2U (TWOU) 12 Nov 192019 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the 2U, Inc. 2019 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. [Operator Instructions].

to Ed conference Goodwin, like your over now today, speaker SVP, would hand call the to I Investor Relations. sir. ahead go Please

Thank call. everyone, quarter afternoon, you, to Operator. third XU's and XXXX welcome conference earnings Good

Paul On the Chip CFO. have call Lalljie, CEO Paucek, our our we and

Paul's will Following take Chip and questions. remarks we

our Statements after forward-looking close website is call are where the release and and made this uncertainties and include market financial webcast. call on press assumptions. regarding new to subject and Our student the is results, was statements this university being issued risks, and statements of other educational posted our operating simultaneously on These matters. offerings, demand

Exchange on and assumptions Please information such release and to statements. the refer uncertainties we factors Form on the from most risks, cause may in risk and differ press set recent quarterly including materially XX-Q Commission those our Securities for report filed results actual to and that documents with the forth

during addition, measures should believe of to non-GAAP GAAP or discuss These today's in substitute measures supplemental performance. a considered XU's isolation financial In in as useful will as and results. are addition be which for measures we call we not from non-GAAP

this days with next disclosures Investor of non-GAAP for regarding the webcast can company press You additional this link. find results available measures comparable including call our be XX in and the replay these our website Investor The of Relations website. reconciliations on GAAP will release earnings our on under Relations page

to it over hand me let Chip. that, With

in remain social will belief is great XU can the and the a and age. engine Ed. on powerful the for digital that Thanks founded economic mobility university

higher growing developing to the universities meet the They education of blended diverse evolving offering fuel to portfolio relevant partnerships demand that engine. of needs learners. are and online enable lifelong by that Our a sustainably for

and which progress We maintain over over XX top in the of offering the is for portfolio. new launched student across bar university remains retention XU quarter. past partner the evident our choice high our tremendous

organization to integration position The Trilogy is is our and students XU progressing drive going. and the serve partners, better where market for realigned the We've nicely. efficiency

Some flow. to We're up a set the cash driving free profitable run executives new growth great for joined team. a

Our original in back XXXX. it as true as remains belief was

As offerings, value model is with than university of XX-year more capitalize our this uniquely proposition powerful universities successfully XU of launched on track secular positioned based digital the is tailwind partnership on stronger ever. record to our partners. working

strategy. with With success Paul new an the introducing of review new our in the provide the I'll including an the its for overview our of status. a integration CFO, our of review over we're and Lalljie, operation. Then a I'll calls. with the of structure Trilogy Then this acquisition of highlight I'll begin give arrival these having quarter segments we're performance

who to Finally, I'll you walk commentary. will and with through turn over it our detail results Paul more

demand enrollment with strategy. and We education market and top-tier start student offerings. OS we build, XU drive our our client. of our expand we for support platform, comprehensive reaffirming our universities that offerings relationship And Let's each and deliver outcomes. those digital with world-class Through strong partner scale meet with

that driving we're get how segments off let's business. our From jumping into the and spot,

to segment was million, quarter. program a $XXX.X up XXXX. compared grad had strong Our Revenue XX% quarter third

older offset which work Growth programs, by somewhat not rightsizing social new scaling program more in launches was by the legacy and particular driven is recent our of news. the our of

why affiliation, choose to more and ramp. foster universities a and they for our partner. believe preserve solid demand on XU programs give will consistently Top-tier revenue integrity highest their how about segment is which think quality, that have detail trajectory Paul We brand there's the the as you academic

of indicator we with segment program launched retention new a we wins XX% XX offering. Student this leading number in of have performance quarter and future highlight. to a pipeline degree This as

Data and with call, of last a program, after the Bachelor first earnings we Analytics Shortly London. our our Business announced University partner of undergraduate Science our LSE and

in total LSE fall is and to engagement based tuition to the we'll XXXX $XX,XXX, The to this a have XU total. degree the program. a strong roughly program demand, has of been as scale with slotted program with partner and but been chose launch correspondence operating increase

the Notably, that our through to validates our it’s belief the comprehensive us leveraged first grad offerings our be client, program across which to partner GetSmarter base. can come

we new Institute The top-tier our Rochester new also vertical. university announced and a launch Technology This online. quarter of architecture brand will

graduates becoming will program license again first field options. in the a the with vertical have We're architect. architecture very prepare architecture will strong focus program modern breaking on sustainability with our online of few the enter This a new once to to and way ground

We new notable. slot licensure largest able It is University, into were Syracuse the which program social shows is The also future. our of launch one master to announced partners. the programs in A another XXXX. fall with with work date university of well to slotted

We in health of require have speech, placements which some psychology, and others. digit counseling deep We're and enrollment a programs. our overall clinical large type including for these kind market winning program often growth mental in licensure seeing mode work's double the social

some with competitors here. Our in to underpenetrated ones are not these not notable play choosing disciplines, --

time hard a us competing licensure. have in with You'll

Hill. We'll more say progress soon. our Chapel UNC here making have with exclusive partnership on we're to pan-university Finally,

summarize, strong to program performed from this launches. newer well growth by driven grad the So our segment quarter

we'll pipeline our partners. growth and of existing number adding continue new execute offerings segment. to a in drive -- and new signing this a execute University at wins long-term we we partner continue against as profitability And against had strategy We to

up our Alternative In also to due courses XXXX revenue addition Trilogy. compared of outperforming million, Short Credential to primarily the XXX% to was $XX.X third contributed growth segment, the quarter expectation.

are pipeline many are volume.There cover. short In to a number also fact, of all-time student courses on wins highs hitting

These brands side, significant faculty in drive Stanford. short course and short the improved of importantly, some aligning the to world, recognizable enrollments, Oxford, the with LSE, also most MIT, courses. winning Yale On including we're progress brands

courses of number We brands. for new we're a with performance global strong XXXX. positioning in believe slotted We've

number the digital boot wins cyber, On boot side, launched marketing. in plenty We and of a camps highlight. are development data, camp there of web to

to boot we'll about addition, In announce which signed marketing offering. three particularly excited camp began new and those our new universities subject, Fintech when we camps to launch boot I'm rolled Rice. in we And Columbia XXXX, which out

in pilot best Fintech is The camp subject. one of starts seen we've the new the boot

of neural predictive roles, stock something. You a it's using prices notebooks, learning creating gain blockchain, deep with creating for building variety models skills really Fintech and flow networks tensor and Jupiter Python wide including for

most and we can needs talent believe it real. boot in the The offering Our great in university is the world compelling industry camp market. with to provide XU. the is tandem here The technology tie

content. relevant most and Our relationships allow us with to rescale continue It's offering, opportunity massive the a to enterprise workforce. upscale the technical

we're such The office comps benefits. and integration of Trilogy finance, and integrated already well tech functions as to some is HR, cost of back underway. those see starting We've

cross the Trilogy clients. We and also universities integrated the camps client selling University to originally beginning in our boot relations sell team, already for university and XX to they're existing

University to better greater expanding and some young our us structure margin. The strategy cost across fact that company, particularly Trilogy integration will bolsters achieve a landing rationalize need still M&A position. further we're also marketing but and a the side validates starting broader of which set we're help spending is discipline our their on and and of the

segment results is pipeline of integration and summarize, proceeding To Alternative and strong nicely. the wins Credential the delivered Trilogy

flow to Turning we're operations; decision-making. cash profitability towards positive and our driving free while streamlining

realigned operation. improving As We efficiency look in closer our quality for org managing line. directors to at we continue of the each invest we're our adding a structure taking product

the departments our support universities of taking. recently for and admissions is company; largest now also approach many merged two teams. our This the student We an are

our experienced two directly work with combined team partners. Additionally, that we distinct program

initiatives, help improved student efficiency experience, progression Paul flow we management this. execution operations. and experience behind play this in focused key With restructuring working the disciplined improve expect So drive to a companywide. role university and the cash our will cost of the capital

team. to Turning the

high to of put continue this the Our incredible who mission-driven the that and to over with I'm and an group employee years strong partners in resulted first. students university culture people work proud be retention our case quarter. has

added Trilogy Officer to who had also He that a our of same industry as experience. our talented Learning join Luyen Trilogy We to prior role. from decades years of team. came Pearson Chief Product We two Chou, five Chief three with in us spent executives Officer, joining

Mark where on report was brought our and world. to Luyen came Officer, new of also Chief the CMO a Jennifer for and Warner some the led consumer Jennifer will spent We iconic multiplatform she years. brands she to Ogden-Reese, Both who decade the COO, in where Jennifer media Time most successful Marketing from at Chernis. three SeatGeek over a strategy past us

part our be will business, honored fantastic his running for passion to of leadership Senior at Paul, given Paul team. have experience importantly, extensive the Management my I'm by also the of me the Lalljie It Jennifer, side. as for diversity XU. Newstar in the back row the partner mission strengthens they Most a in higher not further education, team to Luyen only bring eliminate

in engine believe the I age suited university remain them for social and conclude, drive remains to To and into the bring shareholders. and great for doing mobility we powerful the digital help a best value long-term that economic partner

to hand Paul that, I'll financials. With it the to off discuss

good and Chip afternoon Thanks everyone.

the because a team. off I mission-based leading the how is by saying and XU thrilled a has I and to segment. market position leading in transformational me start am – Let be XU in joined it

an I education company growth in to the see I cash making best in leading XU offer opportunity as look and educational high-quality scalable to free the for online the world. capitalizing the and generation. we the institutions forward on focus way impact

topline quarter integrating performance acquisition on win, on and efficiency. pipeline recent XU's organizational progress focus the relentless important this growth, strong our made reflects

with of then discussion of sheet how think before discussion on I'll revenue drive we with touch cost by and discussion I finishing can a efficiency start followed up a the guidance. the of balance

for $XXX.X the up In the revenue over graduate XX% million, quarter year. segment, third program Revenue from of last the quarter year. last XX% grew totaled

largest headwinds recall, may we program. previously our there You that were disclosed in

in gone Excluding that graduate the program, the segment would've of XX%. impact revenue

pressure also And extremely I'm many original have of But we to size. remain coming well. grown those our down be are We happy scaling told of relatively programs cohorts large programs. were than older to last that expectations. newer that you they our seeing far in some our say quarter Many are larger across while

in We to item. revenue contra launched by XXXX in revenue Full programs XX in the or a for third XX% A was between perspective account number helps by for FCEs. growth one, access decrease into increase which was of and X%, an of increase XX% this scholarships, XX%. segment the partially revenue year-over-year a FCE XXXX factors; quarter Course main driven graduate a education. is on offset by Equivalents put was increase two revenue in This To driven scholarships per the

the of other some strong but less help drive in programs, reduces mix expensive The extremely growth in newer is FCE. which shift in growth revenue and FCEs, our that for

of While need. best is pricing variety we will option the our of provide don't to that to and them students it we well-positioned across programs a important offerings tuition choose are any set works the spectrum. of meet Students for

The was driven increase by $XX.X this Alternative XXX%, in the Credential Trilogy XX% an segment per revenue from and XX%. revenue acquisition. segment a includes basis XX% revenue revenue FCE. FCEs of growth million grew grew in in organic growth which On This

of the should cost strong continue that we FCE to increases a expect is until camp lap that per much than acquisition. show mind in you revenue short so of course, see to the higher Keep Trilogy boot

Trilogy million for loss million and $XX.X $XXX.X with a Net of in million The goodwill impairment million, expenses. charge, the the and quarter of expense non-cash and of costs costs of $X.X third XXXX. $XXX.X quarter and acquisition, versus $XXX.X operating was up $XX.X expenses includes increase at million million look integration $X.X for transaction totaling costs. related restructuring costs Let's million

increased that items primarily operating Excluding expenses and This XX% underlying personal programs marketing, across in technology our our million. platform product grew and was by or spend offerings. support on increase the these investments $XX.X personal direct related the cost driven launch

at presented quarter the non-cash price review. goodwill charge. decline me triggering stock on in a event sustained spend our impairment goodwill warranted during few the a The a moments third impairment Let

exceeded September as and value. in unit review value charge XXXX of fair million $XX.X of its carrying X, resulted a reporting a the impairment because performed the We that Trilogy

a expenses Looking at cost. restructuring and sequential a operating basis impairment, underlying X.X% was sequential Trilogy expenses in on decline actually excluding the and there costs

percent. cost into Adjusted additional this of XXXX cost showed acquisition decline incremental was operating for loss quarter perspective the in million the million. larger the and a of sequential from put $XX.X launching third year and driven by adjusted a of primarily measures showed Both third loss a EBITDA from To loss Trilogy the $XX.X totaled programs. quarter last half expenses in net quarter new

after thinking driving share to few towards and my like some I'd how profitability first about weeks color XU. at I'm

to deliver we As highest works of great provide This help said, digital the partners. build, Chip because make of and education we service investments universities the quality scale. support in and our

become same the that here, clear driving can high business. customers our service to level to we of it has starting Since the deliver across continue efficiencies while

initiatives efficiently. have customers action reduced I way organized our reduce more us quarter cost annually, these positioned The by to have our in million $XX team XXX,XXX should of serve Some million restructuring we cost already and run started. the plus rate by $XX believe that the to

only drive focus My we that how money be We deploy more outcomes. are market going spend to we on investment ensuring select, be on we to desired in and that develop programs. the capital things those will programs disciplined

for and leverage the market build programs. believe how For drive I and of see example, I courses scale. to opportunities will support business we functions continue efficiency certain we in

Trilogy aligned The strategically is with business mission. our

Chip us our maintain clearly As out, education. leadership digital pointed position of us STEM, positions adds number the win and incredible in partners university to helps in it

that more operate considerable smarter clear and as we efficiently to there Trilogy opportunities and is of complete profitability. the it But growth are built sustain integration towards

a discussion balance of for Now sheet. the

by and and September in million $XX.X quarter XX, from June primarily of XXXX cash June million assets from of cash total decrease the cash of and of million XX, a intangible operations the of content delivery. $XXX.X to million, amortizable related $XX.X was $XX.X addition As from million equivalents decrease $XX.X use driven

Accounts receivable of of $XX.X end totaled compared at million quarter the end at $XX.X XXXX million the the to quarter. June

term end to Long-term in pay the related balance maturing full-term quarter the was come quarter principally as We XXXX. to of million in year-end. fourth at $XXX.X debt the facility schools down loan their our balances this the expect May off before

programs As to economic will the the returns efficiency. we the on the for optimize going cash I cadence, operational And of mix think and as partners forward, of program. we're continue based as our from of cash to launch going drive each and launch we demand profiles flow the well

free liquidity our planning process, disclosures quarterly we're quarterly our would a reducing expect that cash flow So our still rates XXXX note results. forward be focus on even metric in though usage. in we at going cash will we of to by and I position the also our enhance discussions that will in

will less flow operating We free cash define and restructuring net excluding payments. as course cash payments identified in used activities, capital expenditures non-ordinary and certain

for discussion guidance. Now, the of

we the Given as strong revenue the indicators XXXX. we And FCE's pipeline year. to for remainder the we have high confidence revenue wins coupled where in our such of leading and for with our are year, visibility increase when have in enrollment

XX% range to $XXX range. midpoint and revenue $XXX growth at representing expect now of the We between million of million the

impairment, loss net for to guidance $XXX.X the we and and restructuring our be million increasing due are $XXX.X million which charges. between expect now We to integration

to This operating not between and for from moved to third loss timing $XX not adjusted the increase adjust guidance fourth is expenses million full changing did the guidance why expected the $XX are for which our is we of EBITDA million. substantially that EBITDA be quarter. more year. order guidance certain our reflects We This the

XXXX. guidance, comment on leave let we Before me

for a the forward. While following going not earnings we on I quarter do doing this plan call third I preview on gave recognize guidance that prior year.

before CFO As budgeting it guidance. the is to my the practice for cycle as complete issuing year

the for expect XXXX Having of to business XXXX. do continue second strong the into trajectory have leading we as said that, and such arc indicators we see half

have a strong with leadership secular a to market huge position tailwind. summarize, we in So

XXXX market we business is rate the team strategy management we HolonIQ The right and by growth annual with global billion believe long-term configuration and growth from drive market right that that to Our projected have $XX education profitable shareholder the a compounded defined online the value. XXXX. and board markets serve is XX% a is to higher

from seen our segment faster a growing basis consolidated on and you've a we rates as are And on growth basis.

value optimizing focus efficiencies shareholders. operational our deliver program increased launches we we expect to long-term to As on and

our call. results which our I that forward turns we today and go are your subject session of Before strategy, you questions on quarter today's third focus question-and-answer the ask

We welcome will perspective report the view be one aware addressing that of company. though of are of media not call. our investor's We regarding shareholders on this we the report

And with that, operator, please open the line for questions.

our Zelnick Instructions] And coming first Credit line [Operator question the from is Suisse. Brad of with

Your open. line is

some well. congrats to much. and the Chip, and Excellent. Nice Thank business see as Luyen good in quarter. a Paul, so welcome you a warm to stability Jennifer on

Brad. you, Thank

sure. For

but disciplined with mentioned adjust opportunities you You both are as growth plenty continue new business more competitive for you segments, How also the see environment. of that expenses becoming on to think next? for you And savings cost between revenue this any Credentials think we each about versus growth balancing how about in insight Alternative DGP should segment? growth for into and year

Thanks Brad.

a are think – of say, we growth alternative So, We about use across profitable the universities would you clearly into category we boost returning and when without strategic credential how about to standpoint think cash to the camp segment segments, from I the offering the the an can't focused boot and segments. to we is our ROIC how you. about think and both the Trilogy brings and where STEM on we offerings opportunity that think need candidly across best industry expand without something tie Trilogy, like to their really going are that

company today partners you, portfolio. grad partners to XX when I for and XXX mean, and will IPO-ed XX we frame we just over degrees So, offerings. the have six we expand we and continue to it the had

whole subject a types across So to just expand of over of think degrees we continue to XX today. and variety about XXX that offerings that. different

just to strong discipline of part for segment bring is the opportunity best Credential is need think a the outcomes that. the as programs And picking and our and possible, to to best both that be continue we driving the I the table for student to So Alternative company.

Now, of at grad our legacy the that Paul the segment can provided one we XX% programs able pleased that, see got when same to program that largest then XX% have time, top the segments I were declining XX%. would grew at think with and and XXXX you and are programs in without growth you our program that And program seen on XXXX of segment the to one still see growth. you

offerings that segment, the talking strong education only still You're very overall of online overall. but growing about the OPM are rest above not

still are of growth top the We at expectation.

pretty So quarter forward as and look to Investor with community specific closer. the to our Day we we'll more as new be we're back pleased the which more to at we in as early with detail giving will clear and a we calendar year get you date possible this be do

makes plan just a sense. your maybe Can you feedback see follow-up. we That any tuition you with interest other jumping well? programs And on perfect Thanks. quick Thanks. zero And Simmons? deferred board on to expect might received share as

Yes. all tuition across a ed long-term that that of university that We about seen offered student. has times I deferred was anyone first love the program. of outcome What the our partner aligns thought we've with -- the is one of higher it it

from they're in of the a at all they've nursing floor a student in As no interest first in program tuition and the program. in minimum graduated and the the with the half job the is there program until

early down was the be about to cost from out that We're overall. out. university clear another and students. It's we to in it's excited rolling pilot announcement believe So it education interested so another do I an expect their particularly to driving shortly have of do rolling

scale partners benefit shows So university the our where world, can body. just but it the we really think our student not

think it's we a great opportunity. So

taking my Awesome. Thanks questions. for

from is the Our of line Baird. with Jeff next Meuler coming question

is open. Your line

call, more about it interest Yes. the two the how Thanks. elasticity guess I question, and economic the and tuition on could impacts Chip, talk I you from they CAC off other deferred up student outsized hoping zero your just points guess data price and the the with increased the broadly growth. picking last scholarships and side model

and how thoughts So price model? your just it your would financial on elasticity impacts Thanks. love

provide we Well, clearly think do greater over improves. -- to student the conversion we value as

that We've education same end across in So the quarter surprise. up FCE of XXXX to proposition. things about is it's across the average now opportunity graduate segments. time to you've lengths about we the various an different as bigger the we played a was in the lost with that Alternative The many a the have got Why? I all start cost much the what on broader $XXX,XXX value we Because prices, always a programs premium notable is income. company of course to back various average and inexpensively largest At was grad, mean, is thought we've programs one much spectrum came Credential. degree I got the FCE obviously way That's the a no way And cost than start at the were and of we as about go types think different up of in side. as – down certification are short $XXXX but market. a all in of

time, something over in how to attainment need have to further like educational of which the learn goals changer. AI to to doctor entire therapy they're their life points three-year to their a is physical price We options a like something like course offer job whether skills spectrum. looking short students from a use for across And we need or

we're enrollments. are building where more moat. disciplines a So we're licensure require certain like pretty digits I think there Those double And do in deep up credit.

very down a cost. offerings like those things competitive be gone tend candidly hadn't to short we significant to path boot of inherently STEM the if space. of rest courses where at higher side So and camps a disadvantage the on STEM the have we'd certain There's

been we options time at importantly. that body outcome the the drive lower the content That's I and quality kind of itself, But not need thought the of be about I are same like universities priced to we feel Like do to, quality. faster is has of that short was our of incredibly last interestingly like quality high this right with got really first Economics to we in-person excellent at times program, quarter the enrollments physically after experience board immersion for really coming they after the London students short of now we STEM. LSE LSE is And where announced in because ultimately experience School for with in something are student most quality student it an call, talked literally undergraduate quality course which quality the driving business having high respond the our are but quality course. like on enough a

We ed. happens a program of opportunity about across don't period for a they and for And we got forward. And got engagement that we've do think launched XXXX. could all improved all us the higher what that And offering it's excited think legacy a been then huge going retention over for world. they've

continue going and XU lot of opportunities on scale. there pursuing quality lot to So a at for

CAC you Thanks. increased graduate and holds? for when price points, target with or programs the undergrad the still And that do financial you or lower make it scale up programs do the model at lower

if if scale expectations for you purely being from just up perspective Yes. ring programs, you're a the larger and programs much outer clearly more larger students expensive. as have we from we I start end the those size up mean, most that -- -- to on thinking end about

over our sized as time best all investment models working full achieve we'll partners balance, So the having of program for our develop I quality partners ROIC expectations, with growth. of to the our a for drive combination think opportunities about more right talk to and think we It's sort partners having on track about we for the geographic and we here. we're the university that program. more identify reasonably good And can new the

Okay. Thanks Chip.

of question is line Corey next from First Our coming with Analysis. Greendale the

open. is line Your

afternoon. Good Thanks.

So, and focused the the efficiency topic, couple program marketing questions on on a sales.

anything kind So sort spending place? What the that years? that would you're sense have extent do cases You intentionally there in can decrease already Do thresholds to amount launched you front? constrain to requirements? for been what certain some in the to of artificially few constraints some lowering first are of meet constraints that Are in the in programs that on contractual any programs you on are or any have in or last need enrollment is makes it place. performance like

or say, the any all, be appreciate too many I here's company practice any first of to company. about the not forward, wise concern. contract. general individual a said, So We, the what too not not it. just just that's offerings With do large for It's university to question. we're would in It's wise Corey, We're a talking of going not going for general individual relationships. the that with

program giving which make XXXX? wanted should more And a sales applaud understand side? efficient it to focus on know flow the question is XXXX be free about two-part the quarterly you that graduate planning the you maybe negative program in given in in just to I for a Are how affect Okay. that marketing you I guidance. make things business just I fact Paul does that early cycle. and the much? change question. lowering the – And the efficiency sure on the is How there XXXX process, two-year quickly in than your how effect suggesting in I understand cash I secondly, but are is that. less clarify not But comment And burn. you're can

a So, things. of couple

it look cash the a ROIC let years look and perspective. three at perspectives. want perspective off to an look forward. to it flow from want at framework we quality it to want We a from at me it look at at from perspective. we going We how and look We programs of we from a launched by start want to the in me will providing Let coming

going we're going have. we that of timing so that -- that reaching to are choose we our program to the we're programs choose launches, essentially, ROIC targets So select programs can and

cash We the and quality of maintain want we want program. the to we flows we sure make our make optimize sure to

seen profitability number if it impactful think then that and our that to most XXXX from the in and financials launch Trilogy cash as point into quarter That's Point our restructuring the our we it of XXXX taken we've particularly the of measures. the whether programs will we free integration measures is So whether the in you've number are perspective that third we alignment business, charge that get it's taken, the of the whether two, organization. one. us the flow

that cash towards next and as improving flow our going year We are we doing into an forward. eye free get with performance

maybe will that plan will So, to is not it less way you but yet, So XXXX? be in cash you answer question answered the the I already think in would a XXXX negative fair than question. – you're just free But expect say

yes. absolutely Yes

Okay.

intend have less a free come as will balance. we the specific to be and back a to We will our cash you when we go as flow cash dilution and to it accretive. on timing quarters through less The at

So absolutely the yes. answer is

Good. for you Well, clarity. Appreciate it. the thank

Okay.

question coming line Blair. William next Sheldon Stephen from Our of with the

is Your line open.

Good afternoon and appreciate bit detail a ask quarter. scholarship the to I this little more all front. wanted on the additional

talking are as down quarter? that you is you funnel initiative. pay thinking did in frame conversion? about frequently more this been about look maybe scholarships much scholarships think You've we spending help And on which help Can forward? then I broader that how And a great a you how

reality the of is now you've getting lot scholarships most to impact drive not I clear the arms going a of quite space right the on just tough we're just get professional on our a have in particular standpoint. a we're growth. additional seen say, are programs across successful students we're for impact in given something we additional a that this their our from So, lower in programs programs, strategy. deploy we've very I professional clarity competitive seeing point all at its any say, really are is programs holding sledding arm segments. It around of I option. our guess given in would notably be standpoint believe call, do professional We only it having would That where the still programs And around campus just campus the significant economic we overall. detail campus conversion on of how into our of – but would where not also and part prices the

various quality program, students and when student at high quality we a have So scholarship their of high students journey so are really stages factor. high quality comes important

it to funnel? that to and the in Got students existing it. offer those Is to both are

I'll just additional to get going not scholarship. into around detail

through far, next just think of any commitment of ones way and for point. And that capital running frame have Okay. type need program year you'll just launches – And the way programs been this announced then up any so to you and get those frame roughly it? what That's to helpful. with to if there kind is

we look math million back of hurdle the not of at that allows the back a look at It's look at million so us something we we as that of launch the programs at of in cash and a better example, far. of flow envelope about the allows look can but how the on we it's the at spend to our to-date million, can we've programs year quality this we've XXXX spent take for us that XX, an see we to gotten spent. if to number. And the launched Let will commitments profitability can going to looking XXXX, $XX rate. that so be on average be a that can math, to about think me cash the $XX We programs. measure absolutely going expenditures pick If we going way and to at we reduce as we at. be of look usage. we have three that Look, We want stab one. If envelope $X here and up a next mean, pieces we're take mentioned I've start speed I at I I to year. doing an plan XX performance

if next if allows a of think that. optimize year, that us can Point short you think of that number business, capital basis now light that we we segments we two, in for grown. has Alternative back So on one. point number Credential are XX, have business We will. that can the have That's the course around more envelope the numbers we do to the

of the on great spectrum degree Alternative us alternative performance allows launching do have in not basis. to in an optimize we also programs annual Credential our segment So only segments, the across which the the but

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Thanks so much.

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great. Okay,

and present at just where our we'll we're And got but soon. clear be there we've point year our to to specifically, next Jeff get terms ready a yet like looks what of not in plan

but pursuing ask involved, options? or about other a it your talk Appreciate of investor, activists. for when but strategic the you some understand. apologizing at unfortunately alternatives not a having like out maybe going either end or know to to this that. about call you Thanks. the of about cut And started does the asking question I somebody the firm I least towards I'm about mindset I'm media change speculation this specific

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Needham from coming of question Ryan from next the Our & McDonald Company. line

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much. Great. Thank you very

Goldman Sachs. the line And our Tong next George with of from question comes

Your now line is open.

Blake is question. my on George. Thanks evening. Good for for taking This

landscape a related expect margins for high that the see XX% XXX trending should XXX, some that its previously, how we see smaller to know over to age? quarter competitive range four cohorts older forward. going state you Given that I time? will to we think trend sizes about And do how than at bit sized the evolving programs of do years continue program see discussed last down steady but or your you

we a the down. got doesn't of great seen and largest have side believe still latter discussed we've Obviously, fairly the come easy. that in the size margin is business as the strong grad we've programs We overall So, the in past change.

of across one to we IPO-ed of just of variety business. talked XX about we was growth of significant degree program a is the is example your But development revenue our today And business XX% were the XXX came But IPO-ed programs. the XX. above have an programs the a from at took from client. the one when one impact plus to part segment very when that give different how in one. As we this in offerings you XX client of we our of same the question we XX%, just client, to company relevant have sort call Today, types. had we time of we that's -- XX product That only

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can return story. quality And outcomes. we our And approaching the needs for partners on and the high the so enough this over drives university our the quality student focused And of the is business. of all that's that about diversifying best long-term solves driving market we're on time, flexibility and capital the with with

and to I over couple I call. the -- our wanted question, road thank Operator. weeks. to his the That's we Lalljie of more end to wanted arrival and talking detail look for forward in get last on to we're the everyone Paul So to as excited next out

participating. today's ladies gentlemen conference for Thank this concludes and call. you you Thank

You may Everyone all disconnect. have great day. a