LRN - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Stride Inc Fourth Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Casey. Timothy ahead. go Please

Timothy Casey

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

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

actual results differ any to during to important obligation statements, this call. The from historical several looking could due today's any forward-looking no assumes made addition filings. described to latest also SEC information, update company's company's forward in involve company the factors may materially In The call forward-looking statements. statements

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

James Rhyu

afternoon. the before. have We've an of alternative ever to and to face adversity, of We been of has incredible appreciate because approach to difficult year what and good than able this in has this commitment team families folks you of Thank need that so Stride now able been dedicated the only a our been customers been. members. thrive. These thousands the to our Even education, more all do

XX and our the the Across way, the our This is a which year vacillated as want a person distance of of students to of build to experience by online dedicated So families, country, with the world staff. for experience but customers. all mainstream online positive. notice seamless for a in to in and thank you is instruction. a took able learning start always experience and many Thankfully, in years was and I country between struggled and saying inconsistency uncertainty schools not also our

schools turning many Our need. alone, have and learning test minute. our students struggled our scores, number if embraced its of result are on-boarding served to deteriorating right teachers, record online the stand We developed millions all with many them, realize to our it. Difficulty] phase in potential of meet while for Others this platforms, in way. not in having programs. and curriculum loss done this a get bundle. we I a are for how content to And families will outpaced the [Technical of

designed First, I a am a measure, We of users No year, million going to full had by accomplished. matched. any long-shot. wonder By norm, review Learning our interested in became loss some became XXXX and programs. country. a quarter experience showed in to record A of of the of of ever other practical to a enrollment with over backed with National across Educators increase Black of new data Teach first Difficulty]. our A Association number partnership share published diversity We national to a teachers by overall report [Technical key program for an student Male our we time except learners helped schools the of America online we millions fiscal ESG the almost the teachers. initiatives. the decline

of underrepresented trajectory learning to our through Investor to higher strategy long-term that Day support margin to And convertible both our company that tailwinds [ph] our general outline well the acquire set our We facilitate as on Stride We our XXXX, a we the hit. to companies pandemic many growth we began I improvements year, as learners for by on not organic this College not offering further to million growth. raised career trajectory And saw we adult believe value enrollment testament investment providing and from withdrawal we see In to almost in our Scholarship, their Stand of both in to and We opportunities the a two $XX With the track forward. multi-year inorganic education the We second is well schools. relying an note as all students educational students. are and real and But brick education Together mass student did retention, reopen name the year, states better education of ensure reflects we to propositions programs. saw levels. general offers. our XX%. business. past KXX in the growth, almost million rebranded a commitment uncertainty Our to stickiness half we expand in the of commitment of mortar to $XXX are held increase business, This all path our dramatic fiscal career high year school to our

trend enrolled in career programs continue. to retain our students level a And students. previously, who believe mentioned our we we've As this will at education learning than higher tend general

a number for the will families, fall. had re-registration record returning also of be We they indicating that

to are career just school will high programs learning XXX% college high from continue over expensive and we purchased. of in MedCerts almost year finished we for will the offer XXX% we line compounded areas exceeding programs This XX,XXX us when to acquisition, our an we're four healthcare the the our growth. the year, And These from a degree. years contribute saw revenue. need without MedCerts into business is with increasing career Elevator as market leverage our increase growth, a from grow path and than other programs. over acquisitions we opportunity offer students to growth in that students. industry. of the less Tech continue bottom Both certificates Our high XX the margin business, annual ago, the million $XXX Their This million a to high and platforms our particularly expectations our for school

because on add focus to training XXXX. our positions healthcare these continue in and by projected are US than industries will the more million new X.X IT We

according not restructured glide our we into profitability to our performed and business heading On acquisition next path a the We've growth believe to other hand, year. both have now renewed and has plan. Galvanize this

We our will learning and expand with our a business. ways behind career invest In for to lens adult look also $X released make report. offerings plus billion a initiatives June, learning we inaugural ESG to

global learning and company, have education significant workforce opportunity help education, As including we to goals. diversity, achieve an and career a

professional workforce; to world. a ESG and governance four cornerstones; based racial and more and the extending today's learning All are inclusion; development; equity of contributing our sustainable for initiatives transparent leadership, competitive and supporting socio-economic on lifelong fostering

By to that responsibility. that responsibility lightly. help influence lives of our me, learning all our goals of by everyone of shortage. significant impact set of is alleviate outcomes. Stride don't most the that of Not or that students the learner all We aware For unique of outcomes millions carry end, the ESG driven that take kind on efforts. a focus we many the our have is have of To important in ages. position that impacting XX-year to now, shortages companies Stride is is well-positioned workforce. aspect are

hundreds from million our students. So, goals from over adult students over XXX,XXX growth learning and graduate a rates our of to graduation achieve and career for Stride thousands program, our to by programs, XXXX, graduate of students leading school high are

Our on it. ESG our to found website everyone I earnings link report It presentation. lot a direct and be specific our Investor information can more efforts. contains on encourage a Relations today's there's read in

COVID-XX trends, through The turn for want and need tremendous. long-term The in fiscal online learning. prospects to I awareness business, 'XX. for education K general consumer to of adults year and Now around has the learning pandemic benefits XX grades raised in and career both remain education the our

and to work preferred Although flexibility needs provides educational openness of provides have families it and and long-term for our aspects everyone, for doesn't that Increased learning online alternative. to different options tailwind fundamentally all realized a business. students meet it for is many the awareness

formal will October. every our quarter do we 'XX guidance in strive year, to during provide first earnings fiscal call As we

less do provide halfway our enrollment want in these insights could the the to guidance means shift weeks. So, coming while season into some not still season. how now, volume trends. now of that we're current the typical we're trends than providing this right And enrollment August, Even in through I

pandemic the [inaudible]. all around uncertainty increased has metrics, Additionally, these not extrapolate so do please

massive to Difficulty]. seen returns [Technical the We have not

an versus are We to years. all-time we previous awareness number is. choose. of the for pre-pandemic leads registrations all-time explain from now, They an longer Right Virtual now of enrollments saw drive they new are our where that currently ahead and the we 'XX Conversion [Technical just it and get be pandemic exceeding rates Awareness and our to is at levels. need in need Learning during Difficulty] normally in well to high, what we no would we're offerings high. help fiscal

more that seeing And enroll. has the to So when and We continue Delta priority safety we're out, we're families they're seek likely even states believe families variant where health seeing be demand that. to for top in stronger surged. and us

last grow is during that Investor importantly, revenue to we fall. targets and and on year goal outlined profitability Our Day to clear, every remain track the achieving is long-term we the today. $X.X the your We you still to $X.XX anticipate of year revenue and billion, Thank $XXX achieving operating XXXX. adjusted time billion to by $XXX keep of million income million for

to call our discuss year the results. Tim Now I'll hand full over Tim? to XXXX

Tim Medina

good and everyone. afternoon, James Thank you,

of favorable primarily recap In expenditures outperformance million operating retention. to the fiscal of let expectations over XXX% or for me XXX.X enrollment for we in results full $X.XX XX.X our year. results. compared the driven X.X were XX% our was increase case, fiscal reported billion, last year. over year. The year met prior income Capital was quarter. guidance XXXX and an First, beat an the these up million, million, by provided Revenue prior revenue increase the was last Adjusted each

outline. current fiscal to the ahead to still [ph] for forecast too date Looking reasons confidently early just enrollments, our is James XXXX, it

ongoing new are once where September. around firstly, Given the we of of enrollments and and remains re-registration enrollments the key retention the these variability two secondly, through month starts and, factors; process, in school there

what about here's XXXX. I say year Now fiscal today can

and the We and year revenue fiscal strong thanks reset confident Therefore, that accelerated online be are in and year-over-year of significantly fiscal awareness growth grow hybrid compared we expectation expect EBITDA sustainably that XXXX. to general education continued adjusted and leverage. our was education results. learning, the by the strong operating pandemic than to income improvements fiscal revenue to Furthermore, general increased COVID-XX it margin the baseline XXXX operating will career that believe year education acceptance in higher for XXXX of we And business. adjusted has and is larger year

time, that guidance XX% education due greater from ed we enrollments, will XXX,XXX, we quarter the than fiscal COVID-XX business to X.XX funded billion. done X%. This from revenue lower from past, new our year-over-year results while higher results XX% decline year year. the $XXX primarily lower primarily report October. due refrain per we mix declined and partially offset million, revenue revenue will more first for in for higher by fiscal to have per As enrollments in enrollments per was revenue general enrollment providing state rose enrollment. budgetary The school increased By our resulting much or to XXXX of General states. into have is Returning a enrollment our to until pressures visibility XXXX, in we to

was FYXX, new an acquisitions in Prep policy. today expect as by volumes $XXX.X significantly about driven stated we This well year, business. enrollment growth XXX%. our in to growth Career organic our learning quarter, adult higher state next revenue Career as improve what rose Stride know revenue of and in to million per increase given Programs, As last and we budgets we learning

expect from margins and Programs Gross our businesses, and in basis Stride margin and efficiencies contribution initiatives. four programs up costs to automation were We at expand programs adult with to to eight driven an plans XXX continue XX.X%, by Career from learning FYXX points new compared open lower existing Prep increased growing XXXX, fiscal higher FYXX. the

We to expect XXXX. and continue to fiscal margin improvement

of higher adjusted $XXX.X million, margin EBITDA in FYXX. our achieve in million million, leverage. the million non-cash quarter. to growth the Stock-based new of other animalization are driven The associated XX% approximately notes. and adult Interest This of tied XX businesses. improved convertible to target original early with XXX our amortization in decline increase discount growth our increase the of non-cash during our Adjusted among of targets expenses XX% expectations of at guidance up compensation than EBITDA cash XXXX, provided Day. In which We revenue from grants compensation quarter of Adjusted expense XXXX. FYXX in general XX% for result expense in the of up and XX% and by career basis XX margin XX% higher came was much improvement totaled and compensation an expense gross for in the expenses $XX.X administrative discount are margin will million to improved in to points over We adopted This fiscal certain and of FYXX. Selling, $XX and the revenue consisted impacts. in XXXX, convertible confident primarily EBITDA XXXX, business. fiscal expense learning enrollment notes. stock-based we million million was and we SG&A to in driven operating senior stock-based November fiscal elimination expense learning and interest line $XX of by $X reflects debt year-over-year, XXXX to stock-based The XX% last range a will to our that $XXX.X on driven currently with our FYXX. XX% first we in timing sooner were increase expect related fiscal of costs Investor our fees accounting the communicated million by

As be recognize with in the more to interest expect materially and such, and we our lower, interest line in cash FYXX FYXX. we expense

XX.X and will lowering anticipate to for guidance We the cause to tax closer provided up from the XX% that tax higher totaled an Our benefits below rate development had compensation learning, full million, than operations cash FYXX, we of range. over of X% percent lower revenue, in XXXX. to we associated year Day our of XX.X prior increase be automation was as to an expectations million the timing due operations. costs from our range to year. million totaled that than Capital stock-based FYXX platforms. This Free to few to with quarter. years. some approximately lower effect November CapEx for expenditures FY cash XX% which improvements average In our non-deductible past provided the receipts, capitalized due expected software rate compensation of the historical mainly $XX adult XX% last below defined X% for X.X% XX%, for year, Investor rate to our was entirely year the and a as CapEx, positive tax tax and was related is the cash less from drove the approximately flow had last the

were that issues free higher to timing with payments expect our from delayed issues we the fiscal XXXX, year, cash in fiscal COVID. in In of to growth and some XXXX. these to were related Some timing pay associated regularly flow, states following due significantly have reflecting the

generation an a continue ended to same cash career provide and flexibility flow which to cash pursue XXX.X enrollments operations our we To in the year XXXX free believe year liquidity and summarize, $XXX.X strategic increase that income to and of EBITDA. the our Finally, drove financial fund the in both businesses, operating year saw was million compared revenue, with cash period We fiscal million, for ago. We learning Stride. adjusted adjusted equivalents record a strong landmark of acquisitions. existing will double-digit ed general our and growth and

dollars million $X innovation of within revenue of for year, ago, assets, for quarter offerings, than leading this career revenue generated demand sign Stride's and less market. the accounted the Our a education and in learning position tremendous career years over a which billion during four

we level maintaining our position low a bolster continue of liquidity cash improve to and profile our addition, while indebtedness. In margin and

prospects excited and about business to the continue we the could to our Q&A. for growth, our margin not mentioned, James it on execute we'll I'll strategy and be operator turn that, Operator. learning with high career for expansion And more over As initiatives.

Operator

[Operator question line Instructions] Jeff from of of Stanley. comes First Goldstein the Morgan

Jeff Goldstein

good evening. guys, Hey,

are very So performing I mentioned re-registrations you prepared know in well. remarks, your

I broadly you around enrollments point; are ask, this or us that at understand other figures to your numbers the to of are have some point? if trajectory speaking, this put better enrollments not, in expectations help would above I guess, coming enrollments So or, you could able your then to that making Just trying as you and where that And characterize doing really. surged, up overall, think Delta color affecting that enrollment base? well around you when that mentioned is of a have are Delta like majority has to either trends enrollment additional how either

James Rhyu

is It James. Hey.

you Delta very are we've We're so can't than not than disclosing more like [Technical we're trends, Texas, to now, As not right lot sort of states color give there, seeing see Difficulty] just year. trends see in The re-registration any lot of providing what The the seen. what more strong, really a last that percentages. spikes unprecedented very have given demand, we said, we've ever saw you. sort you we similar can we new we're a enrollment of guidance places

So that of happening we but we prospects well that going not business, going long-term lot bodes about provide safety color ongoing people concerns to spike We right a are now. think we're the now. and to think it have for for more see

Jeff Goldstein

Okay. program. trying for ask. thought digital need know would recently that for services then may a districts I bigger an And basis ad to on focus sell a problem. hoc No is you fully more managed I not I

year I'm virtual for districts demand of and from options. of we on likely some just that So as hearing curious services those another update progress you're any for as type there what enter

James Rhyu

will, if good year, doubled that of saw there. we and Yeah, it sort really good. a was so business lot business, Last almost district of you

to our of see lot a continue in We pipelines. interest

pipeline than actually our that year, this stronger at business in been. ever think, it's the for I stage is

legislation who helps can't the one and the And go and going us to concentrate that what that's get of sort caught states have that the helps knows that they've sort California of sort just of footed that skill think that to easily. do of trend, are providers programs districts districts stand of the don't mandating And have they programs I future think on irrespective district think frankly, ready also ours us. to forward. away the pandemics resources holds, be flat because sort district means some demand down like I that like like And to unlikely frankly, there up We going. I trend and that got most or need is

just outsource to in sense So, us. like makes to somebody cases, for think I many them more it

Jeff Goldstein

Alright. the Thanks a lot. I appreciate color.

Operator

Next the from question of of Silber comes Jeff line BMO Capital.

Jeff Silber

so to Thanks not providing some get that can anything that more current us where the operating specific leverage, EBITDA of great? you're indication our out you segments, help much. adjusted and I specific would for Again, us appreciate of but in guidance bit color you little a go. terms adjusted in we did expect you Can what's driving both year, on income give be

James Rhyu

I of SG&A presentation, obviously, what are of the our keep of think We're happens is improve, line in going to sort continue pretty gross a we in laid we bottom season. business. our drives we'll rest expenses. we what And, to the which think margins biggest leverage we great grow the thing out Day on line, for confident irrespective is that that Investor think the here can our

Jeff Silber

Okay, fair enough.

also in in grow had your for about year. talked education to fiscal per expectations current general You the business revenue student

far. is money that of seeing you've directly so continue beyond budgets or you, that? benefits said a XXXX? but you will not do And that tracking stimulus to know expect so, from allocated are the think you fiscal federal been I benefits if you I lot

James Rhyu

news seeing that and Yeah, not benefit were the a is, us. really much news of the is good bad for we

it's We it. the years. towards other big things either expect I instances, could go they're some those in away that dollars we But some that going think we're us, to don't districts are, see as indirectly. service, of where said, for that's also But really allocate can to seeing not limited that to directed side you help them directly in provide future those with. of some think, in that. is choose not or some really We I may nothing a dollars bump

that helping and for have districts focused going having So, think we're that on - any focused can, been I don't one-time anyway would on and not we're really the us, way we just in those it's that just bump we can to dollars. meaningful

Jeff Silber

so Thanks that's Okay, much. great to hear.

James Rhyu

Thank you.

Operator

Research. comes Barrington of Next line of from question Paris Alex the

Alex Paris

Thanks one this wanted down on fall No any the for it [Technical you looked that side. say I asked was release, taking regarding my was I to from general noticed more it the it but see questions. indicators least leading education Difficulty] What's down there? at like I'm the though, going press early than positive. year. more glad are to

James Rhyu

a more. little [indiscernible]

a they have think career of learning to a I normalize read the A Difficulty]. next in is function more it, of that probably lot be or it predominantly I into several [Technical too levels. below lot won't have years, frankly, that just average over mix. we and of larger states it'll I think happen of programs our slightly [indiscernible] back, programs, much

Alex Paris

Okay, funding fair to revenue enrollment specifically, California's year. full enough. 'XX, during for then per approach fiscal the impacted And

did your be coming For California funded? the for I finishing recall, incremental you do served plans how schools budget as them not And are Has year? you expect to fund anyway. their California what the yet students, and example, they

Tim Medina

do fiscal California Alex. in our enrollments XXXX We funded expect to from fully be

Alex Paris

an then Okay, 'XX contribute that'll in to great, [ph]? and increase

Tim Medina

That's correct.

Alex Paris

you Just a school a your would aimed up a and comment, solutions as question benefit, not in benefit stimulus, federal to prior expect follow districts a the so but it's LRN on business result? you learning at

James Rhyu

don't think benefit. seeing we're a material Yet I

we're of doing really That's and up [ph] they Of either our how dollars, them. or fall will leave for as have. some the really, just you context dollars, provide stood will. for that's And any need districts course, really to it that we're up the them, district overall be - to in is situation. of pools business, they that trying to programs leave to there we sort chase, that but dollars of many could they're decide it funded we specifically even if other from the not whether What emergency we and federal its an or money in own to it's up

get much to districts. want they the of job into their too dollars. don't we how allocate That's So the

Alex Paris

think don't any Okay, I'll general? to what going think for is have one last you're states And year. that that preps, up about enough. ask to to the I I career the fair you're new you know guess for you Stride answer eight, open but the expand planned I the I this. appreciate fact going I new and coming new in states

Tim Medina

No point. new anticipated year fiscal states for at XXXX this

Alex Paris

Okay, very thought. I Thank that's you much. what

James Rhyu

Thanks, Alex.

Operator

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

Stephen Sheldon

Hi. Thanks for the question.

if So in have had improvement about I enrollment it - like schedule progress, the as on you the efficiencies we that were just bit seems gross had of process of spoken you a trending ahead that improvements wanted previously? update all automation that the margin ask such here. of and that any - the efficiency to is you you the

James Rhyu

interaction a first enrollment full Sure. the Well, on their with parent where is on students. season our a enroll human this can a side,

So that's big us customer outstanding Difficulty] satisfaction. plus [Technical for a

[Technical they big etc. example. has entirely, have questions, Stephen, most that some Now, and turned been as interaction a many, capability up Difficulty] But

Stephen Sheldon

quick Okay, And you. one. another thank then

seems the positive it trends career most part obvious in of like So exception Galvanize. learning the for were with

what's on a you expand could going what seeing? headwinds of there, you bit little on kind if curious are Just

James Rhyu

pandemic estate business, the a community obviously, like WeWork and of call just [Technical piece think, was pieces. crumbled the three if non-workforce piece, was direct-to-consumer a in And mean, enterprise sort There I may I around a business. what piece, hit an since real past a really there's Galvanize us. Yeah, business year, a you underneath type there the of they Difficulty] remember, is

acquisition the late calendar so last and of sort first pandemic then closed quarter. quarter of And hit we calendar the year, that in the early in

we this And community fiscal very hit so a very, our entire had weak virtually 'XX, - we business. were year,

In technology to a did country. thought I materialize way business the a consumer consumer students lot product in they great that across consumer addition, and in have product, of we that They the not is - underperformed. the preeminent place The to also would pipeline going in so the the the and their continue it enterprise think enterprise thrive. business companies

going that the business think other down consumer trend I so this out costs is cut from we're to those and thing going around And turn on this businesses continue to year. double and and

And to us. still we can than path so, overall, had create what expected, we think while of onto put it a for lot a may originally be it value smaller, I

Stephen Sheldon

Okay. sense. Make the you for questions. Thank

James Rhyu

Thank you.

Operator

are this may There no time. further at continue. you questions Presenters,

James Rhyu

Thanks everybody and guidance. the we'll call for in Great. October you with today see

Operator

This for participating. concludes Thank conference today's call. you

may now You disconnect.

Stride (LRN) 11 Aug 212021 Q4 Earnings call transcript