LRN - Earnings call transcript Q4 2018

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Operator

Greetings and welcome to the K12 Fourth Quarter Fiscal 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Kraft.

Mike Kraft

Thank you and good afternoon. Welcome to K12’s fourth quarter and year end earnings call for fiscal year 2018.

would information remind this certain maybe forward-looking I addition that, conference begin, considered historical to comments statements. we like you to in call Before made during of to XXXX. of Safe pursuant Reform made are Securities Litigation statements Harbor These provisions the Private Act the and considered release company’s should our be statements in with conjunction in They periodic cautionary filings with contained earnings the SEC. the

differ implied risks cause actual results statements. to may by and or performance expressed that materially uncertainties involve those statements Forward-looking from such or

contains information KXX any of to that call undertake best conference only as day or management’s forward-looking obligation this the analysis, this addition, In revise time-sensitive publicly update any does reflects statements. of call. live not

refer These in KXX’s For limitation, Investor and affect XX-K. Relations section that further made and materially www.kXX.com. reports cautionary concerning our can filed statements at report annual the could uncertainties These risks found with the our filings include to be reports website results, without SEC. operational Form on information please XXXX financial performance of and on

of to In me results and XX Officer. With comparable in being of the and is Chairman call considered also in will days. non-GAAP information in Chief Principles Generally Accounting posted GAAP, Chief James on today’s will replay Accepted or our earnings A Executive U.S., our information Rhyu, Financial is Nate open webcast. closely and Davis, was The is for and the available certain website. the public call financial This to information. reconciliation Board; to Officer financial call be release is for on information financial that discuss disclosing non-GAAP the accordance is most with addition included this GAAP we

Nate? like will you answer over prepared to Nate. any to our I’d questions Following turn the now call have. remarks, may we

Nate Davis

and focusing our the year. year-over-year. everyone. managed Programs blended was for financial schools and growth underlying to of XXXX am charges options. $XXX.X million, provide both for year expenditures between our for the was of for Business. detail balance ended shortfall the Mike. ‘XX X.X% Public joining of excluding the today. year-over-year. year operating that you, million, afternoon, the Good School focus report more results demonstrates Revenue excellent was more $XX.X year to increase on and with in that income for the which offset on Institutional pleased a up revenue solid making an the profitability. quarter recorded This year, Managed X% public our on call strength on Thank us will core both We than growing KXX outcomes the and demand the Thanks drive This James ‘XX academic for Adjusted result online recorded and fiscal in on I fiscal

the of Our on architecture capital the expenditures systems family experience. adaptability learning the the for the centered were year, and the student, Improvement investment the $XX.X improve to went our of majority and toward upgrading million teacher experience. acceptability and the mobility, enhancing the curriculum

have to more upgraded of languages. design XXX we our courses moderate, popular translation a XX into instance, For than mobile-first most with

the what from new a night machine math every assessment based This student our updated on Recommendations screen, powered activities instructional support are We also data help-me added before. and adaptive day provides by feature feature and learning ELA learning courses. every algorithm, on recommender. call gathered into our the we

the held intelligence the year investing row down number second to in list curriculum. we like where from artificial that Even with bubble. point to have a these are adaptive of While in we takeaway actively a within our million, algorithm, around want I could out our I outlays is capital investments, $XX in this platform machine areas multiple key the and examples learning that other

maintained long date, the that of and would have we delivered the up once systems on expenditure that commitment. to brought we curriculum taper capital and many We

we our capital We over beat an the in produced investment we the over in cash, the Performance than stock of improvement repurchasing of million $XXX the XX% last and With precisely million outlays, and company’s making provided. for million the increase or with and X.X for million. the current fall. with full are consistently shares profitability ended in aligned level met more million These year strategic in the cash free year-over-year. of we $XX.X common guidance quarters $X results even over you in while guidance flow. year That’s gave $XX

the commentary some to turn for me on operations business let year. Now,

in a First, year-over-year. increase business. nearly year $XXX of revenues posted we Business an had of X.X% schools good our public managed million,

about schools improved Ohio most from importantly, XXX points. This basis of we multiyear time. now year the than retention fall in more midyear up by enrollment from focus XXXX, to had our are more have the ECOT we the season past we highest benefit benefiting the then some for X in that students choosing On XXX,XXX This a that for thousands year talked and had student is year-over-year a enrollment with enrollments exited the a we We on we but Importantly, closure, quarter equates were programs. remain students partner X.X% level fourth in support. had enrollment in a basis, in to enrolled retention strong we’ve years.

Each the is a X schools serve. number And fiscal presence power serving highest new In work we the are schools to this Texas in I a KXX we student topics. switching In as in next well. partner added contract expand while years. retention grew level Oregon partner have Pennsylvania. and seen schools in our some we year, close, we we in existing for of fact, year, new seen school am we definitely the have also Indiana,

in also year new look also part allow Growth expand promising other time this will in full learning legislation look which Missouri, like online passed statewide. We time to options and states. states to prospects

you develop. a you so will this is However, keep as things often process know, we informed multiyear effort

move I bears thing repeating. on, before one Now

see that in managed me year optimism, is gives through KXX of process been all than growth steadily to users cornerstone enrolling it’s the demand stronger What I managed school last indication introduced. be the years. our the program programs, continue families X and which business. me believe potential we the has it fiscal new and We KXX schools the indicators reviews. gaining likely guides in for upcoming in our receiving tell remains solid to of to just and app and is X The app strong public identifying

if supported survey increase a XX% technical was survey Second, for career enthusiasm demand school market XX%. in A of for CTE. options it that The our perspective around full-time online parents for parents education their would available, shows of students. found an CTE recent data independent with student choose

their Additionally, strategy offered if parents perspective with it or in or XX% To receptive conjunction school. study it XX% a that program. blended brick-and-mortar course be in potential, be That fourfold. would this their market CTE leverage to student, found online online would of means part-time were choose charter of an will for normal full-time our CTE families that

expanded did school the X opening expand in our year. will year around year schools Ohio. our adding continue we destination past as schools in new this to by programs to nation, we ‘XX/XX we This X footprint First,

total Arkansas, the Indiana, Oregon, in to That For have added the programs. we Pennsylvania school another brings and XX upcoming year, X Michigan, Arizona. programs

our curriculum. continue we to Second, will enhance

year, three CTE brings this to project-based built-in our than learning across For developed collaboration instance, CTE pathways. student total we XXX components. with courses career new courses curriculum This more XX

destinations build a academies separate we career Third, brand. will

platform of of students, to And to the in readiness is to I investment, extremely educators assists to a half with Premier’s KXX talent on in students. represented commenced scholarships. by designing states. career are and to in am across opportunities colleges an a effort, and is marketing CTE this Premier just investment effort. provide students schools campaigns. pipeline supports employers partner continuous high their career STEM stable jobs, different more immediately the over separate number already a developing team Over we help STEM be them XXX,XXX STEM this STEM education, advertising partnerships for announce that proud ongoing schools. schools, associations students to intend platform Our corporations, XX academy talent strategic that higher marketing users, solution will grow X-year develop XX,XXX to to in from destination academy rolling able including Today, a a top named in And we company With with Premier’s recruiting other complete students destinations connect trade corporations, to and students pathway, significantly. an to leverage finally, the will career we trade become more STEM closed assists we program and digital platform than time, career to out Premier Premier

a This includes doing tools, they extracurricular virtual do. build displaying the portfolio career academic and performance, certifications and these leveraging skills, badges, by professional interests, like. Now, students everything to they activities, can aspire are

to free students adults. and also available is to participate it’s to Importantly,

years. growth we team including current will us marketing, in us deliver it allows the meaningful From over Our market business. STEM business, new institutional platform destinations I the just believe and the making outlined the next as adding to ownership that of to it members continue Premier programs. position our strategy together, marketing few am expectations excited steps development, on education strategic to sales. new to tie forward work integrate a third, new in our And are partnership call. into provides business last our to with turning we CTE new about to the potential career I enrollment And to incremental beyond around management schools, move CTE a I

strategy education we digital and clients XXX,XXX supports Teacher the schools but environment. research more Teacher’s Convergence shift a school representing It’s and called teachers list technology the traditional a includes who content system need districts more day. level to Framework. the a being FuelEd than The that platform of investment enables stream to digital in success based they FuelEd steady Modern teachers growing potential methodology online with to of try to national pioneered Modern And also like districts, of support with learning Teacher I online than from framework a milestones. Moderate announced is network the are students just this The leverage now small, is strategic taught company the enable aligns in outlined our directly classroom learning Career to school each help district an investment than modern, Digital Education adviser and and FuelEd to students trusted who and toward million XX has It quarter. be Modern X shift use a housed because and provides framework as last adviser and developed the Teacher. integrates Teacher to Importantly, this strategic professional Modern customers, trusted Technical metrics vendor Modern from over KXX program, Teacher an company learning X,XXX adopt framework and clients the a company a the quarter school and also likely schools better the and students. solutions. who platform districts to

is year you as Modern with transformation aligned Fiscal the continue future growing first institutional complete, likely healthier Teacher is direction a transition mind a clearly happen support a Teacher believe I when for both be likely the not the I of the – although these said, help transformation the in investments second we in Modern revenue state, a It’s new Premier, year you However, will transition outlined ‘XX long-term, year business That row, stronger, as important The shift In in decline to our that and have multiyear STEM step. quarter. just business a a company. will won’t an the overnight. in and for last and want our to ‘XX. for much institutional vision a shift. will although keep growth the I strategy and institutional each FY investment

of our We about and schools, shareholder core the and grow are is improve large while managed making serious value business. drive our largest continuing smart to that which would small investments part both

pay with believe we with FY ‘XX additional what Beijing year personally centers signed ‘XX. organization, China. partners, in agreements At but am this work pay efforts their XXX our the and Education. are CX tutoring and One private the a example content looking based country in with business, leverage KXX’s and recent partnership Now In of across organization, in more FY counseling I is the partner CX admission potential both support number be with to the develop a and within test is more our business summary, CX secure advanced same Education. solution to a that fourth, continue in involved coupled support domestically courses, our School A to process our partnerships provides private country. in and discussions in placement internationally our time, are school, positioned business. in we use The operating students prep we is we I excellent discussions The offering nation. Royal at on ways year. announcement these international is similar often to opportunities growth. private pay sales FY will actively to likely initial business affect to earlier we by ‘XX an preparation the provided for core with are college test had definitely than capabilities with those

year. met in financial solid the XXXX. fall exceeded posted each or First in quarter We set we and and for the we foremost, guidance the results

and school fiscal education continue in in managed to that did is the believe with full ‘XX. These than to time continues even online deliver lead we to poised business stronger Our environment growth in public retention, fiscal be is results, blended this KXX time, improvements the me deliver strong. for to at student combined growing ‘XX we

also to the expand school managed continue KXX public We footprint.

Moreover, with two new of in work be will we independent we will years. the enter opening expand the further coming in in and We next we boards Texas and with Oregon support number near-term. schools programs managed and Missouri the legislators ongoing our states will anticipate in year

platform to the continues student developed in KXX using intelligence cutting-edge our strategic Premier CTE are business tools will enhanced. branding for Curriculum being accelerate were curriculum and STEM be adaptive differentiator artificial a We efforts will forward. made new we developed, are vision. The programs technology which and we curricula capabilities, importantly, moving significantly outcome. believe out, be rolled is strategic Our underway, investment that

addition institutional help back constant been to Modern year transformation of cash, after has partnerships. plus investment in ended business we investing from strategic buying The Our Teacher $XXX than transitioned a in more will total shares that the filler and with solutions provider. accelerate million KXX

pursue a position while ended where sheet our this in balance of Taking I allows in fiscal you also opportunities. are M&A organic having invest strong to business, can a growth the to We year. KXX in am see that why us about total, excited

to today. position reach in inspire financial learning. students for fulfill to and and their to believe full academic KXX I Solid performance, potential, personalized teaching is very a Thank great mission our help much you your time

Now the call James Rhyu. hand I James? will off to

James Rhyu

everybody. afternoon, good and Nate Thanks,

First, for quarter an the million, I recap results would Revenue like the XX.X% to prior the of increase from the year. quarter was year. and $XXX.X our for

an and the increase $XX.X XXX% the $X.X quarter, of million, for year, increase was For of quarter or revenue year, $XX.X XX% million for $X.X of $XX.X income or of Operating $X year, million or and million $XXX.X XX%. for for million the was XX%. million, an million increase was increase Adjusted operating an increase $XX.X income an the million or X.X%. $XX.X of an million the

reminder, adjusted stock-based income a operating compensation. As excludes

mentioned, capital expenditures million a decline of year. Nate from fiscal $X.X million, the As $XX.X prior were

aware, may with our for As to of transition. you were in already the our $X.X year operating third that include be results associated million quarter booked charges costs related CEO the

been $XX.X year have been million. have adjusted would operating Excluding income would that $XX.X the million and charge, for operating

million the been For fiscal pro and at operating $XX.X million stock year income million have adjusted comparison additional have the purposes, would for the million. charges $X.X $XX.X our results, if compensation, performance forma and income XXXX $XX.X ‘XX we been excluding fiscal look would based in operating of

have forma and adjusted have increased million income million income $X.X operating would X%. grown $X.X pro or would So operating

already expenditures growth, met or Nate and revenue exceeded our our year the profitability mentioned, As has for capital guidance.

annual In in is row fact had numbers. this a met we the our fifth where year exceeded or guidance

we Revenue Now, pro today the some on my let increase prior am million, for remarks an year managed and to by Revenue X.X% Average the year. were these to of was year. or programs revenue QX results the aid the compares offset calls, in And I institutional turn the October. year. in is XX.X% for strong increased driven mentioned. was increases up for Revenues as in improved And additional driven for X.X% was quarter in and basis. year long-term quarter increase higher. managed this in in-year X.X% me year, our increased line schools increase enrollment. the the quarter by previous retention by is and the rate our student belief declines per past with $XXX.X enrollments focus just increased right increases of remainder which by increase in business. from and growth a on That our X% for our an XX.X% managed to in somewhat full quarter $X,XXX, was discussed that of The student enrollment the results student the by talent the year-over-year, year for Revenue X.X% and $XXX.X per an in driven to public X.X% I environment the X%. of going million X.X% overall or forma for were enrollment. revenue enrollments the items and flat

funding will level next state to and it continue largely a the continue favorable at expect We see year. into environment

yield, always than it the parity work in While funding for today. brick-and-mortar for for schools which to funding to funding is receive that online lower schools advocate schools is our not managed schools, the student case continue also we serves, which and the to with ensure remain overall will greater improve each

XX.X% software institutional on and a finished basis. on programs as includes while the XX.X% as services public to XX,XXX year which business, both our revenue non-managed business, rose in international full X%. per non-managed declined programs lower enrollment and declined Enrollment our quarter revenue to for well Moving XX.X% school

As services Institutional point did a have which we decreased in have challenging. discussed, QX throughout and our made XX.X% year-over-year more some the year to that softness declines. previously close, the customers revenue contributing year larger enrollment deal these last little out we of of want comparison experienced non-recurring software to I quarter. in the a

beginning the For season, in sales revenue of which was discussed. a software down previously we as this the result XX.X% year, have full of

long-term are are As transition, want business embarking to to a we we do and near-term by encouraged Nate the new both non-managed like negative ‘XX, feel to we same said, it software be and That this outlined, I continue continues approach rate in emphasize this that on fiscal although the revenues programs current trends expect for saw the services we to in into not and we year. at prospects.

in pay private in return flat quarter the revenues, our business, Albeit full increased unit we to positive to the prior small the Turning increase our revenues were year year. X.X% a revenue this year. decline in glad a relatively business and are growth after to for in

Our certain stronger growth second Nate business are licensing up revenues moving for favorable for products. now we sustained we benefited sales from this set as forward. revenues half And believe and mentioned,

for for XX.X% of margin gross the year. gross XX.X% to and on Moving the posted quarter, we margins,

outcomes. other For the business year, decline margins institutional student were year, in from investments from $XX.X X.X% a of previous largely to down by improve the increased about to and Selling, a XXX administrative basis ongoing ago year and result expenses the million. points as our

X.X% the expenses from For of the $XXX.X decrease a year. were prior million, year,

of largely or expenses the million result from compensation continued $X.X sacrificing Excluding the declined management our focus without for years, This output. on cost the decline both year. stock-based X.X% is by

million. XX% development, quarter the to by year and $X.X product for for to declined on XX% the Moving cost

or for for $XX.X X.X% the quarter in team all was costs we less. from the income great $X.X product for for was increase $XX.X the increase was year quarter million year an for And $XXX.X the adjusted increase was getting year, XX.X% increase million, for continuingly of up EBITDA down million, an quarter, quarter for last was $X Adjusted are increasing has million, and increase for X%. year, more million, same year EBITDA job quarter $XXX.X million Our X.X%. the X.X%. and done million, and the and up $XX.X of $XX.X X.X%. development the $XX.X million the Operating X.X% the operating of income an of EBITDA a an managing for unit million XX.X%, year, of an the

our profitability from So across ago. year metrics board, the improved a

items, will that purchases, range a $XX.X in of to and free can and a expenditures $X.X cash program making is up and $XXX.X software to of flow cash CapEx, the profitability includes business million curriculum We to we million $XX with other cash, investments. cash some of and was of Free highest capitalized equivalents last the capital growth repurchasing and million cash grow which This to million, $X.X million for stock flow as million year-over-year gains we believe ended as to of was stable $X and year. mentioned years. the hold we year posted level Turning we an capital support by increased in basis. quarter our restricted million, development I XX% in equipment relatively property of X cash on $XX.X a the we $XX.X flow. million. $XX continue while Nate little year, post decrease in our the also million ongoing free with I year-over-year. compared cash over continue believe investment common core for

tax negative rate the X.X%. for was Our year

X this on operations, trend and our core mentioned, lower most importantly, of have as the the most off. this saw as for deferred benefit, previously percentage and have now stock-based in to to federal growth technology good am revenue we seeing tax we really revenue our investments rate. new school line we points the rate. to business almost for federal accounting our is recognition to our to I we I tax benefit and and XXXX trends of top Re-measuring tax us we well encouraged beginning of year. also rate feel guidance majority look windfall be accounting about of our pay We revenue full fiscal the the effective gave I expect a will XXXX achieved year marketing growth, trajectory made beginning straight academics while we profit drove into and tax forward are on in As the next new stock-based first the business am by years continue rate. tax financial XX% law the curriculum growth corporate compensation year. Fiscal tax The our X the basis. new on will at year enrollment lower will recognized based liability new year effective compensation the year remain mention want where within is each unchanged revenue full contracts our fiscal in implement since on largely that recognition of year, a that for

we have impact seasonality revenue. an our will the on of However,

We in next quarter’s results. will this details our of provide more

want that everybody last October. time report end QX same both I remind year, we results in we Lastly, of to actual the did will fiscal as at the at and enrollments

now over well. full provide as guidance that Nate. And I the Nate? back Thank also at call you. We will to hand time year

Nate Davis

Operator, that concludes our prepared remarks.

ready are questions. any We for there questions? Are now

Operator

[Operator your Instructions] Please BMO Jeff line Capital comes the from of Markets. first Our Silber from proceed question. question with

Jeff Silber

us giving I adjusted be specifics think growth expect EBITDA, paraphrasing so you would guidance are another if free fiscal year. know are cash ‘XX, Thank current you good in do am fiscal enrollment what in congratulations helpful? but remarks I year, you, your than that revenue, you Nate, specific can fiscal you give you and about, some you flow and stronger the ‘XX much I you talking And metrics said on for not in

Nate Davis

congratulating thanks, Those key and indicators. Primarily, thanks talking the and comment. am are the I revenue. about Jeff for primarily enrollment

optimism I Nate Jeff the I got say take and said my be years. season, ones, indicators enrollment people yet oh, We me we we would about we because be are you always than aren’t other is we see want through to they results it course, said careful, very predicting he to going say the all here the context what see all that and but have going looking at in of of out what some on are is and had to internally be. careful showing several growth How better the current comments

I revenue. the always am associated put the I caveats on it. enrollment talking and about So all

We are guidance that’s... giving not but

Jeff Silber

That’s new up, And are those it. opening and you fiscal in year schools Oregon are helpful. mentioned current the guess, caps? that X I for Got the Texas,

Nate Davis

in but high grades especially Texas, but are we off including to high up the starting are school. not They with is are not caps, what school, they

year So, it’s of that later number really and grades a not will the that. do know a getting partner, on after But could cap a year start real want are a be high could and It in we to they reasonable more sense, date. a be then as at after. of up we to It our calls we. it’s open partner’s school effective limited pace

it’s no, So got not a cap, investment. but it’s

Jeff Silber

had you there in the fiscal that years? caps on current for any prior year were caps great. And lifted Alright,

Nate Davis

no are significant there cap year. this no, No, increases

Jeff Silber

you any opened Okay, ‘XX? closing there in great. fiscal review are schools just are were that And can that

Nate Davis

we but were schools had was new we announced was That ‘XX, closed, inside closures but a it we no about, that there a than are more of year – that opened in fiscal already don’t Pennsylvania closure, have know shift had closure.

in are closed, but one the Indiana the We also market, disclosures. no, other already are had new of than ones no schools there out the that in

Jeff Silber

queue. Okay, will will and more I into jump one great. back then ask I

Nate Davis

from on, didn’t on go to go virtual did mention but a that we you in own. managed decided their have closure, before to manage to forget Jeff, I a did Chicago have school ours, we

changed. school, in has want school also it disclosure a that but one so also small And Chicago I changed. It’s to that be full

Jeff Silber

strategic and know. final over years? cash building few up And the been From a cash perspective, just letting are question, expect you the has appreciate one I obviously should we this Alright. announced what investment us afternoon. company use you the

Nate Davis

are There do. that what opportunities are our believe I one I to and in to shot. invest full Similar us minority full approach that for can some $XXX to don’t either we there $X happened don’t to take or to want partnerships but continue this be that I million also year. them. buy companies company time investments, acquire million do want investments and

in not So helps somebody at the we help opportunities something that strategic, to CTE, that just institutional, it it in business finding to look achieve international rather our there. but goals, continue wants that’s will opportunities, will core or strategic does I mean has making growing be What be by than else that is in it something better, that’s sell, will us that’s be, opportunistic. growing to our us whether

see CapEx plus CapEx had you this in I CapEx, or right million, million nor couple same decrease. increases the of any major we year, to Now, see have should wise, minus you expect the in it $XX major range. that are a don’t around range general

have those been primary the uses cash. So, of

Jeff Silber

Thank Okay, so you great. much.

Nate Davis

Jeff. Operator, question. next Thanks,

Operator

question line from with of the question. proceed your Paris Our next Please Research. Alex from Barrington comes

Chris Howe

This Yes, sitting great a for congrats good for the next Alex. to position Howe be seems is afternoon. in on year, guys It the in Chris you quarter. are

Nate Davis

Thank you, Chris.

Chris Howe

success gains growth this head scenes you you your positive accrue? talk in you additional some the retention and to leading into are that there year, share to improve on year In that’s as as much would next regards color this seeing you left can how the much could as your successes as runway the about retention assess and improvement you you the is saw possible behind to perhaps some XXX that metric of bps further How here?

Nate Davis

in in minute, a am things number will but as see there number are of that successful. being are you we a sure James, I of there things and Yes, jump

are and technical tend on is what found and is a stay them that of program meaning with take their more future career in education One of gives technical a the they longer. some the bit career better to this path understanding course they little that them students we that

a retention takes student better career when So, is the course.

the encouragement more We also program process, understand find educational can where retain. where encouragement that are the grades. their through more They they with give are them they with we they they the their meaning understand

called more academic earlier reach meaning have We that to also family we support touching out often found thing students the and students. that teams this

they but when tend FY of in their where we there was to not school but before students lot most those that effort school, and did students, retain we us out frustration students stability in The many year of rollout part. year as systems, often, better we they have have past As into well. a found this stability to every touch a reach put more our in less schools, keep did testing we really ‘XX instability, on some because we the help that

difference. So, those a the things made are that some of

our I look As programs think to there that but at at person still XXX we ago, look I continue as just interact going on ideas do basis It point is job retention there in the the We not went and still change think I a improvement see are fact review as XXX but next at of you be it our not we days simply and trajectory. our matter James run-rates, down be and better. some may sit through year, a may process points, basis room when continue see will looking their it they the I programs to with in going actually that is to kind room XXX, to same table, have system. family’s think for don’t homes to progress. dramatic I in how be our go there out and of It’s is growth. to whose a think X XXX, a far are are be may of

for families. our Just we before. see haven’t the do for to sit one them we make of couple there and done watch of the and a That’s better hours can process what things

it, In make watch in that lives might ideas the better. make them of are sit with and all those terms come miss home of things we going think perspective, did perspective We purposely and just but just their to James, retention the our from have out anything? done I better.

James Rhyu

Yes.

good I understanding Nate experience, think at the off maybe is get whole the to of the in app prospectively it that’s spans, Nate start point how to the as ground mobile ship extends mentioned least at the we materials, customer most sort in of but which schools. they script, his that important interacts, how the how the experience. family last customer a that really mentioned The

have drop, app. of seen in experiences have the the they customer that of had volumes call because some We

to app into to experience going are the continue next year. We the extend

will as of area Nate in customer just the runway, a level of So, in drive. I experience think a that stages lot in really we I the that mentioned there I experience is think be of still it unpacking are and customer think lot really early of improvements we that can

Chris Howe

few and helpful. how Modern the that CX, This we one next I as pricing? environment as strategic in investments That’s investment out how And guess partners what such potential very general, you investment Teacher? be to STEM Teacher. Premier assess to many should there STEM mentioned as CX a far also I could partners guess in there is more. had Modern or regard are the strategic surrounding you similar I and And seeing in just

Nate Davis

say that didn’t them is as Well, a invest with much each are partnered one we Modern I customer content. simply STEM little a Teacher. bit of partner. one as Premier that investment an in in, investing with them company as the different. bringing would That we CX we more did is we is

of I buy them could higher valuations think that are prices to little we them companies like for be. higher The than to many be. right we are like we the the than out a

only we are company so would change buying company. to we thought a we the it we And have what just a If do. about not would did, of be excited trajectory

high think right are I the prices little now. So a

are where they we buying not our people it be somebody, somebody with but the to it’s from arrangement, partner us invest doing with preclude was change strategy. they influence to have would we so think going us trajectory. to joint That better people and I to stronger, strategy be work smartest in thought does And can we think can that’s to marketing what

James Rhyu

Nate Nate ensure just came we our earlier, us CEO along that investing specifically I something very core is which to when strategies. are four reiterate said back into role he the challenged

ways And the it’s along strategies, And this are the high. those four core those company actually really forward the are high. prices important few that prices around strategies. are prices we are drive looking to so digital very at think market practically institutional The pretty a I transformation, as business, fairly Nate of the mentioned,

very in. So, we careful about are investing we were how

that these thrive structuring approach think we use on think level going independence companies investments companies with to better these a their growth and well. those Nate’s grow. for a as try on to of And are a gives own investment I I is our us to help first of capital also

those much And and pillars to wander from to those. are try to things think we four too not within going stray drive I continue so

Nate Davis

content, schools. our significantly but to I it in said maybe say but example. are who I would to am because public an think things content, out building network, absolute, who force, are anything trying had we a that of are company are think don’t James go to just am take content not I add if me. buy don’t also sales for managed that you I what more be just more I and And – in I business I already need then an a had those more interest will distribution more customers, directional. as to hope I buy say But you we content, to great

can it districts. public so be that making to licensed of it are pieces more modular, school We

answer. don’t our as do is think So that, more content we I

I the expansion you capability, more customers. see really think more it’s are of do. of reach Those things kind us would into our

Chris Howe

entrenched how development ground what of in roles? the their a how Franks, in Thank are and other came how you. was about process words, provide be some the or boots And and Mills them in then one fully last are these just What Brian things can announced with finding one for standout makes two to progressing to will they contributor beyond XXXX? much And their in candidates? in Nicole regards oversights search on their you me,

Nate Davis

hired business, a with over a Our honest I to significant business, Sean named guy do the contacts FuelEd new institutional the industry. More contacts in Ryan. the leader, you. Sean we leader than be has

with part a company, there so things from and this had. the some these are knew were to by his contacts, people And of somebody recommendation One company. he relationships out done he was not of things search was done reaching a inside

areas, so skills The somebody specific he Nicole. these of the we person her that And developing is previous people of programs in in other to companies. relative knew area, comes – marketing from And FuelEd actually relationship in one was they our comes one that’s Nicole charge knew. have our

So, she think will bring that area. great I expertise in

area. specific he has business development, Brian are both to – in because they I they So on other going well the be been in think entrenched, he bring sales. in hand their talent been has

to be and a of lot try to So external sort that’s up of we is what think I is his institution. set development go he to for focus the area and relationship brings table and of business schools out going how new

like I helps. just I their ahead fact like straight Hope folks, So, we these them that search. somebody were like both of of I the a came not out they of expertise, time, knew that who

Chris Howe

taking my quarter. Great questions. That Thanks helps. for

Operator

[Operator from First question. your Greendale with proceed comes Please of Instructions] Corey question line next the Our from Analysis.

Ken Wang

Wang Ken is Hey, on thanks. Corey. This for

year. First of all, congratulations on great the the strong to quarter and close a

Nate Davis

Thanks, Ken.

Ken Wang

it it to fiscal trend in maybe offer about just terms Anything qualitative continue it’s in talked bit going more a the on you expect you growth to wondering to mode? just to you ‘XX. down when year commentary sounds business, institutional So return like of little of kind can

Nate Davis

I Yes, I because right. me said make that’s all, wanted think PA make audience, that think I record It was something, the market that I of Ken Ohio I inside correct of need of – Ohio, to something of I one the said clarified that let meant want is earlier. inside which already first about, when but to to to of. sure say I I knew was inside was don’t inside the the information, talked it about Ohio sure was new I schools closed. whole of of I speaking and but I

FY I intention business, FY I growth than of the kind revenue to ‘XX. institutional think hesitate get in back to in ‘XX. our be clearly the is less on to predict Now ‘XX will

talked a we just we Brian sell I more talked change sales been be see district. will think force ago and more can We have am modular, to changes. minute NPS make and we it it the and management license about that changes Nicole about public I that content doing. date the growth the business to so our I it in pretty will the that changes. again. excited are There that about school

definitely We did Modern school you. will I into to we predict better but return will more ‘XX am I growth ‘XX us give got believe be sure, ‘XX. I I – if would FY have in we that do will Teacher tell segment ‘XX a than can’t know partner I we sorry think and helps that I for when districts. in in that don’t leads more new in FY who you

Ken Wang

Thank was that’s enrollment missed before in just then just Yes, during but had quarter? on per growth earlier, this non-managed there you. anything may you mentioned the revenue the helpful. have programs I And that strong really the

James Rhyu

XX%, was Sorry, but I but for non-managed full ended year up per quarter per the the the up think it enrollment, enrollment X%. mentioned the programs for year being revenue non-managed ended revenue I about for being up up full

get and into of You seasonality and timing mix sort some number. that

within I the that’s was but really So, mix client really is just year. it about representative of bit little a little up for a the full base, think more and bit X% the year shift

Ken Wang

is then got And quarter. school separately associated this or point outcomes more And one any you the future then for in just responsible on benefit at me, ECOT, can it. you any are how work? driven anything to with just for the offer kind Okay, student of that ECOT on the during going

Nate Davis

Well, this is Nate speaking.

responsible performance our Academy, performance Virtual came We which ECOT. in. for is where by students obviously any not We at the are as Ohio stand

perhaps some bring able students weren’t an make them sure ECOT in that, that to to see program will they see had we ourselves, and we at the shortcomings on performing from ECOT make up could are focused to we be we we sure if be re-mediating KXX but being any We able will these will the that impact delineate they standard. of

Now to the that and can are proficiency the and Education, you, approach that those students accountability it in is specific on approach but help students, a to best That’s think those them. be those honest and get they goal. activity, track not an excuse Department first their is education. But you primary that and way focus our our make metrics understand is performance we that explain making better there will those of our the are in, primary first attention have sure to working let’s I and with to a against the the students that’s in students like out marketplace, don’t is wrong levels number asked came numbers will of I actually about will hurts about it addition if the they take we Department getting X,XXX know we something this. Education so to says And I our with overall think students

and made in it schools have We enrolled school, think probably options. applications looked their online enrolled the and decision. they they other they then had exploring X,XXX they and The brick-and-mortar who way they to to in all is were of schools students about enrolled, but our

that mentioned disclose but didn’t ECOT. And benefit than improvement probably from numbers, We as to the that the that other of number retention That we country. that. actually half the a happened Most in we in just what in related I Did saw than our ECOT. help was want X,XXX get then I you? schools overall year this across had more impact was range. individual Ohio bigger students got to that’s little the don’t So,

Ken Wang

very helpful congratulations Yes, again. and

Nate Davis

questions? Thanks, Appreciate any other again it. Ken. And

Operator

And would Mr. the Davis session. like remarks. the gentlemen, for call we I reached question-and-answer and turn Ladies to of end back closing the have to

Nate Davis

one story. have the around feel talking earnings we remark. one funny our best best were fact internally time. the best and like quarters, long one one We closing we calls discussed actually is we have of internally in years that this It I are sitting of Yes. in a and is only we that had

for company. think ‘XX and are are FY to We about excited The ‘XX. where intentions where we a results, think I our speak FY as we we that, pretty are

of place. proud are I a in of has going. accomplished I proud the am am I am team. pretty we am and happy excited I good we are and where about I think company what this

So for us to time. you you I today. listening really your Thank appreciate

Operator

concludes This conference. today’s

your disconnect participation. you your Thank may lines You time. at for this

Stride (LRN) 11 Aug 182018 Q4 Earnings call transcript