Q1 2021 Aspen Group Inc Earnings Call
[music].
Good afternoon welcome.
Welcome to Ashland's growth fiscal year, 2021 first quarter earnings call.
Please note that the company's remarks made during this call, including the answers to questions include forward looking statements, which are subject to various risks and uncertainties.
These include statements relating to the expansion of the highest LTV programs revenue growth estimates G and H trends enrollment growth the impact of booking our estimates im sorry, LTV, if they are paying you and.
And since your accounts receivables estimates.
Actual results may differ materially from the results predicted.
And reported results should not be considered as an indication of future performance.
A discussion of risks and uncertainties related to actually visit it's insane and its prospectus, so excuse me sorry.
The man and the 10-K filed with the Securities Exchange Commission and the press release issued this afternoon.
Excellent group disclaims any obligation to update any forward looking statements as a result of future development.
So I like to remind you that during the course of this conference call. The company will discuss adjustment net income loss and adjusted EPS loss per share EBITDA and adjusted EBITDA, which are non-GAAP financial measures in talking about the company's performance reconciliation to the most directly comparable GAAP financial measures offer.
Why did end the tables in the press release issued by the company today.
There will be a transcript of this conference call available for one year at the company's website. Please note that the earnings slides are available on aspens website at A.S.P. you dotcom.
And the presentation page on the company a handful.
Now I'll turn the call over the Michael Matthews aspect as Chairman and Chief Executive Officer. Please go ahead.
Good afternoon.
We've made great progress this past quarter in terms of delivering record enrollment.
Improving operating metrics.
Getting the balance sheet.
And final regulatory approvals for our new pre licensure BSN campuses.
Not to mention delivering top line growth acceleration, so I'll get right to it.
Okay, starting with slide three of our earnings presentation right.
Revenue in our historically seasonally softest quarter Q1 increase.
Increased to 15.2 million up 1.1 million or 8% from the prior quarter and 4.8 million or 46% over there.
Over the prior year period.
Because of this significant beat on the topline in Q1.
We are now raising our full year revenue guidance to 66 million or 35% growth year over year.
As announced previously on slide six.
Company reported record quarterly enrollment of 2000 and 351 new students.
Despite the ongoing cobot 19 pandemic and again during the company's historically seasonally weaker summer months.
After University generated 1779 enrollment.
26% year over year.
Sorry, doctoral and B S and pre licensure units, both enjoying quarterly enrollment records.
Yes, you also delivered a record enrollments in the first quarter with 572 new students.
Which is a 32% sequential increase.
Continuing with the operating metrics our cost of enrollment has remained stable through this growth cycle.
As our weighted average increase 4% to 1200 $3 for the quarter versus 1100 $53 in the comparable year period.
I'd like to remind everyone that U.S. you terminated its 72 month payment plan Rafn piece students as of July 31st 2019, which caused the historic enrollment month for the University with nearly 250 enrollments in that month a year ago.
In that context, we were very satisfied that we grow enrollments year over year at U.S., Yoo by 11% and by 32% sequentially, while keeping the overall company's cost enrollment and only a 4% increase year over year.
In the first quarter, our marketing efficiency ratio or Merck representing revenue per enrollment over cost per enrollment improved by 16% at Aston University from 10.6 times, the 12.3 times you.
You asked Usmar continue to impress at 14 times.
In terms of bookings on slide seven.
Year over year basis, we increased 34% to 36.1 million.
Which translated into a 10% increase in average revenue per enrollment or ARPU from 13919 to $15344.
On slide five note that IGI eyes overall active student body continues to grow steadily each quarter.
As in the first quarter, we grew 24% year over year from 90 752 to 12128 student.
Aspirin universities total active degree seeking students body grew 21% year over year from 8261 9975.
You asked use total lack the student body grew from 1400 91, the 21 53 or 44%.
Of the 12128 active students across both universities.
86% or 10422 students our degree seeking nursing students.
Moving to financial highlights on slide eight.
The company enjoyed another quarter of improved marketing efficiency as a result of minimal increases and our sequential marketing spend rate.
In the current quarter, we delivered a 1.1 million dollar revenue increased over the prior quarter, while increasing marketing spend by only $50000.
Oh, that's leverage of 22 times.
Our marketing spend as a percentage of revenue dropped from 21% a year ago down to.
Down to 18% this quarter.
This leverage in our marketing spend is a benefit delivered by executing our business strategy of focusing the majority of our growth capital on our highest LTV degree programs, namely.
In addition, instructional costs as a percentage of revenue for the quarter dropped from 21% to 20% year over year.
This translated to our gross profit, increasing 56% year over year and $9 million or.
59% gross margin.
Versus a 56% gross margin in the comparable year period.
In his prepared remarks, Frank will walk you through how this gross margin improvement together with managing the increase of our operating gn expenses at less than 50% the rate of revenue growth.
This led to impressive improvements to our bottom line.
Now on to regulatory updates in Texas and Florida.
As we announced last month Aston University received the final required state regulatory approvals.
Are there new pre licensure Bachelor of science in nursing, our BSN campuses in Austin, Texas, and Tampa, Florida.
Giving Aston University. The go ahead to commence marketing and begin to enroll students immediately.
As a reminder, aspirin admit students into one of two program components.
The first component is a pre professional nursing RPP and component that's offered fully online for students that have less than the required 41 prerequisite Gen. Ed credits has completed in year one.
And second the nursing core component for students that are ready to participate in the competitive evaluation process for entry into years, two and three.
Aspen began enrolling ppm students in Austin in the month of August.
And we began enrolling TPN students in Tampa, starting this month.
Initial semester for core nursing students, which are students entering years, two and three.
In Austin is scheduled for September 29, 2020.
And the initial semester for core nursing students years, two and three in Tampa is scheduled for December eight 2020.
Now, let's talk about the announcement, we made today regarding our $10 million convertible notes.
As many of you are aware Mr. Leon Cooperman became a shareholder in the company I participated in our equity offering back in 2014.
Shortly thereafter acid announced this innovative monthly payment plan the work.
The working professionals design to allow our students the ability to graduate debt free.
Mr. Cooperman, a year later in 2015.
Became a lender to the company by providing US a line of credit revolver and then subsequently in 2019. He was the lead investor and a 10 million dollar term loan.
About six months ago, he agreed to restructure the term loan into a convertible instrument that auto converts to the company's share price trade at or above $10 and seven to five cents.
20 consecutive trading days.
Today was the twentyth consecutive trading days above $10 and seven to five cents.
Therefore, the conversion took place this afternoon and consequently, the company has no debt free.
Hi, privately thank mr. cooperman for his ongoing support through the years.
I'd like to publicly thank him today.
As I told them numerous times this company wouldn't be in such a position of strength today without its consistent support on both the equity and the debt side.
Please be aware that the company still holds a $5 million line of credit with Mr. Kuperman Foundation.
Given we have nearly $15.9 million of cash on the balance sheet, we have no intent of drawing on this unused line.
Now I'll turn the call over to Frank to review our financial results.
For Q1.
Thank you, Mike and good afternoon, everyone I'll be.
Ill begin by reviewing our financial results.
2021.
First fiscal quarter, and providing input on our financial progress.
Followed by commentary on some key financial events, which recently transpire.
Well again as Mike indicated revenue in the first quarter were $16.2 million, an increase of 1.1 million over the prior quarter and 4.8 million over a year ago period.
First quarter is typically been our seasonally weakest quarter.
However, this year, we are seeing increasing momentum in enrollment.
Reflecting the secular trends in healthcare and the need to fill more than 1 million open nursing positions. This is.
This has been combined with the cyclical demand driven by the economic slowdown caused by Kobin.
The existing versus looking to move from the front lines of depends on where two or more control and higher paid career opportunity as a family nurse practitioner.
Ashwin post licensure books other units accounted for 53% of revenue this quarter.
Cost of revenue came from our US you subsidiary with the MSN nurse practitioner program accounted for the vast majority of their revenue.
In our previous phase asking BSN pre licensure program.
Together those two programs comprise 47% of total revenue.
As a comparison of these two programs represented 40%.
The full fiscal 2014.
46% the 2024th quarter.
This trend is expected to continue.
As a result, we anticipate these programs represent over 50% of revenue in the second half of this fiscal year.
With the expanded footprint of new pre licensure BSN campuses into two metro.
And our intention to embed FNB immersions in each new Metro. These programs will remain drivers of our long term growth for both revenue and eventually profitability.
Notably we have begun enrolling first year of prerequisite students at both new locations in Austin and Sam.
As I said earlier, we anticipated a pre licensure BSN MSN FSP degree programs to deliver over 50% of revenue in the second half of this fiscal year 2021.
After a group gross profit in the first quarter increased to $9 million or 59% gross margin which is.
Which is up from 56% a year ago, an increase of 300 basis points.
The strong performance of both universities was the primary reason for the increase Ashley.
Ashburn and USA gross margin in the quarter were 59% and 64% perspective.
Marketing spend which only increased by $50000. This quarter continued to drive strong enrollment growth.
Im showing the leverage and efficiency of our marketing efforts.
As a percentage of revenue our marketing expense dropped to 18% from 21% in the year ago quarter and 19% in the prior sequential quarter.
Marketing efficiency continues to be a primary factor in delivering gross margin expansion.
We saw a decrease in marketing costs as a percentage of revenue for Ashford and us to year over year.
Aspen universities marketing costs were 18% of Ashford university's revenue for the quarter.
20%.
A question on the marketing costs dropped down to only 14% from 17% of revenue for the current quarter.
Total cost of revenue dropped from 42% to 39% helped by the decrease in instructional costs, well and to 20% of revenue from 21%.
This is despite growing on a dollar basis by over $900000 year over year.
Ashford university's instructional costs and services represented 19% of Ashford University's revenue for the quarter. While you are Hughes instructional costs and services before 22% of us use revenue for the quarter.
In the first quarter general and administrative expenses were $8.8 million.
An increase of $2 million over the prior year fell to 58% of revenue from 66% in the prior year first quarter.
The primary driver of the growth in GSK was what we are calling grow opex.
John we are defining as primarily personnel and related costs to increase our enrollment center, our academic advisors financial aid advisors and additional academic operations personnel.
These new hires were headed early in the year to be trained and onboarded handily, increasing enrollment activity across both universe.
Non enrollment center, specifically, we decided to grow our EA staff.
Hi, 23% in Q1.
Nine leases.
Two 118 gig.
Adding these advisors across every unit on the company.
We are now fully staffed for the fiscal year to accomplish our enrollment goals for the remainder of the fiscal year.
In the current quarter recurring GA expenses grew $2 million compared to revenue growth of 4.8 billion.
We continue to manage we're targeting expense rose to a level at or below 50% of revenue growth for the full fiscal year 2021.
This will allow us to continue to deliver margin expansion, while we invest in infrastructure and growth capex to support our expansion strategy.
This strategy has led to continued progress in reducing operating losses as we advance on the path towards sustainable profitability.
Net loss was approximately $900000 compared to 2.1 million a year ago.
It was a reduction of the net loss by 1.2 million an improvement of 55%.
As for University generated approximately $2.3 million net income for the quarter and US you delivered net income of a little more than $1 million.
I'd like to point out that 67% of year over year revenue, an increase of $4.8 million drop in the gross profit line and 25% of that increase drop to the bottom line this quarter.
The net loss per share reported for the quarter is minus four cents as compared to minus 11 cents per share for the comparable year ago period, an improvement of seven cents per share.
For fiscal year 2021, now we are introducing a new non-GAAP measure adjusted net income or loss and adjusted EPS.
Personal point, while first quarter adjusted net income was profitable the profit of $87000 compared to an adjusted net loss of $1.4 million in the prior year period.
The adjusted earnings per share in fiscal 21 first quarter reflects zero or breakeven cents compared to EPS of negative eight cents per share in the prior year quarter.
The company reported breakeven EBITDA for the first quarter up from a negative $1 million EBITDA in the quarter a year ago.
Consolidated AG on adjusted EBITDA increased to $1.3 million for the quarter compared to a negative $100000 in the year ago quarter. This year over year improvement for the quarter of $1.4 million, resulting in a 9% adjusted EBITDA margin.
Ashford University's delivered EBITDA of 2.8 million or 26% margin.
And adjusted EBITDA of 3.2 million highlighted by three licensor unit in Phoenix, delivering $1 billion or 37% adjusted EBITDA margin.
You assume delivered EBITDA of $1 million or 23% margin and $1.1 million of adjusted EBITDA margin in the quarter.
Aspirants pre licensure BSN remains our highest margin degree program of our company.
Switching to the balance sheet asset group ended the quarter with approximately $15.9 million from cash up from $7.2 million, a year ago, and 14.4 million at year end fiscal 2020.
Now that our cash used in operations of 600000, no to 600 that our cash used in operations of 600000 is $1.1 billion less than the comparable period, a year ago, an improvement of 64%.
Regarding our accounts receivable and our allowance for doubtful accounts.
We continue to evaluate our soon accounts and our allowance for doubtful accounts in the context of our increase in revenue growth in our change in the mix of our business this quarter.
This quarter, we added $400000 to our allowance $340000 to Aspen and $60000 for us you.
We will continue to add more in line with revenue growth and expected improvements in soon payment performance.
Stepping back from the specific numbers for the first quarter I'd like to discuss two banks that taken place in the last few weeks and will impact our second quarter results.
First the vesting of performance based equity grants to senior executives and second the conversion of $10 million of convertible notes into common stock.
Starting first with the compensation expense related to restricted stock grants the senior leadership team.
Hey, guys compensation Committee.
Put in place a four year performance based bonus plan structure to align leadership performance was the interest of shareholders, which is to drive sustainable shareholder value.
The plan calls for the vesting of restricted shares at a price target thresholds when aspens common stock trade at 40, Bob specific price thresholds or 40 consecutive trading days.
Hello, Graham was for 375000.
Shares.
Besting takes place accordingly.
10%, we're best denying dollar threshold.
5%, that's a 10 dollar threshold and the remaining 65% best when asked the stock trades at or above $12 for 20 consecutive days.
Compensation expense to the company is based on the stock price at the time of investing.
On August 31st the 10% traunch vested at $12.78.
September 2nd the 25% Raj vested at $12.99.
The total non cash compensation expense that will be reported in our second quarter is $1.6 million.
The company has been rewarded by the market for continued growth in our two highest LTV degree programs.
Well the brand continued margin expansion with focused expense control in the July one.
While investing for future growth.
Openings PL BSN campuses into new Metro this year, all while decreasing operating losses towards sustainable profitability.
Absolutely delivering against our promises made promises kept philosophy as reflected in the strong operating results.
Solid execution combined with the stock market rally since the March lows I've listed our share price to all time high.
Finally, there is one remaining traunch that could best over the next three years and will result in an additional non cash compensation expense at best.
Baskin stock price maintains 20 consecutive trading days at forward, while the final vesting threshold of $12.
This expense, while it will be a material drag on our reported net loss or EBITDA numbers in the quarter. The best thing takes place.
It's important to remember this is a non cash item and will not negatively impact our ongoing operating performance.
The second event announced earlier today, which Mike discussed in his comments is the automatic conversion of the convertible notes for a combined base value of $10 million.
Today, Aspen stock achieve 20 consecutive trading days above the automatic conversion threshold of $10 and 72 in the quarter sense.
As detailed in our press release distributed after todays market close these notes converted into 1.4 million shares of Axogen common stock at a conversion price per share of $7.15.
This conversion will increase the outstanding share count by 23.8 million shares for 6.3% dilution.
In addition, the remaining amortization of the original issuance discount of 1.4 million will be accelerated into aspens fiscal second quarter.
We are pleased to eliminate this debt from our balance sheet.
And to say $700000 in annual interest.
Finally today, we are introducing two new performance metrics, adjusted net income or loss and adjusted earnings per share.
Both of these new metrics are non-GAAP and will be shown with a reconciliation to their GAAP counterparts.
Both of these metrics will help the company communicate ongoing and recurring business performance without the effects of certain non cash stock compensation and nonrecurring expenses that would otherwise cloud that visibility to the company performance.
For example, as the.
As the company grew and evolve through its early life cycles. The company entered into funding arrangements that at the time were market base and reflected the risk profile of an early stage company.
As Asias performance improved and the risk profile was reduce the company was able to obtain lower cost financing structures.
The swapping out of these older structures, Bruce acceleration of issuance costs, which caused onetime charges for the piano.
These new metrics are intended to report company performance before and after the effect of these types of expenses as the.
As the company continues to strengthen its balance sheet. These charges will be incurred.
Over time, we expect these adjusted EPS and adjusted metrics to merge make.
Making the adjusted metrics we're done.
We intend to use these new metrics as long as necessary to provide transparency to the company's performance.
Concludes our prepared remarks, I'll now turn the call back to the operator for questions.
Thank you.
The question you would need to press Star then one on your telephone to withdraw your question. Please press the pound key again that is star then one if you would like to ask the question.
Our first question comes from the line of Darren Aftahi with Roth Capital Partners. Your line is now open.
Hey, guys and good afternoon, thanks for taking my questions and nice job on the quarter the guide.
Two if I may.
Maybe Mike with the launch of the.
Lets say Austin I am just kind of curious it's very early days, but could you maybe kind of compare and contrast Carla.
Phoenix campus was that's slated to take and collections in the summer and if so how that performance turned out thanks.
Yes, thanks Darren.
So ill take the last question first quickly our first graduating class.
Finished in the August timeframe July August timeframe, and they are actually taking the complex exam. During the month of September. So we don't have any formal results yet but.
Our first classes are 20 student graph that graduated and if you remember we had our second semester in Phoenix was actually four months later at the time, we weren't doing semesters every other month. So the second graduating class.
Well I will be finished in November and will have scores by approximately January.
In terms of.
Our marketing results, thus far for Austin I know, it's only been genius Threed three weeks, maybe three and a half weeks somewhere in that range.
We jumped out with 36 enrollments already within three and a half weeks, so I would say its going well.
And I think so far it's a very similar.
Start up in terms of lead costs and conversion rates.
We know that we saw in Phoenix, it's not as big of a market. So we certainly don't expect there.
The ramp to be quite as fast as Phoenix that we it looks like it's going to be a big success.
Great and then just one.
One more if I could add I think you guys in the past have talked about.
Reaching profitability I guess with the introduction of this adjusted net income essentially.
Being in the Black slightly is is is that an accelerated number by I want to say it and guidance you had been maybe said by the end of the year. So are you effectively breakeven or profitable three quarters early at this point or four quarters.
No what we said earlier I Mr. Cooper mask the question on queue in a in the earnings call in Q4, and he asks whether or not what point in time do we believe that we are going to be net income positive.
And that would be on a GAAP basis, and we said we are hopeful that we would achieve that by the fourth quarter and I would reiterate that comment today as well.
Fair enough. Thank you appreciate it.
Thank you Darren.
Thank you. Our next question comes from the line of Jeremy Hamblin with Craig Hallum Capital. Your line is now open.
Thanks, I'll add my congratulations on the strong execution I wanted.
I wanted to come to your enrollment saw.
Pretty significant uptick.
In the quarter laps in some tough compares you did see a little bit higher attrition.
The normal I think.
You asked you is about 19% versus typical in the mid teens and I think at Aspen you is about 14% more typically in the 12% to 13% range Wonder I understand why you thought maybe little bit higher return mission first but then the second point is really around the revenue growth.
You were lapping these tough compares and you don't typically see this type of sequential acceleration.
In your overall revenue growth is that just.
Attributable to how much more value you're getting from the pre licensure in the us used to.
Yes, good afternoon, Jeremy whatever.
What I would say is that the analysis of attrition is it can be a bit tricky remember that when we announce our student body.
Our active student body is not necessarily attrition. So we typically see are actually student body flatten somewhat during the first quarter, which are the summer months, because our students tend to take less courses during the summer. So if a given student does not take a class during that given quarter.
We don't get counted so it may seem like there's higher attrition, but actually that's not the case at all and in fact to answer. Your second question. We did not see the typical seasonality in the summer quarter, our first quarter that we normally see at our Aspen post licensure online nursing programs.
Class starts were fairly strong all the way through the quarter as if there was no seasonality at all and so what we believe have and this is true for all of our units by the way. So what we believe is happening here as that as we think about it. If you are registered nurse you typically take off during the summer.
And don't take a course, because you're going on vacation with your family at during covert 19, there is no vacation to take so our students ended up taking courses during the summer where they typically down hopefully that answers the question.
Yeah, that's great color and so taking that a step further then and you provided some nice color on the new campuses, but now with the rest of your existing programs thinking about.
Not seen much seasonality sounds like demand remains very strong.
How is the rest of the business.
Most of your programs look.
As you've gotten here into early fall.
Well again.
We made the announcement in Q1 that we have essentially four business units as we track right. So you've got asked University is our traditional Aspen post licensure online nursing programs, we call. It Aspen nursing plus other the second unit is our doctoral unit is primary.
Only our doctor of nursing practice or DNP program.
And then our third unit of course is our is our pre licensure campus business in Phoenix and now in Austin in Tampa and of course, our fourth unit is us Q3.
Three out of those four units, we had record enrollments the best quarter in our history. So.
So there is no question that.
Demand for our businesses is robust and we don't see that slowing down, especially in this given quarter. This is the fall quarter, which tends to be strong seasonally wise.
Great last one for me is actually just on your sales and marketing.
You provide a little bit more color there on the prepared remarks, but in terms.
But in terms of the investments, you're making and given the what feels like an acceleration in demand are you going to.
You Didnt have a lot of additional cost here.
Clearly in the July quarter, but as you look at.
The remaining three quarters of the year or are you going to get a little bit more aggressive on for Scott, Yes, Yeah. In fact, thanks Thats a great question, Jeremy we really we wanted to signal that today.
As as in my earnings remarks, I mentioned that we increased our enrollment center by 23% over the last 90 days our entire total.
Enrollment group was 90 696 employees at the end of Q4, and we ended Q1 with a 118 enrollment advisors. So again, we increased EPS by 23% sequentially. We're now fully staffed for the year, we don't expect to add a material number of E. Bay's.
The rest of this fiscal year so were in place.
We deliver our enrollment goals that we set forth internally.
So.
The it so it was.
It was the result of such strong demand that we made the decision to staff up entirely over this last 90 day period, rather than doing what we normally do which is adding ease every quarter. So we were more aggressive in increasing our enrollment staff because of this robust demand.
Great. Thanks for the color.
Best wishes guys.
Thank you.
Thank you. Our next question comes on the line.
Mike Grondahl with Northland Securities. Your line is now open.
Hi, Yes, thanks, guys for taking the question and congrats on the results.
Mike could you expand a little bit.
I think you said you had some nurses who wanted to get off the front line and.
They took some nurse practitioner or signed up for some of those classes.
And then I think you also kind of alluded to the economy may be helping a little bit drive the pre licensure program.
Program.
One if you could comment on both of those trends a little bit and then is there any other area of incremental demand that kind of surprised you.
Okay.
Well, okay. So so first of all the nurse practitioner program at United State University.
We had a historic enrollment quarter this.
This past quarter and where there is no question. We're hearing RN city of course, it's a master level program. So you have to have a BSN in order to enter the program.
And these that CSN educated our friends are communicating to our enrollment staff that their dream is to become a nurse practitioner, which allows them the flexibility of getting off the front line have.
Having a private practice setting their own hours and so.
Our program had robust demand before Cove at 19, and then since then it's actually accelerated.
And from an economics, the economy's perspective as you asked.
Sadly a lot of the millennials that have a dream to become registered nurses. This is pre licensure.
They ended up unemployed or furloughed after the pandemic hit so in Phoenix, we saw quite a pickup of enrollments in demand because again a lot of these prospective students.
What better thing to do that and try to accomplish your life's mission.
During a dark period of our.
Of our and from a healthcare perspective so.
It makes sense that both of these.
Also the both of these Tailwinds took place over the last several months.
Theres no other significant trends to answer your third question that I would add that I would point to.
At this time those are the two major trends.
Those are the two driving enrollment that's incremental okay. Okay, great. Thanks, a lot.
Thank you Mike.
Thank you. Our next question comes from the line of Eric Martinuzzi with Lake Street Capital markets. Your line is now open.
Yes, congrats on the quarter and in the beefed up guidance.
A question about you had a recent filing.
Regarding a $12.3 million potential.
I guess.
Yeah.
Equity contribution and Green and I Wasnt sure I'm kind of getting mixed messages because it seems like you guys are putting cash here, especially with clearing out the data are converting that to add to it.
Turning to ticket comment on that and then I have a second question.
Yeah. Good afternoon, Eric Yes, so so we decided to the filed a prospectus supplement and it does have an aftermarket an ATM.
Provision as part of the prospectus supplement the company has no intention of going into the market to raise equity for working capital purposes for the company.
We felt it was just a good governance move.
Okay.
And then I assume that's part of a previously registered shelf whats the cycle on your shelf when does that expire.
Yeah, the shelf expires in April of next year, and you are correct as approximately $12 million available remaining on the shelf.
Gotcha, Okay and then.
Question I have was.
Sometimes when you open up a new program or your new educator, any new states, there's kind of limits on your enrollments I think when you guys acquired U.S. Yoo, there's a certain number of clients as they kind of want to give you a sort of a trade.
Training license is there any limits.
Austin, Tampa, Texas, Florida as far as how it would compare to the size of your Phoenix programs.
Well I mean every every board of nursing and in every state and operates a little differently.
So in Phoenix, where we're not currently subject to any growth restrictions.
In Florida they also.
Do not have any specific guidelines in place.
As we work through the process with the state of Texas The board of nursing there as.
You guys are aware, we like to run a program, where we have six semesters per annum and three a three day semesters and three night night weekend semesters for a total of six per year and they we submitted for sick and they accepted a four semester.
Sure.
Program for this first year. So we're planning to day semester starts and to evening weekend semester starts for a total of four in the first year and.
We plan to go.
To go to the board of nursing in Texas, a year from now and ask to move to that to our normal six semester start.
Understand okay. Thanks for taking my questions.
Thank you.
Thank you. Our next question comes from the line of OSM, The Bell with Canaccord Genuity. Your line is now open.
Hi, Thanks for taking my questions can you give a quick update on the timing of your new weekend immersion spaces for your S&P program.
Yes, sure so we.
We have completed the build out of our space in our original Phoenix campus, which is by the airport I, what we call our Elwood campus and so weekend immersions well.
We'll begin in the fourth quarter of this calendar year.
So we now have two locations as we move into the fourth quarter to come.
To conduct Immersions and we are in the process right now of building out exam rooms.
For Immersions in both Boston, and Tampa, and we hope to have approval for those two locations in the <unk>.
In the coming months.
Great. Thanks, and can you.
Can you talk through a little bit about your you're deferring enrollment channels, you've had in the past that type of.
Type of potential or prospective students and how that's changed during the pandemic. If one is maybe more dominant now.
Yes. Good question. So I mean, we'll let's let's talk about pre licensure, which is really the kind of I mean pretty much all the programs. We're very very active in the internet advertising space across all three major channels right each of the channels of advertising on the internet as display advertising.
Search and email and we of course have a vertically integrated marketing approach, where we essentially behave like.
Everything is vertically integrated and managed in house that we worked directly with web publishers.
With the pre licensure program.
Because these are primarily millennials, whereas the remaining programs that weve been advertising for several years tend to be.
Older professional working professionals, we tend to use social media and much more in the pre licensure side. In addition to a traditional display advertising and then we we then traditional radio local radio. So those are essentially our three channels that we use for a pre licensure every pro.
Program that we have has a very custom unique approach.
That we optimize by doing lots of testing and then once we figure out what works. We then we then.
Ken.
Got it and my last question is.
Can you just kind of give your thoughts on consolidation you are seeing in the industry and how you think it might affect Aspen.
Yeah, I mean so.
As for those of you that follow the sector very carefully you would probably be well aware that our major competitor in the marketplaces Chamberlain College of nursing.
Thats owned of course by the public company I'd tell them and we compete with with Chamberlain across all of our post licensure online nursing programs as well as our pre licensure program in Phoenix.
Great Great University.
Good competitor.
And we expect to continue to compete with them.
For the coming years.
The our second largest competitor is Walden University, which.
It has a very strong MSN program and there are major competitor at U.S. Yoo for our nurse practitioner program.
We had I think and I think you guys are aware, we've proven to be very successful at taking market share from.
From both of these universities and regardless of whether or not well then.
Is owned by laureate or whether they're owned by AD tell them doesn't matter to us we're going to keep competing and hopefully effectively continue taking market share.
Great. Thanks, very much for taking my questions.
Thank you.
As a reminder to ask a question you will need to press Star then one on your telephone.
Our next question comes from the line of Rod Sharma with B. Riley. Your line is now open.
Hello, Good afternoon, and congratulations on the really good enrollment results.
I had a question Mike.
On the tap on the Austin could you please.
A talk a little bit about the the full enrollment trends in sense, what should we expect that to be in line with the Phoenix campuses.
I know that you mentioned in the past that.
Unix could do or 15 million run rate revenue.
Should we expect a similar level and also.
When do you so how do you expect the breakeven profitability.
On these campuses that have just have a follow on on any future any color on sort of future campuses and would they be similar or I know you've said two a year.
Yeah, well I'll, let me talk a little bit about sort of our 30000 foot level, our pre licensure strategy yet so we're planning to launch campuses in what we call tier one locations which are.
Metro populations of 3 million people or more.
As well as tier two locations, which is between 1.5 million and 3 million.
Population in that Metro. So for example, Phoenix.
It is a tier one location and Tampa is right on the edge of being tier one as well obviously would be more of a tier two location in terms of its overall size. Although of course as you guys know their population growth areas is quite quite significant.
So.
Yes, we would expect to have in a tier one market overtime. When we hit maturity, we're looking to do 15 million.
On the top line, which is essentially where we are with regard to Phoenix.
Tampa.
I would expect it to be at full maturity level to be in the $12 million range and Austin, probably 10 to 12 million.
So I think all of our campuses will be at least a $10 million topline all at once it hits maturity over a 345 year period.
And and how should we view the operating profitability and when it achieves breakeven yeah. Yeah, I don't I don't think that you're going to see results, they're going to be materially different from what we saw in Phoenix and what we saw on Phoenix was about.
Half a million dollar operating loss in the first 12 months of operations.
And you know a good percentage of that 500000 loss is in the first couple of quarters.
And we we broke even in that round about that fourth quarter and then we and then of course, we then started to drive profitability in that fifth quarter I don't see any reason why our two new markets one operate in a similar fashion.
Great. Thank you for that congrats again.
Thank you Rob.
Thanks.
Thank you we have no further questions in the queue. At this time I would now turn the call back to management for closing remarks.
Thanks, everyone for attending the first quarter fiscal 2021 earnings call for Aspen Group, We look forward to talking to you in our next earnings call in December good afternoon.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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