My name is James Rhyu. I'm the CEO at Stride, and we have our management team here today with us. Donna Blackman, our CFO, Les Ottolenghi, our Chief Information Technology Officer, Todd Goldthwaite, who heads up all of our new initiative products, and we'll be speaking a little bit more in detail about what those are. Tony Bennett, who runs our entire managed school programs, Vince Mathis, our General Counsel, Val Maddy, Chief Human Resources Officer, and Deb Hannah, our CMO, Chief Marketing Officer. So, I wanna start out by reminding everybody that it's an investor day, so almost everything we say is gonna be forward-looking.
That means you should check out our safe harbor on our website, all those statements about forward-looking things and doing your diligence, making sure that you're careful about what you rely on in our comments today. I'm gonna start off before I head into the presentation with a few comments. The first is, I joined this company about 11 years ago now. I became the CEO about 3 years ago now. I am gonna give you a little bit of a background on myself. First, we probably have a number of people both on the live stream and here in the audience who may not actually know me or my background, so I'll just give you a little bit of a background on who I am.
But there's also a point I'm gonna try to make, when I talk through my background a little bit. So, I think starting off is my original career started off as an accountant. That's sort of my first professional background. And from there, I sort of moved on into finance roles of increasing responsibility throughout the course of about a 10- or 15-year career. I worked at a company about 20 years ago in Hong Kong that was a mobile telco company. And 20 years ago in Hong Kong was probably some of the most advanced mobile technologies in the world.
I worked at a company at the time that took a little device by a company that most of you may not have even heard of, called Compaq. The device was a Compaq iPAQ, the name of the device. In the year 2021, what we did is, we put a slot card into that device and connected that device to the internet. This was at a time that another device was starting to explode. It was called the BlackBerry. The BlackBerry allowed you to send email wirelessly. And 20-some years ago, that was one of the biggest technological breakthroughs. It was a secure, over-the-air email system. And in Hong Kong, at almost exactly that time, we were embarking on mobile internet.
In fact, for a time, I ran a division at this company that we called WIN, for Wireless Internet. Fast-forward, I worked at a satellite radio company, which is now the company Sirius XM. I worked at one of the predecessor companies, XM Satellite Radio. At that time, streaming radio, streaming music, was not a thing. And, satellite radio companies brought essentially streaming music into the mainstream. I then went to work for a company called Dow Jones. This was at a time that a company called News Corp purchased Dow Jones, and when News Corp purchased Dow Jones, they brought in essentially a new management team. I was part of that new management team. And this was at a time when content on the internet was free. People did not pay for content on the internet.
And Dow Jones, with one of its properties, The Wall Street Journal, was one of the very first, and sort of one of the first credible industries, I would say, that charged for content. Then I went to work for a company called Match.com. And, if you're of my generation, you may not have ever heard of them, but if you're of a younger generation, we spawned this little thing, this little app we called Tinder. And, that app is the app that is largely credited with making online dating a mainstream event. And then I came here. So, I'm gonna switch to a different story, and I'm gonna come back to my background in a second. About five years ago, the then CEO of this company, Nate Davis, approached me, asked me to go to breakfast. He said...
At breakfast, he said, "The board would like to consider you for the job as the CEO." At the time, we were called K12. My immediate response was, "No, thank you. Not interested." You can imagine, I was. I'm an accountant. I mean, that at the heart of what I professionally have done for most of my life was being an accountant. So I just had no but view of myself as a CEO of a company. Over time, obviously, they convinced me. Prior to my appointment as a CEO, I wanted to be very clear with the board about three things before they appointed me. The first, as my background suggests, I'm not an educator.
I like to joke, management team will know what I'm about to say. I was a C student, so very far from being an educator. Second is, I'm not a politician, I'm not political, I'm not a policy person, and if you know anything about the education space, that's a very important set of experiences to bring to bear to a particularly to a company like ours. Third, I'm scared of public speaking. It's true. And as a CEO of a company, as it turns out, you're asked to do a fair bit of public speaking. Now, I think we know the outcome. They still appointed me the CEO. Why?
Why would our board take a chance on appointing somebody with no education experience, with no policy experience, with no political background, and who's scared to stand in front of an audience like this? Well, I wanna think, I wanna believe, that all those other experiences I had, that all focused on disrupting industries. That is what I believe, in their minds, was most relevant in helping decide whether I was qualified, 'cause I clearly didn't have on paper a lot of the qualifications that you would think. If you drew up a job description, I would check very few of those boxes. I think that what I'm gonna talk about today is about education. We are an education company, but I think it's about something a little broader. I think the themes are a little bigger. I think our opportunity is massive.
Part of the way that I think about our opportunity is actually reflective of the space you're in. We used to occupy, before the pandemic, six stories in a building down the street here, and it was typical corporate office. In those six stories, you would have one floor of executive offices. We had conference rooms all over, you had people sitting in cubicles working, and it was corporate America. For those of you who are physically here today, I'd invite you to take a stroll around our office, and what you'll see is, if you walk down this hallway, at the end of that hallway right there, you'll see a desk out in the open. That is my desk. You'll see throughout the building, throughout the floor, artwork. That artwork represents kids.
It represents opportunity. A lot of what we are doing is providing opportunity, and we're providing opportunity for millions of families in this country. So when I think about what we are gonna become, I really think about the mainstream opportunity that presents itself in front of us, that has its roots in a niche product that was launched 20 years ago. From that niche product 20 years ago, I think we have a mainstream, global opportunity. So, this is our agenda. I don't know of many industries that have this opportunity. In the U.S. alone, in the U.S. alone, education spend is over $1 trillion. $1 trillion in the U.S. alone. K-12 education over $700 billion. Now, when I joined this company, somebody said, "What's your market opportunity?" And I'd never said this. Why?
We were a niche company. Our opportunity was really targeted at a very small subset of what this represents. I believe today, our opportunity is actually this, and I hope today you'll see why. So full disclosure, we stole this chart. I think we got permission to steal it. Thank you. We were at a conference in 2021, I guess it was. I think actually, the conference we were at was in 2023. But the conference was held by a company called HolonIQ, so shout out to them. Thank you very much for letting us use your chart. But when I was attending this conference, they sort of set the landscape for global education in this way.
If you're like me, you had to be sort of taught that actually, it sort of represents what's called a periodic table, which is the table of elements in science. I wanted to say chemistry, probably. And so it obviously has an education theme to it, but it represents the different verticals within the education ecosystem, and within each of those verticals, the different opportunity sets within each vertical. And as I said, at K12, historically, we played in a very narrow set, predominantly here within the education sector. Over the course of the past several years, we've played in these areas, the four verticals with our name under it, and then we have other verticals here that are pure opportunities for us.
This gives you a little bit of a sort of setting the stage, and you guys will all have a chance to see the presentation and see this in a little more detail. At the core of what we do, we provide virtual education programs, and we generally divide them into two categories: general education and career education. Historically, our programs were predominantly full-time programs. I say that historically and predominantly because I hope, as you'll see throughout the day, we're moving into a broader set of offerings that I think, I believe, at least, will leverage off of the things that we're doing here, but expand our market opportunity.
Within our core educational offering, our fully managed virtual programs, we have been offering or will be offering the product suite that you see here listed under new products and markets. Why? Because our ability to expand into new markets is predicated on leveraging existing assets, existing development, existing opportunity. We'll talk more about some of these later in the presentation. So, we debated this slide, interestingly, which is a weird slide to debate because it's numbers and math on numbers. There's not much to actually debate. 2020, our fiscal 2020, pre-pandemic. Our fiscal 2021, pandemic. Now, for context, in fiscal 2021, we had this pandemic bump. We were sort of considered, I guess, a pandemic stock. I think people, after the initial bump, believed that we would revert back to pre-pandemic levels.
So why did I say we debated this slide, and why is it at all controversial? Because we've had this 18% CAGR since 2020. It includes this almost 50% jump at the pandemic.... If you exclude that, the CAGR from here to here is still 9%. It's not 18%, but it's still 9%. We're gonna show you some stats later about how that translates. People also, I think, were worried that our enrollments would revert back to pre-pandemic levels. Not only have they not reverted back, but we have this year grown our enrollments, and I think we're very confident that we've put ourselves on a trajectory to grow enrollments long term. Even better, 43% CAGR for Adjusted Operating Income . Take out the pandemic year, and this is still 20% plus. Same over here.
I have a basic sort of philosophy about running a company, sort of a 20/10 rule, or 10/20 rule. Grow revenue 10%, grow profit 20%. It's what us accountants like to call leverage. I think that's important in a business, especially at scale. And, I'm gonna come back to this point in a few slides. Okay. So, this slide, I apologize in advance, this slide will appear a little bit braggy. It's purposeful. I apologize because, there's a very simple mantra that I like to operate under, which is gratitude and humility. So generally don't wanna brag too much, but I think it's relevant for this audience. This is nice. You can see it, you can read it. Yes, we have outperformed, all the indices, over a very specific period of time.
If you look very closely at the chart, this does not start on January 1. It starts on January 27th of 2021, my first full day as a CEO of this company. So I'm only measuring performance since I've been the CEO. The complete history of since I've been CEO. I've not curated it at all. I think the only curation done is that we cut it off on November 10. So, before I walked in here, I just wanted to check the stock price just to see that it didn't fall off a cliff. As it turns out, I think the $126 would now be like $127 or something like that. But more interesting, I think, is this side.
And the reason why I think this side of the table is more of the slide is more interesting is because this table tells me that if I had attended the class in school on market efficiency, which I'm sure all of you have, that I probably am better off not having attended it. Why? Because a company that's growing 10% top line and 20% bottom line, and on a relative basis, underindexes every major index in valuation. So from an investor standpoint, it's my belief that over time, this corrects. And I don't think we can attribute it to a pandemic overhang anymore. That's excuses, I think is long gone. Now, I'm gonna apologize again to probably the CEOs of the companies that I'm about to show. This is a slide of a select number of education companies, public education companies.
Our line's exactly the same as the previous slide. Didn't change the starting point, ending point. In this period of time, we have outperformed by a long shot, not even close. And again, I think the right hand of this slide is more interesting. Why? So to be very transparent, our revenue growth, not 18%, 9%, lags most of our peers. As it turns out, most of our peers also don't make money. And in spite of the fact that they don't make money, they have much higher valuations, and in fact, most of them don't have a forward PE multiple, forward PE multiple. The ones that do, largely, well, you've got a sort of a market multiple here, not profitable. Similar market multiple to, to us, that's Pearson. You can talk to them if you want about why that, that's the case.
Not a market multiple, 322, and then again, I don't wanna call out any of my peers, but let somebody else explain that story at the bottom. Growth and leverage. Profitability all along the way. I happened to live through several market bubbles. Most of you look like you're probably not old enough to remember the dot-com bubble, but I lived through that. The bubble of the late 2007, 2008, 2009, whatever, when the credit markets collapsed. Most recently, run up in the stock market through 2020, 2021, 2022. And one thing consistently I think happens is that investor enthusiasm tends to migrate towards flashy, fast-growing, unprofitable stocks, until people realize that at some point, you have to have scale, you have to gain leverage, you have to be profitable. We have done that consistently.
So I've been sort of educated on different groups of investors: value, growth, whatever, and I'm not sure what types of investors are represented here today. But we have growth at a compelling value. We think we hit multiple categories. If you're a dividend investor, please, you can probably turn off right now. We have not issued a dividend, so you're probably not our market. So I think the thesis is actually pretty compelling. The first is, we're a disruptor. We, in fact, created the virtual online K-12 education category. That core business of ours is strong, it's growing, it's sustainable, it has huge market opportunity. We are leveraging the suite of things that we do within those virtual programs to create new market opportunities. We have an amazing team.
I think probably more than anything else, we now have track record. Credibility, that's, that's usually the question. When I became the CEO, a lot of investors posed that question to me. I think three years in, we now have that credibility. We've done exactly. You can go back into every transcript since I've been the CEO, we have done exactly what we said we would do. Okay. Now, this slide also debated some level of debate within our company. Why am I showing a slide that says three words? And why are the three words uncertainty, volatility, and chaos? Well, first of all, I think you have to believe in one basic premise, and if you don't believe in this basic premise, you don't believe in the rest of the slides, probably.
The basic premise is that the education system, particularly in grades K-12 in the United States, is not working. That is the underlying premise for almost everything I'm gonna talk about. I'm not gonna show you any data, by the way, but if you Google it, all the data is there for you... It all points to the U.S. as a country, in grades K-12 education, we are not competitive. Our worldwide rankings are abysmal. I don't think there's a debate there. So why these three words? Because increasingly, for a company like us that's trying to disrupt, when these three things happen, and they happen in greater volume, it creates opportunity for the disruptor. So you also have to believe that the world, the U.S., is a place right now, unfortunately, by the way, unfortunately, that has increasing amounts of uncertainty, volatility, and chaos.
Those market conditions for customers create opportunity for K12. So, bunch of stats here. The generation, not my generation, younger generation, the generation that this country is hopefully betting its future on, they are job hoppers. Part of the reason I think they're job hoppers, by the way, is because of uncertainty, volatility, and chaos. Part of the reason they're job hoppers is because they've been convinced through many generations that the way to improve your future was to go to college. And then they got saddled with that. Economic uncertainty in this country is increasing, and it's tough to deal with. Sorry, for anybody who's concerned, I don't have COVID. I tested this morning. I have allergies. I won't read all the headlines here. This is an uncertain world we live in. The uncertainty in this world, economic, geopolitical, what have you, societal, it creates disparity.
It creates a disjoint, and for a company like ours, creates opportunity. I'm gonna connect the dots for you here in a second. Labor market uncertainty. This is an ongoing message. It's an ongoing theme throughout the history of this country. Innovation upends industries. That same innovation creates new opportunity. As it turns out, the current set of innovation in this country is gonna upend massive industry, and the opportunity it's creating are for people with skills, not degrees. In general, the opportunity that's getting created are with people with skills. My degree is in accounting, by the way. But it's the skill set that's gonna create opportunity for people. You're all familiar with these names. You're familiar with them because they disrupted something. Almost every part of what we do and touch today has been disrupted... except education.
Every aspect of your life today, you do differently than you would have done 20 years ago. And this is despite massive investment in the public education sector. There is massive investment, and one of the biggest reasons the return on this investment has not panned out is very simple. The U.S. K-12 education system operates as a monopoly. When you operate as a monopoly, you do not treat your customers like customers. And when you don't think of your customers like customers, you don't innovate for them. And when you don't innovate for them, they get left behind. That's why none of these companies operate in a monopoly. They were able to innovate. And so it's my belief, it's my view, that education is ripe for the type of innovation necessary to improve customer outcomes.
Now, you'll notice I tend not to say a very specific word, student. It's not because I'm down on students. I just think that the framework of thinking of those customers should be as customers. They deserve to be treated like customers. They deserve better outcomes. They deserve investment in efficiency, investment in technology, investment in innovation. And if you've walked back into, post-pandemic, a classroom or a school district, particularly in underserved neighborhoods, you will see, by and large, a lack of investment, a lack of innovation, a lack of focus on the customer. In fact, I think if you asked those neighborhoods what their customer satisfaction scores were, I'm not sure they would even know. We rate everything here.
If you travel like I do, every time I go to a new city, I'm on some app or something to help me figure out where I should go eat. I'm not gonna eat at a 2-star rated place. So what has this driven? Well, while the system may not be listening to their customers, the pandemic did do one thing: customers started voicing their dissatisfaction. Dating back over 20 years, customer satisfaction, never high, by the way, in and around 50%. Latest number, 2023, 36%. Customers are not happy. They're worried. In fact, there's a huge disjoint between what customers think of the system and what customers think of teachers. Some opponents of ours are going to accuse me of being anti-something. I'm pro-customer. I'm also pro-teacher.
In fact, our network of teachers combined, we qualify as one of the 10 largest employers of teachers in the country today. And teachers, in an age where you hear about teacher shortage and things like that, we have amazing teachers that love working with us, many of them because they're frustrated with the system. But in general, while satisfaction with the institution of education is low, satisfaction with teachers, over 70%. Over 70% satisfaction with teachers. And we have higher satisfaction ratings because our teachers are better, but still, over 70% good, compared to 36% with the system. School choice is a term that is sort of generically used for alternative forms of education, alternative forms of education being essentially everything that's not the public brick-and-mortar school system. 60%-70% of the population believes families should have some choice.
Now, I was surprised when I saw this data. Why? If somebody said to you, "Do you think you should have choice in where you shop, what you eat, where you get your healthcare?" I think the numbers would be a lot higher. So I believe actually the numbers are much higher. I think they're skewed by political views, and I'm a very strong advocate. We should not impose political views onto our kids' education. It's not gonna help us win as a country. Let's keep politics out of it. I think these numbers are actually much higher, and parents are considering options. We have had, for this company, for many years, one major problem. It's the same problem we had when I was working at Match, actually. Awareness, stigma associated with online education or dating, as the case may be. Until you have an opportunity to break through that stigma.
Tinder did that, largely. Actually, the athletes in the Rio Olympics, I think, helped to do that when the news cycle had them all using Tinder to meet each other. The pandemic helped do that for us. Pre-pandemic, very few people knew what online learning was. I don't think anybody now has any doubt what online learning is. Not everybody likes it. Not everybody should like it, by the way, but the stigma and awareness have really sort of been somewhat resolved. I showed you that debt figure, $1.5 trillion of student debt. I said that attitudes are starting to shift. The premise that you have to go to a four-year college degree to get ahead, I think is wrong. Skills are more important. The data suggests that finally, yes, people are starting to recognize this.
Almost half of jobs out there do not require a degree. When people who are looking for employees, they, 5-to-1, are not looking for degrees. I used to be able to say something. I can't say it exactly anymore, but I'll still say it. Well, I graduated from an Ivy League college, but in 30 years, I never hired an Ivy League graduate. I'm not sure if that's actually a good thing or a bad thing. But my experience, I always thought that people who went to some of the other schools, they were a little bit hungrier, actually, and I think it's that drive, that hunger sometimes, that propels people to success. And I think similarly, people with skills will be propelled to success more than people with pieces of paper that say they have a skill. Okay.
Is there a skills gap? I think overwhelmingly, don't ask me. Is there a skills gap in your organization, and in the course of two years, we went from 55% companies saying yes to 69%, and almost 90% expect a significant skills gap in the next three years. That's basically today. Education has not really changed, and we believe we can change the future. Okay.... I'm gonna try to step down a little bit from my pedestal. I'm gonna talk to you a little bit more about our business. We are the largest operator of online schools in the country. You remember I mentioned earlier, chaos, uncertainty, volatility? The dynamics of U.S. education in this country are such that our society is actually leaning into those themes more and more. How does it manifest itself?
Well, when I was growing up, there was nothing called ADD. Those were not three letters that people understood. I don't think we're different as kids. I think that families, parents, have had an awakening maybe. They pay attention to their kids in different ways. But the number of students who have been assessed or qualify as being labeled as special education needs has doubled in, what is that? 40 years. Doubled. And on the flip side, school districts can't handle that volume. It creates great uncertainty. It creates tremendous volatility if you're the family of a student with special needs. And it just turns out, our programs do really well with a lot of categories of special needs in this country. A lot of kids with special needs, they sometimes just need more time.
When you're on a bell schedule in a classroom, in a building, and the bell schedule says, "45 minutes, you're done. Move on," and some kids just learn at a different pace. It's not that they're not smart, just needing more time. Online learning affords you that time. Conversely, some kids are gifted learners, and they wanna accelerate their learning. Increasing the trend in school districts today is to push everybody back to the lowest common denominator. In fact, a lot of states are eliminating or reducing the amount of gifted and talented programs. Now, I'm not here to say. I'm not here to make political commentary, so I'm not saying that's right or wrong. What I am saying is that for the kids and families who are in that category, I think they deserve choice.
They deserve an opportunity to go somewhere that will cater to their needs, and it turns out there are millions of them. We just... Was it last month? We finished National Bullying Month. I was at an event last night, and it was a dinner, and the moderator of the event at this dinner said, "I'm gonna open with a question. And we're gonna go around the table, you're gonna introduce yourself, and then you're gonna give the story of when you first experienced racism." So it got to me. It's pretty easy, actually. I grew up in a predominantly white neighborhood, and my first experience was the first day at the bus stop, when I got the shit kicked out of me for not being white.
It's pretty easy. So what happened? Well, I went back to the bus stop the next day 'cause I had to go to school. No alternative. My parents were certainly not gonna let me sit at home. Forty years ago, 45 years ago, that wasn't considered bullying. I wasn't bullied. In fact, I once got in trouble for fighting back. I got once suspended. So, I should not have said that on live TV, probably. I'm not sure that's in my transcript. Nothing to do with me being a C student. But we all know bullying is real. It happens, and the victims of bullying that represent at least 20% of this country, sometimes they need a safe place to be, and we offer that alternative.
And so amidst all this uncertainty, the volatility that surrounds whether it's a socioeconomic unit, a neighborhood, a set of conditions, all of that plays into what we can offer families. That's why I believe our market opportunity is no longer a small niche opportunity. And we see increasing demand. The pandemic helped with awareness. We've talked about the dissatisfaction, the numbers support that. School safety, a huge issue. Bullying, huge issue. The pandemic created something that I thought was very unique and unusual in this society, and it, we find that it's carried over, which is parents who want greater control. You see this in the divisiveness at the district level, and I feel so sorry for district superintendents. You can't win. If you're on one side of the issue, you've just pissed off 49% of the people.
You go to the other side of the issue, you've pissed off 59% of the people. You cannot win. The divisiveness has gotten really hard. I'm not saying it's right or wrong, I'm just saying that it's hard, and depending on where you live and which sort of side of the aisle you land on and which side of the aisle your district lands on, you may not feel like you have control, and parents increasingly want more control. I've been saying this now for a few years. I think we're really seeing this. I am not a digital native. I did not grow up with this thing. Now, parents are. Parents are digital natives, so their familiarity with technology, their, their comfort level... We're gonna talk about esports later.
Esports is actually, or even just online gaming in general, if you look at parents, they're doing as much online gaming as kids. Why? That's how they grew up. And so the mentality of being a digital native relative to a K-12 education allows parents to think about that education in ways that probably, as a parent, it would be hard for me to. This last bullet is probably the single most prevalent form of transformation you're seeing in school districts. It's driven by publishers. I think the publishers are doing a wonderful job of helping drive this. It's helping meet the customers where they wanna be, which is digital. I think you're gonna see that that benefits us as well.
Then we've talked a bunch of reasons why families are gonna come to us, and that list keeps growing, it keeps getting more diverse, and increasingly, more and more parents keep choosing it. I talked about customer satisfaction, and this may be my favorite set of statistics in the entire company. More important to me than our financials, by the way. We have satisfied customers. You know what happens when you have satisfied customers? They tell their friends. Our customers love our programs. I don't mean to distract us too much. We have a customer in the room. The customer we have in the room, you're gonna see a video he's gonna present in a few minutes. I had a conversation with him two weeks ago. What he said to me was, "I can't wait to put my kids through your program." He's shaking his head.
That's what our customers tell us. "I can't wait to put my kids through the program that I went through with K12." That is a focus on our customers. That is powerful... and that is what I believe creates enduring competitive advantage. I won't go back, but that slide that I put up with all the disruptors, that's what they have. They have a focus on customers, meeting them at their point of need, giving them what they want, with high customer satisfaction ratings that then propel them to be more mainstream. The way our business operates is through a series of partnerships. We manage programs on behalf of a series of partners. We currently have over 90 programs in over 30 states. This is my favorite number, because again, it just means opportunity. That means 90—I see 19.
When I see 31, I see 19. That's the number I really see. But we work with these partners across the entire program to create this for them. That's what they want. Our partners want our customers to be satisfied. They want their customers to be satisfied. This is where we operate, and if you don't think education is political, look at where we don't operate. You think these families don't want choice? They don't need online education? They're no different. It's all opportunity, though. And we continue to expand. We have, I think a lot of expansion opportunity still. These are some of the places that we are, we've been expanding into. But I think here is probably longer term, the more interesting way that we're gonna expand.
Because, our ability, as I mentioned earlier, we have historically managed full-time online programs, and our ability to offer part-time, private programs, pre-K, to operate in a system that is not just an online charter system, but, that is, the ability to access voucher programs, that all expands the reach that we can have into a broader set of customers. Okay. As I said, I was a C student, so I probably shouldn't be talking about our academics. So I'm gonna pass it to Tony, and Tony, see if you can help me out here.
Thank you, James. So one of the things that I think is the neatest from my perspective, and just very quickly, I'm the alter ego to our CEO. This is my first stop in corporate America. I'm a career educator. I was a high school basketball coach, so I really was a C student. And then I really slipped because I became a politician. But one of the things that we know America craves right now is focus in education. And it is a focus to one, prepare kids for one of what we refer to as the Three E's: enrollment in a post-secondary institution, a four-year college, technical college, what have you, or employment, and we define employment as employment in a career that will provide a family-sustaining wage, or enlistment in the U.S. military.
So we believe that really the key to success is preparing students for one of those Three E's: enrollment, employment, and enlistment. And we do that by, with a laser-sharp focus. I mentioned I was a high school basketball coach. When I came into this position, our CEO said to me, "Well, what is your playbook? If you're gonna make our schools better, you know, if you were anything as a coach, do you have a playbook?" And so we rolled out a playbook, and the playbook focuses on some pretty strict measurables. We measure, do children read? Are children literate? I think we see in NAEP, there's probably nothing more inhumane than third graders that cannot read. We are setting kids up for generations of failure if we do that. Secondly, we look at growth.
Do children get a year of academic growth, or at least a year of academic growth in a year of instruction? Many of our kids come to us behind, so it's imperative that we actually work to catch them up. We also look very closely at graduation, because we know that graduating kids without a high school diploma really condemns them to a life of poverty. As part of that, we wanna retain our kids, because we know if our kids stay with us, they do better. It's just that simple. We measure those things literally in our schools every day, and we provide our partners with the resources to do just that. We provide them top-notch instruction, and we meet kids where they are, and we meet families where they are, and we invest in that.
So the result of that is, our kids go to some of the highest higher education institutions in the country, our kids have some of the best jobs in the country, and we have kids in the United States military, and we are filling that need.
Tony, two things I want you to do. One is, without revealing exact numbers, talk about the results that we've just received around our academic achievements.
Well, first, we've really had some of the highest academic achievement. I would say... It's safe to say, really the highest academic achievements we've had in our history. Record numbers of kids graduating, percentages of kids graduating, kids improving in literacy, and again, go back to NAEP, it's vitally important. We focus as a country, as a company, on the science of reading. Used to be called scientific-based reading, and before that, it was called phonics.
And Tony, just for everybody's... NAEP is?
It's the Nation's Report Card . I'm sorry, I shouldn't use education jargon, but it is an assessment that is given every year to a select number of schools all across the country, and it's how we rate states against each other.
If you read the education news at a time where this country's scores around growth have been declining for the past couple of years, declining.
We have improved. More of our kids are growing year- over- year-
The criticism-
Through the year.
The criticism often of online education is, it doesn't work. Well, I have a live example of a gentleman right here that I can tell you it works, a very successful businessman at the... I don't even know how old. How old are you, Bruce? 29. Bruce, he's 29, a very successful business, business owner. Our kids' academic results are improving amidst a nation that is declining. Now, the second thing, Tony, I want you to do. We just announced... We had a partner forum in this room a couple weeks ago, and we just announced to them two customer-focused initiatives. Why don't you tell them what they are?
Thanks, James. And this is the thing that excites me the most as an old high school principal, as an old school superintendent, and as a state policymaker. We have a reading guarantee. We know, and I wanna repeat this, if a child does not read at third-grade level by the time they leave third grade, and they are passed to fourth grade, there is an 80%+ chance they will never get caught up. It's just classic research. So we guarantee that if a student comes to us as a kindergartner, stays with us through the third grade. Now, I wanna give one caveat. We have to pay attention if this child has an IEP or what's called an Individualized Education Plan. They're identified as special needs. So we wanna be certain we recognize that.
We will guarantee that child will read at third-grade level by the end of the third grade, or we will pay for the remediation to get them there.
Now, go into your local school districts and ask them if they're willing to provide the same guarantee.
And James, can I interrupt? Because I wanna say this. They're gonna tell you yes, and you know how they do it? It's a phenomenon called social promotion. They pass them to fourth grade. And they'll say, "We'll catch them up in fourth grade," and they don't. And our second customer-facing initiative, same thing on the other end. Go back to the Three E's. If a student starts with us in ninth grade, stays with us through twelfth grade, does everything they're supposed to do, and they're credit short at the end of the twelfth grade, we will provide them the necessary coursework free of charge to graduate from high school, so they can pursue one of the Three E's.
We will guarantee them on the front end they have the most important skill necessary to be successful throughout their academic career, and we will guarantee them at the end of their academic career, if they stay with us, that they will graduate and have the ability to matriculate to one of the Three E's.
I won't repeat what I just said. Go ask 'em. The focus for us is the customer. Great companies who focus on their customers back up their product. We're backing up our product. We stand behind what we do. And, you know, I actually hope we get a lot of takers. It's gonna cost us money if you're an investor, by the way... but I hope we get a lot of takers. It's the right thing to do, and I think long term it'll make us a better company. But the focus on our customers, I think that's really important, and that's what those two initiatives are all about. All right, Tony. C student, no education experience, not a politician, no political policy experience. Tony just told you he's both a politician and an educator.
We don't, we don't have basketball teams, which he's a basketball coach, so we won't be talking about basketball, but we will talk about some of the political landscape. Tony, why don't you do that for us?
Well, James was a C student, and I was a failed politician. Very simply, the pandemic did more for school choice policy in America than the entire education reform movement has done for school choice policy in the last 20 years. You know, James mentioned it is now a race among states to pass school choice policies. We see it all over the country, and when I say school choice, I'm not just talking about what folks sometimes think of with school choice, which is vouchers, education savings accounts, those types of things that allow public dollars to go to private schools. I'm also talking about the expansion of virtual programming like we saw in Kentucky last year. We see expansion of charter opportunities all over America. So school choice is vogue in America, and the policy opportunities for that are immense.
There are two kind of also nuanced school choice, school policies, education policies that are really benefiting us, and one is the idea that during the pandemic, kids could not be tested in their schools. So there is a growing movement to allowing virtual assessment in America, and it's really interesting. That is a big benefit to us because there's a ton of research out there that says that the mode where a child learns, if that child is tested in that same mode, they will do better. Pretty common sense, and we saw it in the pandemic, and after the pandemic, kids who were in virtual schools but forced to go back into brick-and-mortar testing environments, there were some slippages. There was slippage. So we're seeing states now say, "Hey, we can do these high-stakes assessments virtually," and that's a very big one.
The other one is, we had a very standards-based accountability systems. You know, states rate schools A, B, C, D, F. When I was in office, we did that in Indiana. We are now seeing policymakers say, "Let's look at things like, do kids get national, state, or industry certifications when they graduate? Are parents satisfied? Let's do surveys. Let's survey parents and see if they're satisfied. Let's look at growth as opposed to flat achievement, pass, did not pass." So we're really seeing an evolution of accountability policy across America, and that is really gonna change the face of how we educate kids and what schools pay attention to in the future.
I will say, while I have no policy or political experience, having been with this company 10 years, I have had a chance to meet with, interface with a number of policymakers, politicians. I basically tell them all one thing. It's one very simple thing: Please take politics out of education. It's the same message. Now, I'll also tell you that that message, as logical as it might sound, doesn't resonate with everybody. I think it's really important for investors and potential investors to understand that. The politics of education are serious. We are not immune to it. We think we have a great team. We think we have, except for me, great expertise.
We think the general landscape around the policy, as Tony suggested, is improving for people like us, and, and there's I think one main driving factor for that is politicians still have to answer to constituents, and constituents, as the data that I showed you, increasingly want choice, and we are increasingly a choice that people want to be able to have. And that political, or sorry, that public sentiment, I think, helps at least drive the overall political landscape that we operate under. So I do think that the general landscape of politics and policy has trended favorably to us over the past several years. But if you know even a little bit about politics, that can change on a dime, by the way, and there's very real inherent risk there. Our history suggests that we manage it pretty darn well.
We have a summit that we've put on every fall. We call it our National Advocacy Summit, and I've been attending now for 10 years, and it has got to be one of the most impressive gatherings of... I don't even know what to call them, policy wonks and policy advocates and things like that, that we just gather together, and they really... First of all, they talk about the landscape and sort of overall direction of the country, but then they spend time during the course of the year and really dig into how can we really communicate effectively what we're trying to do in a way that politicians hopefully understand that we're trying to help. Well, there's no political aisle here for us.
We're trying to help their constituents, their customers, and it doesn't matter which side of the political aisle you're on, your customers want that help. And so we spend a lot of time figuring out what tactics we can deploy to communicate that effectively, because not all politicians wanna hear that message. But it's the truth, and they should hear it. Anything else you wanna add, Tony?
No. Thank you, James.
Okay. We will take a five-minute break. For those of you who are on the live stream, you'll see actually a video come up. You'll see a countdown. We'll start back here in five minutes. For those of you who are in the room, there are actually restrooms right up on the other side of sort of this wall here. There's signs out this door and around to the left. So if you walk out here, around to the left, there are restrooms, and we'll be back in five minutes. Thank you.
This year's art competition from students in kindergarten through twelfth grade in over 150 schools across the United States.
I like being creative, and I also like to be challenged, so I decided to go to the competition and see if I could win.
Anayeli.
Ankou.
flehmen. U-
F-L-E-H.
Congratulations, your first place winner.
The K12 National Spelling Bee is a fun and competitive way to get to know your peers and to learn new words and enhance your vocabulary. Plus, the trophy is really nice. Here is mine from last year.
3, 2, 1. This is a national competition. We have students representing our schools from across the nation. These judges, they have impeccable resumes.
So impressive how organized each and every one of you are. Any of you would be hireable in a kitchen right now.
I made salmon cooked in parchment, and then I have avocado rose, and that's my ingredient.
Young people like yourselves coming in, your attention to detail is fascinating.
Students from around the country solve environmental problems facing the planet.
It's safe, it's reliable, it's cheap.
I'm trying to solve sustainability by using piezoelectric technology. My cardinal dream in life is to become a marine biologist. I want to increase recycling capabilities. If it's not our generation, then whose generation is it?
I'm looking forward to working for each and every one of you someday.
After, you know, the whole planning of this Innovation Challenge, we just became like best friends, almost like sisters. It really encouraged innovation in all of the students, which is something that coming from, like, a public high school, I wasn't that familiar with that idea. Everything that we do in our lives actually has an impact on the environment. So that's where my app, Nature, comes in. It shows how much progress you can make by incorporating any tip or lesson into your lifestyle.
The first prize winner is Bun.
I was really surprised by what an amazing and modern company that Stride is. It was an incredible result.
Okay, welcome back from the break. We are about halfway through. I think we're running on schedule here. I will remind those of you on the live stream that if you have a question at any time along the way, you can submit it into the live stream. We're gonna have a section at the end for Q&A, so we'll sort of queue those up, and if there are questions, we'll address them sort of toward the end. But at any point in time during the presentation, feel free to put questions into the live stream. For those of you in the audience today, at the end, again, you feel free to ask a question at the end.
If you feel really compelled, you can interrupt and ask the question during the presentation, that's also generally fine. I'll also remind those folks who are in the live audience that at the end of this presentation, we will try to bribe you with some drinks. They'll be just here next door in the office, and so you can stick around. The management team will stick around. You'll have a chance to interact with them a little bit, and spend a little time offline with them if you'd like. So, okay. So I'm gonna jump in here. The first half of this presentation was really setting the stage for sort of the backdrop or the macro environment, who we are, where we've been, our core offerings.
The second half of it is really gonna focus on a little bit of what's to come in terms of new things, and then we'll close with our financial overview and long-term outlook. Okay, about 5 years ago, we embarked on a pilot, and that pilot was really driven by sort of a strategic review we had done in the previous couple of years. At that time, back in sort of 2016, 2017 or so, when the virtual learning market, and particularly full-time virtual learning market, we still sort of considered a niche, and we wanted to give ourselves an opportunity to tap into a broader market opportunity.
We wanted to do it in a way that we thought leveraged our core capabilities, and so we ran a pilot, and we ran a pilot of a, what we called a career school. It was really focused on giving, career opportunities to high school-level kids, specifically trying to get them skills, which, hopefully you remember from the first half of the presentation, we really value and believe that skills are more important, for many kids, not all kids, but for many kids, it's those skills that are gonna be really important for them for their careers. And so we opened a, we opened a pilot, and the pilot ran pretty successfully. We saw, a lot of interest, from our existing families, meaning the, the families that are already attending our programs.
When they were offered this career avenue, they were very interested, and many of them signed up. We then began to expand those offerings, and over the course of about 5 years, we went from something zero to close to $600 million in about 5 years. In the education space, it's hard. That's not a common event. I've been challenging investors with this question over the past several months. The question is simple. Don't anybody quote me on the statistics I'm just gonna give, but just directionally, over the past 10 years or so, there've been, there's been something like $10-ish billion, billion with a B, of venture capital money invested in edtech, give or take. I think it's more than $10 billion.
I'm very confident that all of those companies that were invested in had a business plan that suggested that they were gonna do … well, they would take over the education space, but, but from a revenue perspective, do well north of $100 million. The business of education can be hard. So, the question is: Is there a venture-backed entity formed in the past 10 years that sells to school districts, which is the main avenue for edtech companies to sell, that has more than $100 million of revenue? Venture-backed, founded in the past 10 years, selling to school districts. Of the $10 billion and thousands of companies that have been invested in, is there one with more than $100 million in revenue?
If anybody gives me the answer, the correct answer, by the end of the presentation, I'll think of some prize to give you. We've gone from 0 to 600 in 5 years. Now, it's not the exact analogy, by the way, but we were able to leverage, I think, a lot of the assets that we have, a lot of who we are, but there's real demand. I've said this on a number of our investor calls over the years. There's a double-edged sword here to this business. All of our research, and increasingly, the research suggests that demand for skilled education starting at lower grades, younger ages, is increasingly important and increasingly what customers want. And so the market and the macro indicators for us all point towards very, very significant opportunity.
In the K through twelve space, which is largely the high school space, but in the K through twelve space, specifically, there's not really a lot of options for kids. There's not really a lot of avenues for kids, frankly. And so, we feel that it's a pretty unique opportunity that also we're very well positioned to take advantage of, and we've done that. Now, what's the other edge of that sword? Well, the other edge of it is that almost all of this has been a function of our legacy business.
The thing that I feel, I have failed miserably on, I wish I was getting a C here, is figuring out a way to go out and target and communicate to, and make aware that audience that would really benefit from these programs that is not already coming to one of our programs. That incremental audience for us has been elusive. We know it's there. We know it's large. We know it can drive tremendous more growth in this business, and I have failed so far in our ability to execute against that opportunity. We'll keep trying. I will keep trying. In spite of that, and without that, the numbers, I think, speak for themselves. The team has done a great job.
The folks that run the programs themselves, sort of, I think, have garnered a lot of the student trust and family trust. We now are starting to see. You know, the first few years, there's really just, you know, pilot, small numbers, whatever, but we're now starting to get to numbers where we're starting to see a scale number of graduates. Those graduates are getting jobs. You know, so we're starting to see this build momentum in a way that the outcomes are really gonna propel themselves. So, I think we're still really very in the early innings of this, but we really, you know, we really believe that this is a really big opportunity. The data I think says, you know, 93% of the parents want career preparation.
That doesn't mean that, that they don't want college, by the way, but it does mean that they want career preparation in high school. 84% of parents felt that taking career courses helps kids prepare for college. Again, not an either/or. Not an either/or. And 90% of our families are satisfied with our curriculum, our career-based curriculum. Again, a focus on your customers. Because I do understand that a lot of school districts offer some career offering, and I don't know well enough how they run theirs, by the way. But my suspicion is many of them, not all of them, but some of them, many of them, don't have customer satisfaction scores like we have.
I wish they did, because a lot of those career pathways for a lot of those students are actually better served in the brick-and-mortar setting, and I think those customers deserve a better experience because the customers want it. They overwhelmingly want it. Again, not a partisan issue. They overwhelmingly want it, and I think all of us, as an industry, should be aiming to provide that kind of customer satisfaction in career pathways at the high school level. So that was our first foray. Career education was the first foray, the first branch, if you will, offshoot, taking our core legacy business and expanding our product offering. And over five years, I think the track record speaks for itself. Both the good and the bad track record, as I said. But the opportunity's there. We've taken advantage of a fair bit of it.
More to come. We have more. This line here represents all of this line represents markets in products that we are currently this year or already have brought to market. For a couple of years, we've talked about, you know, we're piloting some of these things, we're testing some of these things. We've done that over the past couple of years. We've now rolled out some of them. We're going to be, this year, rolling out more. We're gonna continue to invest behind them, we're gonna continue to grow them. I don't think you can be any kind of company these days and not at least say AI. So AI. We're gonna talk a little bit about actually what we're doing, though.
And, it's, I think, pretty unique, and I think we've got some exciting, exciting things that we're gonna be doing. Okay, so, one of the markets that we really think has tremendous opportunity, and it ties exactly in with our career high school programs, is allied healthcare training. The vast majority of jobs in the healthcare marketplace do not require a four-year college degree, the vast majority. We made an acquisition several years ago of a company. When we made the acquisition, they were $30 million of revenue. In the past few years, we've doubled that. I mentioned in the beginning, Todd Goldthwaite, who runs the portfolio of our burgeoning incubating businesses, including this.
I'm gonna ask him to talk a little bit more about that.
So with roughly 2,000,000 open positions every year and expect to grow over the next 10 years, this is a great industry for early talent, high school kids, adults looking to change their career to get into. MedCerts is a great product of ours, a great company of ours that prepares enrollment students to complete and prepare for a certification, and those certifications lead to one of those 2,000,000 jobs. We did about 20,000 enrollments last year. Adding up the handful of years that we've been working with them, it's about 80,000 in total, and while that's a good direct-to-consumer business, those enrollments are now working in one of the 1,000 of healthcare organizations that we have a relationship with today.
What's great about that is those healthcare organizations now know about us, and they're now coming to us directly and asking us to help them fill their open positions that they have, as well as upskill the talent within their healthcare organization. That allows us to monetize those enrollments a couple times over the career of that individual, as well as it's a much lower cost of acquisition for us.
I think the point from my perspective of this business, which I'm sort of in love with this business because the massive opportunity in healthcare now, healthcare is just. It's just tremendous. The need... You know, when you have a dislocation in the marketplace between supply and demand, that always creates huge opportunity, and that's exactly what's happening today. The best part about this business, from my perspective, is the last thing that Todd just said, which is, when we bought this business, it was primarily a B2C business, a direct-to-consumer business. And in this space, because of the relatively high acquisition cost and the sometimes lower incentive to completion rate, you have, you know, a fair bit of dropouts and things like that.
When you start to partner with healthcare organizations, and you can guarantee that job to a student at the end, and you have that pull of demand, from the hiring organizations, who happen to also pay. So we don't have to worry so much about, you know, families or students, you know, not being able to afford it and affordability, even though the programs are fairly affordable. You know, they, they average a couple thousand dollars type, affordability. But, but still, knowing that the affordability equation is often taking care of them, Todd mentioned the upskilling of existing employer-employees.
I think we collectively, meaning Todd, myself, the gentleman who runs that business, think that the actual opportunity in the B2B piece of this business is manifold the opportunity that we bought in the B2C side of the business. And so, we expect this, you know, without that opportunity, we double this business in a few years, and we expect to be able to, I think, more than do that over the next several years here. So, another one of the products that we have is. It's actually a little bit, in my mind, controversial, and that's tutoring. Why is it controversial?
There was a company I put up on a slide here I was comparing, stock prices to, it was actually the last company on the list, and they have a product, sort of a tutoring product, or it's, touted as a tutoring type of product. It's a help product, if you will. And people fear that they've been disrupted by or they're going to be disrupted by AI. And so there's been sort of this, uncertainty, volatility in the tutoring marketplace. One thing I feel very confident about is that, kids, particularly K-12 age kids, need help. They benefit from help. All the research suggests, that tutoring can help students.
And unlike college-level age students, where they're trying to just get through, maybe, K-12 age students really need that help, and they're still soaking up that learning. And because kids learn in so many different ways, sometimes they require specialized attention, and sometimes that's in the form of tutoring. And so, so we have a pretty strong belief that that the tutoring market for us could be pretty special. Why? Well, you see the stats, right? A lot of districts need, want, will pay for it. Students need it. State education agencies are sponsoring it. There's a lot of momentum behind K-12 age level tutoring, institutionally, structurally across this country, in a very large market space that we basically are just dipping our toe in. Well, what makes us better?
Well, the first thing that makes us better is we have an ability, unlike any other at scale, to offer state-certified U.S.-based teachers. There are other companies out in the space. I think there are other public companies out in the space who do tutoring. They cannot offer that. As it turns out, for many customers, and customers being defined as both the families, parents, students, as well as the districts, and almost more so the districts, I think care about state-certified teachers. Now, again, I'm not gonna making a commentary on whether it's better or worse. It is the offering that we are uniquely capable of bringing to the market, though.
For us, I think, the ability to marry that competitive advantage with proprietary content that has a 90% satisfaction rating, with technology, some of which you'll see here in a second, I think will make our offering pretty unique. It's gonna be, we think, at a price point that's gonna be pretty compelling. Anything you wanna add, Todd?
I would add that this is coming at a really important time because schools have access to about $122 billion, half of that is unspent, related to federal funds from COVID to support schools with learning loss. And so when you start talking about a tutor and tutoring applies to that fund, that is a service that schools can use. Tutoring is one of the most effective forms of intervention for a student.
When you look at many of the other products that are out there, as James said, that are using kind of offshore labor or maybe even outdated, you know, chat help, that's not making the mark, that's not meeting the mark, and state-certified teachers does and will, and so we're very proud of that. The other thing I would add is that half of the teachers today have a side hustle business of tutoring. We've just now built, really, we think, a side hustle-friendly tutoring platform because these tutors have access, for free, our content. They have access, for free, our virtual learning platform.
They have access, for free, our e-com platform that goes along with it, and they will have access, for free, the power of our CMO to also help market their business so that the tutors on our platform won't have to think about how to run their business. They will come here, and they will do what they do best, and what they wanna do, is teach.
And Todd, the other nice thing, and if you could talk about is the logistics around tutoring, particularly here, this $25 billion market, where families logistically have to drive. Why don't you just talk about why our platform has an advantage here?
Yeah, I mean, obviously, there's gonna be a shift, right? On the left-hand side, those are, you know, those are your tutoring facilities, where, you know, you're gonna drive 20, 30 minutes to, you know, to attend a 30-minute or a 60-minute tutoring session, and you're gonna drive back. Both the parent's driving, the student is riding in the car, and the tutor is also going there. Not really convenient now, when on the right-hand side, you can think about that being remote. Well, that same type of experience can now be done in a much more efficient way, being home.
And again, we're bringing the curriculum that works on the right-hand side, we're bringing a platform that works on the right-hand side, and an experience that you would expect for going online, and no one has to leave their house.
Great. So we talked through a number of these, and Todd touched on these, but really, the opportunity and the competitive advantage that we bring, you know, we've been through the. I think the unique ability for us at least is not in any one specific piece of this puzzle, it's the package that we can bring. Todd kept mentioning it, it's, there's a platform, there's the content, there's the e-commerce, i.e., billing, the ability to collect money for tutors. It's all in one package, and again, I think if you look along the landscape of this marketplace, that's pretty unique. There are not players who can deliver that suite of things.
So each individual component is pretty unique, we think, but bringing that entire package to market in one thing is, I think, pretty interesting for us. So we've just probably this semester will complete sort of the e-commerce and parts of this platform, and the ability to really roll it out to some districts. We've had some district conversations. They've been pretty, I think, pretty productive so far. So we're excited that we can make some real strides here. One of the other products is a product that we call our Learning Hub. I'm not sure if we landed on that as the external name yet or not, but maybe this may change.
I think Deb has some ideas of how we can maybe brighten up the name a little bit. But basically, you know, if you think about the marketplace around content, and I mentioned earlier, the publishers who are really doing a wonderful job of driving digital engagement and digital penetration into the school districts, really, that digital content marketplace is a very large market.... And what the publishers have done a really great job, actually, I would say masterful job of, is they sell the same content multiple times. So you have your core curriculum, i.e., a textbook. Well, sometimes you need supplemental materials, that's the same material as it's in the textbook. You have sometimes what's called Credit Recovery, which is the textbook sorta slimmed down to do it faster.
So you have all these variants of the core set of materials. If you're learning algebra, and you need supplemental materials for algebra, it can't be trigonometry. It still has to be algebra. If you're doing credit recovery for algebra, it still has to be algebra. And I think part of our approach, one is we have digital-first proprietary content that we think is unique. It's more engaging, it's digital first, we think it competes with the best of the publishers. But I think we also... Because that content, that curriculum, that has a 90% satisfaction rating, is something that we are already investing in for our core programs.
So I think we can bring it to market in some pretty unique ways, that I think is hard for the rest of the industry maybe to keep up with. So, more on this at some point, but it's a really large market. It's got... What's the word? Like an oligopoly. Is that a word, oligopoly? A few select multiple big players. And I think that they've been the market leaders for many, many years, and I got tremendous respect for them. Like I said, I think they've done a wonderful job of helping drive digital penetration within the school districts. I also think that, you know, sometimes a new competitor shaking things up a little bit helps the marketplace, helps customers.
So we're gonna try to do that a little bit here with this. We're gonna try to bring some new things to market in some different ways. It's a really large marketplace here that I think if we can just take a little slice of, you know, we can be a pretty significant mover for this company. We know that districts are starting to wake up to the need for some of these tools, and most specifically, the need for some personalization within their learning. I think, again, we're probably more uniquely positioned to enable that personalized learning because of what we do and how we do it than most.
So I think we've got some really interesting stuff that we're gonna be rolling out here, and I think it could be pretty meaningful. Todd, you wanna talk here?
Yeah. So, what exactly is Learning Hub? We have taken our full-year courses, and we have broken them down into 5 or 10-minute mini lessons. We deliver it to students very much in a Netflix, Spotify playlist type of a way. Again, this is an existing asset, existing capability that we have, and we're bringing it to a new market that James had on the other side that was pretty big, in a market that we haven't traditionally played in. For the homeschool market, which that market has doubled in the last year or so, this is an outstanding product.
And for school districts, while we will come up with the name of it later on, we think that certainly there's a direct market there where we can reach out to school districts directly, but many of them don't want another thing to log into. If when you're out in the schools, single sign-on's pretty important. They're already stacked up with a bunch of things. There are a number of LMS and SIS companies out there, Learning Management Systems and Student Information Systems, that are in schools today. And through partnerships with them, so we today, PowerSchool is in one-third of the school districts today, and we've just recently completed an agreement with them, where on their platform, one-third of their schools will have access to this Learning Hub content.
That is a much more efficient way for us, we think, to get out there. So again, very much in a Netflix, Spotify way, a student, a teacher or parent can drag and drop the content that the student needs in their playlist. Behind the scenes, we've got AI working behind that, that's helping, you know, moving the student along faster or slower depending on how they are progressing. And we've got the state-of-the-art content that the LMS and the SIS companies don't have. And so we are very excited about that.
So we've talked about this actually for the past few years. We made an investment in a company called Tallo several years ago. It was a minority investment. We were interested sort of in the platform, and then we took control of it a couple of years ago. We sort of bought out the interest that we didn't own. And the whole idea really around Tallo is, in one platform, to be able to give learners an opportunity to have discovery and exploration of careers and career pathways, to take courses, get certified in a particular area, and be placed in a job, in one place. And as far as we understand or can see in the marketplace, that does not exist.
Elements of each of those exist, but that does not exist in a single place. Again, I'll sort of be the first to call myself out. I think I have been a little bit negligent in our investment here. We have not performed well against this investment. I think the opportunity's there. I think it's a matter of refocusing execution. I very recently asked Todd to... before Todd, it was reporting to me, so that was probably the biggest issue. Now, I've got it reporting to someone who actually can take care of it properly, and, and I think put the right level of investment into it, the right level of dedication. And, everybody...
We've talked to hundreds, if not thousands, of companies, districts, educators, families, and in those thousands of people who we've spoken to, I don't think there's a single one who has said: "Why would you do this? What's the need?" Quite the opposite. Everybody's excited about what the promise of this is. And the great thing about our approach to it is, our belief is, is that largely, particularly for the student, this is at no cost to the student. Employers are already conditioned to pay for skills, hiring, things like that. So we'd rather monetize it on the employer side than on the customer side. We wanna give a great customer experience, we wanna build a large-scale community around this career platform, and we think if we do that effectively, we will really find ways to monetize this very, very effectively.
But our first challenge is execution around the platform. The second challenge is building a large-scale community on that platform with outcomes, outcomes meaning certificates, jobs, and I believe value for our shareholders will accrue very quickly from there. Anything else you wanna...? So, as I mentioned, we wanna provide outcome opportunities for these kids. Right now, amidst what I've admittedly said is poor execution, this platform has 2 million users. It has jobs and internships on it already. The failing really isn't so much exactly the functionality. The failing is in the user experience. Our customers need an experience that's easy for them, that's intuitive. And so without that, we have actually been able to attract customers. But the opportunity set for this is really large if we can get the customer experience right.
I think that's really stitching this all together in a way that the customers feel like it's seamless, because things like certificates, we're not a certifying body. So in order to enable those certificates, we have to work with a certifying body or multiple certifying bodies and make that user experience easy for our customers. So there are some challenges there for us, but I think if we can pull this off, we're gonna make for a really unique user experience that nobody's been able to do, that fits a real need in the marketplace, and can be pretty powerful.
The only thing I think I would add is that, you know, with This is a platform that really follows the trend of most of what James has said today. With more and more families questioning the value of college, and more than 50% of students that enroll in a four-year degree don't complete, and with companies kind of walking back the requirement for a college degree, this is a platform that hopefully will provide that student the ability to explore careers that they would be interested in, learn about them- get the certification, ultimately get the skills for that, and then all within that one platform, get connected to other corporations. And while we're just beginning with 2 million users on the platform, we do have companies and state organizations that are already paying to have access and to be on our platform.
All right. Esports. So, if you walk around this floor later, for those of you who are here, I mentioned earlier, you'll see sort of indications of our customers. You'll see photography, winning contest winners, art contest winners. And part of the reason we display it is just to remind us a little bit of who our customers are. We provide for our customers various outlets. Some of those are represented within those contests. We also, for a number of years, have provided an esports opportunity for them, and it was sort of, I'd say, flailing. And then, about two years ago, I sat down and had dinner with Les about our Chief Information Technology Officer job.
And we're sitting at dinner, and he's asking me about the company and what we're doing, so where I see us taking us, and I just happened to off-the-cuff mention this set of programs that we sort of generically call enrichment programs. And as an example, I gave esports as one. And I don't know how many sort of really technical people you deal with every day. Les is a master technician, and usually, they're not that excitable. You know, they're sort of in the category of accountants. But man, if I didn't see some eyes light up, and I just... I didn't even know why he was so excited. We ended up spending a bunch of time talking about it, and he has a real passion for esports.
He's really been able to help us think through esports, not as a program offering for the students in the programs that we manage, but more as a business. You know, I'm sort of the school sometimes when, you know, somebody has, like, an idea, and then you're trying to figure out how to do that idea, you give it to the person who has the idea, make them do it. Well, I didn't have to make Les do anything. He has great passion for all things technical, technology, but also for esports. We talk about side hustles. Les sort of does this a little bit as a side hustle, but very effectively. Les, why don't you talk a little bit about esports?
Sure. It is exciting. Now, I am certain all of you, somewhere in your history, have played a video game. But if you have somebody in your home that is under the age of 50, they're playing literally every day. This is a social activity, esports, competitive video gaming, that has 4.5 billion people playing daily. And when you look at competitive video gaming, it makes more money than the NFL, the NBA, and Major League Baseball combined. So what's the target audience here? Well, the target audience is the K12 market.
It's the 210 million kids who play Minecraft every day, and it's also the broader market of people who are living in a networked world, just as James was describing, a world that is digital natives, and who now communicate, decide to organize themselves, work in teams, solve problems, and do all the twenty-first century durable skills in one format: video game. So the opportunity for Stride is not just to get involved in esports and games and everything else because it's popular, but because it leverages our capabilities to teach. And there's no one company that has put their foot forward, because they're all not Switzerland. They're they own a PlayStation platform or an Xbox platform or a PC, and they haven't figured out a way to reach this audience in a positive and beneficial manner.
But if you look at this slide, families expect that. The parents who play video games expect that. They expect that their family is gonna be able to engage in a safe, secure, and a completely regulated environment, which we offer, and in a way that then teaches their children something in a place they always want to be. Because if kids between the ages of eight and, let's just say 19, 20, are on a digital device 9.5 hours a day, guess what? You have their attention. And in the digital economy, it's all about attention. It's all about the demand you have around attention. And so we have an opportunity with esports to not only be a force for good in teaching and learning, but a dominant market position if we execute properly.
This, again, leverages our capabilities in curriculum, technology, and scalable digital platforms.
So, I love when Les talks about esports, because if you ever, like, spend any time, like, with really technical people, I usually don't understand what he's saying. But when he talks about esports, I understand everything. It's very clear. And, and I think the opportunity that he articulates is really clear for us. And, so we think that the esports space is... it's a, it's, it's on the surface, it's not such a natural tangent for us, not, such a natural adjacent for us as a business, but it really is. It's, as Les said, it's the same customers, it's in the environment that they're used to, it's in an environment that we are also in with them.
I think this quarter, we will be finalizing the first version of our platform, our proprietary platform.
Exactly. Yep.
We have already a small community that we're building through various sort of channels that we won't sort of detail out here now, but we've already have a strategy of customer acquisition. So we're really excited that this could be another community of folks that we build on a platform that is actually very close to overlapping with our own existing community, leverages a lot of the existing assets that we currently have, but in something that is really, you know, not normally probably thought of in terms of an education company. Les mentioned this Minecraft, and really, I mean, it's. There's hundreds of millions of Minecraft users. I know my son, when he was younger, played Minecraft.
The cool thing about Minecraft is they actually have an educational version of Minecraft. There's a Minecraft, I don't know, it's Minecraft Education, I guess it's called.
Right.
So there's an actual version of Minecraft that is specifically tailored for education. And the specifically tailored Minecraft versions allow for essentially exploration in certain subject areas. And so you sort of can craft and build these worlds, right, around Minecraft, that really touch on educational subject matter. And so you now have a game that most kids play already, being able to play it and learn at the same time, which is sort of the nirvana of any educational system, right? [The nirvana] is when folks are engaged in that thing that they're learning in a way that doesn't feel like learning. And so that's sort of the engagement that we're trying to create.
You know, as Les mentioned, a lot of the advantages that we have, we're really bringing from the angle of K-12, which is a really tricky space to play in because of concerns around privacy and security and things like that. But also having some level of educational angle to many of the things that we do. Not all of them, but we'll do actually some things that are just purely fun, because engagement will also require some of that fun stuff. We're gonna be doing leagues and leaderboards and all that kind of stuff. And Les and I yesterday were talking about some potential additional avenues that we can maybe pursue around esports that I think really address areas of the market that really are white.
There's really nobody addressing the space that we are looking to attack within esports. We're not just gonna be another big esports platform. We're not, we're not doing shoot-up games. So, we're really attacking a certain space within esports that we've already sort of demonstrated at a smaller scale has great traction and visibility. The partners that we talk to, our technology partners that we talk to, are all very supportive. They are trying to sort of help us along along this path because they see opportunity as well, and so, we've got a couple of validation points that feel very positive for us. Okay. So, we're getting pretty close to the end here.
I'll remind everybody, public service announcement again, if you have questions along the way, please, post them into your video stream, and we'll get to them here, pretty shortly. As I said, you can't do... I don't think any company could do an investor day without saying AI. Just, right? That's, I think our stock would go down if we didn't at least have a slide that says AI. We happen to have a few. What I think that is counterintuitive in the education space is if you look here, the customers, and in this case, I'm referring to customers as teachers, as a proxy, they believe in AI. Now, if you look across the landscape of education, the institution, it's pretty variable right now. It's pretty uncertain.
Districts are struggling with how they address the use of AI, and for good reason. Adoption of any technology is fraught with potential landmines. But the teachers, the folks that are directly interacting with the students, the customers believe in the positive impact AI can have within our education system. To me, that's an important leading indicator. And students, customers, believe that AI, or some version of AI, the most popular version at least today, is important for them, particularly for their life, college, work, whatever. Usage is actually still pretty low. ChatGPT, Les, correct me if I get askew here, went from zero to 100 million users faster than I think almost any technology in the history of mankind.
5, 5 days.
Five days. But it then has sort of plateaued a little bit, because it's not exactly what everybody thought it was gonna be, and then you have these hallucination things that happen. And what I think really the market's waiting for is for some series of companies, it's not gonna be one, to figure out how to leverage the AI tools in a way that customers are really gonna feel benefit from. Right now, there's a lot of intrigue around. But the real benefit, I think, is gonna be the way that companies are applying some of these technologies, for customers that are intuitive, easy to use. And so, so I've said over the past several earnings calls that, when generative AI sort of made a big splash about a year ago, every company in the education space made some announcement.
We have this new product, AI product," and I was very clear we have nothing to announce. Because I thought it was really important for us to make sure that we step back and really think through, what is it that we're trying to do? What are our- what is our customer gonna benefit from? And how can we position ourselves not for the fanfare of generative AI, but how can we position ourselves for the long-term benefit of our customers within the AI space? And so we've taken longer than most, admittedly. I think we've been a little bit more purposeful about how we're approaching it.
I think we're trying to make sure that we're building it on a solid foundation, understanding what the different pieces and parts are, which pieces should be proprietary to us, and which pieces of technology we should just leverage from somebody else. We start with a foundational approach that's not predicated on some splashy corporate announcement around some product that is really just ChatGPT with our name on top. So, Les, you wanna talk a little bit about this?
Sure. And, as James said, there's so much about AI that's going on, right? It's, it's in the news everywhere. It's pretty exciting, you know, you've, you've tried it out. But the question is, as an organization, is Stride ready for that type of technology in a cloud-driven, digital-first, safe, secure, and compliant manner?
And that's where we have been able to leverage our foundational assets, as we've been fortunate to have a CEO who said, "You know, we really have to be the leaders in being digital-first as an edtech company." And it's with those assets we've laid the groundwork of a foundation to allow us to adapt our curriculum in a safe way that protects our IP, and protects also our users in terms of their identity and what they do with generative AI, and allows us also to then start building products, both internal and external, that leverages this very powerful technology. So this is where we've been driving towards a scalable model.
Every time we are able to deploy something, whether we're using our own large language model or we're using somebody else's technology, we can do it in a manner which allows us to repeat the process and go more effectively and with greater speed to market. So what you'll see over the next couple of months is what we're talking about in terms of a product set. But be reassured, it is scalable, it is safe, it is secure, and we are mindful of what we have to do to be compliant.
The really, I think, the foundational approach that Les laid out here allows us to really focus in multiple arenas. I think most companies typically, you know, they think about, "Okay, well, what back office efficiencies can we get?" We have those, for sure. We do a thing here that I refer to as a modern-day hack. And that modern-day hack is, you know, if you Traditional tech companies, they do these things called hackathons, and they get groups of people, teams of people together and you know, they buy pizza, and you spend two days, and you try to build a prototype of a product. And those traditional hackathons require something that is very important: technical skill, knowledge, and capability, i.e., engineers.
Hackathons, as they're commonly known of today, require engineers to be part of the hack. You can't take a bunch of accountants and do a hack, traditionally. The modern-day hack at our company, enabled by the foundation that Les is talking about, allows for Vince's legal team to do a hack, which they will be doing here shortly. They're on the calendar for, I believe, next month. One of the big benefits and, and powers of AI is it really does help democratize some of, this technology. You don't have to know how to write code necessarily to apply AI and to create solutions using AI. And so, so our back office, a lot of our back office, innovation is actually gonna come from the field. We're gonna crowdsource it through the field, and we've already done a couple.
We've had some really impressive wins already so far. We're also gonna be able to improve the existing products that we have. Again, not by hiring a bunch of engineers necessarily. In some cases, we do, by the way, some cases it is necessary. But in many cases, building that thought leadership, the prototyping, that is really the intent of the hacks, can be done by almost anybody. Then the follow-through often, the ability to bring that product to market, requires often more technical talent, things like that, and so, so there is an element of that.
But the ability to actually leverage thought leadership throughout the company to bring some of these things that we already have and raise the level, raise the bar on what they are, you're gonna see a video of an example of how we're thinking about that here in a minute. And then we have new things. There are ways that we're thinking about developing new products and bringing those to market that leverage who we are, what we do, but in a unique way that embed AI into it, that I think that we're gonna be able to building off of this sort of foundation of how we do things. We're gonna be able to improve and increase the cycle of innovation we have in this company.
So, why is socialization on our AI slide? Well, it's the number one reason that students opt out of full-time online learning. It's the number one reason, by far. Now, if you're like me, and you've been hearing this for 10 years, you think, "Oh, you know, yeah, because they don't have a playground, and they can't go play basketball," and that's not it. Go watch a kid today. Go to. I happen to live two blocks from a playground. Actually a school, an elementary school and their playground. And I happen to have a dog. I happen to walk the dog through there every day. And I walk through this playground with kids all the time. And you know what I see? I see kids outside on the playground, on their phones. Socialization and engagement for these kids is often not...
We used to play a game where all you needed was a ball. And as many kids could play as, like, literally, the entire grade could play. You need a ball, and you need a wall, which schools have walls. And you throw the ball against the wall. The game's called Suicide. And if you catch the ball, you throw the ball against the wall. But if you miss the ball, if you touch the ball and don't catch it, you have to run to the wall and touch the wall. And while you're running to the wall, somebody can pick up that ball and throw the ball at you. That's the game called Suicide. That's the game I used to play when I was young.
Now, today, I happened to walk by this park or this school one day, and I asked the teacher, I said: "What are these kids doing out here?" And the teacher said, "Nothing." Like, they're not even playing with each other. Don't they play Suicide anymore? "No. They don't even, they don't even bring a ball out to the playground." They socialize digitally. That's why esports is, we think, such a incredible initiative for us, by the way. I'm not passing judgment on the right or wrong of that, by the way. I've got my own personal views of that, but that's just reality. And the ability for us to innovate with technologies that provide for a level of socialization, like with esports... You're gonna see another example that we've introduced into our ecosystem.
That really, I think, for us, can be a game changer, because it solves one of the biggest problems around online education. 20% of kids, high school kids who are going to college, have a STEM background. STEM is sort of code for practical skill, right? And that's really why it's become so popular, I think. It's practical, it's skill-based. And, and there are a lot of ways that we can enable learning of that skills through AI, but also the world is moving... AI is moving the world more and more towards needing those skills. And this one is crazy. If you think about teachers and the amazing job that they do, how much more amazing a job could they do if they didn't have to do this? Spend half their time not actually teaching. The value of teachers is teaching.
But if we can create tools for teachers that help with some of these other things, we can get the teachers to do more teaching. And so we're really, we think the power of AI, it runs the gamut, really, across all the things that we do. Okay. You're gonna see in the video, I think, a little bit of this as well, but we've just launched a pilot of essentially a virtual world, where kids can go in, it's called the K12 Zone, and you can go in, and it's, it mimics a school. It mimics...
There's a playground, there's a library, there's a game room, but there's classes, you can go see the guidance counselor, but it mimics sort of the physical layout of a school in a way that kids can have an avatar and just walk around if they want, and they can explore different areas of the school. They can go into a room and just meet up with friends and talk. They can play a video game. They can go get help from a K12 tutor, maybe. And, and it's really ties the experience into something that for a kid, is the digital, virtual version of a brick-and-mortar school, that, they really, many of them wouldn't take advantage of in physical form anyway. But it allows them to explore and do the things that they would normally get in a, in a school.
It's not for everybody, by the way, but the feedback so far has been overwhelmingly positive of the kids who are using it. Todd mentioned a little bit, the ability to apply AR within our tutoring product. Tony mentioned a lot of students who come to our programs, and a lot of students in this country, they are behind grade level. It's not just our students, it's students in this country. It's difficult in a classroom setting for teachers to give them the dedicated remediation that they need. So as Todd indicated, we're building remediation tools within our products that allow kids to get personalized, dedicated, specialized help. One of the biggest things, administrative tasks, that teachers have to do of that 50%, is grading papers. It's a lot. It's a big task.
The technology and the tools are getting such that it's really come a long way, even in the year that sort of AI has been sort of in the public domain, the ability to grade papers, not just like math problems, you know, like 2 + 2, whatever, but actual written papers, and not just with a score, but with feedback. Identifying grammar errors, identifying contextual mistakes. And so the ability for us to provide tools to our teachers that give them the ability to apply the tools. It doesn't take the teacher away from the responsibility and accountability of the grade. It enables them to do it faster. They still have to review it, they still have to look at it, they still have to be accountable to the grade, but it enables them to do it much faster....
Is the next slide the video? Okay, that's what I thought. I'm not gonna really tee this up much, except for, we were sort of challenging ourselves with the advent of AI. Again, let's not just put a K12 logo on top of ChatGPT and say that we've innovated. That's not innovation for us. Let's take some of what we know, and let's step back and think, "How could we actually make our customer experience, our product experience, better?" And so, we've landed on what we think is probably the beginning of a long arc of investment, that we think we can actually completely reimagine how education is done in this country.
It's been done with the help of an actual K12 student, who happens to be sitting in the room, who happens to one of his kids also, who happened to, in the same conversation I told you about earlier, said to me, "I want to build this product for my kids." When I actually didn't ask, how old's your oldest?
She's only five months.
Okay. So I should have asked this, because he knows how impatient I am, and I would have said that he needs to put her into preschool then instead of with us. He's on a clock with us, because he really does believe not just in the ability of the technology to do what he's gonna show you, but in the ability of the technology to educate his own child in a manner that is better than what he can currently otherwise get, from a student who went through our program already. And I just... I can't tell you how gratifying but also emboldening something like that can be. 'Cause when you have a student who goes through your program and then comes back...
And I didn't even know this. I was sort of made aware a few years ago. We happened to do an engagement with these guys, and then somebody just said to me, "Hey, this kid, Bruce, Brucey, is like so excited to be working with you guys, 'cause he was one of your students." And, you know, and over time, I got to speak with him a little bit. I got to speak with his dad, who's also here. They work together, by the way. Some people are like: Well, geez, what kind of families go to these programs? I'll tell you what kind of families. The kind of families that love each other so much that they work together. That's the kind of family, and that's really powerful. So,
Hello, and welcome. My name is Bruce Christie. I'm the co-founder of worked, where we specialize in blending design and technology. I am also a proud former student of K12, which is why I'm especially thrilled to share this work with you today. Artificial intelligence, it's disrupting nearly every sector. What if Stride, the leader in educational innovation, could harness the power of AI to more precisely meet the needs of the districts, teachers, parents, and students it serves? Introducing Teaching Intelligence, an AI-powered education platform designed to transform the learning experience. It delivers an even more flexible and personalized journey for those seeking to learn without limits. We are delighted to share a glimpse into the future of education. Let's take a look. Once a student enters the Teaching Intelligence platform, they can customize their avatar just how they want for total personalization.
Through a daily check-in, TI discovers how the student is feeling that day and what their interests are for use in the day's activities. Throughout their lessons, students choose how they want their lessons taught to them, and if the student is having problems, TI is there to help them along, suggesting additional resources or automatically scheduling time with their teacher. At the end of the day, parents receive a progress report detailing all they accomplish. Teaching Intelligence is your personal learning companion. It engages with your interests, creating lessons that dynamically adapt to your learning style, your journey, your co-pilot, uniquely crafted for you.
Now, we've just begun this process, so I wanna make sure I set the expectations right. This may take the world by storm soon. Some of us think it will, but I think realistically, there's an adoption cycle we'll go through. There are some technological hurdles we have to overcome. We have to actually fill in the gaps and fulfill the user experience a little bit more completely... But we think about. We've heard about, and when I came to this company, there was all these buzzwords about individualized learning or customized learning. It was adaptive learning, what it was called back then. We don't use that term anymore, I don't think, because it failed. So consultants, every few years, they come up with some new words that say the same thing.
But it's all about whether it's individualized learning, adaptive learning, customized, it's all about what Bruce said. And what we're doing is we're applying technology, real technology built off the foundation that Les talked about, that will now, I think, for the first time, actually, interactively, be able to provide a customized, adaptive, individualized learning environment for students in a way that it, it doesn't even exist today. Because even if you had 30 teachers for a 30-person classroom, those 30 teachers, you'd have inconsistent methodology. They wouldn't always have the resources to bring to bear. All of that will be brought to bear for this product. And so, we are just stepping up to the plate with this initiative. The first pitch hasn't even been thrown, but we're in this game, and we're playing to win.
So, that's sort of the main part of the presentation, or I would say maybe it's the precursor to the main part of the presentation. 'Cause what everybody, I think, is interested in is: Well, so what does that give you? As an investor, all that stuff's nice, but what does it give you? Donna, our CFO, is gonna talk us through.
Thank you, James. I'll have to start by saying it's probably never a good idea to stand in front of a group, and for this, conversation to actually be recorded, and to disagree, like, really disagree with your boss. I really disagree with my boss! Because he said something earlier, that accountants aren't excited about certain things. They don't get excited. But I can speak for this accountant, and I can speak for that accountant right over there, we are both excited. We wake up every day being excited about our ability to change the future.
For those of you who are not here today, we have on both sides of our walls in this room, one side says, "Change the world," the other side says, "Leave a legacy." I can assure you, all the executives wake up every day knowing that we have an opportunity to change the world. If we change the future of education, if we change the lives of individuals, we have an opportunity to change the world, and when we change the world, that's the legacy we wanna leave behind. That's what's important. That's why we show up every day and do what we do. That's why this accountant and that accountant is very excited. And so, yeah, you're here to understand a little bit about our strategy, to understand about the future. And so I wanna put some context to it.
One of the things that James talked about very early in his talking points was, we have a solid foundation, a financial foundation, and a track record for consistent financial performance. I think that's really important. I don't think we do a good enough job articulating that on a regular basis. For context, in 2023, we reported record revenue, record operating, Adjusted Operating Income , and Adjusted EBITDA. We had an annual growth rate over that four-year period of time, revenue of 15%, AOI of 13%, and Adjusted EBITDA of 12%. And so you say, "Well, there are some COVID numbers in there." Even if you look at the growth rate from 2021, the revenue growth rate was 9%, AOI, 12%.
And so it's important to know that we have a consistent history of delivering top as well as bottom-line growth, and we continue to make improvements. We continue to make improvements that are operational, that actually impact and deliver a higher gross margin. And we've been working on that for the past couple of years, and you've seen how we've been able to improve our gross margins. Our gross margins in 2023 were 200 basis points higher than 2020. And the reason it is really important for me to give you that context is, that's in spite of the fact that, you know, last year we had a, we're in a high inflation environment, and I began the year saying to investors: Yes, we have a, we have high inflation. We're gonna do the right things.
We're gonna pay our employees, particularly our teachers, in line with inflation. But I promise you, we have a strategy and a plan to offset that increase through our efficiency efforts. And we ended the year, 2023, with margins in line with the prior year, in spite of the high inflation. And we reached a, the high of nearly $3 in EPS. And you saw the headline in our, in our earnings release, up 400% compared to 2020. Those are pretty impressive results. James, James wants to establish a culture of, of, gratitude and, and humility. But I do think it's important for us to talk about what we've done. And the reason that's important, because it gives us the credibility when we talk about what we plan to do in the future. Now, thanks, James.
I got so excited when you were talking about accountants. So our, one of our competitive advantages is the strength of our balance sheet. This business requires a lot of investment upfront in teaching platform, curriculum, teachers. I said upfront, so we do that before we actually get funding, and we're able to do that because of the strength of our balance sheet. And so our consistent, strong financial foundation is supported by the high visibility that we have for revenue growth. And it's because of the long-term nature of our contracts, it is because of the high retention rates that we have with those contracts. One thing that's really important to note when we talk about funding: over the history of this company, our funding has been no less than 0% growth or higher.
And you say, "Well, why is that, why, why does that matter?" Because even in recessionary times, think about it, those who are deciding state budgets, the last thing they want to cut is school funding. It's also important to note that online schools receive 30% less in funding than the brick-and-mortar schools. We actually find that unacceptable because the kids who want choice, who come to Stride, deserve to have everything that a kid in a brick-and-mortar school does. Tony and his team are working to close that gap. And so we also make sure we operate in a way, you heard me talk about this a lot last year, to improve our yield. What does that mean? So there are a number of states who require certain attendance records, certain grades to be passed.
There are certain requirements that we have to abide by in order for us to get funding in certain states. So the things that we do to improve onboarding, the things that we do to improve socialization, some of the things that James talked about, the things that we do to make our, our curriculum more interesting, those are the things that not only increase attendance, they also increase outcomes, outcome improvements, which leads to the higher yield, which also leads to higher revenue. And so our consistent funding increases, coupled with the demand, James talked about the acceptance and awareness, this increased demand also drive our revenue growth. And so you look at this chart here, and I talked about the big bump we got in 2021. But look at the consistency after 2021.
One of the things that COVID did was increase the acceptance and awareness of a full-time online program. Parents want more choice. When they look at and compare us to the brick-and-mortars, who had to really quickly adjust for online programming, and compare them to the outcomes that we have, we become a very viable option and choice for parents. Our Career Learning program is an extension of what I call choice and options. We want our customers, our students, to have a choice about where they attend school. We also want our students, our customers, to have a choice when they graduate from high school. Tony talks about those Three E's. We live those Three E's when we think about the options and opportunity for the students that we serve.
Whether they want to go straight to employment, if they want to enroll in a university, or if they want to enlist in the military, we want to make sure that our students are prepared. And I talked about the strength of our balance sheet, and Tony touched on it a little bit, and James touched on it a little bit, as well. We actually have strong relationships with our partners, our advocacy groups, and we have the ability to articulate to regulators the strength of our programs. That's a competitive advantage, as well. That's the reason why we have over 90 programs in over 30 states. That's the reason why we are a great option for parents who want more option and more choice for their students.
That's why we have consistent revenue growth, and that's why we feel comfortable and confident in our ability to continue to drive revenue. And so, you know, many of you have heard me say this time, time and time again, we will always look to see how we can improve student outcomes in the most efficient way possible. And I talked a lot about efficiencies last year. But efficiencies and using technology and automation, we were doing that way before this conversation about bots. For 20-plus years, we have been using technology to improve our efficiencies, to improve our outcomes. And now what we're looking at is using technology, AI, to actually do something that I think is tremendously important, that James talked about, is to free our teachers up to do what they love to do.
And so we are, you know, as we grow, we're able to use our size and scale to create additional efficiencies and sort of in instruction and administrative as well. One of the things that James said last year when we had our count date, I remember this, I remember this earnings call, and he talked about execution. And he talked about the fact that we didn't execute well. And I remember meeting with a lot of investors who were like: "What did he mean by that?" And James talked about it a little bit on the call that we had in our earnings call in October. He talked about the fact that our enrollment numbers increased, and attributed to how we improved in our marketing.
Not just in terms of who we reach, but the way we go to market to reach them. How do we go about doing it in a more efficient way? And so Deb Hannah, who is a CMO, I think Deb started in April. Deb Hannah didn't have time to learn the education space. This is not her background in education, but she knows marketing. And Deb, in a very short period of time, had to ramp up, hit the ground running, and she has been able, and her team, under her leadership, have been able to make improvements in our marketing that was the result that you saw in the numbers that we delivered last month.
And so, Deb, I would just love for you to spend a few minutes talking about your marketing philosophy and some of the things that you have been able to do in such a quick period of time.
Sure. So the really great news about great marketing is that it is simple. Deceptively simple, but simple nonetheless, right? It's the right message to the right customer at the right time. And the team really looked at execution last year and spent a lot of time looking at media, and conversions, and creative, and how we get better at how we work. Media was probably the biggest pivot that we made, right? Historically had been a big investor in linear TV, and that market had just been declining for a really long time, and it was time to take a really hard look at where mom and the decision-makers for education were spending their time, right? And that time is being spent. So many of this age group had cut the cord over the last few years.
And changing our media mix into more addressable, trackable, understandable digital media, particularly in social and other areas where we know Mom is spending time, enabled us to really understand what's performing and what's not performing. Whereas when you put something on national television, you're putting it out there in the mass landscape and hoping that it works. This, coupled with some real agile planning processes, allowed us to work faster. We used AI. We made pivots throughout the season, and tested, and learned, and looked at what worked. The third thing that was probably the most important is every single dollar works harder when you convert better. And if you go to our website, you can see we've made many changes over the course of the last six months, and with many more to come.
Those web changes are the foundation of having every single dollar work harder. When the enrollment process gets less friction in it, and the parent can enroll their student faster, when they can get through the process quicker, when they have the right message given to them at the right time, wherever they are in the enrollment process, they're that much more likely to convert.
Thanks, Deb. Those marketing efficiencies, improvement in our enrollment process, having the discipline around hiring and partnering with Val and HR to make sure we strike the right balance of hiring to support the company's growth, those are the reasons why when you look at that chart on the far right side, that our SG&A, as a percentage of revenue, continues to decline. From 2020 to 2023, as I mentioned earlier, we improved gross margins by 200 basis points. We are on track to improve gross margins by 200-250 basis points in this year alone. The investments that we have made in technology drive efficiencies, they drive outcomes, and we do this not just in times of inflation. This is who we are.
We offer our materials digitally, and we're increasing the amount of materials that we offer that way. So this is not just good for margins, it's good for the environment. MedCerts, you heard James, as well as Todd, talk about MedCerts, MedCerts. That is the highest margin, gross margin business that we have, and that business is continuing to thrive and grow well. And so I talk about efficiency, and I talk about outcomes, and the fact that we want to make sure we continue to deliver, improve student outcomes in the most efficient way possible. I'd love for Tony to just share some of the things that we're doing at the school level.
Well, first, let me, let me say this: It's, it's probably one of the, most natural, sometimes greatest, and can sometimes be one of the most rewarding challenges we have in our business, is that natural tension between academics-
... in finance. It really is. I mean, as an old district superintendent, I was always telling our teachers that, you know, it's not how much money you give education, it's how much education you get for the money. And that's a really hard message in education. But what Donna is talking about is how we utilize everything in our quiver. Let me give you a great example very quickly. You know, James mentioned our career business. You know, in the last, what, James, year, we've really taken our career business and not looked at it as a separate business, how we did in the past.
It is now a function of our managed schools, and what we were able to do was really collapse two lines of business into a single line of business, and very efficiently use all our staffing in a unified manner to provide not only general education services, but career services. We do that with counselors. So what we're able to do is more efficiently use staff. We mentioned the use of AI, teacher grading. We are using every opportunity we can to look at our own practices and say: How do we get more education for our money? And I think it's paying off.
Great. Thanks, Tony. And I won't spend a bunch of time on this slide. I'll say what James has said, reiterate a little bit of what Tony has said. We have been able to drive revenue, increase it consistently. And we've done it in a way, using our size and scale, and using the efficiency methods, and being disciplined, we've been able to grow the bottom line by more than twice the top line. It's the discipline that we have, it is the execution that James is talking about. It is our ability and our desire to continue to deliver strong outcomes. And so I talked about the strength of our balance sheet.
The consistency in which we're able to, and the reliability of our cash receipts and disbursements, as well as our strong, cash position, our very low debt, is not only a competitive advantage, but gives us optionality in how we're able to deploy that capital. We are building on that strength to continue to invest in our business, to continue to drive higher margins. Before you ask in the Q&A, I can assume it's in the Q&A, I haven't seen any questions that have come in. What about your convertible debt? Because of our strong balance sheet, because of our ability to generate cash flow, we will be able to repay our convertible debt when it comes due in 2027 using the cash that we have on our balance sheet. That's an option for us.
And our shareholders will not see any dilution, and any dilution until our stock price exceeds $86.17 because of the capped call that we purchased as part of that transaction. So I'm sure somebody had that question. I've gone ahead and answered it for you. And so I know I keep using the word discipline. It is part of the culture that James is building here. And so we have been disciplined about how we think about deploying our capital. And, you know, our priority has been around organic investment, investing in student outcomes, investing in technology, investing in retention, investing in the things that get kids excited about what it is that we are doing here and the opportunity that we have. That's been our priority, and that priority alone has delivered value to our shareholders.
And yes, you know, Tim, many of you know, Tim Casey not only heads up IR, he heads up our corporate development. His team's been really busy, because we will look for a opportunity for inorganic growth if it has the ability to increase the depth and breadth of our offerings, particularly in our Career Learning space. And I get asked this question oftentimes about returning capital to shareholder via a dividend or share repurchase. It is a conversation that James and I have. It's a conversation that James and I have with our board. As we increase the diversity of our revenue, that creates some additional opportunities for us to put a program like that together. So I want to talk a little bit about our approach to M&A.
And so when we think about M&A, can it - can a transaction help us grow faster? Can an acquisition help us expand our addressable market faster? You heard the old saying, "Does one plus one equal three?" Is it a good fit? Like, we're, we've got, we've got a culture here that is not consistent with a lot of, a lot of companies. A culture of collaboration, a culture around the discipline, the culture around doing what you say that you are going to do, a culture around being committed to outcomes... and a culture around, it's a word I think I hear James use every single day: execution. So it's important to us as we think about any potential M&A, that there is also a fit.
I talked about us being able to grow our revenue from 2019 to 2023 of 15% on average. If we're looking at a transaction, we want a company that has the ability to grow as fast as, if not faster, than we're currently growing. We wanna make sure that there's an opportunity for us to expand our margins. Is there an opportunity for there to be some synergy to drive improvement to the bottom line, to increase the ability of us having the appropriate return on our invested capital? And as I said earlier, today, Tim's team is not... there's no shortage of opportunities for Tim's team to look at. But what we don't want to do is overpay. What we don't want to do is do a transaction that is not a good fit.
What we don't want to do is do a transaction that does not propel our ability to grow our top and bottom line. So the slide. Well, the precursor to the slide you all have been waiting for. In October, we laid out what we thought our guidance would be for the rest of the year. The trends we are seeing since October are more in line with the trends that we saw last year in terms of enrollment, as opposed to the historical trends that we saw with enrollment declines. That gives me the confidence to reaffirm the guidance that we provided in October for the rest of this year.
And so revenue between $1.96 billion and $2.03 billion, AOI between $250 million and $275 million, CapEx between $65 million and $75 million, in line with our historical of 3%-4% of revenue, tax rate of 25%-27%. Notice this bottom line. Those are the targets that we provided in 2020 for 2025. As you can see, we are pacing one year ahead of what we thought we would be back in 2020. So I don't think James realizes, or maybe he did realize, of course, he realized it. He gave away the headline very early if you were listening. He said to expect 10% revenue growth, 20% bottom line growth.
James laid out the macro trends, the addressable market, and our ability to expand into that addressable market. I've talked about, James talked about our history of delivering top and bottom line growth. We talked about our ability to grow margins, and I know I sound like a dead horse, 'cause I wanna make sure it's said. We do that in a way that we still are able to improve our student outcomes. Based upon those factors, I expect that our revenue for 2028 will be between $2.7 billion and $3.3 billion. We expect AOI to be between $415 million and $585 million, EPS to be between $6.15 and $8.30.
And so again, these long-term targets are in line with the growth that we have had over the past few years. It's in line with where we are from the market. It is reflective of the strategy that James has laid out for us to change the future. Thanks. I'll turn it back over to James.
All right. Thanks, Donna. I'm going to see if I can do this real quick. I apologize. I'm gonna read a couple of things. I took a couple of notes. I'm gonna make sure I get what I'm gonna say correct here. So, pre-pandemic, the year before the pandemic, fiscal year 2020, our EPS was $0.60. Fiscal year 2020, our EPS was $0.60 a share. The low end of this guidance range suggests that in fiscal 2028, we will increase EPS more than 10 times. Fiscal year 2020 also happens to coincide with the year right before I became CEO. So again, so if you, if you're tracking it, literally just to, when, when I started, we expect over that period of time, which I think would be seven actual calendar years, to increase EPS tenfold.
Now, Tim, you're gonna have to help me. Can you hear me, Tim? I forget, I forgot to look this up. In fiscal 2020, when we had an EPS of $0.60, our share price was $20-ish a share, $22? And we traded at a much higher multiple with much lower growth rates. So I do think that there's some market catch-up and market dislocation that happens. I think that, as Donna said, we've got a little bit of a track record behind us, and I would expect that that dislocation would gap would close as we continue to perform and execute against this plan.
As Donna said, what we laid out four years ago, we're already ahead of on, and I think that, the guidance that we've given for this fiscal year puts us squarely on track to deliver the first year of these numbers. So okay, with that, I want to thank everybody for coming. I'm going to, I think we have time for a couple of questions. Oh, sorry. We're going to take a five-minute break. Then we're going to come back and do Q&A. And, if you're on the, if you're on the live stream, you can still stream your questions in. We'll take them in five minutes. So we'll be back here in five minutes. Thanks.
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Are you guys ready?
-they imagine.
Okay, so, thanks for being patient. I think we're running a few minutes over, so, we're gonna jump right into Q&A, and then, and then we've got one potential little surprise at the end, and then we're gonna go have some drinks. So, if there's... So we've got a couple, questions, lined up here in the queue online, but, I thought I'd take, questions from the audience here first, if there were any, otherwise, I'll jump into the online questions. Go ahead.
I was just wondering... Oh. Yeah, of course. I was just wondering how much you're going to spend on the new initiatives that you talked about?
Yeah.
And then what is the monetization strategy there?
Yeah, so, question around how much money we're going to spend on the new initiatives, and what's the monetization strategy? I think the basic answer is that we spend sort of within the confines for the past couple- so we've been spending against these for a couple of years now. Within the confines of our current financial discipline, as Donna mentioned, we have been investing. And so, what that means is that I don't think that we expect the investment trajectory to increase dramatically from here. We have signaled previously that CapEx sort of proxy for investment, not exact, but proxy for some of the investment, has historically been somewhere between-
3%-4%.
3%-4% of revenue. I think we've stuck by that in the past three years that I've been CEO, and I think we will continue to be at or better than that, going forward.
Yep. We'll just, we'll just reprioritize, right? But stay within that discipline number.
So I don't think anybody should expect some sort of, you know, dramatically larger spending around... They're not gonna, it's not gonna show up as like, "Oh, our profitability is down because of this, or our CapEx is up because of this." Sort of all within the confines of what we do, and it's hard to parse out specifically because a lot of the investments we're doing for our programs anyway, already. That Learning Hub that you've seen, that's for our programs. Our teachers that we manage, that's for them, too. So it's hard to often parse out the difference. The monetization strategy for most of these is, it's varied. So I have a sort of particular.
It's sort of just my experience, I guess, is that you build really large-scale audience and community, and there are just so many ways to monetize from there. And I think that's our strategy is really about aggregating large customers first, and then you're gonna have your typical sets of monetization strategies that I think we're gonna be able to deploy all of them, whether it's subscriptions, transactions, sponsorships, advertising. Like, I think they're all at our disposal. You know, you think about a platform like Tallo, which already has 2 million registered users. If we reach our goals of having millions and millions of active users, we're gonna monetize it through transaction revenue on the back end with employers.
We're gonna be able to monetize it through subscriptions to certain users, particularly if they want preference around placement for employers or things like that. We're gonna be able to monetize it probably through advertising with the employers who want specific advertising placement. So I just think there's really a lot of strategies that we'll deploy, and I'd rather build it in a way that really is customer-centric first, and then deploy the monetization strategies on top of that. I think, and I think that's proven in many models of other companies to be the way to create a lot of value for both our customers and our shareholders at the same time.
I mean, if you think about the example I gave earlier when I was at Match, and we spawned Tinder, we also owned the, what at the time, was the largest U.S. site called OkCupid. Those... Tinder wasn't monetized at all in the beginning. It was pure investment. And now, I don't, I don't track exactly all their financials anymore, but I believe it's probably the biggest value creation part of their portfolio today. So... Sorry,
Hi, Matt Filek with William Blair. Thank you for the great presentation, team, and having us today. Really appreciate it. Had a question on Career Learning. Was wondering if you could talk about some of the most popular learning pathways for those learners, and then if you could share any data on the Three E's for the program graduates?
Yeah, so the popular learning pathways for career and sort of data around the Three E's. So, the three most popular pathways for learning at the high school level for our career programs is business, sort of generically, category of business, technology, and healthcare. Those are the top three. Obviously, two of those three, technology and healthcare, we have proprietary assets around through acquisitions that we've done. The sort of generic business one is, you know, I mean, it spans everything from, you know, Microsoft Office skills, Adobe skills, and things like that. And most of those have certificates associated with them as well. We don't actually release statistics yet around sort of usage, career usage around even the Three E's.
We have upwards of approaching 10,000 graduates this past year. So, across those 10,000 graduates, generically speaking, enlistment is the lowest percentage, and that's across the United States, and we track similar to that. And then, employment and further education college enrollment is higher. And, you know, college enrollment for us, just like across most of the country, is still a very, very large proportion of our graduates. And employment is also a pretty significant portion.
Thanks, James. So Nancy Bunnell , PNC Bank. A bit of an extension from his question, similar to Allied Health, what other partners, corporate partners, should we think about, you know, as you think to develop further the career-
Yeah
... programs?
Yeah. So, so I think we bucket the corporate partnerships, particularly in Allied Health, in a couple buckets. One is sort of the, what I think people would consider, the traditional healthcare companies. So that could be, pharmaceutical companies. We have a partnership with sort of a, you know, pharm tech type of pipeline for the pharmaceutical... Not pharmaceutical, the pharmacy type companies, traditional healthcare pharmacy-type companies. But also, if you think about, the healthcare space that is not necessarily corporate, if you will, so hospitals, hospital systems that are associated with often university systems, those kinds of partnerships for us, they have the same kind of pipeline issues around technicians and things like that, that the rest of the country has.
And so, that's a big category of opportunity for us as well. So, I think really that corporate side and sort of the healthcare space, but also that sort of, I know we call it not-for-profit space, but sort of that, not corporate for-profit space is a big category for us.
Yep, afternoon. Oscar Turner with PNC Bank. I thought I saw a quote up there that showed General Education was roughly at 31 states, and you made a reference that you see opportunity there for 19 states. Career Learning, I see it at 27. Obviously, there's been a big focus on Career Learning over the past, call it 18, 24 months, just given some acquisitions. Can you give us a picture in terms of, like, what your profile is in acquisitions? Like, what potential clients you're looking for or profile companies, and essentially, how do you expect to fund those acquisitions?
Yeah. So, just one clarification around our sort of our, our geographic landscape of programs, 31, 27, and then sort of the acquisition landscape. The 27, 31 is really focused on high school, middle school programs in the career space. The 31 refers to the number of states where we have general education programs, K-12, across 31 states. And the 27 is within those 31, we have 27 programs that are career-focused in the K-12 space. Obviously, we anticipate and expect to get from 27 to 31. We expect all of our all of our general education programs to also have adjunct career programs. And then as we expand into additional states, we also hope to have those as well. In fact, I probably misspoke.
There's one exception, I think, where we've led with a career program in a state that actually doesn't have a general education program, so there's one exception to that sort of general rule. When it comes to acquisitions in the career space, I think Donna outlined, you know, we have a set of criteria, if you will. I think the most important of what Donna said is really the strategic criteria, and I think she emphasized that, for us, I think that strategic fit's really important. There's also a set of financial criteria, and as Donna said, Tim's been real busy. We do a regular pipeline review.
In fact, two nights ago, I got a call from a, whatever, one of you investor-type people about a deal that they wanted me to do, and, it's a deal that's sort of floating around here a lot. You know, I think the very quick, short answer was I'm not interested. It didn't fit the criteria that Donna mentioned. Donna, have talked about this company numerous times. She has cautioned me against getting too excited about a company with that type of profile. It has sort of some strategic synergy that I can see, but, but it's just not, it's just not a good fit. Then, the word that Donna has used, and I think is the right word, is discipline.
The last part of your question was around how would we fund them? As Donna said, we've got a really strong balance sheet. Last June, we ended the year with over $500 million of cash on our balance sheet. We've got a lot of dry powder there. Our convertible note doesn't come due until 2028?
2027.
2027, sorry. So we have a few more years on that. As you saw from her slides, we are a pretty prolific free cash flow generator. So if you just took our current year profile, extended it through 2027, when our convert comes due, I mean, we'll have upwards of $1 billion of cash on our balance sheet. I mean, if you just literally did that extension math. I'm not saying that that's what's gonna happen, but if you did that extension math, we'll have close to $1 billion of cash on the balance sheet. Our convert, you know, would use about half of that. We'd be left with half. We'll also have, I think, tremendous flexibility in the capital and other credit markets to do other things if we wanted to.
So, I think we've got a lot of, a lot of capability. And if we ever got our multiple to a market multiple, we'd also have equity at our availability. I don't think we'd use much equity now, when we're trading at such a discount. Other. Sure, sure, go ahead.
Just a quick follow-up on the M&A question: Does the fiscal 2028 guidance assume any incremental M&A activity?
So, actually, one of the online questions sort of mimic that. As far as I remember, it's purely organic. The fiscal 2020 is purely organic. It does include some level of growth with our new initiatives, but I'd say the vast lion's share of it is actually less dependent on new initiatives, and really dependent on our existing businesses, which, you know, you interpret that upside or downside as you see fit. But, you know, here, here's the I...
You know, I'm not, I'm no longer sort of in the professional finance arena, but, if we deploy capital on something, technically, I think, you know, some investment bankers model it as, as it theoretically could be dilutive, but, the capital markets are giving us zero credit for the cash on our balance sheet. So, we've got, we've got over $10 a share of cash on our balance sheet today, and, you know, we get zero credit for it.
So if we deploy some of that for an acquisition that gives us extra EPS, you guys can do the math, but I sort of like, I know that some modeling, financial modeling would, in some scenarios, consider that to be dilutive, depending on what we pay and all this other stuff, but I don't think we're getting the point is, I don't think we're getting credit for the cash. So however we do decide to deploy it, I think it is from a shareholder perspective, that's actually accretive.
I do think it's important to note, particularly as I'm sitting next to the management team, who has a directive of an expectation of revenue growth from some of these new initiatives, if we are able to achieve what James has mandated and what, you know, what I'm mandating from the team in terms of the growth, then we have some opportunities to be at the high end, if not really exceed the guidance that we have provided.
Yeah, I think it's a really important point that Donna's making because we internally we set targets for all this stuff, and those targets are not for the faint of heart. And we have executives that are willing to step up to them. We talk internally a lot about the fact that we will not be successful with all of them, and so I think what Donna's put together is a plan that doesn't assume that we have success across the board. I assume we have success across the board, but I think the plan doesn't assume we have success across the board. I'm gonna turn, we've got a couple of questions online here. The first actually question was actually very similar to the question... Oh, it's not on here anymore. Oh, did it get removed.
Okay, so here's another, the other question: will you share specific educational outcomes for Career Learning, such as graduation rates, employment, et cetera? I think the short answer is, for now, no. We're not gonna share very specific educational outcomes. I don't think that we see a dramatic distinction today between career education outcomes and general education outcomes. What we have historically seen, and we've talked about, is generally speaking, retention tends to be better across our career platform. So therefore, just the general math tends to suggest that those outcomes tend to be a little bit better because as retention improves, outcomes improve. So it's very broad statement, but they're sort of not so dramatically different that I think there's clear separation.
And so, you know, so I think as we improve outcomes more broadly, I think you can assume that they translate into the career space as well. Particularly around graduation, by the way, because, you know, when we talk about graduation improving, which we, which Tony did, that's directly correlated to career because, you know, virtually most of our kids in high school are actually in our career program. Like, why would you not sign up for it? It's no incremental anything, really, to a customer. Okay, the next question online here is... Let's see. What are you hearing from brick-and-mortar district adoption of AI, and can your implementation of AI extend your digital leadership, giving you a competitive advantage? Related, does your measured adoption approach to AI leave it at risk of falling behind?
Okay, I'm gonna take the second part of that first, and then I'm gonna address the first part then. Are we, are we worried about being left behind? And I think the answer is, is no. I actually think that, if anything, all the players in this space who sort of leapt ahead with these flashy, splashy announcements, and if you look behind the covers a little bit, I think that they actually are at risk of being left behind.
I think in this case, what we're doing and what Les talked about, building that sort of solid foundation, it lets us, it lets us deploy across multiple products, and, I think it will really accelerate, our ability to deploy AI tools internally and externally for customer-facing things, as well as internally-facing things, at greater velocity, with more impact and outcome. So not worried at all about being left behind. I think that this is a race that is gonna be run over decades, not months, quarters, or years. And as the decades unfold, I think we have, not just because of our approach, but because of our proprietary data that we have, but because of proprietary content that we have, I think we have long-term competitive advantage, and I don't think that, long-term competitive advantage goes away.
From a district standpoint, I think we hear everything across the board. We have some districts that are really embracing and leaning into AI, we have districts that are scared of it. We have districts that are on the sidelines waiting to see what their states say about it, waiting to see what the federal government may say about it. There are districts that are worried about AI from a privacy standpoint, from a data standpoint. There are a lot of districts that rely on third parties to help them manage many of the things in areas that they would employ and deploy AI. There's a lot of districts that are hearing from their teachers that are confused about AI and looking for guidance. So it's really across the board.
And when you have 13,000 school districts across the U.S., and they have different levels of funding, different levels of engagement, different levels of sophistication, you have big, large, small, medium, and so you're gonna have really run the gamut. I think for us it's opportunity because there are gonna be districts, even the biggest districts with the best funding, their expertise is not in AI, their expertise is not in deploying new technologies. In fact, most new technologies that they use are deployed through third parties. They're just not. They don't have the expertise around really building new technologies.
The thing that the past several years, including the pandemic, I think taught a lot of districts is, and goes back to my challenge question, which I've yet to see an answer to, but my challenge question around venture capital-backed companies, is what districts learned, have learned, and the reason why I think a lot of these companies can't breach that $100 million threshold, is that, it's very hard for districts to manage so many different point solutions. So they're increasingly relying on a limited number of technology partners. One of the reasons why I think Todd is engaging with some of these large-scale technology integrated partners with school districts for our products is, is that they are trusted partners, they're great companies, and I think that partnering with them can be really strategically advantageous to us.
But I don't think that we're gonna be competitively disadvantaged. I think, in fact, that the district markets, for us, becomes actually more compelling because of the way that we're approaching it, and I think, it'll endure a better partnership with districts for us. Okay, let's see. So there's a question here about second quarter enrollment trends. And I think Donna mentioned a little bit of this already. In the second quarter of most traditional years, the high point is the end of the first quarter, and then our customer enrollments tend to, over the course of the year, attrit. Last year was an anomalous year for us, in which in-year customer enrollments grew and were strong. And Donna indicated...
In fact, in our first quarter earnings call, we indicated that very, very few weeks of data suggested that last year's trend may not be so anomalous. And Donna just indicated that in Q2 so far, that's largely held. It gives us greater confidence, I think she said that, in our guidance for this current fiscal year. So we don't know if it's the new norm, that in-year, but, but we do see a lot of, a lot of trend in volume.
I think it goes back to sort of the sentiment stuff that I put up earlier, that parents, they just, they feel emboldened, they want more choice, they wanna be able to take matters a little bit into their own hands, when they're dissatisfied, they're less worried about switching midyear. We actually see parents that have already decided that, you know what? They're gonna sort of do things their own way, and maybe in their state, school starts sometime in August, and they say: "You know what? That's nice for them, but I'm gonna take matters into my own hand, my own hands, and school's gonna start in September," and they sign up with us in September. Sort of simple as that.
So, we're seeing really a wide range of outcomes here, but one thing's for certain is, in-year activity continues at least... Again, not sure if it continues to be a trend yet, but data so far for this quarter seems to be pretty promising.
Yeah, and I think I'd add to reiterate something that both James and I talked about earlier today. Not just the fact that parents want more choice, it's really around the thing that COVID did for us, is to bring more acceptance and awareness. And so if a parent was not happy with their school, they didn't realize they had a choice or an option. Now they know they have a choice and an option, and that's because of this acceptance and awareness that we have, that I think is sort of driving some of the results that we, that we see.
Okay. I think one last question, unless there's another question in the audience. But, there was a question about teacher recruitment and whether it's affecting us, and, you know, you hear about teacher shortage. And, Val, I don't know if you wanna spend just a couple minutes maybe talking about our the impact in our recruitment and, and if teacher shortage has really impacted us and how we're dealing it.
Yeah, I think, I mean, I'd be naive if I said teacher shortages don't affect us, 'cause they do. But I think we also have some advantages over school districts, brick-and-mortars in particular. So if you think about us when we're recruiting, we can recruit across the entire state, or we might be able to recruit across multiple states in order to staff. We have a really tenured staff, which I'm very proud of. So our tenure for our leadership on our academic recruiters is about 10 years. Average tenure for our recruiters is 5, so they are very seasoned, they work well with the school leadership team, and they do an amazing job. They leverage the advantages that our ecosystem have in trying to attract teachers.
So, for example, so you've mentioned safety for students, safety for teachers is another thing that we, we promote. So there's a lot of advantages for working in a virtual environment that we leverage in trying to attract quality teachers.
Yeah. I think the other thing, and I forget the stat exactly, but, you know, the majority of districts out there have, you know, some teacher challenge, the vast majority do. As we sit here today, you know, it's never a perfect system, but we're fully staffed. I mean, I think that's sort of the... You know, most districts, if they start the year, they're not fully staffed, they're not fully staffed, they have this shortage, it lasts pretty much all year. I think where we sit today, we're fully staffed, so I think that's, that says something about where we are and how we're able to recruit. So okay, another question here. There are a number of new initiatives being undertaken.
Is there any concern that management may drop the ball, i.e., by trying to do everything, nothing is done? What is being done to prevent this from happening? Okay. I think it's a great question. I think it's a very fair question. I think the simple answer is, well, we've been doing them for most of the year, for most of the past couple of years. And I think our execution over the past year has improved while we've actually been also investing more in some of these initiatives. There's always risk, there's always distraction risk. You know, I think that it's our responsibility to be disciplined about what we say yes to. Also to be disciplined about sometimes when we curtail some of these things. So, it's a balancing act.
I definitely think there's a risk of dropping the ball, as the question was posed. It's my responsibility not to do that. You know, I, again, I think the team has done a really nice job of improving execution over the course of the past couple of years, and, and I think that we're focused on it and we'll continue to do so.
I think it's also important to note that some of the things that we are doing, we were doing anyway. So we're taking our existing products, we're taking our existing platforms and expanding them to expand to an addressable, addressable market, so it's not all new.
Okay. I think that's it, unless there's another question in the audience. I apologize that we've run over. I appreciate people staying a little bit longer. That's gonna conclude the live stream portion of the video. Thank you, everybody, for your time today. And please invest in us.