Q4 2024 Stride Inc Earnings Call

Unknown Speaker: schools over the past 12 months. And we continue to see students reconsidering the traditional college pathway in favor of a more skills-based education.

James Rhyu: schools over the past 12 months. And we continue to see students reconsidering the traditional college pathway in favor of a more skilled-based education. I think that the results we posted for this year demonstrate and validate the longevity of our model.

Yeah.

And we continue to see students reconsidering the traditional college pathway in favor of a more skills based education.

James Rhyu: I think that the results we posted for this year demonstrate and validate the longevity of our model. We are delivering tomorrow's education today. Students and families are looking for something different and finding it at Stride.

Speaker Change: I think that the results we posted for this year demonstrate and validate the longevity of our model.

James Rhyu: We are delivering tomorrow's education today. Students and families are looking for something different and finding abstract. We're providing real choice for families. Choice that is affordable and accessible to anyone, anywhere, and at any time. Our offerings are personalized, career-forward, and tech-driven. And that translated into another record year. We crossed $2 billion revenue for the first time. We had record profitability and free cash flow. Bernie's per share increased 58% year over year and has now grown almost 700% to 2020. We achieved our highest gross margin in over five years. We had our highest in-year enrollment ever, pushing us to the highest enrollment level in the company's history, even larger than during the pandemic highs.

We are delivering tomorrow's education today.

Students and families are looking for something different and finding it at strike.

James Rhyu: We're providing real choice for families, choice that is affordable and accessible to anyone, anywhere, and at any time. Our offerings are personalized, career-forward, and tech-driven. And that translated into another record year. We crossed $2 billion in revenue for the first time. We had record profitability and free cash flow. Earnings per share increased 58% year over year and has now grown almost 700% since 2020. We achieved our highest gross margin in over five years.

Speaker Change: Providing real choice for families.

Speaker Change: Choice that is affordable and accessible to anyone.

Speaker Change: Anywhere and at any time.

Our offerings are personalized career Ford and tech driven.

Yeah.

Speaker Change: And that translated into another record year.

Speaker Change: We crossed $2 billion in revenue for the first time.

Speaker Change: We had record profitability and free cash flow.

Speaker Change: Earnings per share increased 58% year over year and is now grown almost 700% since 2020.

Speaker Change: We achieved our highest gross margin in over five years.

Speaker Change: Yeah.

James Rhyu: We had our highest in-year enrollment ever, pushing us to the highest enrollment level in the company's history, even larger than during the pandemic high. And we finished the year with more enrollments than we started for the second straight year. As I mentioned last year, even with our strong results, including multiple years of near or above double-digit revenue growth, continued margin expansion, and an attractive future growth profile. Are valuation multiples still relevant to the market?

Speaker Change: We had our highest in year enrollment ever.

Speaker Change: Pushing us to the highest enrollment level in the company's history, even larger than during the pandemic highs.

James Rhyu: And we finished the year with more enrollments than we started for the second straight year. As I mentioned last year, even with our strong results, including multiple years of near or above double-digit revenue growth continued. margin expansion and attractive future growth of our file. Our valuation multiples still lagged the market. In addition, the market continues to recognize our superior product and service offerings. Stride was named the Ed Tech Breakthrough Remote Learning Solution Provider of the Year. Our matures programs want to bronze metal for best use of AI in health tech from the merit awards. Our game-based learning offerings won almost too many awards to list, including the prestigious World Society of Chemistry Horizon Prize for our periodic rescue game in Minecraft, a Gold Stevie for a Minecraft education world's game, two Bronze Stevies, one each for a math B and ELL world language games, and our professional development offerings, one two Gold Stevies.

Speaker Change: And we finished the year with more enrollments than we started for the second straight year.

James Rhyu: In addition, the market continues to recognize our superior product and service offering. For example, Stride was named the EdTech Breakthrough Remote Learning Solution Provider of the Year. Our MedService programs won a bronze medal for best use of AI in health tech from the Merit Award. Our game-based learning offerings won almost too many awards to list, including the prestigious Royal Society of Chemistry Horizon Prize for our periodic rescue game in Minecraft, a Gold Stevie for a Minecraft Education Worlds game, two Bronze Stevies, one each, for a Math Bee and ELL World Language Games, and our Professional Development Offerings won two Gold Ste

James Rhyu: We also continued to see early traction with our other new product offerings, including our tutoring solution, which gained formal acceptance across a number of states.

James Rhyu: We also continue to see early traction with our other new product offers, including our tutoring solution, which gained formal acceptance across a number of states. Now, I understand everybody wants some color on our fall enrollment. Please remember that it is still early, and we have a long way to go to close out the season. Having said that, early indicators look positive. Demand, which we define as application volumes, continues to be strong and is pacing ahead of last, consistent with the pacing we have seen for much of the prior year.

James Rhyu: Now I understand everybody wants some color on fall enrollment season. Please remember that it is still early, and we have a long way to go to close this out the season strong. Having said that, early indicators look positive. The man, as I have said before, we define as application volumes, continue to be strong and are pacing ahead of last year, consistent with the pacing we have seen from much of the prior year. So, I feel confident that we will grow our enrollments for this fall, and we remain on track for our long-term goals. All of this demonstrates when I started my comments with.

James Rhyu: So, I feel confident that we will grow our enrollments for this fall and we remain on track for our long-term goals. All of this demonstrates what I started my comment on, offering tomorrow's education today. Now, I'll pass the call to Donna.

James Rhyu: The Stride is offering tomorrow's education today.

Donna Blackman: Now I'll pass the call to Donna. Donna?

Donna Blackman: Thanks, James. I'm believing everyone. We finished fiscal year 2024 with revenue of $2.04 billion, an increase of 11% over the prior fiscal year. Adjusted operating income for the year was $293.9 million, up 46% from last year, and adjusted operating income margin improved 350 basis points. Our results for the year further demonstrate the sustained demand for full-time online options and the US K-12 market. Throughout the year, we saw continued strength and end-year enrollment, coupled with strong retention.

Donna Blackman: We finished fiscal year 2024 with revenue of $2.04 billion, an increase of 11% over the prior fiscal year. Adjusted operating income for the year was $293.9 million, up 46% from last year, and Adjusted Operating Income Margin improved by 350 basis points. Our results for the year further demonstrate the sustained demand for full-time online options in the U.S. K-12 market. Throughout the year, we saw continued strength and in-year enrollment coupled with strong retention. This led to us once again exceeding our revenue and AOI guidance, and it also means we remain firmly on track toward achieving our fiscal year 2028 target.

Donna Blackman: This led to us once again exceeding our revenue and AOI guidance, and it also means we remain firmly on track for achieving our fiscal year 2028 targets. Returning to our full-year result in more detail, career-learning, middle and high-school revenues totaled $651.2 million, up 11%, with full-year enrollments of 72,700, up more than 10% from last year. General education revenue came in at $1.289 billion, up 14%. Enrollments in Gen Ed for the year totaled $121,600.00, up more than 8%. Total revenue per enrollment for both lines of business was $9,623, up 5.4% from last year. Throughout the year, we saw a divergence in career-learning and general education revenue per enrollment.

Donna Blackman: Returning to our full year results in more detail, career learning, middle, and high school revenues totaled $651.2 million, up 11%, with full year enrollments of 72.7 thousand, up more than 10 percent from last year. General education revenue came in at $1.289 billion, up 14%. Enrollments in Gen Ed for the year totaled 121.6 thousand, up more than eight percent.

Donna Blackman: The total revenue per enrollment for both lines of business was $9,623, up 5.4% from last year. Throughout the year, we saw a divergence between general education and career learning revenue per enrollment. General education finished up 8%, while career learning was up just 1%.

Donna Blackman: General education finished up 8%, while career-learning was up just 1%. As we've said all year, career-learning was up against a hard comp from last year, when we finished the year up 16.3%. Overall, the funding environment for both career and general education throughout the year. But, as with any year, revenue per enrollment was impacted by a number of things, including enrollment mix, yield, and timing impacts from prior year catch-ups. For next year, we still see a largely positive environment from a funding perspective at the state level, so not as strong as we see in the past couple of years.

Donna Blackman: As we've said all year, career learning was up against a hard comp from last year, when we finished the year up 16.3%. The overall funding environment for both career and general education throughout the year. But as with any year, revenue per enrollment was impacted by a number of things, including enrollment mix, yield, and timing impacts from the prior year. For next year, we still see a largely positive environment from a funding perspective at the state level. So not as strong as we've seen in the past couple of.

Speaker Change: Revenue per enrollment was impacted by a number of things, including enrollment mixed yield and timing impacts from prior year catch ups.

Speaker Change: For next year, we still see largely positive environment from a funding perspective at the state level.

Speaker Change: So not as strong as you can see in the past couple of years.

Donna Blackman: States also are grappling with the loss of federal extra funding in the coming school year, which will create a headwind in revenue per enrollment growth.

Donna Blackman: States also are grappling with the loss of federal extra funding in the coming school year, which will create a headwind in revenue per enrollment. Given these competing dynamics, as of right now, and it's still early in the year, we expect full year FY 2025 revenue per enrollment growth to be slavish to FY 2025. Adult learning revenue declined 16% for the year to $99.7 million on continued softness in our IT operations.

Speaker Change: They also are grappling with the law of federal extra funding in the coming school year.

Speaker Change: Which will create a headwind in revenue per enrollment growth.

Donna Blackman: Giving these competing dynamics as of right now, and it's still early in the year, we expect full-year FY2025 revenue per enrollment growth to be flatish to FY2024. Adult learning revenue declined 16% for the year to $99.7 million on continued softness in our ITR. Current. The upside is that our allied health business continues to see strong growth, finishing the year with revenues of more than 20%. Going forward, this means that the struggling IT side of adult learning will continue to be a smaller part of the overall business. Growth margins for the year was 37.4% of 220 basis points from FY23.

Speaker Change: Giving these competing dynamics as of right now and it's still early in the year, we expect full year FY 'twenty 25 revenue per enrollment growth to be flattish to FY 2024.

Speaker Change: Adult earning revenue declined 16% for.

Speaker Change: For the year to $99 $7 million on continued softness in our I T offerings.

Donna Blackman: The upside is that our allied health business continues to see strong growth, finishing the year with revenues up more than 20%. Going forward, this means that the struggling IT side of adult learning will continue to be a smaller part of the overall business. Gross margin for the year was 37.4%, or 220 basis points, from FY20. As the business has continued to grow, we've seen benefits from our scale and the payoff from the efficiency efforts we've rolled out over the past couple of years.

Speaker Change: The upside is that our allied health business continues to see strong growth.

Speaker Change: Finishing the year with revenues up.

Speaker Change: More than 20%.

Speaker Change: Going forward. This means that the struggling I T guide of adult learning, we will continue to be a smaller part of the overall business.

Speaker Change: Gross margin for the year was 37, 4% up.

Speaker Change: 220 basis points from FY2023.

Donna Blackman: As the business has continued to grow, we've seen benefits from our scale and the payoff from the efficiency efforts we've rolled out over the past couple of years. The teams have done an incredible job improving leverage. We get out of the business, and I will continue to challenge up to improve this going forward. Selling, general and administrative expenses were $514 million, up 10% from last year, driven by investment in our technology and higher stock-based compensation. As I mentioned during our Investor Day in November, we will continue to keep our SG&A spending in check, and we expect to see strong leverage out of the business going forward.

Donna Blackman: The teams have done an incredible job improving the leverage we get out of the business, and I will continue to challenge us to improve this going forward. Selling General and Administrative Expenses, for $514 million, 7% from last year, driven by investments in our technology and higher stock-based competition. As I mentioned during our investor day in November, we will continue to keep our SG&A spending in check as we expect to see strong leverage out of the business going forward. SG&A as a percent of revenue has declined 500 basis points since FY20.

Donna Blackman: SG&A as a percent of revenue has declined 500 basis points since FY21, and we believe we can continue to improve this metric as the company grows. Stock-based compensation for the year was $31.5 million, up $11.2 million from last year, due to the timing of some stock grant. Adjusted operating income came in at $293.9 million, up $92.9 million, or 46% from last year. Adjusted EBITDA was $390.7 million, up 94.6 million dollars, was 32% from the prior year. Diluted earnings per year total $4.69, up 58% from last year. Improvements in our profitability metrics were driven by our top line growth, coupled with our continued efficiency efforts and operating leverage.

Donna Blackman: And we believe we can continue to improve this metric as the company grows. Stock face compensation for the year was $31.5 million, up $11.2 million from the last due to the timing of some stock. Adjusted operating income came in at $293.9 million, up $92.9 million or 46% from last year. Adjusted EBITDA was $390.7 million, of $94.6 million or 32% from the prior year. Diluted earnings per share totaled $4.69, up 58% from last year.

Donna Blackman: The improvements in our profitability metrics were driven by our top-line growth, coupled with our continued efficiency efforts and operating leverage. Our effective tax rate for the year was 24 percent. Capital expenditures were $61.6 million for the year, and revenues were $217.2 million, up $80.6 million from last year. We'll wait until our Q1 earnings report in October to provide formal guidance. The seasonality for next year should be in line with FY24. With our FY24 results and current trends we are seeing for FY25, we remain on track to achieving the FY28 targets we outlined last November of total revenue CAGR of 10% and AOI CAGR of 20%, both at the mid-term.

Donna Blackman: Our effective tax rate for the year was 24%. Capital expenditures were $61.6 million dollars for the year. Free cash flow, which we define as cash from operations less catfix, was $217.2 million, up $80.6 million from last year. We finished the year with cash, cash equivalent, and marketable securities of $714.2 million dollars. Our cash position gives us flexibility to continue to invest in our business, be opportunistic when the right M&A deal is presented silk at the right price, and consider returning capital to shareholders at the right price. at the time.

Donna Blackman: Fiscal 2024 was another record year for Stride, with continued strong revenue and profitability growth. We saw our enrollment succeed our pandemic high from FY21 and once again finished the year with more enrollment than we started. This puts us in a strong position to see further growth in enrollment revenue and profitability in FY25. However, as James said, it's still early in our enrollment season. Historically, August and September are our busiest months, so we've got a lot of work ahead of us.

Donna Blackman: Because of this, as we do every year, we'll wait until our Q1 earners report in October to provide formal guidance. A couple of quick notes. These analyses for next year should be aligned with FY24, so we're still unsure if the in-year enrollment trends we've seen in FY23 and 24 will continue. We expect to see continued growth margin improvement at a slightly lower rate of improvement than we've seen this year. SG&A expense as a percent of revenue should decrease marginally. Catex as a percent of revenue will be flatish. As there's expense, tax rate, and stock based compensation should be in line with FY24.

Donna Blackman: With our FY24 results and current trends we are seeing for FY25, we remain on track to achieving the FY28 targets we outlined last November of total revenue caterer of 10% and AOI caterer of 20%.

Donna Blackman: Thanks so much for your time today, and I'll pass the call back to the operator for your questions.

Unknown Attendee: Operator? Thank you.

Unknown Attendee: We will now open the line for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Gregory Parrish: Our first question comes from Gregory Parish with Morgan Stanley. Please go ahead. Hey, thank you. Good evening. Congrats on the quarter in the strong year. I guess, and thank you for the color you guys are giving here in the summer. So on to ask any incremental color on what you're seeing in enrollment trends. Of course, any commentary; it sounds like the commentary is the same as last quarter, right? You're trending up year over year; you're in a strong position to grow enrollments, but I mean, has anything changed over the last three months? Anything incremental that you're seeing, maybe here in August so far?

Operator: Our first question comes from Gregory Parrish with Morgan Stanley. Please go ahead.

Gregory Parrish: Hey, thank you. Good evening. Congratulations on the quarter and a strong year.

James Rhyu: Yeah, hey, I think what I guess what I would say is that in the intervening three months since the last quarter, I think, as Donna mentioned, we still have a long way to go. We've got, I think by our estimate, more than 50% of the season to go in terms of enrollment volumes. So, you know, still lock and happen. But I would say, I'm, I'm not sure. I'm not sure. More confident today about our ability to grow into the fall than I was three months ago.

Unknown Speaker: Yeah, I think so.

Speaker Change: <unk> a long way to go we've got.

Speaker Change: I think by our estimate more than 50% of the season to go.

Speaker Change: Enrollment volumes, so still a lot can happen but.

Speaker Change: I would say I'm more confident.

Speaker Change: De.

Speaker Change: About our ability to grow into the fall than I was three months ago.

Donna Blackman: Okay, that's helpful. No funding. Also appreciate the color Donna gave on expectation for flat or maybe that was revenue per enrollment for flat. So, do you see a scenario where funding could go backwards next year and perhaps the, you know, S or headwinds are a little bit greater than you think. Is that a possibility? From what we're saying from the looking at the, just a normal state funding, that funding trend looks, looks favorable from the early funding trends that we're seeing. And from an S or standpoint, just given the amount of extra funding that we have seen, we'll see some offset to that.

Okay. That's helpful.

Speaker Change: And then on funding although I appreciate the color Don you gave an expectation for flat.

Speaker Change: Maybe that was revenue per enrollment for flat.

Speaker Change: So do you see a scenario where funding could go backwards next year and perhaps the essar headwinds are a little bit greater than you think is that a possibility.

Don: From what we're saying from looking at that.

Speaker Change: Just sort of a normal state funding.

Speaker Change: <unk> funding trend looks looks favorable from the early.

Speaker Change: Funding trends that we're seeing and.

From a <unk> standpoint, just given the amount of Essar funding that we have seen we will see some offset to that.

Donna Blackman: And so we think that will sort of offset each other. Now, what we could see some, the variability that we can quite quantify yet will be the mix, right? If we have to grow in state that pay a lower PPR than the funding that PPR could be lower. If we grow to state that plays a higher PPR, the PPR would be higher. And we are projecting that our PPR will be relatively flat next year, year to year.

Speaker Change: And so we think that will sort of offset each other now where we could see some of the variability that we.

Speaker Change: I can't quite quantify yes, it will be the mix right. If we happened to grow in state that pay a lower PPA CPR then.

Speaker Change: <unk> the PPR could be lower if we grow to state that place a higher PPR the PPR we'd be higher.

Thats why we are projecting that our <unk> will be relatively flat next year year over year.

Unknown Speaker: Okay, um, maybe I'll ask one more odd one and pass it. But to SG&A, historically, the fourth quarter has been a little bit higher seasonally. I think that's because you do, you know, you ramp up your marketing.

Donna Blackman: Okay, let me ask one more odd one and pass it, but to SNA, in a story before quarter has been a little bit higher seasonally. I think that you do, you know, you ramp up your marketing. I guess walk us through the SNA line because it's down sequentially, down year, year. Maybe that's just all the efficiencies that you're getting. So, on the marketing side, I assume that's not down year over year, but wanted to confirm that point. Yeah, we have been more efficient. So the marketing spend actually is down. We've been doing some automation in our role of the center.

Speaker Change: Okay.

Speaker Change: Maybe I'll ask one more and pass it back to SG&A historically fourth quarter has been a little bit higher seasonally I think thats skewed ramp.

Speaker Change: Ramp up your marketing.

Speaker Change: I guess walk us through the SG&A line, but it's down sequentially down year over year, maybe thats, just all the efficiencies that you're getting.

Speaker Change: So on the marketing side, I assume thats not down year over year, but wanted to confirm that point.

Donna Blackman: Yes, we have been more efficient. So the marketing spend is actually down. We've been doing some automation in our enrollment centers, so that is down. We've also reduced some costs in our coding business to be aligned with the decrease in revenue for that business, and we had slightly lower claims in our medical expenses. But yeah, we have been more efficient in our spending for marketing, as well as, as I said, the automation associated with our enrollment trends.

Speaker Change: Yes, we have and more efficient so the marketing spend actually is down.

Speaker Change: Been doing some automation in our old et cetera, so that that is down.

Donna Blackman: And so that, that is down. We've also reduced costs in our coding business to be aligned with the decrease in the revenue for that business. And we had slightly lower claims in our, in our, in our medical expenses. But yeah, we did more efficient in our, in our, in our spending for marketing, as well as I said, the automation associated with our moment friends.

Speaker Change: We've also reduced some costs in our coatings business to be aligned with the decrease in the revenue for that business and we had slightly lower claims an hour an hour and a medical expenses, but yes, we have been more efficient in our and our and our spending for marketing as well as I said, the automation associated with our enrollment trends.

Unknown Attendee: Okay, thanks for all the color.

Speaker Change: Okay. Thanks for all the color.

Jeff Silver: Our next question comes from Jeff Silver with Female Capital Markets. Please go ahead. Thanks so much. I wanted to go back to the funding environment, not necessarily from your perspective, but from a competitive perspective. We've been reading about some states cutting back on their own virtual schools as funding has kind of slowed. Are you seeing any of that in the states that you compete or potential new states? And you think that might give you an advantage from a competitive? perspective. Yeah, I mean, I think what we see in the states where we're operating is, you know, and I think by and large, you know, absence of the very unusual. I think the fall sort of school season is upon us, and therefore for states to make a change at this point going forward to be very unusual.

Speaker Change: Our next question comes from Jeff Silber with BMO capital markets. Please go ahead.

Jeff Silber: Thanks, So much I wanted to go back to the funding environment not necessarily from your perspective, but from a competitive perspective, we've been reading about some states cutting back on their own virtual schools is funding has kind of slowed are you seeing any of that in the states that you compete or potential new states.

Speaker Change: And do you think that might give you an advantage from a competitive perspective.

Speaker Change: Yes, I mean, I think what we see.

James Rhyu: In the states where we're operating, and I think, by and large, absent something very unusual, I think the fall of the need to have educational choices for consumers is real. And just like in any other sector of the economy, I don't think that's exactly a partisan issue. Just customer choice is not really a partisan thing. So we're hopeful that education continues to migrate in that direction.

Speaker Change: In the states, where we're operating as you know.

Speaker Change: And I think by and large.

Speaker Change: Absent something very unusual.

Speaker Change: I think the falls sort of.

Speaker Change: School season is upon us and therefore for.

Speaker Change: For states to make a change at this point going forward would be very unusual. So we don't really see a lot of risk for this fall.

James Rhyu: So we don't really see a lot of risk for this fall. You know, I do think that there are a couple of states out there where you know, there's some political pressure to either cut funding, but we just haven't seen that for this fall, and we feel pretty good about where we are heading into the season. I think that you know, I think that the state, the state political landscape for us, as you know, which is very important, I think is, since the pandemic, has become just a little bit more bipartisan. You know, the need to have educational choices for consumers is real, and just like in any other sector of the economy, I don't think that's exactly a partisan issue.

Speaker Change: I do think that there are a couple of states out there where.

Speaker Change: There is some political pressure to two.

Speaker Change: Either cut funding.

Speaker Change: But we just haven't seen that for this fall.

And we feel pretty good about where we are heading into the season I think that.

Speaker Change: I think that.

Speaker Change: The state the state political landscape for us as you know which is very important.

Speaker Change: I think is.

Speaker Change: Since the pandemic has become just a little bit more bipartisan.

Speaker Change: The.

Speaker Change: Sure.

Speaker Change: The need to have educational choices for consumers is real.

Speaker Change: And just like in any other sector of the economy I don't think thats exactly a partisan issue.

James Rhyu: Just customer choices, not really a partisan thing. So we're hopeful that education continues to migrate in that direction. But you know, just the way the politics, unfortunately, play in the educational landscape, there is a little bit of, you know, probably a couple states that, you know, did worry us earlier in the season, and I think sort of I settled into a nice place for the fall.

Speaker Change: Just customer choices not really a partisan thing. So we're hopeful that education continues to migrate in that direction, but.

James Rhyu: But just the way politics unfortunately plays in the educational landscape, there is a little bit of probably a couple of states that did worry us earlier in the season. And I think we've settled into a nice place for the fall.

Speaker Change: Just the way the politics. Unfortunately play in the education landscape, there is a little bit of.

Speaker Change: Probably a couple of states it.

Speaker Change: Did worry as earlier in the season, and I think sort of a set we've settled into a nice place for the fall.

Speaker Change: Alright, thats good to hear.

Unknown Attendee: All right, that's good. This next question, but you talked about being comfortable with your longer term goals of 10% top line compounded growth in revenues and 20% compounded growth in adjusted operating income. I think that's off your base from Fiscal 2023. You did better than that in 2024. Does that imply growth flows from current levels even though you still would be on track to hit those targets? That is not, does not imply that we think growth will slow. We think we have good trajectory to continue momentum for the foreseeable future. Okay, I appreciate that. I know you're not providing any forward-looking guidance beyond, I guess, what you gave us so far, and I just wanted to clarify one thing.

Speaker Change: I'm apologizing in advance for this next question, but you talked about being comfortable with your longer term goals of 10% top line compounded growth in revenues and 20% compounded growth and adjusted operating income I think thats off your base from fiscal 2023.

Speaker Change: Did better than that in 2024 does that imply growth slows from current levels, even though you still would be on track to hit those targets.

Speaker Change: That is not does not imply that we think growth will slow.

James Rhyu: We think we have a good trajectory to continue this momentum.

Speaker Change: We think we have.

Speaker Change: Good trajectory to continue momentum.

Speaker Change: For the foreseeable future.

Speaker Change: Okay I appreciate that I know youre not providing any forward looking guidance beyond I guess, what you gave us so far and just I wanted to clarify one thing you talked about revenue per enrollment expecting that to be flat in fiscal 2025 are we talking just for the general education segment for the total company.

Unknown Attendee: You talked about revenue per enrollment, expecting that to be flat in fiscal 2025. Are we talking just for the general education segment for the total company? For the total company. Okay, great. Thanks so much for the color.

Speaker Change: But the total company.

Speaker Change: Okay, great. Thanks, so much for the color.

Speaker Change: Yes.

Stephen Sheldon: Again, if you would like to ask a question, please press star one. Our next question comes from Stephen Sheldon with William Blair. Please go ahead. Hi, team, you have Pat McLeod on today. Thank you for taking my questions. So my first question: it sounds like early indications of application volumes and conversion are looking strong. So I just wanted to ask how much of those enrollment trends would you attribute to the kind of refresh marketing strategy versus better retention or anything else we should be thinking about?

Operator: Again, if you would like to ask a question, please press star 1.

Speaker Change: Again, if you would like to ask a question. Please press star one.

Speaker Change: Our next question comes from Stephen Sheldon with William Blair. Please go ahead.

Speaker Change: Hi team you Pat Mcafee on today, Thank you for taking my questions.

Stephen Sheldon: So my first question it sounds like early indications of application volumes and conversion are looking strong. So I just wanted to ask how much of those enrollment trends would you attribute to the kind of refreshed marketing strategy versus better retention or anything else, we should be thinking about.

James Rhyu: Yeah, I mean, I think I don't think actually I wouldn't exactly start a marketing strategy has changed dramatically over the past year from last year to this year. I think our execution has improved. And, you know, I think I mentioned we brought in a new person last spring. She was able to implement a number of things during the course of last season, but we didn't really have a full season of it. We now are seeing the full season effect of some of the things she's implemented. And I think they're paying dividends. So I think right now we're in a, I say, sort of a pure execution game.

James Rhyu: Yeah, I think she was able to implement a number of things during the course of last season, but we didn't really have a full season of them. We now are seeing the full season effect of some of the things that she's implemented, and I think they're paying dividends. So I think right now we're in, I'd say, sort of a pure execution game, and I think we're putting points on the board

Speaker Change: Yes, I think.

Speaker Change: I don't think are actually I wouldn't exactly say, our marketing strategy has changed dramatically over the past year from last year to this year.

Speaker Change: Our execution has improved.

Speaker Change: And.

Speaker Change: I think I mentioned, we brought in a new person.

Speaker Change: Last spring.

Speaker Change: She was able to implement a number of things during the course of last season, but we didn't really have a full season of it. We now are seeing the full season effect of some of the things that <unk> implemented and I think they are paying dividends. So I think.

Speaker Change: Right now we're in a I would say sort of a pure execution game and I think we're putting points on the board.

James Rhyu: And I think we're putting points on the board.

James Rhyu: Okay, understood. And then my second question is on the tutoring front. It sounds like there's been some solid early acceptance for that offering, and you have more than enough teachers that are looking for supplemental income. So I just wanted to ask if you could provide an update on the monetization potential you see there and, you know, what the timing of that could potentially look like.

Unknown Attendee: Okay, understood.

Speaker Change: Okay.

Speaker Change: Understood and then my second question is on the tutoring front it sounds like Theres been some solid early acceptance with that offering.

James Rhyu: And then my second question is on the tutoring front. It sounds like there's been some solid early acceptance with that offering. And you have more than enough teachers that are looking for supplement on income. So I just wanted to ask if you could provide an update on the monetization potential. You see there. And, you know, what the timing of that could potentially look like. Yeah, it's still early. I think that there's a lot of opportunity out there. There's a lot of opportunity both with district contracts as well as with direct-to-consumer offerings. I think we're in a unique position in that market where we actually can offer a very competitive platform with, I think.

Speaker Change: And you have more than enough teachers that are looking for supplemental income. So I just wanted to ask if you could provide an update on the monetization potential you see there and what.

Speaker Change: What the timing of that could potentially look like.

James Rhyu: Yeah, it's still early, but I think that there's a lot of opportunity out there. There's a lot of opportunity both with district contracts as well as with direct-to-consumer offerings. I think we're in a unique position in that market where we can actually offer a very competitive platform with, I think, and you'll see this year, increasing functionality that is going to start separating us from the marketplace, and it's a real convenience to be able to do it online.

Speaker Change: Yeah, it's still early.

Speaker Change: That there is there is a lot of opportunity out there there's a lot of opportunity both with district contracts as well as with direct to consumer offerings.

Speaker Change: I think we are in a unique position in that market where.

Speaker Change: We actually can offer.

Speaker Change: A very competitive platform.

Speaker Change: With.

James Rhyu: And you'll see this year with increasing functionality that is going to start separating us from the marketplace. And it's a real convenience to be able to do it online. I think there's greater acceptance to doing it online. I don't think we would expect this year to for it to materially impact our financials, have sort of given such a low starting base in the fact that, you know, we're over two billion of revenue now. But, yeah, I mean, I could see it. I could see us being a serious player in the next couple of years in the touring marketplace.

Speaker Change: And Youll see this year with increasing functionality.

Speaker Change: It's going to start separating us from the marketplace.

Speaker Change: It's a real convenience to be able to do it online I think there's greater acceptance doing online I don't think we would expect this year for it to materially impact our financials. This sort of given such a low starting base and the fact that.

James Rhyu: I think there's greater acceptance of doing it online. But I don't think we would expect this year for it to materially impact our financials, just sort of given such a low starting base and the fact that, you know, we're over $2 billion in revenue now. But yeah, I mean, I could see us being a serious player in the next couple of years in the tutoring marketplace. And I think that could add a couple of points of growth over the next few years.

Speaker Change: We're over 2 billion of revenue now but.

Speaker Change: Yes, I mean, I could see it I could see us being a serious player in the next couple of years and the tutoring marketplace and I think that that can add a couple of points of growth over the next few years.

James Rhyu: And I think that that can add a couple of points of growth over the next few years.

Unknown Attendee: I understand. Thank you for the color, James.

Gregory Parrish: Understood. Thank you for the color, James.

James: Understood. Thank you for the color James.

Unknown Attendee: There are no further questions at this time.

Operator: There are no further questions at this time. With that, we will conclude today's conference call. Thank you all for your participation. You may now disconnect.

Speaker Change: There are no further questions at this time.

Unknown Attendee: With that, we will conclude today's conference call. Thank you all for your participation.

Speaker Change: That we will conclude today's conference call. Thank you all for your participation you may now disconnect.

Unknown Attendee: You may now disconnect. Thank you.

James: Okay.

James: [music].

James: Yeah.

James: [music].

James: Yes.

James: Okay.

James: Yes.

James: [music].

James: Okay.