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

I don’t think it’s impossible to grow from Q2 to Q3, but it will be certainly very hard to keep the same trajectory. And if you look year-over-year, sort of the implication is we’re sort of — if we can keep going here, we can certainly get close to some year-over-year good comps.

Greg Parrish: Okay, great. That’s helpful. And then maybe I want to switch to adult learning. Growth accelerated in the quarter, it’s 42%. And I think this was in calendar fourth quarter, there was a ton of uncertainty going on in the macro. Typically a slower seasonal month for many out there and you accelerated. So can you talk about what drove the strength in the quarter and is that sort of step up sustainable for the rest of the year?

James Rhyu: Yes. So in the adult space specifically, which has the 42% growth year-over-year in the quarter. One is, I think we’re executing well. I got to give a lot of credit to we’ve got a number of businesses in that that we have, I think, really strong leadership. They run fairly independently and I think they’re just doing a really strong job. You may remember that we have one portfolio company in that adult education space galvanized that had been doing poorly. And I think I indicated previously in previous quarters that, it looks like this is a year we’re turning that around and we’re seeing that. So that obviously helps the whole portfolio. So I think really strong execution to market, I think we’ve said this also before, generally speaking, in recessionary type of markets that tends to bode well for adult education.

So I think we’re seeing a strong macro environment for it. And I think we’ve got the wind at our backs for those and we hope certainly to see continued growth.

Greg Parrish: Great. And then just one more from me. I kind of wanted to narrow down here on the revenue per enrollment, because you’ve got a couple of things going on. I understand in the quarter, second quarter, there was some like one time anomaly catch up that’s captured in revenue per enrollment. So we can’t extrapolate that going forward. But then we said that second half revenue per enrollment is still going to be strong similar to last year. And then to tie it all together, I think you said it was going to be up 10% for the year. I think you said both. So I guess what I’m missing is, I mean, if second half is strong in revenue per enrollment, doesn’t that bring you well above 10% year-over-year? Maybe I’m missing something, maybe it’s conservatism given that we don’t know what the funding environment is like, but I just wanted to tie that down.

Donna Blackman: So one thing worth pointing out when I talked about sort of the year-over-year comps. And that last year we were more conservative with what we thought would happen with retention. And so, as we got later in the quarter, in Q4 we had a catch up because the retention was better than we had anticipated. And so the year-over-year for Q4 will certainly be less than what we saw in the first half of the year.

Greg Parrish: Okay.

James Rhyu: So — Sorry, just following up on what Donna said, because I think it’s a really important point. I think we’re seeing — if you look sequentially, Q1 to Q2 to Q3 to Q4, historically over the past several years, sequentially we gain strength in revenue per enrollment through the year. Some of that’s really just sort of the conservative nature of our estimates and things like that. And so I think that’s appropriate. And so we sort of have some strength through the year. And I think this year, similarly, we will have some strength sequentially through the year, which does imply by the way that we will continue to have double digit gain. However, I think as Donna is indicating, in Q4 of last year that sequential strength, if you will, took a sort of a step up in Q4.