Stride(US:LRN)2022-10-25 23:49Financial Data and Key Metrics Changes - Revenue for the quarter was $425.2 million, an increase of 6% year-over-year [32] - Adjusted operating loss was $19.9 million, an improvement compared to the previous year [32] - Capital expenditures totaled $16.8 million, up $1.4 million from last year [32] - Adjusted EBITDA was $3 million, indicating challenges in profitability due to increased market expenses and inflation [40] Business Line Data and Key Metrics Changes - Career Learning revenue increased by 63% to $153.5 million, driven by strong enrollment growth [34] - General Education revenue decreased to $271.7 million, down 11% due to a decline in enrollments [36] - Middle and high school Career Learning revenues were $125.5 million, with enrollments reaching 61.6 thousand, a 47% increase from last year [34] - Adult Learning revenues were $28 million, up 24% year-over-year, with expectations of over 30% growth for the full year [35] Market Data and Key Metrics Changes - General Education enrollments decreased to 112.3 thousand, still above pre-pandemic levels [36] - Revenue per enrollment for General Education increased by 18% to $2,216 [37] - Overall enrollment, including Career Learning, is significantly up from pre-pandemic levels [36] Company Strategy and Development Direction - The company aims to adapt to an evolving educational landscape by focusing on Career Learning and adult education [7][12] - Plans to expand Career Learning programs to address the talent gap in the job market, with a goal of over 100,000 graduates by 2030 [12] - The launch of a new career platform aims to provide comprehensive career education solutions at no cost to students [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the education sector despite inflation and market challenges [6][43] - The company believes it can achieve its 2025 targets, even if the path may differ from initial expectations [43] - Management noted that the overall market for online education continues to improve, with evidence of increasing demand [54] Other Important Information - Free cash flow for the first quarter was negative $160 million, typical for the season due to school launch and onboarding [46] - The company ended the quarter with cash and cash equivalents of $194.5 million, allowing for continued investment in growth opportunities [46] Q&A Session Summary Question: What drove the decline in General Education enrollments? - Management indicated that the decline was due to increased competition from brick-and-mortar schools and execution challenges [53][54] Question: What improvements are needed in execution? - Management acknowledged the need for better localized messaging and adaptation to market conditions [55][56] Question: Why is the current enrollment level considered a new baseline? - Management believes that the overall market for online education is improving, despite some cannibalization from Career Learning programs [62] Question: What factors are necessary to meet operating income margin guidance? - Management stated that revenue acceleration and efficiency improvements are essential to meet guidance [67][68] Question: How have application to enrollment conversion rates been trending? - Management reported strong and improving conversion rates, indicating better understanding of programs by families [92][93]