When you think of ed ex. But at the end of the day, while we get – we see large volumes, how do we increase conversion on those volumes? And I think Michael Kurbjeweit and his team, and we’ve got some really smart people in our marketing team. But how can we help automate some of those processes to make it more efficient. And so those are three or four areas, George, that I think can yield material contribution in the near term if we do them right, and do them quickly.
George Tong: Got it. That’s helpful. You also mentioned working with lenders to extend your debt maturities. Based on your conversations, what targets do your lenders want to see you achieve in order to successfully negotiate and extend those maturities?
Matthew Norden: Hi George, this is Matt. Yes, so we can’t really get into detail around specific conversations with lenders. But I would say that we’ve always had a constructive relationship with our lenders and an open and ongoing dialogue. And they are keenly awaiting the operating plan that we’ve discussed on this call, at which point we’ll engage in further or more detailed discussions or negotiations with them. So I think to give any more detail around targets or expectations wouldn’t be prudent at this time.
George Tong: Got it. Thank you
Operator: [Operator Instructions] Our next question comes from the line of Josh Baer with Morgan Stanley. Please go ahead.
Josh Baer: Great. Thanks for the question. And congrats on the new roles. Wanted to clarify a couple of things as far as the organization bucket and cost savings and what’s new versus what has previously been discussed. So when talking about the new organizational structure, are you making incremental changes or more referring to some of the announcements around the C-suite changes earlier, I guess, in November and then the leadership hires and the structural changes in early January? Or is there anything new?
Paul Lalljie: So this is Paul here. A couple of things. The $90 million that we referred to refers to the events that we had in the October time frame. And then in late January, December ’23, early January, some of the organizational refinements that we put in place. Both of those resulted in two activities. One was probably $50 million, one was $40 million, and that’s the $90 million that we expect on a run rate basis as we get into the back half of this year, we’ll start to see those benefits as we go forward. I mean as we continue and look at our offerings and look at our delivery methodologies, we will continue to refine the organization, eliminate redundancies. And as we look at how do we optimize one of the things we talked about is how do we look at the cadence of some of our alternative credential offerings.
Whether it’s start times, whether it is content and see how we can bring those together. So as to benefit from resources in a more timely fashion. So those are a couple of them. But to answer your question very specifically, it’s the January events and the October events that makes up the $90 million, and we will continue to have some more refinements in the organization as we go through the year.
Josh Baer: Okay. That’s clear. Thanks. And then you mentioned there are a couple or some degree programs that you actually did not go through with the termination. What was the profile of some of those degree programs that you thought you wanted to terminate but are still running? And what were the changes that you made to make them, I guess, more profitable?
Matthew Norden: Yes. So we can touch on this at a high level. So one thing we’ve said with respect to portfolio management is there are a number of reasons why we might begin discussions with a partner around portfolio management. One would be high debt to earnings, for example. We’ve been trying to shift our portfolio to lower cost offerings that have better debt to earnings measures. And so one example is we’ve been able to work with some of our partners to explain the impact to them and to us of higher tuition and what lower tuition means both for the financial results of the program, but also for that student outcomes. And they’ve been amenable to working with us to…
Josh Baer: I think we lost you.
Operator: Ladies and gentlemen, we are experiencing technical difficulties and will resume momentarily.
Matthew Norden: I’m on the backup phone here. Can you hear us?
Josh Baer: Yes, I’m not sure.
Paul Lalljie: What happened to the main line. We were just talking?
Operator: We are able to hear you, sir. If you could please continue.
Matthew Norden: Sure. I think our main line went out again. So my apologies, yet again, Josh, I don’t know how much you heard, but again, I’ll start from the beginning. So when thinking about portfolio management, right? I think it was our Q3 call or the prior call, we highlighted some of the reasons we might engage in portfolio management. One of which was programs with a high debt to earnings ratio, right? We’ve been trying to focus the portfolio and steer the portfolio really more towards programs that are lower cost that have a much better debt-to-earnings ratio. And some of the programs that I mentioned on the call, we’ve been able to have those discussions with the partners, and they were willing to align their tuition around really what we thought and what they ended up thinking made sense from a debt to earnings standpoint, so that it works for both sides.
Josh Baer: Got it. And then last – I’m sorry, was there more or…
Matthew Norden: No, I was just about to say, hopefully, you could hear that.
Josh Baer: Yes. No, loud and clear. Last question with the discussion on kind of the new organization and having the dedicated segment leaders. Just wanted to ask if the purpose of those changes and highlighting those changes is look like we’re going to this is what’s needed to make better, quicker decisions and ultimately drive the profitability that we need? Or is there any element of it that like look, we can run these segments separately and to kind of have that idea out there that they don’t need to be run or together under the same roof?
Paul Lalljie: So Josh, this is Paul here. Look, at the end of the day, focus is 90% of success. We need to make sure that we have full accountability across the organization. And with Andrew and Aaron leading these organization, they’ll be accountable for these businesses. From a top line all the way through to the bottom line. At the end of the day, one of the reasons why we love the portfolio that we have, the assets that we have is because we have a marketing organization that still runs on a horizontal perspective, so that you can do things like portfolio-based marketing so that you can allocate resources, meaning marketing dollars across multiple channels. And if we think of what’s going on in the alternative credential business, for example, coding has been a headwind for us.
But if you think of coding as a search term, it is — there is still tremendous demand for coding. Coding boot camp may not have the same level of demand. So what we were able to do there is to pivot very easily into our courses that are AI related or coding related, and we can benefit from those demand because those are our executive ed type courses. We can do those things with the level of autonomy with one person being accountable for the Alternative Credential segment versus having them together in one organization and allocating resources across multiple segments versus just within one segment. So at the end of the day, it is a different way of running the business. It’s not that one is good or one is bad. We believe that this one is the most efficient way to do this to date, given the resources that we have given the demand environment that we’re in and given our maniacal focus on delivering profitable growth into the future.
Operator: Our next question comes from the line of [Steven Pawlak] with Baird. Please go ahead.
Unidentified Analyst: Thank you. This is Steven Pawlak on for Jeff. Can you quantify what the reductions or cash receipts are from the programs that you decided to move forward with that were originally sort of a candidate for portfolio management actions. And then you talked about the new enrollments within guidance. Just any qualitative metrics that you can provide as far as kind of what you’re seeing, whether from a demand or conversion perspective that gives you confidence?
Paul Lalljie: Yes. So let me start off and Matt will jump in on the enrollment piece of this here. But in our last – I think it was Q3 call, we were expecting I think it was $49 million in the fourth quarter from portfolio management, which we did not have in this quarter. So said differently, the 945 full year numbers excludes portfolio management in the fourth quarter. And it also – the EBITDA number of 170 was achieved despite not having that approximately $40 million of portfolio management revenue.
Matthew Norden: Yes. And from an enrollment standpoint, it really is what we said in the script. That current portfolio we’re seeing new enrollment increase year-over-year, you’re looking at 2024 by about 11%. And that’s really driven by a lot of the key leading indicators we’ve mentioned on prior calls. So I think, right, I think last quarter, we talked about submit volume increasing. And we’ve continued to see that in the fourth quarter with submit volumes – the number of applications, submissions up 12% period-over-period. And that’s a key leading indicator to enrollment, which, as everybody knows, is that a key leading indicator to revenue. So really across the board, across all the key leading indicators they’re trending in the right direction.
Paul Lalljie: And Matt, probably the most important thing is here. This is not a conversation that is based on leading indicators that we expect. The degree business has a unique sales cycle, which Matt described eloquently in his script. But basically, we are seeing the things that are occurring right now in the degree business, 50% of revenue in 2024 is now visible to us, and we’ll start to see our fall cycle as we go through the next few months.
