Lincoln Educational Services Corporation (NASDAQ:LINC) Q2 2023 Earnings Call Transcript

So we are doing well with our marketing. I can’t take that away from my marketing team. We seem to be attracting and getting stronger acceptance and stronger lead flow than we had counted on, to be honest. So part of it has to be market, part of it has to be what our team is doing to access the market.

Brian Meyers: And as Scott mentioned, we are having a slight pickup because not — many programs now do not have a start in July. So some of those students elected to come in, in June. So there was a slight pickup from that as well.

Operator: Our next question comes from Steven Frankel with Rosenblatt Securities.

Steven Frankel: I’m wondering if you could maybe give us some help on how much was the streamlining financial aid and factor in starts, maybe how many points you’d say the start growth was — contributed from that.

Scott Shaw: Yes. I wish I could do that scientifically for you. I can’t break it out as to what percent is. All I can tell you, Steven, is with the process that we’ve put in place, we’ve refined it and I’ll say it this way, we have a process that we’re calling financially aid packaging on demand. which is — the metric I can tell you is that the number of days to get someone packaged at those campuses that are implementing that approach is much less than what it was. And the reason why we implemented the approach was because we know that the sooner students know how they can pay for their education, the more likely it is that they’re going to start. So parsing it out and determining exactly what — how many basis points of improvement is due to that, I don’t know. But that’s why we went after that strategy and we’re getting results. So I can definitely attribute some of that improvement to that but there could be obviously other factors as well.

Steven Frankel: How much room is there for further improvement in revenue per head in the back half?

Brian Meyers: So as I mentioned, for our — what we call our hybrid learning model, we did launch it in the second half of last year. So where most of that pickup is in the night program where we shrunk it from 24 months down to 12 months. So since we did have some start last year in the second half of the year from that, it would be — it will start tapering a little bit, some of it going forward. But the good news is when we finished the quarter with more students. So that’s also going to contribute to our future revenue growth.

Steven Frankel: And then I’ll sneak in one more here. What’s the trend in cost per lead? Are you seeing a friendlier advertising environment [indiscernible] the year?

Scott Shaw: We are. I mean, our — when you look at our total cost per start in marketing, we’re actually down for the first 6 months compared to last year. Now part of that is because of improved performance with the start rate but we’re not seeing or experiencing as much price inflation on our leads as we were last year. That’s for sure.

Operator: Our next question comes from Eric Martinuzzi with Lake Street Capital Markets.

Eric Martinuzzi: I wanted to dive in on the revenue growth versus the growth in your educational services and facilities expense. We had revenue up 10% and the educational services and facilities expense was up 11%. Wondering if — are there onetime items in there? Just looking for points of leverage here going forward?