Zovio (ZVOI) 10 May 222022 Q1 Earnings call transcript

Good afternoon and welcome to Zovio's First Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Vickie Schray, Executive Vice President, Chief External Affairs Officer. Please go ahead.

Thank you and good afternoon. earnings the issued company's XXXX is today Quarter on posted website First release earlier was and Zovio's at www.zovio.com.

results the the fiscal Kevin President, information speak we or number make on we of year forward-looking and Executive you that would statements new forward-looking me cause call may undertake the these Randy by remind are Joining extent forward-looking uncertainties by events, forward-looking statements of Hendricks, statements applicable like Officer, to and to and or leverage Financial be from These securities obligation Royal, could to student Chief retention, growth, required the only Vice and note of today some Executive Officer. programs We today differ statements Chief to expressed those company, considered no our ability are other and successfully revenue to subject law. university suggested and statements. materially ability in our and and enrollment, grow partners regarding EBITDA, acquisition, statements related acquired commentary including that risks future of these guidance, integrate through or regarding later. services, financial to and to Please except update as that this the a performance XXXX presentation light future in actual day forward-looking,

considered supplement Form report which the also SEC information December Please non-GAAP with additional quarterly results. Form as XXXX, are measures. as today. our report XX-Q SEC a as the should year ended note financial our measures GAAP to will certain we our these the annual Please for In March filed release, on discuss ended of to we be XX, earlier substitute these regarding and filings, our financial XX-K disclosures find that well today, for including for measures, you GAAP. financial measures not earnings quarter call will XX, the including XXXX, intended refer GAAP on with On U.S. non-GAAP these our reconciliations

detailed our SEC, risk more by At Relations Randy our pleasure may of of affect a the is the Investor visiting Hendricks. from section it obtain introduce time, the my that website. factors our may or CEO, to this description you For results copies

Vickie, $XX.X Thank for XXXX share. loss Call. of million diluted loss our you, first revenue everyone results had welcome or million, Starting of of a Earnings incurred and quarter, per to quarter and our we the $X.X with net $X.XX a

of $X.X versus share. an closely fourth our million loss, loss $X.X the a quarter XXXX. or non-GAAP for loss per a quarter first certain of million million, XXXX $X.X of Excluding XXXX net $X.XX We for diluted usage our cash was loss of which items, quarter the recorded approximates the more first of for EBITDA adjusted

starting the restructuring company our and are We undertaken to we've recently the our once to until we'll to activities the benefits better structure align carefully with revenues, from our see profitable. expenses manage again is continue cost

and are ago, several our improve underperforming address to grow changes. actions and to the our with UAGC and on we organizational As enrollment operational a experience. included discussed stabilize which taken weeks new of we call also business, student We've few areas working the

discussed encouraged from on preliminary are changes results the We the I XXth. by April

creating student national support TAA and on enrollment two For XXXX, their recognize scheduled is Global associations, Arizona and Xst providing The TAA period in have of new a for issued the our awards. received academic trial on The for for UAGC we supporting the mention March May example, notice academic of commitment textbooks and quality the textbook XXst. a textbooks of was School and to noteworthy filed to to Campus January that University transaction products. Technology at awards dedicated since textbook authors. hearing vacate and, to of December organization author our for These to to currently programs. University the With with for a of undergraduate first or in Forbes strategic the through utilizes grew completed learning time judgment It's the the ending The business move XXth. regard Business educational intention we the have judgment. is March motion Xrd, move both to XXXX,

with and execute long-term our agreements year-over-year. TutorMe growing growth $X.X partnership for million first continue well XXXX, continued universities. be with of to to Academy well-positioned TutorMe to Fullstack value creation. Fullstack businesses, districts quarter for and the in quarter and the and new continued XX% TutorMe the other perform revenues quarter Turning first of school to during

best partnership quarter, is Adding usage tutoring total students the over Edtech Award one robust Our approximately tutored year-over-year continued quarter. for count Digests accolades, has XXX. portfolio first increase of to In student the total already to XXXX solution. now with XX,XXX TutorMe TutorMe an in

the recognized in learning Our finalist personalized category. also was award the team as solution

Fullstack. to Turning

the list Fullstack's as our boot partners, programs. last management as increasing number by the growth continue of our our powered growing of adding to we includes partners. Over strategy to expand product well current by university quarter, programs university university offered camps adding

first delivered India, the QX, partnership In with conjunction sequentially. number by of university and During QX, programs. in data in the partners security by grew programs cyber we cohort total analytics upgrade students started our of XX%

our In meaningful openings Development help addition, web our with actively we development to sharing participating partners New for students. in companies launched after Corporation. graduation secure events York Workforce students Fullstack with by second recruitment our jobs job City the with cohort and

expanding to approximately that of partners new We and addition number XX the with with in are are work pleased QX. we of companies committed the

have Fullstack, for new and partnerships TutorMe our growth for remains to and expectations outlook Zovio high continue for We strong.

call Before our I comprehensive business. Kevin, turn to address of I the to want review the over

look and shown opportunities on all the are three sharing operate. alternatives of you that turnaround mentioned the with being to divestitures for with in businesses for our I I'm growth call, and details which will we we're last includes most the with Simultaneously, create value capitalizing forward enrollment strategic and we future. and pleased are TutorMe As potential Fullstack. are on we assessing the making, at interest executing shareholders, for our plan progress UAGC the

Now, review operating Royal to our financial I turn Kevin over will to and the results. call

Thank you, Randy.

at lower the the results is offset year. of to for decrease Looking the quarter compared by of prior XXXX the the period quarter, $XX.X an enrollment, million revenue for increase $XX.X in related partially segment revenues. Zovio The the primarily the average growth was million in first to same

cost million compared efforts, XXXX, are year services the debt, academic basis of XX.X% and on quarter $XX.X XX% to of million revenue for reduction prior or assets. Expenses of in overall lower lower first and $XX.X the bad this due were intangible or period. comparable technology absolute lower amortization of For revenue, an to category

due of Marketing lower due period. between the decreases prior quarter on The expenses overall services periods advertising and However, decreases primarily $XX.X General $XX.X decrease for revenue; first expenses between on costs. in year revenue XX.X% were expenses cost. $XX.X or year and XXXX prior and administrative the XX.X% of decrease first revenue first period. The the XX.X% year for support due million, were year-over-year. The basis overall and fees. compared for the or million, the or XXXX, for XXXX or and to prior comparable were million between $XX.X of for period. periods were facilities are decreases million the to an were Counseling revenue decrease costs, XX.X% of quarter absolute in compared or professional higher to employee comparable due million, of for $XX.X to of were an employee quarter to or XX.X% a revenues million, revenues percentage primarily $X.X severance of revenue; to periods cost in XX.X% comparable on basis compared basis of communication to as of revenue, overall an employee costs, and absolute of primarily absolute

Our of million, first This $X.XX a share of per million, the $X.X of compared diluted $X.X loss for $X.XX loss the prior diluted was for is a first of net quarter year. or share. loss a the per net quarter of to net loss net or XXXX

for per $X.X net loss costs or legal the costs. the quarter quarter the for $X.XX a costs of non-GAAP million per of first first of non-GAAP quarter or non-GAAP was $X.XX The certain loss million loss million loss severance and diluted share compensation net of non-GAAP XXXX, excludes other including loss acquisition year. of to of $X.X stock $X.X Our a compared prior and of of diluted $X.X first net the share XXXX of $X.X the million, million, non-GAAP for

as XXXX. of compared unrestricted equivalents of cash to XX, XX, of million December had XXXX, and As we cash $XX.X as million March $XX.X

the quarter of Subsequent There the capital. operating term and XX, a March at December the by I the year-over-year addition, year-to-date period primarily had period activities same to XX, the will capital for end, we into lines $X.X was driven in changes for phone provided activities $X.X cash during the year-to-date million XXXX. activities we accounts operating $XX.X The as this towards the million compared provided period million compared loan, a Capital restricted cash was provided the your $X.X the At during lower loss. same March open March year. the operating we had comparison, XX, three-year the change XXXX. XX, last ended [Indiscernible] $X.X million by at were XXXX to period of for by cash By entered to as In $XX,XXX prior XXXX, time, Operator ended in million in working $X.X by of cash ask expenditures questions. net million year. to

the Paris first Instructions] Thank question your Alex you. And from line of Barrington Research. from comes [Operator

go is ahead. line Your Please open.

question. my operational that with Hi, you're you bit a those I more on stats, Couple for working and fact organizational guys. color can actions, to grow give Randy, several questions. Thanks and the if little talked stabilize And you've of taken us about UAGC wonder changes. taking changes. you

calendar Sure. some the really rough we Hi, greater outcome XXXX, few the of first Universities minutes enrollment the the for four commented we're March this Alex. a thank quarters follows joining. what quarter a of and for XXst that of were and about. ending And for the see year talked that that that, first to But that's the all, we're was is was ones on I the which year, of which than starting that for sustaining enrollment ago, beginning actions, pleased you

encouraging direct QX relationship to following. that a results, So there those to the that's is in very see

one. increasing from intent to and reduced we would first size high think January, made in that and team so layers, agile, serves set the we we of organizational adjustments UAGC able early responsive The span the being with of was more a we service that made client. the to that be of our early, and management the very control, reducing nimble That of be I

In made experience have terms their the improved changes, and in experience experience some were coaches. life the Those the enrollment improving operational student and with or students made throughout advisors roles. experience, We of roles out merged hand-offs of they combined defined fewer of the a with change and we enrollment that courses, the two separately We university, we that example. dropping here's reduces in an cycle created us -- and terms dropping as entirely. that's where

that versed the in for of are largest in with of single to a Lastly to I've lead, group areas confidence that leaders that increased, our selection the less objectives of think that well these and the and things they've work they're UAGC, purpose believe, the Alex, -- getting just I leaders and and very few, have client, they that together. about a chosen UAGC UAGC, the mission they are Alex. way We're university. working there's the has really relationship aligned in Those a more are friction I a in as done work

easier, coming to I'm related, break referred little up continuing that's could down from? very UAGC for since when a wondering a the Where foresee overall time in first the from the getting you the is this, negative new were then students? maybe a you environment? it December no -- XXXX, throughout enrollment And bit fit Is year-over-year the although student starts? grow it which both? student be transaction to and in Is and ending March if do easy helpful, about Well, of just And it's demand then bit. turnaround Comps of new XXXX? little and XXst. starts. it talk Is was got starts that to turn December XXst growth, you to

this Alex, Kevin. Sure, is

So the really where the we the saw student in border into improvements strength was retention. in

in the then we the and for we believe But than in a And second higher who first previously second your significant dropped. pretty quarter. had exceed So enrollment the new will of drops new enrollment year's so new retention prior quarter. was with respect question, year our that slower lower did ago, our students a to reentries improvement see enrollment actually students,

see in we demand begin start we'll and the changes, are that to and see respect new Randy quarter. improvement demand. improvements we second the overall that demand, So ability And to and with seeing to to on has changes capitalize in good seeing made with starting enrollment personnel operational our then are

other? you talking That's I'm TutorMe said over I'm at universities school you now universities. awesome how do and assume, your have partnerships color partnerships Fullstack and and now not In other, good Great. XXX I for of with sure. have employers. about Fullstack. many you about news districts TutorMe, or agreements talking with overview partnership universities and

XX. answer that's important Alex, a are go-to-market your The is of universities. our our universities business. question, part And very with partnerships XX academy within to those of Fullstack

mention guidance, I'm Okay. for this Great. And then beyond? the you we're giving but guidance assuming point or not it, didn't full-year at

Alex. provide guidance in that we [Indiscernible] prudent we time most this juncture. correct, point the to just this and changes That's at think withholding continue implement to not it's At as

answering Okay. offline. much questions Thank Fair for will enough. my you for save I so questions, my and other

you, Thank Alex

next from from the Research. of Thank much. Thierry your you Wuilloud comes question Water And so line Tower

Please line Your go open. is ahead.

afternoon, Thank Kevin. Randy. you. afternoon Good Good

Hi Thierry.

I over few points. quite go like to a

I in was challenge very or some terms if from they made it from has their changes changes wondering made cutting, of University your changes. to in Arizona mostly cost UAGC You've some significant enrollment, end, too have really organizational, the end? or of reaction in coming been

revenues, cost-related in UAGC, on Well, have the on I with revenues, that than has really a team leadership Pasterick in keeping leadership do and along I comment confidence of of his Tuition handle don't line, in. to net good University items Paul terms want we cost, believe which other

new our of be the a first until that, in taken to as cost ago, and pleased XXXX. sequential started company going we're the was In to clear, December align cost of the quarter of carefully our to I'm once both mentioned getting few manage terms reduction with minutes improvement And expenses revenues. and our is I structure our terms I needed now this of between Kevin profitable. that XXXX commented again a with year it first XQ week [Indiscernible] swiftly initiatives, action better

was The overall agreed U UAGC there's the A Do from that think get-go. for of increasing context front? and increased And payment contract expecting And enrollment on that with U the has think to A. adjustments you of some guaranteed kind of to hasn't this to unfortunately, room happened. in UAGC I any really, of or

nothing directly it's Pasterick But address there I -- have Paul it's not President with or Robbins. that either

guarantees. thinking organizations. the included of the profit for Unfortunately, the of leadership rough aware year that the fully of Zovio year, strategic last of a and calendar Arizona was behind start at bit I'm that So both the a business time, case was University first

which terms first that I of root on and partnership the we -- the at that cause best improvement shared in I'm since enrollment ultimately opportunity I that together, I transition have quarter decline, transition it As commented this leadership lead in with identifying address year for the of do is contributing four tough case year. whether on was this and a executing What with look and enrollment pleased Kevin is of XXth, been the factors, it a day initiatives, as it's we growth The in year company, in year. example, and April the we to all the having the those UAGC's do quarters. results initiatives I've team, focused a every

leadership facing So we it's But the Campus UAGC, required was largest a in combined new Global and the Arizona Zovio a for are very should as what it's at encouraging. with look it, Thierry, very work and University a our you we teams And this challenges working good are of I partnership becoming you're when a transition after I can relationship, the year. facing for think client University. assure and they XXXX transition year that's is way challenging both

see and that, clearly seem be new improving, to trends It's both of new as indicated, to enrollments retention. in terms encouraging you the in enrollments

the it's we and months, there you I six for been time horizon -- that's there? expect should have question, So we And smooth have months, Or three strategic think just open? one been kinks review? be Or must last some have [Indiscernible] out, nine do is and any stop months, it completely working worked relationships developed. maybe

out the [Indiscernible]. think laid time frame for I you've time good is -- a

next market the to more that where what that six months, the which review shareholders very that cap as does the comprehensive business, we just decisions the have we divestitures or a committed it shareholder them our I to or in our of is includes where make today value clear very We've got a terms three, be our will one to very over And that sense. and in makes as invested part our shareholders increase it'll wanted I'm as many to of Zovio them completed. and of divestitures of the share Over company. we've most become the we make, -- years, low. clear value, include And improving commitment

very for that's it Thank much. question. Great. you my Well,

Thank Thierry. you,

our call over closing This I Randy Thank will you. the any remarks. question-and-answer for turn session. to concludes Hendricks now

And now you I for today's on like interest and very Thank it's you, call work. your much. participation back your callers, I to would everybody, just to in the for Zovio Thank Operator. say for you to thank today.

you call. gentlemen, and this conference today's for Thank participation. concludes your Ladies

disconnect. now may You