LRN - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to the K12 Second Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

to conference like host to now Mr. would turn over the your I Kraft. Mike Thank you.

begin. You may

Mike Kraft

Thank afternoon. and for you, good fiscal earnings second year call quarter XXXX. Welcome to KXX's

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

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

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

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

The and days. on call webcast. call open of for in also on This information posted was is being financial that non-GAAP In Principles is be addition XX information. closely results is for available considered GAAP, most certain this comparable public our discuss the to the non-GAAP disclosing Accepted GAAP our earnings will accordance reconciliation included Accounting Generally A or and with will release financial information in replay information to the website. we financial to U.S. is

Officer of President, Officer and With today’s Board, Executive and James Rhyu, Davis, Financial Product call is the and Chief and Chairman me Technology. Chief on Nate

of Executive Harsh be Galvanize, following Education prepared are joined President of Readiness answer Career questions Chief Mcalmont, we Patel, available Additionally, to Shaun Officer and our who by Dr. remarks. will

call the to I over Nate? Nate. would turn like now

Nate Davis

I'd Good call. KXX's devote you, Galvanize. about of providing Patel, to him and of participate we will our everyone, today. earlier for also Harsh Tech to CEO thanks to to my Harsh session like details Pioneer like he our to time team and is Q&A welcome quarterly and Thank made most acquisition Mike. Galvanize the afternoon, call in our noted. of joining as the remotely announcement welcome Mike calling today. I'd in

financial with results. going get Let's a summary this quarter's of brief

revenue adjusted and million, the the year-over-year. saw today's our income fiscal was release capital in the to revenue As were for increase expenditures of $X.X $XXX.X operating second an million. you quarter million press was quarter for X.X% in quarter XXXX, growth, year Tied of $XX.X

originally second income adjusted of last These met we expenditures our the guidance revenue, the is fiscal and core excluding our and to noting that the operating numbers Note for we achieve provided business of also beat 'XX or our acquisition, quarter our ongoing revenue quarter. adjusted provided. the of operating that business. on impact capital strength full-year the underscore worth It's pace income guidance

Now, our and going acquisition strategy of forward. a let to readiness the me turn career discussion Galvanize

job, list, to for is top X in-demand of jobs create Statistics, now At the expected the million year job initiative and Labor Bureau background, As before, job data age allows growth me U.S. an future, the our of According of career a every for new of scientists. in engineers and mentioned our XXXX. market. peer most heard readiness competitive to you've student to through software than per and the us support increasingly more

these positions However, despite to fill. of the for they most the challenging roles, growing demand some are

Galvanize position the high quality, is to of workforce provides science. us acquisition country's puts Galvanize providers training KXX, facilities this in affordable, top a unique and data engineering, area. one software Like Galvanize a and of in online in KXX's based make of program. difference learning

most Galvanize its and the in-demand relevant engineering and and Galvanize Through students the is Hack on-site time fields. Reactor five industry in bootcamp the offers brand Investopedia. Core skills rated gain Hack full in these part software bootcamps, recognized under bootcamps help its Reactor. top Support name, by

this high now academies our One ability schools of engineering provide with schools. acquisition destinations the synergies entry-level to even more of that have software is

by public tapping other to colleges high This and the training, this their We content the tech will and institutions. and license and also universities this adapting schools. curriculum expertise opportunity school us to into districts, for to do gives train Galvanize the and

both of this schools, exploration grad school schools early public can and we career high with our For option. help

make Now bet the business you that data gainfully of post-high love school training? web is XX% of and effective to education ask, other of and I many how development are Galvanize Nearly six Galvanize within claim. would might graduate, employed forms science months

$XX,XXX than Fortune average, of more. York which includes Additionally, salaries. and salary XXX. even companies, Francisco been have XXXX of and New by on earn hired in XX% base more graduates graduates San annual higher started Graduates Galvanize the

is and instance, to professionals all and find now used more Galvanize For Google them help Apple train workers. the skilled teams, or And have alumni growing. than Facebook, their Amazon, technical base XXXX

are data in world that targeting billion estimate, which It's is software more than this with for the annually. transformation and engineers trillion market the $X $XX turn in adult corporations that drives estimated are around demand digital conservatively this investing scientists. we learning We acquisition the

among of year. now be and this by year, into the Galvanize and to growth will market. growing this the next Galvanize add young revenue of KXX's will accelerated is growth, well many is kind in one enterprises and which KXX this

purchase the the fiscal after effects growth accelerate. accounting, year in next fact, the of In revenue should

to the I Over the year, next expect Galvanize's growth following reasons. accelerate

have now opening adding Galvanize of facilities, up to across education the the includes its funds First, existing business. while This to markets expand direct-to-consumer students will nation. also new

the both use of model. increase hybrid will and training also online Galvanize and KXX fully Together

into KXX's Here, Galvanize and to online deep expertise in blended students environments. will be able teaching leverage

tuition that of they the Second, can students students. believe and or agreements demand. secure Galvanize ISA we participating more is a training will share defer drive both agreement, help This a job. until use after costs accessible, for programs win-win Income their share make income

Galvanize and to a Third, up-skill their enterprise work clients huge existing abroad. with re-skill that workforce, both will and new has market and potential domestically

companies most World skill the that fact, years. given of vast next Economic has required and wave have jobs the skill the some sort And technologies most development. concluded own Galvanize’s that to there's will new of noting software corporate This and five worth XX% of be for will is their in In for expertise. oriented Forum re-skilling trends analytics data that’s requirement is business the It's shifted majority a of fit of significantly by workforce needed perfect model, disrupting training over XXXX. is the needed U.S. promote think tech the

have as companies Corporations tailored plan Galvanize's than to IT find staffing to Many to related credentials, Galvanize unique with need that immediately provide IT to is they spend the by outsourced needs. requirements. will to expand company's billion each we jobs, company's efforts staffer. $XX in graduates feel can an customized candidates because won't outsourced have positioned IT existing fourth, And more staffing support XXXX.

data of team, In brand network summary, management science this gained course, here's of the what we industry campuses, programs. Galvanize and alumni, engineering, recognition, from leading acquisition, and software

entry and growing for KXX of allow benefits to into engineers its software these scientists. the important and market accelerate All data will

Importantly, acquisition strategy into this being leader in of nicely at education also industry career stages existing our all the of learners, fits for life.

$XXX $XXX reaching to already destination Our profitable nearly strong nearly business, career this year couple and academies the next and We're readiness growing, started. continue and goal we're getting our a million of in is million build revenue career over just alone, to in fiscal years.

$XX to year. accounting, that revenue Excluding more add than the effects stream calendar million will of purchase Galvanize this

business will be Galvanize year Importantly, excluding in EBITDA positive, purchase XXXX. unit, accounting fiscal

affect he reminder career purchase discuss organically business, revenue your of inorganically, James's A for enabled in further to Both technology to continue healthcare costs. technology. will expand will especially look the information comments, our and that readiness we areas and your how and will opportunities accounting

drive of a value. funded with debt to We're sheet would. said our work Galvanize and a balance cash we As as you often full balance KXX, to cash of small transaction asked, we was sheet. know, we Investors cash. completely cash putting shareholder has our very from have use how will The amount

However, done. be to our flexibility to continue to This grow. operations. of in to line will our will core be we to us arise, cash opportunity do gives fund This of believe To additional acquisition financing a demonstrate needed, in funded continues the and that the used the million acquisitions addition strong funding strong flow bank us only give this from flow smart if cash sheet line financing. to properly since other business up only the balance just $XXX closed should isn't credit we that with

workforce, In in we closing, skills changing serve. is that based learning, and career is body that economy, rapidly readiness and the student readiness our for increasingly world. critical a students employers Career the important our around for and for diverse prepares country for

leverage, education Galvanize for business, to long-term expertise shareholders. enabled their we also a intended a tech to consistent to prepare Our driving futures, continue We readiness rapidly and which leader. are acquisition is students national for of becoming career a goal, our with strong build while growth help profitability marketing and

But same. can reach potential We through teaching I everyone workforce, to want personalized all remains remind students can coming learning. learners, through full inspired mission pursuits, all full remember, further and career come from potential to locations. military the and the that mean college KXX's help their students ages

to be enabled Our platform leader field. allows flexible in this tech us a

today. your Thank you time for

over on James. some well additional on results, I'll the provide to call hand quarter transaction. He elaborate as James? Galvanize Now, as financial the details will second

James Rhyu

Thank everybody. afternoon Nate. Good you,

Revenue operating And these for a expenditures in decrease X.X% a guidance million. quickly provided results were year. decrease as case mentioned, from of last our of network expectations $X.X was quarter each recap capital our last In of income $XXX.X X.X%. First, reported let quarter. increase me million, Adjusted the $X.X was Nate an results. $XX.X beat we million, the million,

And continues positions acquisition, be on More previously next track we for well provided. to Galvanize to perform in business are and the ranges core Galvanize within growth we us well the into Our accelerating year. minute. a guidance excluding on

in This for programs enrollment. or both revenue enrollment increases School Let for $X.X to X% a grows Enrollment Revenue turn per Managed enrollments result quarter. per Public year-over-year revenue results the grows increased and X%. million. and our me of to $XXX.X was X% million

enrollment revenue For the full-year, to we to last year. flat be per roughly expect

is several our education business. provided clients infrastructure content course of largely we and Institutional revenue major the in have the business, This XX.X%. whom that fact of customers due gone out for the declined to large general

declined the and School full-year, roughly Pay XX% the to $X.X from were Institutional For XX%. million approximately I've last Private Business last flat noted quarter, revenues year.

the remainder Pay will include for that in line business. results note of Galvanize of the the to Private year, want I we the

We external potential will be to and revisiting we changes more the our fiscal quarter. 'XX in any will reporting fourth insights provide for

from basis margins points the our be including of purchase XX% and Galvanize quarter Gross around XX% first minus plus XXX gross marginally the accounting, or were impact up gross will margins and for year. margins,

general flat costs the for the and down last to by Selling, will basis to we million, the year cost accounting. purchase of acquisition year pressure with expect or The Galvanize plus be from back-half slightly a $XX.X still hundred relatively of were particularly, expenses SG&A points. put million. year couple some impact administrative last of But $X.X minus on

operating of balance we was Nate $XX.X equivalents and cash acquisition, so as income quarter EBITDA next from ended million. expect the quarter. and was increase million we funded $XXX.X $XX.X $XX.X with cash quarter. mentioned, restricted hand, income cash million the adjusted will million. to cash, quarter compared We million was cash first for the was an $XX.X drop when materially million, EBITDA adjusted We of Operating and Galvanize our to the on report $XX.X

fund of acquisition million the while in strong believe flow, This acquisitions to free our provides career into Galvanize, with ability the that addition flexibility facility. our sheet operations, financial cash up credit to entered balance financing. us space. pursue addition in existing $XXX this to we've in in provides to to generate continuing and We to And readiness facility facility

costs was range to $X.X tax for indicated flat which Capitalized and were in our We XX% our last full-year quarter a year, still to effective million, expect be tax for rate the last we basically XX.X%. XX% quarter. is rate

offset tax multiyear pay. carry deal Galvanize would will a net will from see help as operating cash We taxes their the we loss also cash benefit forwards some otherwise

Please accounting rest of the of of keep purchase of $XX is for guidance mind, decrease is of accounting, and adjusted implies year, of to impact the year the impact Our income. needed. operating diluted remainder by that the attributable to the The revenue which EBITDA million is guidance a our we somewhat Galvanize. negative decrease in while do also pick revenue fiscal why purchase for up the approximately the this

the Galvanize operating fiscal to And calendar year as to of income. than to year. Nate positively mentioned, next we fully underlying $XX contribute And the we underlying expect million revenue more grow adjusted exit Galvanize and expect our into year next this contributing

at So the looking to million at for rate XX% income million operating income we're of quarter, $XX million. million. range the an $XX billion to of range the $XXX to billion, million in $XX $XXX an for adjusted to capital adjusted range million, looking in million third revenue range full and And $XX expenditures outlook expenditures million of and $XX million, year, $X.XX upcoming the now of to operating tax $XX million to to the $X in capital we're of of XX% $X.XX revenue of $XX of at

to career lifelong hand in readiness want we I for and is Galvanize to and of first-step the I in that creating market. meaningful operator our Before deal our learning to accelerate growing continue we large business shareholder pursuing for the reiterate look opportunities the call current this Nate's believe, will and strategy the have space. to value the Q&A, this will sentiments

you. Thank

turn the it I'll Operator? Now, over operator.

Operator

First we'll [Operator from first your Thank Greendale question-and-answer with you. Our At Instructions] Analysis. be comes line question. Please a time, of this Corey proceed conducting with the question session.

Corey Greendale

acquisition. the questions couple on Galvanize. a Good about have afternoon. I Congratulations

the First of in Galvanize's would bootcamp you differentiation all, versus providers how market? describe other

Nate Davis

Galvanize hi, Corey it things how ask itself. going Nate. attending then the for I Well, and today. give of to you is this first description to I'm to differentiates to Harsh attracted talk Thank about want me that his

find think enough all a a that So, can to I a centered that that culture, not with large outcomes a grow. they is critical student wanted that, be a stuck company have I they have wanted that can't proven first for I of all, and they're about company company students. It's scale. with to small we

growth, had looked quality. strong of they'll team, how were a a highly from differentiate that of think already were team that able highly in And the Harsh, for curriculum. evaluated And when But they I many which want wanted who bootcamp I Harsh, you the company to their so this marketplace? companies, think I that somebody love company rated sights very recommended a to themselves. is did management because I quality the differentiate be think yourself I say, I'd they had want high on we do has, chunk I in I that my perspective, you recognized

Harsh Patel

Nate. Thanks,

as, alumni our I my mentioned alumni hiring hey, for And ways the engineers our very database. other alumni our a who's Difficulty]. One have been a you when there the a software but differentiate or that because is biggest that communities, network, not Galvanized XXXX, biggest the size Hack The scientists of may data ourselves is We've something space in therefore give earliest that larger of that around frequent interested. size quick one I'll because look the of the can the places. at effects I differentiator, large well the and are example, than message I see or many just engaged, XXXX plus as [indiscernible] most back we network in and threads alumni places and is professional Reactor of since most size. [Technical company

is two up places top best Hack of when data Reactor show Galvanize learn to science. to five look and that amongst differentiators software engineering top one you the at thing other often go the The and sites, rating is

so, us space. And student immediately you feel other something this to perspective, a from XXXs Nate, over differentiates not if the competitors me let had missed. of that or I from know you XXs in if there's like Back players

Nate Davis

cover that with thing only high the rate. didn't places think, I we the

Harsh Patel

And right. all junior bootcamps the marketplace and high our to placed nation keep continue generating, have over mostly as the the quality engineers do across as Reactor has months, six and within in we salaries York as placement or the plus, the figures coding as they're like in known to when San big Francisco. XX% $XX,XXX number the at have entire one the rates in out. to starting New alumni to call the majority mid-level been of of Galvanize our reputation some base six average lot markets with that focus. That's Earlier highest And of historically the being more coming of the a well Hack in space. that and out both graduate

Corey Greendale

my queue. of specifically or potential front, see you a number a and I'll about -- Good. the Nate, up interested on you those whether was what Galvanize's little could methods more in from anything of graduates you customer on synergies schools of bit public of the and the then, follow kind I like existing managed in programs get the And primary say back marketing lines? acquisition. to acquisition any are synergy that mentioned

Nate Davis

I'll about Yes, a you talk and can anything. I little if bit miss elaborate this Harsh,

of marketplace and the there's you of First Galvanize. would do optimization, a One little they social search techniques bit marketing. two There's use of names, is consumer web imagine. business. search and then all, number the the recommendation. of of They business, consumer segments And contact a a advertising for and lot engine

coming either little on-air They coming affects of that consumers know that most I recommendation the very social or the many of. advertising is So internet. from do for acquisition the from

reference is recommend based XXXX this there big who that minimize gone need most are gone that the through who And I want referrals, they to others the business we and customers. go they've have get in that's through of pretty same process fact, alumni. and through. how to don't So their because

what sale, that's directly corporations the different and them anything a needs in workforce in is on to then go calls need. face-to-face have. it bootcamps Harsh, add? a information kinds There for very and But those corporations, of they the enterprise you growing corporations , else want have that's business. And specific business, specifically much is train very give they face-to-face face-to-face consumer about different. than their But a sale the to

Harsh Patel

network, our digital mouth alumni alumni, know referrals, you it think I them through word advertising, No, of the of digital from majority strong the acquisition online. come from that rest that of and

Corey Greendale

do Good. anything are directly schools marketing or the who to graduating And foresee people you or those from inside in managed lines? along

Nate Davis

But, want to XX time. that Yes, get intense people to is weeks, time but a really who They we do. level clear this pretty I immersive in the before to first entry most be program. intense have to first of courses qualify apply they few the a It's the program. the take don’t go

students, our So, we qualified intend our Galvanize can market some runs to on basis. roll first, we but the those courses a basic intend into that of program also help to students done to they get so

there's aren't of who who many But there looking to going our careers. want can to college, don't to are students their think we college yes, have go synergy for I a that go or to

into well. exploration with can help then I think help and as we them getting can we courses with the Galvanize them

Corey Greendale

much. thanks Excellent, very

Nate Davis

Have Corey. good you Thank day. a

Operator

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

Chris Howe

is for Howe Alex. sitting This in afternoon. Good Chris

Galvanize. acquisition with and partnership the on congrats Just, the

that or and the Some you to three then some the present you you're Could up-scaling Galvanize workforce? to as training. see to go initial of lifetime that, opportunity an currently the And potential training, for workforce. far the a questions in as more to the do enter for revenue regard for provide on potential how what evolving? re-scaling them color and seeing student mentioned as for years, that additional reroute Is changes software after you

Nate Davis

are think Harsh, you answer best this. I prepared

Harsh Patel

absolutely. Yes,

consumer contained down over base from I alumni, now, offered perspective. think time XXXX growing XXXX the around the a of year we for long-term programs plus education to that of that's Right by every second one biggest Galvanize not re-scope opportunities programs entire and have yet or road.

in their what learn did the modern company you happening is Hack with stuff, students engineering today off job, reference conversation And managers and the But for where may and backed they when Galvanize to or us hey, existing enter then that and reskill say, talent. that come enterprise is they'll their into this Reactor.

the consumer have So courses. yet we But consumer to there's enterprise for is that that then question? second Does the our bigger, graduates, extract engages time. time triple actually to consumer two lifetime begun a that answer which I think perspective, your lifetime value time value lifetime when huge, through or based over and value aspects this, double, could not that third from is

Chris Howe

Yes, it does, thank you.

Nate Davis

of thing Tallo, is, together. a on go there I a how now. to this company that of add to XXX,XXX one is you We want put other talked little call before up are sort to Chris, about they over it we invested in all students

working to are platform. We put hard going to and all alumni be here Tallo the on graduates all XXXX

Now do us will allow alumni to that is what their and track that track skill.

you see on skills. they and them they say, into to the upgraded as grow, and back be the last can as to able track trained the be corporations market talk so them new and grow, technology, able And to got get and was skills. this about to you system realize want them skills ought time to be when we'll to come is some we And

able talk be platform we'll So on those them as we to through Tallo our get graduates platform. to the

way having that's continued So, synergy in another education. of

Chris Howe

question it call difference mentioned seeing other go-to-market from questions, as your seeing last five in proposition of bring. or as of bootcamp, bootcamp are mix, percentage in more students? trends? about series or what Are elite I competitors. you you your the geographic to transferring That's moving value my that far a student great. you wouldn't the comments top And some the Q&A Being you and increasing

Nate Davis

Harsh?

Harsh Patel

to you who could through through halfway or the I'll be data to get went way to I and with some change a tell more software frank, quarter do other example answer based. to through have off to I program, I'll science whether wish be that We Galvanize I either to happens in tell decided data be specific students but focused top what come for of honest, graduated or to Yes, head, quality as increasing most But, happen. expect it need data the at I'll engineering. Reactor does space, especially our That as because rate. you this to on Hack for or increase, top I it's metric. don't continue consolidation we my

Does that your answer question?

Chris Howe

all good, and and for But of And that's front Yes, look helpful. forward me. hop a you in I'll very interesting of to things is lot combination. color this queue, back in thank the the the

Nate Davis

Thanks, Chris. Devin?

Operator

of from BMO with question proceed next comes with Capital Our your the Silber line Jeff Market. Please question.

Jeff Silber

I follow-up on Galvanize. so Thanks also much. wanted to

income the had of You what things in who how tell I that market? to impacted share it And use about possible know on. itself that's use of in roughly Is been prepared the remarks us prides percentage agreement. one of Thanks. the Galvanize students mentioned the And that? that's

Nate Davis

so is, I understands are, an first mention what you share share to just agreement. think else income has the increases we Harsh, to agreements know I reason actually market everybody that. the income can these want Galvanize if don't that answer it But, started using everyone

new work. cost We something it's even believe ISAs a at set the we is so, lower which past, Galvanize develop So, of had why a arrangement capital than find just ISAs an driven in growth accelerator. funded. have is think will cost our their probably renegotiate to lower it's their we not of and growth that's

to I'm at sure going a as we an but wanted Harsh let Harsh? that been So time. I as make everybody answer, knew look long they've not doing accelerated to something that, with how

Harsh Patel

I'll ago. say just want Yes, I and we just broadly, a ISAs started publicizing few months just down more double to on broadcasting that,

believe most their upcoming just this. XX% our started doing the And is to like said, about of ISAs going cohort I we so, our be initial for education. And to Nate data, using cohort, fund

exciting. So, is set to the which we that it believe an so, enrollment, it's our into us, of to market opens be actually up beforehand open wasn't really that added entire going

Jeff Silber

appreciate any something that thought [indiscernible] was Okay, want that’s perfect. online something? doing much sorry, or for Galvanize doing that I'm this, somewhere other you that say you clarification. longer, this to were I

Nate Davis

No, go ahead. no,

Jeff Silber

me, and back going came I'm color company? both what great. how you just us to a repeat get in on companies about terms of to can going of for the give said this Okay, little there? forgive I profitability combination you're late. bit And Thanks. you to Can path the you more

James Rhyu

Jeff. hey, Yes,

So it's James.

exiting is a expect that profitable we a subsidiary. exit calendar growth with underlying And six year, business is to see knew our growth that the we're we've accounting already we've continuing XXXX this know purchase which in going growth going we what So that this particularly fiscal the through first Galvanize the continuing, into impact drive next fiscal calendar year to in profitability will the of But, next seen, signed of to XX or year. that as you sort months. already year,

year. our again, some fiscal that financials be washes next then of something different. as all EBITDA that adjusted will see then on and it washes positive through exiting going you're But of to reflect next year will So the year

Nate Davis

the we but the details will 'XX. but this EBITDA, say around disclosed operating to accounting, all is Yes, Nate be positive confusing for fiscal not yet, a little the year this, income would a purchase be our I EBITDA because get full-year haven't speaking. will This of adjusted

the exiting look year for EBIT, EBITDA, if But comment you it's to it be and our fall to just making 'XX. the cause The is not goodwill that, income, or of like you going to some you're purchase in positive down accounting see be fiscal which fit full at the things year. the will full-year to of of that obviously about up exit, operating amortization in James impact that shows when

contribute to to going . it's So, our EBITDA

Jeff Silber

about to purchase And perspective? give impact is a it both accounting and from it revenue some perspective the of EBIT the framework possible kind

Nate Davis

acquisition. now, I Yes, think early it's right in the really

we there we Yes. guidance the for the of will be mechanics think provide will but give us done just it's year. to But updated know next having acquisition some just we is little through, guidance over to right some early next go you As now or any a have yet. for couple quarters. We

Sorry.

Last to shackles, six of will to operational an from remove to understand, mention from speak funding a their it's that think so I new opening we were important intend They Galvanize is sites. KXX, the on and first thing marketing tight in perspective on their part lot the like didn't up the working that I on have were as arm. They a things hard expenses. were company tight they of months,

marketing to So more students, and more said, up bit spending getting do open bit mind we money a don't to little have money a development. sites, little new to little to a more we more do

So, the the retrain we to all months. with with they which have military some investment of talk there's and well. in by soldiers things And six opportunity those ideas, will but require first military a the especially these money work as bases an will way, about, to didn't lot market, in

that's say So, in going. be we Jeff? for get six fiscal revenue help, a little we're these some spend months, money 'XX. that them why of the going it opportunities next would But positive Does let to of EBITDA bit to

Jeff Silber

Thank does. Yes, much. you, it so

Nate Davis

Okay.

Operator

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

Stephen Sheldon

maybe mix standalone the detail been standalone can based past how on Galvanize's now. in right financial classroom online few it's quickly the From and of growing provided detail a thanks. some provide versus revenue, years, Hi, in profile you performance, on margin just

Nate Davis

mix online I Harsh, of classroom. think question with start you versus should the Well,

Harsh Patel

Sure.

and One couple online, long nine is ladder months the is months. other being about a has a about a three online Galvanize So, the the and full-time online part-time former offerings.

the revenue it enrollment the those offerings, So, cycle. the -- if you it's depends both up of them and on-campus add compare on of against about

So, XX% it's XX% online, roughly about on-campus.

Nate Davis

the do coming over that you changes think years? how Harsh, And

Harsh Patel

to increase continues finding offering. online is strong student feels enrollment education. are going of goes loving online developing It which really we're that counter up. about synchronous students the a online you're the assumptions what like lot think typical really And relationships, to I

so, continue And to expect that we growing.

that few our going of incoming in ever Our a the largest to for weeks one is offering. be most, cohort starts online

mix that will grow that is while expectation my overall pie will also. So, the

Nate Davis

XX%. KXX. we has county, excluding margin the will is to margin over better is gross To that KXX the time, over it the margin, than are as the gross gross that better margins than and I current but currently and that XX% mix it's actually any Harsh of improve impact question But outlining, of in on changing your purchases with today, think that other fact gross think time, obviously by mix constructed again, the current profile business

James Rhyu

In the terms definitely growing fast. a of was in faster past? segment. the question the the opportunity much other enterprise the segment higher the The enterprise as growth I been have like business at than different but two does units. business than a Galvanize business KXX business growth of faster growth grown would The consumer growth, revenue growing tell business has growing the business certainly see is your in grow has individual growth of core has business. It's the rates we -- in fastest the but business was, the consumer profiles, fastest think at It enterprise the what and too segments than business. smaller I consumer growing can at it's the disclose we the that growing well, the rate of two, businesses And don't you Galvanize. the look

thing i.e. we in invest the for growth growing restrictive. as for they say well it's the won't overall a that, into I to so come. a was KXX that fully expect team could we in be of the One the at safe I'll business double-digits question, we expecting growth Galvanize grow Galvanize years think were be Nate business rate say higher little bit to to was And than to add terms earlier, mentioned just what restricted to

Stephen Sheldon

guess that so expectations? That's is it. relative 'XX NPS your guess, trended to student How far business, program? in NPS retention. And your readiness In in on fiscal I regular I school helpful. Got then, core very and both

Nate Davis

This this we talked in way and gory the that And something we more way detail, changed enrollment. early quarter. about is going and that, we call were little bit previous the Nate marketing did about a on it speaking. money we a the what talked the here. year, Without into for put fact into tried little things some we the on the We we

the think it. not market was expecting I

But characteristics was it it of of market part it. what probably metrics. and shifted was our it didn't did retention withdrawal So, anticipate The the our plan.

greater of of than that that year, have the in But half it's we a we be expected better withdrawals year. the expect retention out we washing last slightly happens seen first and So, sort the the rest through year. of will

So, put we expected to the in play. and on we to programs in the see more based and the way marketed to year goes draws early lessen draws students year upon as

going, year different largely it's with just of characteristic. terms it's been with and a how flat previous retention but in So,

we the what marketing is retention, the place. by way seen, happen pick programs which upon three in based last have our exactly to up We the months expected in we way, in put new

Stephen Sheldon

Thank you.

Operator

with from the with Greg Sidoti. proceed Pendy question next question. line comes Our your of Please

Greg Pendy

are I embed want, program to on a going the based of as CTE. understanding question. outcomes my to use some that placement on as my I placement graph assume things of Is for get the outcome. trying certification that? XX% on try the into Because be Python looking was just going under to to I endpoints, or types exams guess, and you taking type thing, still as like for rates be CTE, well rate. able Thanks you you're

much more program outcome? trying just this rate is understand, into intense like going I'm already and salary it to is because sort placement seems of that So the a

Nate Davis

more move a to high to level. at at program Yes, answer right, person program. be programs are right, is the intense a don't one if Galvanize immediately programs the of of Galvanize DCA got I expect of a coming to question, you into our the the higher able be, program average be will out we school qualified The

in, get your have strong immersive of to skills the that the is because to you here they install to go don't key one and us mentioned, level recommended entry be of the the level get can for you Galvanize if enough able to Galvanize, take in enroll I can when to remember programs. a However, courses you number courses, entry take apply you content

the and available going take it's that students more school content And to that So, at we're high school qualified. then make sure our the more level. level at makes of it's high once available, but

high of while certainly they're able in their learning graduate before they'll programs. to sometimes Now, of on performance after be fitting high there high happen to one sometimes they do from these school, between may average that think and your school school. But, that mean is into step we a needs it you get

And immersive, just your it's capacity, that because very intensity, by there's it's way, lifestyle also happens the as well, your it's intellectual there very intense. life change a not

be dedicated really students school level. this are much most be more that you so to And have dedicated, high is Galvanize to going

a lower-end that to and could we to means courses. and on, that's it can because us means, the can students of the school have bridge take like So, the courses, gap you they that it's [ph]. we a number in high think for revenue Harsh, lower-end I which going roll will an miss did add them on would more grow I opportunity anything

Harsh Patel

I do know that.

Nate Davis

Okay.

Greg Pendy

a lot. Thanks

Nate Davis

Craig. Operator? Thanks,

Operator

any remarks. questions to and for back in seems turn floor to like up I There be no further queue, you the closing would to the over

Nate Davis

speaking. Nate is This

engaged look is And who This we to we attended appreciate are time the I always, I overall the obviously, and you those more you As and what it's Appreciate And, that we to hope business. can for KXX. well forward to business in talking about talking demonstrate you were I about, a really very grow questions. will I call, grow exciting this this.

comment, wants I also I to James? think, closing James if a make can,

James Rhyu

Galvanize a today, listeners because larger of have. Yes, it's than I usually group we very the we large had much transaction, of think

craft, emphasize issued the I any follow-up think today. of is on to question did after if information contact I my this, the want release press anybody callers that the So, has with a please earlier we

call. any available will be questions for this Mike So, or follow-ups after

Nate Davis

back you. Devin, to

Operator

teleconference. today's concludes This

participation lines this you disconnect Thank your time. may wonderful now your for day. have a and You at

Stride (LRN) 27 Jan 202019 Q2 Earnings call transcript