Stride, Inc. (NYSE:LRN) Q2 2023 Earnings Call Transcript

I think you see that across the nation today just with the teacher shortage. So — but I don’t think we see any unusual stress. And if you think about across 30 different states and 70 different programs, we’re talking about 6,000 extra enrollments from last quarter spread across that — across any different classroom size, you’re not really talking about a real significant number. So I think for right now, at least we see it’s manageable. It’s obviously not a bad problem to have, but we are certainly monitoring it. And we’re going to continue to make sure that we’re staffing appropriately.

Stephen Sheldon: Very helpful. As follow-up, I wanted to ask about — I think you talked last quarter about some cannibalism from General Ed enrollment switching to career learning enrollments. Did that trend kind of continue as we look at the fiscal second quarter? And any rough quantification of how much of a shift that’s been as we think about the first half of this year?

James Rhyu: Yes. And I think — so the short answer is, yes, it continues and I think it’s going to continue for some foreseeable future, because I think the career offerings specifically for high school students and for many middle school students, it’s so much more compelling because you get all of that general education high school with an extra layer of career education on top. So it’s sort of a no brainer and I think it’s going to continue for some time to come. And I think if you look at, I’d say, largely the growth in career education, even it’s — we’ve said this before, we look at it sort of right now in the aggregate because we think it’s all sort of – one, we see 90% plus of the funnel for career education is actually generated originally from — for career education is generated originally from general education.

So we sort of see it as one pool right now. We do hope in the coming years that we will be able to have more distinct pools as we hone in our ability to attract incremental customers for our career education programs, but that has not yet happened. So predominantly it’s still one pool.

Donna Blackman: But it’s also worth noting that the growth we saw from count date to to date. Some of that growth came in from Gen Ed as well.

Stephen Sheldon: Great. Thank you.

Operator: Thank you. We go next now to Greg Parrish at Morgan Stanley.

Greg Parrish: Hey, good evening. Congrats on the really strong result. I guess, let’s talk about enrollment so far in January. I know what happened last quarter unprecedented, but what are you seeing so far 24 days? I mean could potentially third quarter be higher as well?

James Rhyu: So definitely I don’t want to predict where third quarter is going to end. Historically, third quarter is a quarter that declines as well. And in fact, the third quarter tends to be harder for us because you have the withdrawal that happen and you have less schools that have available spaces to actually backfill those withdrawals. So just logistically, the third quarter actually is, generally speaking, harder for us than the second quarter. Having said that, the first three weeks of this month so far we continue to see strength in our funnel, we continue to see strength in applications and demand, we continue to see growth in enrollments through the first few weeks of the month of the new quarter. But it’s going to be hard, I think, to continue that trajectory at least that we saw in Q2 through the end of Q3.