Q3 2021 Strategic Education Inc Earnings Call
Welcome to strategic Education third quarter, 22, 2021 results conference call Oh, now tell them to call them, what you to reach Wilkie director of Investor Relations for she teaching education Miss Wilkie. Please go ahead.
Thank you good morning, everyone and welcome to strategic Education's Conference call in which we will discuss third quarter 2021 result, with US today Ah Robert Silberman Executive Chairman, Karl Mcdonald, President and Chief Executive Officer, and Daniel Jackson, Executive Vice President and Chief Financial Officer.
Following today's remarks, we will open the call for questions.
Please note that this call may include forward looking statements made pursuant to the safe Harbor provision of the private Security Litigation Reform Act of 1995.
The statements are based on current expectations and are subject to a number of assumptions uncertainties and risks that strategic education has identified in today's press release that could cause the actual results to differ materially.
Further information about these and other relevant uncertainties may be found in strategic education. Most recent annual report on Form 10-K.
The 10 cute to be filed and other filings with the Securities and Exchange Commission as well as strategic education future eight case, <unk> and 10 case.
Copies of these filings in the full press release are available for viewing on the website at strategic education Dot Com and now I'd like to turn the call over to Carl Carl. Please go ahead.
Thank you three could good morning, everyone.
This morning, we released our third quarter financial results and rather than go through them in detail since all the information is actually in the relief I didn't stirred like to provide our owners with updates on our progress towards our strategic goals first or Australia, New Zealand segment continues to perform exceptionally well notwithstanding the fact that they have operated.
Some of the world's most restricted COVID-19 related lockdown measures anywhere in the world.
The integration of these assets on the Sci as infrastructure was completed in the third quarter and without any adverse impacts to students or staff.
Our Australian team has been actively working with our U S. Based team on beginning to implement revenue synergies such as X porting existing U S programs into towards the University to expand their program portfolio.
Currently we see that these revenue synergies are being worth potentially $50 million to $75 million over the next three plus years.
The inability of foreign students to travel into Australia will likely have a slight negative impact on our revenue projections for the year, but this will almost be entirely offset with careful expense management such that they are full year EBITDA will be in line with our original projection of $60 million we are.
Encouraged that many of these restrictive lockdown measures are beginning to ease and we are cautiously optimistic that foreign travel into Australia will be allowed to resume in the early part of 2022.
And the United States are alternative learning unit is on track to meet or exceed all of their objectives for 2021, starting with Sophia learning.
Sorry, since Relaunching Sophia to a monthly paid subscription model and the third quarter of last year. We've added more than 51000 paid subscribers and are seeing strong month to month growth and our subscriber base.
Over the past year more than 64000 learners have collectively completed more than 190000 courses and transferred more than 500000 credit hours to other institutions, thereby dramatically lowering the cost of their degree programs and we fully expect Sophia to be a meaningful source of revenue and earnings.
Both for Sci as we continue to invest in its product offerings for consumers.
Workforce edge are SaaS based educational benefits management platform is gained significant traction in the marketplace. After its first six months since launching we now have 22 corporate agreements, who collectively employ more than 430000 employees on the workforce edge platform.
The monetization strategy for workforce edge is two pronged.
First and what we believe will be the largest source is when employees on the platform select to attend either strayer or Capella University in which case, we collect the tuition dollars or second when an employee on the platform selects to attend a non Sci owned partner school in which case, we collect an annual fee for administering the.
For them it.
Both of these revenue sources will be quite small this year as we've been focused on building the platform and enrolling corporate partners, but beginning next year, we expect several million dollars of revenue and ultimately within the next two to three years to be generating several thousand new students in distrait or Capella University each year.
Finally R U S higher education segment, which primarily consists of strayer and capella universities, a capella, we continue to see very strong growth in Flexpath, where enrollment grew 18% in the third quarter and now comprises more than 19% of all U S. Higher education enrollments. We also continue to see <unk>.
Wrong traction in our employer affiliated enrollments that capella and in particular in health care and.
Turning to Strayer University, where our total enrollment declined in the third quarter contributing to most of the revenue decline that we had in the U S higher education segment.
We are however, encouraged by some of the progress we're seeing within strayer, including our third consecutive quarter of gains in student success as well as improvements in student retention.
As of today 46 campuses, representing 70% of total campuses have reopened and.
And the administrators faculty and staff, a stray or remain as committed as ever to delivering a high quality education will also working to get fully reopened post to COVID-19.
And finally I would like to thank my Sci colleagues for their ongoing dedication and hard work on behalf of our students and with that via we'd be happy to answer questions.
At this time I would like to remind everyone that if you would like to ask a question. Please press star followed by the number one again that's star one for any questions will possibly just a moment.
The first question will come from Jeff Silber with BMO capital markets. Please go ahead and.
Thanks, So much wanted to focus first on U S. Higher education can we parse out if possible both of the new enrollment trends and the total enrollment trends between Strayer University and Capella I know you may not give us specific numbers. If you do great, but at least you know kind of directionally, what's been going on that would be great sure Jeff well.
Directionally Capella University has been growing both new students and total enrollment throughout the year as we've said on prior call <unk> enrollment has been declining.
As I said, we're focused right now on getting as many of our strayer campuses reopened we have about 70% of them are you open today.
We've accepted the fact over the years that there is some amount of volatility, particularly illustrators undergrad focused.
Students and we just have to wait and see when that enrollment will ultimately recover.
Have those trends, specifically and straighter undergrad got worse over the past quarter.
No they have not gotten worse.
Have they gotten better.
In some instances they are better.
Okay, Alright, that's helpful. And then based on our calculation it looks like revenue per student in U S. Higher education declined can we go into that exactly where those declines or an organic we can parse out straighter versus capella that would be helpful.
Sure actually the revenue per student at Capella is down on a year over year basis, a little more than the decline in strayer, which is almost completely attributable to the fact that we've been growing employer affiliated enrollments, who tend to pay lower tuition with a discount and actually Jeff that's completely in line with our longer term strategy.
G to try to transition ultimately over some amount of years all of our tuition revenue. If we can from title for the private sector paid and so.
We don't necessarily look at the decline in revenue per student through a negative lens, we look at it as progress towards our goal to increase.
Ultimately all of our revenue if we can into private sector and corporate pay.
Okay, that's great and one more and then he'll jump back into Q I think on the first quarter call. You gave us some guidance for the year you gave us a little bit of update last quarter. I was wondering we've been getting update out that are you still comfortable with the guidance had given us previously.
We don't have any new guidance.
To update today and as we mentioned in our last call. We still project to be below the low end of the range that we provided earlier in the year.
Okay, any comments and again, if things change directionally compared to last quarter is it lower.
Then the lower end of the range that you talked about are kind of pretty much the same.
There's nothing really more to update other than what we've already provided Jeff It which is to say and we said that's in our in our last call that we expect to be below the low end of the range.
Okay I appreciate it I'll jump back in the cave. Thanks, Thank you Jeff.
And once again, ladies and gentlemen that star one for any questions again star one for any questions over the phone line. Our next question will be from Toby summer with tourists Securities. Please go ahead.
Thanks [noise].
<unk> what are the outward signs that we may see.
In truck quarter outside of quarterly updates that.
The climate for new enrollment.
He is improving.
Certainly it's a tight labor market wages are rising do do we need the labor market in the outlook for wage inflation too.
Moderator to.
To encourage trumps to kind of go get a degree.
We certainly are seeing improvement in the economic conditions that we think impact are strayer undergraduate students 70% of strayer students.
At the undergraduate level half of every new cohort has never been to college before that's the segment of the population that we think is most sensitive to large adverse changes in the labor market and economy as you've noted that started to improve what we look at internally.
Or the the the the size of the inquiry pools that are coming in the percentage of those inquiries that elect to fill out an application for enrollment over the last weeks in several months that has improved and by improved I mean less worse than it had been in prior quarters.
We've remained focus on trying to get as many of Australian locations reopened we're at 70% today, we hope to be at 100% by the end of the year and so we'll just to continue to provide updates each quarter as we make progress.
With respect to the physical campus openings and it has that sort of.
Less worse.
Improvement that you described as that mapped against the footprint of campuses that are open.
Or perhaps Conversely R U.
Evaluating the size of your footprints in maybe thinking about not not going all the way to 100%.
Well, we definitely would like to be at 100%.
And that's what our teams are working on and.
And it's in some cases, it's relatively early to make an assessment because some of these campuses have only been reopened a few weeks. So the data set is quite small, but generally we see positive.
Operational outcomes associated with reopening campuses.
And then does the change in travel rules in Australia, and New Zealand.
It was kind of pending.
What does that do to the outlook in the business trends from your perspective.
Well.
Torrens is operated so far through 2021 with borders being completely closed and foreign students not being able to travel and they've had a ah.
Pretty strong year, all things considered so if in 2022 those restrictions would begin to ease and foreign students would be allowed to travel into the country. We obviously think that that would be a positive catalyst for torrens.
Thank you very much.
The next question will come from Gary dispute with Bank of America. Please go ahead.
Hi, good morning.
Sorry can you hear me.
The.
So I guess first question.
You're obviously, it's strayer lapping the first step down in new students and so.
Is that continuing to decline against the big decline you saw a year ago or.
Or is it is there any recovery can.
Can you just give us any any sense.
The pace of deterioration I noticed that less bad on some of the metrics earlier, but but are you down again against the first decline a year ago.
Well, we're not providing our new student.
Growth for either stray or Capella University I can just reiterate what I said, just a few minutes ago, Gary which is the enrollment trends at strayer are improving by which again I mean, they're less bad beyond that we don't want to get into specific details around new student numbers within the segment.
Okay, all right I mean historically.
I know Rob spent a lot of time talking about labor force participation rate being arguably the best way or at least a good way to think about that.
The desire of new students to enroll.
That remains.
A challenge figure at this point I guess, when you think about the macro factors.
And also what you can do.
As a company to improve the enrollment performance.
<unk> I mean, how are you thinking about that now I guess a couple of quarters ago. You said you thought by early 22, we might see it turn.
Just any updated thoughts and what you can control and and what your outlook for the factors you can't that might help us think about when we might see stabilization.
Well I mean, we are encouraged that the economy broadly is improving and wages are beginning to increase and we'd like to see labor force participation rate pick up. So that's obviously all things that are substantially out of our control.
What we focus on his first and foremost making sure that we're doing the best job that we can teaching the tens of thousands of students that we serve every day, we've been actually very encouraged that students success, which is the percentage of students who are actually earning their credit hours at strayer has improved on a year over year basis every quarter. This.
Year.
We've also seen increases in student retention.
We're very focused on workforce edge and converting as many of our 750 plus corporate partnerships that we can onto the platform and so that over time will be able to continue to grow our employer affiliated enrollments.
And we're just focused on trying to the best that we can right now and just returned Strayer University to a level of normality, which is to get our campus locations open be there to serve our students as we tried to do everyday and just do the best job that we can educating them and we think that ultimately when when the undergraduate student that we predominantly serve.
It's ferring better macroeconomic lens that they will begin to enroll in Strayer University again, and we look forward to that that time when that happens.
Okay, and just one last one I feel like over the last several quarters a lot of discussion around corporate success that you're having today has been more capella focus.
Given flexpath and healthcare and some of the other.
Things that you've been discussing they are going quite well.
When I think back 10 15 years.
Corporate was a huge part of the Strayer story and yet I haven't heard a lot of discussion of that say in the last 12 months from you can you just give us an update how important is that distrait or do you think the workforce edge in in this.
Strategic increased focus on employer over the last 12 18 months.
Really is going to meaningfully over time help strayer.
And what's going on there today. Thank you sure. It's you're right. It's always been a big part of Strayer University over over tens of years decades.
And it remains a big part of it Strayer continues to.
Develop new relationships with new corporations every year last year or earlier this year, we activated Cvs the second largest retailer in the United States. We have a very large agreement with best buy one of the largest national retailers.
We get thousands of students every year from our corporate partners at Strayer.
And and we also have strong growth at Capella and workforce edge was designed to be a portal hopefully for what we see ultimately at maturity, which for US is probably a three year horizon to be generating thousands of new students into both strayer and capella.
As we continue to accumulate more and more employers and more employees on that platform.
That's why we've invested the dollars behind workforce said so.
Employer is still a very big part of stairs ability to serve and lower the cost of education for people, but it's it's becoming an equally big and important part of capella as well.
Thank you.
The next question is a follow up from Toby summer with two of Securities. Please go ahead.
Hi, Thanks, I just wanted to follow up on the guidance commentary.
So we're going to be below the the guidance given previously.
And I think if I remember correctly. The last time you commented on health business trends were performing relative to those targets, we were tracking towards the low end and now we're below.
Remembering that correctly or.
On the prior call did you actually say you were going to be below that that range.
Yeah, well first let me let me just say that when we when we put the.
Lotion all range of outcomes earlier in the year, which was not our practice.
It was really because we had just closed on an acquisition in Australia, and we knew that it was going to be difficult for our owners to try to parse out the contribution that Australia and New Zealand would have in the company. So.
We didn't look at that as guidance per se is more as.
Ah business models, so that people could begin to model in Australia as contribution that being said.
And as we said in our last call in earlier on this call based on the projections that we put out earlier in the year and based on what we see now for.
For the balance of this year, we think that the results will be below the low end of that range.
Okay.
Very much.
And at this time there are no further questions I'd like to turn the conference back over to Carl for any closing comments.
Thank you everybody. We appreciate your time and we look forward to chatting with the next quarter.
Ladies and gentlemen, thank you for participating in today's conference call you may now disconnect.
Oh.
[music] [noise].
[music].
[music].
Welcome to strategic Education's third quarter 'twenty to 2021 results conference call I'll now turn the call over to Teresa Wilkie director of Investor Relations for strategic Education Milwaukee. Please go ahead.
Yeah.
Thank you good morning, everyone and welcome to strategic Education's Conference call in which we will discuss third quarter 2021 results with US today are Robert Silberman Executive Chairman.
Karl Mcdonnell President and Chief Executive Officer, and Daniel Jackson, Executive Vice President and Chief Financial Officer.
Following today's remarks, we will open the call for questions.
Please note that this call may include forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
The statements are based on current expectations and are subject to a number of assumptions uncertainties and risks that strategic education has identified in today's press release that could cause actual results to differ materially.
Further information about these and other relevant uncertainties, maybe found in strategic Education's. Most recent annual report on Form 10-K.
The 10-Q to be filed and other filings with the Securities and Exchange Commission as well as strategic Education's future eight Ks 10, Qs and 10 Ks.
Copies of these filings and the full press release are available for viewing on the website out strategic education Dot com and now I'd like to turn the call over to Carl Carl. Please go ahead.
Thank you Terry and good morning, everyone.
This morning, we released our third quarter financial results and rather than go through them in detail since all the information is actually in the release I didn't say I'd like to provide our owners with updates on our progress towards our strategic goals first our Australia and New Zealand segment continues to perform exceptionally well notwithstanding the fact that they have operated.
With some of the world's most restricted COVID-19 related lockdown measures anywhere in the world.
The integration of these assets onto SCID infrastructure was completed in the third quarter and without any adverse impacts to students or staff.
Our Australian team has been actively working with our U S based team on beginning to implement revenue synergies such as exporting existing U S programs into towards the University to expand their program portfolio.
Currently we see that these revenue synergies are being worth potentially $50 million to $75 million over the next three plus years.
The inability of foreign students to travel into Australia will likely have a slight negative impact on our revenue projections for the year. So this will almost be entirely offset with careful expense management such that their full year EBITDA will be in line with our original projection of $60 million we.
We're encouraged that many of these restrictive lockdown measures are beginning to ease and we are cautiously optimistic that foreign travel into Australia will be allowed to resume in the early part of 2022.
In the United States, our alternative learning unit is on track to meet or exceed all of their objectives for 2021, starting with Sophia learning.
Sorry.
Since Relaunching Sophia to a monthly paid subscription model in the third quarter of last year. We've added more than 51000 paid subscribers and are seeing strong month to month growth in our subscriber base.
Over the past year more than 64000 learners have collectively completed more than 190000 courses and transferred more than 500000 credit hours to other institutions, thereby dramatically lowering the cost of their degree programs and.
And we fully expect Sophia to be a meaningful source of revenue and earnings growth for STI as we continue to invest in its product offering for consumers.
Workforce edge, our SaaS based educational benefits management platform has gained significant traction in the marketplace. After its first six months since launching.
We now have 22 corporate agreements, who collectively employ more than 430000 employees on the workforce edge platform.
The monetization strategy for workforce edge is two pronged first and what we believe will be the largest source is when employees on the platform select to attend either strayer or Capella University in which case, we collect the tuition dollars or second when an employee on the platforms selects to attend a non Sci one part.
School in which case, we collect an annual fee for administering the platform.
Both of these revenue sources will be quite small this year as we've been focused on building the platform and enrolling corporate partners, but beginning next year, we expect several million dollars of revenue and ultimately within the next two to three years to be generating several thousand new students into Australia or Capella University each year.
And finally, our U S higher education segment, which primarily consists of strayer and capella universities.
Capella, we continue to see very strong growth in Flexpath, where enrollment grew 18% in the third quarter and now comprises more than 19% of all U S. Higher education enrollments. We also continue to see strong traction in our employer affiliated enrollments at Capella and in particular in health care.
And turning to Strayer University, where our total enrollment declined in the third quarter contributing to most of the revenue decline that we had in the U S higher education segment.
We are however, encouraged by some of the progress we're seeing within strayer, including our third consecutive quarter of gains in student success as well as improvements in student retention.
As of today 46 campuses, representing 70% of total campuses have reopened and.
And the administrators faculty and staff, Australia remain as committed as ever to delivering a high quality education, while also working to get fully reopened post COVID-19.
And finally I'd like to thank my Sci colleagues for their ongoing dedication and hard work on behalf of our students and with that via we'd be happy to answer questions.
This time I would like to remind everyone that if he would like to ask a question. Please press star followed by the number one again Thats star one for any questions well pause for just a moment.
The first question will come from Jeff Silber with BMO capital markets. Please go ahead.
Thanks, So much wanted to focus first on <unk> higher education can we parse out if possible both the new enrollment trends and the total enrollment trend between Strayer University and Capella I know you may not give a specific numbers, if you're doing great, but at least kind of directionally, what's been going on that would be great sure Jeff well.
Directionally Capella University has been growing both new students and total enrollment throughout the year as we've said on prior calls <unk> enrollment has been declining.
As I said, we're focused right now on getting as many of our strayer campuses reopened we are about 70% of them are reopened today and we've accepted the fact over the years that theres some amount of volatility, particularly in Australia as undergrad focused.
Students.
And we just have to wait and see when that enrollment will ultimately recover.
How have those trends specifically in strayer undergrad got worse over the past quarter.
No they have not gotten worse.
And they've gotten better.
In some instances they are better.
Okay, Alright, that's helpful. And then based on our calculation it looks like revenue per student in U S. Higher education decline can we go into that exactly where those declines were in again, if we can parse out stray ever since capella that would be helpful.
Sure actually the revenue per student at Capella is down on a year over year basis, a little more than the decline in strayer, which is almost completely attributable to the fact that we've been growing employer affiliated enrollments, who tend to pay lower tuition with a discount and actually Jeff that's completely in line with our longer term strategy.
G to try to transition to ultimately over some amount of years all of our tuition revenue. If we can from title four to private sector paid and so.
We don't necessarily look at the decline in revenue per student through a negative lens, we look at it as progress towards our goal to increase.
Ultimately all of our revenue if we can into private sector in corporate pay.
Okay, that's great and one more and then I'll jump back in the queue I think on the first quarter call you gave us some guidance for the year you gave us a little bit of update last quarter. I was wondering if we can get an update on that are you still comfortable with the guidance you'd given us previously.
We don't have any new guidance.
To update today and as we mentioned in our last call. We still project to be below the low end of the range that we provided earlier in the year.
Yes.
Okay, any comments and again, if things change directionally compare to last quarter or is it lower than the lower end of the range that you talked about are kind of pretty much the same.
There's nothing really more to update other than what we've already provided Jeff which is to say and we said this in our in our last call that we expect to be below the low end of the range.
Okay I appreciate it I'll jump back in the queue. Thanks, Thank you Jeff.
And once again, ladies and gentlemen that star one for any questions again star one for any questions over the phone line.
Next question will be from Tobey Sommer with Truest Securities. Please go ahead.
Thanks.
I'm curious.
Curious what are the outward signs that we may see.
Intra quarter outside of sort of quarterly update that.
That.
The climate for new enrollment.
He is improving.
Certainly it's a tight labor market wages are rising due do we need the labor market and the outlook for wage inflation in Q2 to moderate.
To encourage folks to kind of go get a degree.
We certainly are seeing improvement in the economic conditions that we think impact our strayer undergraduate students.
70% of Strayer students.
At the undergraduate level half of every new cohort has never been to college before that's the segment of the population that we think is most sensitive to large adverse changes in the labor market and economy as you've noted that started to improve what we look at internally.
Or the percent.
The size of the inquiry pools that are coming in the percentage of those inquiries that elect to fill out an application for enrollment over the last weeks and several months that has improved and by improved I mean less worse than it had been in prior quarters.
We've remained focus on trying to get as many of our strayer locations reopened we're at 70% today, we hope to be at 100% by the end of the year and so we'll just to continue to provide updates each quarter as we make progress.
Yes.
And with respect to the physical campus openings has.
Is that sort of.
Less worse.
Type improvements that you described is that mapped against the footprint of campuses that are open.
Or perhaps Conversely are you.
Evaluating the size of your footprint and maybe thinking about not not going all the way down.
Well, we definitely would like to be at 100% and that's what our teams are working on.
And it's and in some cases, it's relatively early to make an assessment because some of these campuses have only been reopened a few weeks. So the data set is quite small, but generally we see positive.
Operational outcomes associated with reopening campuses.
And then does the change in travel rules in Australia, and New Zealand.
It was kind of pending.
What does that do to the outlook in the business trends from your perspective.
Well.
Towards is operated so far through 2021 with borders being completely closed and foreign students not being able to travel and they've had a.
A pretty strong year, all things considered so if in 2022 those restrictions would begin to ease in foreign students would be allowed to travel into the country.
We obviously think that that would be a positive catalyst for torrens.
Thank you very much.
The next question will come from Gary Bisbee with Bank of America. Please go ahead.
Hi, good morning.
Okay, sorry can you hear me, yes, yes.
<unk>.
So I guess first question.
Youre, obviously at Strayer lapping the first step down in new students and so.
No.
That continuing to decline against the Big decline, you saw a year ago or or.
Or is it is there any recovery.
Can you just give us any any sense.
The pace of deterioration I know you said less bad than some of the metrics earlier, but are you down again against the first decline a year ago.
Well, we're not providing our new student.
Growth for either Strayer or Capella University I can just reiterate what I said, just a few minutes ago, Gary which is the enrollment trends at strayer are improving by which again I mean theyre less bad beyond that we don't want to get into specific details around new student numbers within the segment.
Okay, Alright, I mean historically.
I know Rob spent a lot of time talking about labor force participation rate being arguably the best way or at least a good way to think about.
The desire of new students to enroll that remains.
A challenge figure at this point I guess, when you think about the macro factors.
And also what you can do.
As a company to improve the enrollment performance at Strayer I mean, how are you thinking about that now I guess a couple of quarters ago. You said you thought by early 'twenty, two we might see it turn.
Just any updated thoughts and what you can control and what your outlook for the factors you can't that might help us think about when we might see stabilization.
Well I mean, we are encouraged that the economy broadly is improving and wages are beginning to increase and we'd like to see labor force participation rate tick up. So that's obviously all things that are substantially out of our control.
What we focus on is first and foremost making sure that we're doing the best job that we can teaching the tens of thousands of students that we serve every day, we've been actually very encouraged that student's success, which is the percentage of students who are actually earning their credit hours at strayer has improved on a year over year basis every quarter. This year.
<unk>.
We've also seen increases in student retention.
We're very focused on workforce edge and converting as many of our 750 plus corporate partnerships that we can onto the platform and so that over time, we'll be able to continue to grow our employer affiliated enrollments.
And we're just focused on trying to the best that we can right now and just return Strayer University to a level of normality, which is to get our campus locations open and be there to serve our students as we try to do everyday and just do the best job that we can educating them and we think that ultimately win win the undergraduate student that we predominantly serve.
It's fairing better macroeconomic lens that they'll begin to enroll and Strayer University again, and we look forward to that that time when that happens.
Okay, and just one last one I feel like over the last several quarters a lot of the discussion around corporate success that you're having today has been more capella focused.
Given flexpath in health care and some of the other.
Things that you've been discussing they are growing quite well.
When I think back 10 15 years.
Corporate was a huge part of the Strayer story and yet I haven't heard a lot of discussion of that say in the last 12 months from you can you just give us an update how important is that to stray or do you think the workforce edge in this <unk>.
Strategic increased focus on employer over the last 12 18 months.
Really is going to meaningfully over time help strayer.
And what's going on there today. Thank you sure. It's you're right. It's always been a big part of Strayer University over over tens of years decades.
And it remains a big part of it Strayer continues to.
And develop new relationships with new corporations every year last year or earlier this year, we activated Cvs the second largest retailer in the United States. We have a very large agreement with best buy one of the largest national retailers.
We get thousands of students every year from our corporate partners at Strayer.
And and we also have strong growth at Capella and workforce edge was designed to be a portal hopefully for what we see ultimately are at maturity, which for US is probably a three year horizon to be generating thousands of new students into both strayer and capella.
As we continue to accumulate more and more employers and more employees on that platform.
That's why we've invested the dollars behind workforce edge so.
Employer is still a very big part of sprayers, our ability to serve and lower the cost of education for people, but it's a it's becoming an equally big and important part of capella as well.
Thank you.
The next question is a follow up from Tobey Sommer with <unk> Securities. Please go ahead.
Hi, Thanks, I just wanted to follow up on the guidance commentary.
So we're going to be below the the guidance given previously.
And I think if I remember correctly. The last time you commented on how business trends were performing relative to those targets, we were tracking towards the low end and now we're below.
Am I remembering that correctly or are on the prior call did you actually say you were going to be below that range.
Yeah, well first let me let me just say that when we when we put the notional range of outcomes earlier in the year, which was not our practice. It was really because we had just closed on an acquisition in Australia, and we knew that it was going to be difficult for our owners to try to parse out the con.
Tribute that Australia, and New Zealand would have in the company. So.
We didn't look at that as guidance per se as more as a.
Our business model, so that people could begin to model in Australia as contribution that being said.
And as we said in our last call and earlier on this call based on the projections that we put out earlier in the year and based on what we see now for.
For the balance of this year, we think that the results will be below the low end of that range.
Okay.
Thank you very much.
And at this time there are no further questions I would like to turn the conference back over to Carl for any closing comments.
Thank you everybody. We appreciate your time and we look forward to chatting with you next quarter.
Ladies and gentlemen, thank you for participating in today's conference call you may now disconnect.