ASPU - Earnings call transcript Q3 2020

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Operator

Good afternoon. Welcome to Aspen Group's Fiscal Year 2020 Third Quarter Earnings Call. Please note that the company's remarks made during this call, including answers-to-questions, include forward-looking statements, which are subject to various risks and uncertainties. These include statements relating to the growth of future student enrollments bookings and ARPU, fiscal 2020 revenue growth, the expansion of the highest LTV programs, expected G&A, trends including fiscal 2020 adjusted EBITDA, gross margins, expected campus expansion, campus capital expenditures and campus operating metrics and generating cash from operations.

Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. and prospective to XXXX. supplement risks contained business of its in dated discussion uncertainties Aspen's related is A January XX, Form filed year its the the press Exchange XX-K XX, this in Its and afternoon. issued XXXX, Commission ended and third the with April XX-Q release Securities and quarter for

obligation any future disclaims forward Aspen developments. as statement any Group looking to update of a result

today. EBITDA, remind this discuss to like GAAP to company's you are adjusted conference EBITDA press in provided the I'd the the of measures tables that financial measures Also, course the financial in release will call, company and about company comparable in the which non-GAAP by during issued are the most talking directly Reconciliation performance. the

transcript conference on available presentations in one be website. page this info. company's the under will aspu.com available at Group's note call that slides There Please company the website at year a earnings for Aspen are of

Now, Chief Michael I will turn Group's Officer. Executive Chairman to Aspen Mathews, the call over and

Michael Mathews

results That Thank University, to affordable college mission strong reporting Good for University dedication and is States you United we're extremely again. Aspen record our my acknowledge reproduces Group. revenue wanted ultimately their and afternoon. financial through quarter hard team to I'm with to how work pleased another make And all Aspen has like This today. dedication the performing. is AGI I been employees.

Okay.

for solid growth. Let's roadmap quarter begin future Then our today discuss results the this will for factors, with the of drove I overview and which our an growth.

few the I'd thoughts. connect over to results, a go we quarterly Before like

plan Nursing in XXXX, March XX% that XXXX, payment Practitioner Subsequently, build we our in featuring a we thereafter. University, XXXX, And since five annual plan fiscal achieved platform Family degree pursuing Pre-Licensure online Aspen acquired program. their out nursing Group First, in back I'd to on-campus point over a Nurse master-level, need began by degrees. offering this for nursing like our We Bachelor hybrid in X-year years meet affordable to United the growth averaged program. could monthly of in today's Science education we States launched of that

steps and our programs significantly strategic portfolio. degrees new us into offering that programs, market, higher addressable two gave of a increased added lifetime degree brought nursing These value comprehensive our

Most our spend nursing our been LTV in increasing programs. high has recently, strategy to marketing focus our on enrollment

As exceptional a working, programs enrollment results, in grow nursing it's strategy XX% that and prioritizing LTV in by quarter the third in revenue clear as growth our bookings. increase is of dollars marketing high of quarter evidenced demonstrated another to

we marketing increase I'm ratio XX.X times delivered spent growth record for in and quarter with enrollment respectively. very spend This pleased is that that and lower enrollment our an only times this year, dollar efficient extraordinarily third model. quarter. year-over-year. which marketing our marketing Each quarter third quarter strongest returned seasonal is X% the University quarter, the United sequentially level Aspen XX.X was in mind this States of efficiency business strong a a each is in an quarter. QX the University, second extremely that school, than past And Keep enrollment active our in a

primarily both Pre-Licensure FNP new growth due States enrollment student at of quarter United enrollments, increase XX% the enrollment accounted enrollments, USU, in Phoenix programs delivering enrollment our to very student year-over-year a of BSN growth new for year-over-year, Aspen of full X,XXX for quarter with due X,XXX That’s third for year-over-year. growth to campuses. a or students. new enrollments said, primarily accounted pleased I'm to XX% University In overall XX% in our University, XXX overall third of quarter, our

revenue. on Aspen earlier, high quarter. spent $XX in this very mentioned Every in delivered remained dollar also we our marketing I marketing As over efficiency ratios University

staff. received we EDTech $XX of results platform for corporate USU, and the reflect our marketing marketing of sophistication revenue over our proprietary spent. dollar the every in value These For

increased In coupled to or The third fiscal costs XX% driver the basis meaningfully QX increase margin bookings with year-over-year delivering from an million revenue ARPU, increase average $XX,XXX. of from gross XX% XXXX, of low bookings the improvement $XX.X of to $XX,XXX million, enrollment the points is per quarter. primary enrollment, in $XX.X XXX to

of performance on competitive combined units thus costs and lowering resulted operational of enrollment growth. in of States for our and Internally, another United flexibility for driving our all stakeholders. our turn continued key powering for I units, to can't EDTech net is outcomes University in BSN quarter and Online, Aspen lower our EDTech University. costs results Aspen’s tuition that underscore lower three enough contributing improvements the with the our income business in positive Pre-Licensure of is focus students, platform value to enrollment advantages our emphasize platform our all better rates, financial These which

down options. payment debt flexibility financial take less achieve and students outcomes. Our enjoyed They better tuition

improvements by our material performance driving our as is point's business adjusted XX evidenced to by improved margin EBITDA Our year-over-year. financial margin

career increased differentiated shareholders high model. employees our opportunity satisfaction business Our job are growth based seen high-performing our report on improving and for and shareholder value

lower record the we our transactions is allowed our in January $XX interest and programs. strengthened $XX add a with million our and restructured our the To roadmap convert capacity out raise liquidity. fuel term, quarter LTV to end a future debt to expense of feature. Longer for our build with balance our us million to highest new degree equity growth, sheet Those

will investing is which For demonstrated spend. financing announced can the calendar XX of next we enrolling intend Pre-Licensure Florida students which locations later our with of We new will new two revenue program the opportunity to the We campuses in a both campuses, programs this XXXX. past high recently five for Texas, in initiatives effective these recent continue marketing and years. that BSN successfully campuses to our by have extremely us year. in BSN be operational have LTV million potential $XXX Pre-Licensure year, grow allow we The an

exam immersions which enrollment metro, have each where to also in will location we after growth, order be out metro and to a BSN each rooms USU’s We a highly for it's presence. catalyst future in Pre-Licensure build MSN-FNP sought degree. In for allow intend weekend

We our creating cash long-term to profitability future from improvement growth, operations. deliver invest in continue flow in and to

$XX,XXX. forecast at first growth a XX% fiscal forecasting strong over to nine of performance expect exceed in exceed XXXX, the XX% $XXX XX%, full-year year-over-year anticipated growth to enrollment based of Given million. year bookings or fiscal And the meet full least on XX% increase to over ARPU revenue months we for now the to approximately we're is to annual year average

to to an financial our QX for liquidity. Frank review on our Now, and provide results to I'll over turn the update call

Frank Cotroneo

you, Thank Mike. Good afternoon, everyone.

some by the results and insight regarding our begin reviewing and to our into for the expectations for quarter, this some fiscal third coming performance quarter's Going commentary then financial quarters. provide XXXX

million, quarter period. XX% $XX.X year Total revenues third the for versus up the ago were

strong X,XXX. our XX% by Mike new was which enrollments, indicated, As growth increased quarter record student revenue driven of to third

Aspen new up total growth States LTV United XX%. student million. Of and of up bookings to Strong University was XX%, $XX.X in enrollments, XX% growth was University higher programs drove our

period. XX% a quarter and drive versus to of year was up for this years. students coming fiscal the $XX.X XXX increase the were of is of XX%. third the expected in third for Booking ago $XX bookings ago the $X.X had period, USU unit in million million of versus X,XXX, in USU significant ago at in University business had of quarter, an total up XX%, was contributor year increase continued our AUM from period. to X,XXX in in bookings QX or Aspen enrollments million bookings from $X.X year of XXX XXXX. enrollments an quarter the growth growth this million

in margin XXX basis gross prior year from X% margins point quarter third gross by increasing primarily marketing to the Group’s XX%, expenses, year-over-year improvement for period. year-over-year. up was Aspen driven improved only our the XX% in

quarter gross University’s ago our period. led the margin XX% overall and XX% Pre-Licensure programs, gross up gross unit in a a United programs. in From the period. versus This the in reflects third perspective, from revenue value as of by effects XX% XX% quarter, the margin percentage the the margin University’s in year States increase was growing of prior higher third year was lifetime Aspen FMB the BSN

this campus strategy roll-out in trend our continue the years. we We coming expect as to

million, of the revenue percentage instructional the for quarter services Overall, of and a revenue, for third period. Instructional XX% year of revenues in $X.X XX% versus as ago. costs or were a costs AU’s total or year ago represented XX%, versus million, XX% University $X.X Aspen

revenue current represented quarter costs of ago USU XX% year in XX% While period. in for the versus the instructional USU

increased approximately same over XX% and growing was in and growing revenue. the investment costs year an was ago. $X.X over Aspen an XX% Total highest revenues, for approximately sequential University This in are and programs. from $X.X program, total the third our quarter LTV our prior Aspen quarter revenue, XXXX. affirmative of a represented student fiscal XX% of to over decision third and marketing and XX% the our promotional University the two million total Marketing quarter and Marketing pipeline expenses or down and XXX,XXX and of costs fastest for the improvement Pre-Licensure FNP promotional period, doctoral which increase year in were million order $XXX,XXX promotional

higher program continued LTV marketing from our of sustained last revenues, value and trajectory to quarter USU’s efficiency cost to third spend the year. contributing cash and towards thus down generation. This flow demonstrates were programs at more fiscal of a XX% students overall increasing marketing in enroll our XX% of costs and EdTech into profitability the promotional USU’s performance our lower creation

$X.X $X.X General of year or the comparable G&A and and tracking approximately our increase of $X.X long-term to million increased for million quarter, goal quarter costs the an million of the quarter XX% The half will at to approximately rate million the $X.X of recurring administrative general grow the administrative Therefore were compared revenue. XX%. costs for year-over-year. during prior

Total non-recurring previous $XXX,XXX costs quarter non-recurring Of activities. costs ago accelerated of $XXX,XXX costs, and is $XXX,XXX are are is cash amortization non-recurring financing for the $XX,XXX third cash current The of of composed expense $X $X G&A for costs, compared from of million. $X the other $XXX,XXX to financing and transition CFO are million million quarter G&A non-cash. $XXX,XXX other year This items. the for

year total total loss for is From perspective, third compared $X,XXX,XXX loss $X,XXX,XXX of bottom-line company a the prior quarter the to in the quarter. a

the in the discussed, quarter the third per quarter, year $X.XX recurring quarter. previously $X.X have million or costs, net this share compared For excluding million basic the $X.X share per basic would prior third for been $X.XX the loss of for non-recurring to

versus Excluding non-recurring ago basic of per million, share costs, this is year the quarter. $X an or improvement $X.XX,

versus platform EDTech year net at our a versus universities’ quarter. Both fiscal loss University's From of bring a efficient its million unit $XXX,XXX growth net higher and reflects XXXX. in quarter perspective, quarter was third improved USU’s by the marketing LTV strong performance income $XX,XXX an our was $XXX,XXX student. per income programs for the into Aspen ability prior $X.X enrollment increasingly to fueled students spend net

items AGI, million discussed and is expenses For year-over-year the earlier, increases G&A marketing primarily increase non-recurring in higher as quarter. accounting to staff, $X expenses $X.X corporate excluding non-cash ago the in year due well versus corporate stock finance, comp million were in The quarter as in expense.

this cash and liquidity days approximately didn't in With year the those company $XXX,XXX quarter, aid million quarter was quarter, received $X.X period, the from in position, ago $XXX,XXX the we end for before last used of funds which prior regard the versus benefit the the just $X.X quarter. approximately Recall financial million to court. in operations of our

our XX% Excluding million. and non-recurring quarters Therefore, our for was the last this the in on two in used current year in is the used cash quarter items in cash XX% performance million $X our towards reflects reduction operations used This second operations cash first to operations reduction $X.XX the quarter third improvement and million used average the ago. quarter quarter, positive a path $X.X the in in the cash from from or operations. $XXX,XXX, the quarter approximately reduction third a quarter, continued

expenditures approximately in our the this Family to Practitioner. quarter invest pipeline BSN value students originally $XXX,XXX a building $XXX,XXX This was for by programs, $XXX,XXX. decision less and over our reflects for continue lifetime to positive our Nurse marketing to than of increase Adjusted our including Doctoral, planned. higher was This quarter EBITDA Pre-Licensure

coming We continue these strategy to the our in increase in our expect investment programs quarters. to

XX,XXX,XXX reflect resources. approximately $X shares yet XXXX. of equity shares million ended January revolver With of ended the January not effect approximately X,XXX,XXX $XX full cash. liquidity quarter. forth with XX, average the quarter flows of outstanding share with our was The weighted the full Together quarter. XX,XXX,XXX to outstanding million sold with increase This which issued versus currently company ago our on the number year Aspen million, account, we $XX the quarter XX,XXX,XXX end unused has common shares a the in will XXXX. coming shares XX, of basic quarter in respect the of at the effect in does The shares and of on the have at raise, EPS Group

our you prepared turn very to I'll call Thank the concludes questions. remarks. the operator for That now much. back

Operator

[Operator line of from Instructions] comes Capital. Darren the with question And first our Aftahi ROTH

Darren Aftahi

a talk to of we about stage early two, your Pre-Licenser couple And of kind curious open open I in doing ups. with of Can was pipeline. Phoenix side? what got the about that's little of a kind And know the kind second of I've built you're when campuses one. the kind follow a on HonorHealth, of this some if then at I marketing here? campus occurred newer bit you second you or already

Michael Mathews

It's our opening you you is asking Mike Tampa? are asking campus about Or next Are I HonorHealth? apologize. Matthews. which about

Darren Aftahi

asking Austin kind and Tampa actually I'm of about that. then behind

Michael Mathews

Okay. Yeah.

looking both April, So Department the Education we to to begin we boards. May with are within the -- start, as week final of first which regulatory plan so subsequent expect of well two, middle Education -- late immediately of month for week of the the of meeting, the the Florida, process and the in marketing I of is the And commence we targeting of And attend. marketing we're will receive we with to regulatory program, semester board bodies nursing our the approval and August. nursing initial the meeting of is review to or we're our following that which the in Department State assuming as at in

Darren Aftahi

of year, up we a and at then, get on -- we to Licensure figures know lower? pre-licensure think that a although market think are forward then of trying And low. with bit cost of I the into these we kind potentially markets? costs these newer new know but of Tampa about kind although And it's the par, relatively your how this sense of the like I kind What should business, on enrollment Aspen higher, as going campuses? those still expectations we rolled your enrollment, and new, it's Just in of of about should kind model all being think follow-up Private side, for it's you've

Michael Mathews

Sure. Yeah.

they've Austin. is the cost slightly enrollment modeling for be the our of both partnership internally with able us to we as students benefit enrollment. of us to simple Tampa folks higher that existing both that HonorHealth, to our where as Pre-Licensure in we're metros, So to they've have well new as a XXX been And deliver been send that of the well reason as for other employees Pre-Licensure to able

– for the a leads. fact we're But so, benefit that giving receive $XXX of HonorHealth, that – won't we're $XXX. will been about the there's to to the That's and business. $XXX no good of enrollment they’ll to our very south range with be us And cost year be we the great believe So anywhere reason that of pipeline and continue that of Pre-Licensure partnership they've modeling. of half what in first

Darren Aftahi

Is impacts That's under would should great. factored next manifest of the itself, COVID-XX kind just I'll you But that you any? the if I what then that quarterly potential see if to somebody your guidance? because And kind into business, of ask will. have going

Michael Mathews

Yes.

little that. So talk about I are me mean, where we bit let a with

of relationship Phoenix. have in only campus we as have we which received a regularly HonorHealth an Metro we And operating with course, thankfully, Phoenix. business is this close first, and So today, the updates very

And absolutely, looking lectures Our two be We, our our in all in very group for times business place, telehealth in are will have that two, we do possibility at universities risk and series a small are reasons. a in any environment doing students we other there number And example, less One, week as live And campus clinical for commuters for the thus our of only none Phoenix, continue three locations. day situation example. of monitor in than for Metro we half clinicals. rotations effect two a come the plans campus. of of per at is students closely. should a to students on one have

some we creative alternative point solutions. So for at for look have have any our Should students. we to, in time, clinical

Operator

Canaccord. Thank you. And Moldow from our with Austin comes next the line of question

Austin Moldow

you year? accelerated more marketing over thought, the modest having actually growth than what's a current Given the that next year-over-year, outlook but marketing for originally growth

Antonio Pietri

you talk remember sustain marketing of We we in as our spend enrollments and sure, minus to Let over I'm And XX ago, growth enrollment just percentile me unbelievable spend. to that year-over-year. enrollment an back just the we able about. unless XX% can't guys, significantly of growth marketing kind was A go year-over-year. quarters couple were deliver our start increase

So as that Frank a consensus another our EPS non-recurring we to $X.X increase fiscal quarter, difference you spend made business on now, the marketing what as costs. that And probably a increase this decision continue our million. to as grow approximately begins. will spend to out, of marketing fiscal We're by – spend basis -- on is a from going sequentially I terms in rate pointed to excluding would this relative saw, delivered estimate as your our QX our Right $XXX,XXX. sequential new say year to QX year we by

Austin Moldow

for talk have given have the the of near in them and the helpful. shifting expect number clinical can you really amount Pre-Licensure you future? with available to of students seats And new pre-rec, about Great. to you in the capacity That's campuses, be your the you

Antonio Pietri

Yes.

we given X,XXX in more time So, year From phase. our our pre-rec, of to expect first back than Metro. in yes, point course, students enroll semester. begin With our any maturation have Phoenix our semesters view, on no envelope, of X-year six with our the per XX I'll pre-rec of campuses. enroll first of average program, we students core currently the two a final each we And in approximately in year

semester XX have the the currently. somewhere program. two, we students of have we hit campus, So in XXX in again, which we in When will Phoenix of be maturity with each of core per in we'll, annum starts the maturity vicinity campuses, each our

across look would total time, the over X,XXX students the around aggregate program. we campuses X,XXX than both And semester. core we a core our of per again, on would that So more XX creates have those Phoenix probably have no in basically approximately basis – to in X-year an waterfall for Metro,

Operator

next question Our Lake comes the of from Eric Street. line with Martinuzzi

Eric Martinuzzi

the was why why the declined I wondering sequentially? side, University ARPU Aspen

Frank Cotroneo

Good University Aspen last that I'd I University. presented was units for the This believe for presented from Aspen for together. don't pull three the collapsed the of to afternoon, each it quarter because way. ARPU have the we what we we've quarter is Eric. ARPU ARPU the And that first

know think comparative, So I a you comparative. don't would is there get I a where don't

Eric Martinuzzi

looking the quarter, release from at breakout. press the QX last I'm just

you up off come whatever? back You've the the with USU, then and up the and you you if number of got you sum that essentially, take bookings XX.X bookings million

Frank Cotroneo

if waiting the if in but me, is and you your would I ARPU. I for which answer. that of highest Pre-Licensure numbers the dictate because higher were the primarily, math front per significantly LTV strong have last that quarter. And would enrollments simple program, were that the mean don't of the a XX,XXX higher student, a is there the be would enrollments tell

Eric Martinuzzi

towards we the element there then let completion legacy would growth the Is enrollment that the BSN explain a skewed program. me question. had seem reask -- The that? Well, that would it seasonal Okay.

Michael Mathews

exactly. Yes. No, exactly,

much higher that the in ARPU So the that overall quarter-over-quarter quarter, formula a quarter. in variables Pre-Licensure the would enrollments be percentage second two and of equal higher previous would

factors So ARPU. would those alter two the

So yes, you're correct.

Eric Martinuzzi

asked, we've did You've I'm I I to just that explained you explain why the -- the case … because question asking was had

Michael Mathews

the that the QX versus in in ARPU. answer. students of we had in what I That's affected higher a did total percentage enrollments Pre-Licensure the the answer QX give The is terms you the of that's answer. difference

Eric Martinuzzi

In did quarter, guidance up wasn't last Why we quarter on the choose quarter? and changed other the to gave words, mid mind. ramp then you marketing your as Okay. table, mid it you

Michael Mathews

doorstep to like marketing Well, get equity an of pretty had we've mean, was obviously, we that we at going we confident get started doing flat were of, And be able looking a were the And about worth I were to spending. we to we year's done. felt aggressive. on time it raise. that And more

marketing of in our exist. one at the any business look efficiency or best probably you the total, to space, sector, that our if in consumer we other ratios think frankly, in have versus ratio I company

increase we're significantly doing So spend. we don't marketing to justice not our our if shareholders start

Eric Martinuzzi

as then profit quarter, for adjusted far expectation And fourth as outlook the perspective? from Okay. the the an what's EBITDA

Frank Cotroneo

I present provided – We're we is line fiscal Well, bottom remain that at top the publicly that guidance for we the not the previously meet to would only guidance -- this know to exceed and line providing adjusted today positive, we reiterate the we year. said point. XX% I or expect EBITDA have company any expects time.

Operator

from our comes Craig Mike of question next with Hallum. line And Malouf the

Mike Malouf

Great. regards on I Diego? more impact to in taking my just have on of well questions San very done couple the on talked USU Phoenix. what's side? What little Thanks quarter. you I to What could that know with going helpful of and on the would kind a coronavirus If with questions, bit focus about the a for

Michael Mathews

campus we mean would it's immersions. implement be I really time same weekend situation. the when Yeah, the students our The have in that we only

some And that cause so plan, at would approaches would to from look order our perspective. -- to alter in a we San in have TeleHealth clinical if something happens to Diego also us

interim diligently in for some the working we're can't clinicals. during XX that very FNP alternatives clinical, their TeleHealth look that USU advised example, their get students this And last do to at so they for have five did us we them hours at timeframe. And

Phoenix them clinical, our could So is to if or another for again, necessary we immersions. do weekend how move have we to and immersions to handle weekend always something Metro again, that alternatives as

Mike Malouf

you you program expanding other the when expand that program the were a us the can allow USU other to because then will give these campuses? campuses, sense of to of timing you And clinical immersion

Michael Mathews

great question. Yeah,

Okay. Yes.

So we're San metro our to be of location we're we're immersions outside where do make actually first going our planning Diego. Mike, able is to what weekend to to going is be going Phoenix to do

the are floor. our a completing the stages campus And our buildings implement that feet lease we're of X,XXX of on by campus. available midyear. in square to final in lease within in We one current FNP We're looking ground immersions Phoenix footprint approximately our to looking to have

Secondly, of we'll launched early terms probably when week of immersions be And as campus weekend in available. implement ready the more Tampa Austin when is as our to be like is to you're going we program. November August then the in first aware, Pre-Licensure as

Mike Malouf

when talking the would Pre-Licensure point? average at maturity, what of X,XXX roughly And your about question, a the students that then be final per you're just weighted your program at revenue student

Frank Cotroneo

about is the Well, sort per And to that graduate matriculate we student Pre-Licensure forecasting weighted range. of into back LTV if core XX%, currently in with XX% that of, number. at that assumes combined have we've LTV said students our that we're get rate our average that That's how $XX,XXX. you students a to publicly $XX,XXX XX% that X,XXX say

Operator

Northland comes next Our Instructions] from with of the question Mike Securities. [Operator line Grondahl

Mike Grondahl

FNP USU program update out Doctoral Aspen program, there or of kind new the the or anything to on just us call Hey, on?

Michael Mathews

Aspen program very nicely. the Well, Doctoral growing is

people, XX%. to we're next nine increased center we're had couple grow the call or our and we by XX of close approximately to expecting now We've previously people. from at year-over-year group up eight the Our XX, Doctoral quarters recently and enrollments are for

grow So we be that expect rapidly. to to to quite -- continue

Mike Grondahl

the guys had did how And it. advisors the quarter? many you end at of enrollment you out Got call January

Michael Mathews

in not. about a But approximately. at did the we're range point, XXX% this We

Operator

further I'm no And you. Thank this showing time. questions at

for the with to that, CEO, Chairman and So remarks. over Mathews, back Michael any further I'll call turn

Michael Mathews

for forward afternoon. everyone fiscal of a do call. to year you quarter to Good months we third And end fourth quarter our call talking joining Thank couple looking our you when in today.

Operator

thank gentlemen, you you for conclude and conference. in the today's Ladies disconnect. participating program. does may This now And

Aspen (ASPU) 10 Mar 202020 Q3 Earnings call transcript