Apollo Education Group Inc (APOL) First Quarter 2015 Earnings Call Transcript

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Our expectations are we will be successful there. We’re very focused on that. We’re also focused on putting the next versions of the platform in place so that their usability and experience going forward for both the faculty and the students is very positive and improves from here. There’s a range of outcomes, right now, Jerry, as I mentioned in my comments. We’re very focused on doing the right things for students and moving forward.

Jerry Herman, Stifel, Nicolaus & Company, Inc.
Just a real quick one, Brian. D&A and stock comp for the year? Give some guidance there?

Brian Swartz, SVP and Chief Financial Officer, Apollo Education Group, Inc.
Yeah, stock comp should be pretty consistent with, I think, prior year was kind of in the mid-40 range, flat with fiscal ’14. D&A should be down a bit, although on the D side the amortization side might be up particularly as we finish some of the purchase accounting related to the recent Brazil acquisition.

Jerry Herman, Stifel, Nicolaus & Company, Inc.
Great. Thanks guys. I’ll turn it over.

Brian Swartz, SVP and Chief Financial Officer, Apollo Education Group, Inc.
Thank you.

Operator
Your next question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.

Henry Chien, BMO Capital Markets
Hey, good morning. It’s Henry Chien, calling in for Jeff.

Greg Cappelli, Chief Executive Officer, Apollo Education Group, Inc.
Hi, Henry.

Henry Chien, BMO Capital Markets
If you could elaborate a little bit more on the initiatives. I know you just mentioned that you would be reaching out to some of the students that dropped out. What other kind of things are you are planning to do to sort of try to bring back those students?

Greg Cappelli, Chief Executive Officer, Apollo Education Group, Inc.
Yeah. Let me just start by saying, Henry, that the most important thing is to get the issues fixed so that when students do re-enroll, they’re having a better experience. That’s been our primary focus. Brian, you want to talk about some of the…

Brian Swartz, SVP and Chief Financial Officer, Apollo Education Group, Inc.
Yeah. I mean, Henry, the links with the third party content providers that Greg mentioned, that has been fixed for the majority of the students that are participating in the courses, the actual number of courses that are out there. We will be releasing, as we mentioned, some additional enhancements, the next version of the platform later this spring that will significantly enhance usability of the platform for both the faculty and the students to create a better experience.

We have rolled out some other items that Greg mentioned such as gamification; we did that actually in fiscal ‘14 for the third course in a student sequence with us. Their new introductory sequence we now rolled it out to the first and second course. We had very good success with that in fiscal ‘14, so we feel good about that as well. I think we’ll reach out to the students. We will provide some level of financial incentives if that makes sense for them to come back as well, because they didn’t have a good experience initially and we want to try to fix that for them and have them re-enroll if they’re interested.

Greg Cappelli, Chief Executive Officer, Apollo Education Group, Inc.
There has also been upgraded training in all areas to make sure that there is training around all these issues, also very good communications to keep people updated along the way.

Henry Chien, BMO Capital Markets
Got it. Thanks for the color. If I could do a quick one around. You mentioned you’re hoping or aiming to achieve around 220,000 total enrollments, does that factor in improvements in retention and related to that could you comment on, I know its early, but any color around start trends that you’re seeing so far this quarter? Thanks.

Brian Swartz, SVP and Chief Financial Officer, Apollo Education Group, Inc.
Yeah. The 220, its 220,000 plus or minus a few percentage points, so I’ll call it plus or minus 6,000 students or so on either end of that 6,000 to 7,000 students. The lower end would align pretty closely with the lower end of our revenue range and the upper end would obviously align closer with the upper end.

In terms of new student trends, I made the comments on Q2. Q2 is so seasonally back-end loaded and we’re just here at the beginning of January, even the next several weeks are really a critical part during the quarter, so it’s very hard to comment on Q2, but we are very focused on focusing all of fiscal ‘14 and have that trend improve in fiscal ‘15 relative to fiscal ‘14. We will play the year out and we will see how it goes, but we are certainly pleased with the performance in Q1.

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