ZVO - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Zovio Q3 2020 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speaker’s presentation there will be a question and answer session. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Alanna Vitucci, our VP of Corporate Communications. Thank you. ahead. go Please

Alanna Vitucci

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

events, forward-looking suggested these speak statements or these obligation in and to presentation, laws. growth, forward-looking of leverage later. ability and the services; materially These partnerships President extent except the today note and date and Joining and be that the Officer. differ a meet considered our to required today are and regarding of We our acquisitions; and Ashford successfully remind statements this ability the Kevin forward-looking are XXXX expressed programs become applicable performance the update do forward-looking and securities to Please other related those number to light integrate our only approvals education Financial to all future information transition in to statements Chief acquired actual and new like and an conditions that results subject forward-looking, the our student that Andrew ability by statements. statements or Royal, me EBITDA, including Chief to required regarding so; Executive of call technology retention; year of could all uncertainties grow enrollment to University risks may required to Clark, company; our guidance, you from no on would current timing through statements to to financial and commentary fiscal plans future of obtain and Officer; planned make close or education revenue as cause ability we to companies, Founder, by new on undertake growth; some we regarding services

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

of the time, You to introduce may Relations website. CEO, visiting it the Andrew Zovio's section and this Clark. Investor obtain copies is from my our by President or pleasure SEC Founder, At

Andrew Clark

quarter discuss our review After results our and metrics. welcome comments. offer Thank call. of closing concludes, quarter, I highlights for the After some third financial Kevin to will and operating my I you, Alanna, the earnings XXXX Kevin will key

strong incredibly quarter XXXX. are report to a pleased We third for

delivered line guidance, enrollment single-digit foremost, with in and we new First growth. our low

quarter and the September focused year, XX.X% reaching a for of prior points XXX flow the energized remained of has inquiries as XXXX. Retention over continued. also basis team Our the steady XX, as improvement, increasing new significant saw

second supported increase since combined place reputation, to Ashford's superior enhance the year we and this retention offerings quarter resources the and with XXXX. best of initiatives put efficiency, in earlier the overall

normalized digits the on continue at in a anticipate to fourth quarter, basis. the mid-single new to this with look we enrollment As growth momentum we Ashford

diluted quarter For or the revenue reported XXXX, million delivered third of per share. of $XXX.X million and we $X.X income net $X.XX

creating the key and reinforce world-class or of technology Zovio's for into Arizona Arizona definitive of the income quarter, million to a Ashford share. a also its transaction University services agreement we a diluted announced University education signing the Campus, third UAGC. Last net Excluding This of XXXX value moment non-GAAP the University evolution $X.X company quarter strength items, of marked acquire Global per students. was or to Ashford's with for non-GAAP the our proposition of $X.XX

hit In fact, the new high. a University's all-time Net Promoter Score

As of XX.X, world-class with Further, highest began the and Ashford's the January with this since indicated the results the from end colleges the that Ashford the education in participated of of quarter, we Engagement, or on NPS third X-year that challenge Student academic leaders. National Survey that an in United par tracking top XXXX in NSSE. metric other NSSE, XXXX was States of of provides XX% the global ranks

and their Bachelor's advising practices. include degree broad and rate with level granting a high experience students representing Ashford's say academic region. or of and faculty type, universities, with and Participating respect colleges private public institution institutions quality interactions they teaching as control, to high diversity size effective

students, partner UAGC in Building superior innovative excited and provide expand for their incredibly with to students to on UAGC meet are learning further will where of We are. outcomes support solutions the history they access of vision.

target continue the the end by the to We transaction of closing year.

Ashford's to subject approval WASC. remains by accrediting this body, However,

and to marks last enhances engagement through client and well UAGC university expertise, online as student foundation of improves growth, other our across data enterprise with platform learning which education continue to unique can services offering technology differentiated individual technology world-class our our our modalities the discussed levels, providing services leveraging student innovative create experiences strategic learners. disciplines. quarter, provide and partnership agreement technology education we This analytics our from personalized and deep we bring we'll inaugural pursue a positioned, incredibly education transition clearly services, advanced likelihood to As will that agreement, to credential our a In services all our provide success. to leveraging and we growth, we personalized of delivering pursuit We corporations strong and remains diversified institutions, company and clients. Zovio

development and bring we retention student the entire solution end-to-end recruitment course First, tools. an and marketing cycle, to spans that life

flexible. are offerings tailored our Second, and

to this growth at powered clients' data-driven our of that making metrics for the and and are yet performance Third, enhance support workflows solutions platform to presented significant all clear graduation. This client offerings normal. lastly, insights overall to challenges objectives. shift. analytics that at we operate are our proprietary are Zovio's an trend, solutions all our enables from it is for Higher institutions aligned everyone, course, pandemic optimize virtual signals. through scale outcomes. this develop Signals And will results that of marketing engineer new rapid by not Zovio education prepared robust our to The has, is improve and provides be forefront predictive accelerated of increasingly world

workforce which number second, online solutions deliver provide institutions execute of First, offerings strong and suite key seeking Learn@Forbes, they where is expectations subsidiaries, differentiate position a them meet meaningfully our Zovio's partners; services better strategy, to higher employed the to investment will upskill existing jobs, continued meets accelerate data-first robust technology success. growth, enterprise that BXC needs through expand centered be leveraging building to established of education addition initiatives: and and them ed be our and opportunities these ongoing students will is leadership growth At Zovio's fourth, perform support and with third, positioned enhances large-scale Zovio's better and and on long-term of most on people. the same to that education platform gap career to a to employment, could help education skills with upskill. that serve Learn@Forbes Zovio Now The BXB more educate to and than higher by businesses a and institutions; it learners to support to and diverse capabilities asset, a trends of expected. our better empower than these ever, are services all enables services to bridge and ecosystem education the offerings. not achieve education connect institutions, critical data-first TutorMe leverage Fullstack, time, unemployed learners to further their the offer important their and as to aspirations in-demand to provider and employment diversification;

continued Emory Fullstack University University Chicago. partnership outperform Colorado quarter, to Illinois, number and meaningful including partnership of university the State the anticipated announcements, University, agreement During with of

As an with Georgia of region Atlanta's its impressive professionals training Emory's sector with to University's the and most aimed staffing meet developing relationships natural a Emory with will to offer the noncredit Education, programs alongside across Emory longstanding example, prospering prominent this businesses, was technology division, Atlanta's needs ECD, Fullstack's accelerated reputation partnership Emory at Continuing qualified bringing fit.

Choice we look for initial end expectations, As increased incredibly opportunities we students and to to both XXXX partners of Choice award TutorMe By Parent most Fullstack In recognition professionals have of a our the Award. teachers. recognized parents for we Parent offering expect upskill, continue HowtoLearn.com from and The awards Teacher experienced as the optimistic for awarded nearly university seeing to by forward. XXXX, our are remain we among prospects offering. was are in and doubled Teacher international and HowtoLearn.com's the and its opportunity move from September, superior

As educational pivoted and remote learning, have support learners. the like importance teachers online students, resources of to necessary parents become have to TutorMe

services. TutorMe TutorMe district program of district increase its provide the to been third added help bringing the learning, Allendale remote to consistently continued students seconds. effective announced gives education where of as a the pandemic XX school to because the continued September, the with need from have vein, execute support companies the schools employee quarter we corporations support demand, successful tutoring In which year-over-year. districts. to access online and of in for growth within the focused District, increasing the In an during remote providing learning total another higher strong customer the districts an second free tutor are have it. to live XXX, and County partnership increased of end to momentum nearly of institutions over to the dynamic an from usage their Since quarter with the tutoring. continuing out on access K-XX XX-plus online nearly saw TutorMe Further, to students. when are they XXXX, will XXX% ensure total tutoring In stood students TutorMe XXXX, X,XXX while alliance platform to students at universities its tutoring And partners K-XX as has third new School TutorMe XXX% has Given the quarter. partner year-over-year, explosive online as quarter, agreements education County driven Allendale the benefit, increased outcomes the leveraging this in COVID-XX

for As we at of consumer, X,XXX had XXXX. quarter quarter, a self-paced, skills-based of a the Learn@Forbes second as teens increased which percentage subscribers, At the the the clip. high platform active a end subscribers from attracted the third content strong in

prospects continue We the we about this very of the and ahead enthusiastic for success remain to by offering, be encouraged Learn@Forbes.

student expectations, achieved with we not new our to third We progress XXXX offerings, growth retention growth our all We seen levels during quarter. broader the and firing Fullstack, at on line are and are incredibly Learn@Forbes since in TutorMe return a the delivered pleased including cylinders. enrollment with and

final into our march remain point. years us step the want and Zovio we transition to deliver technology has we and the commitment It to long-term education a their for the to hard the over growth get creation. advantage company, student take a several a world-class services As future. in work to of Zovio's to this towards thank I excited is on that of last value for education superior attractive put trends path outcomes your higher team

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

Kevin Royal

Thank you, Andrew.

was by the begin third related in for in a the the period decrease September of to an ended key The revenue million $XXX.X for tuition information enrollment, operating in quarter me $XXX.X same decline average some by to million year-over-year for the prior year. XXXX XXXX. financial offset increase XX, providing quarter year-over-year. of primarily and rates Revenue partially Let is compared

of instructional The of period. Net For as XX.X% comparable of revenue primarily expense. quarter debt $X or costs comparable of The million XX.X% percentage as labor to costs debt revenue expense quarter Admissions, or in in compared decrease due third compared and were XXXX increased XX.X% year was to of the period. million cost a to to year-over-year revenue, prior the spend. million were third of of or of bad advisory the These acquisition X.X% costs, the quarter for to prior year revenue period. $XX.X of third administrative or million of from expenses services million lower costs primarily compared relate $XX.X of expenses of period. third compared charges increase driven prior costs. the or by million revenue of or of as of $XX.X was $X.X $XX.X marketing to or percentage revenue as prior Restructuring in the quarter in the primarily a facilities expense. comparable for driven XXXX revenue as XX.X% labor by impairment revenue comparable revenue for XX.X% compared General X.X% for of X.X% to an well the XXXX million of revenue XXXX, by X.X% decreased for offset third in and million increases lower prior percentage relocation or $X.X period. for quarter and $X.X million bad XX% comparable XXXX for third and or was the or were primarily were and advertising for prior The the XXXX $XX.X revenue partially quarter a decrease charges $XX.X the revenue the of the revenue and million

of $X.X quarter XXXX, third an recorded benefit we income million. tax of the During

rate low single Net the million, share. third This of net XXXX remainder quarter quarter and quarter anticipate the income discrete net per continue net effective for trend or of tax the $X.XX loss compared for was we XXXX $X.X per to diluted Our loss million for of a diluted year. was income of items third to digits, the this before share is third $X.X prior a for the XXXX. $X.XX of of of a

income year. income for restructuring share for $X.XX $X.X XXXX $X.X net net loss of non-GAAP to million, The impairment excludes separation third loss prior of acquisition was the non-GAAP million. per costs costs of and share the Our the third $X.X quarter charges the conversion for of non-GAAP of $X.XX income of of and of quarter quarter of the million diluted third million and or XXXX net million per or $X.X compared diluted $X.X

December changes $XX by The of driven By compared XX, of primarily XX, by As December XXXX. activities period by the million million working $XX.X ended of as was generated as The was activities million $XX.X in year-to-date earnings, year. equivalents net compared million during capital. combined same in September increase September the of partially receivable to change XXXX, million offset the the accounts XXXX. to and $XX.X in XXXX, had in year-over-year cash period we We of XX, activities as provided of for ended operating cash XX, period used as expenditures cash XXXX, is in business operating consistent were $XX.X with the XX, XX, million comparison, operating XXXX. $XX $XX.X our cash September prior we The during compared increased Capital million cash balance by the period cycles. the of last million to for September $X.X year-to-date same year. provided

growth. quarter, enrollment In terms fourth for the expect our outlook we of digit new mid-single

of Beyond we XXXX. will providing this, the guidance be remainder financial not for

transaction of to University high with million, successful be For assumes of total of the revenues XXXX, to we in $XXX in anticipate million by the our the XXXX. Please margin completion end range this Arizona note, non-GAAP single the $XXX EBITDA digits. and of

back the Andrew closing for over I will comments. his to turn Now call

Andrew Clark

Kevin. you, Thank

Zovio's marking closing quarter Campus of our to new We Fullstack, of highs by to enrollment gain this sale University technology was of approval, University retention of education third levels its XXXX transformation at Arizona not Global XXXX experienced Pending University the world-class were continue in and returned company. creating final target TutorMe The we and to the end to accreditor a Ashford growth, year, and subsidiaries, to Arizona of continue Learn@Forbes since of momentum. services the step strong.

future the As bright. I have previously Zovio for is said,

a needed ensure achieve the to and an tools our to partners superior delivering strong learners to data-driven resources with culture base, employee innovative, and outcomes. have clients have We energized insights

excited the ahead lines for questions. our operator are us phone lies stakeholders. what to At our opportunities creation ask of for We incredibly time, value will for and this I your the open

Operator

[Operator Instructions] [Operator the Barrington of Instructions] comes line Alex from Your from first question Paris Research.

Alex Paris

to we the on is point -- above revenues my of X congrats perspective, estimate. metric note, acceleration I that quarter. Earnings in And expectations, in quarters Thanks. importantly, again, quarter. with I would on I think But in happened line the don't know And after on expect a this happy decline. inflection P&L more fourth the was but From I hear starts. there. were reaching that congrats what were your consecutive

this we've a So for been while. waiting for

do the what influenced off, attribute you unemployment? it first So sustainable? was to? growth rising it And COVID or And by is

Andrew Clark

Yes. Sure, Alex.

unemployment. So that I believe don't rising or by influenced was COVID it

all XX/X that and of distracted and an the that. value brings University there's kind were support. of argument by And fact, really In I heavily convenience proposition quality that believe consumers it Ashford that of was

internally NPS the very started some that back and seen score, And we in our XXXX, then And really we and ever capability, And have operational we've been bring we've really quarter. our we capabilities internal really proud the things bear heard with like it with about this. we our I along data-driven some execution first that's measuring since that I'm operational results think. to end You've on that the up with working best since of strong when combine we insights team. that

I think growth of be And it's expect QX. to sustainable. in mid-single definitely terms the enrollment us digits new in for would I

Alex Paris

be the is in acceleration your given growth, would new anticipate once traditional student it? name Great. University and that given with subject University approval, you brings Arizona brand enrollment And completed, not-for-profit the that an the or accreditor's will to now of more then transaction

Andrew Clark

just very argument said. kind you of Well, I for logical mean, a I think what there's

caution Ashford because institution, to I'd of the the rebranding say more Ashford Alex, already to Arizona, would think, incrementally it bit from a students the should UAGC. value enjoys, institution. I the that in bring, the you're proposition new I University affiliation I -- think little with to addition

I the of there, fourth the second third half and growth from dissimilar the not think a half in quarter. in enrollment 'XX first the So and be bit the year we're too little there'd of new be would probably meaning experiencing what headwinds in of

do accrue So UAGC the which I'm University and on. think having it really growth occurring to of most to Arizona better. wonderful new at university, become handing students, all a of it Ashford should enrollment I all things it we're and think thing. that benefit pleased make I what And enhance of it that the institution. UAGC we over growing And to is is really the will even focused wonderful do University And have as is, having some

Alex Paris

Absolutely.

with Google be that what and it headwinds university? terms Would kind the name the So would change? things the be like like of Search reestablishing

Andrew Clark

Yes, can cagey tell in many, I been exactly. veteran industry, a many around you're the years. for you've

and you marketing So any come of run at -- our the competitors. could in any probably of

yes, right? populated be the algorithm. So as in Google terms, Search will different absolutely It it's there Google Search UAGC gets

is kind happen in to rates quarter would expect more of in what we're and of half of be be robust a circumstances. little I that call to might we currently catches would anticipate we a of the of headwind. that's and So see up what quite robust algorithm won't enrollment in would you growth the context it than quarter. back it's think of new what the kind In that it's what bit once the today, under as words, would expect be Ashford in other growth headwind I the But similar would which then new a seeing fourth enrollment year, as kind normal this

Alex Paris

That's great.

kind to Moving TutorMe of in on specifically. Fullstack and key the I to wanted on Learn@Forbes, subsidiaries, Fullstack,

you're you you or university think would double that terms there you partnership my by had you count, would of before where right other acquisition. of you're year-end? university Are going likely right up now, time I By at be be that's XX be X in implying announced at to XX now, from said, partners. XX to agreements year-end, and be the thought

Andrew Clark

Yes.

agreement I year-end. the more potential think there's for before one probably the

this You're acquired partners be right, when currently. them point. And at to X we we're for internal XX at our was at plan, Fullstack,

they just team marquee doubled some university this brought what there kind done on like Emory call. would would year, just I one has of example. this expect that of a seen year. We have similar in rate expectation. a The probably little continue we've and It's partner mentioned fantastic that next they job a universities. signings Alex, earlier So really probably

that them the 'XX, they university If you expect partners. the of XX, X of quarter neighborhood means by a signings partner should X next year, of XX to in kind XX, end be do to somewhere

Alex Paris

or along And a upticks rising enrollment questioning, noticed same in of result as line the same on you COVID basis then program a have unemployment? of

Andrew Clark

Fullstack? regards to With

Alex Paris

Yes.

Andrew Clark

Well, New one you mean, been I the tell has which location, has headwind Fullstack closed. -- York was their for been understandably I'll

signed well. hard fantastic. the so this part-time pretty that's their But have online launched we at so would the of signed, And university part-time doing the X we've XX we've operational on have point. been programs them. that online And X really XX, partner say we've offerings But are don't in I been all very universities,

Alex Paris

And how starts? cohort -- start at cohort cohort then monthly have how you second it is does it And does ending? time? a one then Or there? you a do when work is How that launch? Is that

Andrew Clark

it exactly. depends do or timing. on and web of quarter, there's cyber and could cohort No, kind on at can the quarter depends university We the could the cohorts time or it the X strictly be Yes. be usually be it development both, either of partner. It kind a one

Alex Paris

of Great. couple University. a of And on Ashford sale questions just then the

would for approval. days, approval of will will street? So the that of already on Arizona I you when WASC If And the getting I'm got given approval to and your then meet They received The you notify be academic, Street approval, mix. I when think prior they -- we're the you you Xth. November think will meet not would pun and mistaken, parenthetically, the for notified? next, intended, last on a be WASC into When meeting plan Xth, the will notify you University waiting couple no how if initial if know you

Andrew Clark

Yes.

notifications, holiday. we've we'd before say before a altogether, I their know, be of within, sometime usually think of guess, so out when notified So their kind seen a time. I'd that guess out Typically, various be all I the don't Thanksgiving, but get weeks' good it's it's to institutions would the a of WASC were agenda couple and try on I'd say, always

as through most folks, an -- release notify and The In a terms notify definitely we'd quickly we're possible, of likely X-K as would we'd and as press that how do Street well.

Alex Paris

going you. to guess assuming -- adjusted last $XXX queue. And can get Got the revenue then Obviously, from completion just expectations EBITDA I revenue $XXX the my for I'll is million down to the reiterated because Kevin and the XXXX? for in subsidiaries year, year are million back diversified as you grow Zovio simply million a fast transaction in single-digit of some structure your to be momentum? a pursue question, as guidance next beyond margin. perspective, the $XXX successful What XXXX Zovio continue growth and of of you gain million agreement. to How and $XXX high of

Andrew Clark

we'll and achieve objectives XXXX closed our company to see mid-teen January for UAGC X kind year, revenue the the forma of everybody try And what as end though think what of Alex, 'XX. the on is pro eventually of I do Well, growth. the are transaction had at

being the like?" then to of down. you'll just So you occurred would 'XX, what consolidated view "Okay, 'XX compare revenue despite growth we'll be of And kind see, you, obviously, then that commented able give what on, which you of look a revenue is kind and

to a and from we'll then, 'XX. sense 'XX And get of much project for that, that. you'll able out be better So kind

basis in similar. I on digits be would each somewhere think neighborhood of XXXX. And us high-single revenue kind gradual 'XX. that forma probably hitting in probably you a year see a the growth around with number increase around would We'd mid-teen 'XX over of pro probably be

Alex Paris

helpful. waiting relieved it the I the We've Inflection appreciate space. very very key growth a starts long student quarter. this that's is all pleased for and time. for a color. am in this I investing see been Well, the additional to in

kind time through short this, Unfortunately, expanding me inflection. just you that advisor stock changes went years, given made think I negative it bit that durable in the feels you've of order But we to once went it couple all your including more over went again. little enrollment a last doubled that last the workforce. your here, of through

Andrew Clark

No, goes IT. the effort lot folks, analytics It people, team this Yes. our last contributed. internally. really really is everybody not in team done just over and and done to fantastic a job, our operational here internally year a we've a people has credit They've data

lot there's and direction be a organization the is educational taking the to company. a So excitement of energy for inside services the technology company, just world-class

we're excited So about Thank future. you. very the

Operator

I And remarks. back the closing to you for call turn

Andrew Clark

call to on everybody your want for just Zovio. us thank I joining today's and for in interest

Operator

Thank you, today's everybody, concludes for conference call. joining. That

You disconnect. may now

Zovio (ZVOI) 28 Oct 202020 Q3 Earnings call transcript