Q2 2025 Stride Inc Earnings Call
Good day, everyone and welcome to city stride in Q2, FY 'twenty 25 earnings call. Just a reminder, today's call is being recorded I would now like to hand things over to Mr. Tim Casey. Please go ahead Sir.
Speaker Change: Thank you and good afternoon.
Speaker Change: Often described second quarter earnings call for fiscal year 2025 with.
J&J CEO: With me on today's call are J&J, Chief Executive Officer, and Don Blackman, Chief Financial Officer.
J&J CEO: As a reminder, today's conference call and webcast are accompanied by a presentation that can be found on stride investor Relations website.
J&J CEO: Please be advised that todays discussion of our financial results may include certain non-GAAP financial measures. A reconciliation of these measures is provided in the earnings release issued this afternoon. It can also be found on our Investor Relations website.
J&J CEO: In addition to historical information. This call May also involve forward looking statements. The company's actual results could differ materially from any forward looking statements due to several important factors described in the company's latest SEC filings.
J&J CEO: These statements are made on the basis of our views and assumptions regarding future events and business performance at the time, we make them and the company assumes no obligation to update any forward looking statements made during this call.
J&J CEO: Following our prepared remarks, we will answer any questions you may.
James: Now I'll turn the call over to James.
James: Thanks, Ken.
James: Once again posted record results topping 230000 students.
James: We continue to execute against the backdrop of ongoing strong demand.
James: Coming out of the pandemic, we were all uncertainty if the increase in demand for our programs from a structural or temporary.
James: For three consecutive years now we are seeing increasing growth in our business and also for three consecutive years, we see continued strength in demand.
James: The macro environment for our business is as strong as ever.
James: As long as we can continue to execute effectively I believe we can benefit from these conditions.
James: While every business has challenges I believe most of ours are currently within our control.
Speaker Change: Many of our most significant challenges or can you just can.
James: Improving and executing well.
James: Not just in how we have traditionally been our core business.
James: But across all of our initiatives.
James: That includes initiatives that I believe can take our core business to a new level, while also providing us with new market opportunities.
James: We see some early signs that our investments will pay off but we need to remain vigilant to ensure we are setting ourselves up for success over the long run.
James: I remain very bullish on our prospects for future growth.
James: We're seeing continued demand for our core offerings growing support for school choice options and our students seeking real career training.
James: Company, we're in a strong financial position.
James: Incredible team committed to delivering for our customers.
Donna: Thank you and I will now turn the call over to Donna.
Donna: Thanks, James and good evening.
Donna: This quarter confirms we're now in our third year in year enrollment growth and a full time programs. We've talked a lot about market conditions that are pushing families to seek education alternatives.
Donna: Our results demonstrate that our programs.
Donna: The solution.
Donna: Many of these students.
In light of this container strength, we're raising both our revenue and profitability guidance for the full year.
Donna: I will cover in more detail later.
Donna: Turning to our quarterly results, we reported revenue of $587 $2 million, an increase of 16% from the second quarter of fiscal year 'twenty four.
Donna: Although average enrollment of 236000 up 19, 4%.
Donna: Adjusted operating income of $135 6 million.
Donna: 43%.
Donna: Last year.
Donna: Earnings per share of $2 and three six up 32% from last year.
Donna: Capital expenditures of $14 $8 million.
Donna: From $12 7 million last year.
Donna: Revenue in our career learning Middle and high school programs grew 29% to $213 $1 million.
Donna: This strength was driven by enrollment growth.
Donna: 39% year over year.
Donna: General Education revenue was $354 $3 million.
Donna: 13% from last year.
Donna: Driven by continued enrollment growth in the quarter.
Donna: Average enrollments were up 12, 5% from last year to 135 8000.
Donna: During the quarter, we saw accelerating enrollment growth in both of these lines of revenue.
Speaker Change: As I mentioned earlier. This is now the third year and the goals that we've seen strength.
Donna: And in year enrollment.
Total revenue for enrollment across both lines of revenues plus $2395 essentially flat to last year.
Donna: As we mentioned last quarter, we're still.
Speaker Change: Thanks <unk>.
Speaker Change: Jack from state mix, So we're still seeing a largely positive funding environment.
Speaker Change: Given these dynamics, we expect to finish the year Dow wanted to 2% and revenue per enrollment.
Speaker Change: Softness in our adult learning business continues and we finished the quarter with revenue down $6 $1 million from last year to $19 $8 million.
Speaker Change: Gross margins for the quarter.
Speaker Change: 48%.
Speaker Change: 100 basis points from last year.
Speaker Change: We still expect to see gross margins improve 100 to 200 basis points for the full year.
Speaker Change: Selling general and administrative expenses decreased marginally to $148 million.
Speaker Change: Bob we've seen declining SG&A spend in the first half of the year, because I mentioned in the first quarter.
Speaker Change: I expect to see some increase in the back half of the year.
Speaker Change: Finished the year up slightly compared to FY 'twenty four.
Speaker Change: Stock based compensation for the quarter was $7 9 billion.
Speaker Change: We now expect to finish the year with stock based compensation in the range of $33 million to $37 million.
Speaker Change: Adjusted operating income for the quarter was $135 $6 million up.
Speaker Change: 43% from last year.
Speaker Change: Adjusted EBITDA was $164 million up.
Speaker Change: 36%.
Speaker Change: Interest expense for the quarter was two $7 million.
Speaker Change: Our effective tax rate for the quarter was 25, 7%.
Speaker Change: Diluted earnings per share for the quarter were $2.03.
Speaker Change: Our EPS calculation includes incremental shares related to our convertible notes.
Speaker Change: As if converted basis for GAAP reporting purposes.
Speaker Change: These shares are included in our diluted share count, but are not yet issued.
Speaker Change: Some of them have dilutive impact of the shares will be offset by the cap call transaction, we completed at the time of issuance.
Speaker Change: <unk> and upper strike price of $86.17 per share.
Speaker Change: We're now including a table in our quarterly investor presentation that shows the potential dilution from our convertible note at theory of share prices as well as the offset from the call.
Speaker Change: Turning to our balance sheet and cash flow.
Speaker Change: Total expenditures for the quarter were $14 $8 million up from 12.
Speaker Change: $7 million last year.
Speaker Change: Free cash flow.
Speaker Change: As cash from operations less Capex was $208 $6 million up $48 million.
Speaker Change: Prior year period.
Speaker Change: We finished the quarter with cash and cash equivalents of $515 $1 million.
Speaker Change: Given the continued growth in enrollment and margin improvements we are raising our full year revenue.
Speaker Change: Profit guidance and now expect revs.
Speaker Change: Revenue in the range of 220 320.
Speaker Change: The 235 5 billion up from two to two five to $2 3 billion last quarter.
Speaker Change: Adjusted operating income between 430, and $450 million up from $3 $95 million to $425 million last quarter.
Speaker Change: Capital expenditures between 60 and $65 million unchanged from last quarter.
I know the effective tax rate between 24, and 26% also unchanged from last quarter.
Speaker Change: For the third quarter, we are forecasting revenue in the range of $585 million to $600 million.
Speaker Change: Adjusted operating income between 130 and $140 million.
Speaker Change: Capital expenditures between 15 and $17 million.
Speaker Change: Thank you so much for your time this evening and now I'll turn the call over to the operator for Q&A.
Speaker Change: Operator.
Speaker Change: Thank you and everyone. If you would like to ask a question today. Please press star one on your telephone keypad. Once again that is star one for questions. We'll go first to Jason Tilton Canaccord Genuity.
Speaker Change: Great.
Jason Tilton: Congrats on the strong results and thanks for taking my questions I have two if there is time to first I'm. Just wondering if you could unpack some of that enrollment momentum a little bit maybe talk about some of the differences in the finals youre seeing for career learning in general education, and how some of the enrollment numbers on a gross basis are trending versus how retention has been compared to last year.
Speaker Change: Yes.
James: Jason This is James.
Speaker Change: Yes.
Speaker Change: I think the basic.
Speaker Change: Trend, where we can.
Speaker Change: And you can see is across the board.
Speaker Change: Strength in our <unk>.
Speaker Change: And final.
Speaker Change: I think.
Speaker Change: We've been I think a little bit surprised by how strong it continues to be year over year.
Speaker Change: We're in our third year of year over year growth.
Speaker Change: And.
Speaker Change: I think we're executing well against it but I actually think a lot of the underlying demand that we see at least.
Speaker Change: And then just really strong.
Speaker Change: It's been pretty broad based across the board.
Speaker Change: Sure.
Speaker Change: I think there is.
Speaker Change: Hi.
Speaker Change: As we have said.
Speaker Change: Henry.
Speaker Change: Yes.
Speaker Change: The incremental.
Speaker Change: Career funnel has not materialized.
Speaker Change: Yes.
Speaker Change: Go ahead.
Speaker Change: We think that longer term that continues to be an opportunity for us but.
Speaker Change: But I would say.
Speaker Change: The problem here.
Great that's really helpful and just one follow up recently.
Speaker Change: We recently announced the rollout of K 12, tutoring nationwide and I'm. Just wondering if you could share any early learnings from that rollout and sort of any additional color on sort of how the go to market is going to develop there when you expect sort of more material contribution from that on the overall business. Thanks.
Speaker Change: Yeah I think.
So for us.
Speaker Change: It's a clear clearly adjacent business.
Speaker Change: The way that kind of awareness.
Speaker Change: <unk> works on it.
Speaker Change: You have to think about other businesses like.
Speaker Change: The door dash or something like that having a gross merchandise value.
Speaker Change: The revenue, we have a sort of a similar mechanic or dynamic with our tiered inventory.
Speaker Change: Gross tuner value, but we really report everything like that.
Speaker Change: Yes.
Speaker Change: So in the context of our financial statements.
Speaker Change: For some very well.
Speaker Change: A long period of time and material.
Speaker Change: But strategically for us I think it can be very important because one is we know that hydro shire.
Speaker Change: Alright.
Speaker Change: He has a terrific pool.
Speaker Change: Theaters within our network.
Speaker Change: Platform. It also use those teachers opportunities to earn more.
Speaker Change: So we think it's a really good platform.
Speaker Change: Yes.
Speaker Change: And our network.
Speaker Change: And we've already seen numerous cases, both within our programs and outside of our programs.
Speaker Change: District programs, where.
Speaker Change: They are using today.
Speaker Change: Product.
Satisfied and are getting tremendous outcomes. So.
Speaker Change: Well I don't know in the short term it will be financially significant I do thank you.
Speaker Change: Strategically significant.
Speaker Change: Hugh.
Speaker Change: To access to that product.
Speaker Change: <unk>.
Speaker Change: I think unlike other.
Speaker Change: Tutoring companies out there where.
Speaker Change: In both cases, we're teetering as their only product.
Speaker Change: They have to make margin and survive.
Speaker Change: <unk>.
Speaker Change: We actually don't.
Speaker Change: We can invest in this product or other products.
We get tested out I think some different innovation around the product on our platform.
Speaker Change: Recently rolled out.
Speaker Change: Sort of AI summary feature.
Speaker Change: We've got terrific feedback around.
Speaker Change: So we're pretty happy.
Speaker Change: Great very helpful. Thanks, a lot.
Speaker Change: And we'll take the next question from Jeff Silber BMO capital market.
Speaker Change: Sure.
Speaker Change: Thanks, So much just wanted to drill down a bit on the prior question.
Theres not a lot of good industry data out there, but from what we've been able to see you guys have really been dramatically outperforming the industry is there anything specific that youre doing that maybe some of your competitors are not to drive that outperformance.
Jeff Silber: Hey, Jeff.
Speaker Change: So yes.
Jeff Silber: I think I have disorder.
I tend to agree with you.
Jeff Silber: I hate to say it this way but.
Jeff Silber: The data that we would see with wood.
Jeff Silber: I think suggests that we're probably over indexing on them.
Jeff Silber: Industry performance.
Jeff Silber: Because I want all of our competitors actually to do with the industry to grow I think that would be our primary goal is to see the entire industry grow and that all boats rise.
Speaker Change: But I think I would have to agree with you.
Jeff Silber: Hi.
Jeff Silber: I really crazy I think too.
Speaker Change: The team is really I think honed in on execution, you may remember and it was just a couple of years ago, where I got on the call and talked about how we had execution issues that was hampering our ability to grow and then if we can fix those issues, we should be able to accelerate growth.
Jeff Silber: And I think we have I think thats it.
Speaker Change: Team, we've got in place now.
Speaker Change: Executing much better.
And I think that is.
Speaker Change: To execute well in any industry in any company you have the opportunity to take share from some of your competitors I think that's probably what's happening.
Speaker Change: The good news for US I think and I won't speak for the industry here is it.
Speaker Change: While we are executing better.
Speaker Change: I do think that overall, we still have a lot of opportunity to even perform better.
Speaker Change: So I don't think were sitting here a restaurant Laurel and finished with.
Speaker Change: The trajectory that we set ourselves.
Speaker Change: Alright, that's helpful. If I could switch gears and talk about the funding environment, we've been seeing a lot of noise out of Washington in terms of freezes or pauses et cetera.
Speaker Change: I know you don't get a dramatic amount of revenues directly from the federal government, but is there anything maybe that indirectly comes to you from Washington Real estate I'm, just wondering what kind of exposure you might have.
Speaker Change: Sure.
Speaker Change: Yes, so our exposure is pretty limited very limited.
Speaker Change: Yes.
Speaker Change: Without getting into specific numbers I think Ive said previously around similar question.
Speaker Change: Well less than 5%.
Speaker Change: I think we saw the same thing that maybe some of you saw today.
Speaker Change: Before getting on today, we did validate that it continues to be to for this year well less than 5%.
Speaker Change: So I think our exposure is pretty limited.
Speaker Change: Listen I think.
Speaker Change: What I will say is is that.
Speaker Change: Regardless of.
Speaker Change: What the administration is analysis.
Speaker Change: I believe I wanted to leave I think I believe I do believe that the intent is.
Speaker Change: To encourage everybody to focus on the antennas.
Speaker Change: To help students.
Speaker Change: And.
Speaker Change: I don't want to get into a political discussion.
A discussion or debate here.
Speaker Change: Hi.
Speaker Change: I have faith that the administration is going to try and do the things that are going to help students.
Speaker Change: And I think that's what hopefully all of our.
Speaker Change: Political governments are trying to do that.
Speaker Change: That's what we're trying to do.
Speaker Change: And whatever impact it has to us we're going to manage through it.
Speaker Change: This negative will take on the Jan just keep marching forward as a positive.
Speaker Change: Hopefully help our business but.
Speaker Change: But I do think the administration is trying to figure out ways to ultimately to help students.
Speaker Change: I think that.
Speaker Change: The downstream impact of people maybe aren't yet seeing.
Speaker Change: Is.
Speaker Change: Maybe an approach or philosophy to Power's states, I think thats, where some of the state goals.
Speaker Change: That this administration has talked about.
Speaker Change: We support.
Speaker Change: We support things that are going to help students.
Speaker Change: All right really appreciate the color guys. Thanks.
Speaker Change: Yes.
Speaker Change: We'll take the next question from Alex Paris Barrington Research.
Alex Paris: Hey, guys.
Alex Paris: First off I'd like to ask you a couple of clarifying questions.
Speaker Change: The first question Jay.
Speaker Change: James You responded.
Speaker Change: Strength across the board in enrollment.
Speaker Change: I'm presuming, you're talking about new student enrollment in the <unk>.
Speaker Change: <unk> would be how has retention than theory.
Speaker Change: Yes.
Speaker Change: So retention I think.
Speaker Change: A couple of years ago, I think we talked about how we saw.
Speaker Change: Part of what we believe was a structural improvement in retention post pandemic I think.
Speaker Change: Generally speaking that trend continues I think year over year, we're seeing retention numbers that are sort of plus or minus within the same ballpark.
Speaker Change: So we're not seeing ongoing dramatic improvements like we saw a couple of years ago.
Speaker Change: But.
Speaker Change: But I think.
Speaker Change: For us the retention game is.
Speaker Change: Also slightly longer term gain meaning.
Speaker Change: What we're doing is we're identifying.
Structural areas of the program.
Speaker Change: We can see based on all of the feedback that we get.
Speaker Change: In areas that we can improve the program that we believe will have structural long term benefits to retention.
Speaker Change: And that is that.
Speaker Change: I think most people would expect people.
Speaker Change: They think that sometimes there.
Speaker Change: There is still lack of socialization.
Speaker Change: Youll programs, that's true that's not very valid feedback.
Speaker Change: We're investing in.
Speaker Change: Our platforms that allow kids to safely interact with each other.
Speaker Change: Hey.
Speaker Change: In an environment, we call it the K 12 zone.
Speaker Change: Where they can go in and they can they can meet on a virtual playground and play games they could have.
Speaker Change: Communication with each other.
Speaker Change: And.
Speaker Change: So we're investing in those types of things that we think.
Speaker Change: Attacked a thematic elements.
Speaker Change: Why.
Speaker Change: Students and families may shrink.
Speaker Change: But year over year I don't think we are seeing right now.
Speaker Change: Plus or minus.
Speaker Change: Different but I do think longer term over the next three to five years.
Speaker Change: Structural things like why.
Speaker Change: Mentioned argon.
Speaker Change: Provide some <unk>.
Speaker Change: Longer term benefit.
Speaker Change: Yes.
Speaker Change: Great. That's helpful. And then on that same question. The final comment you made was you said something about incremental career funnel has not materialized as strongly.
Speaker Change: As we expected or hoped.
Speaker Change: But then I look at the career learning enrollment up 31% year over year.
Speaker Change: Did I misunderstand your response or perhaps you did all that color.
Speaker Change: No I think you've got you got you have said the response correctly I think that yes.
Yes.
Speaker Change: What I think the strong numbers suggest.
Speaker Change: It's my very strong and long held belief.
Speaker Change: Yes.
Speaker Change: Our career programs.
Speaker Change: Operator, well applied well they can put CAGR trajectory.
Speaker Change: To be career ready when they graduate high school I think increasingly that.
Speaker Change: Macro trends around education support that is a larger need I think the industry.
Speaker Change: Dialogue, if you will not issue any corporate industry dialogue supports that.
Speaker Change: So I think that the market opportunity for those programs.
Speaker Change: You keep something much larger than what we're seeing and doing.
Speaker Change: And so I think that Theres, just a lot more upside opportunity. There. If we can effectively go to market with it captured I don't think we've done that effectively yet and so I think thats present, even more upside for us.
Speaker Change: Great good to hear.
Speaker Change: Last question and I hate to pick at the only negative thing in this report.
Speaker Change: Adult revenues were soft.
Speaker Change: $19 8 million, a little bit below where they were in the first quarter.
Speaker Change: I guess the first question.
Speaker Change: That is what's.
Speaker Change: Whats the makeup of that segment now I realize theres two boot camps in med search.
Speaker Change: Maybe a proportion.
Speaker Change: Sorry.
Speaker Change: I'm, assuming it's the largest.
Speaker Change: But whatever color you could give there would be helpful. I know it's <unk>.
Speaker Change: Very small as a percentage of the total I think 4% on a last 12 month basis, but I was just curious.
Speaker Change: Yes.
Speaker Change: We're not to break out the percentages exactly rational.
Speaker Change: Productive for any because I think that.
Speaker Change: We are disappointed in this office in a business thats for sure.
Speaker Change: Sure.
Speaker Change: I think one of the factors and this is in no way shape or form excuses. We didn't think it was going to be the salt that we go through this transition, but particularly for the networks business.
Speaker Change: We are longer term that business is a structurally better business.
Speaker Change: For us and for our customers is it structured and more of a GDP type business.
Speaker Change: It has historically been a primarily <unk> type business.
Speaker Change: And.
Speaker Change: And so we are pivoting that business into a much more <unk>.
Speaker Change: <unk> focused business.
Speaker Change: Does it mean that we're getting the abandoning the PCB side of it.
Speaker Change: When you have a view.
Speaker Change: <unk> business is.
Speaker Change: One is obviously you have to deal with the DRA customer churn is much.
Speaker Change: A much more stable contracts, it's much more recurring revenue.
Speaker Change: The higher margin generally speaking.
Speaker Change: So we're still very bullish about the business.
Speaker Change: There is I don't know exactly how long, it's going to be but there is going to be some period of time as we transition through.
Speaker Change: As you said its immaterial if it continues to decline for some period of time.
Speaker Change: Materially impacts our overall trajectory of the company or our ability to continue to grow in spite of those kinds of declines.
Speaker Change: But we remain we remain invested in those businesses.
Speaker Change: Invest behind them and we do think this long term value creation for our shareholders with those businesses.
Speaker Change: Great and then just one more clarification question came into my mind.
Speaker Change: And answering the question about federal funding you said before it's well less than 5% of revenue is this effort, we're talking about or are there other things in there like title one and so on.
Speaker Change: Yes so.
Speaker Change: That's a good clarifying question.
Speaker Change: There are other things in there like the up to now at this point as any.
Speaker Change: Basically nothing.
Speaker Change: So I don't think we.
Speaker Change: We should be talking about that kind of thing for us anymore.
Speaker Change: But there is other very small revenue stream that sort of flow through from federal dollars again, well less than 5%.
Speaker Change: <unk>.
Speaker Change: Yes, so I think it's sort of it.
Speaker Change: It is.
Speaker Change: More than just that.
Speaker Change: Historically.
Speaker Change: That's great. Thank you so much for answering my questions and congratulations on the strong quarter.
Speaker Change: And everyone. Just a reminder that is star one if you have a question today, we'll go next to Stephen Sheldon William Blair.
Speaker Change: Yeah.
Speaker Change: Hey, Jason from Donna you have Matt <unk> on for Stephen Great results this quarter and thank you for taking my questions.
Speaker Change: Your optimism about being able to open new schools in new states changed at all especially with the president pushing for Universal School choice, just curious how youre thinking about that.
Speaker Change: Yeah. So.
Speaker Change: Again.
Speaker Change: Try and keep us focused.
Speaker Change: Either way you heard it for years ago eight years ago now.
Speaker Change: Sure.
Speaker Change: Trying not to be too.
Speaker Change: Way in how we run the business either way.
Speaker Change: Given changes in administration predominantly.
Speaker Change: State level of it.
Speaker Change: And for Us.
Speaker Change: I do think that the general tone and tenor of this current administration.
Speaker Change: <unk> supports.
Speaker Change: School choice and the types of programs that we run.
Speaker Change: I think broadly speaking.
Speaker Change: Yes.
Speaker Change: And can be a positive halo effect on our business.
Speaker Change: I don't see that the administration is going to specifically advocate for us are our programs in any given state.
Speaker Change: And.
Speaker Change: I don't know that it will have a tailwind in opening new programs or state to the extent that there is a tailwind from it we will absolutely try to take advantage of that tailwind.
Speaker Change: I, just don't know that I see that materializing right now so I don't want anybody to disease.
Speaker Change: And by the way I hope.
Speaker Change: In whatever period of time in the future.
Speaker Change: Yes.
Speaker Change: Different type of administration.
Speaker Change: People understand the flip side of his commentary which is.
Speaker Change: We believe this is in the state.
Speaker Change: Historically predominantly had been a state run business and we respect.
Speaker Change: The state's views and way to Dana as businesses.
Speaker Change: Current administration also does.
Speaker Change: And we're supportive of that so.
Speaker Change: <unk>.
Speaker Change: And I think I think above and beyond that by the way. My understanding is is that the current administration is also looking for other ways to again help students.
Speaker Change: And to me that's positive for the country.
Speaker Change: To me the commentary from my view.
Speaker Change: <unk>.
Speaker Change: If the government here to step in and try to help students.
Speaker Change: From their vantage point, that's a good thing.
Speaker Change: Our business are not almost secondary at this point, we're focused on running our business well without condition for again.
Speaker Change: Got it that's a helpful explanation James Thank you for that and then I wanted to ask one on career learning I think you've talked about your desire to build out pilot programs for skilled trades like plumbers HVAC repair. So can you talk a little bit more about that and what that opportunity could look like.
Speaker Change: Yes, so we have got a couple of tests already actually.
Speaker Change: I think the early indications of the test.
Speaker Change: That.
Speaker Change: We still have a lot to learn.
Speaker Change: Clearly and you can see this in other public comps out there.
Speaker Change: Overall demand.
Speaker Change: For skilled trades appears to be growing.
Speaker Change: I think thats a good thing I think the country needs. It I think that there is just phenomenal.
Speaker Change: Domino career trajectory for a lot of people without having to incur college debt.
To earn very very.
Speaker Change: Lucrative living doing skilled trades.
Speaker Change: We continue to think Thats opportunity for US I think we've got to figure out where we can effectively play in that space.
Speaker Change: We're going to continue to exploit but we want to be.
Speaker Change: We want to proceed cautiously about how we explore it because.
Speaker Change: Last thing we want is to.
Speaker Change: Make big bets on something that materialized for us because we have tested a properly so.
Speaker Change: And I don't think that the trend is going away tomorrow.
Speaker Change: It is time for us.
Speaker Change: Figured out.
Speaker Change: Ed.
Speaker Change: Explorer space so.
Speaker Change: But yes, we have we have already begun and the testing of it and I think we follow up.
Speaker Change: Okay. It sounds good and then lastly, just wanted to quickly confirm are there any schools that are currently getting close to hitting enrollment caps, especially in light of the strong enrollment growth in the recent quarters.
Speaker Change: Well, we're always dealing with program to have enrollment cap actually like that.
Speaker Change: Not a new thing.
Speaker Change: The good news is that in most of the programs.
Speaker Change: The enrollment caps are generally not long term fixed.
Speaker Change: So there are two flavors of enrollment cap generally speaking one is I'll say a government imposed stay.
Speaker Change: Post enrollment cap and a certain state for certain programs and the other is I'll say sort of a partner imposed cap.
Speaker Change: One of our partners for whatever good reason they have.
Speaker Change: And in both of those cases over time generally speaking there is a conversation to be had to raise the capital necessary.
Speaker Change: <unk> have been reasonably successful.
Speaker Change: And raising cash.
Speaker Change: When the demand warrants it.
Speaker Change: If there is an excessive amount of demand for our program.
Speaker Change: We go with the data to wherever whichever counterparty.
Speaker Change: It is and we show them the data that suggests that there is strong demand.
Speaker Change: Unmet.
Speaker Change: Where there is need and we usually go with the sort of the story if you will.
Speaker Change: These are usually families that don't have other alternatives for one reason or another very valid alternatives.
Speaker Change: Reading to not have all of our alternatives.
Speaker Change: And and we want to just wanted to get a fair statement.
Speaker Change: Where students in states arent being served through another mechanism and we may be the only mechanism through which they can be served.
Speaker Change: We think it's justified to raise cash.
Speaker Change: Fairly successful in our history.
Speaker Change: Therefore, you are having those conversations with our partners on the state government agencies to do that for the benefit of students.
Speaker Change: Great. Thank you team appreciate the time.
Speaker Change: And that does conclude our question and answer session and that also concludes our conference for today, we would like to thank you all for your participation you may now disconnect.
Speaker Change: [music].