Stride, Inc. (NYSE:LRN) Q2 2024 Earnings Call Transcript

Stephen Sheldon: Got it. Makes a lot of sense. And then just quickly on the Career Learning, the revenue per enrollment, and apologies if I missed this, but would that mainly lower due to the mix of students by state, anything else to call out there in terms of that contracting a bit year-over-year? I know that the comps there was also pretty difficult. And then Donna, I think you reaffirmed expectations for revenue per student or enrollment to be 4% to 6% of what you talked about last quarter, our trends are kind of coming in as you would have expected so far this year.

Donna Blackman: And so I’ll answer part of the second one first. Yes. We expect our revenue per enrollment for Gen Ed and Career to be up 4% to 6%. Will you see a decline in the Career for this quarter? Yes, partly due to mix, as you know, overall our revenue per enrollment with Gen Ed and Career combined was up over 5%. You may recall, that last year in this quarter, we talked about some of the upside that we saw in the revenue per enrollment for Career was due to timing. So this is just the offset of that that makes for a tougher comparison.

Stephen Sheldon: Got it. Yeah. It makes sense. And then just last one, maybe just — when do you think you start building a separate marketing funnel for the Career Learning programs? I know this isn’t something you’ve done historically, but you’ve talked about it more as an opportunity, has that started yet, and if not, when could that become a bigger initiative?

James Rhyu: Yeah. I’ll say in some respects, we’ve had fits and starts with it already. I think that this is an area where, unfortunately, we have not executed well. I’d say, actually, we’ve executed poorly. I do think it’s an opportunity and I think we will make some investments for this coming fall season in incremental enrollments around Career, remains to be seen if we can be successful, but we definitely think it’s a very significant opportunity. We definitely believe that part of our issue has been around execution, and we will definitely make some investments in that direction for this fall.

Stephen Sheldon: Got it. Well, thanks again for the time and congrats on the results.

James Rhyu: Thank you.

Operator: [Operator Instructions] Our next question comes from the line of Alex Paris from Barrington Research. Please go ahead with your question.

Alex Paris: Hi, everyone. Thanks for taking my questions, also add my congratulations on the beat and raise for the quarter. I just had a couple of questions. First of all, I wanted to ask about the press release that you put out last week regarding MedCerts. It looked like you did a big new contract with Virginia State University, can you expand on that a little bit? And then just talk about the MedCerts business overall. What sort of growth rates are we experiencing without — I know you don’t give granular detail on it, but orders of magnitude, perhaps?

James Rhyu: Yeah. I mean, I think — okay. So when we bought the MedCerts asset three years ago, it was a predominantly B2C business and it still is by the way today predominantly a B2C business. I think what we see is that, that B2C part of the business is, it continues to be very attractive, continues I think to have a lot of opportunity to grow, but I think the B2B side of it is in some ways, it’s just going to have more legs to it. It’s I think a bigger market opportunity actually. I think they’re better easier clients and a lot of respects to manage on a B2B basis. And so we think that the B2B side is going to be long-term larger than the B2B — than the B2C side of the business. So, I think that means, I think we could double the business over the next several years just by growing the B2B side of the business.

I think that would imply some double-digit growth rate, long-term growth rate on that business. Even at that rate, it’s not going to be a major contributor to the overall company anytime soon, but we are very bullish about our opportunities in that space.

Alex Paris: And is the Virginia state contract the biggest or the first in this B2B effort?

James Rhyu: Not the biggest nor the first. I think it’s University — I think it was University of New England or some other university, but not the biggest nor the first I think. We don’t (ph) have dozens yet, but I think we’re making a lot of good progress with a lot of good conversations. So I think a lot of good traction — a lot of good early tractions.

Alex Paris: Great. That’s good to hear. And then the other and related question is about tutoring. You talked about it in your prepared comments a little bit, James. You said in the past — among your new products these are — this is one of the ones that you’re most excited about. It addresses ‘earning losses. It has AI components as well, anything to report there in terms of wins and go-to-market?