Q2 2022 Barnes & Noble Education Inc Earnings Call
Speaker 1: can call to earnings conference call. My name is Bethany and I'll be your co-operator today.
<unk> quarter earnings Conference call. My name is Bethany and I'll be your cobalt prices today.
Speaker 2: I would now like to hand the call over to your host, Andy Milivoj, Vice President of Investor Relations. Andy, please go ahead. Good morning, and welcome to our fiscal 2022 second quarter earnings call.
I would now like to hand, the call over to your host onto EMEA Lavoy, Vice President of Investor Relations. Andy. Please go ahead, good morning, and welcome to our fiscal 2022 second quarter earnings call.
Speaker 2: Joining us today are Mike Huseby, CEO and Chairman, Tom Donahue, CFO .
Joining us today are Mike Huseby, CEO and chairman.
Tom Donohue CFO.
Speaker 2: Jonathan Scharf, Executive Vice President, BNED Retail.
Jonathan Shar executive Vice President and EDI retail.
Speaker 2: David Henderson, President of MBS, and David Nenke, President of DSS.
David Henderson, President of MBS, and David <unk> President of DSS.
Speaker 2: Before we begin the call, I'd like to remind you that the statements we make on today's call are covered by the Safe Harbor disclaimer contained in our press release and public documents. The contents of this call are the property of Barnes & Noble Education and are not for rebroadcaster use by any other party without prior written consent of Barnes & Noble Education.
Before we begin the call I'd like to remind you that the statements. We make on today's call are covered by the safe Harbor disclaimer contained in our press release and public documents. The contents of this call is the property of Barnes <unk> Noble education and are not for rebroadcast or use by any other party without prior written consent of Barnes <unk> Noble education.
Speaker 2: During this call, we will make forward-looking statements with predictions, projections, and other statements about future events.
During this call we will make forward looking statements with predictions projections and other statements about future events.
Speaker 2: These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission.
These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission.
Speaker 2: The company disclaims any obligation to update any forward-looking statements that may be made or discussed during this call. And now, I'll turn the call over.
The company disclaims any obligation to update any forward looking statements that may be made or discussed during this call.
And now I'll turn the call over to Mike <unk>.
Speaker 3: Thanks, Andy. And thank you all for joining us this morning. We were thrilled to welcome students back.
Thanks, Andy and thank you all for joining us this morning.
We were thrilled to welcome students back to campus. This fall.
Speaker 3: Our second quarter results reflected their eagerness to return to an on-campus, in-person learning environment with a significantly increased resumption of on-campus events and sporting activities.
Our second quarter results reflected their eagerness to return to an on campus in person learning environment with a significantly increased resumption of on campus events and sporting activities.
Speaker 3: This was further corroborated by an NRF report issued this summer that indicated that college students and their families had planned to spend an average of $1,200 on college or university items.
This was further corroborated by an end RF report issued this summer that indicated that college students and their families and plan to spend an average of $200 oncology University items.
Speaker 3: 13% more than a year ago as students prepare to transition back to an in-person learning experience.
13% more than a year ago as students prepare to transition back to an in person learning experience.
Speaker 3: The top three categories included electronics, dorm furnishings, and clothing.
The top three categories included electronics.
Arm furnishings and clothing.
Speaker 3: While many institutions implemented policies to return students to an on-campus learning experience, the volume of students, alumni, and tourists is not yet back to pre-pandemic levels.
While many institutions implemented policy to return students to an on campus learning experience.
The volume of students alumni and tourists is not yet back to pre pandemic levels.
The operating environment continues to present, a number of different challenges, including undergraduate enrollment declines of approximately 3%. According to the national student Clearinghouse Research Center.
Speaker 3: fewer international students than pre-COVID levels, and many community colleges continuing to offer virtual classes.
Fewer international students than pre Covid levels, and many community colleges continuing to offer virtual classes.
Speaker 3: In addition to enrollment declines, we are also experiencing challenges with escalating freight costs, labor shortages, and supply shortages.
In addition to enrollment declines we are also experiencing challenges with escalating freight costs labor shortages and supply chain issues.
While we expect these conditions to persist through fiscal 'twenty. Two we're hopeful that they will begin to mitigate as we move into the next fiscal year.
Speaker 3: Despite these challenges, our organization has proved resilient in providing best-in-class service to our campus partners and their students.
Despite these challenges our organization has proved resilient and providing best in class service to our campus partners and their students.
Speaker 3: The growth of our first day offerings helped to mitigate the macro pressures on our course materials business, and through our general merchandise partnership with Fanatics and Lids, we were better positioned to address the global supply chain issues facing many retailers.
The growth of our first day offerings helped to mitigate the macro pressures on our course materials business and through our general merchandise partnership with fanatics in lids, we are better positioned to address the global supply chain issues facing many retailers.
As we look ahead, our entire organization is excited by our company's momentum as we continue to execute on our strategic initiatives that further distinguish our competitive offerings, which as a whole.
Speaker 3: As we look ahead, our entire organization is excited by our company's momentum as we continue to execute on strategic initiatives that further distinguish our competitive offerings, which, as a whole, cannot be replicated in the marketplace.
Cannot be replicated in the marketplace.
Speaker 3: Our innovative academic solutions offerings, unparalleled merchandise assortment, new best-in-class omni-channel customer experience, and strategic investments provide an unparalleled customer value proposition for the institutions and the customers that we serve, all of which we expect to accelerate our growth.
Our innovative academic solutions offerings unparalleled merchandise assortment.
New best in class Omnichannel customer experience and strategic investments provide an unparalleled customer value proposition for the institutions and the customers that we serve all of which we expect to accelerate our growth.
Speaker 3: The benefits of our inclusive access course material models are resonating with institutions across the country and delivering greater student access and better student outcomes.
The benefits of our inclusive access course material models are resonating with institutions across the country and delivering greater student access and better student outcomes.
Speaker 3: We are seeing tremendous demand for our first day complete equitable access program as schools have demonstrated the positive impact. The solution has on improving student outcomes and reducing stress at the beginning of each academic term.
We are seeing tremendous demand for our first day complete equitable access program as schools have demonstrated the positive impact of solution has an improving student outcomes and reducing stress at the beginning of each academic term.
Speaker 3: Additionally, First Aid Complete eliminates barriers to course material access, allowing students to engage with the course content from day one and achieve greater academic success.
Additionally, first day complete eliminate barriers to course material access, allowing students to engage with of course content from day, one and achieve greater academic success.
Speaker 3: Equally important, the program also supports our school partners' missions of improving student academic achievement, persistence, and retention.
Equally important the program also supports our school partners missions of improving student academic achievement persistence and retention.
Speaker 3: It's not surprising that based on these benefits, we experienced significant growth in the 2021 fall term, when first day complete was offered through 65 campus bookstores, up from just 12 campus bookstores the prior year, representing approximately 295,000 total undergraduate student enrollment, up from 43,000 students last fall, an almost seven times year-over-year increase.
It's not surprising that based on these benefits we experienced significant growth in the 2021 fall term when first day complete was offered through 65 campus bookstores up from just 12 campus bookstores the prior year, representing approximately 295000.
Total undergraduate student enrollment.
From 43000 students last fall and almost seven times year over year increase.
Speaker 3: With this growth, the program was available across a broad spectrum of schools from small private colleges to large public universities and multi-campus community college systems.
With this growth the program was available across a broad spectrum of schools from small private colleges to large public universities and multi campus community College systems.
Speaker 3: Year over year, revenues for both our first day models increased 80%.
Year over year revenue for both our first day models increased 80% for.
Speaker 3: For the 2022 spring term, we have 10 additional stores that have signed up for First Day Complete, representing undergraduate enrollment of over 86,000 students.
For the 2022 spring term, we have 10 additional stores that have signed up for first day complete representing undergraduate enrollment of over 86000 students.
Speaker 3: First State Complete is disrupting the traditional course material delivery model in collaboration with leading institutions across the country.
First day complete is disrupting the traditional course materials delivery model in collaboration with leading institutions across the country.
Speaker 3: By delivering all course materials via one convenient service.
By delivering all course materials via one convenient service.
Speaker 3: First day complete ensures that students have access to all their learning materials across all of their courses before the first day of class.
First day complete ensures that students have access to all of their learning materials across all of their courses before the first day of class.
Speaker 3: This allows them to engage with course content from day one to support their academic success.
This allows them to engage with course content from day, one to support their academic success.
Speaker 3: Also, First Aid Complete offers full academic freedom for faculty, allowing them to select the best course materials for the term from B&ED's expansive relationship with more than 6,000 publishers, creating a one-stop simplified experience.
Also first day complete offers full academic freedom for faculty, allowing them to select the best course materials for the term from <unk> expansive relationship with more than 6000 publishers.
Adding a one stop simplified experience.
Data shows that course materials are still an optional purchase for many students even though it's been well documented that students who have their course materials before the start class perform better academically.
Speaker 3: Data shows that course materials are still an optional purchase for many students, even though it's been well documented that students who have their course materials before the start of class perform better academically.
Speaker 3: First Aid Complete helps to remove barriers and provides the same fundamental level of access across an entire institution for all students.
First day complete helps to remove barriers and provides the same fundamental level of access across an entire institution for all students.
Our survey showed that students who utilize the program felt that they had better experiences we're better prepared for the academic term and ultimately achieved better academic results confirming pnc's equitable access program is making a positive impact on student success.
Speaker 3: Our survey showed that students who utilized the program felt that they had better experiences, were better prepared for the academic term, and ultimately achieved better academic results, confirming BNC's Equitable Access Program is making a positive impact on student success.
Speaker 3: First aid complete is also proving to be a competitive advantage for the schools that have adopted it, which we believe will further help to accelerate the adoption by additional schools.
First day complete is also proving to be a competitive advantage for the schools that have adopted it which we believe will further help to accelerate the adoption by additional schools.
Speaker 3: Some BNC partner institutions have started to report that they have seen enrollment growth, which they, at least in part, attribute to the ability to market the benefits of first day complete to prospective students.
Some D&C partner institutions is starting to report that they have seen enrollment growth, which they at least in part attributed to the ability to market. The benefits of first day complete to prospective students.
Speaker 3: Turning now to our general merchandise business, with the resumption of on-campus events and sporting activities, we experienced 78% gross comparable sales growth during the second quarter.
Turning now to our general merchandise business with resumption of on campus events and sporting activities, we experienced 78% gross comparable sales growth during the second quarter.
Speaker 3: Our partnership with Fanatics and Lids offers an unparalleled merchandise assortment and a best-in-class, omni-channel customer experience for logo and emblematic products, allowing us to offer our schools a totally reimagined retail experience.
Our partnership with fanatics and Lids offers an unparalleled merchandize assortment and a best in class Omnichannel customer experience for logo and emblematic products, allowing us to offer our schools are totally re imagined retail experience.
Speaker 3: This partnership expands the breadth and quality of our offerings in-store and online, including newer, more exciting brands such as Vineyard Vines, Lululemon, and Johnny O, that are highly relevant for our student, parent, and alumni demographic.
This partnership expands the breadth and quality of our offerings in store and online, including newer more exciting brands such as vineyard vines, Lulu Lemon and Johnny O that are highly relevant for our student parent and alumni demographic.
Speaker 3: Both partners are leaders in their space, which provides us with buying power and a partnership that schools will benefit from.
Both partners are leaders in their space, which provides us with buying power and a partnership that schools will benefit from.
Speaker 3: We have already seen the impact on winning new business and are excited to see what this year will bring as the strategic partnership will ultimately benefit the students and schools that we serve.
We have already seen the impact on winning new business and are excited to see what this year will bring as a strategic partnership will ultimately benefit the students and schools that we serve.
Speaker 3: Specific to Fanatics, we will benefit from their powerful e-commerce systems and data insights to grow market share and add new customers.
Specific to fanatics.
We'll benefit from their powerful e-commerce systems, and data insights to grow market share and add new customers.
Speaker 3: These sites are truly best-in-class, mobile-first experiences that leverage the Fanatics platform to provide an incredible user experience.
These sites are truly best in class mobile first experiences that leverage the fanatics platform provided incredible user experience.
Speaker 3: We continued to transition additional school e-commerce websites to the new Fanatics experience, and through November , we now have over 540 sites live on the Fanatics platform.
We continue to transition additional school E Commerce web site to the new fanatics experience and through November we now have over 540 sites live on the fanatics platform.
Turning to our DSS business.
Speaker 3: our Bartleby suite of solutions continues to exhibit its rapid growth.
Our Bartleby suite of solutions continues to exhibit its rapid growth.
Speaker 3: DSS revenue grew 39% to $8.3 million, with Bartleby revenue growing approximately 70% year over year.
<unk> revenue grew 39% to $8 $3 million with Bartleby revenue growing approximately 70% year over year.
Speaker 3: Barnaby generated 120,000 new growth subscribers during the quarter, representing a 33% year-over-year growth.
Probably generated 120000, new gross subscribers during the quarter, representing a 33% year over year growth.
Speaker 3: We introduced Bartleby Plus during the quarter, which combined Bartleby Learn with Bartleby Write to provide a dynamic study bundle to help students tackle their assignments 24-7.
We introduced <unk> plus during the quarter, which combines Barbara learn with Bartleby write to provide a dynamic study bundle to help students tackle their assignments $24 7 million.
Speaker 3: This comprehensive offering includes over 5,000,000 step-by-step textbook and homework solutions, a math solver with detailed solutions, expert Q&A in 30 subjects, essay templates that help students outline their papers with an interactive guide, plagiarism detection, and a citations generator, amongst other tools.
This comprehensive offering includes over $5 million step by step textbook in home solutions, a math solver with detailed solutions expert Q&A and 30 subjects.
Templates that helps students outlined their papers with an interactive guide.
Tourism detection and citations generator amongst other tools.
Speaker 3: Part of these products and services are designed to improve student success and outcomes, offering pathways for learning that fit the schedules and demands of today's students.
All of these products and services are designed to improve student success and outcomes offering pathways for learning that fit the schedules and demands of today's students.
Speaker 3: We believe our bundle provides tremendous value to help improve student outcomes.
We believe our bundle provides tremendous value to help improve student outcomes and.
In conclusion.
Speaker 3: While there continue to be various challenges operating our business in this COVID-affected environment, we remain focused on executing our strategic growth initiatives, which is already helping to mitigate the impact of such near-term challenges.
While there continue to be various challenges operating our business.
In this COVID-19 affected environment.
We remain focused on executing our strategic growth initiatives, which is already helping to mitigate the impact of such near term challenges.
Speaker 3: Most importantly, we believe these initiatives position us well for longer term sustainable growth.
Most importantly, we believe these initiatives position us well for longer term sustainable growth.
Speaker 3: With that, I will turn it over to Tom for the financial review.
With that I will turn it over to Tom for the financial review.
Thanks, Mike.
Speaker 3: Please note that the second quarter of fiscal 2022, consisting of 13 weeks, ended on October 30, 2021.
Please note that the second quarter of fiscal 2022, consisting of 13 weeks ended on October 32021.
Speaker 2: All comparisons will be to the second quarter of fiscal 2021, unless otherwise noted.
All comparisons will be to the second quarter of fiscal 2021, unless otherwise noted.
Speaker 3: As Mike highlighted earlier, while we are not back to pre-pandemic levels, the second quarter, which is historically the highest sales period for the company, benefited from many students returning to in-person classes and greater attendance at campus events and sporting activities as compared to the year-ago period when schools supplemented in-person classes with hybrid and remote learning models coupled with a significant reduction in events and sporting activities.
As Mike highlighted earlier, while we are not back to pre pandemic levels. The second quarter, which is historically the highest sales period for the company benefited from many students returning to in person classes and greater attendance at campus events and sporting activities as compared to the year ago period when schools supplemented in person class.
As with hybrid and remote learning models, coupled with a significant reduction in events and sporting activities.
Speaker 4: Total sales for the quarter were $627 million compared to $595.5 million in the prior year. This increase of $31.5 million, or 5.3%, was comprised of a $32.4 million increase from the retail segment, a $14.7 million decrease from the wholesale segment, and a $2.3 million increase from the DSS segment.
Total sales for the quarter was $627 million compared to $595 5 million in the prior year. This.
This increase of $31 5 million or five 3% was comprised of a $32 4 million increase from the retail segment, a $14 7 million decrease from the wholesale segment and a $2 3 million increase from the DSS segment.
Speaker 4: Retail Gross Comparable Store Sales increased 13.2% during the quarter.
Retail gross comparable store sales increased 13, 2% during the quarter.
Speaker 4: Gross comparable textbook sales were essentially flat as the broader industry headwinds were mitigated by the rapid growth of our first day offering.
Gross comparable textbook sales were essentially flat as the broader industry headwinds were mitigated by the rapid growth of our first day offerings.
Speaker 4: BNC's first day complete and first day by course offerings increased revenue by 80% to $96 million during the quarter as compared to $53.4 million in the prior year period.
<unk> first day complete and first day by course offerings increased revenue by 80% to $96 million during the quarter as compared to $53 4 million in the prior year period.
Speaker 4: Gross comparable general merchandise sales increased 78.3% as compared to a 52% decline a year ago.
Gross comparable general merchandise sales increased 78, 3% as compared to a 52% decline a year ago.
Speaker 4: Our general merchandise business benefited from the return of many students to the campus and the reopening of most of our campus stores, the majority of which were closed in the year-ago period due to COVID.
Our general merchandise business benefited from the return of many students to the campus and the reopening of most of our campus stores. The majority of which were closed in the year ago period due to COVID-19.
Speaker 4: As a reminder, per our agreement with Fanatics and LIDS, logo and emblematic product sales are now accounted for under the agency accounting method in which BNED receives a percent of sales for the logo and emblematic sales online and in-store.
As a reminder.
Minder per our agreement with fanatics and lids logo emblematic product sales are now accounted for under the agency accounting method in which <unk> receives a percent of sales for the logo and emblematic sales online and in store.
Speaker 4: Each sales channel, in-store and online, has its own commission rate, which will change as the relationship matures.
Each sales channel in store and online has its own commission rate, which will change as it relationship matures.
Speaker 4: Our comparable sales reflect the actual retail selling price or tender received for the products sold under the agency model rather than solely the commission received, whereas gap sales on our P&L reflect the commission we've received.
Our comparable sales reflect the actual retail selling price or tend to receive for the products sold under the agency model.
Other than solely the commission received.
As GAAP sales on our P&L reflect the commission we've received.
Speaker 4: Net sales for the wholesale segment decreased $14.7 million, or 40.5%, to $21.7 million primarily due to COVID-19-related supply constraints resulting from the lack of on-campus textbook buyback opportunities during the prior fiscal year and lower customer demand, which is partially offset by lower returns and allowance.
Net sales for the wholesale segment decreased $14 7 million or 45% to $21 7 million, primarily due to COVID-19 related supply constraints, resulting from the lack of on campus textbook buyback opportunities during the prior fiscal year.
And lower customer demand, which was partially offset by lower returns and allowances.
Speaker 4: Additionally, during the prior year period, Wholesale's CSS model fulfilled direct to student course material orders for retail's campus bookstores that were not fully operational due to COVID-19 campus store closures, whereas those sales shifted back to the campus bookstores in the current period.
Additionally, during the prior year period.
Sales CSS model fulfill direct to student course material orders for retail campus bookstores that were not fully operational due to COVID-19 campus store closures, whereas those sales shifted back to the campus bookstores in the current period.
Speaker 4: DSS sales grew $2.3 million, or 39.2%, to $8.3 million, benefiting from an increase in subscription sales.
DSS sales grew $2 3 million or 39, 2% to $8 3 million benefiting from an increase in subscription sales.
The consolidated gross margin rate for the quarter was 23, 2% compared to 19, 4% in the prior year period.
Speaker 4: The consolidated gross margin rate for the quarter was 23.2% compared to 19.4% in the prior year period.
Speaker 4: This was primarily due to the favorable sales mix of higher margin general merchandise products, lower contract costs on renewals and new contracts, coupled with lower inventory reserves and lower markdown.
This was primarily due to the favorable sales mix of higher margin general merchandise products lower contract cost on renewals and new contracts, coupled with lower inventory reserves and lower markdowns.
Speaker 4: Our selling and administrative expenses increased by $15.9 million, or 17.3%, compared with the prior year period as we reopened most stores and brought employees back to serve the increase in on-campus students as compared to the prior year period when we furloughed many employees in response to our COVID-related temporary store closures.
Our selling and administrative expenses increased by $15 9 million or 17, 3% compared with the prior year period as we reopen most stores and brought employees back to serve the increase in on campus students as compared to the prior year period.
When we furloughed many employees in response to Covid related temporary store closures.
Speaker 4: At the end of the quarter, our cash balance was $11 million, with outstanding borrowings of $183.3 million, as compared to borrowings of $99.5 million in the prior year period.
At the end of the quarter, our cash balance was $11 million with outstanding borrowings of $183 3 million as compared to borrowings of $99 5 million in the prior year period.
Speaker 4: This increase is mostly due to the timing of receivables associated with the significant growth of our first day offer.
This increase is mostly due to the timing of receivables associated with the significant growth of our first day offerings.
Speaker 4: Schools generally remit payments for students enrolled in the courses after their student drop-out dates. Our current liquidity position remains strong.
Schools generally remit payments for students enrolled in the courses after their student drop add dates our current liquidity position remains strong.
Speaker 4: CapEx for the quarter was $9.9 million, essentially in line with the prior year period.
Capex for the quarter was $9 9 million essentially in line with the prior year period.
Speaker 4: Currently, our retail segment operates 1,445 college, university, and K-12 school bookstores comprised of 794 physical bookstores and their e-commerce sites, as well as 651 virtual bookstores. With that, we will open
Currently our retail segment operates 1445 College University and K 12 school bookstores comprised of 794, physical bookstores and their e-commerce sites as well as 651 virtual bookstores.
With that we will open the call for questions opt.
Speaker 4: Operator, please provide instructions for those interested in asking a question.
Operator, please provide instructions for those interested in asking a question.
Speaker 1: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. When preparing to ask your question, please ensure your device is unmuted locally.
Thank you if you would like to ask a question. Please press star one on your telephone keypad when preparing to ask your question. Please ensure your device is on mute locally.
Speaker 1: The first question comes from Alex Thurman at Craig Hallam Capital Group. Alex, your line is open.
The first question comes from Alex Fuhrman at Craig Hallum Capital Great.
Alex Your line is open.
Speaker 5: Hi, everyone. Thanks for taking my question. You know, wanted to ask about the first day complete offering. Looks like it added a good amount of revenue for the quarter. Can you talk about how it performed operationally, given everything going on with the supply chain and in terms of profitability and how it contributed to the overall EBITDA for the quarter? Would you say that it met your expectations here in the first big semester with a critical mass of students?
Hi, everyone. Thanks for taking my question wanted to ask about the first day complete offering it looks like it added.
Good amount of revenue for the quarter can you talk about how it performed operationally given everything going on with the supply chain and in terms of profitability and how it contributed to the overall EBITDA for the quarter would you say that it met your expectations here in the first big Master with a critical mass of steel.
<unk>.
Okay.
Speaker 3: Yeah, Alex, thanks for your question. It's I think probably the primary one that we've been focusing on, and we're still given that rush in the fall semester are still underway, still analyzing some of it, given how the cash flows are on first day complete. But we're very, very happy with the performance.
Okay.
Yes, Alex Thanks for your question.
I think probably the primary one that we've been focusing on.
So given the rush in the fall semester are still underway still analyzing some of it given the cash flows are on first day complete, but we're very very happy with the performance, especially the operational execution of first day complete and I'll, let Jon Scheyer talk about it a little bit more but from.
Speaker 3: especially the operational execution of first day complete. I'll let John Scharr talk about it a little bit more but.
Speaker 3: From our perspective, it went very, very well. Some of that was aided by the fact that a large percentage of the courseware that was being sold in some of the big first day complete implementations that we did this year for the first time.
Our perspective, it went very very well some of that was aided by the fact that a large percentage of the courseware that was being sold in some of the Big first day complete implementations that we did this year for the first time.
Speaker 3: were digital courseware, which, you know, made it somewhat easier to fulfill in the large schools that elected the first date complete versus, you know, those with a larger mix of physical books. But the execution went very well. In terms of the financial impact, you know, there's several variables that
Digital courseware, which made it somewhat easier to fulfill and the large schools that elected the first day complete versus those with a larger mix of physical books, but the execution went very well.
The financial impact.
There are several variables that affect first day complete contribution.
Speaker 3: affect first aid complete contribution to the financials and the economic formula, enrollments, conversion of enrollments.
So the financials and the and the economic kind of Formula enrollments conversion of enrollments and then just the unit pricing for the semester hours. If you are looking at how do you build the model and then how does that not as a result.
Speaker 3: and then just the unit pricing for the semester hours. If you're looking at, you know, how do you build the model and then how does it, how does it result? You know, to answer your question around expectation.
To answer your question around expectations I think that our expectation is depends on what time of year, you're talking about I think when we built our budget for fiscal year 'twenty three R 22, rather sorry back in the spring.
Speaker 3: I think that, you know, our expectations depends on what time of year you're talking about. I think when we built our budget for fiscal year 2020.
Speaker 3: three, or 22 rather, sorry, back in the spring, we didn't have the knowledge of the enrollment declines, especially in the community colleges that happened. I think the conversion was very, very close, very close to where we expected it to be.
We didn't have the knowledge of the enrollment declines, especially in the community colleges.
And I think the conversion and it was very very close very close to where we expected it to be and then average pricing.
Speaker 3: And then average pricing, you know, it varies by school.
It varies by school, probably somewhat somewhat lower just because of the number of credit hours. So there are a number of full time students, but they are also a lot of part time students given the environment. We're in right now so the number of credit hours, it's probably a little bit lower than we thought it would be but overall very very pleased.
Speaker 3: probably somewhat lower just because the number of...
Speaker 3: credit hours. There are a number of full-time students, but there are also a lot of part-time students given the environment we're in right now, so the number of credit hours.
Speaker 3: It's probably a little bit lower than we thought it would be. But overall, very, very pleased with the performance, the first day, complete and first day. And I'll let John talk about it a little bit further.
With the performance of first day complete and first day.
And I'll, let John talk about it a little bit further.
Yes, Thanks, Mike and just building on that.
Speaker 6: Yeah, thanks, Mike. And just building on that, you know, the team did an incredible job of executing first day completed scale across the 65 campus stores, where it was implemented in fall term. We really had
The team.
Yes.
Did an incredible job of executing first day complete at scale across 65 campus stores, whereas implemented and fall term.
We really had.
Speaker 6: you know, complete coverage of the book lists for those.
Yeah.
Complete coverage of the book lists for those schools.
Speaker 6: We were aided by the transition to digital and the availability of digital content that helped with the execution, but I would say from an execution standpoint at scale, it was outstanding and really sort of gives us a lot of confidence in the ability to continue to scale the program.
Were aided by the transition to digital.
And the availability of digital content that.
Yes.
Helped with the execution, but I would say from a execution standpoint at scale it was outstanding and really sort of.
It gives us a lot of confidence in the ability to continue to scale the program.
Speaker 6: And in terms of sort of expectations, in terms of the model and the benefit of the program, I think that it was very much in line with our expectations. And the nice thing about the program is that
And in terms of sort of expectations in terms of.
The model and the benefit of the program.
That it was very much in line with our expectations and then the nice thing about the program is that it's really done on an individual campus by campus basis local basis, so the cost and the pricing on a per credit hour basis is really individuals for each campus space.
Speaker 6: it's really done on an individual campus-by-campus basis, local basis.
Speaker 6: the cost and the pricing on a per credit hour basis is really individual for each campus based on their weighted average of enrollment against courses and the specific book.
On their weighted average of enrollment against courses and the specific book list against those courses. So we did see prices come down, but thats because of the cost of the content came down as well.
Speaker 6: against those courses. So we did see prices come down, but that's because the cost of the content came down as well. And also our school's desire to bring down the cost of content, which help us from an operating cost standpoint.
And also our schools desire to bring down the cost of content, which help us from an operating cost standpoint. So I think the model was really great. We've added as we said in the script 10 additional campus stores and at the end approximately 86000 in undergrad.
Speaker 6: I think the model was really great. We've added, as we said in the script, 10 additional campus stores, and
Speaker 6: approximately 86,000 in undergrad enrollment for spring, which is not really a term where you'd expect to add a lot of campus stores and enrollment to the program.
Add enrollment for spring, which is not really a term where you would expect to add a lot of <unk>.
Campus stores and enrollment excuse me the programs based on the fact that the majority of campuses and institutions would make that decision on an academic year basis, when tuition and fees are set for that year in advance and sort of the first quarter timeframe.
Speaker 6: based on the fact that the majority of campuses and institutions would make that decision on an academic year basis when tuition and fees are set for that year in advance in sort of the first quarter time frame of calendar first quarter time frame so incredibly excited about.
Calendar first quarter timeframe, so incredibly excited about.
Speaker 6: the prospects of First State Complete and what it will mean for our campus partners, student outcomes, and our business.
The prospects first day complete and mobile mean for our campus partners student outcomes and our business.
Great that's really helpful and let me add one.
Speaker 3: That's really helpful. Let me add one comment. I want to add one comment, Alex, too, is that, you know, this is a, we're just scaling this. This is our first semester where we really got significant scale on first day complete.
I would add one comment I would add one comment Alex too is that this is we're just scaling. This this was our first first semester, where we really got significant scale on first day complete.
Speaker 3: And there's a lot of things that we learned in scaling in terms of how different schools are marketing this program, what works, what didn't work as well, which resulted in, in some cases, lower what I would call conversion or, you know, lower, higher opt-out.
And there's a lot of things that we learned in scaling in terms of how different schools are marketing. This program what works what didn't work as well which resulted in in some cases lower.
I'd call conversion or lower higher opt out perhaps than we would see in many other cases, we have some schools that are 100%.
Speaker 3: than we would see in many other cases. We have some schools that are 100%. You know, we have some that are lower, getting us to an average that's kind of below 100%.
Some that are lower getting us to an average that's kind of.
Below 100%, but we've learned a lot and I think that will only improve.
Speaker 3: You know, we learned a lot and I think that will only improve, you know, the conversion and results going forward and starting.
The conversion in our results going forward starting in the spring.
Speaker 5: Right, that's that's that's really helpful. And I did want to follow up on the 10 additional schools that are signed up for the spring semester. You know, that that was certainly unexpected, given that, you know, schools don't typically tend to shake things up like that in the middle of the academic year. Can you talk a little bit about the sales?
Great.
And that's really help and I did want to follow up on the 10 additional schools that are signed up for the spring semester that was certainly unexpected given that growth.
Don't typically tend to shake things up like that in the middle of the academic year.
Can you talk a little bit about the sale.
Speaker 5: pipeline? I mean, you know, would have to think it's pretty strong, given that you have 10 schools joining the program mid-year. Is it too early to get a sense of how many strong leads you have heading into the fall semester next year?
<unk> I mean it.
I think it's pretty strong given that you have 10 schools joining joining the program midyear is it is it too early to get a sense of.
How many strong leads you had heading into the fall semester next year.
Yes, Alex this is John.
Speaker 6: Yeah, yeah, we're optimistic. I mean, I think that 10, as you said, the 10 stores and 86,000 of additional enrollment are a really good sign. And I think why we're so optimistic is the impact to the program is having on student outcomes.
Civic guidance. Yeah go ahead, John Yeah, we're optimistic I mean, I think the 10.
As you said the 10 stores and 86000 of additional enrollment are a really good sign and I think why we're so optimistic is the impact of the program is having on student outcomes and having students prepared and the and the benefits of retention.
Speaker 6: and having students prepared and the benefits of retention and persistence that our institutions are showing. And as Mike said in his script, you know, certain institutions are also showing that enrollment growth because of their ability to market this program. So based on that, the pipeline is really robust and we're really excited about the prospects of that based on the data that's coming from the institutions that have executed the program with us.
And persistent stat, our institutions are showing and as Mike said in his script certain institutions are also showing that.
Enrollment growth because of their ability to market. This program. So based on that the pipeline is really robust and really excited about the prospects.
Of that based on the data that's coming from the institutions that have executed the program with us.
Great. That's really helpful. Thank you very much.
Speaker 1: The next question comes from Ryan McDonald at Needham. Ryan, your line is open.
The next question comes from Ryan Macdonald Needham Brian Your line is open.
Speaker 7: Yeah, good morning, Mike and Tom, and thanks for taking my question. I've got a nice quarter here. You know, great to see the progress you're making on the fanatics and Lyds' relationship in terms of…
Yes, good morning, Mike and Tom and Thanks for taking my question Congrats on nice quarter here Greg.
Great to see the progress you're making on the fanatics and lids relationship in terms of.
Speaker 7: you know additional sites that you've been adding just curious as as you've been you know those sites have been going live you know what sort of uplift you're seeing uh... to general merchandise sales you know from that perspective and and sort of how you're feeling about you know as we
Additional sites that you have been adding just curious as you've been.
<unk> been going live.
Sort of uplift youre seeing two general merchandise sales from that perspective.
And sort of how you are feeling about as we see these these additional sites rolling out about sort of the opportunity here for general merchandise as we go on to say the spring semester.
Speaker 7: see these additional sites rolling out about sort of the opportunity, you know, here for General Merchandise as we go into, say, the spring semester.
Speaker 3: Yeah, thanks, Ryan. That's a really important question. It's, you know, for purposes of the fall rush, as I think we've disclosed, we had, you know, about just under 15 schools that were really up and running on the, what we call, Fanatic e-commerce system. As you know, we turned over the management of the stores in terms of the emblematic and logoed items to Liz and Fanatics under the FLC.
Thanks, Brian that's a really important question.
For purposes of the fall rush.
I think we disclosed we had about just under 15 schools that were really up and running on the what we call fanatics ecommerce system.
As you know we turned over the management of the stores in terms of the emblematic logo logo items.
To lids and fanatics under the FFC.
Entity that we partnered with backing back in April.
Speaker 3: entity that we partnered with back in back in April . And they worked feverishly to get inventory into the stores all summer long, as it became apparent that there was gonna be a snapback in demand.
And they worked feverishly to get inventory into the stores.
All summer long as it became apparent that there is going to be a snapback in demand.
Speaker 3: Those 15 stores where we had e-commerce results increased substantially, you know, you're trying to compare it to 20 and you're trying to compare it to 19. When we compare it to 20, 20 was a big year for e-commerce because of the fact that there were no.
Those 15 stores, where we had e-commerce results.
Greece substantially you're trying to compare it to 'twenty and you're trying to compare to 19, when we compare it to 2020 was a big year for E Commerce because of the fact that there were no.
Speaker 3: Very, very few campuses open, very few stores open.
Very very few campuses opened.
Two stores open.
Speaker 3: You know, so the e-commerce activity is much higher in 20. So we compare it to both 20 and 19, and comparing it to both years without getting into the specific percentages, there's substantial, substantial improvement.
So the ecommerce activity is much higher in 'twenty. So we compare it to both 2019 and comparing it to both years without getting into the specifics.
Percentages there.
There is substantial substantial improvement.
Speaker 3: It's important to note that the 540 sites that we talk about that are now.
Important to note that the 540 sites that we talk about that are now.
Speaker 3: part of the, you know, subject to the Fanatics experience, which means that a student comes into our e-commerce system, and if they select from the menu they want apparel, logo, emblematic items, they're seamlessly transferred into the Fanatics system, which is being customized.
Part of that.
Subject to the fanatics experience, which means that a student comes into our e-commerce system and if they select from a menu. They want apparel logo emblematic items. They are seamlessly transferred into the fanatics system, which is being customized to reflect each student's brand new schools brands sorry.
Speaker 3: to reflect each student's brand, each school's brand, sorry.
Speaker 3: brand of each school more local personalized approach. And that's only happened for over 500 of those schools within the last six weeks or so.
The brand of each school more local and personalized approach and Thats only happen.
For over 500 of those schools within the last six weeks or so.
Speaker 3: So what we're really looking forward to is, and we've started to see already with Black Friday, we're looking at the results.
So what we're really looking forward to as we started to see already with Black Friday, and we're looking at the results, which we are reporting our third quarter and also cyber Monday, which we haven't gathered results from having received the results yet from from fanatics, but.
Speaker 3: in our third quarter, and also Cyber Monday, which we haven't gathered the results from, or haven't received the results yet from Fanatics, but we're very encouraged by the early results from what we saw for this.
Very encouraged by the early results from what we saw for this batch.
Speaker 3: vastly higher number of schools that are now on offering the fanatics experience. And I would encourage you or anyone else that's interested to go look at the sites.
Vastly higher number of schools that are now on offering the fanatics experience and I would encourage you or anyone else. That's interested to go look at the sites.
Speaker 3: and see how expansive they are in terms of assortment and how easy they are to use, and how representative they are, what I would call really a best-in-class e-commerce website. So we're excited about what's going to happen, not just in the spring semester but over the holidays from an e-commerce perspective now that we have so many schools up and running.
And you can see see how how expansive there in terms of assortment and how easy they are to use and how.
How representative they are what I would call really.
Best in class E Commerce website. So we're excited about what's going to happen.
Yes in the spring semester, but overall holidays from an E. Commerce perspective, now that we have so many schools up and running.
Speaker 3: Not just on e-commerce, but also in stores, but particularly in commerce.
Not just on e-commerce, but also that stores, but particularly in e-commerce.
Speaker 7: Yeah, it's a really good point on the e-commerce side when you think about the holiday season and the potential that opens up here.
Yes, it's a really good point on the ecommerce side when.
When you think about the holiday season, and the potential that opened up here.
My second question I really wanted to ask about our Bartleby, it's great to see the continued strength in the growth rate there and that the gross subs numbers continues to climb just curious to see what youre, what youre seeing in terms of student usage and adoption there as we progress through the semester, because obviously as we saw.
Speaker 3: right there and and that the growth subs numbers continues to climb you're just curious to see what you're what you're seeing in terms of student usage and adoption there as we've progressed through the semester because obviously you know as we saw you know a check put up some some weak numbers and talked about maybe some changing student usage patterns there you know just trying to understand you know if that's something that's more industry-wide or or you know how Barnes & Noble's a performance comparatively looks for Bartleby thanks
<unk> put up some some weak numbers and I talked about maybe some changing student usage patterns. There just trying to understand if that's something that's more industry wide or how.
Barnes <unk> nobles performance comparatively looks for Bartleby.
Speaker 3: Yeah, I think David Nenty can address that for us.
I think David <unk>.
That for us.
Yes.
Speaker 8: We've seen students come back and as we said in the introduction, the students are learning through a mix of on-campus as well as virtual. We are providing a set
We've seen students come back at us.
We said in the introduction.
The students are learning through mix.
On campus as well as.
As well as Mitchell.
We.
Providing a service to.
Speaker 8: customers to help augment their learning.
Customers to help augment their learning.
So we.
Thank you John.
Speaker 8: agnostic to their learning method, we want to be there to support students as they learn. We have continued to see good usage, our customers are continuing to use us and in fact we saw most of our metrics for our paid subscribers actually increase year on year in regards to time on site and usage etc. So we're encouraged that we're building.
I can I'll speak to their learning method, we won't be there to support students as they learn.
We have continued to see good usage.
Estimate.
Continuing to use the same effect.
<unk>.
So.
Most of our metrics for our paid subscribers has actually increased year on year, but got time.
Time on sides and usage et cetera.
We're encouraged that we're building.
Speaker 8: the services that can help support customers as they go through their learning and so we're excited about what we're seeing. I wouldn't speculate on more broadly industry dynamics or anything like that. All we're trying to do is focus on providing the best service we can to our customers. So we're seeing good usage and we're excited about how customers are responding to our products.
The services that can help support customers.
As they go through their lending.
We're excited about what we're seeing I wouldnt speculate on that.
More broadly industry dynamics or anything like that all we're trying to do is focus on providing the best service we can to al.
<unk>.
Seeing good usage.
Cited about how customers are responding to our products.
Excellent thanks for taking my questions.
Yes.
Speaker 1: The next question comes from Rory Wallace at Alta Bridge Capital. Rory, your line is open.
The next question comes from Rory Wallace Alto Bridge capital Lawrie. Your line is open.
Speaker 9: Thanks for taking my question. I was curious on first day complete with the new signings, which would seem like a quite high average enrollment for the spring term. Is this a situation where the first day revenues could actually grow sequentially in the January quarter and just following on some of the comments that Mike made around optimizing the marketing strategy behind the program.
Thanks for taking my question I was curious on first day complete with the new signings, which would seem like a quite high average enrollment for the spring term is this a situation where the first day revenues could actually grow sequentially in the January quarter.
Just following on some of the comments that Mike made around optimizing the marketing strategy behind the program.
Speaker 9: Is this something where the schools are being receptive to kind of this co-marketing feedback in terms of how to optimize the program structure to really drive enrollment?
Is this something where the schools are.
Receptive to kind of this co marketing feedback in terms of how to how to optimize the program structure to really drive enrollment.
Our conversion.
Speaker 3: Yeah, Murray, this is Mike and I'll let John jump in. But on your question around marketing, co-marketing, you know, each, like John said, each school is different and they approach the marketing differently. Some are more cautious than others. Some are.
Randy This is Mike and I'll, let John jump in but on your question around marketing.
Co marketing.
Each like John said each school is different in the approach to marketing differently, some are more cautious than others.
Some are very aggressive.
Speaker 3: Some have marketed first aid complete as books are free. And as John said, in those cases, some of those schools have actually increased enrollment and have gotten the attention of their, what we would call competitor schools, you know, in their geo areas, who are now calling us saying, hey, this works for them. We need to see this.
Somehow marketed first day complete.
Books are free and as John said in those cases, some of those schools have actually increased enrollments and gotten the attention of their what we would call competitors schools.
<unk> areas, we are now calling us, saying hey, this works for them.
We need to see this.
Speaker 3: You know, some of those schools that are cautious, you know, are cautious because, you know, during the sales process, there's a lot of people in the schools that are involved in making the decision to go to a first aid complete inclusive access model. And so I think some of the schools are perhaps overly cautious in terms of how they market and how they might highlight the ability to opt out and that type of thing. Sometimes, you know, probably more so than the benefits. That's happened in a few cases.
Some of it some of those schools that are cautious our.
Our cautious because during the sales process, there's a lot of people in the schools that are involved in.
Making the decision to go to our first day complete inclusive access model and so I think some of the schools are perhaps overly cautious in terms of how they market and how they might highlight the ability to opt out and that type of thing.
Sometimes probably more so than the benefits that's happened in a few cases.
Speaker 3: and I think our conversations with the school when we were in the process of
I think our conversations with the school when we were in the process of <unk>.
Speaker 3: selling the, you know, the first day complete product, it's clear that they see the benefits of it. And I now, I think now that they understand, you know, those benefits aren't going to be fully realized until, you know, unless they, you know, they, they are more, um, wouldn't call it aggressive in their marketing. They're just more positive in their marketing as opposed to cautious and, uh, basically trying to.
<unk>.
On the first day complete product, it's clear that they see the benefits of it and I know I think now that they understand.
Those benefits are going to be fully realized until and unless Nate.
They are more.
I wouldn't call it aggressive in their marketing they are just more.
Positive in their marketing as opposed to cautious and basically trying to.
Speaker 3: to send the signals that more cover themselves from some of the constituents and the faculty and others that have had some issues during the sales process. So I think the answer is yes. These learnings that I referred to, that's basically one of the things I was referring to, the learnings around the marketing. And I think the schools.
Just send the signals that more cover themselves some of the constituents and the fact that you and others.
I've had some issues during the sales process. So I think the answer is yes there.
These learnings that I referred to that.
And one of the things I was referring to the learnings around the marketing and I think the schools.
But we have that experience with have come around but I'll, let I'll, let John talk about more specifically if he wants to.
Speaker 6: Yeah, no, and I think that I think that just building on that, that
Yes, and I think that.
Just building on that.
Speaker 6: based on the outstanding execution from our store teams and supporting the institutions that moved to first day complete.
Based on the outstanding execution from our store teams and supporting the institutions have moved to first day complete there is a lot of confidence in our ability to execute at a high level and drive student outcomes and convenience and really create.
Speaker 6: There is a lot of confidence in our ability to execute at a high level and drive student outcomes and convenience and really create a concierge experience for students and really sort of disrupt the course material delivery model at those schools. And there's been a lot of great discussions on how to collaborate and optimize.
A concierge.
Experience for students.
And really sort of just.
Disrupt the course material Lindsay model at those schools and Theres been a lot of great discussions on how to collaborate and optimize the marketing and positioning of the program within institutions. So we think that there is a lot of opportunity to within the schools that we've executed.
Speaker 6: uh... the marketing and positioning of the program within institutions so uh... we think that uh... there's a lot of opportunity to within the school that we've executed to improve uh... the percent of students that are participating in the program and driving uh... you know driving our uh... sell-throughs even higher at those institutions
To improve the percent of students that are participating in the program and driving driving our.
Sell through is even higher at those institutions as well as the students as they've experienced this for the first time many of the schools.
Speaker 6: as well as the students as they've experienced this for the first time. Many of the schools were the first, this was the first semester that they were participating in the program.
This was the first semester that they are participating in the program.
Speaker 6: And as students see what the benefits and having sort of a box of books ready for them prior to the first day of class, picking that up.
And as student C with the benefits and having sort of a box it looks ready for them prior to the first day of class picking that up I think there is more and more acceptance and understanding of the benefits of that of having materials doing.
Speaker 6: I think there's more and more acceptance and understanding of the benefits of that, of having materials, doing better in class, being better prepared, and our survey results show that as well. So I think it's both the schools becoming very willing to collaborate in marketing and students becoming more excited that over time.
Better in class being better prepared in our survey results show that as well so I think it's both the schools.
Becoming very willing to collaborate and marketing and students becoming more excited that over time we're.
Speaker 6: we're going to see even enhanced participation and growth within the schools and then also will lead to more schools participating as they see the benefits of competitive or peer institutions.
We're going to see even enhanced participation in growth within the schools and then also will lead to more schools participating as they see the benefits of competitive or peer institutions.
Speaker 3: on your question on incremental January revenue growth. We're not obviously giving any specific guidance on what's gonna happen, but it just would be logical to assume that that's going to happen with the number of.
On your question on incremental January revenue growth, obviously give me any specific guidance on what's going to happen, but it.
It would be logical to assume that.
That's going to happen with the number of.
Speaker 3: of student enrollments being added under the first day complete program.
Student enrollments being out in the first day.
Complete program.
Speaker 9: I appreciate that and I guess following on the on the question around the fall 23 pipeline Do you do you have enough sort of sales and operational capacity to? Try to target similar even higher levels of enrollment growth for first day complete In fall 23, I understand there's a lot of moving parts with the environment right now
I appreciate that.
Following on the question around the 23 pipeline.
You do have enough sales and operational capacity to trying to target similar or even higher levels of enrollment growth for first and complete.
I understand a lot of moving parts with the environment right now.
Using that as not only yes, we do.
Speaker 3: And yes, we are, we do have a pipeline, we do have very, very detailed.
Yes, we are.
We do have a pipeline we do have.
Very very detailed.
Sales process.
Speaker 3: We won't get into describing, but it's got a very robust pipeline for.
We won't get into describing but.
It's not a very robust pipeline.
For fall of 'twenty three.
Speaker 3: And some of the things you see happening, some of the schools you see adopting.
And some some of the things you see happening in some of the schools you see adopting pretty complete.
Speaker 3: in spring semester of this year are some schools that are pulling forward, but most of those are, you know, most of those schools that we have on our site, so to speak, are having discussions with or have commitments from, in many cases, for fall of 23.
Spring semester of this year.
Some schools and are pulling forward most of those are <unk>.
The schools that we have on our site. So to speak we are having discussions with them have commitments.
The cases for fall 'twenty three.
Speaker 3: You know, our schools that some wanted to do it earlier, but they just can't get to the point where they felt comfortable making that change that quickly given the fact that they've already published, you know, rates and tuition rates and that type of thing for fiscal year, our fiscal year.
Our schools net some wanted to do it early we really just can't get to the point where.
<unk>, making that change that quickly given the fact that they have already published.
Rates tuition rates.
Right.
For the fiscal year, our fiscal year 'twenty two for spring semester.
Speaker 9: Thanks Mike. And Tom just a couple for you in terms of the one on cash flow from first day complete. I know it's you're creating more receivables and kind of there's a cadence to collections now. I mean do you think that those are those going to be kind of worked down by the end of this fiscal or you know is this kind of a structurally higher level.
Thanks, Tom.
Tom just a couple for you in terms of the one on cash flow from first day complete youre, creating more receivables in Congress the cadence to collections now I mean.
Do you think that those are those going to be kind of worked down by the.
The end of this fiscal or is this kind of a structurally higher level.
Speaker 9: of receivable VSOs that you're going to be running with, and maybe just comment briefly on that. And then my last question was just on incremental margin performance. Obviously, it's a tough supply environment, but at the same time, you seem to be getting a good benefit from your higher margin initiatives. Just curious how you're feeling about sort of margin performance in the next few quarters.
Receivables dsos.
We're going to be running with.
Maybe you can just comment briefly on that.
And then.
My last question was just on incremental margin performance obviously.
It's a tough supply environment, but at the same time, you seem to be getting a good benefit from your higher margin initiatives. So just curious how youre feeling about sort of margin performance in the next few quarters.
Yes, thanks Rory.
Speaker 6: Yeah, thanks Rory. In terms of the working capital cycle, historically our working capital cycle was get the product in, sell it to the students, get the cash, and then pay the vendors.
In terms of working capital cycle historically, our working capital cycle was get the product and sell it to the students get the cash and then paying the vendors.
Speaker 6: To your point, and it's a good point, with the first day and first day complete products and the cadence on the campus, we're typically providing the products in a lot of instances paying for those products before we get paid by the school.
To your point and it's a good point with the first day and first day complete products and the cadence on the campus, where typically providing the products and a lot of instances paying for those products before we get paid by the school. So youre right. The receivables are higher end.
Speaker 4: So, you're right, the receivables are higher and, you know, this chalks up to, perhaps, you know, lessons learned and we'll look to address that and we're collecting it as we get through the semester, but really the billing, the real important date in the first day and first day complete product.
This chalk up to perhaps lessons learned.
We'll look to address that and we're collecting as we as we get through the semester, but really the billing the real important date in the first day intrastate complete products is that census date.
Speaker 4: is that census date. And that's really what triggers the, you know, billing and reconciliation with the school, student by student. So, you will see that in your seat in the balance sheet, the receivables are higher, which is reflective of the growth of those programs, which is great that they're growing so quickly. And you would expect as we get through the spring term that a lot of that would wash out by the fiscal year end. So, yes.
And Thats really what triggers the.
Billing and reconciliation with the school students by students so.
You will see that in your seat and the balance sheet. The receivables are higher which is reflective of the growth of those programs which is.
Which is great that they're growing so quickly and you.
You would expect as we get through the spring term that a lot of that would wash out by the fiscal year end. So yes.
Speaker 6: um you know that that that should happen and in terms of the margin performance i think it really comes down to you know what what was missing last year were students on campus and what we're experiencing and and it's certainly not back to the pre-pandemic levels is the mix.
That should happen and in terms of the margin performance I think it really comes down to what was missing last year, where students on campus and what we're experiencing and it's certainly not back to the pre pandemic levels as the mix when.
Speaker 4: you know, when the kids come into the store and they pick up their materials or they're buying their course materials, they're also getting other supply products and, you know, caffeine convenience products as well as emblematic logos. So, having the full experience on campus will drive that sales mix, which should improve the margin performance over time. It's certainly not back to pre-pandemic levels, but it's certainly moving in the right direction.
When the kids come into the store and they pick up their materials or they are buying they are of course materials. They're also getting other supply products.
Caffeine convenience products as well as emblematic of a logo so having the full experience on campus will drive that sales mix, which should improve the margin performance over time, it's certainly not back to pre pandemic levels.
But it's certainly moving in the right direction.
Speaker 3: And I would make one of the copies of my story that in the general merchandise area.
This is Mike Murray.
The general merchandise area.
Speaker 3: Given the supply chain issues, we did sell through some of the older inventory that was transferred to.
Due to the supply chain issues, we do sell through some of the older inventory that.
Transfer to.
And your next moves back in April.
Speaker 3: while we were waiting supply of some of the newer inventory, that inventory under our agreement with Maddox and Liz because of the failed contract that we signed.
While we are waiting to supply some of the new inventory that inventory under our agreement.
Because it's the same contract that was struck is lower.
Speaker 3: payment back to us, commission, I guess you would call it, than the current newer inventory that we're now moving into. So that did affect our margin somewhat, although the percentage of that that's remaining is not very low, so we should not see that dragging impact going forward.
In fact, most commission that gives you call it.
And.
Current newer inventory now moving into so our margins somewhat on the percentage of inventory remains very low so we should not see that impact.
Sure.
Okay.
Speaker 9: Okay yeah I appreciate that distinction and I guess just one more on um kind of it for David just in terms of you know understand police with the engagement at Bartleby which seems to be
I appreciate that distinct.
Distinction and I guess, just one more on <unk>.
David just in terms of understand pleased with the engagement bartleby, which seems to be.
Speaker 9: bucking the trend somewhat versus some peers. What are sort of the top growth initiatives for the business, for the Bartleby and DSS business looking into the back half of this fiscal year and just how you can kind of structurally improve the positioning here with the environment rapidly in flux, of course.
Bucking the trend somewhat versus some peers, what are sort of the top growth initiatives for the business.
For the Bartleby in DSS business looking into the back half of this fiscal year.
And just how you can kind of structurally improve the positioning here.
The environment rapidly influx of course.
Yes.
Yes, the main thing.
Speaker 8: that we will focus on over the rest of the year. We're going to continue to work on the product and features, et cetera. But I think Barlaby Plus is one of the main priorities. What we saw from our limited launch in store to 55 stores.
Sure.
That we.
We will focus on the rest of the year, we're going to continue to work on the product and features et cetera, but I think bartleby pluses that.
One of the main.
Priority is what we saw from our limited launch in store.
55 stores.
Speaker 8: Obviously, we'll aim to roll that out to the rest of the stores, or as many as possible, also available online in SEO. We've seen good take-up and good usage from...
Obviously, we will.
The rollout at the risks.
The stores are as many as possible also available online and we're seeing good take up in good usage from.
Speaker 8: our customers on that product. We're very excited about the full range of features being available to customers, etc. So, you know, that will be one of our key priorities going forward as we kind of look at.
Our customers on that product, we're very excited about.
The full range of pitches being available just estimates et cetera.
That will be.
One of our key priorities going forward as we as we kind of look at.
Speaker 8: providing a full suite of services to the customers and how they use it and how they engage with that product. So for the back half of the year, we'll continue to work on features and some of those things. But Bartlebury Plus is going to be one of the key initiatives for us and really getting that in the hands of students so they can use the full range of the product. So that was, I think,
Providing a full suite of services to customers and how they use it and how they engage with that product side.
For the back half of the year.
We continue to work on features and some of that it seems that vital for process is going to be one of the key initiatives for us and really good.
Any of that in the hands of students. So they can use the full range of the product. So that was I think.
Speaker 8: one of the things that we were excited about going into and it exceeded our expectations for the fall rush period.
One of the things that we're excited about going into <unk>.
It exceeded.
Our expectations for.
For the fall rush period.
Speaker 9: Okay. Thanks a lot. I appreciate you taking all my questions. Thanks, everyone.
Okay.
I appreciate you taking all my questions. Thanks, everyone.
Alright.
Speaker 1: Another reminder to press star 1 if you have any more questions to ask.
Another reminder, to press star one if you have any more questions to ask.
Speaker 1: don't appear to be having any more questions coming through, so I'll hand the call back to Andy for any closing remarks.
Don't appear to be having any more questions coming through so I'll hand, the call back to Andy for any closing remarks.
Great. Thanks, Bethany and thank you all for joining us on today's call and your continued interest in <unk>. Please.
Speaker 2: Great. Thanks, Bethany. And thank you all for joining us on today's call and your continued interest in BNED. Please note, our next scheduled financial release will be our fiscal 22 third quarter earnings in early March. We hope everybody has a great holiday season. Thank you.
Please note our next scheduled financial release will be our fiscal 'twenty two third quarter earnings in early March we hope everybody has a great holiday season. Thank you.
This concludes today's conference call. Thank you for joining you may now disconnect your lines.
Speaker 1: This concludes today's conference call. Thank you for joining. You may now disconnect your lines.
Speaker 10: ?
Okay.
[music].
Okay.
Okay.
Okay.