on to call management, is strong where there with side really start quarter. management I margin the expense on to expectations going your trajectory, least at outperform there's continue the year, to full able at the upside into the I you it. quarter? look then related, way if And the

quite -- any there timing related margin back strong why So be as won't second? the anything or half reason is

we gross margin, some do last about things So this year, are continuing on of talked that we year. the to the

much all talked had a that said out, our I better of do changes of talk The changes, and to the continue I an quarter, teach might things year. were do And recall, material the margins, using time making on as were they gross last things spent size with are you And our the scale, talking more we but still innovation we a timing structural hiring using digital, lot send impact hiring me you about about, last technology, margins that and that One that. we we holds that and using heard about of process. we job when the your true.

the and of of later the those rest put of year. terms comparison some place efforts year-over-year as we into the because place In one, be won't year, in favorable, the put into

also then school QX, comparison had some So typically funding you of in we sort that costs have see spend And restrictive we state in that. QX. level from perspective, like more testing and a won't to

that's see typically and QX where might gross QX as QX. so in as you is margin And high might you see not

it XXX Okay. at you ]. Great. guess, ended That's helpful. I like [ sounds

the trending So quarter. throughout everything positive was

days the quarterly think trends. so now, So this I I in but similar asking I January, know But far, we're we're answer. XX think seeing

-- students thing the still January this trending So think through but like here far? and it is so to third harder it quarter, second it's than sounds seems add quarter, upwards, I in

Yes.

today, not we're yes, good. but about talk January so going of the pretty January looks think to I specifics

there's enrollment open spots in -- the meaning a think it's down what said even window actually the has is lot I in QX, you shut just less harder quarter. -- right, of

we to kids ] think So add But closes like I quarter. a what the from sort during just [ see. of perspective, ability continue even funnel to we the

little it And growing And how bit there adult loss in expect quarter? long just when the a dependence, does there? how revenue. but call last Okay. did of know, this a know about I do you anything I small, in don't asked get something guess talked quarter, to back then to I I to kind headwinds. maybe client it's I or for it's shift is X% get X%, macro seems about of Or Fair of sort out But it's like, macro Last big past? learning. then this the enough.

continue. headwinds macro the -- think I mean I Yes.

you'll across think that see the I industry.

think don't we're across perspective. what's I So from industry happening an adult line and the viewing to

certainly I would think continue. year, that through of expect the the the I to rest headwinds

think we're a little of of we our have industry learning if with -- is think TeleX Next -- or I industry, broader difference year, we're -- excited the in see I our will, sort business, cities. you the to don't bit a the

have performed that. health But we boot macro in well, which, technology-based to and any that stuff, continues some grow is And well. everybody camp everybody which to it We going point, other we stuff, have the I side. offset, continues think, again, think our side, the seeing see declines the that, care I to headwinds, at perform as think will is

either be remains think seen. whether or material it So down But won't way, next I be year. year next to for don't that's up a not impact, or

from next question from Jeff of Capital the BMO Our comes Silber line Markets.

and actually between quarter a year there. sequential some broken general second you a a I separate know this little I the segment wanted with start segments. years. the out focus you But going cited different quarter. Gen surprise bit I'm growth of if I can improvements this not I color, know in have we've is looking we it nice Ed first for historically, enrollment back seen in as But many the think too was education. the get retention. more to on first to kind

Yes.

happens reverse speaking, get we enrollment execution. -- in because actually improvement. that that have Obviously, do strong think into of speaking, little is will, generally think, adjustments you I lot of you're to and QX of September to we December. because able trying think if us. had many sort come a And adjust, what year, of of then we'll generally to to bit those is did for we of they're see sequentially. we the of were of QX period, in And this you off of decline. That QX, every October September a I a the then I sort a a push and families it A find sequential end this tail November just and part right, lot sort of year

I years think it execution. a there's or macro trend definitely We be here not. to for whether remains seen improved see future

that contribute think a and second to We see I helped improve. to funnel metrics like continuing things conversion like So quarter. stronger that

really think our -- execution, is So I improving. that's and which

have I trend suggest to QX. is sort just improving we that to tailwind still that of But go see, that think ways a enough think, we can sequential I the QX there's continue macro a ongoing I not to it. would data

I me middle I can and focus it. school. on appreciate helpful. on let That's If high Okay. Learning move Career to

the of growth seen growth in but it's Again, lot historical did that we time on segment. that year-over-year don't Although a see did data, the year-over-year basis, think have slow. first I we've single-digit we growth a

looks slow. it about what did it going like we talk there? Can on So was

-- mean X-plus the digit, Yes. I we're range. I think percent single in

So starting like, to yes, single-digit scale. I business got, we've mean, I that's think, -- a

a programs. we're double-digit because for I of a still will adding comp the not growth. in lot out we'll business average into And -- new it's probably that think year, have some be We probably a still same-store respects, now a

margin for a and talking career that kids. a there's of hundred and think few that's growth, low we the pretty But hundred the here, We're And think is between on little continue be happy. going difference double-digit -- to so X-plus at a I bit. us, several sort kids we're percent mix that's bit little XX% I if of

So we're bit. margins talking here, a I on the little think,

Yes. I was actually referring to revenue.

student, was per So pressure I there. revenue little know have there a you

no So valid answer okay, your as worries. well. that's But to -- that is

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

have that with I'm districts. does asked what look sure results again. something career like solution start the opportunity your I really lot school into here too. local been once I've you And a nice wanted getting about to guys investors. from more take to But learning

Do a to I think Electus learning their then where pursue locally in you've and opportunity the before and team? career next few person what to highlighted programs. that some you your your years? online that take in classes programs think take is students larger like mean their And core could this

Yes.

short the answer larger So the opportunity, I think yes. is

way change. going of be part think I to is across districts the the issue embrace country the just will with that

I think, to strategy, opportunity those does our Career present get into Our with an districts Learning program.

less literally multipronged We light students, for a bit will offer a give meaning take bit and way, We'll bit -- compelling a be teacher little career be same will more of be of think is will, sort sort that through level. bit of what will But you the platform It solution a virtual our districts. a do will one little land, little them et offer offer I little them it a at cetera. be can it will do also we more solution, of that still platform our districts high if in Tala will self-serve. best-in-class some will strategy school for learning think allow light. a the a program we platform for to It instructor we which

pretty the coming given is XX from to bit original going us much of the for think, I following your to that of season be beta fall to to phase for platform. the we're it would in upgrade good behind in But we're little traction does offer our question, longer-term It to -- in selling just I district I fall opportunity. I a robustly don't probably don't because more perspective. us offer see So quickly. answer is think you'll it next that I platform selling see just get a mean, to short yes. But a the able sort this expect cycle, just us a going think months. the

it. students revenue mix Anything bit this pretty in to the revenue expectations Learning, also if talked you enrollment that Career so student there comp And was then, to and sense. quickly the out know about due to I but Got reaffirmed that Then state? for per lot per of system of contracting of by of apologies terms Are enrollment, I a to this, think Donna, call year? lower you be the a mainly would else difficult. the as X% last quarter. there missed just that on Makes kind was or I there X% far expected coming in trends have you year-over-year?

enrollment career we career was the part enrollment you our combined X%. decline the answer partly Ed the to for for in for up We know, Yes, yes, up second X%. expect one as quarter, and X% be on a due revenue mix, Gen I'll and our so this revenue And per overall, to Ed see to over first. the Gen Korea

last that Korea per recall saw this year, time. upside was about the the talked in quarter, may for we student You that enrollment revenue we in

that, makes So this offset is just that a tougher the of comparison. for

makes when do that Yes, I an done Learning Career opportunity. historically, more Maybe just this you you've you'd think could And funnel And isn't a a just it. last it as one. started know that bigger about when Has something Got talked the yet? but start you've separate become programs. sense. initiative? marketing for building not, if then

say, it and in respects, some with already. I'll fits we've had starts Yes.

think think And some and in we've have investments we poorly. coming will this I can part think not say in fall that make definitely this of executed significant be I think an we opportunity. our We is well, very unfortunately, successful. around But season will that incremental executed been it's for around opportunity. career make some for issue it's do I investments I'd we that definitely area actually if we direction believe we where, has a remains fall. this enrollments execution, seen to be definitely -- it's an

comes next line Barrington Research. Our the Paris question Instructions] from from [Operator of Alex

add congratulations couple for a of the and my had quarter. Also on just the questions. beat I raise

release but the Can granular a don't MedCerts State all, of of then are just rates the on First know big without you magnitude week little on what with expand of about you detail wanted like looked talk press it, that new did growth sort a that It perhaps. about out University. I I give ask And contract Virginia to put business. we experiencing MedCerts. bit? -- last you overall, regarding you orders

Yes. think I I okay. mean --

MedCerts So predominantly today, when a the it And bought we years asset was BXC is, it predominantly business. a business. whatever by the ago, still BXC way,

to it basis. just bigger to we think, that it's of I I continues the It's, be of is in what attractive, it. a part opportunity. opportunity ways, to think on BXB is, the manage think I I they're better, think see think, have legs BXC is have I is Actually, lot some that, clients respect BXB very of easier grow. continues, it more business a to going side a But to market to in

that And the business. side think of term the so BXB side the -- be larger we is BXC than going to long

bullish just think it's opportunities company business side we think some overall going that imply in I the BXB soon, growth we double on So about double-digit major not I several that are next our long-term to years I that could rate, over growth by business. means the business, contributor a that space. rate, at the of be would think anytime that to the growing Even the very rate but

or effort? the contract, the is biggest first Virginia State And BXB this in the

or the the biggest Not first.

first. university biggest of university, think a University the the some the but the or I was New it's England nor not think I -- it of

good don't with making yet, of the think a I have progress think I but a we we're lot of conversations. dozens lot

lot So early a I a lot think of of tractions. good traction, good

That's question to and hear. Great. good related the tutoring. And then about other is

your about bit, a it talked comments You in little James. prepared

report your go It of about. one among of to this products, It well. excited these new past, to learning terms as you're -- is has AI most the Anything in in market? losses. are there the said addresses that and components wins ones You've

is Yes. a one I we've mean of wins. think nice had I couple

about Maybe District a -- go my press -- going video didn't know or They or the And can know that by Pulaski, even announcement it. we're can't public with we on how in a there's but prospects something bodes deal we that business. completely for -- made -- think And particularly us, even didn't -- You out district that to sort somebody really Virginia. organization you loss. of -- for called they unprompted There's a helped platform there's I I kind were there's when press on long-term those of there testimonials YouTube did, don't like know learning didn't their release. a our I they do I release, a think well this. big

you. Got

And in with so market to be clear, this product right you're just the now?

the with also in pretty a in product, product. yes, elements good We're today. Yes, this we embed next into update year, are AI to is more But market -- we're have to for going going it. which we're think to market we the

you, gentlemen. and Thank ladies

have we questions further at and may will now We conclude you time, participating, this conference for thank disconnect. today's you we As no call.