Earnings Call: Q1 2022

Oct 19, 2021

Good day and thank you for standing by. Welcome to the Stride Inc. First Quarter Fiscal 2022 Earnings Call. And Answer Session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Tim Casey. Thank you and good afternoon. Welcome to Stride's Q1 earnings call for fiscal year With me on today's call are James Root, Chief Executive Officer and Tim Medina, Chief Financial Officer. As a reminder, today's conference call and webcast are accompanied by a slide presentation that can be found in the Stride Investor Relations website. Please be advised that the discussion of our financial results may include certain non GAAP financial measures. A reconciliation of these measures is provided in the earnings release issued this afternoon and can also be found on the Investors section of our website. In addition to historical information, today's call may also involve forward looking statements. The company's actual results could differ materially from any forward looking statements due to several important factors as described in the company's latest SEC filings. The company assumes no obligation to update any forward looking statements made during this call. Following our prepared remarks, we will answer any questions you may have. I will now turn the call over to James. James? Thanks, Tim. Each summer as we prepare for the upcoming school year, We face operational and logistical demands to support the needs of millions of potential customers and thousands of teachers and support staff. These past 2 summers have proven even more challenging as a result of the ongoing global pandemic. Our country has been facing disruptions in the supply chain, Shortages of workers across industries, uncertainty in the workplace and renewed fears of inflation among many other difficulties. In spite of this, I have great faith in our country, our ability to persevere and create opportunities through adversities. We are resilient, adaptive, Innovative, compassionate, opinionated, proud and sometimes disagree, but we are always united and as we navigate these recent challenges, We are evolving. We are being forced to rethink certain norms and one of those has been our approach to education. I hope we now realize that there is no one size fits all solution to education, to training or to workforce Certainly, some of the traditional methods work for many, but we need to ensure we are providing choices and how we deliver opportunities for those seeking new paths. Over 20 years ago, Stride was founded on the premise that students and families should have a choice in their education. The pandemic has made this mission more critical than ever before. We remain committed to ensuring that we are providing a best in class experience across the range of customers we serve from Early elementary to adult workforce solutions and we want to make sure that these educational options are available to as many learners as possible. The increasing demand for educational and training options continues to fuel our business. The pandemic and the resulting disruption across schools and districts has led to a surge of support for School Choice. Total support for School Choice has increased to almost 75% of the population. The pandemic raised awareness for parents about their students' education and many recognized that they are not getting what they need from their existing school. And that surge in interest spans private schools, voucher programs, virtual schools and other similar programs and specifically interest in virtual education has seen dramatic increases. In large part, this was because so many were forced into it during the pandemic. And while the experience was not always positive, it absolutely opened the eyes of many to the benefits of a virtual model. And In fact, peak website traffic this year surpassed the traffic we saw last year at the height of the pandemic. We are seeing well over a 1000000 unique visitors to our websites each month and growing and they are more educated consumer. Conversion rates for those who apply to our program are at a multiyear high. We attribute this in large part to the increase in awareness. Families that apply to our program know what they were looking for and so they convert at higher rates. This is an important trend for us over the longer term. And as families become more comfortable with virtual education and Stride's experience, it opens up other opportunities for us to offer other institutional and consumer offerings. And while conversion rates have improved, so have conversion times. Families both know what they want and we are also making it easier for them to enroll. Our focus on the consumer experience and customer journey is just beginning and if these early trends are any indication of what we can We are going to deliver some really exciting customer experience improvements in the coming months and years ahead. There are labor shortages in many industries and education is not immune. Teacher shortages have been a real threat to US education system for many years and the pandemic has only exacerbated this risk. We're thankful for the thousands of wonderful teachers we manage, These shortages have limited our ability to enroll new students in some states. Given the dissatisfaction Many teachers experience in traditional schools and the high satisfaction rates we see for teachers that we manage, we hope that they consider us as an option. Particularly with vaccination requirements, accessibility and age restrictions, some teachers just don't feel comfortable in their And so over time, we will be looking to shift more and more teachers to online programs where they have greater flexibility, impact and reach than they have in their current roles. Another trend that we see accelerating is the focus on career training and workforce development. We desperately need skilled workers and many high school students are realizing that their future success does not need to be tied to a 4 This fall, our STRIDE career programs for middle and high school students enrolled 42,000 students, a 30 6% increase from last year. It's also 3 times the level we were at just 2 years ago. And our surveys for career learning demand are even more positive in overall virtual education. Even as interest in virtual options increased, career learning interest continues to outpace it by multiples Thanks, strong growth in this business over the long term. I think the investment community was rightfully skeptical of our ability to grow after last year's pandemic And make no mistake, we continue to see a positive impact on our business from the ongoing pandemic uncertainty. But we also believe That there is an ongoing structural shift in education and we are the digital leader in the space and we believe that positions us to thrive over the long term across a broad spectrum of product and service offerings. For this year, that means we expect to grow both our top and bottom line and we believe we are on pace or better to the long term goals we set out for ourselves just last November. Tim will provide more details on Just a minute. I also wanted to highlight one of our new product offerings for this school year. As many of you know, younger students were disproportionately impacted by the pandemic. Younger students were less likely to attend school consistently and were more likely to suffer from significant learning loss. Additionally, supporting younger students during at home learning can be a challenge for families. We recognize the particular difficulties of this age group Even prior to the pandemic, we have been working on an entirely new design for our K-five course catalog. Our new programs are built specifically to support more independent learning and allow parents and families to play a more supporting role in a child's education. We believe these new courses will allow for deeper engagement and better academic outcomes. And lastly, while COVID was rightfully receiving much The attention over the last year, there have been other catastrophic disruptions. For example, in September, Hurricane Ida hit the Gulf Coast And a significant number of students were displaced from their homes and schools. Our team quickly mobilized to offer a free Private virtual program for these students that is now serving hundreds of families. Proud of the team for this effort. It's doing what I call absolute right and is a core principle for STRIDE. Thank you for your time today. Now I'll pass the call over to Tim Medina to discuss our quarterly results and fiscal 'twenty two guidance. Tim? Thank you, James, and good afternoon, everyone. First, let me quickly recap our reported results. Revenue for the quarter was $400,200,000 an increase of almost 8% over the same last year. Adjusted operating income was $4,500,000 down significantly compared to the prior year, which I will discuss in a few minutes. And capital expenditures were $15,400,000 an increase of $2,600,000 over last year. Driven by strong demand in career learning and the recovery in revenue per K-twelve enrollment, we expect to grow revenue and profitability this year compared to prior year. Our Q1 results and this guidance for the rest of the year demonstrates We believe this sets Stride up for continued long term growth and expanding margins across our lines of revenue. Q1 revenue from our general education business decreased $7,500,000 to $306,300,000 This was due primarily to the expected decline in enrollments, partially offset by an increase in revenue per enrollment. General ed enrollments decreased to 147,600 from 164,600 last year during the height of COVID. As James discussed, we continue to see strong demand for our offerings and we expect that over the coming years this business Revenue per enrollment in general education increased 9.7% in Q1 compared to the same quarter last year. We are seeing favorable funding impacts in many states offset by some mix shift to lower funded states. For the full year, we expect to see revenue per enrollment in line with or even better than our fiscal 2020 results. Career learning revenue grew to $93,900,000 an increase of 64.4%. This was driven by continued strong growth in our Stride Career Prep enrollments and growth across our adult learning business. Within our career learning business, our middle and high school career learning revenue was $71,400,000 up 46.4% from last year. This was driven by 36.4% increase in enrollments and an 8% increase in revenue per enrollment. Like our general education K-twelve business, we expect revenue per enrollment in Stride career prep programs to improve significantly over last year. Our adult learning business had another Strong quarter, finishing with revenue of $22,500,000 This puts us on a great trajectory for the full year and we expect adult learning to contribute almost $100,000,000 in revenue during fiscal year 2022. Gross margins for the quarter were 31.6 percent, down 3.40 basis points compared to the same period last year. We returned to a more normal seasonal pattern in our materials and computer expenses this year. Last year, we had a slower ramp in shipments to students, which pushed 1st quarter gross margins up. Therefore, we expect our 2nd quarter comparison to be more favorable as spending this year is more in line with the normal seasonality we saw in years prior to last year. We continue to feel confident in our ability to achieve the 2025 gross margin targets we laid out last November and faster than we originally anticipated. Selling, general and administrative expenses for the quarter were $133,400,000 up $15,600,000 from the Q1 of fiscal 2021. The increase in SG and A is primarily driven by higher costs associated with enrollment and onboarding and the annualization of expenses from our acquisitions. Stock based comp was $8,300,000 for the quarter. We anticipate that we will finish the year with stock based compensation in the range of $29,000,000 to $31,000,000 Adjusted operating income for the quarter was $4,500,000 Adjusted EBITDA was $25,500,000 Both these metrics were impacted by the seasonality of costs that I outlined above. The timing of our costs and income in fiscal year 2021 had timing anomalies that we explained during our quarterly calls last year. This year, we expect our seasonality of expenses will be more similar to the years prior to FY 2021. And as you can see in our guidance, we think the 2nd quarter will be very strong from a profitability standpoint. Interest expense for the quarter was $2,000,000 As we mentioned last quarter, we have adopted new accounting guidance that eliminates The non cash interest expense related to the amortization of the debt discount from our convertible note. This results in lower interest expense. It also means that we have increased the long term debt recorded on our balance sheet even though we have not taken on any additional debt. For the year, we expect our quarterly interest expense to be fairly consistent with the Q1. Our effective tax rate came in at 33%. For FY 'twenty two, we believe we will finish the year with in the 28% to 30% range, mostly due to an increase in non deductible compensation above FY 'twenty one. Capital expenditures in the quarter totaled $15,400,000 up $2,600,000 from the prior period last year. This increase was expected as we invest in more mainstream consumer facing products expected to contribute to future financial performance as well as ongoing investments in our high growth career and adult learning businesses. Free cash flow in the Q1 defined as cash from operations less CapEx was negative $146,900,000 as compared to the prior year's $127,300,000 This normal seasonality of cash flows relates to school launch and the enrollment and onboarding of new students. We expect to see positive cash flow for the next three quarters. For fiscal year 2022, we expect to have significantly higher cash flow from operations than in fiscal year 2021. We ended the quarter with cash and cash equivalents of $218,500,000 Turning to our guidance, For the Q2 of fiscal year 2022, the company is forecasting revenue in the range of $390,000,000 to $400,000,000 Adjusted operating income between $55,000,000 $60,000,000 and capital expenditures between $14,000,000 $17,000,000 For the full year, we are forecasting revenue in the range of $1,560,000,000 to $1,60,000,000 Adjusted operating income between $165,000,000 $180,000,000 capital expenditures between $65,000,000 $75,000,000 And lastly, an effective tax rate between 28% 30%. Before I wrap up, I want to be sure to thank our employees Thousands of Stride employees, we could not have achieved the strong results we saw this quarter and that we expect to see for the full year. Thank you all. And with that, I'll turn it over to the operator. Operator? Please standby while we compile the Q and A roster. First question comes from the line of Jeff Silber of BMO Capital. Thank you so much and congrats to the strong start of the year. I wanted to dig into your general Education enrollment trends, obviously the numbers were better than people thought. Is it possible to kind of parse through The difference between last year and this year in terms of the students that you retained versus new students that started this fall? Hey, Jeff. It's James. So, yes, I mean, obviously, as you know, we don't break that out actually. What I will say is that We have continued to see strong renewing interest in our programs. And I think it's just sort of logical, like in order for us to, I think hit the kind of numbers we're hitting, we have to have had both a lot of returning families and then Ongoing interest from new families, but like I said, we don't you as you know, we don't break that out specifically, but I just I think that The comments we're making around us seeing sort of a structural shift and sort of the tide rising, if you will, on demand is it's real. And I think in addition to that, as I mentioned, We have more demand than we could actually have dealt with because we actually had to cut enrollment short in some states because of the teacher shortages. So We just don't see the demand abating as I think most people predicted. All right. That's great to hear. And maybe we can drill down into the structural changes in demand. Are you seeing it all across The Board, are there certain grade levels or geographies that are stronger than others? Yes. I think generically speaking, we're seeing it Fairly across the board. We do see a slight bias towards some of the younger grades. That's actually good for us, as you know, because it gives us actually a longer Potential lifetime value with those students that lets us often get more than one bite at the apple with those students because some of them do leave and come back. So we see a slight bias there. We did see some slight bias in states that had some Higher COVID cases, I think that's sort of also natural. So we saw a little bit of bias there. But we've seen pretty strong demand across the board. Okay. And if I can get back to what you talked about on the teacher shortage, can you just remind us how easy It is for you to transfer teachers again kind of across straight lines. And do you have a large number Teachers that teach your U. S. Students. Yes. So I'll answer the second question first. We do not have An international sort of teacher pool that we draw from. I know there are other companies out there that do that. We have not headed down that path to date. And So far, at least all of our teachers really we try to keep as domestically managed as possible. The teacher shortage is definitely it's across the board. We did See some specific concentrations in some of our larger states like California or Texas. And so But it is a really pretty broad spread teacher shortage across the U. S. And I think if you do any of your Digging into this independently, you'll see that I mean, this is a widespread all the brick and mortar school districts are dealing with this. It was actually there was a teacher shortage pre pandemic. The pandemic exacerbated it. A lot of teachers are reluctant to go back. I think long term, it's actually just A great opportunity for us. We do not, I think to your first question, we do not though do much in the way of sort of cross State pollination. As you know, in many states where you have to be certified, we have limited numbers of cross certified teachers and things like that. So is something we need to work through because we do have some teachers that are cross certified and of course there we can use them. But we obviously We are very strict on our compliance requirements and ensuring that we manage the compliance requirements in each state. Okay, great. I'll jump back in the queue. Thanks so much. Next question comes from the line of Jeff Goldstein of Morgan Stanley. Hey, guys. Good evening. On the career learning enrollments, was growth They're in line with your expectations coming into the year. I know initially you didn't expect a large COVID driven impact there, but do you think that came into play with student retention At all. And then I guess looking forward, is there any change to how you see the long term enrollment trends in that business? Yes. I mean, I think, Jeff, that The nice thing on an absolute basis is that retention in our career Programs tend to be a little bit higher than our general education program. So that obviously helps the trajectory of the enrollment business and just The mathematical sort of law of large numbers when we have a smaller business, it actually helps retention as well. So those kinds of things do help. I think that Though, we were I don't think we were surprised by the trajectory of this business. I think we continue to see all the research that we do, suggesting that the demand for these kinds of programs is just growing. And so I don't in fact think that we're surprised. I think the trajectory can 3 can continue. In fact, I actually think longer term it gets better because the one thing that I don't think we do a great job yet of is Tapping the vein of the career specific interested families. I think we continue to sort of tap the vein Of the more general education families that do have an interesting career programs and they opt into that program. But I think we can do a lot more into tapping into career specific families that are looking for programs like ours. And I think that we've got a lot of upside in doing a better job of that. So I think the trajectory can certainly continue. Okay, perfect. And then you mentioned general education revenue per enrollment being higher than last year. But I guess given the nearly 10% growth in the Q1, is there something that will temper that growth rate for the remainder of the year? Or maybe or did I misinterpret that and a number like 10% is the right run rate going forward? Maybe just help me with the trajectory for the remainder of the year and what's behind that? I think generically speaking, we're seeing this year, it's not a Q1 thing. It's We're seeing this year, we will see higher per people revenue or per enrollment revenue funding throughout the year. Of course, there's always a little bit of Sort of give or take during the course of the year, but it's not going to go 10% this quarter and then down to 2% next quarter. So it'll stay in that range. We expect it at least to stay in that range through the year. Okay. Thanks a lot. Appreciate it. Next question comes from the line of Stephen Sheldon of William Blair. Thanks. Hi, James and Tim, and congrats on the results here. First, I think it'd be great just to get some You mentioned a little bit in the prepared remarks, but just your ability to launch programs in new states over the next few years, especially with some of the favorable trends you're seeing Accepting public vouchers, what opportunities do you think there could be in expanding to new states over the medium term? So I think In the short to medium term, there's a lot of opportunity. And I'm going to say this sort of I don't mean to get too far maybe out of my own swim lane here, but I just think given everything that's going on over the past 2 years in this country, I'm disappointed in those politicians who are still resisting giving the kids in their states Opportunities for virtual programs like ours. I just think it's a disappointing it's just disappointing to me. And I think that the families out there that we hear from, it's disappointing to I think from a new state opportunity perspective, I do think that there are a small handful of states that we can see, We will get some traction in. We already know Georgia is going to come online next year. States like Kentucky, West Virginia, we see good traction in those states. New Hampshire, we see some early traction in that state. So I think that there is in the short to medium term Some good conversations we see happening. And again, I just think that when you mentioned voucher programs, I think when you throw in things like the voucher programs, which will really help our private pay business more, but I think when you throw those kinds of things in, I think that there's a lot of states who are they're just considering ways that they can offer more choice to their to the families in that state. And I just again, just Given what we've been through in the past 18 months, I can't see how you can't do that. Got it. That's helpful. On the guidance, I think in the past couple of years, you've seen quarterly absolute revenue relative to the Q1 of the fiscal year either remain steady Over remaining quarters or increased some, it seems like and I think there's some acquisitions might be playing some of that, but it seems like you're assuming some slight moderation over the rest right now. So just wanted to ask how much of that is conservatism. Is there anything you're assuming, especially in terms of in year retention rates that may be different relative To what you've historically seen, just any detail there? As with any year, we have always had some variability in James talked to. And since this does introduce some more risk in our retention, we're being a little bit conservative in our forward estimates. Got it. That's helpful. And then just lastly on the middle and high school career learning enrollments, I know you're going to see many more students graduate from those programs over the coming years. But for those that have graduated, What can you share about what those student outcomes what the students are frequently doing post graduation in terms of entering the workforce, continuing into other forms of higher education? And what do their outcomes look like, even though I know it's probably somewhat small sample size at this point? Yes. I think your last comments, the most relevant is Just in terms of the number of actual absolute graduates that we've been able to track, the sample size is still pretty small. We advocate very strongly, even in our career programs, that we want 1 of 3 outcomes for each of our graduates. We want them either going to an employment path, Going to further education or doing some enlistment in the military, and we think that they're all very viable. And by the way, We advocate the exact same for our non career high school students. It's actually no different. And so What we early returns that we see from our career graduates are that they are in fact Motivated to go down one of those paths. I think we have pretty good success in getting them down into that path. I think we're going to continue to invest behind Our sort of counselor program and making sure that we provide the right kind of counseling and advice to these kids, But too early to tell sort of definitively from a data perspective. And as you may know, for those of you who are on the call That have graduated high school and or college, I suspect that many of you don't know or don't keep Track with where your classmates are today and your schools have had difficulty to do that. The data is always a little bit tough to get at. So we're working hard to figure out a way that we can really have good solid data around it, but the earlier returns certainly look good. Next question comes from the line of Alex Paris of Barrington Research. Hi, guys. Thanks for taking my call. I'd add my congratulations to the better than expected Q1 results and the strong start to the year. I just have a couple of questions. So enrollment was better than expected, particularly in Strike Career Prep versus my model, obviously driven by demand, driven by delta variant, Clearly a tough comp. Just wondering, are there any new programs in the mix that account for that enrollment in Managed schools on the general education side. I believe you have some new schools on the Stride Career Prep side this year. Yes, we actually so we didn't really have a lot of new programs this year, meaning fiscal year 'twenty two on the career side. We're talking to all our clients about starting programs and I think we still have some new programs that over the next couple of years we will be opening. But it's a pretty good Year over year comp for us, I think, in the sense that a lot of that growth was in fact not from new programs. And that's a little bit of a double edged sword. I mean, I actually wish we had More new programs than we did, but I think most of, if not all of the programs that we have or states that we're in, They're interested in it. We just sort of work through all the mechanics and logistics of getting them up and running. So I actually think that the comp is pretty good and the upside is pretty good in the sense that we have a There are a number of programs where we can still enter into in states. Got you. I appreciate that. You've talked about the I'm wondering, can you quantify the Impact on enrollment due to the teacher shortage, I'm sure you left some families Unable to enroll given the teacher shortage. What are your thoughts there? Any additional color would be helpful. Yes. I don't want to quantify it for you exactly, but I will give you a little bit of stats here. For sure, we could have topped Last year, pretty sure we would have topped 200 if we could. We were several, if not more, 100 So you sort of can do the math around ratios and stuff like that and back into a round number, but it's not insignificant. And we are working very hard To try to make sure that we can get as many teachers filled as we can, but we also want to make sure that we do the right thing here. So it's a delicate balance and we're working hard to fill the need, but we do have the shortage. And contributing to the teacher shortage is vaccination requirements. I'm in Chicago, so it's in the news Every day. Your teachers are obviously remote teaching, but do you have any vaccination requirements for teachers In certain states or in general? So by and large, we do not. And when I refer to, I think, Sort of long term benefit to us about what's going on. I think there's a lot of that, whether it's a vaccination requirement that Some teachers are maybe reluctant to meet where they don't have to meet with us. Whether it's the fact that kids that they're teaching kids in a classroom That aren't yet able to be vaccinated. I think that long term trend plays well for us. I think it's the way that many school districts in the brick and mortar sort of realm have handled remote learning and their teachers during the past 18 months. I think that plays into it. And we see a lot of dissatisfaction and we want to provide our teachers, teachers that we manage, a safe Work environment, I think we do that. We are providing them great professional development opportunities, I think, to teach in a way that is Modern and will reflect where the education industry is going to go and head. So I think there's just a lot of benefits That we provide for our teacher population and I think that trend is going to work in our favor over the next several years. Makes sense. And then I guess my last question is on revenue per enrollment, kind of following up on a prior question. General education, it was up 9.7%, per learning up 7.9 And I assume that has to do with state to state and mix and so on. But I was kind of going into So you're assuming that you'd have a 6% to 7% increase in revenue per enrollment this year, making up all that you lost last year due to COVID related budget issues and that sort of thing. So given that we're more in the 8% to 10% range, are revenue per enrollment coming in higher than you had previously Expected? So I think the delta might be and I don't want to get into too many specifics here, But in a previous call, I think we've talked about that we're not going to see or we at that time, I think we didn't see a significant Amount of ESSER money coming in, we still don't. But there is a little bit of that. There's a little bit of mix. There's A little bit of stronger enrollment funding trends. So I think it's sort of an accumulation of things. It's not don't think one thing particularly that we can point to, but the general tailwind I think is there and I think that state governments Are trying to make sure that these schools get funded. And I give a lot of states a lot of credit for really trying to do the right things here in this environment. So So really a shout out to a lot of the state governments who have I think really done a great job. So just in conclusion, is 8% plus sort of a better number to use than 6% or 7% for fiscal 2022? Yes, for this year, for sure. Okay, good. Very helpful again. Congratulations on the quarter and setting up well for fiscal 'twenty two. Thank you. Thanks, Next question comes from the line of Tom Singlehurst of Citi. Yes, good evening. It's Tom here from Citi. Thanks for taking the questions and Congratulations on the results. First question is on share. I mean, obviously, you're So dealing with the sort of hiatus from last year, but do you think you actually took share of the sort of The virtual school market, if that's the right way of putting it. I'm just sort of comparing and contrasting what you guys have said relative to Pearson, who look like they weren't necessarily as Robust enrollment performance, that would be my sort of reading of what they've said. That was the first question. And then secondly, they had talked about revenue per enrollment coming down, albeit I think they did indicate that that might be down to mix of states. I was just wondering what the sort of the growth profile across different states is doing to your Revenue per enrollment, I. E. Would the revenue per enrollment have been even better on a different sort of pattern of demand across different states? Those are the 2 questions I was going to start with, and I've got maybe one follow-up. Thank you. Yes. I think the Market share question is one that is it's a little bit hard because So many programs, whether the brick and mortar programs or whatever, have sort of spawned over the past year or so. But I think when you're talking about Sort of like for like full time virtual programs like the ones that we offer, it does Look like, if anything, we're either holding or gaining a little bit in share. So I don't know that it I don't know how dramatic it is. And again, it's a little bit confusing because of the number of brick and mortar programs that have been still running. And And there's a lot of sort of in and out in that. So I think that market share question is we're certainly it doesn't See, we can't see anything that we're losing share against sort of like for like competitors. On the funding side, I think that The funding for us at least, we did have, I think, a mix this year that was, I want to say pretty comparable to last year with one slight benefit in, if you may remember, California last year was sort of artificially depressed. They have pretty decent funding. We were able to enroll a little bit more in This year, although California is also a state where we had to cut it off because of the teacher shortage. So California state has tremendous demand and It's a great state. A lot of families really want this choice. And but we couldn't serve all of it. So I think that from a mix perspective, we sort of tread water this year by and large. And I can't speak to what Other competitors' mix was, but I think for us at least, we pretty much tread water. Okay. And then the follow on, I mean, obviously, now you've got through the back to school period, you know what the enrollment looks like. I mean, what have you learned sort of incrementally about the sort of, if I can call it the COVID cohort, Are they fundamentally different in terms of the withdrawal rates, the engagement with the platform or any other sort of insights that perhaps you can offer just a little bit more information now we're a quarter into the New Year. Yes. So interestingly enough, we went into last Actually thinking that the COVID cohorts were going to behave a lot differently than sort of the rest of the population that We normally attract. And what we found out through last year at least was, is that they didn't they did not in fact behave dramatically different Than sort of our normal cohort. We actually expected them to and they didn't. And early returns are this year that sort of similarly is that They're just not that much different. I think our programs are engaging. I think families are engaged. I think Families are particularly engaged now with COVID. They've gotten sort of paid more attention to online learning, and I think they understand a The difference between good online learning and data online learning. I think that helped our retention rate last year a lot. And I think that bodes well for the long term in that whether you're a COVID family or non COVID family, I think we're Ourselves a little bit from a lot of other online programs, whether they're brick and mortar or other online school programs and that Families come to us, they see that we're the market leader, they understand that our programs are digital first, they understand that we have well trained teachers, our teachers They care about their online learning. Our teachers want to be in an online digital environment. And I think it sort of shows up in the way That they show us in their satisfaction surveys, their onboarding has been very active. And I think we just have a sort of a program That outshines a lot of the other programs out there. That's very clear. Thank you very much. Questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.