Q4 2019 Earnings Call
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Good morning, Matt.
The name of the conference your coatings drilling.
The Barnes and noble education earnings call.
Thank you, Matt How's the spending or if your first and last name. Please.
Our y and.
H.A.L. Eli.
In Q may help the spending of your company name. Please.
And I are a.
In Q you have your phone number beginning with the area codes. Please.
97879 01138.
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Thank you.
Incentive Barnes <unk> noble education.
During this call we will be making forward looking statements with predictions projections and other statements about future events.
These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release in public filings with the Securities and Exchange Commission.
The company disclaims any obligation to update any forward looking statements that may be made or discussed during this call.
At this time I'll turn the call over to Mike Huckabee.
Thanks, Tom Good morning, everyone and thank you for joining us.
Fiscal 2019 was truly a transformative year for BMD.
I'm proud of all that our people accomplished as we continue to pivot our platforms and offerings to digital delivery.
Fiscal year 2019 results were in line with our expectations as we continue to generate significant EBITDA and as a result strong free cash flow.
We're making important changes throughout our organization as we continue our digital pivot.
We are very encouraged by our significant progress including.
The development of our first internally developed digital study product initially introduced as far we textbook solutions and now branded as far Ob learn.
Unification of the BMC and MBS sales teams, creating an expanded and incentivize new business sales team with a revitalized our go to market strategy.
The continued growth of our first day inclusive access program, which substantially increases courseware sales penetration volumes when adopted.
The upcoming launch or VNC adoption and insights portal, a new courseware adoption and insights platform for faculty and academic leadership that leapfrogs, our prior adoption platform and important enhancement to our institutional sales capabilities.
And the introduction and completion of a pilot of four highly curated concept shops focused on elevating our in store experience.
These concept shops and drove very meaningful improvement in sales trends in our pilot stores. During the test period. Additionally, this fiscal year, we have begun to make important investments to drive growth for our general merchandise business in fiscal 2021, including drop ship capabilities. This fall and the next generation digital commerce platform expected to be life in fiscal 21.
As disclosed in this mornings press release, we have realigned our reporting segments to reflect our new go to market approach.
We now have the following three reportable segments retail wholesale and DSS.
The new retail and wholesale segments reflect changes we have made internally to combine physical and virtual store sales teams to more proactively identify and actively pursue new institutional business.
The retail segment combines the operations of a former DSD segment with MBS directs virtual bookstore sales operations from the former MBS segment.
The wholesale segment is comprised of the MPS wholesale business, which provides a comprehensive selection of new and used textbooks at a lower cost of supply to approximately 3500, physical bookstores, including our retail segment 772 physical campus bookstores.
Our wholesale business also sources and distributes new and used textbooks to our 676 virtual bookstores.
Additionally, through our wholesale segment, we sell hardware and a software suite of applications that provide inventory management and point of sale solutions to approximately 400 College bookstores.
The DSS segment operating components of student brands and borrow beat remain unchanged.
We believe the realignment of the resources and related reporting segments will deliver significant benefits and allow be an AG to deliver growth and net new store contracts.
Our campus stores, whether physical virtual or a combination of both provide incredible value to institutions across the country and our key competitive differentiator for BMD.
We are already starting to see the positive impacts of our larger combined new business Salesforce.
In fiscal 2019, net new store sales were impacted by some large competitive losses and fewer new business wins.
So far in fiscal 20, we expect annualized net new store sales to be approximately $35 million as we drive new business wins and narrow competitive losses.
We are very encouraged by these initial results of our new unified sales team.
We introduced our DSS reporting segment, just one year ago and by this upcoming fall Rush bar will be learned is expected to grow. These offer nearly 2 million step by step olmert solutions across approximately 1200 titles.
Students can also now access are relatively new and developing kunaev feature to ask tolmar questions to experts virtually.
We experienced strong initial demand for part will be learn which added more than 50000 subscribers. During our first in store sales force and our spring rush period.
We are focused on and anticipate continued partovi subscription acquisition growth.
As we head into our fall rush period injury, a brand new cohort of students.
Our physical footprint on campuses nationwide together with our deep knowledge of student course material consumption remains a significant competitive advantage, allowing us to better inform and manage the cost of our Barbie content development.
Our entire company is focused on growing Barbie subscribers in recognition of the value we can deliver to both students and institutions and also the high margins as business will contribute to be any d. as it scales.
Dsos is a much different business than our historical one.
The power of leveraging all of our physical and virtual assets together is unique to us and we will become evident as evident as BARDA we scales.
The success of our DSS segment is key to unlocking shareholder value and we are very focused on making that happen.
Our DSS offerings also complement our institutional offerings and can bring added value to our partners and the students that they serve.
We recently completed a survey of more than 100000 students station wide, which found that nearly 50% of first year students are interested in paying a onetime cost for access to all supplemental digital tools and resources.
That are bundled with wishon.
We believe there is a strong opportunity to offer these types of bundled offerings through VNC first day are inclusive access model.
Delivering institutional digital product bundles, and an inclusive access model would accelerate bartel nuscale objectives with minimal acquisition costs, while mitigating the churn so normally associated with such digital subscription products.
We are actively exploring institutional barbie offerings to determine the optimal packaging and pricing.
First day is a strong example of the value we can bring to partners from a content distribution standpoint inclusive access has become increasingly popular in college campuses as institutions look for solutions that will drive down costs and enhance outcomes for students.
Entering fiscal 19, we had already entered into digital distribution agreements with the three largest higher at publishers.
This year, we expanded our digital distribution and first day relationships with multiple publishers, including Oxford, Wiley Mcmillan learning stage, and Norton, enabling us to offer even more content through our first day platform.
Inclusive access model are incredibly important in terms of increased penetration that they drive.
At our schools using first day, we see sell through of more than 90% versus the traditional sell through rate of approximately 35%.
So even as digital content pricing is lower than fiscal content Sps the increased volumes resolve in a better business model for both be in AG and the publishers and importantly, more affordable prices for students.
As more content moves digital in the long term first days high sell through penetration is expected to be a significant driver of revenue.
We continue to see success with our first day model with revenue from first day sales, increasing 92% year over year.
To further enhance the value we offer institutions. This summer we are launching the DMC adoption and insights portal.
A new innovative platform that will transform how faculty and academic leadership research submit and monitor course materials selections affordability and student success.
This tool provides a highly personalized user friendly experience actionable insights with high impact reporting dashboards and more.
The initial reactions to the portal from current and prospective clients as well as publishers, who may benefit from the platform has been incredibly positive.
We are installing platform and a relatively small number of schools in August and look forward to rolling it out to more campus partners' prospectively.
Tools, such as this adoption and insights portal are important to our strategy for packaging and pricing digital offerings that solve for multiple pain points that our college and University partners as well as their students and faculty are facing.
Accordingly, the value of this and other tools, we are investing in and offering to campus partners is directly contributing to recent new business success.
And our physical stores, we have introduced some exciting changes to strengthen our advantage as the official on campus retailer.
In four of our stores.
We have successfully completed an innovative and promising pilot of highly curated and relevant concept shops focused on elevating our store experience.
We're very pleased with the initial results of these pilot concept shops, which drove higher customer engagement and improvements in sales trends during the test period.
We plan to introduce these new concepts to an additional 70 stores this summer.
We're also very pleased to announced.
An exciting collaboration with urban Outfitters, a favorite brand of our students.
This partnership will create a one of a time retail experience in our stores.
Bringing trend relevant apparel and home decor direct to the college consumer.
Urban Outfitters concept shops are planned for introduction in 10 of our stores beginning this fall.
Looking ahead, we are continuing to make important strategic investments to drive increased levels of success in our retail business.
Particularly in the areas of general merchandise and emblematic apparel.
This includes advanced digital commerce capabilities that will extend our product assortment and real time availability for customers.
We expect to see incremental online sales growth in the first half of this fiscal year, when we greatly expand our online assortment through our new dropship capabilities and other customer engagement and funds.
In fiscal 2021, we expect to launch our developing next generation digital commerce platform, which will further unlock sales growth by leveraging dynamic product discovering personalization promotions and user experience tools to ensure that the shopping experience for customers across all our stores physical or virtual is best in class.
Historically, we have under invested in our e-commerce platforms, and we have substantial upside to capture by making online shopping and fulfillment a much better experience for our customers.
Fiscal 2019, as I said, it's been a year of significant change and progress towards our objective of pivoting to a leading provider of both digital and physical offerings to institutional and student customers, we strive to delight.
Fiscal 2020 will be a year when we will continue to allocate human expense and investment capital to our digital pivot.
But we also expect to begin to see more meaningful operating results from these investments as we expect to grow Barbie subscribers.
Increased general merchandise sales.
Continue to add inclusive access mild customers and add significant net new managed store business.
We will continue to manage our cost structure to reflect the realities of our fiscal book related trends. During this transition period, we are in.
We would also like to thank our entire workforce for being fully dedicated as shown by the very personal commitments and contributions each of them are making during this transition period.
Our people are contributing substantially to our purpose in strategy, while also essentially investing in Vienna geese future with the understanding that their personal economic successes are tied to be any de success.
In our wholesale segment revenue was down 13.5% year over year, primarily due to lower demand.
We continue to transform our wholesale segment to physician MBS as an innovative service provider to the industry. While also exploring additional weight ways to utilize MBS has advanced distribution capabilities as in the case of publisher consignment rental programs.
As a reminder, under these agreements we do not take title to the rental books, but earn margin and a fee for processing the rentals for the publishers.
This model has faced market acceptance and publisher execution issues.
We are working closely with the two large publishers within we have consignment rental agreements to facilitate improved execution from fall rush of the more than 700 titles subject to this program.
While we originally anticipated that the benefits from these consignment rental programs would be more recognized in fiscal 2019, we now anticipate increased cash flow benefits, we recognize this fiscal year.
While the public market appears to value be any d. as in traditional and perhaps even troubled retailers the strength of the strength of our assets such as our store footprint distribution capabilities and general merchandise business together with our investments in digital such as barley inclusive access and our adoption insights portable are already beginning to yield positive momentum.
BTD has a unique set of assets and a strategic business business model that are very hard to replicate.
We remain confident in our role as a leading aggregator and distributor of educational content, both within and outside of our store footprint.
Our management team continues to lead the execution of our strategy for digital transformation.
And no change at this scale is challenging and never happens fast enough. Our entire company is energized and confident in vanities future and future value.
As we prepare for the upcoming fall rush.
We are highly focused on leveraging the unique strengths and expertise of each of our business units to help drive success for all of our customers.
I will turn it back over to Tom now for the financial review.
Thank you Mike.
Please note that the fourth quarter ended on April 27, 2019, consisting of 13 weeks.
All comparisons will be to the fourth quarter of fiscal 2018, unless otherwise noted.
As Mike stated and as disclosed in this mornings press release, we realigned our business that business and sales organization into the following three reportable segments retail wholesale and DSS. The retail segment combines the operations of the former be DNC segment.
With the MBS direct virtual bookstore operations. The wholesale segment is comprised of MBS wholesale business.
And the DSS segment remains unchanged.
Total sales for the quarter were $334.4 million compared with $357.7 million in the prior year.
This decrease of $23.3 million or 6.5% was comprised of a 15.2 million decrease from the retail segment of $5.8 million decrease from the wholesale segment and a zero point $2 million decrease from the DSS segment.
Comparable store sales in the retail segment increased by 0.9% in the quarter as compared to a two 2.0% increase from the prior year period.
Comparable store sales for the full year declined 5.1% consistent with our expectations.
Comparable comparable textbook sales for the quarter increase 0.9% as compared to the prior year increase of 1.8%.
Comparable textbook sales for the full year declined 8% also consistent with our expectations.
Textbook sales continued to be impacted by lower average selling prices of course materials enrollment declines and students purchases from publishers directly as well as other on online providers.
Net sales for the wholesale segment.
For the quarter were $14.1 million a decrease of 5.8.
Net sales for the full fiscal year were $223.4 million, a decline of $35 million or 13.5%.
Wholesale sales were down primarily due to lower demand.
DSS sales were 5.5 in the quarter compared to 5.6 in the prior year period.
Sales for the full year were 21.3 million as compared to $15.8 million in the prior year.
The consolidated gross margin rate for the quarter was 35.1% down.
From 35.9% in the prior year period.
The consolidated gross margin rate for the full fiscal year was 25.9% up slightly from 25.3% in the prior year period.
The primary this is primarily attributable to a shift to lower margin digital products and higher contract costs related to contract renewals and new store contracts.
Selling and administrative expenses in the fourth quarter decreased by $7.6 million or 7.2% compared with the prior year period and decreased $9.9 million or 2.3% for the full fiscal year.
The decrease in the retail segment for the quarter and the full year was primarily the result of decreases in physical store payroll and operating expenses.
A decrease in the Loudcloud digital operations.
A decrease in virtual store payroll and operating expenses and a decrease in corporate payroll and infrastructure.
Wholesale expenses decreased in the fourth quarter in the full year, primarily due to lower payroll expenses and professional fees.
DSS selling and administrative expenses increased in the quarter and the full year.
Primarily due to the ongoing costs associated with the development of barley as well as costs related to the student brands and other digital offerings.
Corporate services in the quarter and the full year increased as a result of higher professional fees.
During the fourth quarter due to due to the change in our segment presentation reporting units, we performed an interim goodwill impairment test and concluded that the carrying values of the retail and wholesale reporting units exceeded their respective fair values as such we recognized a noncash goodwill impairment loss of 49.3 million or 36.5 million after tax and a net tax basis, consistent consisting of the carrying value of goodwill allocated to each of those segments.
Additionally, as a result of certain other operational changes, we recognized an $8.5 million noncash impairment loss primarily related to certain other long lived assets.
We recognized a $4.7 million and a $7.2 million.
Charge of restructuring and other charges during the fourth quarter and during fiscal year 2019, respectively.
Restructuring charges are primarily comprised of severance and transition payments related to senior management changes employee termination cost and benefit costs.
Our cash balance at the end in the quarter was $14 million, a slight decrease compared to the $16.1 million in the prior year period.
There was 135.
133.5 million in outstanding borrowings compared with $196.4 million in outstanding borrowings in the prior year period.
The decrease in borrowings for the year is primarily attributable to the improved free cash flow.
In fiscal 2020, we expect the average debt to be approximately $100 million with peak borrowings of approximately $200 million.
Fully repaid during our fall rush with additional borrowings until the end of the fiscal year. This is a similar pattern to fiscal 2019.
Capex for the fourth quarter was $14.7 million compared with $12.7 million in the prior year.
Capex for the full fiscal year was 46.4 million as compared to $42.8 million in the prior year increases in Capex was due to our continued investments in digital.
Currently our retail segment operates 1448 College University and K through 12 schools book stores comprised of 772, physical bookstores and 676 virtual bookstores.
As of today, we have contracts to open an additional 78 stores in fiscal 2020 with 37 additional known closings.
This would bring our total physical and virtual store count to 1489 locations net of closed stores.
For fiscal 2020.
We expect consolidated adjusted EBITDA to be between 90 million and $100 million.
Due to the continued investments capital expenditures are expected to increase from fiscal 2019 by approximately $10 million and are expected to be in the range of 50 million to $60 million.
We expect free cash flow to be between 25 million to $40 million as compared to the $39.7 million in fiscal year 2019.
We define free cash flow as adjusted EBITDA less capital expenditures cash interest and cash taxes.
With that we will open the call for questions.
Operator, please provide instructions for those interested in asking a question.
Certainly at this time, ladies and gentlemen, I would like to remind everyone that in order to ask a question. Please press Star then the number one on your telephone keypad.
We'll pause for just a moment to compile acuity roster.
Thanks.
Your first question comes from the line of Alex Fuhrman with Craig Hallum Capital. Your line is open.
Great. Thanks, very much for taking my question.
I wanted to ask about the outlook for for next year I apologize if I missed this maybe in the prepared remarks, but didn't see a revenue guidance.
In in the press release.
So just curious as you're thinking about your your EBITDA and free cash flow guidance for the year.
Just just what type of revenue trends are baked into that and then specifically looking at the new.
Reportable segments is there anything to major to call out in terms of trends you're seeing so far this year on the top line.
Hey, Alex This is Mike I, we decided not to give revenue guidance I mean, theres. So much change in business model around is an example, like publisher consignment funnel or we don't take titles of books, we don't think we book.
Only book the fees in the margin that we receive off those transactions.
We want to get away from comp store sales.
Because we get thrown into the retail bucket, while its important information we'll continue to disclose it we really are trying to focus managing the business on on margin and cash flow as it moved to more and more digital as the deals that were cutting with publishers and other partners are really more focused that way. So in terms of revenue trends I think the one thing that we have alluded to is the new business.
We're really happy with.
Pleased thus far.
With with the new new Salesforce, and what they're doing and just our approach to go to market approach. So we've given some information on on what we expect lease of experienced thus far in that new store sales.
I think you know there's no reason to believe that the trends that we have been seeing are going to change.
Markedly as it relates to physical books in the coming year.
Try to forecast average prices of our publishers are doing in the mixes has proved to be very.
Difficult for example, they sold a lot of lower margin loosely.
Of types of publications to school of last year.
Instead of.
Following through on the publisher consignment rental so were you know.
With the revenue.
Forecast to us just aren't as germain as trying to give the market a sense of what EBITDA and.
And free cash flow look like and Capex Capex is really important because of the investments that we're making and how they are driving the expansion of the products and the accelerating the time to digital.
I would one thing I talked about during the comments. This is as that is the adoption of insights portal that we're rolling out that that's been invested in we'll see the benefits of that but the important thing. There also is that it's a really a tool that's needed by colleges and the ones that were showing it to and proposals and other current situations are re are really really want these tools to now to manage whats increasingly complex business for them. So the answer to your question simply were not giving revenue guidance, we're not going to talk about forecasting the specific trends unless something we have.
Fairly high degree of confidence on but I don't think that on the physical side.
The trends Directionally will change from where they've been in the last few years. So.
We don't we don't tend to get valued based on revenue and revenue movements.
All our conversations in our valuation in the public markets seem to be more based around EBITDA and what we're doing with.
Pivoting to digital second we're emphasizing as we're managing to.
Sure No thats helpful. Thanks, and then if I could ask just about the digital.
Segment.
Specifically I guess, the Bartoli piece I mean, it sounds like your you got some nice early signs of subscriber growth. There just wondering what it's really going to take for you to get that business and turning it into a growth engine, obviously, there's a big competitor out there with it with a similar product that's been doing very very well over the last couple of years. I mean do you feel that you have the content is is as robust as you need it to be to really be able to put the foot on the gas in terms of marketing or is there may be some some lifting still there to half and just just curious where where you feel that product is.
Heading into the new school year.
Alex This is community I think by fall, we feel very good about where the content will give you in terms of coverage of books. Most important most frequently views on title. So we think we'll have very good coverage in area of increased investment and focused and accumulate and we're very focused on being able to grow the library. So I guess in short we feel very good about.
Both sort of the headroom that exist in the market, having a new freshman class.
As Mike alluded to earlier for students that are on in eco system that was a really big opportunity leveraging on our titles.
You know in footprint as well as out of footprint increasingly so we feel very good about being able to really start to drive the given where the content will be relative to where it was moved from sprint.
Great.
Very helpful and then about what 25% of the titles in the spring that we have in the fall 20% to 25% so in other words.
Variable and double down yet, it's more than well doubled or tripled in terms of the titles that we got available per textbook solutions.
And you know we gained 50000 subscribers with primarily most of those coming from in store support.
So.
As for your question expand on a little bit if we if you know.
If we had.
Didn't have to worry so much about managing to EBITDA, we probably step on the gas little harder, but I think that we'll know more as we get into the fall season, and we may do some of that Thats one of the one of the reasons that our free cash flow estimates are somewhat variable we want them, we want to be able to take advantage of opportunities as we see them happening during the course of the year.
I mean in the last point I would just add Alex is that relative to where competitors are price were priced very disruptively.
Roughly.
30% discount so we think once we get into a consideration so increase that awareness Tom student full naturally.
Our move towards the product.
Hi.
Comparable if not better futures.
Great Thats really helpful. Thank you very much.
Your next question comes from the line of Ryan Macdonald with me Tim Your line is open.
Hi, good morning, everyone.
I guess just following up on on sort of the bar will be question and as you're sort of looking at the growth trajectory. There now we're in at the end of June you've had sort of a full semester to sort of monitor the usage and sort of habits of the 50000 subscribers you've added in the spring.
Talk about maybe what you've learned about retention in utilization from the students.
From what you've seen thus far with that Thats 50, K. number.
Hey, Ryan its fits committed we've seen sort of typical file patterns emerge for a user sort of what you would suspect in terms of human data usage, becoming more p. Good during mid terms and final period some through its consistent with what we thought in terms of churn behavior. Likewise, the seasonal falloff that's associated with the summer. So it's pretty much. According to pattern now we are trying to get more nuanced on how we can drive more engagement and more usage and I'd say, it's early stages, there, but we.
We remain focused on being able to those of the previous question alluded to to get the content library expanded so we can cover students in all need to fund all subject disciplines. So I think the fall will be more dispositive in learning more.
But right now I'd say, it's probably according to where we thought it would be.
John Thanks, and then I guess following up.
Sort of on the new retail.
Operating segments sort of combining the MBS in the B and C.
Sales teams, there and it sounds like there's a lot of interesting developments in innovation going around.
In terms of the adoption insights and some of these concept stores can you talk about sort of what the go to market or how you're sort of positioning that competitively.
With your sales teams to try and win more retail business through sort of those two initiatives.
Ill give a quick answer and I'll, let Lisa Mallett, who is our CEO of college is heading up the sales effort expand on it.
But in essence, what we've done is expanded that sales team using.
Internal resources, we promoted people from within the VNC field manager ranks regional manager ranks as well as.
Combined the.
Formally MBS direct sales team quite effectively that weve more than doubled the number of salespeople, we have in the market and and really taken a much more what I would call proactive approach about targeting.
Targeting.
Potential new business and in a very intelligent way and emphasis on on those that have bigger general merchandise.
Portfolios in some cases and.
It's a very disciplined approach that emphasizes all the new things we are doing as well as what we've done in the past and have a great tradition of service et cetera, let Lisa talk about the competitive positioning a little bit more.
Yes, I mean, I think we all know what I understand the transformation that is happening with the industry and you know as much as we are feeling at higher education is experiencing an even greater levels, though we feel that we are in a very very unique position right now to really be able to offer innovative really on state of the art solutions to our higher education partners, one that really aren't differentiate differentiating us in the marketplace, such as Mike talked about with IP or some of our new retail concepts.
And we're finding that these solutions are really resonating with our partners.
Because we do a really.
Good job listening and understanding the different needs of all of our constituencies, we understand the pain points for academic leadership, we understand that higher education is looking to create these community centers or cultural hubs in points of engagement with the retail footprints wanting to bring students together. So we take these learnings from our campus partners on and we create these innovative solutions that are really helping us.
When contracts can grow topline for the business.
It's really important for us to continue to grow our store contract footprint because as you saw in January .
Just as it relates to borrow b.
Engagement, we have from our in store personnel was critical to.
Growing that business up 70% or so of the subscriptions came from.
In store, the physical and store.
Sales and while we expect that.
Distribution between store and online to probably change scale occurs to certain extent.
Growing the growing need in store the store manage footprint is essential not just in terms of of of selling digital but it also leverages all the skills, we have within Barnes <unk> noble college across a broader footprint.
Which which makes our obviously helps make our cost our cost structure in the way we run the business more effective.
So.
From a competitive versus perspective, I think we're we're doing very well versus where we were.
About a year and a half ago year ago, where as you look at the exhibit to the earnings release, you can see that.
We ended up losing net new.
Net business from store closures over store openings at a very significant impact on our financials and so that's another reason why it's important.
It's not for the revenue growth it's per se, it's for the opportunity that we have.
And the margin expansion with general merchandise with digital and also to leverage our organization across a broader footprint.
Yes, thank you very much.
Thanks Ryan.
Ladies and gentlemen, again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your next question comes from the line of Greg Pendy with Sidoti Your line is open.
Hey, guys. Thanks for taking my questions.
I just I wanted to I guess.
Understand the 50000 subs that was last quarter and I just want to understand that was with one month free correct and I know there will be some serious seasonality to the bartoli textbook.
Subscriptions, but it's not it wasn't at 50000 during this quarter was it.
50000, with a number of subs, we acquired during the spring Rush, which is what we disclosed.
There was initial introduction of the product, Greg and we discussed it fairly thoroughly I think in the last quarter call and as Canoe said, it's fairly early days and analysis and the learnings on retention and engagement and that type of thing but.
No. It's not it's not this quarter. It's it's the same information we disclose from last quarter. As we go forward, we'll decide what detail we want to disclose on subscribers and that type of thing that was just an initial rollout to see if we could be successful, which we seem to be a successful launch.
Especially with the relatively.
Disadvantaged number of titles et cetera, we had versus the competition and the fact that it was the spring rush.
Where we are coming in with.
Many students having already selected their their their online supplemental provider in the fall period as you pointed out we have a new cohort coming in so we'll disclose more information on subscribers going forward, but.
Yes. Your question knowledge that does not another 50000 this quarter. It's the same 50000 from the first quarter when we had initial push.
Understood and then just I have one more question I mean, just the bundled offering with first day it sounds.
Exciting given given where you stand having that the college store footprint, but just kind of wondering I think a competitor of yours and the space is trying to bundle sort of the the writing something has at least talked about bundling their textbook solutions in writing solutions is that something you guys would be thinking about as well.
Well I alluded to in my comments actually that we do have some some schools that are interested and from our personal perspective, you know our home run would be in addition to selling it direct students. If you put yourself in the place of a student or a parent that's looking at.
A bill for inclusive access that Bill includes tuition includes your courseware in other words your books your digital access codes all your access to digital content that also includes.
Some digital products could be bartel b.
Learn could be fairly writing, which we're just releasing.
Self tutoring self study eight it's all included in.
One inclusive access package, whether its build and what amount to all students or whether it's a different which we call first a complete or different model you can see that these students. These leased the schools rather that are competing with each other.
No we can offer them a lot of value in an inclusive access package not all schools want to have part will be in there.
In their lineup to offer many do if you look at those that are.
Especially community colleges and others large four year public schools, they're looking to pack as much value into these packages as they can get to get the most value to the students which equates to.
Portability win.
So that's that's something we're exploring with schools being we think about.
Selling subscriptions on all Carte basis, and you think about bundling in thousands of subscriptions at a time and institutionalizing them and the cost of that and what the the churn would be going forward relatively flat relatively zero.
That's that's a discussion we are having but we don't have that.
In place as I said, we're exploring it.
And I think that it gets us.
An interesting conversation you know that we can have with with schools that really want to provide as much possible value in an inclusive access pot package as possible as it relates to the the illusion to the competitor I don't think I think that we are designing bar will be honored conducive supervision to be.
Much more institutional friendly than maybe the some of the other products that are out there that are arguably viewed that way by the institutions.
So that's a that's a different we consolidated footprint you know our card as well but in footprint.
Every every school we serve.
As a different way of looking at how they want to teach their students and we respect that and therefore, we're customizing.
What we do with with our with our.
Institutional partners that gives us the ability to customize but all these different tools we have.
Okay. That's helpful. And then just one final one if I could get one more question.
You mentioned.
78, I think store openings can you just talk a little bit is that wins or is that company. A lot of are you seeing colleges kind of move to the outsourcing model I think you know roughly 50% of college bookstores are still managed internally can you just kind of give us a sense on just the overall environment are you seeing it.
That that shift continuing or is it just a less competitive environment than last year from.
On winning new new campuses.
You know as I physically at the so as I was mentioning before again I was definitely the complexity in the market, it's creating a lot of opportunity for us to grow the top line. So its really a combination of both but we're continuing to see a shift.
Our self operated bookstores on looking to looking for solutions looking for experts looking for innovation, which is why the products and services, we are bringing to the market are resonating.
Okay. We're also how are also competing head to head with head to head with our primary competitor that field and and.
Feel like we're doing we're doing well.
In that regard as well so as leases thats a combination of both yeah.
Okay, great. Thanks, a lot guys.
Thanks, Craig.
And there are no further questions at this time I will turn it back over to Mr. Donohue.
Thank you for joining today's call. Please note that our next scheduled financial release will be our fiscal 2021st quarter earnings call on or about August 27, Thank you and have a good day.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.