Q3 2025 Stride Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by my name is Abby and I'll be your conference operator today.
Abby: My name is Abby, and I will be your conference operator today.
Abby: At this time, I would like to welcome everyone to the Stride Incorporated third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise.
At this time I would like to welcome everyone to the stride incorporated third quarter 2025 earnings Conference call.
All lines have been placed on mute to prevent any background noise.
Abby: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time simply press. The star key followed by the number one on your telephone keypad.
If you would like to withdraw your question Press Star one a second time.
Tim Casey: And I would now like to turn the conference over to Tim Casey, Vice President of Investor Relations. You may begin. Thank you and good afternoon.
Speaker Change: Thank you and I would now like to turn the conference over to Tim Casey Vice President of Investor Relations you may begin.
Tim Casey: Thank you and good afternoon, welcome to <unk> third quarter earnings call for fiscal year 2025.
Tim Casey: Welcome to Stride's third quarter earnings call for fiscal year 2025. With me on today's call are James Rhyu, Chief Executive Officer, and Donna Blackman, Chief Financial Officer. As a reminder, today's conference call and webcasts are accompanied by a presentation that can be found on the Stride Investor Relations website. Please be advised that today's 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 and can also be found on our investor relations website.
Speaker Change: With me on today's call are James <unk>, Chief Executive Officer, David Blackman, Chief Financial Officer.
Speaker Change: As a reminder, today's conference call and webcast are accompanied by a presentation that can be found on the <unk> Investor Relations website.
Speaker Change: 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.
Tim Casey: In addition to historical information, this call will also involve forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to several important factors as described in the company's earnings release and latest SEC filing. 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 statement.
Speaker Change: In addition to historical information. This call will 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 earnings release and latest SEC filings.
These statements are made on the basis of our views and assumptions regarding future events and business performance at the time, we make them and the company assumes no obligation to update any forward looking statements.
Tim Casey: Following our prepared remarks, we will answer any questions you may have.
Speaker Change: All of our prepared remarks, we will answer any questions you may have.
James Rhyu: Now, I'll turn the call over to James. James? Thanks, Tim, and good afternoon, everyone. Well, another solid quarter as demand continues to outpace last year. I mentioned last quarter that the macro environment remains favorable, and some recent polling supports our thesis. A survey of parents compiled by the National School Choice Awareness Foundation earlier this year found that more than 60% of parents considered sending at least one of their children to a different school last year. and those 27% consider sending their child to a full-time online program. meaning over 15% of all families are considering a full-time online program.
James Fish: Now I'll turn the call over to James fish.
James Fish: Thanks, Ken and good afternoon, everyone.
Speaker Change: Well another solid quarter as demand continues to outpace last year.
Speaker Change: I mentioned last quarter that the macro environment remains favorable and some recent polling supports our thesis.
Speaker Change: Our survey of parents compiled by the National School Choice awareness Foundation earlier this year found that more than 60% of parents considered sending at least one of their children at a different school last year.
Speaker Change: And those 27% considered sending their child to a full time online program.
Speaker Change: Meaning over 15% of all families are considering a full time online program.
James Rhyu: And that is a much higher level than we saw just a few years ago. Also, a February Gallup poll indicated that less than a quarter of Americans are satisfied with public education. Now that's the lowest level since the survey began in 2001. and nearly 90% of parents are interested in non-college degree pathways, meaning a focus on career education.
Speaker Change: And that is a much higher level than we saw just a few years ago.
Speaker Change: Also our February Gallup poll indicated less than a quarter of Americans are satisfied with public education.
Speaker Change: That's the lowest level since the survey began in 2001.
Speaker Change: And nearly 90% of parents are interested in non college degree pathways, meaning a focus on career education.
James Rhyu: All of this bodes well for our future prospects.
Speaker Change: All of this bodes well for our future prospects.
James Rhyu: Now this is the time of year we are trying to both finish the year strong and gear up for the fall. If we continue to execute and given the macro trends we're seeing, that should position us for continued strong growth heading into next fall. We also need to look past this fall, while we celebrate our 25th anniversary this year. We need to ensure we build an enduring business for the next 25 years. I believe we can continue to change the future of education by leveraging our core capabilities to deliver innovative, outcomes-driven solutions to the 50 million plus students across the country.
Speaker Change: Now this is the time of year, we're trying to finish the year strong and gear up for the fall.
Speaker Change: We continue to execute and given the macro trends we're seeing.
Speaker Change: That should position us for continued strong growth heading into next fall.
We also need to look pass this fall, while we celebrate our 20 <unk> anniversary this year.
Speaker Change: We need to ensure we build an enduring business for the next 25 years.
Speaker Change: I believe we can continue to change the future of education by leveraging our core capabilities to deliver innovative outcomes driven solutions.
Speaker Change: Million plus students across the country.
James Rhyu: Parents remain dissatisfied with the current state of education, and we are in a position to give schools, administrators, teachers, and students the tools to redefine the system and set ourselves up as leaders for the next 25 years. In the near term, the trends we see in market demand, in-year enrollment, and retention set us up for another strong start to the fall season. For context, since January 1, demand, as measured by in-year application volumes, has grown in each of the past four years. This year, application volumes are almost twice what they were two years ago and four times what they were four years ago.
Speaker Change: Paris remain dissatisfied with current state of education.
Speaker Change: We are in a position to give schools administrators teachers and students the tools to redefine the system and set ourselves up as leaders for the next 25 years.
Speaker Change: In the near term the trends, we see in market demand in year enrollment and retention set us up for another strong start to the fall season.
Speaker Change: For context since January one demand as measured in your application volumes has grown each of the past four years.
Speaker Change: This year application volumes are almost twice what they were two years ago and four times, what they were four years ago.
James Rhyu: This is during a time when we have some constraints to the number of new enrollments we can add, as some schools have closed enrollment for the school year. I've been pleasantly surprised by this ongoing trend, and it supports our thesis that demand for our products and services continues to strengthen. So once again, we expect to finish the year with more enrollments than we started. We still have a lot of work to do before the next school year begins, but we feel confident in our ability to continue to grow enrollments in fiscal year 2020.
Speaker Change: This is during a time when we have some constraints to the number of new enrollments. We can add as some schools have closed enrollment for the school year.
Speaker Change: I've been pleasantly surprised by this ongoing trend and it supports our thesis that demand for our products and services continues to strengthen.
Speaker Change: So once again, we expect to finish the year with more enrollments than we started.
Speaker Change: We still have a lot of work to do before the next school year begins but we felt confident in our ability to continue to grow enrollments in fiscal year 'twenty six.
Donna Blackman: Thank you, and now I'll turn the call over to Donna. Donna? Thanks, James, and good afternoon. As James mentioned, we continue to see strong in-year demand in QC. We finished the quarter with enrollment up over 21% from last year, and we believe this has set us up to once again finish the fiscal year with more enrollments than we started for the third year in a row. The market conditions, including demand for full-time online programs, coupled with our continued strong execution, give us confidence to again raise out FY25 revenue and adjusted operating income guidance. For the full year, the implied growth rates, both revenue and profitability, exceed the 2028 CAGR targets we outlined during our investor day in November 2023.
Speaker Change: And now I'll turn the call over to Dr. Donna.
Donna: Thanks, and good afternoon.
James Fish: James mentioned, we continue to see strong demand in Q3.
James Fish: We finished the quarter with enrollment up over 21% from last year and we believe this has set us up to once again finished the fiscal year with more enrollments than we started.
James Fish: Third year in a row.
James Fish: And market conditions, including demand for full time online programs, coupled with our continued strong execution give us confidence to again raise our FY 'twenty revenue and adjusted operating income guidance for the full here the implied growth rates, both revenue and profitability exceeding the 2028 <unk>.
James Fish: We outlined during our Investor day in November 2023.
Donna Blackman: Our AOI guidance for this year suggests we will be well ahead of the low end of our FY28 AOI targets three years early. For our Q3 results, total revenue was $613.4 million, up 17.8%. Revenue from our career learning, middle, and high school programs grew to $223.9 million, up 33%. This strength was driven by enrollment growth of 34% to 98.7 thousand enrollments. General education revenue was $370.8 million, up 13% from last year, which was also driven by continued enrollment growth in the quarter. Average enrollments were up 14% from last year to 141.5 thousand. Total revenue per enrollment across both lines of revenue was $2,415 compared to $2,420 last year.
James Fish: Our guidance for this year suggests we will be well ahead of the low end of our FY 'twenty eight.
James Fish: Target three years early.
James Fish: For our Q3 results total revenue was $613 4 million up 17, 8%.
James Fish: Revenue from our career learning Middle and high school programs grew to $223 9 billion up 33%.
James Fish: This strength was driven by enrollment growth of 34% to 98 7000 enrollments.
James Fish: General Education revenue was $378 million up 13% from last year.
James Fish: This was also driven by continued enrollment growth in the quarter.
James Fish: Average enrollments were up 14% from last year to 141 5000.
James Fish: Hello revenue per enrollment across both lines of revenue was $2415 compared to 2420 last year.
Donna Blackman: And as we've discussed over the last two quarters, the cause of the slight decline is the impact of state mix from in-year enrollments as we otherwise continue to see a largely positive funding environment. Given the results this quarter, we now expect to finish the year down less than 1% in revenue per annum.
James Fish: As we've discussed over the last few quarters the car to the slight decline is the impact of state mix from Asia enrollment have you otherwise continue to see a largely fund.
James Fish: Funding environment.
James Fish: Given the result, this quarter, we now expect to finish the year down less than 1% and revenue per load on that.
Donna Blackman: While I know this is a quarter we received lots of questions about next year and we remind you that it's very early in the season, I do want to give a little insight into what we are seeing for the funding environment for FY26. Recognizing it's still very early in the process of states setting their budgets, we are seeing a generally favorable funding environment going into the And as states finalize their budgets over the next few months, I'll be able to give more color during our fourth quarter earnings call. Additionally, I know there's lots of discussion about federal funding and the impact that could have on Stride.
James Fish: Well I know this is the quarter, we received lots of questions about next year and we remind you that it's very early in the season do you want to give a little insight until what we are seeing.
James Fish: Funding environment for FY 'twenty six.
James Fish: Recognizing it's still very early in the process of state setting their budgets, we are seeing a generally favorable funding environment going into next year.
James Fish: And as states finalize the budgets over the next few months I'll be able to give more color during our fourth quarter earnings call.
James Fish: Additionally, I know theres lots of discussion about federal funding and the impact that could have on strike.
Donna Blackman: I want to reiterate what we said last week. Well, less than 5% of our overall revenues come from federal sources.
James Fish: Want to reiterate what we said last quarter.
James Fish: Less than 5% of our overall revenues come from federal sources.
Donna Blackman: Now to wrap up the remaining highlights for the third quarter. Gross margins were 40.6%. of 190 basis points from last year. Given the strength through the first three quarters, we expect to see gross margin improve around 200 basis points for the full year. Selling general and administrative expenses increased 5% to $118.5 million. And as I mentioned previously, we expected some increase in the back half of the year. We still expect to finish the year up slightly compared to FY24. Stock-based compensation was $8.5 million, and we expect to finish the year with stock-based compensation in the range of $34 to $37 million.
James Fish: Now to wrap up the remaining highlights for the third quarter.
James Fish: Gross margins were 46%.
James Fish: 190 basis points from last year.
Given the strength through the first three quarters, we expect to see gross margin improve around 200 basis points for the full year.
James Fish: Selling general and administrative expenses increased 5% to $118 $5 million.
James Fish: And as I've mentioned previously we expected some increase in the back half of the year, we still expect to finish the year up slightly compared to FY 'twenty four.
James Fish: Stock based compensation was $8 5 million.
James Fish: Back to finish the year with stock based compensation in the range of $34 million to $37 million.
Donna Blackman: Adjusted operating income was $141.7 million, up 47%. Adjusted EBITDA was $168.3 million, up 40%. Both metrics are quality records for the company. Satellite earnings per share for the quarter were $2.02. Our EPS calculation now includes incremental shares related to our convertible notes on an as-if converted basis for GAP reporting. Our quarterly investor presentation includes a slide that shows the potential dilution from our convertible note at various share prices, as well as the offset from the cap call transaction we completed at the time of the note issuer. And starting next quarter, in addition to the investor presentation, we plan to introduce an adjusted earnings per share calculation in our earnings material to give investors a picture of the underlying EPS growth in the business.
James Fish: Adjusted operating income was $141 7 billion up 47%.
James Fish: Adjusted EBITDA was $168 3 million up 40%.
James Fish: Both metrics well he records for the company.
James Fish: Diluted earnings per share for the quarter were $2 <unk>.
James Fish: Our EPS calculation now includes incremental shares related to our convertible notes as if converted basis for GAAP reporting purposes.
James Fish: Quarterly Investor presentation includes a slide that showed the potential dilution from our convertible note at various prices as well.
James Fish: The offset from the cap call transaction, we completed.
James Fish: The note issuance.
James Fish: And starting next quarter. In addition to the Investor presentation, we plan to introduce an adjusted earnings per share calculation in our earnings materials to give investors a picture of the underlying EPS growth in the business.
Donna Blackman: Capital expenditures for the quarter were $15.8 million, down slightly from $16.3 million. Free cash flow, defined as cash from operations, less CapEx, was $37.3 million, down from $52.2 million. due to the timing of cash receipts. As with last year, we expect fourth quarter free cash flow to be up significantly.
James Fish: Capital expenditures for the quarter were $15 8 million down slightly from $16 $3 million.
James Fish: Free cash flow defined as cash from operations less Capex was $37 3 million.
James Fish: Down from $52 2 million.
James Fish: Due to the timing of cash receipts.
James Fish: Look last year, we expect fourth quarter free cash flow to be up significantly.
Donna Blackman: Given the continued strength of in-year enrollments and the margin improvements, we are raising our full-year revenue and AOI guidance, and we now expect revenue in the range of $2.370 to $2.385 billion, up from $2.320 to $2.355 billion last quarter. Adjusted operating income between $455 and $465 million, up from $430 and $450 million last quarter. Capital expenditures between $60 and $65 million unchanged from last quarter and an effective tax rate between 24% and 26% also unchanged from last quarter.
James Fish: Given the continued strength of enrollments and the margin improvements we are raising our full year revenue guidance and we now expect.
James Fish: Revenue in the range of 2.37 to $2 38 5 billion upfront.
James Fish: Two three to two.
James Fish: 235, 5 billion last quarter.
James Fish: Adjusted operating income between 455, and $465 million up from 430 and $450 million last quarter.
Capital expenditures between 60 and $65 million unchanged from last quarter.
James Fish: And an effective tax rate between 24, 6%.
James Fish: So unchanged from last quarter.
Operator: Thank you so much for your time this afternoon, and now I will turn it over to the operator for Q&A. Operator? Thank you, and we will now begin the question and answer session. 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, press star 1 a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Thank you so much for your time this afternoon and now I will turn it over to the operator for Q&A.
James Fish: Operator.
James Fish: Yeah.
James Fish: Thank you.
Speaker Change: And we will now begin the question and answer session.
Speaker Change: 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.
Speaker Change: If you would like to withdraw your question Press Star one a second time.
Speaker Change: If you are called upon to ask your question and our listening via Speakerphone on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Operator: Again, it is star one to join the queue.
Speaker Change: Again, it is star one to join the queue.
Jason Tilchen: And our first question comes from the line of Jason Tilchen with Canaccord Genuity. Your line is open. Great. Good afternoon. Thanks for taking my question. I guess the first thing I'm curious about, you continue to see really strong enrollment growth from the Career Learning Program, and I think you talked about last quarter. That's largely coming from the same application funnel as general education, but that over time you're going to work towards opening up that sort of second funnel. sort of directly related to career learning.
Speaker Change: Okay.
Speaker Change: And our first question comes from the line of Jason Tilton with Canaccord Genuity. Your line is open.
Jason Tilton: Great. Good afternoon, Thanks for taking my question.
Jason Tilton: I guess the first thing I'm curious about you continue to see really strong enrollment growth from the career learning program and I think you talked about last quarter, that's largely coming from the same application funnel is just general education, but that over time.
Jason Tilton: To work towards opening up that sort of second funnel with sort of directly.
James Rhyu: I'm wondering if you could talk a bit more about some of the steps you're taking in that area, some of the progress that's being made, and sort of what's the timeline we could really expect to start to see that standalone funnel really start to contribute to overall. Yeah, um...
Jason Tilton: Related to career learning I'm wondering if you could talk a bit more about some of the steps we're taking in that area. Some of the progress that's being made and sort of what the timeline, we could realistically expect to start to see that standalone funnel really start to contribute to overall revenue growth.
Jason Tilton: Yes.
James Rhyu: So I think, Jason, the unfortunate truth of it is that, and I think this, I've been saying this now for a number of years, not quarters, is that we just, we haven't cracked the code on it yet. We keep running a bunch of tests around it. I think this year we ran a number of tests where we saw maybe a little bit more promise. But... Everything outside of the tests we're running point to this being an attractive market force and a good opportunity for us. And if you look more broadly at the market, and see the activity that whether it's, you know, corporate enterprises are having.
Jason Tilton: So I think Jason.
Jason Tilton: The unfortunate.
Jason Tilton: Truth of it is is that and I think <unk> been saying this now for a number of years not quarters is that we just we haven't cracked the code on it yet.
Jason Tilton: We keep running a bunch of tests around it.
Jason Tilton: I think this year, we ran a number of test set where we saw maybe a little bit more promise.
Jason Tilton:
Jason Tilton: But.
Jason Tilton: Everything everything outside of the tests, we're running point to this being.
Jason Tilton: An attractive market for us and a good opportunity for us and if you look more broadly at the market.
Jason Tilton: And see the activity that.
Jason Tilton: Whether it's corporate enterprises are having.
James Rhyu: around. direct hiring out of high school, focus on skills as opposed to degrees and things like that. We know that this is sort of an evolving market in the direction of career education for high So, probably a long way to saying that I don't think that we've yet cracked the code.
Jason Tilton: Around.
Jason Tilton: <unk>.
Jason Tilton: Direct.
Jason Tilton: Hiring out of high school.
Jason Tilton: Focus on skills as opposed to degrees and things like that we know that this is.
Jason Tilton: Sort of an evolving market in the direction of career education for high School.
Jason Tilton: So.
Jason Tilton: Probably a long way to saying that I don't I don't think that we get correct could I don't know if theres a timing, yes, I think we're making incremental progress it's not as good as I would have hoped.
James Rhyu: I don't know if there's a timing yet. I think we're making incremental progress. It's not as good as I would have hoped. And that's on.
Jason Tilton: And that's on us.
Jason Tilton: Yeah.
Speaker Change: Okay, Great really helpful overview, there and then one other question I'm curious about some of the efforts you guys are making to improve socialization opportunities for students that are in sort of full time online programs or anything you can share there about some of the some of the steps you've taken there to help sort of create a more similar experience to the sort of traditional in person socialization opportunities.
James Rhyu: And then one other question, I'm curious about some of the efforts you guys are making to improve socialization opportunities for students that are in sort of full-time online programs. Anything you can share there about some of the steps you've taken there to help sort of create a more similar experience to the sort of traditional in-person socialization opportunities? Yeah, I mean, I think, you know, we all I think, recognize that socialization is, you know, one very significant aspect of school experience. We also, I think, recognize whether you like it or not that Kids, school-age kids these days socialize predominantly online.
Jason Tilton: Yes, I mean.
Jason Tilton: I think.
Jason Tilton: We all I think recognize.
Jason Tilton: That socialization is.
Jason Tilton: One very significant aspect of school experience.
Jason Tilton: Also I think recognize whether you like it or not.
Jason Tilton: Kids School age Kids. These days socialized predominantly online again, not a commentary on whether that's good or bad just I think the factual statement.
James Rhyu: Again, not a commentary on whether that's good or bad, just I think the factual statement. And so. um we are leaning into a number of platforms that enable. That type of socialization, one of them is we call our K-12 zone. It's a virtual. School, basically school structure, if you will, as a playground or the library and things like that. We've gotten a record this year record usage. formerly a year ago, but we had it in test even before that, and we're just seeing record numbers out of that. And so we think that that's one very, very powerful element.
Jason Tilton: And so.
Jason Tilton: We are.
Jason Tilton: Leaning into a number of platforms that enable.
Jason Tilton: That type of socialization and one of them is we call our K 12 zone, it's a virtual.
Jason Tilton: School basically school structure, if you will as a playground, our library and things like that.
Jason Tilton: We've gotten a record this year record.
Jason Tilton: Usage.
Jason Tilton: We rolled it out.
Jason Tilton: I guess, formerly a year ago.
Jason Tilton: But we had it in tests, even before that and we're just seeing record numbers out of that.
Jason Tilton: And so we think that Thats, one very very powerful element. The other thing that we're doing and we just started testing it this calendar year.
James Rhyu: The other thing that we're doing, and we just started testing it this calendar year, which is actually counter to the online engagement model, is we're rolling out what's essentially Pods, meaning we are rolling out the ability for families that live geographically close to each other. that have similar school-age kids in the program. to do meetups and things like that with the kids. And it just so happens that I spoke to a. a family that was unbelievably grateful that they were going to get the opportunity to do both. of those. both the online and the in-person, I think the families recognize that there's a reality about sort of just online socialization that's important, but also just the opportunity to being from an online school to have a chance to meet up with kids in person.
Jason Tilton: Which is actually counter to the online engagement model is we are rolling out was essentially geographic.
Speaker Change: Uh huh.
Jason Tilton: Pods meeting.
Speaker Change: We are.
Speaker Change: Rolling out the ability for families that live geographically close to each other.
Speaker Change: That have similar school age kids in the program.
Speaker Change: Two.
Speaker Change: To do meet ups and things like that with the kids.
Speaker Change: It just so happens that I.
Speaker Change: Spoke to.
Speaker Change: Our family that.
Speaker Change: Yes.
Speaker Change: Believably grateful that.
Speaker Change: They were going to get the opportunity to do both.
Speaker Change: Of those.
Speaker Change: Activities, both online and in person I think the families recognize that there is a reality about sort of just online socialization that's important.
Speaker Change: But also just the opportunity to being from an online school to have a chat.
Speaker Change: Chance to meet up with with kids in person we were just this past weekend.
James Rhyu: We were just this past weekend at an event for one of our amazing kids in Florida. His name's Carter Bonas, and he's an incredible golfer. He had a golf tournament, and they did a meet-up party, meet-up pizza party with mini-golf the night before, and some of the families there had said that it was, you know, one of the most exciting things that their kids do is to do these in-person meet-ups. So we're just, you know, there's a lot of different angles that we can approach to improve our ability to enable socialization, and we're going to continue investing behind that.
Speaker Change: At an event for one of our one of our Amazing Kids in Florida is named <unk> bonus.
Speaker Change: He is an incredible golfer hit a golf tournament.
Speaker Change: They did meet up party Pizza party with mini golf the night before and some of the families. There had said that it was.
Speaker Change: One of the most exciting things.
Speaker Change: There are kids do is to do these in person meet up so.
Speaker Change: We're just there's a lot of different angles that we can approach to improve our ability to enable socialization and we're going to continue investing behind that we think it's really important for the families and for the kids.
James Rhyu: We think it's really important for the families.
James Rhyu: Thanks a lot for taking my question.
Speaker Change: Great. Thanks, a lot for taking my questions.
Speaker Change: Sure.
Greg Parrish: And your next question comes from the line of Greg Parrish with Morgan Stanley. Your line is open. Hey, thanks. Good evening. Congrats on the quarter. Strong Result.
Speaker Change: Your next question comes from the line of Greg Parish with Morgan Stanley. Your line is open.
Greg Parish: Hey, Thanks, good evening, congrats on the quarter a strong result.
James Rhyu: On your marketing strategy, thinking maybe ahead for the summer, I imagine the strategy may be limited changes. I don't know if there's anything to talk through. And on the marketing spend, it's been pretty consistent over the last couple of years. Do you anticipate that number changing at all, or maybe the similar spot is the right way to think about it? Yeah, I think the approach from a marketing perspective, it is, I think, going to be pretty similar. Of course, we're always evolving. I think one of the things that from a sort of approach perspective that I think that we've been doing a good job of in the past year or two is testing a lot of different things.
Speaker Change: So in your marketing strategy thinking maybe a head for the summer I imagine the stress strategy, maybe limited changes I don't know if there's anything to talk through.
Speaker Change: And then on the marketing spend it's been pretty consistent over the last couple of years do you anticipate that number changing at all or maybe the similar spot is the right way to think about it. Thanks.
Speaker Change: Yes, I think the approach on marketing perspective it is.
Speaker Change: I think going to be pretty similar of course, we're always evolving I think.
Speaker Change: One of the things that from a sort of approach perspective.
Speaker Change: I think that we've been doing a good job of in the past year or two is is testing a lot of different things I think are sort of testing velocity has increased and so I think.
James Rhyu: I think our sort of testing velocity has increased. And so I think we're going to continue to lean into that, the ability to test a lot of different approaches, methodologies, creatives. And I think that will continue to improve. And so I think that there's actually, I think, a lot of different angles of our marketing approach that we can continue to pursue. That, you know, it goes back to the previous question around career as well, around creative and approach and social media and things like that, that, you know, local social media. I think, you know, there's just a lot of different things that we have been testing and we're gonna continue to test.
Speaker Change: We're going to continue to lean into that the ability to test a lot of different.
Speaker Change: Approaches methodologies create is.
Speaker Change: And.
Speaker Change: And I think that we will continue to improve.
Speaker Change: Improve and so I think that there is.
Speaker Change: There is actually I think a lot of different angles of our marketing approach that we can.
Speaker Change: That we can continue to pursue that if.
Speaker Change: It goes back to the previous question around career as well around creative and approach in social.
Speaker Change: Social media and things like that.
Speaker Change: Local social media I think there's just a lot of different things that we have been testing and we're going to continue to test and I think we continue to see opportunities to make improvements so.
James Rhyu: And I think we continue to see opportunities to make improvements. So I think that's gonna be consistent and that'll, you know, We'll keep double downing on that through the summer.
Speaker Change: I think thats going to be consistent in that.
Speaker Change: We'll just keep doubling down on that through the summer.
James Rhyu: And sorry, the other question was? Yeah. With respect to spend, I mean, as you know, we grew enrollment significantly this year without increasing our marketing spend. Our priority is really around certainly doing some more testing, optimizing media placement, SEO, testing our messaging, and improving our messaging. So we'll focus on that. And so the plan is not to spend significantly more on marketing, but to be smart about our marketing and to look for ways to be more efficient in our marketing. Okay, that's all very helpful.
Speaker Change: And sorry, the other question was yes.
Speaker Change: Dr perspective.
Speaker Change: With respect to spend.
Speaker Change: As you know we grew enrolled.
Speaker Change: Enrollment significantly this year without increasing our marketing spend.
Speaker Change: Priority is really around certainly doing some more testing optimizing our media placement.
Speaker Change: Oh testing on messaging.
Speaker Change: And improving our messaging so we'll focus on that.
Speaker Change: And so the plan is not to spend significantly more on marketing, but to be smart about our marketing and to look for ways to be more efficient in our marketing spend.
Speaker Change: Alright, that's all very helpful.
Greg Parrish: And then I'm going to talk a little bit about the changes going on at the federal level and the shakeup at the DOE and not the funding side. I think that's well covered over the last year or so. But you know, they have a very pro-choice stance, right?
Speaker Change: And then I mean, it really was.
Speaker Change: Talk a little bit about the changes going on at the federal level on the shakeup at the Doe and not the funding side I think that's it [laughter] well covered over the last year or so.
Speaker Change: But you know they have a very approachable stance right. So I mean, what are the impacts of those kind of as they sort of filter down to the states through this administration and maybe any other impacts really.
James Rhyu: So I mean, what are the impacts of those kind of as they sort of filter down to the states through this administration, and maybe any other impacts really, from the DOE and some of their some of their Yeah, I mean, I think. I think we have observed. that said before that we have a lot of confidence that this administration and the Department of Education is going to keep kids and families in focus. continue to believe that that's the case.
Speaker Change: From the Doe and some of their some of their stances.
Speaker Change: Yes, I mean I think.
Speaker Change: I think we have observed.
Speaker Change: That.
Speaker Change: I think we said we said before that.
Speaker Change: We have a lot of confidence that this administration and the department of education is going to keep kids and families.
Speaker Change: In focus.
Speaker Change: And we continue to believe that that's the case.
James Rhyu: Some of the more tactical things that they're doing, I think, have maybe a little bit more soundbite, and impact at the post-secondary level right now. But, you know, I think... Generally speaking, their general overall stance of empowering the states, which, you know, we state-level business really, reducing sort of overhead administration. We think that tends to be good. It does tend to send a message of more choice that I think this administration really brought. in the power of choice and customers for the customers. So I think that's really an important message. But, you know, I think outside of just you know, continues to monitor the things that they're advocating for and continuing to be aligned with what the administration is advocating, which I think we are.
Speaker Change: Some of the more tactical things that they're doing I think have maybe a little bit more sort of a soundbite in an impact post secondary level right now.
Speaker Change: But but I think just generally speaking.
Speaker Change: There are general overall stance of empowering the states, which.
Speaker Change: <unk>.
Speaker Change: Where state level business really.
Speaker Change: Reducing.
Speaker Change: Sort of overhead administration, if you will.
Speaker Change: We think that tends to be good.
Speaker Change: Hence two it does tend to send a message of more choice that I think this administration really believes in the power of choice and customers for.
Speaker Change: For the customers. So I think thats really an important message.
Speaker Change: But.
Speaker Change: I think outside of just.
Speaker Change: Continuing to monitor the things that they're they're advocating for and continuing to be aligned with what the administration is advocating which I think we are.
James Rhyu: You know, we're just very optimistic that both the federal government and the state governments are going to keep the focus on.
Speaker Change: We're just very optimistic that both the federal government and the state governments.
Speaker Change: Going to keep the focus on the kids and the students and the families.
Greg Parrish: Great, I'll pass it off.
Speaker Change: Great I'll pass it off thank you.
Jeff Silber: And your next question comes from the line of Jeff Silber with BMO Capital Markets. Thank you so much. I wanted to go back to career learning, specifically the middle high school area. Just a really, another strong quarter with growth accelerating. Can we get a little bit more color, what's driving this strong growth? Yeah, I mean I think I might actually say it the opposite way, Jeff, and I know this is going to sound. I don't know, it may sound odd, but I actually think that.
And your next question comes from the line of Jeff Silber with BMO capital markets. Your line is open.
Speaker Change: Thank you so much wanted to go back to a career learning specifically the middle High School area.
Speaker Change: I really another strong quarter with growth accelerating can we get a little bit more color, what's driving the strong growth.
Speaker Change: Yes, I think.
Speaker Change: I might actually save the opposite way, Jeff and I know this is going to sound.
Speaker Change: I don't know it may sound odd but.
Speaker Change: I actually think that.
James Rhyu: I look at it as instead of the fact that our growth is higher in middle and high school, I actually think we're missing some opportunities in the lower. I think the robust strength in middle and high school, we've seen that there for a while. I think that our types of programs directly address a lot of the needs that we're seeing in those grade levels. You know, we see a lot of the parent satisfaction surveys and things like that in those grade levels, you know, where, you know, there, for a lot of different reasons, the local either districts or the states or the way the state programs run or, you know, whether it's, you know, the lack of certain academic elements or restrictions around certain academic elements or things like that.
Speaker Change: I look at it is instead of the fact that our growth is higher in middle and high school.
Speaker Change: Do you think we're missing some opportunities in the lower grades.
Speaker Change: I think the robust strength in middle and high school and we've seen that there for a while.
Speaker Change: I think that our types of programs directly address a lot of the needs that we're seeing in those grade levels.
Speaker Change: We see a lot of the parents' satisfaction surveys and things like that and those grade levels.
Speaker Change: Where.
Speaker Change: For a lot of different reasons.
Speaker Change: The local either districts or the states state the way the state programs, Ron or whether it's.
Speaker Change: The lack of.
Speaker Change: Certain.
Speaker Change: Academic elements or.
Speaker Change: <unk> around certain academic elements or things like that just it just opens up for those grade levels a lot of.
James Rhyu: It just opens up for those grade levels a lot of parental desire to look at alternatives.
Speaker Change: Parental desire to look at alternatives.
James Rhyu: But I think it similarly applies in the lower grade levels, and we haven't been as effective in communicating that message, you know, in the lower grade levels. Because, you know, I'll tell you, you know, one thing that we know across the country is specifically third-grading reading scores are really subpar. And one of the messages that we're really going to promote here to sort of have the lower grades quote-unquote catch up to the upper grades in terms of the awareness and growth is we're going to really lean into some sort of high-dosage tutoring in the lowest grades, specifically around because we think it's that important, and we're going to make some pretty significant investments in that arena.
Speaker Change: But I think similarly applies in the lower grade levels and and.
Speaker Change: And we haven't been as effective in communicating that message.
Speaker Change: The lower grade levels, because I'll tell you.
Speaker Change: One thing that we know.
Speaker Change: Cross the country.
Speaker Change: Is.
Speaker Change: Reading scores, specifically third rating risk scores are really sub par and one of the message that we're really going to promote here to sort of have the lower rates catch up to the upper grades in terms of.
Speaker Change: The awareness and growth is.
Speaker Change: We're going to really lean into some.
Speaker Change: Sort of high dosage tutoring in the lowest grade specifically around reading.
Speaker Change: Because we think it's that important and we're going to make some pretty significant investments in that in that arena.
James Rhyu: We've launched our tutoring platform a couple years ago. It's running really well, and we think we can apply some of that into the lowest grades for a lot of programs and really accelerate learning in the lowest grades. And I think that may be a message that's going to resonate as well with some families. So I think, to me, it's more of a challenge of improving the lower grades as opposed to why are the upper grades outperform. Okay, fair enough.
Speaker Change: We've launched our tutoring platform a couple of years ago is running really well and we think we can apply some of that into the lowest grades for a lot of the programs.
Speaker Change: And really accelerate learning and the lowest grades and I think that may be a message that is going to resonate as well with some family. So I think to me it's more of a challenge of improving the lower grades as opposed to why are the upper grades.
Speaker Change: Outperformed the lower grades.
Speaker Change: Okay fair enough.
James Rhyu: Shifting gears a bit, I think in your prepared remarks, talked about some constraints. I don't know if it was some schools that have closed enrollment or some states that have closed enrollment.
Speaker Change: Shifting gears a bit I think in your prepared remarks, you talked about some constraints with some schools that have closed enrollment are some states that have closed enrollment.
James Rhyu: Is that in both general education and career learning in any specific color would be great. Thank you. Yeah. It's a great question. And yes, it is in both. I think, as I mentioned in my remarks, the demand side of this equation has just really continued to grow in ways that I think are unexpected, at least to me, in a time of year that usually isn't the strongest part of the year. And just by the nature of either the policy or the school or the partner or whatever, sometimes we close up the enrollment windows. And this is, by the way, it's not new, but just those enrollment windows close up often during this quarter.
Speaker Change: Is that in both Jan and.
Speaker Change: And career learning in any specific color would be great. Thank yes, yes, great question and yes. It is in both.
Speaker Change: We.
Speaker Change: I think as I mentioned in my remarks like the demand side of this equation has just really continue to grow in ways that I think are unexpected at least to me.
Speaker Change: In a time of year that usually isn't the strongest part of the year.
Speaker Change: And.
Speaker Change: And we've just just by the nature of the policy or the school or the partner or whatever.
Speaker Change: Sometimes we close up the enrollment windows and this is by the way it's not new.
Speaker Change: But just those enrollment windows close up often during this quarter and so as demand continues to spike the ability to meet that man actually.
James Rhyu: And so as demand continues to spike, the ability to meet that man actually stays somewhat contained. And so that's just really a phenomenon that's always happened. We just haven't really had to deal with it as much in previous years because we haven't seen such a spike in demand. So it hasn't been as sort of acute as it has been this year. So it's really been. A really a demand side issue more than any change in like enrollment windows or caps or anything like that. That's really always been.
Speaker Change: So somewhat contained and so.
Speaker Change: So that's just really a phenomenon thats always happen, we just haven't really had to deal with it as much in previous years, because we haven't seen.
Speaker Change: Such a spike in demand so it hasnt been as sort of acute as it is has been this year. So it's really been.
Speaker Change: Oh really.
Speaker Change: A demand side issue more than any change in like enrollment windows or caps or anything like that that's really always been there.
Operator: Okay, thanks so much. And as a reminder, it is star one if you would like to ask a question.
Speaker Change: Okay. Thanks, so much.
Speaker Change: And as a reminder, it is star one if you would like to ask a question.
Stephen Sheldon: And your next question comes from the line of Stephen Sheldon with William Blair. Hi, team. You have Pat McIlwee on today. So, James, you've talked about this a bit, but in the past, you've said that uncertainty and chaos have historically benefited Stride.
Speaker Change: And your next question comes from the line of Stephen Sheldon with William Blair. Your line is open.
Speaker Change: Hi team Pat Mcinally on today.
Speaker Change: So James you've talked about this a bit but in the past you've said that uncertainty and chaos of historically benefited stride.
James Rhyu: I understand that K-12 isn't necessarily within the crosshairs of recent trade policies or geopolitical tensions, but do you get the sense any of the traction you've been seeing has been supported by these uncertain times, or do you think this demand is more so a factor of you reaching scale and, you know, word-of-mouth referral kind of beginning to flywheel? Yeah, it's a great question. I think it's actually both. I do think that, you know, uncertainty, I think broad macro uncertainty is probably less the issue. And, you know, we've just seen just uncertainty and volatility, whether it's, you know, gun violence, certainly.
Speaker Change: Understand the K through 12 isn't necessarily but within the crosshairs of recent trade policies or geopolitical tensions, but do you get the sense any of the traction you've been seeing has been supported by these uncertain times or do you think this demand is more so.
Speaker Change: A factor of you reaching scale and.
Speaker Change: Word of mouth referral kind of beginning to flywheel.
Speaker Change: Yeah. It's a great question I think it's actually both.
Speaker Change: I do think that.
Speaker Change: Uncertainty I think broad macro uncertainty is probably less the issue.
Speaker Change: And we've just seen uncertainty and volatility whether it's.
Speaker Change: Gun violence certainly.
James Rhyu: has precipitated, I think, a lot of interest in our programs, uncertainty at the district level, and volatility in sort of how certain districts may be administering programs or whatever, you know, has benefited our programs, I think. Some of the larger sort of geopolitical, you know, things like tariffs and things like that, I don't think we see that as having as direct a correlation with demand. In fact, I could say, like, in the data that I've seen, we have not direct correlation between, you know, The past few weeks spikes in, you know, policies of tariffs or things like that, you know, spiking demand.
Speaker Change: Has precipitated I think a lot of interest in our programs.
Speaker Change: Uncertainty at the district level.
Speaker Change: And volatility in sort of how certain districts may be administering.
Programs or whatever.
Speaker Change: As benefited our programs I think.
Speaker Change: Some of the larger sort of geopolitical things like tariffs and things like that I don't think we see that as having as direct a correlation.
Speaker Change: With demand in fact.
Speaker Change: I can say like the data that I've seen there we have not seen.
Speaker Change: Direct correlation between.
Speaker Change: The past few weeks spikes in.
Speaker Change: Policies of tariffs or things like that.
James Rhyu: So I don't think it's that type of uncertainty, but certainly the uncertainty that happens at the district level and certainty that happens around school safety, uncertainty that happens around school policy. Those types of things, I think, do have a positive impact. And I think your last comment there around the flywheel, we do see that I think that the... more scale that we get and the high customer satisfaction scores that we receive does create a lot of referral business. And so, you know, we see that you know, sort of just directionally, you know, the referral numbers are strong, cost of acquisition is good, you know, things that sort of indicate towards referral also, those things tend to look good as well.
Speaker Change: Spiking demand. So I don't think it's that type of uncertainty, but certainly the uncertainty that happens at the district level of uncertainty that happens around school safety uncertainty.
Speaker Change: That happens around school policy.
Speaker Change: Those types of things I think to have a positive impact and I think your last comment there around the flywheel, we do see that I think that the.
Speaker Change: The more scale that we get and the high customer satisfaction scores that we've received does create a lot of referral business and so.
Speaker Change: We see that.
Speaker Change: Sort of just directionally.
The referral numbers.
Speaker Change: Our strong cost of acquisition is good things that sort of indicate towards referral also those things tend to look good as well.
James Rhyu: Right. Okay. All very helpful. Thank you.
Speaker Change: Right. Okay. All very helpful. Thank you.
Donna Blackman: And Donna, on the gross margins, once again, above 40% this quarter, you know, you're already pacing ahead of your margin targets for the year. So my question really is just how much more room for expansion do you think you have in that line over time?
Speaker Change: Donna on the gross margins once again above 40% this quarter.
Speaker Change: Youre already pacing ahead of your margin targets for the year. So my question really is just how much more room for expense expansion do you think you have in that line over time.
Donna Blackman: And What are the primary lovers? think about driving that expansion over the next few years. Look, I think we will continue to see good flow through in the business. I think the efficiency efforts that I started to talk about two years ago, maintaining those efficiency efforts. That's bearing out well for us. We'll continue to do that. I think we'll continue that into the future. I wouldn't expect to have gross margins be significantly higher than they are now. We're not coming up, even though we are at the high end of our targets for 2028, I'm not changing our overall targets for our gross margins.
Speaker Change: What are the primary levers as you think about driving that expansion over the next few years.
Speaker Change: Okay.
Speaker Change: Think we will.
Speaker Change: We're continuing to see good flow through in the business I think the efficiency efforts that I.
Speaker Change: Starting to talk about two years ago, maintaining those efficiency efforts.
Speaker Change: They are not well for us we will continue to do that.
Speaker Change: I think we'll continue that and to continue that into the future.
Speaker Change: I wouldn't expect to have gross margins to be significantly higher than they are now we're not coming off even though we are at the high end of our targets for 2028, I'm not changing our overall targets for our gross margins. We will continue though however, see strong flow through as the business.
Donna Blackman: We will continue, though, however, to see strong flow through as the business grows and expands and we are continuing to maintain those efficiency efforts that we put into place over the past.
Speaker Change: As it grows and expands and we are continuing to maintain those efficiency efforts that we put into place over the past couple of years.
Donna Blackman: I also want to say that as much as those efforts are ongoing, we continue to look at ways to reinvest. for the programs. So, I mean, I mentioned earlier the investment we'll make in tutoring. So, there is a balance that we try to strike. You know, not always are those investments, you know, gross margin impacting, but, you know, sort of in aggregate dollars, we're investing more today in the business, in new tools, investing in our teachers than we've ever done before. So, you know, so I think there's a balance there that, you know, we need to keep investing for the longevity of the business as.
Speaker Change: I also wanted to say that.
Speaker Change: As much as those efforts are ongoing we continue to look at ways to reinvest.
Speaker Change: For the.
Speaker Change: The programs. So I mentioned earlier the investment we're making tutoring. So there is a balance that we try to strike.
Speaker Change: Not always are those investments gross margin impacting but sort of in aggregate dollars.
Speaker Change: We're investing more today.
Speaker Change: In the business.
Speaker Change: In.
Speaker Change: New tools investing and our teachers than we've ever done before so.
Speaker Change: So I think there is a balance there.
Speaker Change: We need to keep investing for the longevity of the business.
Speaker Change: As the sort of the market dynamics evolve technologies evolve we want to keep investing in new technologies. So there is a big investment piece of it that sort of gets maybe a little bit masked by how sort of other parts of the business. We've run efficiently, but there is there are a lot of investments that go into.
Donna Blackman: sort of the market dynamics evolve, technologies evolve. We want to keep investing in new technologies.
Donna Blackman: So there is a big investment piece of this that sort of gets maybe a little bit masked by how sort of other parts of the business we've run efficiently. But there are a lot of investments that go into improving our product. You know, the socialization stuff I mentioned earlier, those are all very significant investments that will grow over time as we see them work. And some of those investments are some of what I talked about, as you may recall, during our investor day to help the teachers out, to make their lives a lot easier, right?
Speaker Change: And to improving our product.
Speaker Change: The socialization stuff I mentioned earlier those are all very significant investments that will grow over time as we see them working.
Speaker Change: And some of those investments or what I talked about as you may recall during our Investor day.
Speaker Change: To help the T cells to make their lives a lot easier and take some of that administrative burden from them. So they can do the things that they love to do which is teach kids.
Donna Blackman: And take some of that administrative burden from them so they can do the things that they love to do, which is. Right. Understood.
Speaker Change: Right.
Donna Blackman: Thank you both for the thoughts.
Speaker Change: Understood. Thank you both for the thoughts.
Alex Parrish: And your next question comes from the line of Alex Parrish with Barrington Research. Your line is open. Hi, guys. Thanks for taking my questions. I essentially have two. First one for James.
Speaker Change: And your next question comes from the line of Alex Paris with Barrington Research. Your line is open.
Alex Paris: Hi, guys. Thanks for taking my questions.
Essentially have two first one for.
James Rhyu: James, would you mind repeating your comments about, you know, finishing the year with more enrollment than you started? And, you know, while early, your comments for next year, I think you said that you would expect growth. You were just kind of going fast for my pencil. So can we get that recapped? Yeah, I mean, so then this has been now a multi-year trend where we were on a trajectory, we feel pretty confident that will end the year with a higher enrollment level than we began. And, you know, you can sort of see, I mean, we reported we just reported numbers are pretty significantly higher than we started the year, right?
James Fish: James James would you mind.
Alex Paris: Repeating your comments about.
Alex Paris: Finishing the year with more enrollment than you started and.
Alex Paris: And while early your comments for next year.
Alex Paris: <unk> you said that you would expect growth or just kind of going fast for my pencil. So.
Alex Paris: And then we get that recap.
Alex Paris: Yes.
Alex Paris: So and this has been now a multiyear trend where.
Alex Paris: We were on a trajectory we feel pretty confident that we will end the year with a higher enrollment level than we began the year.
Alex Paris: Can you sort of see let me we reported.
Alex Paris: We just reported numbers are pretty significantly higher than we started the year right. So.
James Rhyu: So, you know, ending the year at a higher level. What it does is it gives us a higher jumping off point for the fall enrollment because obviously many of those. um you know will come back and in fact As we get, almost counter-intuitively, as we get toward the end of the year... Many of the students who joined right at the end of the year a propensity to return in the fall. And so ending the year strong just really does set us up for strength going into the fall. And so there is some early indicator that, you know, we are going to end the year strong and that will bode well for the re-registration cohort for the fall.
Alex Paris: Ending the year at.
Alex Paris: At a higher level what it does is it gives us a higher jumping off point for the fall enrollment because obviously many of those students.
Alex Paris: We'll come back and in fact.
Alex Paris: As we get almost counterintuitively as we get towards the end of the year.
Alex Paris: Many of the students who joined right at the end of the year.
Alex Paris: I have actually a high.
Our propensity to return in the fall.
Alex Paris: And so so ending the year strong just really does set us up for <unk>.
Alex Paris: Strength going into the fall and so there is some early indicators that we are going to end the year strong.
Alex Paris: And that will bode well for the re registration cohort.
Alex Paris: For the fall.
James Rhyu: And so those, that early indication, along with the very strong demand we saw in Q3, you know, January through March. If that continues... It really sets us up for a very strong demand season for the fall, which I think sets us up for growth. So, I think the characteristics are there, are all there for us to continue our enrollment.
Alex Paris: And so those that early indication along with.
Alex Paris: The <unk>.
Alex Paris: Very strong demand we saw in Q3 January through March.
Alex Paris: If that continues.
Alex Paris: <unk>.
It just it really sets us up for a very strong demand.
Alex Paris: Season for the fall, which I think sets us up for growth. So I think the characteristics are they're all there for us to continue.
Alex Paris: Our enrollment trajectory.
James Rhyu: And then along those lines, is it too early to talk about applications for the fall? When do those start rolling in? Yeah, the fall application season is like literally, you know, the windows are just opening up here.
Alex Paris: And then along those lines is it too early to talk about.
Alex Paris: Applications for the fall.
When do those start rolling in.
Alex Paris: Yes. The fall application season is like literally the windows are just opening up here. So it's.
James Rhyu: So it's, it is, that is way too early to, to really have any good indicator of how that's shaping up. You know, so I think that, that we'll have a little bit more information on that, you know, in the next call, but. But, you know, like it's just it's the at least the past couple of years that we've seen the back half of the year. The strength in the back half of the year has boded well for the fall applications. So we don't yet see that, but if the prior years are any indicator, the strength that we've seen this past quarter in application volume is a pretty good indicator.
Alex Paris: That is way too early to really have any good indicator.
Alex Paris: Of how that shaping up.
Alex Paris: So I think that that will have a little bit more information on that in the next call but.
Alex Paris: Okay.
Alex Paris: But it's just a it's.
Alex Paris: At least the past couple of years that we've seen the.
Alex Paris: The back half of the year.
Alex Paris: Has boded well the strength in the back half of the year, it's boding well for the fall.
Alex Paris: Fall applications, so we don't yet see that but.
Alex Paris: But if the prior years or any indicator the strength that we've seen this past quarter in application volume.
Alex Paris: Is it is a pretty good indicator for the fall.
Donna Blackman: That's great. And then, Donna, I think you said in terms of revenue per enrollment for the full year, you're saying down less than 1%. I think you said down 1 to 2% as recently as the Q2 report. Do I have that right? That's correct. And now that we're sort of three quarters in, so comfortable saying that we'll be down less than 1%. Great. That's helpful.
Alex Paris: That's great and then Don I think you said in terms of revenue per enrollment.
Alex Paris: For the full year, you are saying down less than 1% I think you said down 1% to 2% as recently as the Q2 report.
Alex Paris: Do I have that right now.
Alex Paris: That is correct and now that we're sort of three quarters and feel comfortable saying that will be down less than 1%.
Alex Paris: Great. That's helpful. And then the last one is on the slide.
Donna Blackman: And then the last one is on the slide, on page 17. It's the – just to understand how to use it a little bit better, because I was off. I was using 47.6 million shares on a diluted basis that came in at 49.2. You talk about the illustrative average quarterly stock price. I'm just looking at Q3, and you started the year at about 104, or the quarter, and then you finished the quarter at 126. Is this just a simple average, or is it a VWAP? How do we calculate that? So just it's the average stock price for the quarter.
Alex Paris: On page 17.
Alex Paris: It's the.
Alex Paris: Just to understand how to use it a little bit better because I was off.
Alex Paris: Using 47 6 million shares.
Alex Paris: On a diluted basis came in at $49 two.
Alex Paris: You're talking about the illustrative average quarterly stock price.
Alex Paris: And just looking at Q3 and you started the year at about 104 in the quarter and then you finished the quarter at 126 is this just a simple average or is it a V wap.
Alex Paris: How do we calculate that.
So just.
Alex Paris: The average stock price for the quarter. So if you look on page 17, so the average stock price for the quarter, whereas around roughly 127. So I use the 125 as the example, and so you would have added roughly $4 6 million shares to otherwise have been.
Donna Blackman: So if you look on page 17, so the average stock price for the quarter was around roughly 127. So use the 125 as the example. And so you would have added roughly 4.6 million shares to otherwise have been without the conversion.
Alex Paris: Without the convert.
Donna Blackman: For the purpose of time, what is the... And what am I adding that to? The basic shares, my assumption for basic shares, basic shares plus whatever stock option underlying stuff is there, plus the 4.6 million shares. How are you doing? Gotcha. Okay, just wanted to have a more accurate shear count.
Alex Paris: For the purpose of kind of what it is.
Alex Paris: And what am I, adding that to the basic shares my assumption for basic shares basic shares plus.
Alex Paris: Whatever stock option underlying stuff is there plus the $4 6 million shares.
Speaker Change: Are you doing.
Speaker Change: Got you Okay I just wanted to have a more accurate.
Donna Blackman: Yes, and we can certainly walk you through it offline if you like. Okay, for sure. And you know, to me, your numbers were spot on mine, but you were slightly below the consensus EPS estimate. And I suspect it's just because of the share count that the consensus of analysts were using.
Speaker Change: Yes, and we can certainly walk you through it offline if you like.
Speaker Change: Okay for sure.
Speaker Change: To me your numbers are spot on mine, but you were slightly below the consensus EPS estimate and I suspect, it's because of the share count.
Speaker Change: The consensus of analyst reusing.
Donna Blackman: Thank you very much.
Speaker Change: Thank you very much that does it for me.
Operator: That does it for me.
Speaker Change: Thanks.
Speaker Change: Okay.
And ladies and gentlemen, that concludes our question and answer session and today's conference call. We thank you for your participation and you may now disconnect.
Speaker Change: And ladies and gentlemen that concludes our question and answer session and today's conference call. We thank you for your participation and you may now disconnect.
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Speaker Change: Okay.
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Speaker Change: Yes.
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Speaker Change: Okay.
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