Q1 2022 John Wiley & Sons Inc Earnings Call

Good morning, and welcome to why at least the first quarter of fiscal 2022 earnings call. As a reminder, this conference is being recorded at this time I'd like to introduce wireless Vice President of Investor Relations. Mr. Brian Campbell. Please go ahead.

Hello, everyone and thanks for joining US with me are Brian <unk>, President and Chief Executive Officer, and John Gritzmacher, Executive Vice President and Chief Financial Officer.

A few reminders to start the call is being recorded and May include forward looking statements shouldn't rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings.

The company does not undertake any obligations to update or revise forward looking statements to reflect subsequent events or circumstances.

Awesome Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends.

We do not have standardized meanings prescribed by U S. GAAP and therefore may not be comparable to similar measures used by other companies.

Should they be viewed as alternatives to measures under GAAP.

Unless otherwise noted we will refer to non-GAAP metrics on the call and variances are on a year over year basis and will exclude the impact of currency.

After the call a copy of this presentation and a playback of the webcast will be available on our Investor Relations webpage.

I'll now turn the call over to <unk>, President and CEO, Brian Netback.

Okay.

Good morning, everyone and welcome to our Q1 earnings call.

Today, while he is reporting another quarter of solid revenue growth across all segments.

We continue to take advantage of strong demand for scientific research and career connected education throughout the global economy.

Performance underscores the tight alignment of our strategy to prevailing trends in the market and now more than ever the critical importance of the work we do in powering discovery and learning worldwide.

Simply stated the more researchers and learners that while it can help to succeed the greater the positive societal impact.

One example of this is in our talent development business, where today, we are filling the critical technology skill gap, while also actively targeting the acute lack of diversity in the technology space overall.

In partnership with our clients, we target underrepresented populations and train them so that they can get.

<unk> got a great jobs and succeed in those high demand high paying jobs with leading corporations.

As a result of this specific focus on diversity and equity the representation of people of color in our tech career placement programs is far above the national average.

From ensuring equity in hiring to making education more accessible to facilitating breakthrough climate research. While it continues to have an outsized impact on society.

Across Wiley, we are making substantial progress on ESG and sustainability.

While these diversity disclosure in our annual report was cited as a top example by a leading corporate governance authority. We recently earned a silver rating from Eagle bought it so leading sustainability ratings firm.

This placed wildly in the top 25% of all companies SaaS.

After achieving carbon neutrality in fiscal 'twenty, we've kicked off our fiscal 'twenty, one carbon measurement initiatives and have engaged a third party to guide us through the process of committing to and achieving science based targets.

Lots of progress, we got a long way to go in this journey and we look forward to updating you regularly.

Now onto our Q1 results.

The team continues to execute well and our performance reflects that with revenue up 9% overall and 7% organically.

This revenue growth drove a 12% increase in adjusted EBITDA and a 17% increase in adjusted EPS.

Revenue growth was strong across all segments with with research and up 10% academic and professional up 7% and Ed services up 13%.

As a reminder, all variances exclude currency impact.

Simply stated our strategy is on the Mark for where the market is headed.

And this was reflected in our Q1 performance.

The long term trends that we are pursuing continue to advance here of course I'm talking about the shifts toward open research hybrid and online education and digital learning tools and courseware further the drive of corporations to fill the talent GAAP continues to be a great extent.

Excuse me continues to create a significant demand for wireless career connected learning products and programs.

In fact, we're seeing great momentum in our corporate offerings across research and education corporations have long showed strong demand for our research products to fuel innovation and they rely on our learning products and platforms to upskill their teams.

Increasingly corporate leaders are coming to Wiley for their talent development needs and in fact for job really talent ready talent to fill their critical skill gaps.

Looking ahead, the corporate customer has a clear and compelling opportunity.

Earnings growth this quarter was largely fueled by strong profit performance in research and APL, mainly driven by revenue growth.

This performance offset a profit decline in it services due to higher marketing cost and University services and investment to expand and expand client relationships and talent development.

Overall, we're pleased with how we started the year. However, COVID-19 remaining related uncertainty remains a reality for now, particularly as it relates to university enrollment and related customer buying behavior as students and schools adapt to changing market conditions that said, we're confident in the ongoing strength and expansion of our core markets.

At its core Wiley does three things we enabled discovery.

We power life changing education.

And we shaped workforces.

These three important areas of impact are central to human advancement, and we're deriving strong growth from each.

We're enabling discovery to our lead it through our leadership in open research, where we're making record volumes of new research freely available to the public.

The rise of open research publishing has accelerated research revenue growth overall, our strong growth. This year is based on both the enduring draw of our journal brands and the execution of our open research strategy, including our multi year wheat and Polish agreements.

This performance is being augmented by strong growth in our corporate lines of business, which include career centers science databases and advertising to our very valuable audiences.

We're powering education by delivering high impact learning experiences and online degree programs that connect education directly to career outcomes.

While he is helping institutions plan and deliver career connected education and this is driving growth in our University services and digital courseware lines of business.

And while he is shaping the workforce.

Working with leading corporations to find train and develop the talent they need to overcome the widening skill gap.

Demand for our talent development services is particularly strong now as corporations remained challenged by the war for talent and a persistent shortage of critical tech skills.

Our professional learning lines of business that deliver corporate training and professional publishing are seeing a strong recovery as corporations and professionals alike focus on upscaling to differentiate themselves in a highly competitive market.

Let's take a look at our Q1 performance by segment.

Wiley research delivered another good quarter with revenue up 10%, 5% of which was organic.

Our performance was driven by open research publishing research platforms and corporate sales adjusted EBITDA Rose, 12% for Q1 EBITDA margin of 37%.

Research article output continues to grow nicely, although as expected article submissions has slowed a bit from last year's COVID-19 related spike.

Notably underlying Oh AG revenue growth was over 50%, including hinder.

Our OE revenue nearly doubled.

Our multi year read and publish agreements often referred to as transformational agreements continue to drive incremental volume growth this quarter.

The pipeline remains strong for these mixed model deals, which provides full access for our client community to read and publish Wiley journals.

We continue to expand our major society partnerships, delivering a broad range of products and services that help them succeed.

Including research publishing research platforms, author services, Inc career services for the societies constituents.

In August we announced a landmark agreement with the Society of hospital medicine to publish its industry, leading publications and to grow its career center.

S. HN has more than 15000 hospitalists as members.

We recently launched a knowledge hub for Gilead sciences that targets HIV specialists.

We also signed new career center partnerships with Lexisnexis and with the Institute of Physics among others.

Going forward there is a significant opportunity to upsell additional products platforms and services to our unmatched network of societies and corporations.

In summary for research there continues to be very good momentum and lots of opportunity for growth as we drive the transition to open research and expand our portfolio of partner solutions.

I'm very pleased to report, 7% organic growth this quarter for the academic and professional learning segment.

This was driven by 13% growth in professional learning compared to a COVID-19 impacted last year.

Adjusted EBIT for the quarter Rose, 37% for Q1 EBITDA margin of 19%. This is up from 15% in the prior year period.

Education publishing revenue rose modestly with continued strong growth in digital courseware and modest growth in print and digital content, both offsetting ongoing COVID-19 related challenges in test revenue.

As noted Covid continues to hinder visibility on fall enrollment and student buying behavior industry projections for enrollment range from flat to modestly down the data remains limited thus far as we drive through the busy back to school season.

Note that in June we sold our World languages publishing list to Vista higher learning a specialist in language learning.

This sale, although it's small one is a reflection of our important strategy to focus on highly on high demand skills.

And careers, such as stem and business.

Professional learning saw strong growth in both professional publishing and corporate training benefiting from favorable comparisons to prior year.

Corporate training continue to see a very strong recovery through both virtual and in class delivery with revenue growth of 46% against a lockdown in Q1 last year.

Finally, our cloud based cross knowledge corporate learning platform also grew this quarter it'll be up modestly.

Signing 10, new corporate clients.

In summary, we are encouraged by our return to growth in <unk> as we continue to scale, our digital courseware offerings and leverage our strong corporate relationships and professional learning brands.

It services reported 13% growth for the quarter with University services up 8% and talent development up 34%.

As a reminder, University services was formerly reported as OPM and talent development as answering.

Adjusted EBITDA for the segment was down 21% due to higher marketing costs and University services as competition increased for student leads and increased investment in talent development to accelerate the expansion of client relationships.

In our smallest quarter of the year for University services, adjusted EBITDA margin was 9%.

University services growth was driven by eight new partners, we added last year.

Along with student enrollment growth.

While no new partners were signed this quarter, we recently signed important renewals and added 13, new degree programs with existing partners.

Online enrollment was up 9% for the quarter down from 14% we saw for the full fiscal year 'twenty one.

We are seeing slower in online enrollment growth compared to last year's Covid related spike.

Over the summer term for example, we saw a lower rate of re enrollment compared to historical patterns and expect some of that to continue into the fall.

This variability in enrollment patterns is to be expected as the system adapts to the ongoing impact of Covid.

Yeah.

As expected we are seeing great momentum in talent development, whereas you know Wiley helps corporations identified train place and retain hard to find talent.

In the quarter, we signed three more multinational clients, including a leading financial services firm, a leading industrial services service areas company and a global retailer.

These new clients are on top of the seven we signed in the previous two quarters. We also delivered record town on placements to our existing fortune 100 customers such as Morgan Stanley Bank of America, and many others.

And a great example of our business model, having impact we recently launched a program with Amazon, Canada to Reskill warehouse workers and truck drivers with software development skills.

The goal of this program is to provide great new career path opportunities for these workers, even if this means that they gain skills that allow them to leave Amazon to pursue pursue higher potential careers.

Amazon like many leading companies knows that they need to provide career development opportunities to both attract and retain high quality workers. We truly appreciate this forward thinking socially positive partnership and we're seeing real impact already.

This is another clear example of this significant corporate opportunity that Wiley is now tapping into.

The pipeline and talent development is strong and we're expanding our reach into international markets, such as India and Australia.

We're also making great progress in industries outside of our core financial services vertical.

In summary, we're pleased with the growth of edge services as we continue to drive online enrollment growth and launch new degree programs in University services.

And as we signed major corporations and deliver record placements and talent development.

Again, we do anticipate some moderation of online enrollment growth. This year as students returned to physical campus and focus on their personal career path overall it was a good quarter in which all three segments are wildly contributed to our revenue growth and to the achievement of our mission to unlock human potential.

I'll pass the call over to John to take you through our financial position and outlook.

Thank you, Brian and good morning, everyone.

As Brian noted the widely team continues to make good progress in executing our growth strategies and driving operational gains free.

Free cash flow for the quarter was 25% better than prior year, driven by higher cash earnings and favorable working capital timing, partly offset by higher annual incentive compensation payments.

Our fiscal year 'twenty one performance.

Capex was $24 million for the quarter modestly lower than prior year and there were no acquisitions of note this quarter.

We continue to be active on the M&A front as we seek out capabilities in key strategic areas of research and career connected education.

Our improved cash flow for the quarter complements our healthy balance sheet with more than $82 million of cash on hand, and undrawn revolving credit capacity of more than $518 million at quarter end.

Our net debt to EBITDA ratio was 2.0 at the end of July consistent with prior year, even after funding the $298 million acquisition of Hendawi last January.

We allocated $27 million to dividends and share repurchases this quarter.

From $19 million in the prior year.

In June we raised our dividend payout for the 28th consecutive year and our current dividend yield is around two 4%.

After taking a pause on share repurchases in the year ago quarter.

<unk> 130000 shares this quarter at an average cost per share of <unk> $144.0

Our total spend of $11.0 million.

Our fiscal year 'twenty two business plan provides for important investments in our growth strategies and business optimization initiatives.

In research, we will publish more to meet global demand, taking full advantage of our <unk> acquisition to advance our leadership position and open research.

We will also broaden our research publishing platform and service offerings for societies and corporations.

And career connected education, we will continue to expand our online degree programs drive online enrollment.

Our digital courseware portfolio and expand the reach of our talent development services for corporations.

We are also investing to drive operational excellence across the organization.

We will continue to streamline standardize and automate our workflows, particularly for publishing and for our back office operations on.

On the customer facing side, we will drive improvements in student acquisition and enhance our direct to consumer capabilities, including our ecommerce experience.

As we noted in our earnings release, we are modifying our adjusted EPS metric to exclude the impact of certain noncash items directly related to acquisitions, particularly the amortization of acquired intangibles.

We do not consider these noncash amortization charges to be indicative of our ongoing operating and underlying performance.

Amortization of acquired intangibles amounted to $22 million in the first quarter or $17 million on a tax adjusted basis.

<unk> in the newly defined adjusted EPS of <unk> 85 per share compared to 54 as it was formally defines.

For fiscal 'twenty, one and fiscal 'twenty wireless adjusted EPS has it as newly defined was $37.0, respectively.

Going forward, we will only report on and guide to this newly defined adjusted EPS metric.

And finally now onto our outlook given the first quarter performance and leading indicators, we are reaffirming our fiscal 'twenty two guidance.

Total Wiley revenue is expected to be up by mid to high single digits to a range of 2.17 to $3.0 billion.

Adjusted EBITDA is expected to range between $850 million.

With profit gains on higher revenue tempered by investments to accelerate growth initiatives.

Adjusted EPS as it is newly defined is anticipated to range between $33.0

Reflecting investments and a higher effective tax rate.

Again this is a reaffirmation of our EPS guidance, but now excludes the noncash amortization of acquired intangibles totaling $21.0 per share.

Free cash flow is expected to range between 202 hundred $20 million.

While cash earnings are expected to be strong, we see certain headwinds compared to fiscal 'twenty, one, including higher capex higher net cash taxes and higher annual incentive compensation payments for fiscal 'twenty one.

And one final note current FX rates are relatively unchanged from the prevailing rates when we issued our guidance in June.

And now I'll pass the call back to Brian.

Thanks, John.

Let me quickly summarize key takeaways and then we'll open it up to Q&A.

Q1 was a good quarter for Wiley with strong revenue and earnings growth driven by good performance across all segments.

The long term favorable trends that have defined our markets continue to March forward, including the shift to open research the migration to hybrid and online education in both University and corporate settings, and the increased adoption of digital tools and courseware for learners.

Also the ever growing need of corporations to fill critical skill and talent gaps.

While these growth strategies are tightly aligned with these trends and this is reflected in our current performance and full year outlook.

Variability remains from the pandemic as our global markets adapt to the new realities. Nonetheless, we remain confident in our expanding markets and while these outlook as we continue to meet the growing global need for research and education as always we remain close to our customers. So we can rapidly adapt to market developments and new opportunities.

We continue to make significant progress in ESG and sustainability.

As an impact company widely is working to unlock human potential by enabling discovery powering education and shaping workforces engagement of our wildly team is very high and we're all energized by our mission as we work to increase the success of millions of learners and researchers worldwide.

I want to thank our colleagues everywhere for the continued accomplishments their dedication to each other and to our mission.

I remain grateful to work with each and every one of them.

One final note, we had targeted Investor day for late October, but we've now decided to push it back by six to nine months, we want our investor day to be substantive and in person and to provide additional long term clarity.

The current Covid affected environment is not conducive to a productive long term discussion, but we do expect better visibility as we make our way through the fiscal year.

In the meantime, we will continue to be active in our investor outreach and provide regular updates on our continued progress in executing our growth strategies and driving improvements in sustainability.

I will now open the floor to any comments and questions.

Thank you Brian I'll start reminder, to all our participants to ask a question. Please press star one again prices power one and our first question coming from Mr. Daniel Moore of CJS Securities. Please go ahead Sir.

Thank you, Brian and thank you John Good morning, Thanks for taking the questions.

I wanted to start with research.

We look to calendar 'twenty, two and I realize it gets blurred as you sort of expand and I've read in publishing that way, but maybe update us on renewal rates and pricing trends related to the core journal subscription business.

Any sense for what percentage of businesses book today, and how we're looking for 'twenty two.

Sure absolutely always a good question Dan Thanks, a lot.

So.

Basically as we look out through the year, our proportionate business in each of our segments.

Has continued the pathway that they've been on so OE is now in Q1 up to 21% of our.

Of our revenue.

And in research.

It was 13% last year and I think that's a significant shift and shift in the right direction. Our subs revenue has moderated from 62% last year down to 55% this year.

So youre seeing continued shifts.

<unk> remained strong it is.

Early in the year, so we haven't really gotten into the renewal season, yet we will get into that next quarter, but we continue we expect to continue to see a.

A continued significant growth in OE.

In a slow moderation in the subscription business.

I will note that our.

That our subscription business continues to be very strong and.

And.

Any moderation is has been minor.

Understood very helpful and you.

Go ahead John.

So I just wanted to add since you asked about pricing as well as just part of that as you know.

Traditionally we've had.

Relative to <unk>.

Moderate price increases from year to year, and we took a pause on that in the last year, given the impacts of Covid and some of the budget challenges that our university customers were facing.

That has.

That pause, but as we now make our way.

Into the next season, we're expecting to resume the nominal increases that we've seen historically for those customers who are traditional subscription customers.

Got it and certainly sounds like it but how is hendawi performing relative.

To your expectations and kind of any concrete examples of how that's opening up.

Growth opportunities faster for you.

Absolutely. So look hendawi is doing very very well growing strong double digits. We expect that continue through the year. We just had our largest months of submissions and publishing ever at Hendawi and I think in what is can only be described as a validation of our strategy.

The reason for buying it a material portion of Hendawi use growth not most of it still just a small part of it but a material part of it is driven by the Cascade of articles that we've been talking about for so long.

Cascade of articles from the total wildly submission pool throughout the wildly Empire, but also.

Materially into.

Hendawi. So all systems go the integration has gone well minimal disruption of any kind and we're really honestly very pleased with how things are going and Hendawi is is really leading the way in terms of growth.

Very helpful.

Maybe one more and I'll jump back in queue, but thanks for the increased transparency.

And to your cash flow with the new adjusted EPS calculation, you started to buy back a few shares this quarter. Once again the stock kind of 13 times that this year's adjusted EPS Guide and leverage two times are you considering being more aggressive.

That part of your capital allocation budget Gulf going forward. Thanks for the color.

Dan I would say that will be up in terms of our share repurchases over prior year as you'll recall for the first half of last year, we stayed out of the market.

Conserving cash and observing that in certain times that we're in an hour and then we resumed purchases in the second half of the year.

We're on a pace that we're comfortable with now and will continue.

To buy throughout the year, we'll be opportunistic when the when the chances arise, but we're I would say we're at about the pace that we expect to be over the course of the year.

Got it alright, I'll jump back with any follow ups. Thank you.

And our next question is coming from Greg <unk> of Sidoti. Please go ahead.

Hey, guys. Thanks for taking my questions. Just two one can you just help us out you maintain the free cash flow guidance. It looks like it was pretty good.

In this quarter some of that was probably capex related that has to catch up throughout the year are there any other puts and takes.

But kind of after a good quarter of free cash flow of that kind of hazard maintaining at that we should be aware of.

Greg I would say it's early on in the year the quarter was favorable partly driven by strong cash earnings, which which we anticipated and significantly driven by working capital timing. So some of that May unwind later in the year. So we're comfortable for sure with the guidance level that we're at.

To the extent that we need to adapt as we make our way through the year, we will but I would say there's not a lot of evidence in the first quarter that we should we should change the position we've taken all of the year.

Okay very helpful. And then just moving on just education services. It seems like it might be getting a little bit more competitive there can you kind of elaborate and maybe are you seeing.

Possibly I know you.

You sell services may be single.

Services as well is that becoming more favorable can you just give us a little bit of color on.

What's going on as maybe enrollment start to normalize.

Absolutely and I think the important thing is that the long term trend that we've been talking about is continuing.

The.

Current period, we're in is more the performance in the current period is more reflection of what happened last year than what's happening going forward.

We do believe that.

We're seeing tremendous interest from our clients both for traditional Rev share models and for fee for service models in fact as the <unk>.

As the financial.

The environment has gotten challenged the Rev share model continues to have a lot of legs, because essentially we are using our financial strength to help. These these these schools achieve the goals that they want to achieve so again in the longer term, we believe that the enrollment trends toward online and hybrid education will continue we think there is enormous and glue.

<unk> opportunity that is very very.

A lot of green space, it's not particularly highly penetrated right.

Right now you will see evidence in this in our in our significant growth now in edge services coming out of Australia.

Where we've where we've opened up.

The partnership with a major University called Latrobe 36000 students.

In order to deliver their programs.

Online into new audiences. What we are seeing overall is a continued evolution of the space as the needs of the education market change what we see is is that.

Demand for our traditional programs remains and there is increasing demand for for non traditional offerings that we're providing throughout throughout our offering as well so I wouldn't say.

I would say what's happening now is simply a natural result of a.

Very high demand last year as everyone had to go online and what we're seeing now is students are some of them are migrating to on ground a little bit some of them are returning to their careers and some of them. We've just taken a path.

But nonetheless demand remains remains very strong.

That's very helpful I'll jump back in.

As a reminder to all our participants to ask a question. Please press star one and ticketing and now our next question is back from Mr. Daniel Moore of CJS Securities Go ahead Sir.

Yes. Thanks again, you gave great detail around professional corporate learning and great to see the rebound still not quite back to pre COVID-19 levels, just talk about the momentum you're seeing there and what type of growth is reasonable to expect from this.

If this is a new base or run rate or if we're still sort of in recovery mode right now.

Great question.

It's a very interesting time, because what we saw last year, which we were very pleased with is as the professional and corporate learning.

Businesses were adapting to to Covid, we saw a I wouldn't call a.

Covid related bounce.

Certainly saw COVID-19 related bounce in our digital offerings, but what we saw is a change in the behavior of our corporate clients towards things that are actually incredibly aligned with our strategy. So one of them.

As we talked about last year is this migration of corporate training to being digital versus in person and even at this point with a lot of workplaces back we're still.

Above 70% proportion of digital training, which is pretty incredible and really positive as we've discussed that opens up a lot of opportunities for us.

And so we're seeing that and we're also seeing corporations.

Again as we discussed.

<unk> talked about in my prepared remarks, we're seeing corporations waging war for talent and when they are waging war for talent. They got to do a bunch of things in order to find that talent in the case of <unk>.

Of our offerings, we are actually have been helping to build that talent. So we really like what we see there.

What we've what we've seen the results in in that segment is is basically some some hangover with regard to things like test prep, which are struggling to get back to normal but overall, we think the performance in that segment is on the right track and getting back to I should get us a supportive of.

Longer term strategies, and we're seeing growth in all the spaces, we expect to see growth and need to see growth two to empower our strategy are to realize the fruits of our strategy.

And if we see.

Digital delivery.

Remaining that the lion's share is there a meaningful differential in terms of profitability versus those kind of legacy our historic in person delivery models.

Yes, I'll ask John to comment on that in a second but as as we go forward. It what happens is the digital delivery.

Which will allows us to tap into a significantly greater greater audiences. Because obviously, we can get to more places where there may be a training one day.

We're two days if it's in person that same training is available to people 365 days a year.

When it's when it's digital.

And similarly, if we can only access if were training new talent for companies and we can only access them in person there are certain physical limitations.

The.

Yes.

Digital delivery allows us to access a significantly.

Larger audiences.

John do you want to comment on profitability.

I would just I would just add Dan.

It's really doing is it's helping to support the recovery of the revenue base and then growth for the longer term. The fundamental product line is still at the end of the largely digital product and so.

It's essentially building more demand for card card product line, which is largely a digital product I wouldn't expect it to.

To materially change the margin performance of that business, but it certainly will help improve the volume of that business.

Makes sense, one last string I'd love to call on if I could.

And in the education services side, I'd love to drill down a little bit more into the profitability of each of the two businesses.

And talent development.

So you are seeing really strong growth and obviously you're reinvesting in that as you described.

What's the glide path towards a more normal whether it's a double digit.

Low teens sort of more normal margin.

Achievement in that business over time.

So again, we usually don't get down to far deeper into the performance of the individual product lines, but I will.

In this case I'll say that the the.

And three business definitely in a growth phase right.

And to tell development business I should say.

And in this early stage.

Centrally breakeven based on an EBITDA level.

Growing so.

<unk> for the segment overall.

Relative to the margin rate inside of the OPM business.

Skills and so we're in a very deep prophage is an important part of our investment in that period this period and for the year, it's part of the.

That will kick in.

The ability for the segment overall is here, but we fully expect that that's going to grow as we build that business globally.

Okay, and lastly on the University services side with.

Three enrollments slowing somewhat.

Take a little bit longer to get back to those operating margins or is this more of just a normalization as you described for this one to three quarter period.

I'm expecting that we're going to get back to over the over the longer term, we can get back to the kind of rates that we've been talking about for long term performance. So we said we expected that the EBITDA margin in that business of 17% or greater and we will get there as I said I don't know if this is will.

A year of investment for us in that business as well as we are seeking to expand our capabilities to attract.

At.

<unk>.

That's ever improving rates in terms of student acquisition costs and provide better services.

So.

We will see lower margin and the OPM business here, we've been signaling that it's really driven by investment and some additional challenges that we've been seeing around marketing costs in the short term.

Okay very helpful. Thanks for the color.

Thanks, Dan.

And once again remind all our participants to ask a question. Please press star one on your telephone.

And currently we don't have any questions on the queue.

And at this point I'd like to hand, it over back to our president and CEO, Mr <unk> and APAC.

Great well, thanks for the great questions and thanks, everyone for joining today, we'll look forward to sharing our second quarter results in December.

Thank you again.

And this concludes today's conference call. Thank you everyone for your participation you may now disconnect.

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