ASPU - Earnings call transcript Q3 2018

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Operator

Good day ladies and gentlemen and thank you for your patience.

You've joined the Aspen Group Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference may be recorded. to call like host to now Ms. would turn over the your I Gill. Janet begin. Ma'am, you may

Janet Gill

business Thank My us Good Earnings issued may materially made discussion contained Officer. results A an Group's you. results Actual EBITDA. during afternoon. Year Call. Thank Chief in and considered Gill, of Fiscal predicted the indication the you of Financial Please Aspen's reported risks ended adjusted this note for company's Third filings our joining XXXX not today that our as Aspen name is for Quarter be and Factors is remarks differ Janet student metrics, our XXth, call, from to questions, statements Risk are and performance. Securities results University afternoon with risks uncertainties various section particularly to These future year should growth release including in EBITDA, include to the Commission, release include related this which today. our the in other answers and the and to relating April enrollment the marketing spend, for and regarding expectations Exchange subject and Aspen issued forward titled looking and press uncertainties. revenue, XXXX statements Form XX-K press

company's of obligations course any this Also, from result of results be conference at of I'd forward-looking we to begin company our the comparable and Michael press for future disclaims in measures revenues the the in about one GAAP financial by fiscal will Group Mathews. $X,XXX,XXX, tables the reviewing statement third provided a the and available call, our the Aspen discuss call financial developments. this that you for Aspen There company's like To call conference are increase most issued Then Reconciliation measures the any I CEO to update non-GAAP X% were as period. year EBITDA are adjusted Chairman transcript by during today turn will a will quarterly open, XXXX release talking which the EBITDA the quarter. financial to will year of comparable over operational a to performance. and website. the prior directly Group, in today. Mr. remind

comparative include USU contributions All of December month numbers, and our of of the course, in January.

announced previously record, in quarter's XX.X% new achieved Aspen quarter and University As matched X,XXX rate. fiscal previous student conversion three the enrollments

Aspen Doctoral at result its a increased increase by $XXX advertising spending of the XX% University Internet level rate sequentially, the spend a a of January. during or month primarily

nine-person and targeting a Los in efficiency initiatives marketing the metropolitan marketing to Angeles, short-term expected initially designed investment XXXX Consequently, two decline areas. and sales company's Diego, as a year. fiscal launched salesforce gross upcoming company outside margin January enrollment the growth and are the to in are the incremental San moderately Phoenix, Additionally, ratios New drive York These result.

decreased incremental a to marketing its an earn spend. company the given six-month rolling increased period, spend by per enrollment return generate which rate is a that cost XX%. University's quarter Note profit to enrollment the Aspen there's average from $XXX an effect gross that investments. Aspen on ratio enrollment at Aspen meaning dividing six-month Specifically, is whenever times or lag $XXX X.X over projecting marketing cost its sequentially times, increases of from Therefore, efficiency times eight we calculated before per to currently revenue per marketing in on eight end approximate three that

revenues as a company's faculty USU versus XX% in added quarter XX% XX% year-over-year. margin, that Aspen being full-time Group's of previous instructional of to a increased XX% the representing increased quarter, quarter revenues profit or for the to gross costs part $X,XXX,XXX or the now to of increase Note third payroll. $X,XXX,XXX result this

the sequentially increased company's by from Excluding University legal the G&A full-time $XXX,XXX which to year-over-year non-faculty $XXX,XXX,XXX the as for Jersey in one-time acquisition XXX Aspen the New stock. $X,XXX,XXX to three company we staff to $XXX,XXX. acquisition Note of working in bankruptcy was that shares remaining employees. XXX% of major G&A of United accounted rose expense XXX take XXX,XXX of of creditor. the fees G&A quarters States The majority the one-time of increase by On related two is grows from over $X,XXX,XXX. USU one expenses, to over possession The proceedings just creditors HEMG that a a Group are a of basis,

$X,XXX,XXX our share of terms net per or net $X.XX. In our loss bottom-line, the was of diluted quarter third for loss

receiving XX% monthly one-time XX% Aspen A represents a meaning measure, XXX a growth University EBITDA, margin. negative which utilizing a XX% payment and which by from Adjusted now X,XXX, $X.XX. year-over-year. closing, company of total had students non-GAAP of previously a both of just the was cash for the non-GAAP the a expenses negative the payment margin. X,XXX Universities MPP students. end the mentioned, a $X,XXX,XXX measure, to of increased students a in acquisition to quarter is at University method, another Aspen this an the method the In increase monthly from company's $X.X reminder, USU in method. on of a was Aspen in payment an financial month additional of Already represented financial monthly quarter, $XXX,XXX,XXX, over alone third related EBITDA, students four a or at University. $X $XXX,XXX As loss loss USU over or number the per totaled million third are month loss utilizing each is the At EPS million

to the Mathews for results guidance quarter our to over an to provide Now, operational additional third Michael and I'll next provide color the quarter. turn call on

Michael Mathews

acquisition everyone. Janet. initial United was Fiscal afternoon States University. the Thanks course, of Good QX, our quarter following of

in our of quarter. for So, three the of the were two months they numbers

over the Of those quarter, student of that from were those students. for majority is USU Let which start for enrollments achieved me another and just months. enrollments business Aspen by We the X,XXX X,XXX vast two strong. at practitioners XXX saying XXX at USU, nurse quite new

the program demand USU. and are in year. additional graduate is of degree our practitioners previously X% practitioner of each share licensed In our about X,XXX we two we an States there reach country; clearly nurse practitioners at As should market approximately to United XX,XXX nurse target enrollments the across new nurse annum. predicted, highest would per Today next us three the this students years, that give new XXX

enrollment advisors of slightly January, outside which Our we at the most the end people quarter advisors. total Aspen existing an declined of in number of were nine launched because of actually salesforce enrollment

and San We've area. Angeles, in enrollment terms initially York Phoenix, quarter will very metropolitan Diego, in Los of The targeting New salesforce the mentioned, advisors. Janet As been successful additional current be hiring the

enrollment year-end XX the a weeks at target early We from advisors expect of employed few company our now, which date. will original to ahead April, month have by one fiscal be approximately approximately

our expected. spend Internet of month tracking April, April, $XXX,XXX to marketing a our and -- Enrollment to rate beginning being spend by ramp our size rate result As schedule. with center early to increase monthly one are ahead as target revenue again the enrollment of just staffed of over our we intend month

to rise sequentially $X announced that earlier million over revenues this quarter $X.X forecasting today we at by million. now As to we're least

quarter expenses, the was the USU $X related approximately subject majority loss non-recurring was, approximately to this one-time operating of of acquisition. course, million of which Our to $XXX,XXX

so our loss the EBITDA Another a non-cash $XXX,XXX operating were approximately of using loss formula only $XXX,XXX. charges, adjusted was

basis made basis Now quarter on EBITDA in historical at a a USU's the over incremental the investment Aspen's adjusted operate little January loss meaning USU in adjusted positive business we the Doctoral of marketing EBITDA even that including was level. that $XXX,XXX, $XXX,XXX not given

we we're This operating fiscal approximately from historical schools $XXX,XXX As will is negative previously schools XXXX. to in to per plan for jump rate short-term turn of our the $XXX,XXX month our both quarters, EBITDA to of spend in two monthly both adjusted Consequently, second next Internet schools. month indicated, then obviously half territory for including in suppress starting year the remain over forecast spend significant per increase April XX% positive for our advertising both results.

rate should powerful already made we've model. date prospective the testament paid advertising weeks of update turn I about July. announcement Since to of be the first other before the inquiries projected new we over our return our three call students marketing for EBITDA is any without increase, economic our our a two received pre-licensure target BSN spend ago, XX course, campus marketing prospects One positive and this adjust Q&A. XX% Phoenix Given would, quickly the item cohort business, in extremely territory way, to We're approximately increase, quarters the unit excited following we and by of for efficiency to a student efforts.

first would quarter our approximately million this later And calendar whether to program raise $XX fiscal cash to prepared we calendar first That weeks additional our at investment, inquiries our credit today received I'd have revenues initial to reiterate campus will to ago a for hit the equity. million year, would ends to equity afternoon. and After like to position look the before toward year. raise end to our equity company we few see require we we'll our BSN this begin CapEx decided this for should So, would increase plans time, of year of of facility need I that as XXXX. existing number this additional pre-licensure consider that indicated, it a we this and $X announce no comments we increase of

open to address call up questions. like to the any I'd Now,

Operator

comes Eric Lake Instructions] Our [Operator sir. you, Thank first of Street. line Martinuzzi the of from question

open. is Your line

Eric Martinuzzi

University practitioner you put and there's it's Internet Internet the Doctoral get a Aspen you confused pre-licensure. question Aspen Thanks I plus and spend there, the and talk guys compelling, there's and Doctoral I partly really family growth. the then nurse on old traction then there's when about congratulations on spend. I USU University the that's monthly Aspen for had plus University USU think plus because

$XXX,XXX month. old spend the include the new all was You per Does vectors? per $XXX,XXX growth month, $XXX,XXX said that month four per at spend

Michael Mathews

Eric. it No, Good doesn't. question

historical walk you I'll through numbers. So, the

$XXX,XXX nursing. and Aspen the all month then, months. course, And couple month for $XXX,XXX other was programs, behalf approximately split USU of So, of on per the spent the was a last of $XX,XXX primarily previous degree for of their was University

level spend we we've we're dollars we because on I the as previously $XXX,XXX going would this So, Doctoral per into guesstimate month, that going say, move than the historically, to more business. of announced forward, spend not to does $XXX,XXX have start USUS. vicinity University Aspen going significantly the for for advertising $XXX,XXX That we're include approximately the of on campus to behalf pre-licensure and other, in that

program our such able cohorts three or to into about our marketing how a chance any are in feedback is. to might is getting we without one, bring place good that dollars. Phoenix spend That's two, there first compelling program; We the be metro our having

Eric Martinuzzi

definitely terrific. -- that's rate. It No, could get -- get tuition

talked the part advisor outside about the in that to of as as into and some salesforce? investments your people side, the incremental well, adds cost enrollment of outside the fact turning reason the advisors for some is You best nine-person well as salesforce your enrollment the per taking of rising due an you're them enrollment on

Michael Mathews

I wouldn't that. would say no, -- I

of at we're those that to know take have rise traction. center you obtain with two outside enrollment you through going the handful that day, sure, would months And For the our benefit in spectacular they end hired an the -- from picked our outside great have of of people to talents. just it's them out company, of build walking seven and cost, streaming to had a enrollment because we Scottsdale, but to salesforce, when people short-term you the

a So, issue of effect. just simple it's lag

Eric Martinuzzi

going spend And acquisition higher much Doctoral a after it candidates, candidate, would enrollment takes imagine there's does I to also Okay. of how more impacting -- get these cost? Doctoral a customer a -- then that

Michael Mathews

Yes Eric. great it question wills,

vicinity venture Doctoral It's We're $XX,XXX about somewhere is the our tend higher. you too what going $XX,XXX. tell to be, I but we'll unit similar. early when run would the that are going You're you XXX% rate cost to to But you're correct. leads traditional guess to to finding on conversion XX% rate in that of over clearly XX%. don't be or run again $XX,XXX be think the tuition program, when which economics nursing programs, versus talking I it's

rise into opposed to So, at today LTV right? going is as to seven, teens the our

Eric Martinuzzi

Yes.

Michael Mathews

be So, in gross conclusion on going is students to higher. profit our Doctoral

Eric Martinuzzi

me, it's whether appreciate X.X is customer see ROI When we compelling. do see QX with we your I last do when of in acquisition when XXXX? that line spend because you six-month XXXX? -- to on I per or historical -- a that trailing very and back come six-month a expect do know should cost for still kind question QX should X.X of Yes, on that enrollment, Is that Is norms? a of trailing you that the

Michael Mathews

say. to hard so It's

-- lack this of saying right. of much So, a data business, for analytics from very business it, way I run better a a

week-after-week going constantly achieving That's whatever to on what I'm really So, a be higher is business gross month-after-month making matters. decisions profit. based

my will And perhaps so six-month growing X.X nine or more is rise up over because if and tax my obviously my enrollment goes rapid XX. LTV up, -- trailing average cost goes to rate, that at but from time a

Eric Martinuzzi

quarter Okay. Congrats and questions. on the for my thanks taking

Michael Mathews

Thank you.

Operator

Thank you.

Our comes of Capital. next from Craig-Hallum the line question Malouf of Mike

Your line is open.

Eric Des Lauriers

on afternoon this congrats Eric with Eric. on course. a traction is guys, the and Congrats great your Hi quarter from Yes, on Mike. hybrid early

Eric Des Lauriers

wondering the traction early what there. the we I results afternoon. spend on received the just was of kind Doctoral on Good Thanks. wondering if program, dive marketing some you into could of

Michael Mathews

we you then any It in in really when a XXX to to investment very remember is tested launched invest to program, monthly the enrollment very, what QX significantly for cost mean I takes idea we January. you of days going program for carefully be. have that this in exactly and Well, XX and good

but we that per case expect level. exact if -- to be don't the at $XXX,XXX and in somewhere enrollments amount, between So, the month, worst $XX,XXX averaging I was spend would going Doctoral month it I would I suggest we're the XX that remember

Eric Des Lauriers

That's great.

historical -- mentioning see your Going And sort in-house? of but I the I'm you outsourcing you to market increased come discuss kind spend versus we guess can of over on between is the you of marketing, what outsource? to associated that kind of ratio lag were how kind is? I that wondering back just kind know a earlier, then to to with question, just in-house impact And levels? that of outsourced how can number what how can then efficiency expected follow-up

Michael Mathews

when outsourced, are you Eric the salesforce? outside you about say, apologize. I new talking

Eric Des Lauriers

Yes.

Michael Mathews

Okay. Because that's really not--

Eric Des Lauriers

it former -- Outsourced is lot of but a a -- is Aspen so-- because little incorrect employees, Aspen

Michael Mathews

Yes, yes.

And -- where year this so approach sophisticated targeting six the a everything internet techniques, we is is clearly right. marketing for this business different using viewed advertising data than

takes build to is going various this process going that each So, be they're to what is this and that place those the of salespeople is in these sectors augment efforts to relationships the is going outside target.

military, salespeople are we're four nursing, I going to the -- So, and mentioned different I that think segments; earlier targeting outside education, community colleges.

first leadership then positions tables their up relationships then with that set in job these of locations. second each And of people to so presentations leadership go build in and in various they and is the -- things And and make step nature. is

so significant into it's be to enrollment before they're center. to several month able going leads a And our drive process

months. month drive will answered know of are to don't expectations salespeople, our that six our enrollments be able I So, one I if question, to your of them, each say a four but minimum per XX within

Eric Des Lauriers

it simply bit seems more of What little Okay. That's costly I than into definitely just I online that's helpful. like initiative advertising. a -- a if more. that dig suppose bit could a

just over beyond, efficiency to can rebound? year the And out we of marketing ratios you how sort you of of that expect wondering or next to I'm how that outside two evolve marketing ratio versus the the time? outsourced expect looking or team expect sort do how then in-house, and mix So,

Michael Mathews

we you to when was guys it created it how money. and first to our Aspen is nursing I marketing using thing using we the efficiency ratio, the was business is want mean would spent say only primarily the think University I I that that's only

know average taken course the eight and so there average being number an completions enrollment. we an courses by we on enrollment, that when scientifically And is get per student what of watched we were

call going and it have a -- so not I'm year. the for is. We And this watch got numbers to what suggest to we to

levels. in, We point our that to differs will to we update have time, that And in historical I to to many see are to how -- when versus these ratio. one come going begin courses at that new students watch take year have how in and

Before -- me. accurate it's enough wouldn't statistically that, it be for

Eric Des Lauriers

a All Well, congrats quarter. and thank enough. on right. again great you Fair

Michael Mathews

you. Thank

Operator

you. Thank

of comes next the Howard Brothers. Taglich of Our from question Halpern line

Your line open. is

Howard Halpern

Congratulations on quarter. the

Michael Mathews

Good afternoon Howard.

Howard Halpern

nine, the that to the a hospitals nursing also with those candidates within the group are wondering going departments developed and in you? using, have of relationships been was with I organizations at be segment, you that they HR relationships that have feeding nursing some least to

Michael Mathews

if system up are, Imagine is you're look. you your you intelligent I first Absolutely. a which do pull company, really thing you would CRM we and would think would the

are going students is New its and going And you're you're If the who's where to Great becomes going you saying; great hey thing York York this see the all look about, it running do outside to is that's students metro and sales you're person first Aspen know? across you're New area, all the those networking. the metro. start relationships what do building And to calling -- who to

the And process through. they're so that's going

Howard Halpern

Okay. in half turning of to next going include of year on have the you're -- of positive, program? the terms spend of some in does second you EBITDA do incremental the year pre-licensure about talked And to that the

Michael Mathews

Yes.

Howard Halpern

Okay.

Michael Mathews

We're commencing campus with the pre-licensure July. in

to drive It's with nod go kind this marketing take because unique me do get to this business a share. so thing up that coming is this model. the will year, a couldn't turnaround. And model to just model of after them. the positive cost our heard And We right by unit and me know given we business second very that, say And gave I economics be of on -- more going all even need our have a in fiscal very fiscal of everyone was turn XX% our bullish I we they and it year starting they market quick go of the up. we half

Howard Halpern

guys. up good the work Okay. Well, keep

Janet Gill

you. Thank

Operator

Thank you.

line from question William Gibson of Capital. of the comes ROTH Our next

Your is line open.

Michael Mathews

have may this line. lost We

Operator

[Operator Instructions] Thank you.

Our next [Indiscernible] of from comes question Jamie the Capital. line

open. is line Your

Unidentified Analyst

Thank you. Afternoon Mike. Good

Michael Mathews

Good afternoon Jamie.

Unidentified Analyst

but to a DNP profitable? ask I the most by far got bit on isn’t question just late, programs ROI and the with first marketing a spend, respect and little FNP wanted I ROI and to

Michael Mathews

program to actual other to to the It and most to courses very they're a what profitable the number appears revenue watch some the determine It's in come of us that ago programs. will a the taking But going we these mentioned provide order to students that time. and in be the student the they many minutes in enrollments need attrition statistically accurate University. how per few behavior is I compared take

Unidentified Analyst

Okay, And helpful. great. need marketing second had $XX lower desire cash with the faster share about breakeven your I more are capture profitability your at That's future thinking in revenue, question grow then was at to growth? any your given million could raise back rich How to throttle cash burn. support market to you time to to balancing you your more

Michael Mathews

-- stated in said question. meaningfully month course, Great previously, in as April. we're XXXX, our to to we upcoming this plan going next growth begin Well, and we've spend fiscal marketing of accelerate which

cash spend and marketing growth our will credit fiscal through to and Our our our allow access needing accelerate position our us to additional to raise facility current XXXX without equity.

Many expressed to I And they the have our I'm say. addition, can raise profitability in sometime additional to shareholders breakeven to have of the to upcoming very still interest company year grateful even spend. potential us investors for equity, so become with second In this the half interest, like elevated of expect fiscal would our get and company. marketing we in

However, this of raise to calendar. just not is equity happen any going sort anytime

the off basically it's So, table.

Unidentified Analyst

you you last think think student. around And that the on recently market Phoenix to students capacity. get over it facility there. accommodate program think to sufficient said you're the And pre-licensure capital moving breakeven And just and mentioned last time earlier that do XXX with you mentioned per got to that get was then in so you you correctly understood I sounds -- could if said question mentioned many $XX,XXX Okay. the $XX,XXX, you've starting and that getting to as I with like call back full once I into I my has as you Great. year, half you

be could the So, is peak it years the in mid-teens several at revenue capacity full possible doing that into those programs at road? down

Michael Mathews

per Yes. full it four to have us in It be take $XX will north status. will five yes, maturation -- a million of be annum, yes. well to appreciably But years to

Unidentified Analyst

Great. Thanks so much--

Michael Mathews

campus. Per

Unidentified Analyst

for Understood. Thanks my questions. taking so much

Michael Mathews

Thank you Jamie and good day.

Operator

question the Capital ROTH [Operator of comes Gibson of you. line from Thank next Instructions] Our Partners. William

open. is line Your

William Gibson

you Thank me this you. Can time? hear

Michael Mathews

about that. I Yes. what don't No, sorry know happened.

William Gibson

income does increase all the of Internet and that advisors going the SG&A part the adding to in How statement? cost enrollment spend sales? Is of is through or flow

Michael Mathews

yes. Okay,

So, center item. within line has always the the been enrollment G&A

William Gibson

Okay.

Michael Mathews

marketing now essentially but sales nine our those been advertising label has And have because to we've changed to-date, salespeople. outside we marketing spend, Internet and that

William Gibson

behind mentioned Or bankruptcy just what What -- you some lastly stock? they did And the back that? potentially stock get giving how on was proceeding.

Michael Mathews

it's are HEMG those in of So, two looking amount, I major declared shares. the company XXX,XXX course, of the it’s Jersey that significant -- about and in to, owner original of paying has bankruptcy New University its Aspen -- bankruptcy one are think a we shares was back. and that There's creditors

William Gibson

Thank you. Okay.

Michael Mathews

welcome. You're

Operator

you. like back At I'd management over remarks. this call time, for the turn to to closing any Thank

Michael Mathews

for everybody to questions. I Thanks your afternoon. you joining me this thank for want

looks afternoon. here Have talking soon. team you with a forward to nice again Our

Operator

Thank for gentlemen you a today's conference. day. Ladies does wonderful have your and participation that conclude and

Aspen (ASPU) 15 Mar 182018 Q3 Earnings call transcript