Zovio Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Sovio Q4 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, then one on your telephone. If you require any further assistance, please press star, then zero. I would now like to hand the conference over to your speaker today, Elena Vitucci, VP of Corporate Communications.

Thank you and good afternoon. Zovio's fourth quarter and full year 2020 earnings release was issued earlier today and is posted on the company's website at www.zovio.com. Joining me on the call today are Andrew Clark, founder, president, and chief executive officer, and Kevin Royal, chief financial officer. We would like to remind you that some of the statements we make today may be considered forward-looking, including statements regarding new enrollment growth, student retention, university partners, and other programs and services, our ability to grow through acquisition, our ability to successfully integrate and leverage acquired companies, future revenue growth, EBITDA, financial and related guidance, and commentary regarding fiscal year 20, 21, and later. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Please note that these forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update these forward-looking statements in light of new information or future events, except to the extent required by applicable securities laws. On the call today, we will also discuss certain non-GAAP financial measures. In our earnings release, you will find additional disclosures regarding these measures, including reconciliations of these measures with U.S. GAAP. Note that these non-GAAP financial measures are intended to supplement GAAP financial information and should not be considered as a substitute for our GAAP results. Please refer to our SEC filings, including our annual report on Form 10-K, for the year ended December 31st, 2020, which we filed with the SEC earlier today for a more detailed description of the risk factors that may affect our results. You may obtain copies from the SEC or by visiting the investor relations section of our website. At this time, it is my pleasure to introduce Zobio's founder, president and CEO, Andrew Clark.

Thank you, Ilana, and welcome to Zovio's fourth quarter and full year 2020 earnings call. On the call today, Kevin and I will discuss our results as well as other business developments. After our remarks, we will open the call to your questions. We had a strong end to our fiscal 2020. For the fourth quarter of 2020, we reported revenue of $93.1 million and non-GAAP diluted income per share of $0.03. which exceeded expectations. Today marks our first earnings call since completing the sale of the university to the University of Arizona Global Campus, or UAGC. This was a key inflection point for Zovio as a world-class education technology services company. Given the sale of the university, our reporting structure has changed. both from a segment and key metric standpoint, which I will outline in a bit, more detail shortly. That said, during the fourth quarter, we are pleased to report that new enrollment grew more in the fourth quarter of 2020 than the third quarter, and we saw the best one-year cohort retention metric in the fourth quarter in our recent history of tracking this metric. In addition, inquiries, new enrollment, and total enrollment exceeded our expectations for December the first month following the close of the transaction. As an education technology services company, we will begin to report more in line with others in the industry. Therefore, we will not be reporting new and total enrollment in the future. That said, we could not be happier with the progress we have experienced over the last several quarters. To provide investors with a better understanding of Dovia's growth drivers that highlight the unrealized value of our platform and offering, as well as our progress to capture the untapped value creation opportunity for the company, we have aligned our reporting segments to be Zovio Growth and University Partners. In addition, we will be providing key metrics we believe will show our progress against our strategic vision for Zovio. Strategically as an organization, we are aligned to deliver significant growth, the majority of which in the near term will come from what we call Xovio Growth, which includes Fullstack and TutorMe. In 2020, we saw robust growth from Xovio Growth, including accelerating top line, new university partnership acquisitions, and better than anticipated enrollment. For our university partners group, in the coming year, we will be focused on building off the strong foundation we have created to build a robust partner network and drive long-term growth. Before I discuss each segment in more detail, let me touch on what we are seeing in the marketplace today. As we have discussed before, the way learners access education has been changing rapidly and was only accelerated by the COVID-19 pandemic. Universities are feverishly adding and enhancing their online programs to meet learners where they are. And today, that is online. Further, expanding educational opportunities for underrepresented students and nontraditional students who work or parent full-time is driving structural changes in the education landscape. With an ever-growing student population, educators who seek to expand the potential for all students are delivering classes online and embracing new and innovative learning formats. To meet this rapid shift, educators are looking for strong partners that have demonstrated a track record supporting student life cycle and delivering strong student outcomes. Xovio is that perfect partner. Today, we serve more than 200 institutional customers covering 44 states in the Xovio ecosystem, and that number is growing every day. With a differentiated and flexible value proposition that spans the student life cycle, Zovio is a thought leader. We are meeting the growing needs of our current and future partners, both at a graduate level, but even more importantly, at the undergraduate level, where we believe there is relatively untapped opportunity. Turning to our Zovio growth segment, which includes our subsidiaries, Fullstack and TutorMe, continue to perform exceptionally well. In 2020, Zovio Growth delivered revenues of $20.9 million, growing 105% year over year. The services that these subsidiaries provide enhance Zovio's ecosystem to support learners' education and career aspirations by building on our existing capabilities to meaningfully serve higher ed institutions, bridge the education-to-employment gap, and help enterprises upskill and educate their people. As students and experienced professionals continue to look for opportunities to upskill, we are seeing increased opportunity for our offerings. During the fourth quarter, Fullstack continued to leverage the new partnerships that came online in 2020, including Virginia Tech and Emory University, among many others. In total, Fullstack nearly doubled our expectations for new partnerships, adding eight new universities during the year. For context, the average university partner agreement is five years with an average revenue contribution of $10 million per partner over the term of the contract. The revenue is generated once the class starts, and as a result, it typically takes 18 months from the start of marketing to become profitable. Given the momentum we've seen thus far, combined with the strong institutional pipeline for new partners, we're excited for what lies ahead for full-stack. As students, parents, and teachers continue with remote learning, the importance of online educational resources like TutorMe have become necessary to support learners. Given the dynamic of remote learning, companies are providing tutoring support as an employee benefit while educational institutions from higher education to K-12 districts are leveraging TutorMe to ensure their students have help when and where they need it. In this vein, TutorMe continued to execute new partnership agreements during the quarter from universities to corporations to school districts. TutorMe added another 23 partners during the fourth quarter of 2020. bringing the total to 199, an increase of nearly 230% year over year. Further, as the COVID pandemic has driven increased demand, remote learning has continued to support explosive growth for online tutoring services. In the fourth quarter, total customer and partner hours usage increased nearly 400% year over year, continuing the strong momentum we saw earlier in the year. our outlook for Xovia growth remains strong. For 2021, we anticipate full stack adding between seven and 10 new university partners, and TutorMe adding between 50 and 60 new partners. We will continue to invest for growth in this segment, including strategic sales and marketing initiatives to bring our new partners online, while at the same time maintaining our momentum of new partner acquisition. Given these investments for the segment in 2021, we expect Zovio growth revenues to grow approximately 30% year-over-year and anticipate generating an EBITDA loss of between $6 and $8 million. This planned investment will decrease consolidated EBITDA margins in the near term. Longer term, we expect the segment to grow 30% plus through 2025 and be profitable beginning in 2023. Turning to the university partner group, we have a strong foundation from which we plan to pursue diversified growth, providing technology and services to institutions, corporations, and learners. We provide our university clients with our enterprise education technology and services, that leverage our unique advanced data analytics platform to provide personalized and innovative online education that enhances student engagement and improves the likelihood of student success. Zovio remains well-positioned as we bring a clearly differentiated offering to our clients. First, we provide an end-to-end solution that spans the entire student life cycle, marketing and recruitment, to retention and course development tools. Second, our offerings are tailored and flexible and can be unbundled or bundled enterprise solutions. Third, we are aligned to operate at scale to support our clients' rapid growth objectives. Additionally, all of our solutions are powered by signals. Our proprietary predictive analytics platform Signals provides data-driven insight to enhance our clients' offerings and improve overall results and outcomes. This enables OVO to develop solutions and engineer workflows that optimize performance metrics from marketing through graduation. We have also enhanced the leadership of this segment, bringing together a team that will leverage significant leadership to execute a clear roadmap for growth. As such, we will further cultivate an already robust pipeline of potential university partners. For 2021, we expect to bring on one to three new small to medium-sized partnerships before the end of the year. To give you a bit of perspective, the size and scope of our partnerships will vary. At a high level, our small to medium-sized deals are generally under $1 million, and have an engagement length of one year or less. These could include project-based work, such as learner outreach or course development, or strategically targeted deals, including marketing, recruitment, or student support services. Large deals, between one and five million, are typically multi-year deals, but vary in length and could include services from unbundled solutions for launching online programs or enrollment continuity. And lastly, our enterprise deals will utilize Zovia's full end-to-end service offering. These engagements will range between five and seven years with a mature contract value of greater than $5 million annually. Given the strong momentum we have experienced and our continued optimism as we look forward, we are raising our 2021 full-year revenue outlook. On a consolidated basis, we now expect total revenues to be in the range of $305 million to $315 million, and non-GAAP EBITDA margins in the mid-single digits. Zodio is positioned well to continue as a world-class education technology services company, and we are poised for continued growth as we move forward. We have a robust offering to meet the needs of learners. We have built a strong ecosystem of clients and our network of partners is growing rapidly. The shift to a more virtual world has accelerated the opportunity for us. Now, more than ever, it is critical to provide students with a robust online platform that meets them where they are and enables them to achieve success. At the same time, the employed and unemployed workforce is seeking opportunities to upskill we remain squarely focused on executing our long-term strategy in order to deliver education services that meet the diverse and large-scale needs of higher education institutions, accelerate growth businesses through ongoing investment to support strong growth expectations and diversification, expand our skills to employment, B2B and B2C offerings, to empower learners to better connect with in-demand jobs leveraging our university partners, and establish our leadership position as a data-driven services provider utilizing signals to offer institutions a technology and data-driven suite of solutions that will further differentiate Xovio's offerings. With that, I'll turn the call over to Kevin Royal to review our financial and operating results.

Thank you, Andrew. As Andrew mentioned, this is our first earnings call post-sale of the university. As a result, our fourth quarter 2020 results include two months that included the university results and one month as a standalone education technology services company. For comparative purposes, we have reclassified 2019 revenues and expenses to be consistent with the 2020 presentation and classification for this discussion. For the fourth quarter of 2020, revenue was $93.1 million compared to $96.3 million for the same period in the prior year. The decrease is primarily due to lower average weekly enrollment year over year. As a result of the sale of the university to UAGC on December 1, 2020, and the completion of our transition to an education technology service provider, we have reclassified the cost structure of the company's operations into the following categories. Technology and academic services for the fourth quarter of 2020 were $19.6 million, or 21% of revenue, compared to $17.9 million, or 18.6% of revenue for the comparable prior year period. The increase in the fourth quarter as a percentage of revenue was primarily due to employee costs and outside services partially offset by a decrease in facilities costs. Counseling services and support costs for the fourth quarter of 2020 were $25.5 million or 27.3% of revenue compared to $25.2 million or 26.2% of revenue for the comparable prior year period. These costs as a percentage of revenue increased due to employee costs partially offset by decrease in facilities costs. Marketing and communication expenses for the fourth quarter of 2020 were 21.6 million or 23.2% of revenue compared to $19.5 million or 20.2% of revenue for the comparable prior year period. These costs as a percentage of revenue increased due to increased employee costs and higher advertising costs due to lead inquiry mix and volume. General and administrative expenses for the fourth quarter of 2020 were $10.9 million or 11.8% of revenue compared to $13 million or 13.5% of revenue for the comparable prior year period. These expenses as a percentage of revenue decreased due to certain non-recurring prior acquisition costs partially offset by an increase in employee costs and professional fees. University-related expenses were $16.7 million or 17.9% of revenue for the fourth quarter of 2020 compared to $28.3 million or 29.4% of revenue for the comparable prior period. These expenses represent costs related to the university prior to the sale in December 2020, and there were only two months of these expenses in 2020 as compared to three months in 2019. We recorded $1.4 million of restructuring and impairment charges in the fourth quarter of 2020, as compared to $13.6 million in the fourth quarter of the prior year. The restructuring and impairment charges in the fourth quarter of 2020 related primarily to the termination of a contract. We also recorded $54.8 million as a loss on transaction in the fourth quarter of 2020 for the transaction completed with Global Campus in December 2020. As a result, The net loss for the fourth quarter of 2020 was $57.2 million, or a loss of $1.75 per diluted share, compared with net loss of $23 million, or a loss of $0.76 per diluted share for the same period in the prior year. Excluding the loss on transaction, separation costs, restructuring costs, acquisition costs, and related tax impacts, the non-GAAP net income for the fourth quarter of 2020 was $0.9 million, or $0.03 per diluted share, compared to a non-GAAP net loss of $4.5 million, or a loss of $0.15 per diluted share for the same period in the prior year. Regarding the full year results, revenue for the year ended December 31, 2020 was $397.1 million, compared with revenue of $417.8 million for the year ended December 31, 2019. The decrease is primarily due to lower average weekly enrollment year over year. Net loss for the full year ended December 31, 2020 was $49 million, or diluted loss per share of $1.53. compared with net loss of $54.8 million or diluted loss per share of $1.86 for the year ended December 31, 2019. Excluding the loss on transaction, separation costs, restructuring costs, acquisition costs, and related tax impacts, the non-GAAP net income for the year ended December 31, 2020 was $8.6 million or non-GAAP diluted income per share of 27 cents compared with a non-GAAP net loss of $13.9 million or non-GAAP diluted loss per share of 47 cents for the year ended December 31, 2019. Income tax benefit for the full year ended December 31, 2020 was $13.1 million, which primarily related to tax benefits associated with the CARES Act. The company had $25.3 million provided by cash in operating activities during the 12 months into December 31, 2020. By comparison, the company used $46.1 million of cash in operating activities during the same period in 2019. The improvement is due to the lower net loss year over year, excluding the loss on the sale of the university to UAGC. Capital expenditures for the 12 months into December 31, 2020 were $3.2 million as compared to $31 million in the comparable period last year. The decrease was primarily due to the 2019 capital expenditures associated with the Zovio headquarters facility in Chandler, Arizona. As of December 31, 2020, the company had combined cash and cash equivalents of $35.5 million as compared to $69.3 million as of December 31, 2019. This decrease is primarily related to the transaction completed with Global Campus in December 2020. As Andrew noted, for 2021, on a consolidated basis, we now expect total revenues to be in the range of $305 to $315 million, and non-GAAP EBITDA margin in the mid single digits. Now I will turn the call back over to Andrew for his closing comments. Thank you, Kevin.

Zovio is in an enviable position as we embark on this new chapter as a leading education technology services business. Leveraging our 17 plus years providing technology services that fuel student success, we have the opportunity to be a premier player in a large, evolving, and growing industry. Our track record of innovation, driven by advanced data and analytics, will allow us to offer services to our university partners that span the student journey and support the best possible outcomes. Additionally, our strong culture and shared vision across our organization will continue to support the more than 200 institutional customers in the Zovio ecosystem. As we enter 2021, We remain poised for long-term growth and value creation as we capture the rapid changes in education to empower all learners. At this time, I'll ask our operator to open the phone lines for your questions.

Certainly. At this time, as a reminder, if you would like to ask a question, please press star and the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Alex Paris from Barrington Research. Your line is open.

Hi, guys. Thanks for taking my call. Congratulations on the earnings beat and getting your most significantly UAGC transaction completed during the quarter. Thanks, Alex. Quick question. You beat me by a wide margin on adjusted EBITDA and non-GAAP EPS. Revenues were a little light versus my published estimate, but my published estimate was not guided, and it was pre the University of Arizona Global Campus sale. Do you know, Kevin, what revenues would have been for the fourth quarter had it been status quo had you not sold the university?

I don't know. I don't have that with me, Alex.

Okay. That's all right. We can follow up on that one also. And then I'm sorry.

That's fine. I think that explains why your revenue number was a little lighter.

Yeah, exactly, because you had two months of owning the university, one month of not owning the university, and that one month was subject to the master services agreement, under which you get 19.5% of revenue, and then reimbursement of direct costs. I would think that would account for all or more of it. Quick question on... New enrollment, you said the growth accelerated from the third quarter. Is that how you're going to leave it? I think you were low single digits in the third quarter. You sort of guided to mid-single digits in the fourth quarter. Did you hit that?

Yeah, I think, you know, we're going to leave it at what we said earlier, that we exceeded our third quarter results. You know, I'll just say we're really pleased with how the – transition is gone with UAGC. Alex, I mean, you know, I think the most relevant example out there for us has been, and a lot of people have used this example, Purdue Kaplan. And UAGC is certainly, you know, in our opinion, performing much better at the beginning of rebranding the institution than Purdue was when they first got out of the gates. And I, you know, I think UAGC benefited probably from witnessing some of the pitfalls they experienced, and as a result, I think as partners, we've done a really good job jointly at avoiding some of the challenges that Purdue had.

Great. And then just moving to, rather than getting into the details of the rearview mirror, under a different business model, I wanted to talk more about growth going forward and and the various segments. You said in 2021 you expect to add one to three small to medium-sized university partnerships within the university partnerships segment. These could be enterprise or a la carte. I'm assuming what you are projecting is they'd be more of the a la carte variety in 2021, given the small and medium size as opposed to enterprise or large.

Yeah, exactly. Alex, we are projecting these will be small to medium-sized clients, so generally under a million dollars of revenue on an annualized basis and probably a year or less in terms of their length. And we just look at the university partnership group in 21 as really just a foundational year where I'm confident they'll take on, you know, as we said, you know, one to three new partners. You know, UAGC will, you know, continue to move forward and is off to a fantastic start. But I think Zovia growth is really going to be – that group's going to be the highlight for Zovia throughout 21 – You know, we've seen tremendous performance out of that group in 2020 and have a lot of confidence in what 21 looks like for them and what that will mean to the overall Zovio story.

Great. And then... you know, without a doubt, Zovia growth will be the bigger driver of growth in the near term as you have a foundational year for the university partner segment. You'll add one to three university partners, small and midsize, in the coming year. And then I presume you should expect bigger and more in 22 and beyond.

Yes, absolutely. I mean, university partners, we expect a lot more in 22 and beyond. You know, our key strategic focus really for the university partner group over the longer term is going to be, you know, client partner diversification. So I think, you know, we've got an excellent leader running that group, have hired a leader of business development, and we're in active conversations with a variety of university partners as we speak.

Can you characterize that activity? I would assume you have a lot of inbound activity, you know, for a couple of reasons. One, COVID, and then two, the high-profile transactions you did with the University of Arizona. Are you actually reaching out as the university partners team, led by Matt Hillman, reaching out, refreshing old relationships? How would you characterize the pipeline, I guess is what I'm asking.

Yeah, no, I would characterize that Matt and Jim are not bored. They're very busy. We've got a strong combination of institutions that have reached out to us. You're absolutely right. UAGC did put Zovio on the radar of a lot of institutions, as well as just, you know, going and reaching back out to a variety of different clients through our network and not just the gentlemen at University Partners, but really the network that many of the leaders and even directors of Zovio have out there in higher education. So it's a combination of both, and those gentlemen are quite busy right now.

Good. Glad to hear it. This is a question I get a lot and I'd like to hear your answer. Why can't big public land grant institutions like University of Arizona or in the case of Purdue Kaplan, why can't they do this themselves? What is the challenge and why do they generally seek ed tech partners like Zovio to help them do that?

Yeah, you know, it's a great question. I think, you know, while it's not rocket science, a lot of people underestimate really the complexity of especially a large online initiative. So if you are establishing and want to, the institution has, you know, goals and objectives to grow their online presence, both undergraduate and graduate, to 10, 15, 20,000 students. There's a lot of complexity, a lot of expertise that's required to accomplish that. You know, I think what we do see institutions doing more today than they used to is really looking for a partner like Zovio to provide Some of the services, not necessarily the full enterprise suite of services. Now, that's very situational. It depends on the institution, and some absolutely would take you up on the enterprise solution. I don't think that's in the cards for Zovia until probably 22, maybe even 23, to have a big enterprise client. But there's a skill set here that we've spent almost 18 years developing and building. There's technology that we've built. There's data analytics and an incredible investment we have around that that supports what we do. It's just difficult for any institution, and land-grant institutions are no exception, to try to make a go of that from a standstill start. It takes a lot of investment and a lot of expertise and I think there's an element out there where these large public universities are realizing that, you know, to remain competitive, they need to have a very strong presence from an online perspective. It needs to be part of their overall strategy and vision as an institution. And they might already be a little bit behind as it is as you look at some of the very successful large state universities with online presence today. And so they're better off reaching out to a company like Zovio who can get them and their plans and their strategy accelerated much more quickly than they could otherwise do on their own.

Great, thanks. And then, Kevin, you increased guidance from a range of 290 to 310 or a midpoint of 300 to a midpoint of 310 million for 2021 total revenues. Where is that outperformance coming from? Is it the Zovia growth side, or is it the better-than-expected launch with UAGC?

Yeah, I would say it's really coming from both. Alex, probably from an absolute dollar standpoint, a little bit more from Zovio, but those segments are contributing to that outperformance.

Okay, great. And then the target for adjusted EBITDA margins in 2021, you're saying mid-single digits. I think you previously said mid to high single digits. What's the delta there?

Yeah, so let me take that one, Alex. So, you know, one of the things we've tried to do for you and investors is separate out the two business groups here at Zovio. So if you look at university partners today, you know, that margin is in the high single digits on a standalone basis. If you look at our Zovio growth and what we're investing toward the revenue growth that Fullstack and TutorMe are generating, You know, as I said earlier, it's about $68 million loss. So you shave a few points off of the margin in reinvestment really in the Zovio growth business. And, you know, in that business, we're seeing, you know, tremendous acceleration, you know, as I commented earlier. You know, today our partners are, you know, well over 200,000. you know, not just universities but corporations and K-12 districts, I think we're going to be at least at 280 by the end of 21, you know, close to 300 perhaps. So So you see a little bit of our margin being reinvested. However, you know, because our revenue guidance is up, the effective kind of profitability that I think you were thinking of, or at least kind of forecasting out, for 21 is kind of relatively unchanged.

No, I agree with that. So that's understandable. Growth investments on the Zovio growth side. are the primary reason for the slightly lower adjusted EBITDA margin of expectation, although adjusted EBITDA dollars are not as dramatically changed. Yes, that's correct. Given the higher run of expectation.

That's a good, precise summary of what I just said.

That's all I was doing, just to make sure I had it straight. All right, well, great, guys. Thank you very much, and I will be off. I'll follow up with you after the call for some modeling-related questions. Thanks.

Your next question comes from the line of Terry View from Watertar Research. Your line is open.

Thank you. Greetings, Andrew and Kevin. Alex covered a lot of ground, so I just had maybe two or three additional questions. On the UAGC front, any major or any notable changes that the new owner has made to the way the university functions or have they been able to maybe tap a new group of potential students or any commentary around that?

Yeah, Terry, first thanks for calling in today and for your questions. You know, I would say it's too early yet to describe any kind of new changes. As you know, they became the owners of UAGC on December the 1st, so we're kind of the better part of almost 90 days into them owning the institution. I'm sure and confident that UAGC will make changes throughout 21 and beyond. as they codify, you know, their vision and their strategy for the institution. I think the thing to really emphasize with you today and with investors is that we've gotten off to a really nice start with UAGC. December was, you know, surprisingly much better than even we had anticipated. And we had, you know, taken into consideration that there is an effort in rebranding the institution and that effort would take time and that there would be an impact to some extent in prospective new students, at least initially. There was an impact, but it just was not as great as we had anticipated for a variety of reasons. I think the partnership is off to a really good start and good beginning. And we're just having a lot of fun supporting the institution right now and helping them to achieve their objectives and goals for the long term.

Well, that's good to hear. I'm excited to see how that business evolves. A quick question on Fullstack. I think one of the campuses was closed part of last year. Can you give us an update there in terms of the two physical campuses?

Yeah, certainly. So there was just two physical retail locations where students would do in-class learning before the pandemic. And that was in New York and Chicago. Of course, the New York one has been closed since the pandemic. Those students have been taking their curriculum online. And then the one in Chicago, we took a similar approach with online, but then also decided to close that Chicago location because University of Illinois Chicago is one of our new clients. So it made sense for us to, for Fullstack to consolidate their offerings around UIC.

Okay, so the way forward for Fullstack is new partners, not potentially opening a new location like they had in Chicago and in New York.

Absolutely. I mean, the entire business model and the reason, Terry, we acquired Fullstack, you know, going back in time, they had one university partner relationship with Cal Poly but had plans to – to partner with many more institutions. They exceeded our expectations. We'd hoped they'd be at six by the end of 20 and they were at 12 and just have some fantastic institutions and brand names that they support. We see them continuing to be successful there. I would expect that they would add probably at least probably two new university partners a quarter, one to two. I think, you know, overall our guidance today was seven to ten more partners for full stack. And that's where a majority of the growth is going to be generated from. And really the entire plan there, business plan, is around supporting students additional university partner clients.

Okay. And then finally, maybe an accounting question for Kevin. The guidance, obviously, I would think, implies some type of revenue share from UAGC. Is it Is it something you will estimate on a quarterly basis, or is it something that happens in the fourth quarter?

Yeah, no, that would take place on a quarterly basis. You know, we would be in communication to understand, you know, what they're forecasting and planning, and then we would record our share of actual revenues for the quarter.

Okay, great. Well, that does it for me. Thank you very much.

Thanks, Jerry.

There are no questions. I turn the call back to you for closing remarks.

Thank you. We'd like to thank all of today's callers for your interest in Zodio and for your participation on the call today.

That concludes today's conference call.