Q3 2023 Stride Inc. Earnings Call
Good afternoon, My name is Emma and I will be your conference operator today.
At this time I would like to welcome everyone to the Stride, Inc. Third quarter 2023 earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again just to start one thank you.
Tim Casey VP of Investor Relations you May begin your conference.
Thank you and good afternoon.
I'll come to stride third quarter earnings call for fiscal year 2023.
With me on today's call are James roof, Chief Executive Officer, and Al Blackman, Chief Financial Officer.
A reminder, today's conference call and webcast are accompanied by a presentation that can be found on the stride Investor Relations website.
Please be advised that todays discussion of our financial results may include certain non-GAAP financial measures.
A reconciliation of these measures is provided in the earnings release issued this afternoon. It can also be found on our Investor Relations website.
In addition to historical information. This call May also involve forward looking statements.
Actual results could differ materially from any forward looking statements due to several important factors as described in the company's latest SEC filings.
These statements are made on the basis of our views and assumptions regarding future events and business performance at the time, we make them and the company assumes no obligation to update any forward looking statements made during this call.
Following our prepared remarks, we will answer any questions you may have.
I will now turn the call over to James James.
Thank you and good afternoon.
The underlying systems and institutions in the U S and across the world can be fragile.
We've seen this repeatedly over many decades.
Headlines in the banking and technology sector are just recent examples.
But each time, we see these cracks in the economy. The U S has been resilient and more often than not we surged forward through innovation.
These cycles have enabled the U S to progress in amazing ways.
The ways in which we travel bank shop, and even he'd have changed dramatically.
Wasn't that long ago.
We did most of our banking shopping shopping and transacting in person.
However, it is not permeated all sectors equally.
One of the sectors that has not evolved as dramatically as the education sector and let us know.
Notably the K 12 education sector.
With our recent experience coming through a pandemic I would've hoped we would've emerge with more fundamental change in the system.
Particularly given the customer feedback we have heard.
But I see kids being schooled largely the same way as they have for decades.
Sure. There are some minor tweaks that technology has enabled but no real substantive change.
That both Disheartens me, but also gives me hope that stride can begin to move the needle on a system that will power the future of this nation.
From how do we think about the trade offs of skills versus knowledge trade versus professions college versus jobs practical versus theoretical.
Sure.
They'll be on a traditional bell schedule or should they have flexibility should all students really be spending the exact same amount of time on each lesson.
Should we enable our students to use their time efficiently in a manner that meets them at their point of need.
And should we empower parents have a say in how their children's time is being spent.
At stride, we are investing behind these themes.
Our core full time virtual business, both the career and general education aspect is at the forefront of that investment to enable parents and families to really see how the next generation of schooling can break away from the traditional paradigm of the education system.
And I'd love to invite the leaders of the traditional establishment to participate with us.
<unk> of our children.
But I also feel the politics and fight for power often get in the way.
I think the macro data and the trends in our business contained to support my thesis.
While we began this year down 8% in enrollments we saw in your demand continue to outpace the prior year.
We were down 4% at the end of the second quarter.
And were down just over 1% at the end of the third quarter.
The strength of our third quarter was even more impressive in that we bought a trend.
Last year, we lost about 5000 students from the beginning to the end of the quarter wishes.
Which is consistent with what we've typically seen.
And this year, we're basically flat from the beginning to the end of the quarter as we continued to see strong demand for our product and services.
Yeah.
We're always asked at this time of year, how things are shaping up for next year.
And we always say, it's far too early to tell.
The positive demand trends have continued in terms of application volumes.
As I previously stated these metrics are the best indicator of demand. So I'm optimistic that we will return to enrollment growth for this fall.
Okay.
And if you've followed us.
Since I took over as CEO just over two years ago.
I'll note that I've pushed us to continue to innovate.
I believe that schools and districts in the U S are too complacent.
So I believe it is going to be up to companies like stride to drive innovation that is focused on the customers the students.
For example.
I've spoken previously about our career platform students and parents continue to want more exposure to career skills and opportunities and yet traditional schools still fall short in delivering these options.
For example.
A recent survey the top priority.
For respondents.
It was for students to develop practical life skills, and yet only 26% right at their local schools.
A satisfactory in providing these skills.
Similarly, only 30% said their local schools has satisfactory prepared students for careers.
In a separate survey of Gen Z students, 44% said that school only taught them very basic computing skills, while 37% said that school education did not prepare them with the technology skills they needed for their planned careers.
And at the same time, the number of organizations with the skills gap has increased from 55% in 2021 to almost 70% in 2022.
Uses of arc tallo career platform, including the $1 7 billion current users while access to exclusive employment educational options.
At employers' workforce organizations in colleges and universities will be able to engage with a unique pool of talent seekers.
The platform includes educational content badges credentials and certifications and the top current interest areas, including healthcare stem business and education and training.
As I've mentioned before tallo is available to anyone over 13 at no cost students in high School College and joined to showcase their skills and talent and connect with employment opportunities. They can take courses and prepare for in demand certifications, while developing durable skills to help them in any industry.
On top of the opportunity to get connected to companies looking for their chosen skills users can match with over $20 billion in scholarships.
On the other side of that platform companies at post secondary organizations can use the platform to recruit specific talent based on interest credentials community involvement in test scores.
We can also attract talent over time to provide predictive information on employee retention.
I also want to talk about another product that I think can revolutionize the way parents students and teachers collaborate on education.
We call this product our learning.
For too long.
<unk> education, a separated interactions between parents and teachers students feel like they need more help at home and parents want to help but may not know Hal.
Meanwhile, teachers want parental support but find it challenging to manage so many relationships.
Our learning hub solve this by being a single platform for personalized content to enhance learning.
The platform offers a comprehensive library of curated lessons and resources aligned state standards.
It uses best practices to suggest content for each individual student based on their past use and success.
And since students parents and teachers all have access to the platform support as seamless and comprehensive.
Yeah.
We just launched learning how this last month, but we have already received positive feedback from teachers and administrators are.
The great thing about both these products is that we have a built in user base.
We can reach out to us to learn and use to evolve the product.
At the same time these products have the ability to address significant market opportunities outside of our core fulltime offering they have.
Stride to diversify our revenue streams and reach more users and they do so by leveraging the expertise we've developed over the past 20 plus years.
Now before I wrap up I'm excited to announce that we're planning an analyst day sometime later this calendar year likely in the late fall.
By fall of the three years since we provided our fiscal 'twenty five targets and while we remain committed to those targets, but Donna and I look forward to offering a deeper dive into our financial goals and strategic priorities looking at further and including some of the exciting things we've been working on.
While we are exceeding expectations for this fiscal year I'm, even more bullish on our ability to help transform our educational system in the years to come.
Now I'll pass the call over to Don to give some commentary on our third quarter results and discuss our updated guidance Donna.
Thank you Jamie and good afternoon, everyone.
First let me quickly recap our quarterly results revenue was $473 million an increase of 11, 5% from the same period last year.
Adjusted operating income was $80 2 million.
Up $10 8 million or 15, 6% from last year's third quarter.
And capital expenditures were $15 2 million a decrease of $3 2 million.
We remain very pleased with how the year is coming together.
Our results this quarter for both revenue and adjusted operating income exceeded the high end of our guidance.
We continue to see strong retention and new enrollments in the third quarter.
We finished the quarter with total average enrollment of 181 8000 up nearly 8000 enrollments from the first quarter.
This reinforces what we've said before about the continued demand for virtual options and furthers our belief that we remain on a path to achieve our fiscal year 2025 revenue and NOI targets.
Now for some more detail on our third quarter results.
Career learning revenue was $180 7 million.
Up 71% from the third quarter fiscal 2022.
Continued growth in the adult learning business and strength in our Middle and high School program both contributed to the increase.
Middle and high school career learning revenue was $158 million.
Up 81% from the third quarter fiscal year 'twenty two.
This was driven by a 60% increase in enrollments and a 13% increase in revenue per enrollment.
As we've mentioned previously in the first half of the year. The revenue per enrollment improvement was somewhat timing driven and we now have a harder comparison in the back half of the year.
That said, we now think we will see overall revenue per enrollment growth in the mid teens for the full year.
Adult learning revenue in the quarter was $29 $9 million up over 32% from the third quarter fiscal 'twenty two.
We continue to see growth across all of our adult learning brand and remain excited about the future growth prospects.
We still expect to finish the year up around 30% from last year.
Quarterly revenue from our general education business with $289 6 million down 8% from the third quarter last fiscal year.
Despite the decrease we are very encouraged by the in year enrollment growth in this business.
Janet enrollments in the third quarter were $114 6000 up more than 2000 enrollments since the first quarter.
This strength and in year enrollment demonstrates the sustained demand for first of all options in the K 12 space.
Revenue per enrollment for Gen, Ed increased 16% from the third quarter last year.
We believe this business will finish the year with revenue per enrollment growth in the low teens.
Gross margin for the third quarter was 37, 3% up 60 basis points from last year.
We feel confident we can finish the full year with gross margins that are roughly flat to last year.
Selling general and administrative expenses were $103 1 billion.
Up $8 9 million from last year.
The increase is mostly due to continued adult learning growth and investments in our new product S. James previously mentioned.
Stock based compensation was $4 7 million for the quarter.
Adjusted operating income for the quarter was $80 2 million.
And adjusted EBITDA was $103 $9 million.
Interest expense for the quarter came in at $2 2 million the effective tax rate for the quarter was 26%.
And diluted earnings per share totaled $1 30.
Moving to our balance sheet and cash flow items.
Capital expenditures totaled $15 2 million down $3 $2 million from last year.
Free cash flow for the quarter was $69 8 million down.
Down $4 $8 million from last year.
As with many years, we may see some timing impacts in the fourth quarter based on when states pay so we don't expect free cash flow to be as strong as it was last year.
We finished the quarter with cash and cash equivalents of $373 $7 million.
Turning to our guidance for the full year, we are raising our revenue guidance raising the bottom end of our adjusted operating guidance and updating our capex and tax rate guidance.
We now expect revenue in the range of one 805 to $1 85 billion up from 170.
775 to $1 $8 5 billion previously.
Adjusted operating income between $1 93 and $200 million.
Up from $180 million to $200 million previously.
Capital expenditures between 65 and $70 million.
And an effective tax rate between 26 and 28%.
Thank you for your time today now I'll turn the call back over to the operator for Q&A operator.
Thank you.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Your first question today comes from the line of Jeff Silber with BMO capital markets. Your line is now open.
Hey, good afternoon, just Ryan Griffin on for Jeff I was just curious if you can give any color on some of the early indicators.
How it relates to G&A in her career learning and then those are coming through the same funnel do you have any updates on segregating those funnels at any point in the future. Thank you.
Yes.
Yes, so right now they are still primarily coming from the same funnel I.
I think we do have some initiatives that were planning for this fall season that will hopefully open up some incremental correct specific funnels, but for right now we're seeing the demand that's released from the same funnel.
And I think that.
Sort of the comments, we've already made about the fall probably not going to give that much more context around them I think we've given a lot probably more than we normally would give at this time.
So we're one season remember anything that we're talking about now we're talking about something like less than 10% of overall total.
Total enrollment.
<unk> volumes.
For the season, so while very encouraging I think early on still very early.
Got it. Thank you and then just one follow up on the margins.
I think in the past you've spoken about some of the efficiency initiatives.
How you are also lapping some of the cost inflation that you're seeing this year. Just wondering if you can give any color on what we might expect from the cost piece.
And what that implies for margins next year. Thank you.
So one of the things we've certainly talked about this year is looking at some of those efficiency efforts too.
Offsetting those inflationary pressures and so looking at auto.
Automation and looking at are looking at our size and scale.
Some of those examples of some of those efforts and so those arent, but we're always looking at how do we continue to deliver student outcomes and the most efficient way possible and so we will continue to look for ways to do that and so while many of those efficiency efforts mitigate.
The impact of inflation, it's not like next year, we critical back to the way we are doing things. We're always looking at how do we continue to.
To improve and so with that we think for this year relative to last year, our margins will be relatively flat.
I also would point out that.
Just sort of as I think a data point that suggests that what we're doing is actually paying dividends as we started the year with gross margins below the prior year, we said that we were going to.
So really its sort of tighten our belts and look for efficiencies. We did it in in second and third quarter. We both saw gross margins above the prior year.
And I think that I think Dan has mentioned this before but most of those are sort of I'll say I'll call structural in nature, meaning they should have legs into subsequent years I don't think Theres just quick one off things that.
That we wont see any benefit into next year.
Got it thanks for the clarity.
Okay.
Your next question comes from the line of Greg Parish with Morgan Stanley . Your line is now open.
Hey, good evening, congrats on a strong quarter.
What does that what the makeup of the students joining made midyear here I know I ask enrollments have grown grown 8000, since the first quarter and your doctor and attrition than even larger numbers.
What's really driving these students out of brick and mortar and the.
The middle of the school year here.
So I.
I mean, obviously there is a ton of different reasons why kids are leaving.
What we're hearing from families I think particularly.
Post pandemic I think continues to be sort of a simple premise that I'll summarize.
I think the simplistic way, although it's really a lot of different reasons driving it which is that.
I think school districts in spite of the experiences they had in the pandemic I think are still struggling to treat their families like customers.
To listen to the feedback that theyre getting from them that they got during the pandemic et cetera, and I think families. We're expecting in many cases.
For districts to hear them.
Maybe a little bit more clearly through the pandemic and post pandemic and I think when when they solve the district's reverting back to pretty much status quo E pre pandemic type of everything.
A lot of the feedback that we get is that thats.
It's been disappointing for many families.
Obviously, not all families but.
There are increasing numbers of families who I think.
Want something different and I think the pandemic.
Sort of ignited a little bit of maybe.
Uh huh.
And enthusiasm for parents to really go out and explore something different and I think.
The in year demand that we keep seeing is really that sort of tension between parents.
Spectation during the school year for what they see in their districts and then.
They come to us.
I think that we've talked about our NPS scores I think are pretty robust and so I think that they find that we offer them something that's just a little more flexible.
It sort of meets them at their point of need a little bit more so I think thats sort of generically I mean, there's so many situations, whether it's safety related or academically related or courseware related, but I think thats sort of the general theme of it.
Yes, Okay, that's very helpful.
And then thinking about next year and clearly this year was kind of unprecedented the way enrollments have come in coming out of the pandemic.
How do you go about capturing these students in the summer that maybe.
Maybe are kind of on the fence and last year default back to brick and mortar, but clearly the demand is still there. So how do you go about sort of capturing them before the school year starts.
Yes, I think it goes along sort of the same theme in the sense that we're right now.
We're reaching out to families about next fall and very specifically, reaching out to them talking to them about things that we've heard them say.
We've heard them say that they they want more socialization, we're talking to them about some of the programs that we're going to be instituting footfall around socialization.
We're going to be trailing new ways of community of letting the students communicate with each other so I think what we're trying to do is listen to what our customers are saying build in improvements to our program and then proactively reaching back out to them and say hey, listen we heard you and were making these improvements.
And we will do that we've already started doing that for the fall, we'll do that through the summer.
We thought we've done that now for a couple of years I think we continue to see improvements in.
In retention rates because of it so.
I think we just continue to do that and really listen to our customers and listen to what they want and try to meet their needs as best as best we can and I think that just continues to promote stronger and stronger retention for us.
Great. Thanks.
Thanks for the color there.
And I just wanted to ask about the broader funding environment. Thank.
Thank you Donna for the color on revenue per enrollment to finish this year, but I just wanted to think about sort of sort of high level, how to think about funding for next year.
I think high level.
I sort of often talk about where this generic heat map that we have around the U S for funding.
And our generic sort of the heat map that we see funding across the U S continues to be largely green.
There is one or two sort of yellow red spots, but but by and large it continues to be green. So I think thats consistent with what we've said long term, we believe the funding environment continues to be strong.
Certainly within the range of 1% to 2% average funding increased across the board.
Great. Thank you very much.
Your next question comes from the line of Alex Paris with Barrington Research.
Your line is now open.
Thank you and thank you for taking my question.
Question.
Congrats on the quarter.
And James based on the momentum of the year to date period. Thank.
I think you said in your prepared comments that you're cautiously optimistic that enrollment can increase next year.
First off is that correct and then second.
I think I heard you just say.
Revenue per enrollment should be positive along the long term trends of 1% to 2%.
And then.
Similarly, I heard Dennis.
Gross margins flat next year.
Would gross margins expand.
Given those metrics rising enrollment positive.
Funding.
Let me let me let me jump in real quick I wanted to make sure I clarify clarify something when I was looking at gross margins flat its gross margins this year flat versus last year.
As a point of clarity.
Okay, great. Thank you.
So.
Let me sort of try to take this as a growth.
Yes listen.
I think I've said this for each of the past two years, our intent is to grow every year.
<unk>.
And and we've grown revenue in each of the past two years that I've said that.
I think I was a little bit more specific in my comments today that.
Our intent is to grow enrollment for next year.
Okay.
The early indicators look good for us.
I think last year, we did deal with some execution issues I think that we're improving our execution.
So.
I have optimism.
Based on the facts and circumstances I understand I can see today.
Net.
We have an ability to grow enrollments in the fall.
As I said.
Still less than 10% of the season.
So a lot can change, but based on what I can see.
And what our plans are and our intent is is to grow enrollment.
The funding environment.
So.
Rate per enrollment.
Is somewhat of a proxy, but remember mix and all these other things come into play.
I was referring to the funding environment that sort of overall across the.
The.
The landscape of programs that we serve the funding environment continues to be positive by and large.
One or two outliers, but by and large continues to be positive move we expect on average that funding to be.
1% to 2% higher long term and.
The.
I think the view of next year at least of that is consistent with that sort of long term view based on everything we know today.
Got you.
So with positive new enrollment positive funding.
Leverage of fixed cost is there room for gross margins to expand in fiscal 2004.
Well, here's what I would say.
Is that I think.
Without getting specific gross margin targets, because a lot of that plays into our mix because sometimes if we mix into certain schools that have higher ratio lower ratio requirements and things like that.
There is a lot a lot a plane without knowing the mixed hard to say what I do think though is that.
It does come into play in terms of adjusted operating income leverage so I do think that the more we can grow.
Enrollments in the funding environment is stays strong that I think it translates into better leverage for our profitability.
For sure.
Thanks, Alright, so let's keep it from an efficiency standpoint, as James noted, our structural right and so.
We will continue that into next year as well.
Great. Thank you for that and then just a big picture question with regard to marketing.
Marketing must have changed over the last.
Three years pre COVID-19 versus post Covid pre Covid I think it was a missionary sale to some extent how has it changed and what's your go to market now.
Has it changed.
Notably.
Yes, it's a great question and I think the short answer is yes. It has changed I think it has changed in both messaging and tactics, meaning I think youre right I think.
I, probably didnt use these words, but that sort of a missionary.
Messaging I think is a pretty good description of <unk>.
Lot of how we did go to market area, we have gone to market and I think a lot of that still can apply what I think we've honed and tactics are that.
We there are there are several broad themes.
That seemed to resonate.
But within those broad themes. There are a lot of very specific tactics that also resonate in a lot of different messages within those themes. So one theme of safety by the way safety is a theme that resonates with a lot of families.
That could be a bullying message there could be a gun violence message. There could there is a lot of messages so vessels within that but things like that and so what.
Well I think we were going for.
Some of that more sort of sentimental messaging previously I think we're trying to hone in two or more specific message. These days and the tactics around that around whether it's social media or digital marketing.
As opposed to sort of the broader maybe meet broader media TV type messaging as well those tactics are shifting as well and we're finding them to be.
Pretty effective for us so it's both the messaging and the tactics.
Okay.
Great. That's helpful. I appreciate the color and I'll get back in the queue.
Thank you.
As a reminder, if you would like to ask a question press star followed by the number one and your telephone keypad.
Your next question comes from the line of Tom <unk> with Citi. Your line is now open.
Good evening, yet Tom here from Citi. Thanks for taking my question and congratulations on the results.
I had a couple of questions on on the Scoop.
I don't know if that's okay.
You talked about the funding environment sort of big largely green.
I'm just interested in the sort of to the broader political risk whether you can.
Google Cros.
Sorry.
So I sort of look great, but I was wondering if maybe Jim I'm just wondering whether you can give us a quick run through how you see sort of the.
The landscape in terms of risks around.
Changes in the policy environment.
That would be my first question.
Come back with a second okay.
Yes.
I would say the broader political environment for us.
In general terms pre pandemic post tender pandemic actually has improved.
I think and I think it continues to sustain that improvement.
We see.
Across the sort.
The landscape of education, we see policy.
That both directly and indirectly, yes looks to be in our favor generically Juan <unk>.
Fairly predominant example is laws around.
Sure.
Voucher type of programs in this different names for it obviously, but.
They seem to be.
Gaining more traction that tends to benefit our types of programs.
Not exactly.
<unk> targeted towards our programs, but the ability for families to have greater choice in how educational funds get applied and used where we are one of the options that they can apply to tends to be good for our business. So that's one that is there are several states that have enacted laws in that favor and I think more.
No.
I think from the broad political risk standpoint.
We see less overarching risk.
In general than we did pre pandemic today.
So so I think our risk profile has improved.
And.
That doesn't mean that there are not pockets of risks there are pockets of risk, but I think just as a general statement, we feel like our general risk profile has improved over the past several years.
Okay.
That's very clear.
Question is on the competitive landscape Pearson.
As announced effectively that they've got a sort of a similar strategy to yours and explore launching two if I could such as schools. I mean, obviously imitation is the sincerest form of flattery, but.
Im wondering whether that.
Has any impact on the competitive tension within the market does it make a difference.
Okay.
How should we think about the competitive landscape.
Yes.
Yeah.
So.
I guess I would say is I'm hopeful that Pearson is successful.
I think it grows the pie I think we're more interested in having a larger pie as opposed to splitting up a smaller pie more ways.
I think that.
Whether it's a career program, which I do think.
This country needs a lot more of it I think that all the research or surveys indicate that that is true I mentioned some of my comments earlier today.
But I think competition is good for our industry.
I think that it will create greater awareness it creates greater validity for our programs.
So I'm actually encouraged by the competition.
Not just because it's whatever you said imitation is a form of flattery, but more for I think the validation in the marketplace clearly the opportunity keeps growing for all of us.
And I think it's it is healthy so I welcome it I hope I'm, hoping pearson's very successful at their programs I think it's going to grow the pie for all of us and I think theres more than enough to go around.
Okay, and one final one quickly.
We haven't talked about it yet I don't nothing and in particular tech elevator.
They seem to be getting.
Greg said, which is which is obviously great.
I'm just wondering whether.
As of June <unk>.
Allocating capital more capital to that area can you just talk about your philosophy on that.
Yes.
I wouldn't say we're overdue.
What I would say I think is that.
We continue to look for ways to allocate capital to all parts of our business that have opportunity those are included.
And.
That means both internal investment as well as sort of more strategic M&A type investment.
We have a pretty robust pipeline of.
Companies that we monitor.
Debt for the right deal the right price, we would certainly deploy capital for an acquisition.
And but we also think that there are internal investments that we can make as well to deploy capital to expand product line.
Two to invest behind different.
Different services.
Not just for the adult learning category, but for the K 12 category.
I talked a little bit about our learning hub investment.
I think that can be really significant across the broad spectrum of.
Both K through 12 core education, but also supplemental tutoring et cetera. So I, just think that theres a lot of opportunity to invest.
And I don't think that Theres, a singular category of investment that's more attractive than others I think that we want to we want to play within the education training Skilling space.
Broadly.
And we will look to invest behind those themes.
Where the the equations right for us where valuations have historically been really I think pricing folks like us out of the market, where we're not going to.
We're not overpay when I tried to be real disciplined so.
I think that the valuations have to be reasonable enough to give us what we believe is the right return for our shareholders.
Super clear thank you very much.
Your next question comes from the line of Stephen Sheldon with William Blair. Your line is now open.
Hi, This is Pat mckelvey on for Steven Thanks for the questions.
So last quarter, you mentioned that you were comfortable with your teacher capacity in and more recently James I think you actually mentioned that youre somewhat over subscribed in terms of future capacity.
And with that being said can you just talk a little bit about the trends youre seeing there in terms of teacher salaries and staffing in ifs.
Some of that wage inflation, you've seen in past quarters has begun to subside at all.
Yes, I mean, I guess, here's what I would say.
I mentioned I think what you just said I mentioned it at ASU GSV just the other day.
Which is what you might be referring to but what I would say that.
First of all a shout out to our teachers, we have the best teacher workforce I think in the country. They are phenomenal I get notes from teachers all the time.
Many of them thanking me.
For giving them an opportunity.
To serve kids in the way that we allow.
For them to serve kits.
So I think because of that and because of our unique model and because of some of the sort of the flexibility we provide.
Yes, we we don't have a teacher shortage.
I know a lot of districts are struggling with it and I am actually hopefully we can help some of this just as we've helped a number of districts. This past year with our teacher shortage.
We hope to continue to help more districts with their teacher shortages.
I really empathize with.
Those districts that have that shortage I think it is.
It hurts it hurts kit and hurts their customers and I think that it's incumbent upon all of us to help that situation.
But for our programs by and large we do not have a shortage.
We.
Had the ability to hire more teachers than we need.
I would say.
Oversubscribed, meaning we have more applications and more opportunities to hire teachers and the teachers that we actually need to to run our programs.
So for us at least.
We happen to be at least this past year.
In a pretty good situation where.
We're we're not struggling to meet the teacher side of the equation now.
In previous years to this year.
Particularly the first year of the pandemic when we saw really explosive growth, we got a little bit caught flat footed in hiring up teachers fast off so it's not that we have not ever had a.
<unk>, we got caught a little flat footed operationally a few years ago, when we had that explosive growth for the pandemic.
But since then we've sort of normalized I think we continue to be able to hire and recruit I think very effectively.
And.
Hopefully that continues.
And.
<unk>.
I think the.
The benefits that we can offer.
For our teachers.
Forget about.
Just pure compensation for a second but we offer them trajectories professional trajectories, we offer them professional development opportunities.
We have <unk>.
Many executives within our building.
Who are in various roles who came up through the school ranks whether that be teacher administrator or whatever.
Many of our executives have a trajectory of career development here that I think would be hard to replicate in other places, particularly in a school district that doesn't have a sort of a corporate structure like we have that offer some of those opportunities and its just by the fact that we are a corporate entity. So we operate a little bit differently.
And so I think all those things help attract teachers and.
It's not for everybody.
But but we've been very very fortunate and I'm very grateful for the wonderful teachers that we have that really help our students out and help our customers.
Understood that's very helpful. Thanks James.
Switching gears last quarter, you mentioned some pilots for our new products like the career platform teacher development solutions.
Today, you talked about launching the learning hub.
Understanding that it's still very early on I just wanted to ask quickly if you could talk a little bit about how those pilots have been going.
Yep.
So.
So we've run a series of pilots as you mentioned.
Our career platform nuclear platform pilot over this past year.
It went off we learned a ton.
And I think we're going to get some real good traction here in our next iteration of this summer.
I think.
It's a space that we continue to be hugely bullish about we continue to see huge need around we continue to see select.
Point solution products in the marketplace that I think.
Our under serving the needs of high School Kids, we think our intended product really.
Can really fill.
Gap in the marketplace and all the feedback that we've gotten through a pilot has only reinforced that.
So so I think that thats for us at least very reinforcing very positive very validating.
We continue to also run other pilots.
The learning hub that I mentioned.
We've run some select pilots for that product again got great feedback.
Here, we've heard superintendents principals educators.
I'll say there.
There is a need for a product like this.
And the market pace so again.
The pilots that have been very validating we've also run some other smaller pilot surround.
Product set.
Maybe less fanfare drip.
Driven but.
But for our Corp for our core services are pretty meaningful we just launched a couple of weeks ago. A pilot actually is very exciting thats sort of essentially like a virtual world for our students.
Today, everybody is talking about virtual reality and things like that.
It's not even that it's just it's.
It's just a.
It's a virtual space that our students can mingle and they can talk to each other and communicate and they can.
<unk>, they can play esports games and things like that and so.
That has gotten tremendous feedback.
As well so so far at least we have been very fortunate that most of the pilots that we've drawn.
<unk> been able to learn a lot from and most importantly have been very validating for us.
Got it that's all great to hear thank you for the context and congrats on a nice quarter.
Thank you.
This concludes today's Q&A session as well as today's conference. Thank you. So much for attending you may now disconnect.
Yes.
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Yes.
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<unk>.
Okay.
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Okay.
Yes.