Q1 2024 2U Inc Earnings Call

Operator: Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2U Inc. first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Jamie and I will be your conference operator today.

Speaker Change: At this time I would like to welcome everyone to the two you Inc. First quarter 2024 earnings call.

Operator: All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's 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, press star 1 again. Thank you. I would now like to turn the conference over to Steve Virostek. You may begin.

Operator: After the Speakers' remarks, there will be a question and answer session.

Stephen A. Virostek: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Stephen A. Virostek: If you would like to withdraw your question Press Star one again.

Operator: Thank you I would now like to turn the conference over to Steve Burdick, you may begin.

Stephen A. Virostek: Thank you, Jeanne, and good afternoon, everyone. Welcome to 2U's first quarter 2024 earnings call. Joining me on the call this afternoon are Paul Lalljie, our chief executive officer, and Matt Norden, our chief financial officer. We will be sharing our remarks before opening the call up for your questions, but first, I'd like to cover a few housekeeping items. Our earnings release and slide presentation are available on the Investor Relations website. Our remarks today are being recorded, and a webcast replay will be made available later today.

Stephen A. Virostek: Thank you Jeannie and good afternoon, everyone. Welcome to <unk> first quarter 2024 earnings call. Joining me on the call. This afternoon are Paul <unk>, Our Chief Executive Officer, and Matt Jordan, Our Chief Financial Officer, we will be sharing our remarks before opening the call up for your questions, but first I'd like to cover a few housekeeping.

Stephen A. Virostek: Items, our earnings release and slide presentation are available on the Investor Relations website.

Stephen A. Virostek: Our remarks today are being recorded and webcast replay will be made available later today.

Stephen A. Virostek: Statements made during our call will include forward-looking statements regarding our financial and operating results, plans and objectives of management for future operations, including our performance improvement initiative, Plans and Ability to Improve Our Balance Sheet, Anticipated Trends for Learners and University Partners, Changes in Laws, Regulations, and Agency Guidance for Our Industry, and Other Matters. These statements are subject to risks, uncertainties, and assumptions. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them.

Stephen A. Virostek: Statements made during our call will include forward looking statements regarding our financial and operating results plans and objectives of management for future operations, including our performance improvement initiatives.

Stephen A. Virostek: <unk> ability to improve our balance sheet anticipated trends for learners and University partners changes in laws regulations and agency guidance for our industry and other matters.

Stephen A. Virostek: These statements are subject to risks uncertainties and assumptions.

Stephen A. Virostek: Any forward looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them.

Stephen A. Virostek: Please refer to the earnings press release and to the risk factors described in the documents filed with the Securities and Exchange Commission, including our quarterly report on Form 10-Q for the quarter-ended March 31, 2024, and other SEC filings, for information on risks, uncertainties, and assumptions that may cause our actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of real-world performance.

Stephen A. Virostek: Please refer to the earnings press release and to the risk factors described in the documents filed with the Securities and Exchange Commission, including our quarterly report on Form 10-Q for the quarter ended March 31, 2024, and other SEC filings for information on risks uncertainties and assumptions that may cause.

Stephen A. Virostek: Our actual results to differ materially from those set forth in such statements.

Stephen A. Virostek: In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of to use performance. These non-GAAP measures should be considered in addition to and not a substitute for or in isolation from our GAAP results you can find additional disclosures regarding these non-GAAP measures.

Stephen A. Virostek: Non-GAAP measures should be considered in addition to, and not a substitute for, or in isolation from, our GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with Comparable GAAP Results in our earnings press release and on the Investor Relations page of our website.

Stephen A. Virostek: <unk> reconciliations with comparable GAAP results in our earnings press release and on the Investor Relations page of our website with that let me hand, the call to Paul.

Stephen A. Virostek: With that, I'm going to hand the call to Paul.

Paul S. Lalljie: Thank you, Steve, and good afternoon, everyone. We are off to a solid start in 2021. Our first quarter financial results exceeded our expectations. As we continue to execute our Strength to Grow strategy, where we are laser-focused on revenue that delivers the greatest impact and profitability, revenue for the quarter was $198.4 million, while our adjusted EBITDA was $17.3 million.

Paul: Thank you, Steve and good afternoon, everyone.

Paul S. Lalljie: We are off to a solid start in 2024, our first quarter financial results exceeded our expectations as we continued to execute our shrink to grow strategy, where we are laser focused on revenue that delivers the greatest impact on profitability.

Paul S. Lalljie: Revenue for the quarter was $198 4 million.

Paul S. Lalljie: While our adjusted EBITDA was $17 3 million.

Paul S. Lalljie: We've seen an increase in total new enrollments, which went up to 116,000 from 88,000 in the last quarter, across all of our 4,600 partner programs. In addition, our learner network has grown to 86 million compared to 83 million last quarter. We are continuing to lean into our product line, which is performing strongly, and we have some exciting progress to share on our executive education and degree business. Matt will provide further details on our financial results shortly.

Paul S. Lalljie: We have seen an increase in total new enrollments, which went up to 116000 from 88000 in the last quarter across all of our 4600 partner programs.

Paul S. Lalljie: In addition, our learning network has grown to $86 million compared to $83 million last quarter.

Paul S. Lalljie: We are continuing to lean into our product lines that are performing strongly and have some exciting progress to share on our executive education and degree businesses Matt.

Matt: We'll provide further details on our financial results shortly.

Paul S. Lalljie: On the business side, we've made significant strides to hone our strategy, to optimize the business for profitability, and to implement the Return to Revenue Group. This began with a rigorous evaluation of operations and making smart decisions to enhance programs and focus resources. We have made significant progress establishing the right operational framework and are now establishing a baseline for revenue, margin, and cash flow. We are also tackling our balance sheet challenges head-on.

Paul S. Lalljie: On the business side, we've made significant strides to hone our strategies to optimize the business for profitability and a return to revenue growth.

Paul S. Lalljie: This began with a rigorous evaluation of operations and making smart decisions enhanced programs and focus resources.

Paul S. Lalljie: We have made significant progress in establishing the right operational framework and are now establishing a baseline for revenue margin and cash flow.

Paul S. Lalljie: We're also tackling our balance sheet challenges head on.

Paul S. Lalljie: We have the management team to navigate these hurdles and the fundamentals to fix our balance sheet in the near term and return to top-line growth in 2025. We are bullish on the future of 2U because of the market opportunity and our leading position in the education industry. Advancements in generative AI coinciding with paradigm shifts in the labor force are creating a technological moment and driving strong demand for workforce development.

Paul S. Lalljie: Have the management team to navigate these hurdles and the fundamentals to fix our balance sheet in the near term and returned to topline growth in 2025.

Paul S. Lalljie: We are bullish on the future of to you because of the market opportunity and our leading position in the education industry.

Paul S. Lalljie: Advances in generative AI, coinciding with paradigm shifts in the Labor force are creating a technology moment and driving strong demand for workforce development.

Paul S. Lalljie: According to the World Economic Forum's Future of Jobs Report for 2023, 60% of workers will require additional training by 2027, although only half of them currently have access to the proper training resources. In addition, at the forefront of this wave, we are ready to seize the immense opportunity that this presents. However, we must make the most of this opportunity.

Paul S. Lalljie: According to the World economic Forum's future of jobs report for 2023, 60% of workers will require additional training by 2027.

Paul S. Lalljie: Although only half of them.

Paul S. Lalljie: Currently have access to the proper training resources.

Paul S. Lalljie: In addition to the forefront of this wave we are ready to seize the men's opportunity that this presents however.

Paul S. Lalljie: However to make the most of this opportunity we must ensure we have the right foundation in place.

Paul S. Lalljie: We must ensure that we have the right foundation. To fully capitalize on this moment, we continue to focus on three areas. Product Innovation, Operational Efficiency, and Fixing Our Balance Sheet. Our goal is clear, to be the go-to company for workforce development, meeting learners where the learner wants to be met. Starting with product, in the first quarter, we launched 42 new degree programs, many in high-demand fields with a strong organic appeal. As I mentioned last quarter, our objective is to launch programs that deliver the best value proposition and outcomes for students, as well as provide strong economics for two years.

Paul S. Lalljie: To fully capitalize on this moment, we continue to focus on three areas.

Paul S. Lalljie: Product innovation operational efficiency and fixing our balance sheet.

Paul S. Lalljie: Our goal is clear.

Paul S. Lalljie: To be the go to company for workforce development meeting learners were to learner wants to be met.

Paul S. Lalljie: Starting with product in the first quarter, we launched 42, new degree programs. Many in high demand fields at the strong organic appeal.

Paul S. Lalljie: As I mentioned last quarter, our objective is to launch programs that deliver the best value proposition and outcomes for students as well as provide strong economics for two years.

Paul S. Lalljie: These launches fit the objective, and they bode well for our future financial performance. Most of these programs are under our flex model and require about one-fifth of the capital outlay of a degree under our traditional model, and we anticipate that they will begin generating positive cash flow about one to two years from now.

Paul S. Lalljie: These launches the objective and they bode well for our future financial performance.

Paul S. Lalljie: Most of these programs are under our flex model.

Paul S. Lalljie: And require about one fifth of the capital outlay of a degree under our traditional model.

Paul S. Lalljie: And we anticipate that they will begin generating positive cash flow about one to two year sooner.

Paul S. Lalljie: We remain encouraged by the robust demand from our partners for our educational offerings. Recently, we expanded our partnership with Pepperdine University to launch six new degree programs. Bringing the total number of degrees with Pepperdine to 12. One of these new degrees is a Master's in Speech Language Pathology. This is a first of its kind for Pepperdine University and its newly established College of Health Science. This program aligns perfectly with our strategic focus and our core competencies. Leveraging Our Strength, in fields where we have a proven track record. We possess the most extensive network of placement centers and have consistently demonstrated our ability to scale programs effectively.

Paul S. Lalljie: We continue we remain encouraged by the robust demand from our partners for our educational offerings.

Paul S. Lalljie: <unk>, we expanded our partnership with Pepperdine University to launch six new degree programs.

Paul S. Lalljie: The total number of degrees with Pepperdine to 12.

Paul S. Lalljie: One of these new degrees a master's in speech language pathology.

Paul S. Lalljie: A first of its kind for Pepperdine University and its newly established college of Health Science.

Paul S. Lalljie: This program aligns perfectly with our strategic focus on our core competencies leveraging our strengths.

Paul S. Lalljie: In fields, where we have a proven track record.

Paul S. Lalljie: We possess the most extensive network of placement centers and have consistently demonstrated our ability to scale programs effectively in this vertical.

Paul S. Lalljie: Building on this success, we expect year-over-year growth and degree enrollments from continuing programs, when combined with enrollments from newly launched programs. We have confidence in our ability to deliver profitable growth in our degree segment. Our long-term prospects are also looking good. Based on a robust pipeline, we build on our strong track record of delivering positive learner outcomes. In the alternative credential segment, we are seeing that online education is emerging as the most important tool for upskilling workforces faced with unprecedented technological changes.

Paul S. Lalljie: Building on this success, we expect year over year growth in degree enrollments from continuing programs.

Paul S. Lalljie: When combined with enrollments from newly launched programs.

Paul S. Lalljie: We have confidence in our ability to deliver profitable growth in our degree segment next year.

Paul S. Lalljie: Our long term prospects are also looking good based on our robust pipeline scale on our strong track record of delivering positive learner outcomes.

Paul S. Lalljie: In the alternative credential segment, we are seeing that online education is emerging as the most important tool for upskilling workforces facing unprecedented technological changes.

Paul S. Lalljie: We intend to capture this opportunity. This quarter, we signed five new contracts to offer AI boot camps, which we believe will help mitigate the softer demand we're seeing in coding. Just as important, we are working to deliver these programs as efficiently as possible through innovations in our delivery model. As with all of our business improvements, continuity of student experience and delivering strong student outcomes remain at the forefront of our decision making.

Paul S. Lalljie: We intend to capture this opportunity.

Paul S. Lalljie: This quarter, we signed five new contracts to offer AI boot camps, which we believe will help mitigate the softer demand we are seeing in coating.

Paul S. Lalljie: Just as important we are working to deliver these programs as efficiently as possible through innovations in our delivery model.

Paul S. Lalljie: As with all of our business improvements and to new anti of student experience and delivering strong student outcomes remain at the forefront revitalization, making.

Paul S. Lalljie: In the first quarter, our students achieved completion rates of 89% for exec ed and 76% for our boot camp. For exec ed, we continue to see accelerated growth, led by our AI courses offered by MIT Sloan and Oxford, and we expect this trend to continue. We recently signed a subscription-based contract with the Council for Higher Education in Andhra Pradesh, India. The program is off to an impressive start, with over 100 course completions in the first month of July. Our high quality online courses are now available to over 1 million students across the States 22 universities, for providing, and many more.

Paul S. Lalljie: In the first quarter, our students achieved completion rates of 89% for exec, Ed and 76% for our boot camps.

Paul S. Lalljie: And exact AD, we continue to see accelerated growth led by our AI courses offered by MIT Sloan and Oxford.

Paul S. Lalljie: And we expect this trend to continue.

Paul S. Lalljie: We recently signed a subscription based contract with the council of higher education and entrepreneur India.

Paul S. Lalljie: The program is off to an impressive start with over 100 course completions in the first month alone.

Paul S. Lalljie: Our high quality online courses are now available to over 1 million students across the states 22 universities, providing a valuable learning resource.

Paul S. Lalljie: Our bootcamp business is experiencing weaker demand, particularly in coding. Although our executive education business is performing well and making up for it, the sum of the shortfalls in boot camp, the overall predictability of the boot camp business remains difficult. Now turning to Operating Efficiency. We are building on our prior action, which has already reduced our operating expenses by approximately $90 million on an annual basis. Our focus remains on optimizing our cost structure on all fronts, from personnel and delivery costs to our technology, stack, and marketing efforts.

Paul S. Lalljie: Our boot camp business is experiencing weaker demand, particularly in coding.

Paul S. Lalljie: Although our executive education business is performing well and making up for.

Paul S. Lalljie: For some of the shortfall.

Paul S. Lalljie: And boot camp the overall predictability.

Paul S. Lalljie: And demand for the boot camp business remains difficult.

Paul S. Lalljie: Now turning to operating efficiency, we are building on our prior actions, which have already reduced our operating expenses by approximately $90 million on an annual basis.

Paul S. Lalljie: Our focus remains on optimizing our cost structure on all fronts from personnel and delivery costs.

Paul S. Lalljie: So our technology stack and marketing efforts.

Paul S. Lalljie: Two specific ways we're looking to reduce our costs while increasing efficiency and quality are first... through the introduction of technology into various points of our process, and second, by strategically teaming up with partners that excel in specific areas. If a partner demonstrates superior efficiency and effectiveness... We prioritize collaboration over performing those functions ourselves, allowing us to focus on areas that are our core competencies. These types of changes can increase our speed to market, improve our efficiency while reducing our fixed costs. edX Marketplace gives us powerful reach and

Paul S. Lalljie: Two specific ways, we're looking to reduce our cost while increasing efficiency and quality are.

Paul S. Lalljie: First <unk>.

Paul S. Lalljie: Through the introduction of technology into various points of our processes.

Paul S. Lalljie: And second by strategically teaming up with partners that excel in specific areas.

Paul S. Lalljie: If a partner demonstrates superior efficiency and effectiveness with prioritized collaboration over performing those functions ourselves, allowing us to focus on areas that are our core competency.

Paul S. Lalljie: These types of changes can increase our speed to market and improve our efficiency, while reducing our fixed costs.

Paul S. Lalljie: Our next marketplace gives us powerful reach and scale.

Paul S. Lalljie: The key to unlocking the value of this region scale is organic lead generation. Through Improved Market Segmentation, Cross-Sell Activities, and Search Engine Optimization, we expect to increase organic lead generation. Financial benefits include incremental revenue from a greater yield on marketing dollars and reducing our technology and marketing support. These are examples of how we're operating differently.

Paul S. Lalljie: The key to unlocking the value of this reach and scale as organic lead generation.

Paul S. Lalljie: Through improved market segmentation cross sell activities and search engine optimization, we expect to increase organic lead generation.

Paul S. Lalljie: The financial benefits include incremental revenue from a greater yield on marketing dollars and reducing our technology and marketing support costs. These are examples of how we are operating differently.

Paul S. Lalljie: Turning now to The Balance Sheet. We are tackling our balance sheet challenges head-on. The business improvements are meant to put us on a trajectory to deliver higher profitability and cash flow, which in turn becomes the impetus for fixing the balance. We have begun the process of fixing the balance sheet by working collaboratively with our lenders and expect those conversations will continue over the coming months as we work for the best possible future.

Paul S. Lalljie: Turning now to the balance sheet, we are tackling our balance sheet challenges head on.

Paul S. Lalljie: Business improvements are meant to put us on a trajectory to deliver higher profitability and cash flow, which in return becomes the impetus for fixing the balance sheet.

Paul S. Lalljie: We have begun the process of fixing the balance sheet by working collaboratively with our lenders and expect those conversations will continue over the coming months as we work for the best possible terms.

Paul S. Lalljie: As we implement our plans, we are closely monitoring the needs of our students, partners, and employees. We strive to continue delivering a compelling value proposition that includes the content they need, delivery that fits the way they want to learn, at a price that represents good value, and outcomes that support their lives. We need to deliver programs that support and advance their mission while providing flexibility in program structure. And, just as important, we need to demonstrate that we have the right plan in place to continue to be a valued partner for many years to come.

Paul S. Lalljie: As we implement our plans we are closely monitoring and needs of our students partners and employees.

Paul S. Lalljie: For students.

Paul S. Lalljie: We strive to continue delivering a compelling value proposition that includes the content they need delivery that fits the way they want to learn on it.

Paul S. Lalljie: Price that represents good value and outcomes that support their life goals.

Paul S. Lalljie: Our University partners we.

Paul S. Lalljie: We need to deliver programs that support and advance their missions.

Paul S. Lalljie: While providing flexibility in future.

Paul S. Lalljie: Program structure.

Paul S. Lalljie: Just as important we need to demonstrate that we have the right plan in place continued to be a valued partner for many years to come.

Paul S. Lalljie: We are talking to partners regularly, especially as we work on fixing the balance. And none of this would be possible without the day-to-day contributions of our valuable employees, a period of significant change for the company. We thank our employees, my colleagues, for their focus and unwavering commitment to our mission, our students, and our partners. In conclusion, I want to emphasize that we possess the necessary technology, partnerships, and resources to return to top-line growth.

Paul S. Lalljie: We are talking to partners regularly, especially as we work on fixing the balance sheet.

Paul S. Lalljie: And none of this is possible without the day to day contributions of our valuable employees.

Paul S. Lalljie: In a period of significant change for the company, we thank our employees my colleagues.

Paul S. Lalljie: For their focus and unwavering commitment to our mission our students on our partners.

Paul S. Lalljie: In conclusion, I want to emphasize that we possess the necessary technology partnerships and resources.

Paul S. Lalljie: Turning to top line growth. Our primary goal is to expand our product range by offering relevant programs that are competitively priced and delivered in the most efficient manner.

Paul S. Lalljie: Our primary goal is to expand our product range by offering relevant programs that are competitively priced and delivered in the most efficient manner. With new launches in the first quarter and the upcoming new launches, we are confident we will achieve top-line growth in 2025. Additionally, we expect our profitability and cash flow to improve due to the cost-saving measures we are implementing and Peter Poise to fix our balance sheet while maintaining our reputation as a good company, so we can ensure that we have a solid capital structure that matches our reputation as a top-tiered company. With that, I'll turn the call over to Matt.

Matt: With new launches in the first quarter and the upcoming new launches. We are confident we will achieve top line growth in 2025.

Matt: Additionally, we expect our profitability and cash flow to improve.

Matt: Due to the cost saving measures we are implementing.

Matt: We are poised to fix our balance sheet, while maintaining our reputation as a good company.

Matt: So we can ensure that we have a solid capital structure that matches, our reputation as a top tier company.

Paul S. Lalljie: And with that I'll turn the call over to Matt.

Matthew J. Norden: Thanks, Paul, and good afternoon, everyone. Before walking through the results, I wanted to start with a few key themes for you to keep in mind. First, as you heard on prior calls, we've taken steps to bolster our financial position. While we have more work to do, we're pleased to see the positive impact of these actions reflected in the first quarter results. Notably, we exceeded our revenue and profitability expectations for the first quarter, driven by the strong performance of our executive ed business, with enrollment growth of 32% over the first quarter of 2023, and the positive impact of our prior Cost Optimization Act. Second, in the first quarter, we began implementing our performance improvement initiatives with the goal of putting us in a strong position to address our balance sheet issues as soon as possible.

Matt: Thanks, Paul and good afternoon, everyone.

Matthew J. Norden: We expect that these initiatives will enable us to achieve our full year adjusted EBITDA expectations, notwithstanding trends we're seeing in the boot camp business, which I'll talk more about later in the call. Third, due to the extensive transformation work we have underway and where we are in the year, we're maintaining our prior full year 2024 revenue and adjusted EBITDA guidance. With those themes in mind, let's move on to the results.

Matthew J. Norden: Before walking through the results I wanted to start with a few key themes for you to keep in mind first as you heard on prior calls we've taken steps to bolster our financial position. While we have more work to do we are pleased to see the positive impact of these actions are reflected in the first quarter resolved.

Matthew J. Norden: Notably, we exceeded our revenue and profitability expectations for the first quarter driven by the strong performance of our executive business with enrollment growth of 32% over the first quarter of 2023 and the positive impact of our prior cost optimization actions second the first.

Matthew J. Norden: We began implementing our performance improvement initiatives with the goal of putting us in a strong position to address our balance sheet issues as soon as possible.

Matthew J. Norden: We expect that these initiatives will enable us to achieve our full year adjusted EBIT expectations notwithstanding trends, we're seeing in the boot camp business, which I'll talk more about later in the call.

Matthew J. Norden: Third due to the extensive transformation work, we have underway, where we are in the year, we're maintaining our prior full year 2020 for revenue and adjusted EBITDA guidance.

Matthew J. Norden: With those themes in mind, let's move on to the results.

Matthew J. Norden: I'll start by walking through the P&L, and then I'll provide an update on our balance sheet and cash flow. I'll then share some additional detail on our performance improvement initiatives, and we'll present our thoughts on what is driving our outlook for the second quarter and the remainder of 2024. I'll conclude with an update on the status of discussions with our debt holders.

Matthew J. Norden: Start by walking through the P&L and then I'll provide an update on our balance sheet and cash flow statement. I'll then share some additional detail on our performance improvement initiatives and will present, our thoughts on what is driving our outlook for the second quarter and the remainder of 2024 I'll conclude with an update on the status of discussions with our debtholders.

Matthew J. Norden: Starting with revenue. In the first quarter, we generated total revenue of $198.4 million, a 17% decline from $238.5 million in the first quarter of 2020. This decrease was driven by a 21% decline in the degree segment and an 11% decline in the alt cred segment.

Matthew J. Norden: Starting with revenue.

Matthew J. Norden: In the first quarter, we generated total revenue of $198 4, million% to 17% decline from $238 $5 million in the first quarter of 2023.

Matthew J. Norden: This decrease was driven by a 21% decline in the degree segment and an 11% decline in the <unk> segment. The decline in the degree segment, primarily driven by fewer steady state programs operating in the quarter as compared to the first quarter of 2023 due to our portfolio management activities in 2023.

Matthew J. Norden: The decline in the degree segment is primarily driven by fewer steady-state programs operating in the quarter compared to the first quarter of 2023 due to our portfolio management activities in 2020. In light of this, and as we did on the fourth quarter call, to gain a better perspective on the degree segment's performance, we evaluated the segment excluding the impact of portfolio. This analysis reveals that degree revenue declined only 4% year-over-year.

Matthew J. Norden: In light of this and as we did on the fourth quarter call to gain a better perspective on the degree segment's performance. We evaluated the segment excluding the impact of portfolio management. This analysis reveals that degree revenue declined only 4% year over year, a significant improvement from the 9% decline of the current portfolio, which we've reported in the fourth.

Matthew J. Norden: Significant improvement from the 9% decline in the current portfolio, which we reported in the fourth quarter. Also, as was the case in the fourth quarter, this decline was primarily due to a higher number of graduates who enrolled during the pandemic and the number of new student enrollments in the quarter.

Matthew J. Norden: The quarter also as was the case in the fourth quarter. This decline was primarily due to a higher number of graduates who enrolled during the pandemic and the number of new student enrollments in the quarter, but new student enrollment from the current portfolio grew 6% over the first quarter of 2023, which again shows the strong momentum of the decree business.

Matthew J. Norden: But new student enrollment from the current portfolio grew six percent over the first quarter of 2023, which again shows the strong momentum of the degree business. Also, note that the 6% new enrollment increase includes new enrollments from the 42 new programs we launched in the first quarter. Including these programs, new enrollment increased 17% year-over-year.

Matthew J. Norden: Also note that the 6% new enrollment increase excludes new enrollments from the 42, new programs, we launched in the first quarter, including these programs new enrollment increased 17% year over year. So overall, we were quite pleased with the degree segment's performance in the quarter and the trajectory it's on.

Matthew J. Norden: So, overall, we were quite pleased with the degree segment's performance in the quarter and the trajectory it's on. The first quarter was impacted by similar factors, continued softness in boot camps, particularly coding, partially offset by continued strength in our executive education offerings, particularly AI. Bootcamp revenue declined 33% compared to the first quarter of 2023, while executive education revenue increased 44% over the same period. Moving on to operating expenses, operating expenses improved across the board, reflecting the impact of our recent cost optimization activity.

Matthew J. Norden: Decline in Alt credit revenue in the first quarter was impacted by similar factors to those we experienced in the fourth quarter continued softness in boot camps, particularly coating, partially offset by continued strength in our executive education offerings, particularly AI.

Matthew J. Norden: Bootcamp revenue declined 33% compared to the first quarter of 2023.

Matthew J. Norden: <unk> of education revenue increased 44% over the same period.

Matthew J. Norden: Moving on to operating expenses operating expense improved across the board, reflecting the impact of our recent cost optimization activities for the first quarter operating expense was $225 7, million% to 13% decrease from the first quarter of 2023.

Matthew J. Norden: In the first quarter, operating expense was $225.7 million, a 13% decrease from the first quarter of 2022. This decrease was primarily driven by a $29.5 million decrease in personnel and personnel-related expenses and a $5.6 million decrease in paid marketing costs.

Matthew J. Norden: This decrease was primarily driven by a $29 $5 million decrease in personnel and personnel related expense and a $5 $6 million decrease in paid marketing costs. This decrease was.

Matthew J. Norden: This decrease was partially offset by $7 million in costs to implement our performance improvement initiatives, which resulted in G&A expense being relatively flat year-over-year. Turning now to our profitability measures, net loss for the quarter totaled $54.6 million compared to $54.1 million in the first quarter of 2023, reflecting the revenue and operating expense drivers I mentioned previously. Adjusted EBITDA for the quarter decreased 43%, $17.3 million, a margin of This was largely driven by the same factors that I mentioned earlier, primarily fewer steady-state programs operating in the quarter as compared to the first quarter of 2020.

Matthew J. Norden: Partially offset by $7 million in costs to implement our performance improvement initiatives, which resulted in G&A expense being relatively flat year over year.

Matthew J. Norden: Turning now to our profitability measures net loss for the quarter totaled $54 6 million compared to $54 1 million in the first quarter of 2023, reflecting the revenue and operating expense drivers I mentioned previously adjusted EBITDA for the quarter decreased 43% to $17 3 million margin of nine.

Matthew J. Norden: Percent. This was largely driven by the same factors that I mentioned earlier, primarily fewer steady state programs operating in the quarter as compared to the first quarter of 2023.

Matthew J. Norden: Looking at profitability by segment degree segment, adjusted EBITDA was $32 million for the quarter a margin of 29% for the <unk> segment. Adjusted EBITDA loss was $14 7 million or $2 $3 million improvement over the first quarter of 2023.

Matthew J. Norden: Looking at profitability by segment, the degree segment adjusted EBITDA was $32 million for the quarter, a margin of 29%. For the alt-cred segment, adjusted EBITDA loss was $14.7 million, a $2.3 million improvement over the first quarter of 2023. Now let's turn to the balance sheet and cash flow. We ended the quarter with cash, cash equivalents, and restricted cash of $137.4 million, an increase of $64 million from December 31st, 2022. This increase includes $74 million received in the quarter in connection with the sale of certain receivables that we referenced on our prior call. Looking at the cash flow statement, cash provided by operating activities was $72.2 million for the quarter.

Matthew J. Norden: Now, let's turn to the balance sheet and cash flow statement, we ended the quarter with cash cash equivalents and restricted cash $137 4 million an increase of $64 million from December 31 2023.

Matthew J. Norden: This increase includes $74 million received in the quarter in connection with the sale of certain receivables that we referenced on our prior call.

Matthew J. Norden: Looking at the cash flow statement cash provided by operating activities was $72 2 million for the quarter, we delivered adjusted Unlevered free cash flow of $102 $7 million for the 12 months ending March 31 2024.

Matthew J. Norden: We delivered adjusted, unlevered free cash flow of $102.7 million for the 12 months ending March 31st, 2024 compared to $45.4 million for the 12 months ending December 31st, 2023. These results show the positive impact that our cost optimization and working capital initiatives had on liquidity in the company. I'll now provide some more detail regarding our performance improvement initiatives and their financial implications. As Paul mentioned, a key goal of this plan is to significantly improve operating efficiency to put us in a stronger position to fix our balance sheet.

Matthew J. Norden: Compared to $45 $4 million for the 12 months ending December 31 2023.

Matthew J. Norden: These results show the positive impact of our cost optimization and working capital initiatives had on liquidity in the quarter I will now provide some more detail regarding our performance improvement initiatives and their financial implications as Paul mentioned, a key goal of this plan is to significantly improve operating efficiency to put us in a stronger position.

Matthew J. Norden: To fix our balance sheet. In addition to the cost optimization actions. We took in 2023, we've now identified 90% to $100 million of additional run rate cost savings from initiatives across the company, which we expect to fully realize by the end of 2025.

Matthew J. Norden: In addition to the cost optimization actions we took in 2023, we've now identified $90 to $100 million of additional run rate cost savings from initiatives across the company, which we expect to fully realize by the end of 2025. To highlight a few of the specific initiatives underpinning the plan, We expect to continue to improve the efficiency of our sales and marketing operation by leveraging the edX platform and further streamlining marketing technology and processes. We've identified approximately $15 million of run rate savings from this initiative.

Matthew J. Norden: To highlight a few of the specific initiatives underpinning. The plan, we expect to continue to improve the efficiency of our sales and marketing operation by leveraging the <unk> platform and further streamlining marketing technology and processes. We have identified approximately $15 million of run rate savings from this initiative also through the use of.

Matthew J. Norden: Also, through the use of lower-cost locations and outsourcing arrangements for various back-office functions and standardizing and simplifying our technology infrastructure, we believe we can reduce our technology and product spend by approximately $20 million on a run rate basis. We are also continuing to take a hard look at GNA, where we have identified approximately $8 million in run rates. The remaining savings come from various initiatives that we've identified across the entire organization, including opportunities related to real estate, process improvements, and various other corporate hygiene initiatives.

Matthew J. Norden: Lower cost locations and outsourcing arrangements for various back office functions and standardizing and simplifying our technology infrastructure. We believe we can reduce our technology and product spend by approximately $20 million on a run rate basis.

Matthew J. Norden: We are also continuing to take a hard look at G&A, where we have identified approximately $8 million of run rate savings the remaining savings from various initiatives that we've identified across the entire organization, including opportunities related to real estate process improvements and various other corporate hygiene initiatives.

Matthew J. Norden: Turning now to a discussion of our outlook for the second quarter and full year 2024, starting with revenue. Our guidance for the second quarter calls for revenue to range from $191 million to $194 million. For the year, as I mentioned previously, we're affirming our prior revenue guidance, with revenue expected to range from $805 million to $815 million. For Adjusted EBITDA, our guidance for the second quarter calls for Adjusted EBITDA to range from $16 million to $18 million.

Speaker Change: Turning now to a discussion of our outlook for the second quarter and full year 2024, starting with revenue our guidance for the second quarter calls for revenue to range from $191 million to $194 million for the year as I mentioned previously we're affirming our prior revenue guidance with revenue expected to range from 805 million to eight.

Matthew J. Norden: <unk> hundred $15 million.

Matthew J. Norden: For adjusted EBITDA, our guidance for the second quarter calls for adjusted EBITDA to range from 16 million to $18 million for the full year. We're again affirming our prior adjusted EBITDA guidance with adjusted EBITDA expected to range from $120 million to $125 million for the year.

Matthew J. Norden: For the full year, we're again affirming our prior Adjusted EBITDA guidance, with Adjusted EBITDA expected to range from $120 million to $125 million for 2021. This outlook reflects continued headwinds in coding bootcamps, partially offset by continued strong exec ed performance throughout the rest of 2024. We are currently evaluating all options to mitigate these headwinds as much as possible.

Matthew J. Norden: This outlook reflects continued headwinds in coding boot camps, partially offset by continued strong <unk> performance throughout the rest of 2024.

Matthew J. Norden: We are currently evaluating all options to mitigate boot camp performance as much as possible. While we have taken some steps already capitalizing on the strength of our AI executive offerings to launch five new AI boot camps. This quarter, we're evaluating other options like reallocating resources across the boot camp portfolio and optimizing the delivery model.

Matthew J. Norden: While we have taken some steps already, like capitalizing on the strength of our AI ExecEd offerings to launch five new AI bootcamps this quarter, we're evaluating other options, like reallocating resources across the bootcamp portfolio and optimizing the delivery model, which could reduce bootcamp revenue for the full year while improving adjusted costs. Also, we're still working on refining and implementing many of the initiatives in our performance improvement plan, so the exact impact on 2024 Adjusted EBITDA is still in flux at this time.

Matthew J. Norden: Which could reduce bootcamp revenue for the full year, while improving adjusted EBITDA also we're still working on refining and implementing many of the initiatives in our performance improvement plan. So the exact impact on 2024 adjusted EBITDA is still in flux at this time, but we do believe that the cost optimization actions, we took in 2023 along.

Matthew J. Norden: But we do believe that the cost optimization actions we took in 2023, along with some in-year impact from our performance improvement plan, will enable us to meet our Adjusted EBITDA expectations for the full year, regardless of boot camp performance. Before I conclude, I wanted to briefly comment on the status of our discussions with our debt holders. Based on our current guidance for the second quarter, we do not expect revenue for the 12 months ended June 30, 2024, to satisfy the recurring revenue covenant contained in our credit formula.

Matthew J. Norden: Some in year impact from our performance improvement plan will enable us to meet our adjusted EBITDA expectations for the full year, regardless of boot camp performance.

Matthew J. Norden: Before I conclude I wanted to briefly comment on the status of discussions with our debt holders based on our current guidance for the second quarter. We do not expect revenue for the 12 months ended June 32024 to satisfy the recurring revenue covenant contained in our credit facilities.

Matthew J. Norden: But we have continued to have a constructive dialogue with our creditors to timely address the revenue covenant and find the overall best solution to best position the company for the long term. We expect those discussions to continue with the goal of executing a transaction in the near term. We expect that any transaction would fully support the company's ability to continue operating and providing services for our partners and students. To conclude, we exceeded our expectations for the first quarter, marking a solid start to the year.

Matthew J. Norden: But we have continued to have a constructive dialogue with our creditors to timely address the revenue covenant and find the overall best solution. The best position for the company to best position the company for the long term we.

Matthew J. Norden: We expect those discussions to continue with the goal of executing a transaction in the near term, we expect that any transaction would fully support the company's ability to continue operating and providing services for our partners and students.

Matthew J. Norden: To conclude we exceeded our expectations for the first quarter, marking a solid start to the year. Our team remains highly committed to strengthening our financial position, which is crucial for enhancing our capital structure and securing the company's long term success. We are actively implementing a performance improvement initiatives and are optimistic about our prospects for <unk>.

Matthew J. Norden: Our team remains highly committed to strengthening our financial position, which is crucial for enhancing our capital structure and securing the company's long-term success. We are actively implementing our performance improvement initiatives and are optimistic about our prospects for reinforcing our market position. This will enable us to thrive well into the future and deliver value first.

Speaker Change: Forcing our market position this will enable us to thrive well into the future and deliver value for our stakeholders and with that let me hand, the call back to the operator to begin the Q&A session.

Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And your first question comes from the line of Joshua Baer with Morgan Stanley. Please go ahead.

Matthew J. Norden: Yes.

Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Joshua Phillip Baer: If you would like to withdraw your question simply press Star one again.

Joshua Phillip Baer: You are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Joshua Phillip Baer: Again press star one to join the queue.

Joshua Phillip Baer: And your first question comes from the line of Josh Baer with Morgan Stanley. Please go ahead.

Joshua Phillip Baer: Great, thanks for the question. I wanted to dig into the newly launched programs, talked about kind of the steeper, or sorry, the shallower payback, free cash flow, one to two years sooner under the flex model. If you look at all the newly launched programs, the 42, can you help to quantify what the impact is for this year and next year from a revenue and a free cash flow perspective?

Joshua Phillip Baer: Great. Thanks for the question.

Joshua Phillip Baer: Wanted to dig into the newly launched programs talked about kind of the.

Joshua Phillip Baer: The steeper or sorry, the shallower payback free cash flow one to two years sooner.

Joshua Phillip Baer: Under the flex model.

Joshua Phillip Baer: If you look at all the newly launched programs 42 can you help to quantify what the impact is for this year and next year from a revenue and a free cash flow perspective.

Paul S. Lalljie: Josh, let me start off, and Matt will jump in here shortly. On last quarter's call, we said that in total, the approximately 60 programs that we launch in 2024 will cost us about $23, $25 million in expenses. And we'll have revenue of somewhere between $10 to $15 million in this calendar year. The other data point that we provided was that we expect to have steady state revenue of about $100 million, $100 million, $120 million.

Joshua Phillip Baer: Josh Let me start off and Matt will jump in here shortly on last quarter's call. We said that in total to 60, approximately 60 programs that we launch in 2024 will cost us about $23 $25 million of expenses and we will have revenue of somewhere between 10% to 15.

Paul S. Lalljie: And this calendar year.

Paul S. Lalljie: The data point that we provided was that we expect to have steady state revenue or about $100 million.

Speaker Change: 100, $120 million I don't remember exactly which of those numbers we said.

Paul S. Lalljie: I don't remember exactly which of those numbers we said. One hundred? One hundred is the steady state revenue going forward, and you know we expect these programs will get to steady state probably within years, between two and three or sometimes a little bit later. And that's because you have cohort one, cohort two that come in on top of the other, which I think you know very well. But the bottom line is that this really projects very well for the outer years as we launch them in the calendar year 2021.

Paul S. Lalljie: 100, 100 is a steady state revenue.

Paul S. Lalljie: Going forward, we expect that these programs will get the steady state.

Paul S. Lalljie: Years to between two and three years, sometimes a little bit later and Thats because you have cohort one cohort two that comes in on top of the other which I think you know very well but.

Paul S. Lalljie: The bottom line is this.

Paul S. Lalljie: This really projects very well.

Paul S. Lalljie: For the outer years, as we launched them in calendar year 2024.

Matthew J. Norden: Matt, I don't know if you had anything else. No, I think you hit it all.

Speaker Change: Matt I don't know if you'd add anything else no I think you hit all the key points.

Joshua Phillip Baer: Okay, that's great. And then on operational efficiency, you mentioned the introduction of tech to drive cost savings, and clearly this makes sense. I think it also takes some time and investment, so do you have any specific examples of some of those initiatives where you're looking to use technology to drive cost savings and how to think about the impact?

Matt: Okay, that's great and then.

Joshua Phillip Baer: One on the operational efficiency.

Joshua Phillip Baer: You.

Joshua Phillip Baer: You mentioned the introduction of tech.

Joshua Phillip Baer: To drive costs cost savings.

Joshua Phillip Baer: Technology and clearly this makes sense.

Joshua Phillip Baer: I think it also takes some time and investment. So do you have any specific examples of some of those initiatives, where youre looking to use technology to drive.

Joshua Phillip Baer: Cost savings and kind of think about the impact.

Matthew J. Norden: Yeah, so I think it falls into a couple buckets. Certainly, what I mentioned around outsourcing and moving some back office functions to low-cost, lower-cost locations, some of that is in the tech department. And that takes less of an upfront investment than some of what you might be thinking about. And I think there are opportunities to automate a lot of our processes throughout the business. On the marketing side, as I mentioned, we expect $15 million in run rate savings related to those activities.

Speaker Change: Yes, so I think it falls into a couple of buckets.

Matthew J. Norden: Certainly what I mentioned around outsourcing and moving some back office functions to low cost lower cost locations.

Matthew J. Norden: Some of that is in the Tech Tech Department and that takes less of an upfront investment.

Matthew J. Norden: Some of what you might be thinking about.

Matthew J. Norden: And.

Matthew J. Norden: I think there are opportunities to automate a lot of our processes throughout the business on the marketing side as I mentioned, where we expect $15 million and run rate savings related related to those activities.

Matthew J. Norden: And I also think there are opportunities to deploy AI in multiple areas of the business. Also, really on the marketing side, which is the marketing and operations side, I would say, to make the way we engage with students at the top of the funnel more efficient, ultimately leading to not only a more efficient business but probably a better experience for students.

Matthew J. Norden: And I also think theres opportunities to deploy.

Matthew J. Norden: AI in multiple areas of the business.

Matthew J. Norden: Also really on the marketing side, which is good.

Matthew J. Norden: The marketing and operation side, I would say to make.

Matthew J. Norden: We engage with students at the top of the funnel more efficient.

Matthew J. Norden: Ultimately leading to not only a more efficient business, but probably a better experience for students.

Paul S. Lalljie: Paul, I don't know if you would have anything to add there. The only thing I would add is that, you know, we do have a presence in Cape Town. We do have a tremendous employee base there, a talented employee base there, that I think we can build off of as we think of broadening our operations into a lower-cost environment. Okay.

Speaker Change: Paul I don't know if you'd have anything to add there. The only thing I would add is that we do have a presence in Cape town.

Paul S. Lalljie: Sure.

Paul S. Lalljie: We do have.

Paul S. Lalljie: A tremendous employee base their talented employee base there that I think we can build off of as we think of broadening our.

Paul S. Lalljie: Our operations into lower cost environment.

Joshua Phillip Baer: Okay, all very helpful. Thank you.

Paul: Okay. All helpful. Thank you.

Speaker Change: Appreciate it.

Ryan Michael MacDonald: Your next question comes from the line of Ryan MacDonald with Needham & Company. Please go ahead.

Joshua Phillip Baer: Your next question comes from the line of Ryan Macdonald with Needham and company. Please go ahead.

Ryan Michael MacDonald: Thanks for taking my questions. Great to see the strong results and some nice growth in executive education in particular. Can you just talk about what seems to be responding well with that offering from customers and what you know is, seemingly, a tough sort of environment for corporate learning and development spend? Thanks.

Ryan Michael MacDonald: Alright, thanks for taking my questions great either.

Ryan Michael MacDonald: These are strong results and some nice growth on executive education in particular.

Ryan Michael MacDonald: Can you just talk about what seems to be resonating well with that offering with with customers and what seemingly is a tough sort of environment for corporate learning and development spend thanks.

Paul S. Lalljie: Ryan, let me start off. And again, Matt, Matt may join in our AI. Executive education courses are definitely doing very well for us. You know, it goes, it goes back to, the objective and the fundamentals of the Alternative Credential.

Ryan Michael MacDonald: Brian Let me start off and again, Matt math may join in.

Speaker Change: Our our AI.

Speaker Change: Executive education courses are definitely.

Speaker Change: Doing very well for us.

Speaker Change: It goes it goes back to.

Speaker Change: The objective and the fundamentals in alternative credential, it's all about hit driven.

Paul S. Lalljie: It's all about hit-driven topics, and it's all about making sure you have the appropriate content. And I can't underestimate having the appropriate partners. We do have great partners. MIT and Oxford are really, really great partners for us as we continue to grow executive education. Look, our objective here is to continue to launch new content and new programs so that we can always have that new S-curve that is on top of what we have currently.

Paul S. Lalljie: Opex and it's all about making sure you have the appropriate content and I can't underestimate, having the appropriate partners, we do have great partners.

Paul S. Lalljie: And Oxford are really really.

Paul S. Lalljie: Great partners for Us as we as we continued to grow executive education look our objective here is to continue to have.

Paul S. Lalljie: The launch new content and new programs. So that we can always have that in U S curve that is on top of what we have currently and that allows us to have a sustainable growth in a sustainable trajectory in that business.

Paul S. Lalljie: and that allows us to have sustainable growth and a sustainable trajectory in that. You know, the other thing I'd point to and highlight, as we think of alternative credentials in general, the Entrepreneurship Deal is a significant deal for us. It is in a different market, and, you know, it's, like I said, it's off to an impressive start. A hundred thousand course completions in the first month alone. And this is something that is unique and different from what we have traditionally offered. Most importantly, it is done on a subscription-based model. And that will allow us to have recurring revenue as we go forward.

Paul S. Lalljie: The other thing.

Paul S. Lalljie: 0.2, and highlight as we think of alternative credentials in general.

Paul S. Lalljie: The entrepreneur <unk> deal is a significant deal for us. It is it is in a different market and it's like I said, it's off to an impressive start 100000 of course completions in the first month alone and this is something that is unique and different from.

Paul S. Lalljie: What we have traditionally offered most importantly, it is done on a subscription based model and that allows us.

Paul S. Lalljie: To have recurring revenue as we go forward.

Ryan Michael MacDonald: Very helpful. Thanks. And maybe just as a follow-up on the topic of shoring up the balance sheet, just as we think about sort of the next steps in progression here, it seems like, you know, you've kind of bolstered cash on the balance sheet, you've identified additional operational efficiencies to drive more savings, and you've generated more adjusted EBITDA. What, I guess, do the lenders need to see to maybe progress further on those talks, Thanks.

Speaker Change: Okay. That's helpful. Thanks, and maybe just as a follow up.

Ryan Michael MacDonald: On the topic of shoring up the balance sheet.

Ryan Michael MacDonald: As we think about sort of the next steps in progression here, but it seems like you've kind of <unk>.

Ryan Michael MacDonald: Bolstered cash on the balance sheet, you've identified additional operational efficiencies to drive more savings generating more just keep to what I guess do you need the lenders need to see to maybe progress further on those talks or where do you think you need to kind of continue to execute to get.

Ryan Michael MacDonald: Close to a resolution there thanks.

Matthew J. Norden: Yeah, you know, as we said on the last call and this call, we have a constructive dialogue with our lenders, and that's obviously increasing in frequency, I would say. So I don't think they need to see anything else necessarily.

Ryan Michael MacDonald: Yes.

Ryan Michael MacDonald: As we said on the last call and this call we have a constructive dialogue with our lenders and Thats, obviously, increasing in frequency I would say so so I don't think they need to see anything else necessarily I think it's a question of coming up with the right solution for the company and given where we are and we are.

Matthew J. Norden: I think it's a question of coming up with the right solution for the company, given where we are. And we are, as you can imagine, hyper-focused on getting to that solution as quickly as possible to turn the page from where we are. So I think, as we said, in the near term, we're going to have a resolution that will really set you up for future success.

Matthew J. Norden: As you can imagine the hyper focused on getting to that solution as quickly as possible to turn the page from where we are.

Matthew J. Norden: So I think as we said in the near term, we're going to have a resolution that.

Matthew J. Norden: That will really set up to you for future success.

Paul S. Lalljie: And Ryan, we're fortunate. We have a group of lenders, you know; it's concentrated, number one. And number two, it consists of players that we're very familiar with and we've spoken to a number of times. This makes it all more convenient for us to get through this in a shorter time frame. The one point that I would want to make to all of this, as we go through this now, the first quarter was all about developing that plan, making sure we had the right framework to have these discussions with our lenders.

Matthew J. Norden: And Ryan we are fortunate we have a group of lenders.

Paul S. Lalljie: It's concentrated number one and number two it's consistent players that were very familiar with.

Paul S. Lalljie: And we've spoken to a number of times. So this makes it all.

Paul S. Lalljie: More convenient for us to get through this and in a shorter timeframe.

Paul S. Lalljie: The one point that I would want to make to all of this as we go through this now the first quarter was all about developing that plan, making sure. We have the right framework to have these discussion with our lenders, but none of this absolutely none of that has anything to do with operations.

Paul S. Lalljie: But none of this, absolutely none of this, has anything to do with operations, our focus on our partners and our students, and delivering quality education. Those are operational things. That's what we do every day, and that's what we do well. It has nothing to do with the balance sheet. We're trying to separate the two things, and math and the team are going to be the tip of the iceberg as we fix the balance sheet. But operationally, we're very proud of where we are and the commitment of our employee base to serve students and make them the highest priority.

Paul S. Lalljie: Our focus on our partners and our students and delivering the quality of education. Those are operational things. That's what we do everyday and that's what we do well has nothing to do with the balance sheet, we're trying to separate the two things.

Paul S. Lalljie: Matt and the team are going to lead be the tip of the spear as we fixed the balance sheet, but operationally, we're very proud of where we are and the commitment of our employee base.

Paul S. Lalljie: To serve students and make them the highest priority for us.

Ryan Michael MacDonald: Excellent. I appreciate the color. Thanks.

Speaker Change: Excellent I appreciate the color. Thanks.

Operator: Again, if you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. We will pause for a moment to compile that queue.

Speaker Change: Again, if you have dialed in and then we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Operator: We will pause for a moment capella Q.

Operator: That concludes our Q&A session. Thank you for your participation. This concludes today's conference call. You may now disconnect.

Speaker Change: That concludes our Q&A session.

Operator: Thank you for your participation. This concludes today's conference call you may now disconnect.

Operator: Okay.

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